ITO, WARD-2(2), PUNE, PUNE vs. VASANT TUKARAM KALATE, PUNE

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “B”, PUNE BEFORE SHRI MANISH BORAD, ACCOUNTANT MEMBER AND SHRI VINAY BHAMORE, JUDICIAL MEMBER आयकर अपील सं. / ITA No.3084/PUN/2025 िनधा�रण वष� / Assessment Year : 2015-16 ITO, Ward-2(2) Pune. Vs. Vasant Tukaram Kalate, H. 104, Swaoborasadm Wakad Chowk, Wakad, Pune- 411057. PAN : AFZPK6770M Appellant Respondent C. O. No.24/PUN/2026 (Arising out of ITA No.3084/PUN/2025) िनधा�रण वष� / Assessment Year : 2015-16 Vasant Tukaram Kalate, Vs. ITO, Ward-2(2) Pune. H. 104, Swaoborasadm Wakad Chowk, Wakad, Pune- 411057. PAN : AFZPK6770M Appellant Respondent Revenue by : Shri Amit Bobde Assessee by : Shri Shubhada A. Koppa Date of hearing : 23.04.2026 Date of pronouncement : 29.06.2026 आदेश / ORDER PER VINAY BHAMORE, JM: The appeal filed by the Revenue is directed against the order dated 30.10.2025 passed by Ld. CIT(A)/NFAC for the assessment

2 ITA No.3084/PUN/2025 C.O. No.24/PUN/2026 year 2015-16. The assessee is also in cross objection against the appeal of the Revenue. 2. The Revenue has raised the following grounds of appeal :- “1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in quashing the notice issued u/s 148 of the Income-tax Act, 1961 (as amended by Finance Act, 2021) while not taking into account the 5th proviso to section 149(1)(b) of the Act (as it stood immediately before the commencement of Finance Act (No. 2), 2024) which allowed the Assessing Officer to issue notice u/s 148 of the Act beyond 31.03.2022 for AY 2015-16 in a case where income escaped assessment was more than Rs.50 Lakh? 2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in applying submission of the Ld. Additional Solicitor General of India made before the Apex Court in the case of Union of India vs. Rajeev Bansal [2024] 167 taxmann.com 70/301 Taxman 238/469 ITR 46(SC) in the instant case? 3. The appellant craves leave to add, amend, alter, vary and/or withdraw any or all of the above grounds of appeal in the course of appellate proceeding.” 3. Facts of the case, in brief, are that the assessee is an individual and has not filed his return of income for the year under consideration. On the basis of information available with the Department that the assessee has sold an immovable property for an amount of Rs.13,33,52,583/- during the year under consideration and the assessee has not declared any long term capital gain/loss on sale of the above property in the return of income, therefore, the case of the assessee was reopened u/s 147 and notice u/s 148A(b) of

3 ITA No.3084/PUN/2025 C.O. No.24/PUN/2026 the IT Act was issued on 22.03.2022 and the assessee was allowed time till 29.03.2022 to respond. The assessee did not file any reply, therefore, the Assessing Officer passed the order u/s 148A(d) of the IT Act on 04.04.2022 and also issued notice u/s 148 of the IT Act on the same date i.e. on 04.04.2022. The assessee failed to file return in response to above notice issued u/s 148 of the IT Act. Subsequently, notices u/s 142(1) and show cause notice u/s 144 of the IT Act respectively were issued to the assessee, however, the assessee failed to comply with the above notices therefore, the Assessing Officer vide order dated 12.01.2024 completed the assessment proceedings u/s 147 r.w.s. 144 r.w.s. 144B of the IT Act by determining the income of Rs.13,33,52,583/- as against no return filed by the assessee. The above assessed income includes addition of Rs.13,33,52,583/- being undisclosed income as per provisions of section 48 of the IT Act (i.e. capital gain). 4. Being aggrieved with the above assessment order, the assessee preferred an appeal before Ld. CIT(A)/NFAC. After considering the reply and submissions of the assessee, Ld. CIT(A)/NFAC allowed the appeal filed by the assessee by observing as under :- “6. Submission of the appellant

4 ITA No.3084/PUN/2025 C.O. No.24/PUN/2026 The appellant filed no written submission in course of appellate proceedings except for what has been submitted as statement of facts at serial no. 11 of form no. 35. The same has been reproduced in the section 2(a) of this appellate order. 7. Decision I have gone through the facts of the case. The AO issued a notice dated 04.04.2022 u/s 148 along with an order u/s 148A(d) on the ground that income chargeable to tax escaped assessment. The notice itself indicates that it is issued for the AY 2015-16 and this admittedly was issued on 04.04.2022. The limitation prescribed u/s 148 is for a period of 6 years from the end of the relevant assessment year. Admittedly for the AY 2015-16, the limitation expired on 31.03.2022. The Apex Court in the case of Union of India v. Rajeev Bansal [2024] 167 taxmann.com 70/301 Taxman 238/469 ITR 46 (SC), held that 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, and that the new time limit of ten years prescribed under section 149(1)(b) applies prospectively to protect the interests of the assessee. For the aforesaid reasons, the impugned order u/s 148A(d) dated 04.04.2022 for the AY 2015-16 stands quashed. The impugned notice u/s 148 issued on 04.04.2022 for the AY 2015-16 also stands quashed. In this context, it is pertinent to quote the decision in the case of Rajeev Bansal ( supra) where the Ld. Additional Solicitor General of India made the following submission conceding that for the AY 2015-16 all notices issued on or after 01.04.2021 will have to be dropped as they will not fall for completion during the period prescribed under TOLA: C. Submissions 19. Mr. N Venkataraman, learned Additional Solicitor General of India, made the following submissions on behalf of the Revenue: a. Parliament enacted TOLA as a free-standing legislation to provide relief and relaxation to both the assesses and the Revenue during the time of COVID- 19. TOLA seeks to relax actions and proceedings that could not be completed or complied with within the original time limits specified under the Income-tax Act; b. Section 149 of the new regime provides three crucial benefits to the assesses: (i)

5 ITA No.3084/PUN/2025 C.O. No.24/PUN/2026 the four-year time limit for all situations has been reduced to three years; (ii) the first proviso to Section 149 ensures that re-assessment for previous assessment years cannot be undertaken beyond six years; and (iii) the monetary threshold of Rupees fifty lakhs will apply to the re assessment for previous assessment years; c. The relaxations provided under section 3(1) of TOLA apply "notwithstanding anything contained in the specified Act." Section 3(1), therefore, overrides the time limits for issuing a notice under section 148 read with Section 149 of the Income-tax Act; d. TOLA does not extend the life of the old regime. It merely provides a relaxation for the completion or compliance of actions following the procedure laid down under the new regime; e. The Finance Act 2021 substituted the old regime for re-assessment with a new regime. The first proviso to Section 149 does not expressly bar the application of TOLA. Section 3 of TOLA applies to the entire Income-tax Act, including Sections 149 and 151 of the new regime. Once the first proviso to Section 149(1)(b) is read with TOLA, then all the notices issued between 1 April 2021 and 30 June 2021 pertaining to assessment years 2013-2014, 2014-2015, 2015-2016, 2016-2017, and 2017-2018 will be within the period of limitation as explained in the tabulation below: Assessment Within 3 Expiry of Within six Expiry of Limitation Year Years Limitation Years read with TOLA for read with (4) TOLA for (2) (1) (2) (3) (4) (5) 2013-2014 31-3-2017 TOLA not 31-3-2020 30-6-2021 applicable 2014-2015 31-3-2018 TOLA not 31-3-2021 30-6-2021 applicable 2015-2016 31-3-2019 TOLA not 31-3-2022 TOLA not applicable applicable 2016-2017 31-3-2020 30-6-2021 31-3-2023 TOLA not applicable 2017-2018 31-3-2021 30-6-2021 31-3-2024 TOLA not applicable 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; g. Section 2 of TOLA defines "specified Act" to mean and include the Income-tax Act. The new regime, which came into effect on 1 April 2021, is now part of the Income-tax Act. Therefore, TOLA continues to apply to the Income T a x Act even after 1 April 2021; and

6 ITA No.3084/PUN/2025 C.O. No.24/PUN/2026 h. Ashish Agarwal (supra) treated Section 148 notices issued by the Revenue between 1 April 2021 and 30 June 2021 as show-cause notices in terms of Section 148A(b). Thereafter, the Revenue issued notices under section 148 of the new regime between July and August 2022. Invalidation of the Section 148 notices issued under the new regime on the ground that they were issued beyond the time limit specified under the Income-tax Act read with TOLA will completely frustrate the judicial exercise undertaken by this Court in Ashish Agarwal (supra). Considering the above discussion, the assessment order stands cancelled. In the result, appeal is allowed.” 5. It is the above order against which the Revenue is in appeal as well as the assessee is in Cross Objection before this Tribunal. 6. Ld. DR appearing from the side of the Revenue submitted before us that the order passed by Ld. CIT(A)/NFAC is unjustified. In support of its contentions, a written submission is furnished by Ld. DR before this Bench, which reads as under :- “The assessee is an individual. No return of Income for AY 2015-16 has been filed by the assessee. As per the information in the possession of the AO, the assessee had sold immovable property for consideration of Rs.13,33,52,583/-. In view of this information, the AO issued notice u/s 148A(b) on 22.03.2022 and allowed the assessee time till 29.03.2022 to respond. However, assessee failed to respond and AO passed order u/s 148A(d) and issued notice u/s 148 on 04.04.2022. During the reassessment proceedings there was no compliance from the assessee and the AO, in absence of any compliance from the assessee, considered the whole of sale consideration from immovable property amounting to Rs. 13,33,52,583/- as the capital gain. The order u/s 147 rws 144 was passed on 12.01.2024 determining total income at Rs.13,33,52,583/-. 2. DECISION OF CIT(A) The assessee preferred the appeal to CIT(A). The learned CIT(A) vide order dated 30.10.2025 relying on the decision of the Apex court in Union of India v. Rajeev Bansal [2023] 147 taxmann.com

7 ITA No.3084/PUN/2025 C.O. No.24/PUN/2026 549/453 ITR 153 held that notice issued under section 148 on 04.04.2022 is invalid and bad in law. He further observed that notice u/s.148 for A.Y. 2015-16 was issued on 04.04.2022 for which the TOLA is not applicable. The Ld.CIT(A) relied upon the concession made by the Ld.ASG as per para 19 of the Rajeev Bansal(supra) order. Considering these facts, the CIT(A) quashed the assessment order dated 12.01.2024 without going into the merits of additions made. Contention of the Revenue 3. The Ld.CIT(A) has held the notice u/s 148 as bad in law relying on the decision of Rajeev Bansal case (Supra). The Ld.CIT(A) did not decide the case on merits as notice u/s 148 was held to be invalid and bad in law. It is pertinent to note here that the assessees, in his grounds of appeal, has not taken this ground. However, the Ld.CIT(A) ,suo- moto, considered the application of the Rajeev Bansal case to the notice u/s 148. At the outset, it is pertinent to mention here that the Ld.CIT(A) has completely misinterpreted the decision of Hon. Supreme Court in RB case in general and concession of the Ld.ASG (mentioned in para 19 of the order of Hon.SC) in respect of notices u/s 148 for AY 2015-16 in particular. Ld.ASG had conceded that those notices u/s 148 have to dropped which were issued after 01.04.2021 under old regime taking the benefit of the TOLA extensions and later regularized by the decision of Hon. Supreme Court in Union of India v. Ashish Agarwal [2022]444ITR1(SC) (Annexure-2). The reason behind the dropping the notices u/s 148 for AY 2015-16 was that the time barring for issuing notices u/s AY 2015-16 did not fall between TOLA period and hence, these notices cannot be saved by the TOLA. TOLA could give protection to only those actions which fell for completion during the period prescribed under TOLA ie 20th March, 2020 to 30th June, 2021. Thus, the concession was only in the cases where original notices were issued under old regime during the TOLA period and were regularized by Ashish Agrawal (supra). However, in the case of the assessee, the original notice was issued after the TOLA period under new regime following procedure laid down in new sections 148A, 148 and 149 and after seeking approval from prescribed specified authority as per new section 151. Thus, the contention of the Ld.AR that all notices for AY 2015-16, including those which were issued as per new regime and after the TOLA period without the benefit of TOLA, were conceded by the Revenue is erroneous. The detailed analysis of the issue including the decision of Hon.Supreme Court in Rajeev Bansal case is given in following paras. Analysis of the decision of the Hon.Supreme Court in Rajeev Bansal case. 4. For understanding the decision of Rajeev Bansal case, it is imperative to understand the interplay of TOLA, changes brought in the reassessment

8 ITA No.3084/PUN/2025 C.O. No.24/PUN/2026 provisions by Finance Act, 2021 and the decision of Hon. Supreme Court in Union of India v. Ashish Agarwal [2022]444ITR1(SC). Back ground of the Rajeev Bansal case COVID and TOLA In order to tide over the crisis created by COVID-19 Pandemic, the 4.1 Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (TOLA), was promulgated by the President of India on 31 March 2020. The ordinance was introduced to extend time limits for various statutory and regulatory compliances under specified Acts, such as the Income Tax Act, which were due between 20 March 2020 and 29 June 2020. Initially, the time limit was extended until 30 June 2020. On 24 June 2020, the Central Government issued a notification under Section 3(1) of the TOLA Ordinance, further extending the deadline for compliance under the specified Acts to 31 March 2021. Later, on 29 September 2020, Parliament enacted TOLA, giving it retrospective effect from 31 March 2020. Section 3(1) of TOLA empowered the Central Government to extend these deadlines further, allowing compliance or completion of actions beyond 31 March 2021 by issuing subsequent notifications. 4.2 In pursuance of this, several notifications were issued to extend the deadlines. For instance, Notification No. 93 of 2020 extended the deadline to 30 March 2021, while Notification No. 20 of 2021 further extended it to 30 April 2021. Lastly, Notification No. 38 of 2021 extended the deadline until 30 June 2021. These extensions provided relief to taxpayers and authorities by extending the time limit for completing statutory actions such as passing orders, issuing notices, and obtaining sanctions under the Income Tax Act, covering the period from 20 March 2020 to 30 June 2021. Simply put the time limit for actions which were getting time barred during the period 20- 03-2020 to 30-06-21 was extended to 30-06-21 by TOLA. New Reassessment Regime During the same period, the Finance Act 2021 introduced significant 4.3 changes to the reassessment procedure under Sections 147 to 151 of the Income Tax Act, effective from 1 April, 2021 ( The changes brought are hereinafter referred to “New Regime” and unamdended provisions are referred to as “Old Regime”). These changes revamped the entire scheme of reassessment, aiming to make the process more structured and transparent. The key highlights of the new regime were Opportunity before issue of notice u/s 148 : a. Introduction of new Section 148A mandating that the assessing officer conduct an inquiry (if needed) and provide the assessee with an opportunity to be heard before issuing a reassessment notice. Change in time Limit for Reassessments (Section 149): b. The time limit for reopening assessments has been reduced from four years to three years. However, in cases where income that escaped assessment amounts to Rs.50 lakhs or more, assessments can be reopened within ten years. The new regime prohibits reopening of assessments that were time- barred under the old regime.

9 ITA No.3084/PUN/2025 C.O. No.24/PUN/2026 Change in specified authority c. For cases within three years, approval is required from the Principal Commissioner or Commissioner, while for cases beyond three years, higher authorities such as the Principal Chief Commissioner or Director General must provide approval Notice u/s 148 issued between 01.04.2021 and June 30,2021 under old regime The notification issued by the Central Government under section 3(1) 4.4 of TOLA contained an explanation that provisions of section 147 to 151 of the Act prior to April 1, 2021 (herein after referred to as “old regime”) shall be applied to reassessment proceedings initiated under them between April 1,2021 and June 30,2021. Accordingly, Notification No.20 of 2021 dated March 31, 2021 [(2021) 432 ITR (St.) 141] and Notification No.38 of 2021 dated April 27,2021 [(2021) 434 ITR (St.)11] directed and permitted the Assessing Officers to apply the provisions of the old regime for reassessment notices to be issued after coming into force of the Finance Act, 2021 with amendment with effect from April 1, 2021. Hence, the reassessment notices were issued between April 1, 2021, and 30th June 2021 under the provisions of section 148 of the old regime for A.Y.2013-14 to A.Y. 2017- 18. 4.5 The assessee challenged such notices issued after 1st April, 2021 for reassessment on the ground that such notices could not have been issued under the old regime in view of coming into force of amendment brought by the Finance Act, 2021. Various High Courts allowed the writ petitions field by the assessee and quashed all the reassessment notices issued between April 1, 2021 and June 30, 2021 under section 148 of the Act under the old regime on the ground that no such notices could have been issued under the provisions of section 147 to 151 of the Act which are not in existence after April 1, 2021 and there was no saving clause which could have been resorted to by the Revenue and the reassessment proceedings could have been initiated as per the amended provisions of sections 147 to 151 of the Act after April 1, 2021 (herein after referred to as “new regime”) since they were remedial, beneficial and meant to protect the rights and interests of the assesses. Being aggrieved by the decisions of various High Courts, the Income tax Department challenged the same before the Apex Court. Decision in case of Ashish Agarwal 5.1 The Hon’ble Apex Court in case of Ashish Agarwal(supra) vide order dated 04.05.2022 held that it was in complete agreement with the view taken by various High Courts. However, the Hon’ble Apex Court considering the stand of the Revenue that the reassessment notices were issued under bona fide belief that amendment may not yet have been enforced in view of TOLA, exercised the discretionary jurisdiction under Article 142 to strike a balance between the interest of Revenue and the assessee and directed that such notices issued between April 1, 2021 and June 30, 2021 under the old regime be deemed to be notices under the new regime as provided under section 148A(b) of the Act.

10 ITA No.3084/PUN/2025 C.O. No.24/PUN/2026 Notice u/s 148 issued between July & Sept.,2022 in pursuance of Ashish Agarwal In compliance of the aforesaid directions issued by the Apex Court, 5.2 the Central Board of Direct Taxes issued an Instruction on May 11, 2022, [(2022) 444 I.T.R. (St.) 43] ( Annexure-1 ) which reads as under: “6.1 With respect of operation of new section 149 of the Act, the following may be seen: Hon'ble Supreme Court has held that the new law shall operate and all the defences available to assessees under section 149 of the new law and whatever rights are available to the Assessing Officer under the new law shall continue to be available. Sub-section (1) of new section 149 of the Act as amended by the Finance Act,2021 (before its amendment by the Finance Act, 2022) reads as under:- 149. (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 asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more for that year: 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, if such notice 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, as they stood immediately before the commencement of the Finance Act, 2021: 6.2 Hon'ble Supreme Court has upheld the views of High Courts that the benefit of new law shall be made available even in respect of proceedings relating to past assessment years. Decision of Hon'ble Supreme Court read with the time extension provided by TOLA will allow extended reassessment notices to travel back in time to their original date when such notices were to be issued and then new section 149 of the Act is to be applied at that point. Based on above, the extended reassessment notices are to be dealt with as under: (i) AY 2013-14, AY 2014-15 and AY 2015- 16: Fresh notice under section 148 of the Act can be issued in these cases, with the approval of the specified authority, only if the case falls under clause (b) of sub-section (1) of section 149 as amended by the Finance Act, 2021 and reproduced in paragraph 6.1 above. Specified authority under section 151 of the new law in this case shall be the authority prescribed under clause (ii) of that section. (ii) AY 16-17, AY 17-18: Fresh notice under section 148 can be issued in these cases. with the approval of the specified authority, under clause (a) of sub-section (1) of new section 149 of the Act, since they are within the period of three years from the end of the

11 ITA No.3084/PUN/2025 C.O. No.24/PUN/2026 relevant assessment year. Specified authority under section 151 of the new law in this case shall be the authority prescribed under clause (i) of that section.” The assessing officers accordingly considered the replies furnished by 5.3 the assessees and passed orders under section 148A(d). Subsequently, notices under section 148 of the new regime were issued to the assessees by the assessing officers between July and September 2022 for the assessment years 2013-2014, 2014-2015, 2015-2016, 2016-2017, and 2017-2018. Decision in case of Rajeev Bansal 6.1 These notices were challenged before several High Courts. The High Courts declared the notices to be invalid on the ground that they were: (i) time-barred; and (ii) issued without the appropriate sanction of the specified authority. Aggrieved, the department moved the Apex Court in Rajeev Bansal case(supra). The Hon'ble Apex Court crystalised following two issues in the present appeal. a) Whether TOLA and notifications issued under it will also apply to reassessment notices issued after 1 April 2021; and b) Whether the reassessment notices issued under section 148 of the new regime between July and September 2022 are valid. The key issue revolves around the applicability of TOLA and whether it extended time limits beyond 1 April 2021 when the new reassessment regime came into effect. The Revenue's position was that TOLA continued to apply, whereas the respondents argued that TOLA's application ended when the new regime was introduced. The dispute also involves questions of whether reassessment notices issued after this period were validly sanctioned and within the extended time limits. 6.2 The Hon. Apex Court carried out the comprehensible analysis of provisions of TOLA, old and new reassessment regime and decision in Ashish Agrawal case and decided, among other findings, the following (a) After 1-4-2021, 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 1-4- 2021 if any action or proceeding specified under the substituted provisions of the Income-tax Act falls for completion between 20-3-2020 and 31-3-2021; (c) Section 3(1) of TOLA overrides section 149 only to the extent of relaxing the time-limit for issuance of a reassessment notice under section 148. It meant that first proviso to section 149(1) of the new regime would not be overridden by TOLA. (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 20-3-2020 and 31-3-2021, then the specified authority under section 151(i) has extended time till 30-6-2021 to grant approval;

12 ITA No.3084/PUN/2025 C.O. No.24/PUN/2026 (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 20-3-2020 and 31-3-2021, then the specified authority under section 151(2) has extended time till 31-3-2021 to grant approval; (f) The directions in Ashish Agarwal (supra) will extend to all the ninety thousand reassessment notices issued under the old regime during the period 1-4-2021 and 30-6-2021; (g) The time during which the show cause notices were deemed to be stayed is from the date of issuance of the deemed notice between 1-4-2021 and 30-6-2021 till the supply of relevant information and material by the Assessing Officers to the assessees in terms of the directions issued by this Court in Ashish Agarwal (supra), and the period of two weeks allowed to the assessees to respond to the show cause notices; and (h) The Assessing Officers were required to issue the reassessment notice under section 148 of the new regime within the time-limit surviving under the Income-tax Act read with TOLA. All notices issued beyond the surviving period are time barred and liable to be set aside. [Para 114] 6.3 Thus, in conclusion, Ashish Agrawal case, Hon. Supreme Court directed that all reassessment notices issued after 1 April 2021 under the unamended Section 148 should be treated as notices issued under Section 148A(b) of the new regime. These notices would now be considered as show- cause notices, giving the assessees an opportunity to respond before a reassessment was finalised. It, thus, regularised the cases in which notices u/s 148 were issued from AY 2013-14 to AY 17-18 originally during the period between 01.0.2021 and 30.06.2021 as per old regime. In Rajeev Bansal case, the Hon. Supreme Court decided the validity of these notices u/s148 issued in pursuance of decision of Ashish Agrawal case. Is the decision of Rajeev Bansal case applicable to the case of the assessee? As discussed above, the Apex Court in Rajeev Bansal case decided on 6.4 the validity of reassessment notices issued under section 148 which were originally issued between 01.04.2021 and 30.06.2021 and then reissued between July and September, 2022 in pursuance of decision of Hon.Supreme Court in Ashish Agarwal. More precisely, Rajeev Bansal case(supra) dealt with notices u/s 148 for AY 2013-14 to AY 2017-18 issued between 01.04.2021 and 30.06.2021 as per the old regime of reassessment. These notices were then deemed as show-cause notices u/s 148(b) of the new regime by the Supreme Court in Ashish Agrawal case and accordingly, notices u/s 148 were once again issued in these cases between July and September, 2022 as per directions of Hon.Supreme Couer in Ashish Agrawal.. However, the facts in the case of the assessee are completely different. In this case, original notice u/s 148 was issued on

13 ITA No.3084/PUN/2025 C.O. No.24/PUN/2026 04.04.2022 following the provisions of the new regime such as issuing show cause notices u/s 148A(b) and passing order u/s 148A(d). This is not a case wherein notice was originally issued during the TOLA period i.e between 01.04.2021 and 30.06.2021. Thus, the contention of the Ld.CIT(A) that notice u/s 148 for AY 2015-16 needed to dropped as per concession of the Revenue before Supreme Court in Rajeev Bansal is erroneous. Which notices for AY 2015-16 were conceded by the Revenue during the Rajeev Bansal case ? The order of Supreme Court in Rajeev Bansal case (supra) in para 19 6.5 mentions about the Revenue conceding 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. For better understanding the relevant para 19 of the order of Hon.SC is reproduced here “19. Mr. N Venkataraman, learned Additional Solicitor General of India, made the following submissions on behalf of the Revenue: a. Parliament enacted TOLA as a free-standing legislation to provide relief and relaxation to both the assesses and the Revenue during the time of COVID- 19. TOLA seeks to relax actions and proceedings that could not be completed or complied with within the original time limits specified under the Income-tax Act; b. Section 149 of the new regime provides three crucial benefits to the assesses: (i) the four-year time limit for all situations has been reduced to three years; (ii) the first proviso to Section 149 ensures that re-assessment for previous assessment years cannot be undertaken beyond six years; and (iii) the monetary threshold of Rupees fifty lakhs will apply to the re assessment for previous assessment years; c. The relaxations provided under section 3(1) of TOLA apply "notwithstanding anything contained in the specified Act." Section 3(1), therefore, overrides the time limits for issuing a notice under section 148 read with Section 149 of the Income-tax Act; d. TOLA does not extend the life of the old regime. It merely provides a relaxation for the completion or compliance of actions following the procedure laid down under the new regime; e. The Finance Act 2021 substituted the old regime for re-assessment with a new regime. The first proviso to Section 149 does not expressly bar the application of TOLA. Section 3 of TOLA applies to the entire Income-tax Act, including Sections 149 and 151 of the new regime. Once the first proviso to Section 149(1)(b) is read with TOLA, then all the notices issued between 1 April 2021 and 30 June 2021 pertaining to assessment years 2013-2014, 2014-2015, 2015-2016, 2016-2017, and 2017-2018 will be within the period of limitation as explained in the tabulation below:

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; g. Section 2 of TOLA defines "specified Act" to mean and include the Income-tax Act. The new regime, which came into effect on 1 April 2021, is now part of the Income-tax Act. Therefore, TOLA continues to apply to the Income T a x Act even after 1 April 2021; and

14 ITA No.3084/PUN/2025 C.O. No.24/PUN/2026 h. Ashish Agarwal (supra) treated Section 148 notices issued by the Revenue between 1 April 2021 and 30 June 2021 as show-cause notices in terms of Section 148A(b). Thereafter, the Revenue issued notices under section 148 of the new regime between July and August 2022. Invalidation of the Section 148 notices issued under the new regime on the ground that they were issued beyond the time limit specified under the Income-tax Act read with TOLA will completely frustrate the judicial exercise undertaken by this Court in Ashish Agarwal (supra).” 6.7 From the above, it is seen that the Revenue had conceded that notice u/s 148 for AY 2015-16 will have to be dropped. But these are the notices for AY 2015-16 which were originally issued between 01.04.2021 and 30.06.2021 as per old regime and regularized following Ashish Agarwal They needed to be dropped as they would not fall for completion during the period prescribed under TOLA (applicable from 20th March,2020 till 30th June,2021) as explained in the above table. Simply put, these notices for AY 2015-16 which were issued under old regime could not be saved by TOLA as the time barring for AY 2015- 16 ( i.e either 31.03.2019 or 31.03.2022) did not fall in the TOLA period ( 20-03-2021 to 30.06.2021). Thus, it is seen that only those notices u/s 148 for AY 2015-16 which were issued between the period 01.04.2021 and 30.06.2021 would be hit by the decision of Rajeev Bansal. The Income Tax Department still had time to issue notices u/s 148 till 31.03.2022 albeit under new regime. Such notices u/s 148 for AY 2015-16 beyond TOLA period as per new regime were issued by the Assessing Officers all over India. In case of assessee, such notice was issued well beyond the period between 01.04.2021 and 30.06.2021 and that too under new regime following the procedure and conditions prescribed in secton 148A, 149 and 151 of the new regime introduced from 01.04.2021. Thus, it is not hit by concession made by Ld.ASG in para 19 of Rajeev Bansal. Is notice u/s 148 issued in case of assessee hit by 1st proviso to Section 149(1) 6.8 As per the first proviso to section 149(1) of the new regime, no notice shall be issued for the relevant assessment year beginning on or before 01.04.2021, if such notice could not have been issued at that time on account of being time-barred under the old law. Under the old law, the date of issuance of notice u/s 148 , if the escaped income was more than 50 lakhs, was 6 years. Therefore, the time-barring was 31.03.2022 for AY 2015-16, if the escaped income was more than Rs.50 Lakhs. In the case of the assessee, the escaped income was Rs. 50 lakhs and therefore, time limit to issue the notice was 31.03.2022. The AO issued notice u/s 148A(b) on 22.03.2022 and allowed the assessee time till 29.03.2022 to respond. However, assessee failed to respond and AO passed order u/s 148A(d) and issued notice u/s 148 on 04.04.2022. As per the 4th proviso to section 149 (1)(b) , 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

15 ITA No.3084/PUN/2025 C.O. No.24/PUN/2026 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: Thus, after exclusion of 7 days which were allowed to the assessee, as per notice u/s 148A(b), the notice u/s 148 was within 31.03.2022. Therefore, the AO has rightly issued notice u/s 148 for AY 2015-16 on 04.04.2022 ie within the time limit prescribed u/s 149 after exclusion of the period allowed to the assessee under notice u/s 148A(b). Is notice u/s 148 dated 04.04.2022 in the case of assessee valid under new regime The notice u/s 148 was issued on 04.04.2022, therefore, it was 6.9 case beyond the three year period. Therefore, following conditions needed to be fulfilled a. Amount of escapement of income is more than 50 Lakhs b. Sanctioning authority should be PCCIT. Further, the procedure prescribed in section 148A needed to be followed. In the case of the assessee, the escapement of income is more than 50 Lakhs and sanctioning authority is PCCIT, Pune. Further, notices u/s 148(b) was issued on 22.03.2022. Order u/s 148(d) was passed on 04.04.2022. Subsequently, notice u/s 148 was issued on 04.04.2022. Thus, it is a valid notice and is not covered by the concession by the Ld.ASG before the Supreme Court in Rajeev Bansal. Does first proviso gets precedence over the third proviso ? 3.3 The Ld.CIT(A) , relying on the order of Hon.ITAT in Babu Hasan Sheikh(supra), has held that the first proviso to section 149(1) gets precedence over third proviso. Ld.CIT(A) has held that since notice u/s 148 is hit by first proviso , third proviso does not come to the aid of the AO. Before going into any such interpretation, it is necessary to look into the purpose of use of “Proviso” in legal drfating . A proviso to a section or sub-section is a legal clause that begins with the words "Provided that...". Its primary purpose is to qualify, exclude, limit, or create an exception to the main, general enactment, taking out of it a specific situation that would otherwise fall within its scope. For eg. In case of new amended section 149(1), the first proviso to new section 149(1) restricts the time period for issuing reassessment notices for AY 21-22 and earlier AYrs by linking it to time limits prescribed under the old Section 149 (un-amended) and does not allow the benefit of extended time limits under new law. For eg. though a notice u/s 148 is issued in say, January 2022 and new section 149(1) allows reassessment upto ten years, no notice u/s148 can be issued for say AY 2012-13 in January, 2022. This is due to the first to proviso to new section 149(1) which limits reassessment as per old section 149(1) where the time limit upto 6 years was prescribed. Thus, we see that first proviso limits or qualifies or excepts the time limits given in the main sub-section (1). 3.3.1 Now, let us see what purpose 3rd proviso to section 149(1) serves. The relevant proviso is reproduced below

16 ITA No.3084/PUN/2025 C.O. No.24/PUN/2026 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: The proviso starts with the words “ that for the purposes of computing the period of limitation as per this section ”. Thus, it is evident that while computing the period of limitation of three years or ten years, the time excluded as per this proviso should be considered. This proviso excludes the 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 of any court. Thus, this proviso stops the clock of limitation at the moment stay/injunction/notice u/s 148A(b) is issued and restarts only when stay/injunction is lifted or time allowed as per notice u/s 148A(b) ends. Thus, this proviso excludes certain mandated time in special cases, creating an exception to time lines as per main sub-section. 3.4 It is pertinent to note here that if the contention of Ld.CIT(A) is accepted then first proviso gets primacy over 3rd proviso. It is a trite law that section as a whole should be read together and not in parts. No one proviso should be considered having primacy over the other. The doctrine of harmonious construction is a fundamental rule of statutory interpretation used to resolve conflicts between different provisions of a statute or between multiple statutes. It mandates that seemingly contradictory provisions should be interpreted to give effect to both, ensuring that no provision is rendered useless or dead, as the legislature is presumed not to create inconsistencies. Provisions must not be read in isolation but as part of the entire statute, aligning with the overall legislative intent. Hence, to say that notice u/s 148 should be tested first on restriction provided in first proviso to section 149(1) without even applying third proviso for computing the period of limitation under section 149(1) is not as per law. Provision for benefit of Taxpayer 3.5 New reassessment regime was brought in to safeguard the interests of the taxpayers and bring in transparency in the reassessment proceedings. Hence, new section 148A was introduced where in opportunity is given under section 148A(b) to the taxpayer of being heard in respect of the information in the possession of the department. It is in this context the third proviso excludes the time or the extended time allowed u/s 148A(b) notice. This is beneficial provision and in the interest of the transparency. Treating this proviso as redundant does not serve any purpose New Machinery after 01.04.2021

17 ITA No.3084/PUN/2025 C.O. No.24/PUN/2026 3.6 It is pertinent to note that Supreme Court in various decisions and most famously in Union of India v. Ashish Agarwal [2022]444ITR1(SC) has stated that after 01.04.2021, the procedure for reassessment should be the new regime brought in by the FA 2021. Now, as per first proviso to section 149(1) of the new regime, as on 01.04.2021, the AY 15-16 was “live year or actionable year” ie the farthest department can go back and reassess, provided other conditions such quantum of escapement etc. are satisfied. Hence, after 01.04.2021, for initiating reassessment proceedings for AY 2015-16, new machinery of reassessment such as section 148A had to be used. This will include notices u/s 148A(b), order u/s 148A(d) etc. Now, when these sections are to be given full effect all relevant provisions related to these sections have to be considered. The third proviso to section 149(1) provides exclusion of time or extended time allowed to the assessee to reply to notice u/s 148A(b). To ignore this proviso would be curtail the operation of the section 148A. 3.6.1 Once the first proviso is satisfied (i.e., the year was "actionable" on 01.04.2021 for AY 2015-16), the computation of the actual date of expiry for that "actionable" year must be done in accordance with the current statutory framework, which includes the provisions of section 148A and third proviso to section 149(1). To hold otherwise would be to suggest that for any year beginning on or before 01.04.2021, the Revenue must comply with the new Section 148A (natural justice) but is denied the time-exclusion benefits under third proviso to specifically provided to facilitate that compliance. This would create a legislative absurdity where the Revenue is burdened with more procedures but stripped of the time to complete them. It can also be argued that if the machinery of the old regime was used for AY 2015-16 then notice u/s 148 would have been well within time as it is compliance with section 148A procedures which had necessitated extra time. Impinges on powers of Judiciary 3.6.2 The subordination of the third proviso to the first proviso also results in impinging on the powers of judiciary. This proviso excludes the 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 of any court. Thus, this proviso stops the clock of limitation at the moment stay/injunction is granted and restarts only when stay/injunction is lifted. Now, let us suppose a scenario when third proviso is rendered un-operational. Suppose notice u/s 148(b) for AY 2015-16 is issued on 10.03.2022 and assessee files writ against the notice in High Court. High Court grants stay on 15.03.2022. The stay is vacated on 07.04.2022 and writ is dismissed. Then will the reassessment proceedings be barred by limitation as the time barring date was 31.03.2022 ? This scenario leaves revenue with

18 ITA No.3084/PUN/2025 C.O. No.24/PUN/2026 no recourse. It also impinges on the powers of the judiciary. This surely is not the intention of the legislature. The courts should prefer an interpretation that makes a statute effective, operative, and functional rather than one that defeats its purpose or renders it meaningless. Harmonious construction of the new reassessment regime is necessary as it was brought in to safeguard the interests of the taxpayers and bring in transparency in the reassessment proceedings. Decision of Bombay High Court in Hexaware Technologies 4. The Ld.CIT(A) has quoted the decision of the Mumbai Bench of ITAT in the case of Babu Hasan Sheikh (ITA No.926/Mum/2025) wherein it was held that notice u/s 148 dated 18.04.2022 was time barred as first of all, the test of first proviso to section 149(1) should be applied and seen that the notice u/s 148 is within time. If the notice is not within time then the question of applying 3rd proviso for calculating the time limit does not arise. 4.1 However, this is not legally tenable. First proviso to sec.149(1) restricts the time limit for issuing notice u/s 148 for AYrs before AY2022-23. Whereas the purpose of third proviso is to see whether the notice u/s 148 is as per time limit as per section 149(1)(a) or 149(1)(b). Both have different purposes. Hence, in the first instance, third proviso should be applied to see whether it falls under three year or ten year category. Once, that is done, then it is to be seen whether the notice u/s 148 , after exclusion of time, passes the test of first proviso. This interpretation has been upheld by the Hon.Jurisdictional High Court in Hexaware Technologies Limited [2024] 162 taxmann.com 225 (Bombay)/[2024] 464 ITR 430 (Bombay) (See Annexure-1). The relevant para 30 is reproduced here 30. With respect to applicability of the fifth proviso and the sixth proviso to Section 149(1)(b) of the Act for extension of limitation for issuing the notice under section 148 of the Act, fifth and sixth provisos are only applicable with respect to the period of limitation prescribed in Section 149(1) of the Act, i.e., three years or ten years, as the case may be. Fifth proviso or sixth proviso extend limitation for issuing notice under section 149 of the Act, however, the first proviso is an exception to the period of limitation and provides for a restriction on the notices under section 148 being issued for Assessment Years upto 2021-22 beyond a certain date. Therefore, the way the Section would operate, is first to decide whether a notice issued under section 148 of the Act is within the period of limitation in terms of Section 149(1)(a) or (b) of the Act. To decide whether the notice is within the period of limitation under section 149(1)(a) or (b) of the Act, the extension of time as per

19 ITA No.3084/PUN/2025 C.O. No.24/PUN/2026 the fifth and/or sixth proviso would be considered. Once, the notice is otherwise within the period of limitation, thereafter one has to see whether the said time limit is within the restriction provided in the first proviso or not. If the notice is beyond the restriction period, the notice is invalid. ( emphasis supplied ) Thus, the Hon.Bombay High Court has clearly mentioned how the section 149 has to be read. First exclusion provisos such as third and fourth ( fifth/sixth in HC order as by FA 2023, three new provisos related search were introduced and third proviso became fifth proviso) and then the test of first proviso should be applied. Thus, in the case of the assessee, at first instance – if the exclusion of third proviso is applied then the notice is within 31.03.2022 and thus, passes the test of first proviso. Conclusion : 4.0 The interpretation that views the first proviso as an overriding "veto" over the rest of the section goes against the established principles of law. The first proviso specifies that a notice cannot be issued if it "could not have been issued at that time" under the old law. This phrase "at that time" refers to the limitation status as of 01.04.2021. Since AY 2015-16 was not barred as of 01.04.2021, the first proviso does not prohibit the issuance of the notice; it merely limits the Revenue's ability to use the new 10-year window for cases that were already dead under the 6-year window. To give primacy to the first proviso over the third proviso fails the test of harmonious interpretation. It also creates absurd situation where after 01.04.2021, the Revenue is expected to comply with the new Section 148A (natural justice) but is denied the time-exclusion benefits specifically provided to facilitate that compliance. The third proviso to Section 149(1) is essential to the working of the new assessment. Any interpretation which renders third proviso otiose is not as per the letter and spirit of the law. Lastly, the third proviso accommodates the Judicial intervention. The overruling of the third proviso may lead to unintended consequence of impinging on the scope of exercise of the powers by Constitutional courts. Further, the para 30 of the decision of Jurisdictional High Court in Hexaware Technologies Limited [2024] 162 taxmann.com 225 (Bombay)/[2024] 464 ITR 430 (Bombay) supports the above contention of the Revenue. 4.1 Thus, in view of the above, though the notice u/s 148 was issued on 04.04.2022, through the application of third proviso to section 149(1) is legally indistinguishable from a notice issued on or before 31.03.2022. In view of the above discussion, it is prayed that the reassessment proceedings may kindly be upheld.” 7. On the other hand, Ld. AR appearing from the side of the assessee supported the order passed by Ld. CIT(A)/NFAC and also

20 ITA No.3084/PUN/2025 C.O. No.24/PUN/2026 raised legal grounds as well as grounds on merits in the Cross Objection No.24/PUN/2026. 8. We have heard Ld. Counsels from both the sides and perused the material available on record including the written submission filed by the Revenue and the submissions made by the counsel of the assessee. In this regard, we find that the assessee neither appeared during the course of assessment proceedings nor furnished return of income in response to notice u/s 148 of the IT Act. The assessee also did not furnish any written submission before the first appellate authority, however, Ld. CIT(A)/NFAC without going into merits of the case decided the appeal on legal ground, since according to him, the impugned notice issued u/s 148 of the IT Act was time barred in the light of judgement passed in the case of UOI vs. Rajeev Bansal [2024] 167 taxmann.com 70 (SC). In this regard, it is the contention of Ld. DR that the concession given by Ld. ASG before Hon’ble Supreme Court was with regard to notices issued after 01.04.2021 taking the benefit of TOLA and in the instant case in hand the impugned notice dated 04.04.2022 itself was issued under the new regime and has nothing to do with the notices issued after 01.04.2021 taking the benefit of TOLA, therefore, the

21 ITA No.3084/PUN/2025 C.O. No.24/PUN/2026 judgement of UOI vs. Rajeev Bansal (supra) is not applicable. It is also the stand of the Revenue that the procedure prescribed under the new regime was duly followed since notice u/s 148A(b) of the IT Act was issued on 22.03.2022 and 7 days time upto 29.03.2022 was provided to the assessee to respond and since the assessee not responded, order u/s 148A(d) of the IT Act was passed within 7 days i.e. on 04.04.2022 and notice u/s 148 of the IT Act was also issued on the same day i.e. on 04.04.2022. According to the Revenue, since the notice was not issued after 01.04.2021 taking the benefit of TOLA, rather issued under new regime, the time period of 7 days provided to the assessee to respond to the notice is required to be excluded as per the 3rd proviso to section 149 of the IT Act & after excluding the 7 days period the notice issued u/s 148 of the IT Act is well within 31.03.2022 and thus, passes the test of first proviso also. 9. On the other hand, Ld. AR through Cross Objection ground no.6 requested before the bench that if the Tribunal deems it appropriate then the matter may kindly be remanded back to the file of the Assessing Officer to pass assessment order afresh after providing the documents or evidence to the assessee on the basis of

22 ITA No.3084/PUN/2025 C.O. No.24/PUN/2026 which notice u/s 148 of the IT Act was issued, so that the assessee can raise objection with regard to the impugned notice issued u/s 148 of the IT Act, since earlier both the lower authorities passed the orders ex-parte i.e. in the absence of assessee and therefore, the assessee could not raise any objection either legal or on merits with regard to impugned proceedings initiated u/s 148 of the IT Act. 10. We find force in the above arguments of both the parties and accordingly, deem it appropriate to set-aside the order passed by Ld. CIT(A)/NFAC & restore the matter back to the file of the Assessing Officer to pass assessment order afresh & as per fact & law after providing reasonable opportunity of hearing to the assessee. We hereby also direct the assessee to respond to the notices issued by the Assessing Officer in this regard and to produce relevant documents, evidences and submissions, if any, in support of its contentions and also raise objections legal and on merits, if any, without taking any adjournment under any pretext, otherwise the Assessing Officer shall be at liberty to pass appropriate orders as per law. Thus, the grounds raised by the Revenue and the cross objection grounds raised by the assessee are allowed for statistical purposes.

23 ITA No.3084/PUN/2025 C.O. No.24/PUN/2026 11. In the result, the appeal filed by the Revenue in ITA No.3084/PUN/2025 and the Cross Objection No.24/PUN/2026 filed by the assessee are allowed for statistical purposes. Order pronounced on this 29th day of June, 2026. Sd/- Sd/- (MANISH BORAD) (VINAY BHAMORE) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे / Pune; �दनांक / Dated : 29th June, 2026. Sujeet/DOC Sujeet Kumar Digitally signed by Sujeet Kumar Sharma Sharma Date: 2026.06.29 12:42:22 आदेश क� �ितिलिप अ�ेिषत / Copy of the Order forwarded to : +05'30' अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The Pr. CIT concerned. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, “B” ब�च, 4. पुणे / DR, ITAT, “B” Bench, Pune. गाड� फ़ाइल / Guard File. 5. आदेशानुसार / BY ORDER, // True Copy // Assistant Registrar आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.