KRISHNAN RAJINI,DHARMAPURI vs. ITO, WARD-1., DHARMAPURI

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ITA 1462/CHNY/2026Status: DisposedITAT Chennai03 July 2026AY 2015-169 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the notice issued under Section 148 for AY 2015-16, dated 13.04.2022, was barred by limitation as per the first proviso to Section 149 of the Act. Consequently, the reassessment proceedings and order were quashed.

What were the facts?

The assessee filed an appeal after a delay of 106 days due to accidental injuries. The core issue was the validity of the notice issued under Section 148 of the Income Tax Act for the assessment year 2015-16, which the assessee claimed was time-barred.

What were the issues?

The primary issue was whether the notice issued under Section 148 of the Income Tax Act for AY 2015-16 was barred by limitation, considering the amendments and provisos to Section 149.

Which sections of the Income-tax Act were involved?

Section 148,Section 149,Section 44AE,Section 69A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI

Before: SHRI GEORGE GEORGE K & SHRI GAGAN GOYAL

Hearing: 02.07.2026Pronounced: 03.07.2026

आदेश/ O R D E R PER GEORGE GEORGE K, VICE PRESIDENT: This appeal filed by the assessee is directed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 03.09.2025 passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2015-16.

ITA No.1462/CHNY/2026 - 2 - Krishnan Rajini 2. There is a delay of 106 days in filing the appeal. The assessee has filed an affidavit for condonation of delay stating therein the reasons for the delay. The reason stated is that, the assessee is a small transporter engaged in plying five goods carriage lorries on hire basis and derives his livelihood solely from the said transport business. It was stated that the assessee sustained accidental injuries during September, 2025 and remained under continuous medical treatment and supervision for several months. Consequently, he was unable to attend to his day-to-day affairs and inadvertently lost sight of his tax matters, resulting in the delay in filing the appeal. On perusal of the reasons stated, we are of the view that no latches can be attributed to the assessee as there is sufficient cause for belated filing of this appeal. Hence, we condone the delay and proceed to dispose off the appeal on merits.

3.

At the very outset, we find that the assessee has raised a legal ground relating to the validity of the notice issued u/s.148 of the Act. The relevant ground raised reads as under:- “1.3 The CIT(A) ought to have seen that the notice u/s.148 being issued beyond 31.03.2022 is clearly barred by limitation as stipulated under 1st Proviso to Sec.149.”

4.

Brief facts of the case are that the assessee is an individual engaged in transport business. For the assessment year 2015-16, return of income was filed on 28.04.2022 in response to notice issued

ITA No.1462/CHNY/2026 - 3 - Krishnan Rajini u/s.148 of the Act declaring total income of Rs.4,50,000/- under presumptive taxation scheme of section 44AE of the Act. During scrutiny, the AO observed that assessee was operative four bank accounts in which total hire receipts of Rs.2,29,70,260/- were deposited relating to operations of five goods carrier vehicles. Out of these deposits, there was cash deposits amounting to Rs.1,55,45,000/-. Since, the assessee could not explain the source for a portion of his deposits, the AO completed the reassessment by treating Rs.74,25,260/- as unexplained money u/s.69A of the Act. Aggrieved by the reassessment order, the assessee preferred an appeal before the FAA. The FAA dismissed the appeal by confirming the addition made by the AO.

5.

Aggrieved by the order of the FAA, the assessee has filed the present appeal before the Tribunal. The Ld.AR reiterated that the notice issued u/s.148 of the Act is barred by limitation. It was submitted that the notice dated 26.04.2022 having been issued beyond six years from the end of the relevant assessment year 2015- 16 is time barred and therefore invalid in law. In support of the said contention, the Ld.AR placed reliance on the order of the Co-ordinate Bench of the Tribunal in the case of Kaliyappan Arumugam vs. ITO in ITA No.3017/CHNY/2025 (order dated 04.03.2026).

ITA No.1462/CHNY/2026 - 4 - Krishnan Rajini 6. The Ld.DR supported the orders of the AO & FAA. The Ld.DR further submitted that while computing the limitation period for issuance of notice u/s.148 of the Act, the period granted to the assessee for furnishing a reply to the show-cause notice issued under clause (b) of section 148A of the Act is liable to be excluded. Accordingly, the Ld. DR submitted that, after excluding the said period, the notice issued u/s.148 cannot be regarded as barred by limitation.

7.

We have heard rival submissions and perused the material on record. We note that on identical facts, the Chennai Bench of the Tribunal in the case of Kaliyappan Arumugam (supra) has rejected the DR’s argument that time given to the assessee to reply to the show-cause notice issued u/s.143A(b) of the Act should be excluded for the purpose of calculating the period of limitation by placing reliance on the various judicial pronouncements on the issue and held that the notice u/s.148 of the Act for the assessment year 2015-16 beyond 31.03.2022 is barred by limitation in view of the first proviso to section 149 of the Act. The relevant finding of the Tribunal reads as under:- 6. We heard the parties and perused the material on record. We will first look at the following observations of the Hon'ble Supreme Court in the case

ITA No.1462/CHNY/2026 - 5 - Krishnan Rajini of Rajeev Bansal (supra) with regard to validity of notices issued for AY 2015-16 issued under the old regime – 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. Thus, a notice could be issued under section 148 of the new regime for assessment year 2021-2022 and before only if the time limit for issuance of such notice continued to exist under section 149(1)(b) of the old regime.

49.

The first proviso to Section 149(1)(b) requires the determination of whether the time limit prescribed under section 149(1)(b) of the old regime continues to exist for the assessment year 2021-2022 and before. Resultantly, a notice under Section 148 of the new regime cannot be issued if the period of six years from the end of the relevant assessment year has expired at the time of issuance of the notice. This also ensures that the new time limit of ten years prescribed under section 149(1)(b) of the new regime applies prospectively. For example, for the assessment year 2012-2013, the ten year period would have expired on 31 March 2023, while the six year period expired on 31 March 2019. Without the proviso to Section 149(1)(b) of the new regime, the Revenue could have had the power to reopen assessments for the year 2012-2013 if the escaped assessment amounted to Rupees fifty lakhs or more. The proviso limits the retrospective operation of Section 149(1)(b) to protect the interests of the assesses.”

7.

The Hon'ble Supreme Court while dismissing the SLP filed by Revenue in the case of ACIT vs. Nehal Ashit Shah in SLP (Civil) Diary No(s). 57209/2024, dated 04.04.2025 held that impugned issued does not

ITA No.1462/CHNY/2026 - 6 - Krishnan Rajini survive for further consideration. While holding so, Hon'ble Court noted in para 5 as under: "5. In this regard, reference could also be made to paragraph 19(e) and (f) in the case of Union of India vs. Rajeev Bansal, Civil Appeal No.8629 of 2024 on 03.10.2024 (2024 SCC ONLINE 754) under which the learned Additional Solicitor General for India has made a concession insofar as the assessment year 2015-16 is concerned."

8.

The above view was again reiterated by the Hon’ble Supreme Court in Deepak Steel and Power Ltd. vs. CBDT[2025] 476 ITR 369 (SC) by stating as under; "5. As the revenue made a concession in the aforesaid decision that is for the assessment year 2015-2016, all notices issued on or 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".

9.

Therefore in our considered view, the issue of validity of notice u/s.148 issued after 31.03.2022 is no longer res integra and accordingly unable to appreciate the arguments of the ld DR. Section 149(1) of the Act contain the provisions with regard to the time limit for issue of notice under section 148 of the Act and the relevant provisions applicable for the year under consideration read as under – 149 - Time limit for notice. (1) No notice under section 148 shall be issued for the relevant assessment year,— (a) if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b); (b) if three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income chargeable to tax, represented in the form of— (i) an asset; (ii) expenditure in respect of a transaction or in relation to an event or occasion; or (iii) an entry or entries in the books of account,

ITA No.1462/CHNY/2026 - 7 - Krishnan Rajini which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more: Provided that no notice under section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before 1st day of April, 2021, if a notice under section 148 or section 153A or section 153C could not have been issued at that time on account of being beyond the time limit specified under the provisions of clause (b) of sub-section (1) of this section or section 153A or section 153C, as the case may be], as they stood immediately before the commencement of the Finance Act, 2021

Provided further that the provisions of this sub-section shall not apply in a case, where a notice under section 153A, or section 153C read with section 153A, is required to be issued in relation to a search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A, on or before the 31st day of March, 2021: Provided also that for the purposes of computing the period of limitation as per this section, the time or extended time allowed to the assessee, as per show-cause notice issued under clause (b) of section 148A or the period during which the proceeding under section 148A is stayed by an order or injunction of any court, shall be excluded: Provided also that where immediately after the exclusion of the period referred to in the immediately preceding proviso, the period of limitation available to the Assessing Officer for passing an order under clause (d) of section 148A is less than seven days, such remaining period shall be extended to seven days and the period of limitation under this sub-section shall be deemed to be extended accordingly. Explanation.—For the purposes of clause (b) of this sub-section, "asset" shall include immovable property, being land or building or both, shares and securities, loans and advances, deposits in bank account. (2) The provisions of sub-section (1) as to the issue of notice shall be subject to the provisions of section 151

10.

The time limits for issue of notice under section 148 of the Act were amended as above w.e.f. 01.04.2021. Prior to the amendment the relevant provisions of section 149(1) of the Act read as under –

149 - Time limit for notice. (1) No notice under section 148 shall be issued for the relevant assessment year,—

ITA No.1462/CHNY/2026 - 8 - Krishnan Rajini (a) if four years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b) or clause (c); (b) if four years, but not more than six years, have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to one lakh rupees or more for that year; (c) **** Explanation.—In determining income chargeable to tax which has escaped assessment for the purposes of this sub-section, the provisions of Explanation 2 of section 147 shall apply as they apply for the purposes of that section.

(2) & (3) ****

11.

From the combined perusal of the provisions of section 149 post amendment, it is clear that the time limit for issue of notice under section 148 of the Act was revised with effect from 01.04.2021 and the legislature in order to make the amendment prospective introduced the first proviso to section 149(1). In view of above discussion both on facts and law including the judicial precedence, we hold that notice for A.Y. 2015-16 issued on 13.04.2022 u/s 148 of the new regime is barred by limitation. The resulting impugned reassessment proceedings as well as the impugned reassessment order are therefore bad in law and liable to be quashed.

12.

Since we have allowed the appeal considering the legal contention raised ground No.1, the grounds on merits have become academic not warranting any separate adjudication.

8.

In light of the above discussion, we hold that the notice issued u/s.148 of the Act dated 26.04.2022 is barred by limitation and consequently, the reassessment proceedings initiated pursuant to such invalid notice are liable to be quashed. Since we have adjudicated the legal issue in favour of the assessee, the grounds

ITA No.1462/CHNY/2026 - 9 - Krishnan Rajini raised on merits are left open and are not adjudicated. It is ordered accordingly.

9.

In the result, the appeal filed by the assessee is partly-allowed.

Order pronounced in the open court on 3rd July,2026 at Chennai.

Sd/- Sd/- (जॉज� जॉज� के) (गगन गोयल) (GAGAN GOYAL) (GEORGE GEORGE K) लेखा सद�य/ACCOUNTANT MEMBER उपा�य� /VICE PRESIDENT चे�नई/Chennai, �दनांक/Dated, the 3rd July, 2026 RSR, Sr.PS आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��यथ�/Respondent 3. आयकर आयु�त /CIT, Salem 4. �वभागीय ��त�न�ध/DR 5. गाड� फाईल/GF. By Order Digitally signed by REKHA REKHA SENTHIL RAJ SENTHIL RAJ Date: 2026.07.07 11:33:45 +05'30'

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