SUNDARARAGHAVAN,CHENNAI vs. INCOME TAX OFFICER, NON CORPORATE WARD 17(7), CHENNAI, CHENNAI

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ITA 1333/CHNY/2026Status: DisposedITAT Chennai08 June 2026AY 2015-1610 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the reassessment proceedings are invalid and void ab initio. The Tribunal noted that the assessment year involved is 2015-16 and the notice under Section 148 was issued on 07.04.2022, which is after the expiry of the limitation period on 31.03.2022 as prescribed under the erstwhile provisions of Section 149 of the Act. The Tribunal relied on the authoritative decisions of the Hon'ble Supreme Court in The Income Tax Officer & Anr. vs. Sri Sai Kumar Mateti & Ors. (Civil Appeal No. ___ of 2026 arising out of SLP (Civil) No. 8682 of 2024, order dated 04.05.2026) and Union of India & Ors. vs. Rajeev Bansal (2024 SCC OnLine SC 2693). The Supreme Court had conceded that notices for AY 2015-16 would be barred by limitation and observed that such notices are liable to be struck down as time-barred. Consequently, the Tribunal held that the notice dated 07.04.2022 is invalid in law and void ab initio, and all proceedings initiated pursuant to this notice, including the reassessment order, are vitiated and quashed. Adjudication on the merits of the additions was rendered academic.

What were the facts?

The assessee, an individual, is appealing against an order of the CIT(A) dated 13.01.2026, which upheld the assessment order dated 26.02.2024 passed by the AO. The assessment year in question is 2015-16. Reassessment proceedings under Section 147 read with Section 144 of the Income-tax Act, 1961, were initiated based on information from the Insight Portal concerning various financial transactions. The AO made additions totaling Rs. 2,87,05,800/- for unexplained money, unexplained investments in immovable properties, undisclosed capital gains from share sales, and unexplained investment in listed equity shares. The assessee had failed to provide effective compliance or supporting details during reassessment and appellate proceedings. The CIT(A) dismissed the appeal, sustaining the additions.

What were the issues?

1. Whether the reassessment proceedings initiated under Section 147 of the Income-tax Act, 1961, for Assessment Year 2015-16 are valid, considering the notice under Section 148 was issued on 07.04.2022, which is after the expiry of the limitation period under the erstwhile provisions of Section 149(1) of the Act. The assessee argued that the notice under Section 148 dated 07.04.2022 is barred by limitation as the period prescribed under the erstwhile Section 149(1) expired on 31.03.2022. The assessee contended that the amended provisions introduced by the Finance Act, 2021, cannot revive a right that had already extinguished, relying on the proviso to Section 149 and the decision in ITA No. 3188/Chny/2025. The assessee argued that the notice is invalid and all consequent proceedings are void ab initio. The revenue contended that the notice issued under Section 148 on 07.04.2022 is protected by the amended provisions of Section 149 and that the reassessment proceedings were initiated strictly in accordance with the substituted statutory scheme, thus not being time-barred.

Which sections of the Income-tax Act were involved?

Section 147,Section 144,Section 148A,Section 148,Section 142(1),Section 69A,Section 69B,Section 149(1),Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘A’ BENCH: CHENNAI

Before: MS. PADMAVATHY S & SHRI MANU KUMAR GIRI

For Respondent: Mr. Gautam S. Mukundan
Hearing: 12.05.2026

आदेश / O R D E R

PER MANU KUMAR GIRI, JM:

The captioned appeal is filed by the assessee challenging the order dated 13.01.2026 passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC) (In short "CIT(A)"), arising out of the assessment order dated 26.02.2024 passed by the Assessing Officer, Assessment Unit, National Faceless Assessment Centre (In short "AO") u/s. 147 read with section 144

ITA No. 1333/Chny/2026 (AY 2015-16) Sundararaghavan Vs ITO, NCW-17(7) :: 2 :: of the Income-tax Act, 1961 (In short "the Act") for the Assessment Year ("A.Y.") 2015-16. 2. Briefly stated, the assessee is an individual. For A.Y. 2015-16, information was received through the Insight Portal regarding certain financial transactions allegedly carried out by the assessee, including cash deposits in bank accounts, purchase of immovable properties, purchase and sale of shares, and other specified financial transactions. Based on such information, proceedings u/s. 148A of the Act were initiated. Subsequently, an order u/s. 148A(d) of the Act was passed on 05.04.2022, holding that it was a fit case for issuance of notice u/s. 148. Accordingly, a notice u/s. 148 was issued on 07.04.2022 and reassessment proceedings were thereafter undertaken by the National Faceless Assessment Centre ("NFAC"). During the course of reassessment proceedings, notices u/s.s 142(1) and 148 of the Act, along with various show-cause notices, were issued from time to time. According to the AO, apart from seeking adjournments on certain occasions, the assessee failed to make any effective compliance and neither furnished a return of income nor submitted the supporting details called for during the reassessment proceedings.On the basis of information received from ICICI Bank, the Sub-Registrar Offices at Mylapore and Kodambakkam, and AIR/Insight data relating to share transactions, the AO completed the assessment ex parte u/s. 144 read with section 147 of the Act vide order dated 26.02.2024. The following additions were made in the assessment order: (i) Rs.59,25,024/- u/s. 69A of the Act as unexplained money representing credits reflected in the bank account;

ITA No. 1333/Chny/2026 (AY 2015-16) Sundararaghavan Vs ITO, NCW-17(7) :: 3 :: (ii) Rs.1,44,85,000/- u/s. 69B of the Act towards unexplained investment in an immovable property situated at Abhiramapuram, Chennai; (iii) Rs.37,50,000/- u/s. 69B of the Act towards unexplained investment relating to another immovable property transaction; (iv) Rs.43,55,034/- being the aggregate value of share sale transactions treated as undisclosed capital gains; and (v) Rs.1,90,747/- u/s. 69B of the Act towards unexplained investment in the purchase of listed equity shares. Consequently, the total income of the assessee was assessed at Rs.2,87,05,800/- as against the returned income of Nil.

3.

Aggrieved by the reassessment order, the assessee preferred an appeal before the Ld. CIT(A). In the memorandum of appeal, the assessee challenged both the validity of the reopening and the additions made by the AO, contending, inter alia, that the additions towards unexplained money, unexplained investments and alleged capital gains were untenable both in law and on facts. 4. During the appellate proceedings, the Ld. CIT(A) issued several notices u/s. 250 of the Act calling upon the assessee to furnish written submissions and documentary evidence in support of the grounds raised. Although the assessee sought, on certain occasions, to have the assessment proceedings set aside, no documentary evidence or detailed submissions were furnished in support of the appeal. The assessee also failed to respond to the subsequent hearing notices issued by the appellate authority. 5. Upon consideration of the material available on record, the Ld. CIT(A) observed that the assessee had failed to discharge the burden of proving the nature and source of the impugned transactions and had not produced any evidence either before the AO or during the appellate proceedings to rebut the findings recorded in the assessment order. Placing reliance on various judicial precedents governing the burden of proof in cases involving

ITA No. 1333/Chny/2026 (AY 2015-16) Sundararaghavan Vs ITO, NCW-17(7) :: 4 :: unexplained credits and investments, the Ld. CIT(A) sustained the additions made by the AO.Accordingly, by order dated 13.01.2026 passed u/s. 250 of the Act, the Ld. CIT(A) dismissed the appeal and upheld the assessment framed u/s. 147 read with section 144 of the Act, including the additions aggregating to Rs.2,87,05,800/- made by the AO. 6. Being dissatisfied with the order of the Ld. CIT(A), the assessee has preferred the present appeal before this Tribunal.At the outset, the assessee sought to raise a legal ground challenging the validity of the reassessment proceedings on the basis that the reopening of the assessment was barred by limitation. The relevant ground of appeal raised by the assessee reads as under:

That the Ld. Commissioner of Income Tax (Appeals), NFAC, Delhi [“Ld.CIT(A)”] erred in not appreciating that the assessment order dated 26.02.2024 passed by the NaFAC, Delhi [“Assessing Officer”] u/s.147 r.w.s. 144 of the Income Tax Act, 1961 [“Act”], for the Assessment Year 2015-16 is invalid, void ab initio, and liable to be quashed as bad in law. That the Ld.CIT(A) erred in law and on facts in upholding the reassessment proceedings without appreciating that the reopening of the assessment itself was barred by limitation under the provisions of the Income-tax Act, 1961, and therefore the consequent assessment order deserves to be quashed as being illegal, void ab initio and without jurisdiction.

7.

The Ld. Authorised Representative ("Ld. AR") assailed the validity of the reassessment proceedings initiated u/s. 147 of the Act, contending that the assumption of jurisdiction by the Assessing Officer was wholly without sanction of law and, consequently, the entire reassessment proceedings are liable to be declared void ab initio. It was submitted that the notice issued u/s. 148 of the Act dated 07.04.2022 is ex facie barred by limitation and, therefore,

ITA No. 1333/Chny/2026 (AY 2015-16) Sundararaghavan Vs ITO, NCW-17(7) :: 5 :: incapable of conferring valid jurisdiction upon the Assessing Officer to reopen the assessment. 8. Elaborating the aforesaid contention, the Ld. AR submitted that, in respect of A.Y. 2015-16, the period of limitation prescribed under the erstwhile provisions of section 149(1) of the Act, as they stood prior to their substitution by the Finance Act, 2021, expired on 31.03.2022. Admittedly, the impugned notice u/s. 148 was issued only on 07.04.2022, i.e., subsequent to the expiry of the limitation period available under the unamended provisions. It was argued that the Revenue cannot seek refuge under the amended provisions introduced by the Finance Act, 2021, in view of the express mandate contained in the first proviso to section 149 of the Act, which protects cases where the limitation had already expired under the erstwhile regime. According to the Ld. AR, once the Revenue's right to issue a notice u/s. 148 stood extinguished on 31.03.2022, the same could not be revived by operation of the amended statutory framework. Consequently, the notice dated 07.04.2022 being hopelessly barred by limitation is invalid in law, and all proceedings emanating therefrom, including the reassessment order, are liable to be annulled. In support of the aforesaid proposition, reliance was placed on the decision of the Co-ordinate Bench of this Tribunal in ITA No. 3188/Chny/2025 dated 27.01.2026. 9. Per contra, the Ld. Departmental Representative ("Ld. DR") strongly relied upon the orders of the lower authorities and submitted that the notice issued u/s. 148 of the Act on 07.04.2022 is duly protected by the amended provisions of section 149. It was contended that the reassessment proceedings were initiated strictly in accordance with the substituted statutory scheme and, therefore,

ITA No. 1333/Chny/2026 (AY 2015-16) Sundararaghavan Vs ITO, NCW-17(7) :: 6 :: cannot be regarded as time-barred. The Ld. DR accordingly submitted that the reassessment proceedings are legally valid and the preliminary ground raised by the assessee deserves to be rejected. 10. We have carefully considered the rival submissions, perused the orders of the authorities below, and examined the material placed on record. We have also duly considered the judicial precedents cited before us.Upon a careful consideration of the matter, we find substantial force in the preliminary legal ground raised by the assessee challenging the very assumption of jurisdiction u/s. 147 and 148 of the Act. The relevant facts are undisputed. The assessment year under consideration is A.Y. 2015-16. It is an admitted position that, under the erstwhile provisions of section 149 of the Act, the period available to the Revenue for issuance of notice u/s. 148 expired on 31.03.2022. Equally undisputed is the fact that the impugned notice u/s. 148 came to be issued only on 07.04.2022.In our considered opinion, the issue is no longer res integra and stands concluded by the express provisions of the first proviso to section 149 of the Act, inserted by the Finance Act, 2021, as well as by the authoritative pronouncements of the Hon'ble Supreme Court. The first proviso to section 149 categorically stipulates that no notice u/s. 148 shall be issued at any time in a case pertaining to an assessment year beginning on or before 01.04.2021 if such notice could not have been issued on account of being beyond the time limit prescribed under clause (b) of sub- section (1) of section 149, as it stood immediately prior to the commencement of the Finance Act, 2021.The legislative intent is thus manifest. Where the limitation prescribed under the erstwhile provisions had already expired, the amended regime does not

ITA No. 1333/Chny/2026 (AY 2015-16) Sundararaghavan Vs ITO, NCW-17(7) :: 7 :: authorize the revival of a proceeding that had become barred by time. The substituted provisions cannot be invoked to resurrect a jurisdiction which stood extinguished under the earlier statutory framework. 11. The aforesaid legal position now stands authoritatively settled by the Hon'ble Supreme Court in the case of The Income Tax Officer & Anr. vs. Sri Sai Kumar Mateti & Ors., Civil Appeal No. ___ of 2026 arising out of SLP (Civil) No. 8682 of 2024, order dated 04.05.2026. While dealing with a batch of reassessment matters, the Hon'ble Apex Court specifically recorded the concession of the Revenue that notices issued for A.Y. 2015-16 would be barred by limitation in view of the judgment rendered in Union of India & Ors. vs. Rajeev Bansal, 2024 SCC OnLine SC 2693. The Hon'ble Supreme Court further observed that, insofar as reassessment proceedings pertaining to A.Y. 2015-16 are concerned, the notices are liable to be struck down as time-barred and no further adjudicatory exercise would be necessary except to declare such notices invalid. The relevant observations of the Hon'ble Supreme Court are reproduced hereunder: O R D E R 1. Delay condoned. 2. Leave granted. 3. This batch of civil appeals comprising 103 cases is slightly different than those cases which came to be disposed of by a three Judge Bench of this Court, including both of us (Surya Kant, CJI. and Joymalya Bagchi, J.), vide order dated 10.04.2026 passed in Civil Appeal No. 4716 of 2026 and connected matters. 4. The instant cases were segregated through the above-mentioned order on the premise that they may be pertaining to Assessment Year 2015-16. It is fairly conceded by Mr. N. Venkataraman, ld. Additional Solicitor General of India, representing the Revenue, that in the assessment cases pertaining to the year 2015-16, the notices issued/proposed to be issued for reassessment would stand barred by time in light of the view taken by this Court in Union of India & Ors. v. Rajeev Bansal, 2024 SCC OnLine SC 2693.

ITA No. 1333/Chny/2026 (AY 2015-16) Sundararaghavan Vs ITO, NCW-17(7) :: 8 :: 5. There is no quarrel that if the instant cases are found to pertain to Assessment Year 2015-16, then the impugned notices are liable to be struck down outrightly in terms of the concession on behalf of the Department recorded in paragraph 19(f) of Rajeev Bansal (supra) and reiterated before us by the ld. Additional Solicitor General of India 6. However, if it is found that these cases pertain to an assessment year other than 2015-16, the respondent-assessees shall be entitled to raise all the contentions that have been permitted by this Court vide order dated 10.04.2026. Ordered accordingly. 7. Consequently, keeping in mind the reasons set out in order dated 10.04.2026, the impugned judgment in each appeal is set aside and the instant appeals are disposed of by remitting the matters to the jurisdictional High Courts for redetermination of the issues. As observed above, the High Courts shall firstly determine whether the matters pertain to Assessment Year 2015-16. If it is found to be so, no further adjudicatory exercise shall be required to be undertaken by the High Court, except to declare the notices as being time-barred in light of Rajeev Bansal (supra). However, if it is found that the case does not pertain to Assessment Year 2015 16, then all the issues shall be resolved in terms of the order dated 10.04.2026 passed in Civil Appeal No. 4716 of 2026. 8. Pending application(s), if any, including application(s) for substitution and impleadment/intervention stand closed. ..........................CJI. (SURYA KANT) ..........................J. (JOYMALYA BAGCHI) NEW DELHI; MAY 04, 2026.

12.

The legal position emerging from the aforesaid decisions of the Hon'ble Supreme Court admits to no ambiguity. In the present case, it is an undisputed fact that the assessment year involved is A.Y. 2015-16 and that the notice u/s. 148 of the Act was issued on 07.04.2022, i.e., after the expiry of the period of limitation on 31.03.2022 as prescribed under the erstwhile provisions of section 149 of the Act. Consequently, the impugned notice is clearly barred by limitation and, therefore, suffers from an inherent lack of jurisdiction.

ITA No. 1333/Chny/2026 (AY 2015-16) Sundararaghavan Vs ITO, NCW-17(7) :: 9 :: 13. Respectfully following the precedent laid down by the Hon'ble Supreme Court in Sri Sai Kumar Mateti & Others (supra) and Rajeev Bansal (supra), we hold that the notice issued u/s. 148 of the Act dated 07.04.2022 for A.Y. 2015-16 is invalid in law and void ab initio, having been issued beyond the period of limitation prescribed under the Act. The very assumption of jurisdiction by the Assessing Officer u/s. 147 of the Act is, therefore, unsustainable and without the authority of law. As a necessary consequence, all proceedings initiated pursuant to such invalid notice, including the reassessment order dated 26.02.2024 passed u/s. 147 read with section 144 of the Act, stand vitiated and are accordingly quashed. 14. Having annulled the reassessment proceedings on the preliminary jurisdictional issue, any adjudication on the merits of the additions made therein would be merely academic and devoid of practical consequence. 15. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on the 08th day of June 2026, in Chennai

Sd/- Sd/- (प�ावती एस) (मनु कुमार िग#र) (PADMAVATHY S) (MANU KUMAR GIRI) लेखा सद$या/ACCOUNTANT MEMBER %या�यक सद$य/JUDICIAL MEMBER

चे%नई/Chennai, 'दनांक/Dated: 08th June, 2026. SNDP, Sr. PS

ITA No. 1333/Chny/2026 (AY 2015-16) Sundararaghavan Vs ITO, NCW-17(7) :: 10 ::

आदेश क� ��त(ल)प अ*े)षत/Copy to: 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकरआयु�/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय�ितिनिध/DR 5. गाड�फाईल/GF

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