SUBRAMANI MOORTHY,DHARMAPURI vs. ITO, WARD-1(6), SALEM

The brief facts of the case, as borne out from the material available on record, are that the assessee is an individual and had not filed his return of income for the assessment year under consideration. Information received by the Department revealed that the assessee had deposited cash aggregating to Rs.2,09,00,000/- in his bank account and had also received contract receipts amounting to Rs.47,32,845/- during the relevant previous year.

Based on the aforesaid information, proceedings for reassessment were initiated by issuance of a show-cause notice u/s.148A(b) of the Act on 28.03.2022. Thereafter, an order u/s.148A(d) of the Act was passed on 21.04.2022 and, consequently, notice u/s.148 of the Act was also issued on the same date. In response thereto, the assessee filed his return of income declaring a total income of Rs.5,57,170/-, wherein contract receipts of Rs.49,60,038/- received from L&T were duly disclosed.

During the course of reassessment proceedings, the AO observed that no addition was called for in respect of the contract receipts of Rs.47,32,845/- reflected in Form No.26AS, as the same had already been offered to tax by the assessee in the return of income filed in response to the notice issued u/s.148 of the Act. However, with regard to the cash deposits aggregating to Rs.2,09,00,000/- made in the bank account of the assessee, the AO was not satisfied with the explanation furnished by the assessee. Accordingly, the AO treated the said amount as unexplained money u/s.69A of the Act and made an addition of Rs.2,09,00,000/- to the income of the assessee.

Consequently, the assessment was completed u/s.147 of the Act vide order dated 19.03.2024, determining the total income of the assessee at Rs.2,14,57,170/-.

Being aggrieved by the assessment order, particularly the addition of Rs.2,09,00,000/- made u/s.69A of the Act, the assessee preferred an appeal before the Ld.CIT(A).

The Ld.CIT(A), vide the impugned appellate order dated 21.12.2025, dismissed the appeal of the assessee and upheld the action of the AO in treating the cash deposits of Rs.2,09,00,000/- as unexplained money u/s.69A of the Act.

Still aggrieved, the assessee is now in further appeal before the Tribunal.

At the very outset, the assessee sought to urge an additional ground of appeal assailing the validity of the reassessment proceedings on the ground that the reopening was barred by limitation. The additional ground raised by the assessee reads as under:–

The Ld.AR vehemently assailed the validity of the reassessment proceedings initiated u/s.147 of the Act, contending that the assumption of jurisdiction by the AO is wholly without authority of law and consequently the entire reassessment proceedings are liable to be quashed as void ab initio. It was submitted that the notice issued u/s.148 of the Act dated 21.04.2022 is ex facie barred by limitation and, therefore, incapable of conferring jurisdiction upon the AO to reopen the completed assessment.

The Ld.AR submitted that insofar as A.Y.2015-16 is concerned, the period of limitation prescribed under the erstwhile provisions of section 149(1) of the Act, as it stood prior to its substitution by the Finance Act, 2021, expired on 31.03.2022. Admittedly, the impugned notice under section 148 came to be issued only on 21.04.2022, i.e., after the expiry of the limitation period available under the unamended provisions of the Act. It was argued that the Revenue cannot derive any assistance from the amended provisions introduced by the Finance Act, 2021, inasmuch as the first proviso to section 149 expressly protects cases where the limitation had already expired under the erstwhile regime. According to the Ld. AR, once the right of the Revenue to issue a notice u/s.148 of the Act stood extinguished on 31.03.2022, the same could not be revived by virtue of the amended provisions. Therefore, the notice dated 21.04.2022 being hopelessly time-barred is invalid in law and all consequential proceedings culminating in the reassessment order are liable to be annulled. In support of the aforesaid proposition, reliance was placed on the order of the Co- ordinate Bench of this Tribunal in ITA No.3188/Chny/2025 dated 27.01.2026.

Per contra, the Ld.DR strongly supported the orders of the lower authorities and submitted that the notice issued u/s.148 of the Act on 21.04.2022 is protected by the amended provisions of section 149 of the Act. It was contended that the reassessment proceedings have been initiated within

We have heard the rival submissions, perused the orders of the authorities below and carefully examined the material available on record. We have also considered the judicial precedents cited before us.

At the outset, we find considerable merit in the preliminary legal ground raised by the assessee challenging the very assumption of jurisdiction under sections 147/148 of the Act. The factual matrix is not in dispute. The assessment year involved is A.Y.2015-16. It is an admitted position that under the erstwhile provisions of section 149 of the Act, the limitation available to the Revenue for issuance of notice u/s.148 of the Act expired on 31.03.2022. Equally undisputed is the fact that the impugned notice u/s.148 of the Act was issued only on 21.04.2022.

In our considered view, the controversy is no longer res integra and stands concluded by the provisions of 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 of the Act specifically provides that no notice u/s.148 of the Act shall be issued at any time in a case for the relevant 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 the provisions of clause (b) of sub-section (1) of section 149, as they stood immediately before the commencement of the Finance Act, 2021. Thus, where the limitation under the erstwhile provisions had already expired, the amended regime does not permit revival of a dead or barred proceeding. The legislative intent is explicit that the substituted provisions cannot be invoked to breathe life into proceedings that had already become time-barred under the old law.

The aforesaid legal position now stands conclusively 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. The Hon'ble Apex Court, while dealing with a batch of cases relating to reassessment notices, categorically recorded the concession of the Revenue that notices pertaining to 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 held that wherever the reassessment proceedings pertain to A.Y.2015- 16, the notices are liable to be struck down outrightly as being time-barred and no further adjudicatory exercise would be required except to declare such notices as invalid. The relevant observations of the Hon'ble Supreme Court read as under:

Respectfully following the binding dicta of 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 21.04.2022 for A.Y. 2015-16 is invalid and void ab initio, having been issued beyond the period of limitation prescribed under law. Consequently, the assumption of jurisdiction by the AO u/s.147 of the Act is held to be without authority of law. As a natural corollary, the reassessment proceedings initiated in pursuance of such invalid notice, including the impugned reassessment order dated 19.03.2024 passed u/s.147 of the Act, cannot be sustained and are hereby quashed.

Since we have annulled the reassessment proceedings on the preliminary jurisdictional issue itself, which goes to the very root of the matter, the other grounds raised by the assessee challenging the

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