KIRIT DUNGARLAL SHAH,MUMBAI vs. ITO WARD 19(2)(2), MUMBAI, MUMBAI

The present appeal is delayed by 56 days. Along with the appeal, the assessee has filed an affidavit seeking condonation of the delay. Having perused the affidavit, which forms part of the record, we are of the considered view that there was sufficient cause which prevented the assessee from filing

In this appeal, the assessee has raised the following grounds: - “1. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming reassessment proceedings u/s 148 of the Income Tax Act, 1961 which is bad in law and required to be quashed. 2. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming the action of Ld. AO in initiating reassessment proceeding under section 148 in violation of provision of section149 of Income Tax Act, 1961 as the proceeding for A.Y. 2015-16 is time barred. 3. On the facts and circumstances of the case and in law, the Ld. CIT(A) failed to appreciate the facts that the permission obtained under section 151 of the Act, is not in accordance with the law 4. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming the action of Ld. AO in in issuing notice under section 148 of Income Tax Act, 1961 without mentioning the DIN on notice itself which is violation of CBDT Circular No 19 of 2019 dated 14.08.2019. 5. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming the action of Ld. AO in making addition of Rs. 2,59,67,232 as unexplained cash credits under section 68 of Income Tax Act, 1961. 6. Without Prejudice to Ground No 5, On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming the action of Ld. AO in making addition of Rs. 2,06,00,000/- under section 68 of Income Tax Act, 1961 on account of alleged accommodation entry from Shripal Vora despite knowing of facts that the appellant has not made any such transaction with such Shripal Vora and when nothing is credited during the year, then the provision of section 68 of Income Tax Act, 1961 is not applicable. 7. Without Prejudice to Ground No 5, On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming the action of Ld. AO in making addition of Rs. 25,97,961/- under section 68 of Income Tax Act, 1961 on account of alleged accommodation entry from Darshan Sadhani despite knowing of facts that the appellant has not made any such transaction with such Darshan Sadhani and when nothing is credited during the year, then the provision of section 68 of Income Tax Act, 1961 is not applicable. 8. Without Prejudice to Ground No 5, On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming the action of Ld. AO in making addition of Rs. 27,69,271/- under section 68 of Income Tax Act, 1961 on account of alleged accommodation entry despite knowing of facts that such amount was repayment of loan in A.Y. 2016-17 for which the loan was obtained in earlier years and no loan was taken in relevant assessment year A.Y. 2015-16. Thus, when nothing is credited during the year, then the provision of section 68 of Income Tax Act, 1961 is not applicable

The assessee has raised the ground, inter alia, challenging the initiation of reassessment proceedings under section 147 of the Act. Since this is a jurisdictional issue that goes to the root of the matter, we are considering it at the outset. During the hearing, the learned Authorised Representative (“learned AR”) submitted that the notice issued under section 148 of the Act in the present case is beyond the limitation period specified under section 149(1) of the Act, and thus, the assessment order passed under section 147 read with section 144B of the Act is void ab initio.

The brief facts of the case pertaining to this issue, as emanating from the record, are: The assessee is an individual and for the year under consideration, filed his original return of income on 26/08/2015, declaring a total income of Rs. 6,09,110/-. On the basis of the information that the assessee is a beneficiary of an accommodation entry transaction of a bogus loan, proceedings under section 147 of the Act were initiated in the case of the assessee, and a notice under section 148 of the Act was issued on 27/05/2021.

Thereafter, in view of the decision of the Hon’ble Supreme Court in Union of India vs. Ashish Agrawal, reported in [2022] 444 ITR 1 (SC), the original notice issued under section 148 on 27/05/2021 was deemed to be issued

After rejecting the objections filed by the assessee, an order under section 148A(d) of the Act was passed on 29/07/2022, declaring that it is a fit case for the issuance of a notice under section 148 of the Act. On the very same date, i.e. on 29/07/2022, a notice under section 148 of the Act was issued by the Jurisdictional Assessing Officer. Vide order dated 07/05/2023 passed under section 147 read with section 144B of the Act, the Assessing Officer (“AO”) made an addition of Rs. 2,59,67,232 under section 68 of the Act in the hands of the assessee by treating the entire loan received by the assessee as bogus. The learned CIT(A), vide impugned order, upheld the validity of the notice issued under section 148 of the Act. On merits also, the learned CIT(A) dismissed the grounds raised by the assessee. Being aggrieved, the assessee is in appeal before us.

During the hearing, the learned AR submitted that the year under consideration is the assessment year 2015-16, and therefore, the limitation period available with the Assessing Officer under section 149 of the Act for issuance of notice under section 148 of the Act was till 31/03/2022, and therefore, the notice issued under section 148 of the Act on 29/07/2022 is barred by limitation. Hence, it was submitted that the entire re-assessment proceedings culminating in the order passed under section 147 read with section 144B of the Act are void ab initio. The learned AR by placing reliance

On the other hand, the learned Departmental Representative (“learned DR”) vehemently relied upon the order passed by the lower authorities.

We have considered the submissions of both sides and perused the material available on record. We, at the outset, find that similar issue pertaining to the challenge against notices issued under section 148 of the Act for the assessment year 2015-16 on the basis that same are beyond the limitation period prescribed under section 149 of the Act has been decided in favour of the taxpayers after noting the submission of the Revenue before the Hon’ble Supreme Court in Rajeev Bansal (supra), wherein it was conceded by the Revenue that for the assessment year 2015-16, all notices issued on or after 1st April, 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 (“the TOLA”). We find that the Hon’ble Delhi High Court in Pratishtha Garg vs. ACIT, reported in (2015) 171 taxmann.com 264 (Delhi), allowed the writ petition filed by the taxpayer and set aside the notice issued under section 148 of the Act for the assessment year 2015-16, by observing as follows: -

We further find that similar findings were rendered by the Hon’ble Delhi High Court in IBIBO Group Pvt. Ltd. vs. ACIT, in W.P.(C) No.17639 of 2022, vide order dated 13/12/2024. We find that in the following decisions of the

We further find that vide order dated 04/04/2025, the Hon’ble Supreme Court in ACIT vs. Nehal Ashit Shah, in SLP (C) Diary No.57209 of 2024, upheld the quashing of the re-assessment proceedings initiated for the assessment year 2015-16 considering the submissions of the Revenue as recorded in paragraph 19(e) and 19(f) of the decision in Rajeev Bansal (supra). Similar findings were rendered by the Hon’ble Supreme Court in Deepak Steel and Power Ltd vs. CBDT, reported in [2025] 174 taxmann.com 144 (SC).

Therefore, it is evident that the Hon’ble Courts, consistently considering the submissions made by the Revenue before the Hon’ble Supreme Court in Rajeev Bansal (supra), have held that the reassessment notice issued under section 148 of the Act for the assessment year 2015-16 is barred by limitation. Thus, on this limited basis alone, the notice dated 29/07/2022, issued under section 148 of the Act in the present case, is liable to be quashed, as time- barred under the provisions of the Act. We order accordingly. Consequently, the entire reassessment proceedings and assessment order passed under section 147 read with section 144B of the Act are also quashed.

Since the relief has been granted to the assessee on the afore-noted jurisdictional aspect, the other grounds raised by the assessee in its appeal are rendered academic and, therefore, are kept open.

In the result, the appeal by the assessee is allowed. Order pronounced in the open Court on 22/05/2026