SEETHAPATHY NARENDIRAN,DHARMAPURI vs. ITO, WARD-1,, DHARMAPURI

The Ld.DR was duly heard on the admission of the additional ground.

We have heard the rival submissions and perused the material available on record. The issue relating to the validity of the notice issued u/s.148 of the Act is a pure legal issue, which does not require examination of any fresh facts, since the notice issued u/s.148 of the Act already forms part of the record. Since the issue raised goes to

Brief facts of the case are that the assessee is an individual who had not filed the return of income for the assessment year 2015- 16. The AO was in possession of information that the assessee had made cash deposits aggregating to Rs.58.42 lakhs in bank accounts. Accordingly, after obtaining approval from the competent authority, the AO issued notice u/s.148 of the Act on 22.04.2022. During the course of reassessment proceedings, the assessee did not furnish the relevant details. The AO completed the reassessment by treating the cash deposits of Rs.58,42,000/- as unexplained money u/s.69A r.w.s

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 22.04.2022 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, reliance was placed 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), Bangalore Bench of the Tribunal in the case of Arun Duraiswamy vs. ITO in ITA No.193/Bang/2025 (order dated 16.02.2026) and Mumbai Bench of the Tribunal in the case of Elsie Hubald vs. ITO in ITA No.955/Mum/2025 (order dated 25.06.2025).

The Ld.DR supported the orders of the AO & FAA. The Ld.DR further submitted that the time given to the assessee to reply to the show-cause notice issued clause ‘b’ to section 148 of the Act should

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.148A(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 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;

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.”

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 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."

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

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, 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

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,— (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.

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

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.

Similar view has been taken by the Bangalore Bench of the Tribunal in the case of Arun Duraiswamy (supra) and Mumbai Bench of the Tribunal in the case of Elsie Hubald (supra).

In light of the above discussion, we hold that the notice issued u/s.148 of the Act dated 22.04.2022 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 raised on merits are left open and are not adjudicated. It is ordered accordingly.

In the result, the appeals filed by the assessee in ITA No.1475/CHNY/2026 is partly-allowed and ITA No.1476/CHNY/2026 is allowed.