MAZHARHUSAIN ABDULRAHUF BAGWAN,PANDHARPUR vs. ITO WARD 2 PANDHARPUR, PANDHARPUR

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ITA 2329/PUN/2025Status: DisposedITAT Pune25 May 2026AY 2015-201615 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the notice issued under Section 148 of the Income Tax Act was barred by limitation as it was issued after the prescribed period. Consequently, the reassessment proceedings were quashed.

What were the facts?

The assessee did not file an income tax return for AY 2015-16. The Assessing Officer (AO) reopened the case and issued a notice under Section 148 after finding cash deposits of Rs. 1,58,85,000/- in the assessee's bank account. The AO treated these deposits as unexplained money under Section 69A.

What were the issues?

The primary issue was whether the notice issued under Section 148 for reassessment was time-barred, rendering the entire reassessment proceedings invalid.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 69A,Section 149(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH, PUNE

Before: SHRI R.K. PANDA & MS. ASTHA CHANDRA

For Appellant: Shri Girish Ladda
For Respondent: Shri Gaurav K. Singh

आदेश / ORDER PER ASTHA CHANDRA, JM : The appeal filed by the assessee is directed against the order dated 15.09.2025 of the Ld. Commissioner of Income Tax (Appeals)/NFAC, Delhi [“CIT(A)”/“NFAC”] pertaining to Assessment Year (“AY”) 2015-16.

2.

Briefly stated, the facts are that the assessee is an individual. He did not file his return of income for AY 2015-16. As per the information available with the Department, it was found that the assessee had deposited cash of Rs.1,58,85,000/- in his saving bank account maintained with Bank of Baroda during the FY 2014-15 relevant to the AY 2015-16. Based on this information, the case of the assessee was reopened u/s 147 of the Income Tax Act, 1961 (the “Act”) and notice u/s 148 of the Act was issued on 06.04.2022 after seeking necessary approval of the competent authority. In response to the notice u/s 148 of the Act, the assessee filed his return of income for AY 2015- 16 on 20.06.2026 declaring gross receipts of business to the tune of Rs.3,18,573/- and total income of Rs.1,81,390/-. Thereafter, various notices u/s 142(1) of the Act were issued by the Ld. Assessing Officer (“AO”) calling for explanation and supporting evidences regarding the source of the said deposits. In response thereto, the assessee submitted that he was engaged in

2 ITA No.2329/PUN/2025, AY 2015-16

the business of purchasing fruits from farmers in Pandharpur Agricultural Produce Market Committee (APMC) on behalf of fruit merchants situated in other cities and claimed that the cash deposited represented amounts received from such merchants. The Ld. AO, however, found that no reliable evidence was filed by the assessee to substantiate his above claim. He, therefore, proceeded to complete the assessment determining the total income of the assessee at Rs.1,58,85,000/- for AY 2015-16 treating the entire cash deposits of Rs.1,58,85,000/- as unexplained money u/s 69A of the Act vide his order dated 29.12.2023 passed u/s 147 r.w.s. 144B of the Act.

3.

Aggrieved, the assessee filed an appeal before the Ld. CIT(A)/NFAC. The appeal was filed with a delay before the Ld. CIT(A)/NFAC, however, he dismissed the assessee’s appeal and upheld the order of the Ld. AO observing that the explanations offered by the assessee in respect of various grounds of appeal raised before him are unsubstantiated and the evidences filed by the assessee are either irrelevant to the year in question or unreliable and highly suspicious.

4.

Dissatisfied, the assessee is in appeal before the Tribunal raising the following grounds of appeal : “1) On the facts of the case and in law, it may please be held that the time limit for issue of notice under section 148 of the Act i.e. six years from the end of the relevant AY 2015-16 expired on 31.03.2022, as per the first proviso to section 149(1), and therefore the notice u/s 148 issued on 06.04.2022 is time barred. The entire assessment proceedings based on such time barred notice may please be quashed. (Squarely Covered by MUMBAI ITAT decision dated 28/04/25 in case of Babu Hasan Shaikh ITA 926/MUM/2025) 2) On the facts of the case and in law, it may please be held that Notice U/s 148 issued by ITO Ward 2 Pandharpur is violative of Section 151A of Income tax Act being issued by JAO and therefore the same may please be quashed. 3) The reopening of assessment, notice u/s 148 and reassessment order u/s 147 are bad in law and same may please be quashed. 4) Without prejudice to above grounds, the Id. CIT(A) has erred in confirming the addition u/s 69A for Rs 1,58,85000 being entire cash deposits in bank account without appreciating the submission that the assessee purchases fruits from local market of Pandharpur on behalf of fruit merchants at Vellore and entire deposits in bank account of the assessee are made by such fruit merchants at Vellore and subsequently assessee withdraws cash and makes payment to farmers producing fruits. The Assessee earns only commission in all these transactions which is duly offered in Return of Income, hence the addition made by the AO may please be deleted. 5) Without prejudice to above grounds, the lower authorities have failed to appreciate the law that entire deposits in the bank account can never be

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the income of the appellant and only net income embedded in such deposits Rs 1,58,85,000 or the peak credits can be treated as income. The Appellant prays for appropriate relief. 6) Without prejudice to above grounds, the lower authorities have erred in looking at only one side of bank statement and ignoring the debit/payments side of bank statement. The lower authorities completely ignored that along with deposits in bank account, there are simultaneously payments also leaving negligible balance. It is only net income embedded in Gross deposits that can be taxed under Income Tax Act and the appellant prays for the same. 7) The Appellant seeks leave to add, alter, amend, modify, explain or drop any of the grounds taken above.”

5.

The Ld. AR, at the outset, submitted that apart from the quantum addition made by the Ld. AO and sustained by the Ld. CIT(A)/NFAC, the assessee has also challenged the validity of reassessment proceedings before the Tribunal on the ground that the notice issued u/s 148 is barred by limitation and therefore bad in law and deserves to be quashed. He submitted that there are no disputed facts/new facts involved and therefore the legal issue raised by the assessee may be decided by the Tribunal. Relying on the decision of the Hon’ble Supreme Court in the case of Union of India Vs. Rajeev Bansal (2024) 167 taxmann.com 70 (SC), the Ld. AR submitted that as per the said decision the due date of issuing notice u/s 148 of the Act for AY 2015-16 as applicable to the instant case is 31.03.2022, however the notice u/s 148 was issued to the assessee on 06.04.2022 and thus said notice issued by the Ld. AO u/s 148 of the Act on 06.04.2022 after expiry of six years from the end of the relevant assessment year is barred by limitation. He further relied on the following decision(s) in support of his above claim: i. Cherian Nallathu Abraham Annamma Vs. ITO (2025) 179 taxmann.com 433 (Bom.); ii. Babu Hasan Shaikh Vs. ITO in ITA No. 926/Mum/2025, order dated 28.04.2025 (Mumbai-Trib.); iii. Swami Vivekanand College Vs. ITO in ITA No. 6628/Mum/2025, order dated 05.01.2026.

6.

The Ld. DR, on the other hand, supported the order of the Ld. CIT(A)/NFAC and opposed the above submissions of the Ld. AR. The Ld. DR filed written submissions on the issue of validity of notice u/s 148 of the Act for AY 2015-16 which is reproduced here under :

ITA No.2329/PUN/2025, AY 2015-16

ITA No.2329/PUN/2025, AY 2015-16

ITA No.2329/PUN/2025, AY 2015-16

ITA No.2329/PUN/2025, AY 2015-16

ITA No.2329/PUN/2025, AY 2015-16

9 ITA No.2329/PUN/2025, AY 2015-16

7.

We have heard the rival arguments made by both the sides, perused the paper book filed by the Ld. AR on behalf of the assessee as well as written submissions filed by the Ld. DR. We have also perused the various judicial

10 ITA No.2329/PUN/2025, AY 2015-16

precedents relied upon by the Ld. AR. We find that the Ld. AO completed the reassessment proceedings u/s 147 r.w.s. 144B of the Act determining the total income of the assessee at Rs.1,58,85,000/- for AY 2015-16 treating the entire cash deposits of Rs.1,58,85,000/- as unexplained money u/s 69A of the Act vide his order dated 29.12.2023 passed u/s 147 r.w.s. 144B of the Act. We find that the Ld. CIT(A)/NFAC has dismissed the appeal of the assessee on merits for the reasons reproduced in the preceding paragraphs. Before us, the assessee has raised a legal ground challenging the validity of reassessment proceedings relying on the decision of Hon’ble Supreme Court in the case of Union of India Vs. Rajeev Bansal (supra) on the ground that the notice issued to the assessee under section 148 of the Act is barred by limitation. On perusal of this legal ground raised by the assessee, we find that it goes to the root of the matter and does not require verification of any additional/ new facts. Further, we find that the impugned issue raised in the said legal ground stands squarely covered in favour of the assessee by the decision of the Hon’ble Apex Court and the Hon’ble jurisdictional Bombay High Court as well as Co- ordinate Bench(es) of the Tribunal including the Pune Tribunal. In the absence of any contrary material brought on record by the Revenue, we deem it fit, in the interest of justice and fair play, to proceed and adjudicate the legal ground at this stage.

8.

The facts of the case are not in dispute. The Ld. AO issued notice u/s 148 of the Act for the relevant AY 2015-16 under consideration on 06.04.2022 (page 1 of the paper book refers). Under the old provisions of section 149, which is applicable for the assessment year under consideration i.e. AY 2015- 16, the notice u/s 148 would not have been issued beyond the period of 6 years from end of the relevant assessment year. The period of 6 years from the AY 2015-16 lapse on 31.03.2022. As stated earlier, in the instant case, notice u/s 148 was issued to the assessee on 06.04.2022 which is clearly beyond the time limit prescribed under the said provisions of the Act. Although, the Ld. DR has vehemently argued against the legal ground raised by the assessee, we find that the Revenue has also conceded before the Hon’ble Supreme Court in the case of Rajeev Bansal (supra) that the provisions of Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) is not applicable to the notices issued for AY 2015-16. The relevant para of the judgment is reproduced below : “19. Mr N Venkataraman, learned Additional Solicitor General of India, made the following submissions on behalf of the Revenue:

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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, PART C 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 Year Years Limitation Years Limitation read read with with TOLA for TOLA (or (2) (4) (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 Tax Act even after 1 April 2021; and 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

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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).

9.

Similarly, at para 46 of the order the Hon'ble Supreme Court has observed as under:

“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.”

10.

Finally, the Hon'ble Supreme Court at para 114 of the order has observed as under:

“G. Conclusions 114. In view of the above discussion, we conclude that: a. After 1 April 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 April 2021 if any action or proceeding specified under the substituted provisions of the Income Tax Act falls for completion between 20 March 2020 and 31 March 2021; c. Section 3(1) of TOLA overrides Section 149 of the Income Tax Act only to the extent of relaxing the time limit for issuance of a reassessment notice under Section 148; 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 March 2020 and 31 March 2021, then the specified authority under Section 151(i) has extended time till 30 June 2021 to grant approval; 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 March 2020 and 31 March 2021, then the specified authority under Section 151(2) has extended time till 31 March 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 April 2021 and 30 June 2021;

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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 April 2021 and 30 June 2021 till the supply of relevant information and material by the assessing officers to the assesses in terms of the directions issued by this Court in Ashish Agarwal (supra), and the period of two weeks allowed to the assesses 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;”

11.

Recently in the case of Cherian Nallathu Abraham Annamma, order dated 13.10.2025 (supra), the Hon’ble Bombay High Court held as under: “6. We have heard the learned counsel for the parties. It is not in dispute that the present petition relates to A.Y.2015-16. Further, it is also undisputed that the notice under Section 148 has been issued on 5th April 2022 which is at page 52 of the paperbook. Once these are the facts, paragraphs 19 (e) and (f) of the judgment of the Hon'ble Supreme Court in the case of Rajeev Bansal (supra) become relevant. They read as under:- 19. Mr. N Venkataraman, learned Additional Solicitor General of India, made the following submissions on behalf of the Revenue:- ....... e. The Finance Act 2021 substitute the old regime for reassessment 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 Year Years Limitation Years Limitation read with read with TOLA for (2) TOLA for (4) (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 21-3-2019 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 21-3-2021 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;" (emphasis supplied) 7. From the above it is clear, that the Department has conceded before the Hon'ble Supreme Court that all the notices issued under Section 148 after 1st April 2021 for A.Y.2015-16 have to be dropped. In the present case, the Notice under Section 148 is dated 5th April 2022 and therefore, has to be dropped.

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8.

The decision in Rajeev Bansal (supra) has been subsequently followed by the Hon'ble Supreme Court in Deepak Steel and Power Limited (supra). Paragraphs 4 and 5 of the said order is reproduced hereunder:- 4. The learned counsel appearing for the revenue with his usual fairness invited the attention of this Court to a three judge bench decision of this Court in Union of India and Ors. v. Rajeev Bansal, reported in 2024 SCC OnLine SC 2693, more particularly, paragraph 19(f) which reads thus:- "19. (f) The Revenue concedes that for the assessment year 2015- 2016, all notices issued on or after April 1, 2021 will have to be dropped as they will not fall for completion during the period prescribed under the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020." 5. As the revenue made a concession in the aforesaid decision that is for the assessment year 2015-2016, all notices issued on or 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. (emphasis supplied) 9. Similarly, even in the matter of Nehal Ashit Shah (supra), the Hon'ble Supreme Court, relying upon paragraphs 19 (e) and (f) of the decision in case of Rajeev Bansal (supra), dismissed the SLP filed by the Revenue. Paragraph 5 of the said order is reproduced hereunder:- "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." 10. Lastly, this very Bench has on 6th October 2025, in the matter of Spicy Sangria (supra), allowed the petition filed by the Petitioner therein by noting that since, the notice under Section 148 was issued after 1st April 2021, the same was required to be set aside in light of the concession made by the Revenue before the Hon'ble Supreme Court in the case of Rajeev Bansal (supra). 11. In light of the above discussion, we find merit in the submissions as canvassed by the Petitioner. The Revenue has categorically made a concession that for A.Y.2015-16 they would drop all notices issued under Section 148 after 1st April 2021. Once this is position, it is appropriate that the notice under Section 148 dated 5th April 2022, and the consequential assessment order, notice of demand, penalty notices/orders as well as the recovery notices be quashed and set aside. It is accordingly so ordered.”

12.

Similar view has been taken by the Hon’ble Bombay High Court in the case of Verjinia Foods Ltd., order dated 06.10.2025 holding as under : “17. Accordingly, we hold that the Notice under Section 148 for A.Y. 2015-16 issued on 5th April 2022 was barred by limitation and ought to have been dropped pursuant to the decision of Hon'ble Supreme Court in the case of UOI v. Rajeev Bansal (supra). We also agree with the submission of both the parties, that the Notice issued on 5th April 2022 under Section 148 is also bad in law in view of the decision of this Court in Hexaware (supra). 18. Since the Notice issued on 5th April 2022[wrongly mentioned as 6th April 2024] under Section 148 was already quashed by order dated 9th May 2024 passed in the above Writ Petition, the consequent order of reassessment dated

15 ITA No.2329/PUN/2025, AY 2015-16

3rd March 2025 passed under Section 147 read with Section 144B of the Act, the Notice of Demand dated 3rd March 2025 issued under Section 156 and all the notices proposing to impose penalty under Section 271F, Section 271(1)(b) and Section 271(1)(c) and any order/notice, if any, emanating therefrom are hereby quashed and set aside.”

13.

The case of the assessee also finds support from the various decisions of the Mumbai as well as Pune Tribunal wherein the Tribunal in turn relying upon the decision of the Hon’ble Supreme Court in the case of Rajeev Bansal (supra) has decided the impugned issue in favour of the assessee.

14.

In view of the factual matrix of the case and legal position set out above and in the absence of any contrary material/judicial precedent brought on record by the Revenue, we hold that the impugned notice issued to the assessee under section 148 of the Act dated 06.04.2022 is bad in law and deserves to be quashed. Since the assessee succeeds on this legal ground, the other grounds raised by the assessee are rendered academic in nature and therefore not adjudicated.

15.

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

Order pronounced in the open court on 25th May, 2026.

Sd/- Sd/- (R.K. Panda) (Astha Chandra) JUDICIAL MEMBER VICE PRESIDENT पुणे / Pune; दिन ांक / Dated : 25th May, 2026. रदि Ravi Kumar Digitally signed by Ravi Kumar Date: 2026.05.27 12:51:16 +05'30' आदेश की प्रधिधलधप अग्रेधर्ि / Copy of the Order forwarded to : अपील र्थी / The Appellant. 1. प्रत्यर्थी / The Respondent. 2. 3. The Pr. CIT concerned. दिभ गीय प्रदिदनदि, आयकर अपीलीय अदिकरण, “बी” बेंच, 4. पुणे / DR, ITAT, “B” Bench, Pune. ग र्ड फ़ इल / Guard File. 5. //सत्य दपि प्रदि// True Copy// आिेश नुस र / BY ORDER,

सहायक पंजीकार/ Assistant Registrar आयकर अपीलीय अदिकरण ,पुणे / ITAT, Pune

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