INCOME TAX OFFICER, JALNA vs. ASTLAXMI RE LOLLS JALNA PRIVATE LIMITED, JALNA

There is a delay of 99 days in filing of the CO by the assessee before the Tribunal for which the assessee has filed a condonation application along with an affidavit explaining the reasons for such delay. After considering the contents of the condonation application filed along with the affidavit and after hearing the Ld. DR, the delay in filing of the CO is condoned and the CO is admitted for adjudication.

Facts of the case, in brief, are that the assessee is a private limited company and engaged in the business of manufacturing of TMT bars from MS Billets and also future and option trading in shares of Bombay Stock Exchange. It filed its return of income on 26.09.2015 declaring total loss at Rs.81,97,144/- and deemed total income u/s 115JB of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) at Rs.43,76,885/-. The assessment was completed u/s 143(3) vide order dated 20.11.2017 assessing the total income of the assessee at Nil.

Subsequently in compliance to the judgment of the Hon’ble Supreme Court in the case of Union of India vs. Ashish Agrawal reported in 286 Taxman 183 vide order dated 26.07.2022 an order u/s 148A(d) of the Act was passed after obtaining necessary approval from the competent authority and accordingly a notice u/s 148 was issued to the assessee. The assessee did not respond to the said notice.

As per information received from the DDIT/ADIT(Inv), 6(3), Mumbai through insight portal, the Assessing Officer noted that certain entities have received accommodation entries through fictitious equity / derivative trading. The assessee has entered into co-ordinated and premediated trading in liquid stock options on the BSE. He, therefore, observed that the assessee has brought back own unaccounted money through such bogus profit to the extent of Rs.2,89,26,275/-. Thereafter, notices u/s 142(1) were issued and served on the assessee. Rejecting the various explanations given by the assessee and observing that in absence of the complete reply along with supporting documents, the Assessing Officer made addition of Rs.2,89,26,275/- to the total income of the assessee as unexplained cash credit u/s 68 r.w.s. 115BBE of the Act. He accordingly determined the total income of the assessee at Rs.2,07,29,131/- as against the loss declared by the assessee at Rs.81,97,144/-.

Before the Ld. CIT(A) / NFAC the assessee made various submissions and also filed additional evidence under Rule 46A of the IT Rules, 1962. The Ld. CIT(A) / NFAC called for a remand report from the Assessing Officer based on the submissions and additional evidence filed by the assessee. After considering the remand report of the Assessing Officer and reply of the assessee to such remand report, the Ld. CIT(A) / NFAC admitted the additional evidence and deleted the addition made by the Assessing Officer u/s 68 by observing as under:

Aggrieved with such order of the Ld. CIT(A) / NFAC the Revenue is in appeal before the Tribunal by raising the following grounds:

The order of the Assessing Officer may be restored and that of the CIT(A), NFAC, Delhi be vacated.

The appellant craves leave to add, amend, or alter all or any of the grounds of appeal.

The assessee filed the following grounds in his Cross Objection: Ground No.1 Condonation of Delay The Cross-Objector prays that the delay, in filing the present Cross-Objections under section 253(4) of the Income-tax Act, 1961 may kindly be condoned, the same having occurred due to bona fide and reasonable causes, as fully explained in the separate application supported by a sworn affidavit filed herewith. Ground No.2 Invalid Juri iction - Violation of Section 144B (Void ab initio) On the facts and in law, the reassessment proceedings culminating in the order passed under section 147 dated 24.05.2023 are void ab initio, being founded on a notice issued under section 148 dated 22.04.2021 by the Juri ictional Assessing Officer, in complete violation of mandatory provisions of section 144B, applicable with effect from 01.04.2021. Since the notice itself was issued dehors the faceless procedure prescribed by statute, the assumption of juri iction is invalid, rendering the entire reassessment proceedings non est in law. Ground No.3 Time-barred Notice under Section 148-Section 149 On the facts and in law, the reassessment order under section 147 is liable to be quashed, as it is based on a notice issued under section 148 dated 26.07.2022, pursuant to an order under section 148A(d) dated 26.07.2022, which was issued beyond the limitation period prescribed under section 149 of the Act. Reliance placed on the judgments of the Hon'ble Supreme Court in Union of India v. Ashish Agarwal and Union of India v. Rajeev Bansal does not override or dilute the statutory bar of limitation under section 149. Ground No.4 Reassessment Void for Failure to Issue Notice under Section 143(2) On the facts and circumstances of the case and in law, the reassessment order passed under section 147 is invalid and void ab initio, as the Faceless Assessing Officer assumed and exercised juri iction to complete the reassessment without issuing any mandatory notice under section 143(2) of the Income-tax Act, 1961, after issuance of notice under section 148. Issuance of a notice under section 143(2) is a sine qua non for valid assumption of juri iction to frame an assessment or reassessment under section 147, and failure to issue such notice goes to the root of juri iction, thereby vitiating the entire reassessment proceedings.

The Ld. Counsel for the assessee at the outset drew the attention of the Bench to the ground No.3 raised in CO and submitted that if a notice for assessment year 2015-16 is issued after 31.03.2022 the same has to be quashed being barred by limitation. For the above proposition, he relied on the following decisions: Mazaharhussain Abdulrahuf Bagwan vs. ITO vide ITA No.2329/PUN/2025 order dated 25.05.2026 for assessment year 2015-16

The Ld. DR on the other hand relied on the orders of the Assessing Officer and the Ld. CIT(A) / NFAC.

We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and the Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. A perusal of the notice issued u/s 148 dated 26.07.2022, copy of which is placed at page 164 of the paper book shows that the approval has been taken from the Pr.Chief Commissioner of Income-tax, Pune who accorded his approval on 22.07.2022. The relevant notice dated 26.07.2022 reads as under:

We find in the instant case the assessment year involved is assessment year 2015-16 and the notice u/s 148 has been issued on 26.07.2022. Under the old provisions of section 149, which is applicable for the assessment year under consideration i.e. AY 2015-16, the notice u/s 148 would not have been issued beyond the period of 6 years from end of the relevant assessment year. The period of 6 years from the AY 2015-16 laps on 31.03.2022. As stated earlier, in the instant case, notice u/s 148 was issued to the assessee on 26.07.2022 which is clearly beyond the time limit prescribed under the said provisions of the Act. We find that the Revenue has also conceded before the Hon’ble Supreme Court in the case of Rajeev Bansal (supra) that the provisions of Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) is not applicable to the notices issued for AY 2015-16. The relevant para of the judgment is reproduced below :

Finally, the Hon'ble Supreme Court at para 114 of the order has observed as under: “G. Conclusions

In view of the above discussion, we conclude that: a. After 1 April 2021, the Income Tax Act has to be read along with the substituted provisions; b. TOLA will continue to apply to the Income Tax Act after 1 April 2021 if any action or proceeding specified under the substituted provisions of the Income Tax Act falls for completion between 20 March 2020 and 31 March 2021; c. Section 3(1) of TOLA overrides Section 149 of the Income Tax Act only to the extent of relaxing the time limit for issuance of a reassessment notice under Section 148; d. TOLA will extend the time limit for the grant of sanction by the authority specified under Section 151. The test to determine whether TOLA will apply to Section 151 of the new regime is this: if the time limit of three years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under Section 151(i) has extended time till 30 June 2021 to grant approval; e. In the case of Section 151 of the old regime, the test is: if the time limit of four years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under Section 151(2) has extended time till 31 March 2021 to grant approval;

We find Hon’ble Supreme Court in the recent case of ITO vs. Sri Sai Kumar Mateti (supra) has held that if a notice for assessment year 2015-16 is issued after 31.03.2022, the ratio laid down in the case of Union of India vs. Rajeev Bansal (supra) is squarely applicable and such notices issued for re-assessment stand barred by limitation.

We further find the Hon’ble Bombay High Court once again in the case of Devendra Jaswantrai vs. ITO (supra) following the ratio laid down by the Hon’ble Supreme Court in the case of Union of India vs. Rajeev Bansal (supra) has quashed the re-assessment proceedings initiated pursuant to a notice u/s 148 dated 18.04.2022. 17. We find the Coordinate Bench of the Tribunal in the case of Mazaharhussain Abdulrahuf Bagwan vs. ITO (supra) while applying the ratio of Hon’ble Supreme

Respectfully following the decisions cited (supra), we, quash the re- assessment proceedings initiated by the Assessing Officer on the ground that the same were initiated on the time barred notice issued u/s 148 of the Act. The ground No.3 raised by the assessee in the CO is accordingly allowed. The other grounds in the CO are not adjudicated being rendered academic in nature.

Since the re-assessment proceedings are quashed, the appeal filed by the Revenue becomes infructuous and therefore, the same is dismissed.

In the result, the appeal filed by the Revenue is dismissed and the CO filed by the assessee is allowed.

DR, ITAT, ‘A’Bench, Pune

The concerned Pr.CIT, Pune 5. ग र्ड फ ईल / Guard file. आदेशानुसार/ BY ORDER, ////