BHERARAM,CHENNAI vs. ITO, NCW-11(3), CHENNAI

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ITA 1417/CHNY/2026Status: HeardITAT Chennai25 June 2026AY 2015-1610 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the notice issued under Section 148 of the Act was barred by limitation. Consequently, the reassessment proceedings initiated based on this invalid notice were quashed.

What were the facts?

The assessee's appeal challenges the reopening of assessment for AY 2015-16. The primary contention is that the notice issued under Section 148 of the Income Tax Act, 1961, was beyond the prescribed period of limitation.

What were the issues?

Whether the notice for reopening of assessment for AY 2015-16 was issued within the period of limitation as per the provisions of the Income Tax Act, 1961.

Which sections of the Income-tax Act were involved?

Section 148,Section 148A,Section 149

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI

Before: SHRI GEORGE GEORGE K & SHRI GAGAN GOYAL

Hearing: 25.06.2026Pronounced: 25.06.2026

आदेश/ O R D E R PER GEORGE GEORGE K, VICE PRESIDENT: This appeal filed by the assessee is directed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 11.02.2026 passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2015-16.

ITA No.1417/CHNY/2026 - 2 - Bheraram 2. At the outset, we find that the assessee had raised legal issue in Ground No.4, which reads as follows:- “Without prejudice, the Learned Commissioner of Income Tax (Appeals) erred in upholding the action of the Learned Assessing Officer in reopening the matter of the Appellant for assessment beyond the period of limitation.”

3.

The Ld. AR submitted that the notice issued u/s.148 of the Act dated 07.04.2022 for the assessment year 2015-16 is barred by limitation and therefore liable to be quashed. It was contended that, in terms of the provisions applicable to the relevant assessment year, the notice u/s.148 of the Act ought to have been issued within six years from the end of the assessment year and the said period expired on 31.03.2022. Since the impugned notice was issued only on 07.04.2022, the same is beyond the prescribed period of limitation and consequently invalid in law. The Ld. AR further submitted that the assessee's case is squarely covered by the first proviso to section 149(1) of the Act. Reliance was placed on the decision of the Chennai Bench of the Tribunal in the case of Ms. Thirumoorthy Revathy vs. ITO in ITA No.3188/CHNY/2025 dated 27.01.2026. It was submitted that the Tribunal, while deciding the said case, had followed the judgment of the Hon'ble Supreme Court in UOI vs. Rajiv Bansal reported in 469 ITR 430 (SC), wherein it was held that Assessment Year

ITA No.1417/CHNY/2026 - 3 - Bheraram 2015-16 is not covered by the benefit of the extended limitation under the TOLA provisions and, therefore, a notice u/s.148 of the Act cannot be issued beyond the normal period of six years. The Ld. AR also placed on record a copy of the order passed u/s. 148A(d) of the Act dated 07.04.2022 in support of the contention that the impugned proceedings were initiated beyond the period prescribed under law. Accordingly, it was submitted that the reassessment proceedings are liable to be annulled on the legal ground itself. The Ld. AR further submitted that, if the jurisdictional issue is adjudicated in favour of the assessee, the issues on merits may be left open.

4.

The Ld. DR on the other hand submitted that in assessee's case the AO issued notice u/s. 148A(b) on 19.03.2022 and after enquiry passed the order u/s. 148A(d) on 07.04.2022. The ld. DR further argued that as per the 3rd proviso to section 149 of the Act for the purpose of computing the period of limitation the time or the extended time allowed to the assessee as per the showcause notice issued u/s. 148A(b) or the period during which the proceeding u/s. 148A is stayed by an order or injunction of any Court shall be excluded. The ld. DR also submitted that as per the 4th proviso to section 149(1) if the additional time during which

ITA No.1417/CHNY/2026 - 4 - Bheraram the proceedings were stayed is less than seven days, the AO gets the extended period for issue of notice by seven days. Therefore the ld. DR submitted that in assessee's case the extended time would apply whereby the AO would get time till 07.04.2022 for issuing notice under section 148 of the Act. In the instant case, since the notice was issued on 07.04.2022, the Ld.DR submitted that the same is not barred by period of limitation.

5.

We have heard rival submissions and perused the material on record. In the instant case, the show-cause notice has been issued u/s.148A(b) of the Act on 19.03.2022 directing the assessee to show-cause by 25.03.2022, why notice u/s.148 of the Act ought not to be issued on the basis of information available with the Revenue. The assessee, in response to the notice issued u/s.148A(b) of the Act filed his response on 26.03.2022. However, objections for reopening of assessment was rejected by the AO and order was passed u/s.148A(d) of the Act on 07.04.2022 and notice u/s.148 of the Act was issued on the same date namely 07.04.2022. On identical facts, the Chennai Bench of the Tribunal in the case of Ms.Thirumoorthy Revathy (supra) by considering the various judicial precedence on the subject had held that the notice issued u/s.148 of the Act after 31.03.2022 for the

ITA No.1417/CHNY/2026 - 5 - Bheraram assessment year 2015-16 is time barred and consequent reassessment order is to be quashed. The relevant findings of the order of the Chennai Bench of the Tribunal reads as follows:- 6. We heard the rival submissions and perused the material on record. In order to find out whether the notice under section 148 is time barred or not, we need to first examine the relevant provisions of the Act and the legal position as per judicial precedence. Section 149(1) of the Act contain the provisions with regard to the time limit for issue of notice under section 148 of the Act. Notice has to judged according to the law existing on the date of notice issued. The relevant provisions applicable when the notice u/s.148 of the Act was issued reads as under (as on 01.04.2022):- 149 - Time limit for notice. (1) No notice under section 148 shall be issued for the relevant assessment year,— (a) if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b); (b) if three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income chargeable to tax, represented in the form of— (i) an asset; (ii) expenditure in respect of a transaction or in relation to an event or occasion; or (iii) an entry or entries in the books of account, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more: Provided that no notice under section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before 1st day of April, 2021, if a notice under section 148 or section 153A or section 153C could not have been issued at that time on account of being beyond the time limit specified under the provisions of clause (b) of sub-section (1) of this section or section 153A or section 153C, as the case may be], as they stood immediately before the commencement of the Finance Act, 2021

Provided further that the provisions of this sub-section shall not apply in a case, where a notice under section 153A, or section 153C read with section 153A, is required to be issued in relation to a search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A, on or before the 31st day of March, 2021:

ITA No.1417/CHNY/2026 - 6 - Bheraram Provided also that for the purposes of computing the period of limitation as per this section, the time or extended time allowed to the assessee, as per show-cause notice issued under clause (b) of section 148A or the period during which the proceeding under section 148A is stayed by an order or injunction of any court, shall be excluded:

Provided also that where immediately after the exclusion of the period referred to in the immediately preceding proviso, the period of limitation available to the Assessing Officer for passing an order under clause (d) of section 148A is less than seven days, such remaining period shall be extended to seven days and the period of limitation under this sub-section shall be deemed to be extended accordingly. Explanation.—For the purposes of clause (b) of this sub-section, "asset" shall include immovable property, being land or building or both, shares and securities, loans and advances, deposits in bank account. (2) The provisions of sub-section (1) as to the issue of notice shall be subject to the provisions of section 151

7.

The time limits for issue of notice under section 148 of the Act were amended as above w.e.f. 01.04.2021. Prior to the amendment the relevant provisions of section 149(1) of the Act read as under – 149 - Time limit for notice. (1) No notice under section 148 shall be issued for the relevant assessment year,— (a) if four years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b) or clause (c); (b) if four years, but not more than six years, have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to one lakh rupees or more for that year; (c) **** Explanation.—In determining income chargeable to tax which has escaped assessment for the purposes of this sub-section, the provisions of Explanation 2 of section 147 shall apply as they apply for the purposes of that section.

(2) & (3) ****

8.

The time limit for issue of notice under section 148 of the Act was revised with effect from 01.04.2021 and the legislature in order to make the amendment prospective introduced the first proviso to section 149(1). The intent of the first proviso is that the revenue does not get the extended time of ten years where the notices were not issued within a period of six years for AYs

ITA No.1417/CHNY/2026 - 7 - Bheraram prior to 2021-22. The said legislative intent has been clearly explained by the Hon'ble Supreme Court in the case of Rajiv Bansal (supra). The relevant of observations of the Apex Court is extracted below “– 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. 47. **** 48. Notices have to be judged according to the law existing on the date the notice is issued. Section 149 of the old regime primarily provided two time limits: (i) four years for all situations and (ii) beyond four years and within six years if the income chargeable to tax which escaped assessment amounted to Rupees one lakh or more. After 1 April 2021, the time limits prescribed under the new regime came into force. The ordinary time limit of four years was reduced to three years. Therefore, in all situations, reassessment notices could be issued under the new regime if not more than three years have elapsed from the end of the relevant assessment year. For example, for assessment year 2018-2019, the four year period would have expired on 31 March 2023 under the old regime. However, if the notice is issued after 1 April 2021, the three year time limit prescribed under the new regime will be applicable. The three year time limit will expire on 31 March 2022. 49. The first proviso to Section 149(1)(b) requires the determination of whether the time limit prescribed under section 149(1)(b) of the old regime continues to exist for the assessment year 2021-2022 and before. Resultantly, a notice under Section 148 of the new regime cannot be issued if the period of six years from the end of the relevant assessment year has expired at the time of issuance of the notice. This also ensures that the new time limit of ten years prescribed under section 149(1)(b) of the new regime applies prospectively. For example, for the assessment year 2012-2013, the ten year period would have expired on 31 March 2023, while the six year period expired on 31 March 2019. Without the proviso to Section 149(1)(b) of the new regime, the Revenue could have had the power to reopen assessments for the year 2012-2013 if the escaped assessment amounted to Rupees fifty lakhs or more. The proviso limits the retrospective operation of Section 149(1)(b) to protect the interests of the assesses. 50. to 52. *** 53. The position of law which can be derived based on the above discussion may be summarized thus: (i) Section 149(1) of the new regime is not prospective. It also applies to past assessment years; (ii) The time limit of four

ITA No.1417/CHNY/2026 - 8 - Bheraram years is now reduced to three years for all situations. The Revenue can issue notices under section 148 of the new regime only if three years or less have elapsed from the end of the relevant assessment year; (iii) the proviso to Section 149(1)(b) of the new regime stipulates that the Revenue can issue reassessment notices for past assessment years only if the time limit survives according to Section 149(1)(b) of the old regime, that is, six years from the end of the relevant assessment year; and (iv) all notices issued invoking the time limit under section 149(1)(b) of the old regime will have to be dropped if the income chargeable to tax which has escaped assessment is less than Rupees fifty lakhs.”

9.

From the perusal of the legislative intent of the first proviso to section 149(1) of the Act and interpretation given by the Hon'ble Supreme Court it is clear that Revenue cannot issue notice under section 148 for assessment years prior to AY 2021-22 if six years from the end of the relevant assessment year has expired on the date of issue of such notice. In the light of the above legal position we will now examine the facts in present case. The year under consideration here is AY 2015-16. For assessment year 2015-16, the time limit as per the old regime, for issue of notice for AY 2015-16 under section 148 of the Act is six years from the end of the relevant assessment year. i.e. 31.03.2022. Accordingly, the notice dated 01.04.2022 issued u/s.148 of the Act in assessee's case is beyond the time limit and not valid.

10.

The argument of the Ld.DR is that the time allowed to the assessee to respond to the notice issued under section 148A(b) i.e., from 22.03.2022 to 29.03.2022 should be excluded as per the third proviso to section 149(1). We are of the considered view, for the purpose applying the exclusion period, the notice should first survive the test of being issued either under section 149(1)(a) or 149(1)(b) under the new regime. In the given case the notice under section 148 of the Act for AY 2015-16 does not survive the test by virtue of the first proviso and therefore the question of applying the third proviso for calculating the time limit does not arise. In this regard, the Hon’ble Jurisdictional High Court in the case of Sridhar Lokesh vs. ITO in WP No.16526 of 2022 (judgment dated 28.11.2024) was considering the following prayer:- Writ Petition filed under Article 226 of the Constitution of India, to issue a writ of certiorari to call for the records on the file of the Respondent and quash the impugned order under Section 148A(d) of the Act in PAN:ADDPL2229A dated 04.04.2022 in DIN & Notice No.ITBA/AST/F/148A/2022-23/1042464779(1) for the AY 2015~16 along with the impugned notice no.1 issued under Section 148A(b) of the Act in PAN:ADDPL2229A dated 23.03.2022 in DIN & Notice

ITA No.1417/CHNY/2026 - 9 - Bheraram No.ITBA/AST/F/148A(SCN)/2021-22/1041356299(1) for the AY 2015-16 and the impugned notice No.2 under Section 148 of the Act in PAN:ADDPL2229A dated 04.04.2022 in DIN & Notice No.ITBA/AST/S/148_1/2022-23/1042466733(1) for the AY 2015-16.

11.

In disposing off the above prayer, the Hon’ble Jurisdictional High Court held as follows:- “2.The issue, as on date is covered by a decision of the Division Bench of the Bombay High Court in Hexaware Technologies Ltd. Vs. Assistant Commissioner of Income Tax [(2024) 162 taxmann.com 225 (Bombay)]. In paras 29 and 30, the Court has examined the issue in the light of the 1st and 3rd proviso to Section 149 of the Income Tax Act, 1961 as in force with effect from 01.04.2021. The 3rd proviso to Section 149 (1) is now the 5th proviso to Section 149 (1) with effect from 01.04.2023.

3.

Although, the submissions made by the learned counsel for the respondents appears to be more attractive, I am bound by the decision of the Division Bench of the Bombay High Court in the above case, which had followed an earlier decision rendered in Godrej Industries Vs. The Assistant Commissioner of Income Tax and Ors. rendered on 28.02.2024.”

12.

In light of the aforesaid discussion and relying on the judicial pronouncements cited supra, we hold that the notice issued u/s.148 of the Act dated 01.04.2022 is barred by limitation. Consequently, the reassessment proceedings based on an invalid notice is quashed and addition made therein is deleted. Since, we have adjudicated the legal ground, the grounds raised on merits is not adjudicated and is left open. It is ordered accordingly.”

6.

In light of the aforesaid discussion and relying on the judicial pronouncements cited supra, we hold that the notice issued u/s.148 of the Act dated 07.04.2022 is barred by limitation. Consequently, the reassessment proceedings based on an invalid notice is quashed and addition made therein is deleted. Since, we have adjudicated the legal ground, the grounds raised on merits is not adjudicated and is left open. It is ordered accordingly

ITA No.1417/CHNY/2026 - 10 - Bheraram

7.

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

Order pronounced in the open court on 25th June,2026 at Chennai.

Sd/- Sd/- (गगन गोयल) (जॉज� जॉज� के) (GEORGE GEORGE K) (GAGAN GOYAL) लेखा सद�य/ACCOUNTANT MEMBER उपा�य� /VICE PRESIDENT चे�नई/Chennai, �दनांक/Dated, the 25th June, 2026 RSR, Sr.PS आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��यथ�/Respondent 3. आयकर आयु�त /CIT, Chennai 4. �वभागीय ��त�न�ध/DR 5. गाड� फाईल/GF. By Order Digitally signed by REKHA REKHA SENTHIL RAJ SENTHIL RAJ Date: 2026.06.25 17:28:09 +05'30'

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