ABHILASH NARAYAN RAO,BANGALORE vs. INCOME TAX OFFICER, WARD-1(1)(1), BANGALORE

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ITA 2125/BANG/2025Status: DisposedITAT Bangalore11 June 2026AY 2015-1610 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the notice under Section 148 was issued after the commencement of the new regime and was barred by limitation as per the unamended provisions of Section 149(1)(b). Therefore, the reassessment proceedings were without jurisdiction.

What were the facts?

The Assessing Officer reopened assessment for AY 2015-16 based on information regarding sale of property, cash deposits, and share transactions. A notice under Section 148 was issued on 05.04.2022, and the subsequent assessment order was passed.

What were the issues?

Whether the notice issued under Section 148 for AY 2015-16 was validly issued following the amended provisions and within the prescribed limitation period.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 148A,Section 149,Section 69A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH : BANGALORE

Before: SHRI BALAKRISHNAN S, ACCOUNTANT

For Respondent: Shri. Manikandan S, Addl. CIT(DR)(ITAT), Bengaluru
Hearing: 02.06.2026Pronounced: 11.06.2026

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH : BANGALORE BEFORE SHRI BALAKRISHNAN S, ACCOUNTANT MEMBERAND SHRISOUNDARARAJAN K, JUDICIAL MEMBER ITA No.2125/Bang/2025 Assessment Year :2015-16 Shri. Abhilash Narayan Rao, Vs. ITO, No.62, (New No.54), 8th Main Road, Ward – 1(1)(1), Vasanthnagar, Bangalore. Bangalore-560052, Karnataka. PAN :AJMPN 9192 P APPELLANT RESPONDENT Assesseeby : Shri. V. Narendra Sharma and Ms. Ema Bindu, Advocates Revenue by : Shri. Manikandan S, Addl. CIT(DR)(ITAT), Bengaluru. Date of hearing : 02.06.2026 Date of Pronouncement : 11.06.2026 O R D E R Per Balakrishnan S, Accountant Member : This appeal isfiled by the assessee against the order of learned Commissioner of Income Tax – Appeals (NFAC, Delhi) [in short “CIT(A)”] vide DIN No.ITBA/NFAC/S/250/2025-26/1079075932(1) dated 30.07.2025, for the Assessment Year 2015-16, arising out of the order passed under section 147 r.w.s. 144Bof the Act dated 27.03.2024.

2.

Brief facts of the case are thatbased on the information available on record, it was noticed that the assessee has entered into the following transactions during the Financial Year 2014-15:

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Information S.NO Source Amount (Rs.) Description

Sale of Immovable 1 (Bhanwar Lal Ji Parasmal Mali) 1,01,00,000/- property

2 Cash Mahila Cooperative Bank and 59,92,366/- IDBI Bank Deposits

3 National Stock Exchange 28,75,50,122/- Sate of Equity Shares

4 Max New York Life Max New York Life Insurance 4.41.52,600/- Insurance

3.

Therefore, the learned Assessing Officer [in short „AO‟] noticed that tax has escaped the assessment within the meaning of section 147 of the Act and thereafter notice under section 148 of the Act issued and served on the assessee on 05.04.2022 after passing an order under section 148A(d) of the Act on 05.04.2022. In response to the notice, the assessee filed his return of income on 29.04.2022 by declaring a total income of Rs.33,38,720/-. Thereafter, various notices under sections 143(2) and 142(1) of the Act were issued and served on the assessee on various dates. Final show cause notice dated 09.03.2024 was issued and served on the assessee. In response, the assessee made part submissions. On examining the submissions made by the assessee, the learned AO proceeded to making the following additions:

i. Cash deposits amounting to Rs.59,92,366/- under section 69A of the Act. ii. Long term capital gain of Rs.58,15,019/-.

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4.

On being aggrieved by the addition made by the learned AO, the assessee filed appeal before the learned CIT(A). Before the learned CIT(A) the assessee made similar submissions. The learned CIT(A) being not satisfied dismissed the appeal of the assessee.

5.

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

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6.

Assessee has also filed a petition for admission of additional grounds as below:

7.

We admit the additional legal grounds raised by the assessee since it goes to the root of the matter. At the outset, the learned Authorized Representative [in short „AR‟] submitted that notice under section 148 of the Act was issued on 05.04.2022 for the Assessment Year 2015-16 without following the procedure prescribed by the new provision commensurate w.e.f. 01.04.2021. The learned AR also submitted that notice under section 148 of the

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Act dated 05.04.2022 is barred by limitation as per proviso to section 149(1)(b) of the Act. The learned AR pleaded that legal grounds raised by the assessee shall first be addressed before adjudicating other grounds raised on merits. On this issue, the learned AR placed reliance on the decision of the Co-ordinate Bench of Bangalore in IT(IT)A No.3124/Bang/2025 dated 13.02.2026. The learned AR further submitted that the time limit for notice issued under unamended provisions under section 149 of the Act expired on 31.03.2022 i.e., 6 years from the end of the relevant Assessment Year. The learned AR therefore pleaded that notice issued under section 148 of the Act dated 05.04.2022 is invalid and the consequential assessment order passed in accordance with invalid notice is void-ab-initio.

8.

Per contra, the learned Departmental Representative [in short „DR‟]submitted that mere procedural mistake cannot invalidate the assessment proceedings. It is appropriate for upholding the order of the learned CIT(A).

9.

We have heard both the sides and perused the material available on record. It is an undisputed fact that the assessment was reopened by issuance of notice under section 148 of the Act dated 05.04.2022. The grievance of the Ld.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 Act, r.w.s. 3(1) of TOLAas 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

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of the Act only to the extent of relaxing the time limitfor 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. In the instant case, the time limit as per the provisions of unamended Act for the Assessment Year 2015-16 as the income is considered as escaping assessment of more than Rs.1,00,000/-the term expires on 31.03.2022.

10.

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: -

“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;

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** 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 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.”

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11.

Further, the Hon‟ble Supreme Court in the case of Deepak Steel and Power Ltd., Vs. 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 inUnion 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 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.” 12. 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 Assessment Year 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 05.04.2022 cannot be sustained and liable to be quashed. Since the legal

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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. 13. In the result, appeal of the assessee is allowed.

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

Sd/- Sd/-/- Sd/- (SOUNDARARAJAN K) (BALAKRISHNAN S) Accountant Member Judicial Member Bangalore. Dated:11.06.2026. /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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