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

आदेश / O R D E R

PER MANU KUMAR GIRI, JM:

The captioned appeal is filed by the assessee challenging the order dated 18.11.2024 passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [“Ld. CIT(A)”], arising out of the assessment order dated 26.01.2024 passed by the Assessing Officer, Assessment Unit, National Faceless Assessment Centre [“AO”] u/s. 147 read with section 144 of the Income-tax Act, 1961 (“the Act”) for Assessment Year (“AY”) 2015-16.

ITA No. 1334/Chny/2026 (AY 2015-16) Sundararaghavan Swapna Vs ITO, NCW-17(7) :: 2 :: 2. At the outset, it is noticed that the present appeal has been filed with a delay of 401 days. We have carefully considered the petition seeking condonation of delay, together with the affidavit filed by the assessee, we find thatthere was sufficient cause for delay in filing appeal, hence condone the delay and admit the appeal for adjudication. 3. Briefly stated, the assessee is an individual. For AY 2015-16, no return of income was filed u/s. 139(1) of the Act. Subsequently, information was received by the Income-tax Department through the Risk Management Strategy developed by the Central Board of Direct Taxes (CBDT), indicating that during Financial Year 2014-15, relevant to AY 2015-16, the assessee had undertaken certain high- value transactions. The information revealed that the assessee had purchased immovable property valued at Rs.1,44,85,000/-, sold immovable property valued at Rs.30,00,000/-, and sold equity shares through recognised stock exchanges amounting to Rs.14,60,707/-. Since no return of income had been filed, proceedings u/s. 148A of the Act were initiated.A show-cause notice u/s. 148A(b) was issued to the assessee. As recorded by the AO, no response was received. Consequently, an order u/s. 148A(d) dated 06.04.2022 was passed holding that income chargeable to tax had escaped assessment and that the case was fit for issuance of notice u/s. 148. Thereafter, notice u/s. 148 dated 07.04.2022 was issued requiring the assessee to furnish a return of income for the relevant assessment year.The assessment records indicate that several statutory notices and communications, including notices u/s. 142(1), reminder notices, centralised communications, and show- cause notices issued u/s. 144B(1)(ix), were served by the National Faceless Assessment Centre (NaFAC). According to the AO, the

ITA No. 1334/Chny/2026 (AY 2015-16) Sundararaghavan Swapna Vs ITO, NCW-17(7) :: 3 :: assessee neither complied with the notices nor furnished a return of income in response to the notice u/s. 148. Accordingly, the assessment proceedings were completed ex parte u/s. 144 of the Act.During the course of assessment, the AO undertook verification of the property transactions through the Designated Verification Unit (DVU) and by issuing notices u/s. 133(6) to the concerned Sub- Registrar Offices. The verification report disclosed that the assessee had purchased a residential flat bearing Door No.10, “Sri Ramabhavan”, Abhiramapuram Third Street, Chennai, through a registered sale deed dated 27.08.2014. The property carried a stamp duty value of Rs.1,44,85,000/-, whereas the sale consideration recorded in the deed was Rs.1,10,00,000/-. It was further observed that out of the total consideration, Rs.50,00,000/- had been financed through a housing loan obtained from DHFL and the balance amount of Rs.60,00,000/- had been paid through banking channels. Since no explanation regarding the source of the said amount was available on record, the AO treated Rs.60,00,000/- as unexplained investment u/s. 69 of the Act.The AO further observed that the difference between the stamp duty value of Rs.1,44,85,000/- and the purchase consideration of Rs.1,10,00,000/- amounted to Rs.34,85,000/-. Invoking section 56(2)(x), the AO treated the differential amount as taxable income under the head “Income from Other Sources”.The AO also noted from information available on the Insight Portal that the assessee had sold equity shares through recognised stock exchanges for a total consideration of Rs.14,60,707/- during the relevant previous year. Since no return of income had been filed and no explanation was furnished, the AO treated the entire amount as taxable Short- Term Capital Gain.Accordingly, the AO completed the assessment

ITA No. 1334/Chny/2026 (AY 2015-16) Sundararaghavan Swapna Vs ITO, NCW-17(7) :: 4 :: u/s. 147 read with section 144 vide order dated 26.01.2024, determining the assessee’s total income at Rs.1,09,45,707/-, comprising: (i) Rs.60,00,000/- added u/s. 69 as unexplained investment; (ii) Rs.34,85,000/- added u/s. 56(2)(x) towards the difference between the stamp duty value and the purchase consideration of the property; and (iii) Rs.14,60,707/- assessed as Short-Term Capital Gain. 4. Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A). The assessee challenged the validity of the reassessment proceedings, the ex parte nature of the assessment, and the additions made by the AO. It was contended that the notices issued during the reassessment proceedings had been sent to an inactive email address belonging to the auditor, which had originally been created only for filing income-tax returns. Consequently, the assessee remained unaware of the proceedings and was unable to participate in the assessment. It was further contended that the property had, in fact, been purchased by the assessee’s spouse and that the assessee’s name was included merely for convenience and family reasons. The additions made u/s.s 69 and 56(2)(x), as well as the treatment of the share transactions, were also disputed on merits.The appeal before the Ld. CIT(A) was filed with a delay of 30 days. The assessee explained that the assessment order had likewise been served on the inactive email address and that knowledge of the assessment proceedings was obtained only upon receipt of communication relating to penalty proceedings. Being satisfied with the explanation, the Ld. CIT(A) condoned the delay and admitted the appeal.During the appellate proceedings, the assessee requested that the assessment order be set aside and the matter remanded to the AO for fresh adjudication

ITA No. 1334/Chny/2026 (AY 2015-16) Sundararaghavan Swapna Vs ITO, NCW-17(7) :: 5 :: in accordance with the principles of natural justice and the first proviso to section 251(1)(a) of the Act. After considering the submissions and noting that the assessment had been completed u/s. 144 owing to non-compliance, the Ld. CIT(A) accepted the explanation furnished regarding the assessee’s non-participation in the assessment proceedings. Accordingly, exercising powers u/s. 251(1)(a), the Ld. CIT(A), by order dated 18.11.2024, set aside the assessment and restored the matter to the file of the AO with directions to frame a fresh assessment after granting adequate opportunity of hearing and considering all relevant evidence and submissions. The appeal was thus allowed for statistical purposes. 5. Dissatisfied with the order of the Ld. CIT(A), the assessee has preferred the present appeal before the Tribunal.At the outset of the hearing, the assessee sought to raise a ground challenging the validity of the reassessment proceedings on the basis that the reopening of the assessment was barred by limitation. The additional ground raised by the assessee reads as follows: That the Ld. Commissioner of Income Tax (Appeals), NFAC, Delhi [“Ld.CIT(A)”] erred in not appreciating that the assessment order dated 26.01.2024 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. 6. The Ld. Authorised Representative (Ld. AR) assailed the validity of the reassessment proceedings initiated u/s. 147 of the Act, contending that the Assessing Officer (AO) lacked jurisdiction to reopen the assessment and that the entire proceedings were

ITA No. 1334/Chny/2026 (AY 2015-16) Sundararaghavan Swapna Vs ITO, NCW-17(7) :: 6 :: therefore void ab initio. It was submitted that the notice issued u/s. 148 of the Act on 07.04.2022 was ex facie barred by limitation and consequently incapable of conferring valid jurisdiction upon the AO.Elaborating on the contention, the Ld. AR submitted that in respect of Assessment Year (AY) 2015-16, the period of limitation prescribed under the unamended provisions of section 149(1) of the Act, as they existed 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., after the expiry of the limitation period available under the erstwhile regime. According to the Ld. AR, the Revenue cannot seek support from the amended provisions introduced by the Finance Act, 2021, since the first proviso to section 149 expressly safeguards cases where the limitation had already expired under the pre-amended law. It was argued that once the Revenue's right to issue notice u/s. 148 stood extinguished on 31.03.2022, such right could not be revived through the substituted provisions. Consequently, the notice dated 07.04.2022 being barred by limitation is invalid in law and all proceedings undertaken pursuant thereto, including the reassessment order, are liable to be quashed. Reliance in support of this proposition was placed on the decision of the Co-ordinate Bench of this Tribunal in ITA No.3188/Chny/2025 dated 27.01.2026. 7. Per contra, the Ld. Departmental Representative (Ld. DR) supported the orders passed by the lower authorities and contended that the notice issued u/s. 148 on 07.04.2022 is saved by the amended provisions of section 149 of the Act. It was submitted that the reassessment proceedings were initiated in accordance with the substituted statutory framework and, therefore, cannot be regarded as barred by limitation. The Ld. DR accordingly urged that the

ITA No. 1334/Chny/2026 (AY 2015-16) Sundararaghavan Swapna Vs ITO, NCW-17(7) :: 7 :: reassessment proceedings are legally valid and that the ground raised by the assessee deserves to be dismissed. 8. We have carefully considered the rival submissions, perused the orders of the authorities below, and examined the material placed on record. We have also taken into account the judicial precedents relied upon by both parties.Upon due consideration of the matter, we find substantial force in the preliminary legal challenge raised by the assessee regarding the assumption of jurisdiction u/s.s 147 and 148 of the Act. The relevant facts are undisputed. The assessment year involved is AY 2015-16. It is an admitted position that under the erstwhile provisions of section 149, the limitation available to the Revenue for issuance of notice u/s. 148 expired on 31.03.2022. It is equally undisputed that the impugned notice came to be issued only on 07.04.2022.In our considered opinion, the issue is no longer res integra and stands settled by the first proviso to section 149 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 expressly stipulates that no notice u/s. 148 shall be issued for any assessment year beginning on or before 01.04.2021 if such notice could not have been issued on account of being barred by the time limits 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 statutory mandate thus makes it abundantly clear that where the limitation period under the erstwhile provisions had already expired, the amended regime does not permit the revival of proceedings that had become barred by time. The legislative intent is explicit that the substituted provisions cannot be invoked to resurrect a right that had already lapsed under the pre-existing law.

ITA No. 1334/Chny/2026 (AY 2015-16) Sundararaghavan Swapna Vs ITO, NCW-17(7) :: 8 :: 9. The aforesaid legal position now stands conclusively affirmed by the Hon’ble Supreme Court in The Income Tax Officer & Anr. v. 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 recorded the concession made on behalf of the Revenue that notices pertaining to AY 2015-16 would be barred by limitation in view of the judgment in Union of India & Ors. v. Rajeev Bansal, 2024 SCC OnLine SC 2693. The Hon’ble Supreme Court further observed that, insofar as reassessment proceedings relating to AY 2015-16 are concerned, the notices are liable to be struck down as being time- barred and no further adjudicatory exercise is required 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. 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

ITA No. 1334/Chny/2026 (AY 2015-16) Sundararaghavan Swapna Vs ITO, NCW-17(7) :: 9 :: 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.

ITA No. 1334/Chny/2026 (AY 2015-16) Sundararaghavan Swapna Vs ITO, NCW-17(7) :: 10 :: 26.01.2024 passed u/s.147 r.w.s 144 of the Act, cannot be sustained and are hereby quashed. 12. Since we have annulled the reassessment proceedings on the preliminary jurisdictional issue itself, any examination of the merits of the additions would be purely academic and would not have any practical consequence. 13. In the result, the appeal of the assessee stands 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

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