MR. PERIYANNAN MADESHA ,HALE KOTE, JAGERI SATHEGALA POST, HANUR vs. INCOME TAX OFFICER WARD 1, CHAMARAJANAGAR , CHAMARAJANAGAR, KARNATAKA

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ITA 3037/BANG/2025Status: DisposedITAT Bangalore21 July 2026AY 2018-1910 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the reassessment proceedings were initiated without jurisdiction as the notice under Section 148 was issued after the commencement of the new regime and was barred by limitation as per Supreme Court decisions.

What were the facts?

The assessee failed to file an income tax return for AY 2018-19 despite significant cash deposits, professional fees, and sale of motor vehicle transactions. The case was reopened under Section 147, and an addition was made under Section 69C for unexplained expenditure.

What were the issues?

The primary issue was the validity of the reassessment proceedings initiated under Section 148, specifically whether the notice was issued in accordance with the amended provisions of the Income Tax Act and within the prescribed time limits.

Which sections of the Income-tax Act were involved?

Section 147,Section 144,Section 144B,Section 148,Section 143(2),Section 142(1),Section 69C,Section 151A,Section 250(6),Section 234A,Section 234B,Section 234F,Section 149

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH : BANGALORE

Before: SHRI BALAKRISHNAN S & SHRI KESHAV DUBEY

For Appellant: Shri. Siddesh Gaddi, CA
For Respondent: Shri. Pradeep S - Addl. CIT(DR)(ITAT), Bengaluru
Hearing: 01.07.2026Pronounced: 21.07.2026

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH : BANGALORE BEFORE SHRI BALAKRISHNAN S, ACCOUNTANT MEMBER AND SHRI KESHAV DUBEY, JUDICIAL MEMBER ITA No.3037/Bang/2026 Assessment Year : 2018-19 Shri. Periyannan Madesha, Vs. Income Tax Officer Hale Kote, Jageri Sathegala Post, Hanur, Ward 1, Kollegala Kollegal 571439, Chamarajanagara-571313, Karnataka Karnataka PAN : BFDPM9475G APPELLANT RESPONDENT Assessee by : Shri. Siddesh Gaddi, CA Revenue by : Shri. Pradeep S - Addl. CIT(DR)(ITAT), Bengaluru. Date of hearing : 01.07.2026 Date of Pronouncement : 21.07.2026 O R D E R Per Balakrishnan S, Accountant Member : This appeal filed by the assessee against the order of learned CIT(A) (NFAC, Delhi], vide DIN and Order No.ITBA/NFAC/S/250/2025- 26/1081229782(1) dated 26.09.2025, for the Assessment Year 2018-19 arising out of the Order passed under section 147 r.w.s. 144 r.w.s. 144B of the Act, dated 19.03.2024.

2.

At the outset, it was noticed that assessee has filed an appeal with a delay of 24 days. The assessee stated in the petition for condonation of delay that the Order passed by the learned CIT(A) dated 29.09.2025 was deemed to been received on the same date and the assessee ought to have

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filed appeal before the Tribunal on or before 30.11.2025. However, the assessee has filed appeal on 24.12.2025 resulting in a delay of 24 days. Assessee stated that no communication or email regarding the passing of the Order was received by the assessee and the assessee remained unaware of the passing of the said Order. Therefore, he prayed that delay may be condoned and the issue may be adjudicated on merits. We find that since the assessee has not received any communication regarding the passing of Order and there is sufficient cause for the delay in filing of appeal, the delay of 24 days in filing of appeal before the Tribunal is condoned and we proceed to adjudicate the appeal on merits.

3.

Briefly stated facts of the case are as per the information flagged in accordance with risk management strategy available in the insight portal, the assessee has carried the following transactions during the Financial Year 2017-18 relevant to Assessment Year 2018-19 but has not filed return of income for the relevant Assessment Year 2018-19

Information Information Description Source Amount (Rs.) Code

SFT-004 Cash deposits in one or more AXIS BANK 57.31,800/- accounts (other than a current LIMITED account and time deposit) of a person

4.

The assessee has also received professional fees/fees for technical services as under:

ITA No.3037/Bang/2025 Page 3 of 10

Information Information Description Source Amount (Rs.) Code

TDS-194J TDS Statement - Fees for PRIMARY HEALTH 65,419/- professional or technical CENTRE - services (Section 194J) CHANDAKAWADI

5.

The assessee has made transactions in respect of sale of motor vehicle as under:

Information Information Description Source Amount (Rs.) Code

TCS-206CL TCS Statement - Sale of motor T V SUNDRAM 59,40,593/- vehicle exceeding Rs 10 Lakhs IYENGAR AND SONS (Section 206C) PRIVATE LIMITED

6.

The learned AO observing that income chargeable to tax has escaped assessment, reopened the case by issue of notice under section 148 of the Act on 20.04.2022. Thereafter, statutory notices under sections 143(2) and 142(1) of the Act were issued and served on the assessee. In response to notice under section 148 of the Act, assessee filed reply. The assessee has admitted income under sections 44AD and 44ADA of the Act. The learned AO, after considering the information furnished by the assessee, added an amount of Rs.59,40,594/- under section 69C of the Act as unexplained expenditure.

7.

On being aggrieved by the order of the learned AO, assessee carried the matter before the learned CIT(A). Similar submissions were made

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before the learned CIT(A) and learned CIT(A), not being satisfied, dismissed the appeal of the assessee.

8.

On being aggrieved by the order of the learned CIT(A), the assessee is in appeal before us by raising following grounds:

1.

The impugned order passed by the learned AO and CIT(A), to the extent prejudicial to the Appellant, is not justified in law and on the facts and circumstances of the case. 2. The learned AO and CIT(A) have erred in law and on the facts in passing the impugned order without jurisdiction. 3. The order passed in violation of the provisions of section 151A of the Act is not legally tenable; 4. The learned AO and CIT(A). has erred in law and on facts in treating the purchase of tippers amounting to ₹59,40,594/- as unexplained expenditure u/S. 69C, ignoring the fact that the said tippers were purchased out of loans obtained from Hinduja Leyland Finance, the existence of which was never disputed. 5. The learned AO and CIT(A). has failed to appreciate that the appellant had disclosed receipts arising from the use of the tippers in the return of income filed in response to notice u/S. 148 and had offered income thereon on a presumptive basis, thereby negating the allegation that the investment was unexplained. 6. The Ld.AO and CIT(A) has erred in law and on facts in not appreciating that, having accepted the returned income, there is no question of doubting the application thereof. 7. The learned AO and CIT(A) have erred in dismissing the appeal primarily for non-prosecution and have failed to adjudicate the grounds on merits in accordance with the mandate of Section 250(6) of the Act, thereby violating the principles of natural justice. 8. The learned AO and CIT(A) have erred in upholding the addition merely on the basis of alleged non-submission of documents, without

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granting a reasonable and effective opportunity of being heard, despite the appeal having been admitted after condonation of delay. 9. The learned AO and CIT(A) have erred in relying on alleged entries in the bank account without confronting the appellant with specific adverse material or issuing any enhancement notice, while simultaneously making observations prejudicial to the appellant regarding the applicability of Sections 44AD, 44ADA and 44AE. 10. The addition sustained u/S. 69C is arbitrary, excessive and unsustainable in law, as the source of investment was identifiable and the payments were routed through banking channels, which were already available on record. 11. Since the jurisdictional fact to invoke Section 69C of the Act is not applicable, there is no question of making an addition under this section. 12. The levy of interest u/S. 234A, 234B and 234F, being purely consequential, are liable to be deleted if the impugned addition is deleted. 13. The appellant craves leave to add, alter, amend or withdraw any of the above grounds at the time of hearing of the appeal.

(Tax effect Rs. 45,30,980/-)

9.

At the outset, the learned AR challenged the notice issued under section 148 of the Act on 20.04.2022 after obtaining prior approval from PCIT, Bangalore. He further submitted that the prior approval ought to have been obtained from Principal Chief Commissioner of Income Tax and not Principal Commissioner of Income Tax, Bangalore. Therefore, the notice under section 148 of the Act has no jurisdiction and the consequent proceedings becomes void.

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10.

Per contra, the learned DR relied on the order of Revenue authorities.

11.

We have heard both the sides and perused the material available on record including the written submissions made by the Ld. DR. It is an undisputed fact that the assessment was reopened by issuance of notice under section 148 of the Act dated 20.04.2022. The grievance of the learned AR is since the notice has been issued after the commencement of new regime wherein the Finance Act, 2021 amended the provisions of section 147 to 151 of the Act, the Ld. AO ought to have followed the procedure prescribed as per the new regime. Ld.AR placed heavy reliance on the decision of the Hon’ble Supreme Court in the case of Union of India &Ors. v. Ashish Agarwal (supra) wherein the Hon’ble Supreme Court has directed vide its order dated 04.05.2022 to treat the notice issued under section 148 of the Act as per the amended provisions of the I.T.Act, r.w.section 3(1) of TOLA as deemed to be a show-cause notice under the provisions of section 148A of the Act. The Hon’ble Supreme Court concluded that section 3(1) of the TOLA overrides section 149 of the Act only to the extent of relaxing the time limit for issuance of the re-assessment notice under section 148 of the Act. TOLA will continue to apply to the Act after 01.04.2021 if any action or proceeding specified under the substituted provisions of the Act falls for completion between 20.03.2020 and 31.03.2021.

12.

Further, we also observe that in the case of Vaka Ghanta Nageswararao v. ITO in ITA No. 251/Viz/2025 the Co-ordinate Bench of Visakhapatnam held as follows: -

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“9. We have heard both the sides and perused the material available on record including the case laws cited by the Ld.AR. It is not in dispute that the date of the order u/s 148A(d) is 07.04.2022 and that of the consequential section 148 notice is also dated post 31.03.2022. In the instant case the notice under section 148 was issued on 07.04.2022 for the A.Y. 2015-16. It is the contention of the assessee that the said notice is barred by limitation as per the first proviso of the unamended proviso to section 149(1)(b) of the Act which has been confirmed by the Hon’ble Supreme Court in the case of UOI v. Rajeev Bansal (supra). The Hon’ble Supreme Court in the case of UOI v. Rajeev Bansal (supra) held as follows: - “19. Mr N Venkataraman, learned Additional Solicitor General of India, made the following submissions on behalf of the Revenue: (a) to (e)** (f). The Revenue concedes that for the assessment year 2015-16, all notices issued on or after 1 April 2021 will have to be dropped as they will not fall for completion during the period prescribed under TOLA; ** 46. The ingredients of the proviso could be broken down for analysis as follows: (i) no notice under section 148 of the new regime can be issued at any time for an assessment year beginning on or before 1 April 2021; (ii) if it is barred at the time when the notice is sought to be issued because of the "time limits specified under the provisions of" 149(1)(b) of the old regime.” 10. The first proviso of section 149(1)(b) prescribed under section 149(1)(a) of the old regime continues to exist for the A.Y. 2021-2022 and before. Consequently, notice under section 148 of the Act as per amended provisions cannot be issued for the period beyond six years from the end of the relevant assessment year has expired at the time of issuance of notice. In the instant case, the time

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limit of six years expires on 31.03.2022 and the notice u/s 148 issued on 07.04.2022 is not valid notice for the re assessment proceedings. From the observations of the Hon’ble Supreme Court and also by the Co-ordinate Bench of the Tribunal, it is clear that for the purpose of checking of the validity of the notices issued under section 148 of the Act under the new regime for the A.Y. 2021-2022 or prior years is whether the period of six years has expired at the time of issuance of such notice as per the unamended section to determine the validity of the notice under section 148 of the Act under the amended section. In the assessee’s case, the period of six years expires on 31.03.2022 and therefore notice dated 07.04.2022 under section 148 of the Act for the A.Y. 2015-16 is invalid and barred by limitation. In view of the above findings and in light of binding judicial precedents, we hold that the reassessment proceedings initiated for AY 2015-16 are without jurisdiction, and hence the notice issued under section 148 and subsequent proceedings are quashed. Accordingly, the assessment completed under section 147 of the Act is liable to quashed. Thus the ground raised by the assessee is allowed.”

13.

Further, the Hon’ble Supreme Court in the case of Deepak Steel and Power Ltd., v. Central Board of Direct Taxes [2025] 174 taxmann.com 144 (SC) held as follows: -

“4. The learned counsel appearing for the revenue with his usual fairness invited the attention of this Court to a three judge bench decision of this Court in Union of India and Ors. v. Rajeev Bansal, reported in 2024 SCC OnLine SC 2693, more particularly, paragraph 19(f) which reads thus:- “19. (f) The Revenue concedes that for the assessment year 2015- 2016, all notices issued on or after April 1, 2021 will have to be dropped as they will not fall for completion during the period prescribed under the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020.” 5. As the revenue made a concession in the aforesaid decision that is for the assessment year 2015-2016, all notices issued on or

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after 1st April, 2021 will have to be dropped as they would not fall for completion during the period prescribed under the taxation and other laws (Relaxation and Amendment of certain Provisions Act, 2020). Nothing further is required to be adjudicated in this matter as the notices so far as the present litigation is concerned is dated 25.6.2021. 6. In view of the aforesaid, in such circumstances referred to above the original writ petition nos.2446 of 2023, 2543 of 2023 and 2544 of 2023 respectively filed before the High Court of Orissa at cuttack stands allowed.” 14. Respectfully following the decision of the Hon’ble Supreme Court in Deepak Steel and Power Ltd., v. Central Board of Direct Taxes (supra) and consistently following the view taken in ITA No. 251/VIZ/2025, we are of the view that re-assessment proceedings initiated for the A.Y. 2015- 16 in the instant case are without jurisdiction and hence assessment completed u/s. 147 of the Act consequent to the notice issued u/s. 148 of the Act dated 20.04.2022 cannot be sustained and liable to be quashed. Since the legal grounds are adjudicated in favour of the assessee by quashing the re-assessment order the other grounds raised by the assessee on merits are not adjudicated.

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15.

In the result, appeal of the assessee is allowed.

Pronounced in the open court on the date mentioned on the caption page.

Sd/- Sd/- (KESHAV DUBEY) (BALAKRISHNAN S) Judicial Member Accountant Member Bangalore. Dated: 21.07.2026. /NS/*

Copy to: 1. Appellants 2. Respondent 3. CIT 4. CIT(A) 5. DR 6. Guard file By order

Assistant Registrar, ITAT, Bangalore.

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