SHAILESH KANTILAL JAIN,MUMBAI vs. DCIT CIRCLE 19(3),MUMBAI , PIRAMAL CHAMBERS,MUMBAI

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ITA 8851/MUM/2025Status: DisposedITAT Mumbai05 May 2026AY 2014-20156 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 found that the notice under Section 148 was indeed issued beyond the permissible time limit. Consequently, all subsequent actions taken in the reassessment proceedings were deemed void ab initio.

What were the facts?

The assessee's assessment for AY 2014-15 was reopened by a notice under Section 148 dated 29.07.2022. The assessee contended that this notice was issued beyond the time limits prescribed by Section 149 of the IT Act, as interpreted by Supreme Court judgments.

What were the issues?

The primary issue was whether the reopening of assessment under Section 148 was time-barred. The validity of the reassessment proceedings hinged on the timeliness of the Section 148 notice.

Which sections of the Income-tax Act were involved?

Section 148,Section 149,Section 147,Section 69A,Section 115BBE,Section 271(1)(c)

AI-generated summary — verify with the full judgment below

PER PAWAN SINGH, JUDICIAL MEMBER:

1.

This appeal by assessee is directed against the order of National Faceless

Appeal Centre New Delhi [NFAC/ ld CIT(A)] 21.10.2025 for assessment

year (AY) 2014-15. The assessee has raised following grounds of appeal:

“1. The Learned Commissioner of Income-tax (Appeals), NFAC has erred in confirming the re-opening of the assessment for Assessment year 2014- 2015 which was re-opened based on Notice dated 29/07/2022 u/s 148 of the IT.Act, 1961 and served on the Appellant on or about 29/07/2022 after the expiry of period of Four years from the end of the Assessment year i.c. after 31/03/2019 or after expiry of Six years from the end of assessment year i.e. 31/03/2021 as provided u/s. 149 of the Act.

Jurisdictional & Procedural Grounds

(a) Invalid Reopening by Jurisdictional AO Instead of FAO * The Learned Income-tax Officer erred in violating reopening of assessment, initiated by the Jurisdictional Assessing Officer (JAO) despite the case being under the Faceless Assessment Scheme, thus violating CBDT's Notification No. S.O. 1436(E) dated 13.08.2020 and subsequent instructions mandating that reopening and reassessment proceedings be conducted by the Faceless Assessment Unit (FAU).

* The entire reassessment process is vitiated due to lack of jurisdiction and procedural irregularity.

(b) Reopening Time-Barred Under Section 149(1)(b)of the IT Act 1961:

The Learned Income-tax Office erred in issuing notice under Section 148 dated 29.07.2022 pertains to AY 2014-15. As per Section 149(1)(b) of The IT Act 1961, the time limit for issuing such notice is six years from the end of the relevant assessment year, i.e., on or before 31.03.2021.

The notice was issued after the permissible time limit, and no exception under the amended law or proviso to Section 147 applies. Hence, the reassessment is time-barred and void ab initio.

(c) Mechanical Reopening Under Section 147 of The IT Act 1961:

* The reopening was based on borrowed satisfaction from investigation wing reports without independent application of mind.

* No fresh tangible material was brought on record to justify reopening

2) The Learned Commissioner of Income-tax (Appeals) has erred in confirming the Order of Income-tax Officer for A.Y. 2014-15 on the ground which wherein it was specifically mentioned that the addition of Rs. 3,72,24,400/- was declared as Income u/s. 183 of the Finance Act 2016 and in respect of which the Certificate of Declaration under section 183 of the Finance Act 2016 in respect of the Income Declaration Scheme 2016 received on 09/06/2023 (Form No.4 of IDS 2016) which was also filed before CIT(A).

Substantive Grounds on Additions

(a) Addition of 23,72,24,409/- already Declared Under IDS 2016:

* The appellant had declared Income of ₹3,54,91,520/- after claiming deduction of cost of shares sold under the Income Declaration Scheme (IDS) 2016, which was accepted by Pr. CIT, Mumbai and thereafter Form 4 was issued on 09.06.2023 accepting the Income declared and paid Taxes thereon.

* The addition of this amount again in the reassessment proceedings results in double taxation and violates the sanctity of IDS declarations under Section 183 of the Finance Act, 2016. The Order passed u/s. 147 has already been rectified by ACIT- 19(3), Mumbai vide Order u/s. 154 dated 27/06/2023.

3.

Disallowance of Cost of Acquisition is Arbitrary:

The AO erred in disallowing 215,00,000/- as cost of acquisition of shares of Grandma Trading & Agencies Ltd, paid through banking channel despite submission of:

• Demat statements • Broker contract notes • Ledger and bank statements

Order for Assessment Year 2013-14, wherein the Income-tax Officer has considered the claim and allowed it.

* The cost is a legitimate deduction under Section 48 and its denial is unjustified.

4) Disallowance of Sale-Related Expenses is Unwarranted:

* The AO erred in not deducting 22,32,885/- towards cost of sale and purchase i.e. STT, brokerage, and other transaction charges. which were incurred through recognized stock exchange and supported by evidence.

* These are allowable deductions under Section 48 and their disallowance inflates taxable income.

* The entire expenditures were considered by the Assessing Officer for A.Y. 2013-14 and were allowed as deduction see the Order for A.Y. 2013-14. In any event it may not disallowed for A.Y. 2014-15 as the expenses were incurred in earlier year.

5) Incorrect Invocation of Section 69A of The IT Act 1961:

The CIT(A) erred in taxing the residual amount of 217.32,889/-under Section 69A of The IT Act 1961 without establishing that it represented unexplained money, the transaction having been routed through banking channels and disclosed in the return, Section 69A of The IT Act 1961 is inapplicable.

Legal & Equitable Grounds

Violation of Principles of Natural Justice:

* The AO failed to provide adequate opportunity to rebut the disallowance of cost and expenses post-rectification.

* No specific show cause was issued regarding denial of these deductions.

6) The Learned A.O. erred in Initiation of Penalty Under Section 271(1)(c) of the I.T. Act, 1961 being unwarranted as the income was disclosed, and the dispute pertains to computation methodology. not concealment.

7) Incorrect Application of Section 115BBE of The IT Act 1961:

* The AO applied Section 115BBE without establishing that the income was unexplained or undisclosed.

* The assessee had already disclosed the transaction in the return and under IDS.

8) The appellant reserves the right to add, amend, or withdraw any ground of appeal at the time of hearing.”

2.

Rival submissions of the parties have been heard and record perused. The

ld AR of the assessee submits that the case of assessee for assessment

year (AY) 2014-15 was reopened by issuing notice under section 148 on

22.07.2022, which is beyond the grace time period allowed as per the

decision of Hon’ble Supreme Court Rajeev Bansal (2024) 167

taxmann.com 70 SC, which was rendered after the decision in Union of

India Vs Ashish Agarwal (2022) 138 taxmann.com64 SC/ 444 ITR 1 SC.

The ld AR of the assessee also furnished the working of time period for

issuing fresh notice under section 148, which is extracted below;

1 Assessment Year 2014-15 2 Last date to issue notice u/s 148 as per old law 31.03.2021 3 Extended deadline as per TOLA 30.06.2021 4 Present 148 notice issue under old law 07.06.2021 5 Date of Hon’ble Supreme Court’s order in Ashish 04.05.2022 Agarwal 6 Date of issue of notice u/s 148A(b) in pursuance 25.05.2022 & to Ashish Agarwal in present cases 02.06.2022 7 Time limit to file the reply as per section 16.06.2022 148A(b) – 14 days 8 Reply filed by assessee No reply filed 9 Time excluded as per SC judgement in Rejeev 30.06.2021 to Bansal 16.06.2022 10 Time that was available / left to issue notice u/s 23 days 07.06.2021 to 148 as per TOLA limit 30.06.2021 11 Extended time limit as per fourth proviso to 7 days from section 149(1) 16.06.2022 i.e. 23.06.2022, If one goes by the date of filing the reply on 16.06.2022 12 Time limit to issue notice u’/s 148 as per section 16.07.2022 149 as amended by F.A. 2021 and as per Rajeev 23.06.2022 + 23 days Bansal 13 Order passed u/s 148A(d) 25.07.2022 14 Actual date of notice u/s 148 29.07.2022 3. On the basis of aforesaid working the ld AR of the assessee submits that

once, it is held that notice under section 148 is issued beyond time limit,

the entire proceedings will become void-ab-initio. And in case his primary

submission is accepted, other grounds of appeal will become academic.

4.

On the other hand, the ld Senior departmental representative (Sr DR) for

revenue submits that he supports the order of assessing officer.

5.

We have considered the submissions of both the parties and have gone

through the orders of lower authorities. On perusal of record, we find that

the working of time period available to the assessing officer is not in dispute. We find that the assessing officer could issue notice under section

148 only up to 16/07/2022. The assessing officer issued notice under

section 148 only on 29.07.2022, which is beyond the time period allowed

by Hon’ble Supreme Court. Hence, notice under section 148 is invalid,

therefore all subsequent action initiated thereto is void ab-initio. In the

result, the assessee succeeded on the primary submissions. Considering

the facts that the assessee succeeded on primary submissions, hence,

adjudication on other grounds of appeal have become academic.

6.

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

Order was pronounced on 05/05/2026 in the open Court.

Sd/- Sd/-

BIJAYANANDA PRUSETH PAWAN SINGH ACCOUNTANT MEMBER JUDICIAL MEMBER

MUMBAI, Dated: 05/05/2026 Biswajit Sr PS

Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Mumbai; and (5) Guard file. By Order

Assistant Registrar ITAT, Mumbai

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