INCOME TAX OFFICER, WARD-1(3), JAIPUR, STATUE CIRCLE vs. MAYANK KHANDELWAL, JHOTWARA, JAIPUR

IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, “SMC” BENCH, JAIPUR BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER & SHRI KULDIP SINGH, JUDICIAL MEMBER ITA No. 381/JPR/2026 (Assessment Year:2019-20) ITO Vs. Mayank Khandelwal Ward 1(3) 1(B) Gulab Bari Kamani Jaipur Road Johtwara Jaipur �थायीलेखासं./जीआइआरसं./PAN/GIR No:BLMPK 8222 N Appellant .. Respondent CO No. 09/JPR/2026 (Arising out of ITA No. 381/JPR/2026 (Assessment Year: 2019-20)

Mayank Khandelwal Vs. ITO 1(B) Gulab Bari Kamani Ward 1(3) Road Johtwara Jaipur Jaipur �थायीलेखासं./जीआइआरसं./PAN/GIR No: BLMPK 8222 N Appellant .. Respondent Assessee by : Sh.Ashok Kumar Gupta, Adv. & Sh. Puneet Pareek, Adv. Department by : Ms. Aarti Rawat, Addl. CIT Date of Hearing 17.08.2026 Date of Pronouncement 25.08.2026

P a g e | 2 ITA No. 381/JPR/2026 & CO No.09/JPR/2026 Mayank Khandelwal O R D E R Per Annapurna Gupta, AM:- The present appeal has been filed by the Revenue and the cross- objection has been filed by the assessee against the order passed by National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as “Ld. CIT(A)”) dated 29.12.2025 under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”). 2. Brief facts relating to the case are that, the case of the assessee was reopened on the basis of information with the Department that the assessee had claimed deduction u/s 80GGC of the Actof an alleged bogus political donation amounting to Rs.1,00,000/-. Subsequently assessment order was passed u/s 147 of the Act disallowing the claim of donation made by the assessee. The Ld. CIT(A) deleted the addition made by the AO allowing the legal ground raised by the assessee that the order passed was barred by limitation in terms of Section 149(1) of the Act. 3. Aggrieved by the same, the Revenue has come up in appeal before us and the assessee has filed cross-objection to the same. The assessee has raised a legal ground contending that the assessment order passed was barred by limitation for a different reason. The said ground is raised in ground No.1 of the assessee’s cross objection as under:- 1. Ground 1. Whether on facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in holding that the notice issued under section 148 dated 12.04.2023 was barred by limitation, by incorrectly ignoring the fifth and sixth provisos to section

P a g e | 3 ITA No. 381/JPR/2026 & CO No.09/JPR/2026 Mayank Khandelwal 149, which mandate exclusion of time allowed under section 148A(b) and statutory extension of limitation. 4. Since it is a legal ground raised by the assessee, we shall be first dealing with the same. 5. Ld. Counsel for the assessee pointed out at the outset that in the facts of the present case reopening was resorted to on the basis of information with the AO that the assessee had wrongly claimed deduction u/s 80GGC of the Act for a bogus political donation made of Rs.1 lacs. The information was revealed from a search action conducted on Recognised Unregistered Political Parties (RUPP’s) by the Investigation Wing of the Department. He stated that the AO reopened the case of the assessee issuing notice u/s 148 of the Act after following the procedure prescribed u/s 148A of the Act. The notice u/s 148 of the Act was issued on 12.04.2023. The Ld. CIT(A) found the same being issued beyond three years and noting the income escaping assessment to be less than Rs. 50 lacs, he held the notice issued u/s 148 of the Act to be barred by limitation as per section 149 of the Act. 6. De hors the aforesaid finding of the Ld. CIT(A), ld. Counsel for the assessee contended that even on another basis the impugned notice u/s 148 of the Act was barred by limitation. He contended that the procedure followed by the AO as prescribed u/s 148A of the Act, for issuing notice u/s 148 of the Act, was not that prescribed in law. That therefore the notice issued u/s 148 of the Act was to be considered on stand alone basis ignoring all the other notices issued as per section 148A of the Act. And admittedly the said notice was issued beyond the

P a g e | 4 ITA No. 381/JPR/2026 & CO No.09/JPR/2026 Mayank Khandelwal period of three years prescribed u/s 149 of the Act for incomes escaping assessment less than 50 Lacs. 7. He drew our attention to the applicable provisions of law, drawing our attention first to section 149(1)(a) of the Act pointing out therefrom that the reopening in the impugned case could have been resorted only upto three years from the end of the relevant assessment year since the income escaping assessment was less than Rs.50 lakhs. He drew our attention to Section 149(1)(a) and (b) of the Act in this regard as under:- ………………… 149. Time limit for notice.- (1) No notice under section 148 shall be issued for the relevant assessment year,-

(a) if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b); (b) if three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income chargeable to tax, represented in the form of- (1) an asset; (ii) expenditure in respect of a transaction or in relation to an event or occasion, or (iii) an entry or entries in the books of account, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more: ………….. 8. Thereafter he pointed out the facts of the present case, that the information relating to the escapement of the income of the assessee had emanated during the course of search action in the case of

P a g e | 5 ITA No. 381/JPR/2026 & CO No.09/JPR/2026 Mayank Khandelwal Registered Unrecognised Political Party (RUPPs) Group of Ahmedabad on 07.09.2022. He drew our attention to para 1 to 3 of the assessment order recording the said facts as under: 1. Reasons for selection of the Case and Type of Case and background facts:- In case of the assessee, specific information was flagged as per Risk Management Strategy formulated by the CBDT through Insight Portal under head 'High Risk CRIU/VRU Cases' for A.Y. 2019-20. The information has been received on the basis of the search u/s 132 of the Act, in the case of RUPPs group of Ahmadabad on 07.09.2022. In this search, a total of 23 Registered Unrecognized Political Parties, 35 bogus intermediary entities and 3 major exit providers were covered which was combined called as RUPP group of Ahmadabad. The 23 RUPPs, inter alia, covered in the action are as hereunder:

P a g e | 6 ITA No. 381/JPR/2026 & CO No.09/JPR/2026 Mayank Khandelwal

Accordingly, Order u/s 148A(d) of the Act has been passed on 12.04.2023 and subsequently Notice u/s 148 of the Act issued and served upon the assessee on 12.04.2023. The assessee, MAYANK KHANDELWA, (PAN: BLMPK8222N) is an

P a g e | 7 ITA No. 381/JPR/2026 & CO No.09/JPR/2026 Mayank Khandelwal individual, has filed his return of income on 11.05.2023 in compliance with notice u/s 148 of the Act, admitting a total income of Rs.9,20,610/-. 2. Details of opportunities given

P a g e | 8 ITA No. 381/JPR/2026 & CO No.09/JPR/2026 Mayank Khandelwal

(a) conduct any enquiry, if required, with the prior approval of specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment;

(b) provide an opportunity of being heard to the assessee, by serving upon him a notice to show cause within such time, as may be specified in the notice, being not less than seven days and but not exceeding thirty days from the date on which such note is issued, or such time, as may be extended by him on the basis of an application this behalf, as to why a notice under section 148 should not be issued on the basis of information which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year and results of enquiry conducted if any, as per clause (a);

(c) consider the reply of assessee furnished, if any, in response to the show-cause note referred to in clause (b); the Assessing Officer has received information under the scheme notified under section 135A.

Explanation-For the purposes of this section and section 148, "specified authority" means the specified authority referred to in section 151.

(d) decide, on the basis of material available on record including reply of the assessee, whether or not it is a fit case to issue a notice under section 148, by passing an order, with the prior approval of specified authority, within one month from the end of the month in which the reply referred to in clause (c) is received by him, or where no such reply is furnished, within one month from the end of the month in which time or extended time allowed to furnish a reply as per clause (b) expires:

Provided that the provisions of this section shall not apply in a case where,-

(a) a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A in the case of the assessee on or after the 1st day of April, 2021; or

(b) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any money, bullion, jewellery or other valuable article or thing, seized in a search under section 132 or requisitioned

P a g e | 9 ITA No. 381/JPR/2026 & CO No.09/JPR/2026 Mayank Khandelwal under section 132A, in the case of any other person on or after the 1st day of April, 2021, belongs to the assessee, oг (c) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any books of account or documents, seized in a search under section 132 or requisitioned under section 132A, in case of any other person on or after the 1st day of April, 2021, pertains or pertain to, or any information contained therein, relate to, the assessee; or (d) the Assessing Officer has received any information under the scheme notified under section 135A pertaining to income chargeable to tax escaping assessment for any assessment year in the case of the assessee. Explanation. For the purposes of this section, specified authority means the specified authority referred to in section 151." …………

P a g e | 10 ITA No. 381/JPR/2026 & CO No.09/JPR/2026 Mayank Khandelwal proposition of law applicable for the impugned year, that reopening of cases by issuing notices u/s 148 of the Act on the basis of information procured during search were not required to follow the procedure prescribed u/s 148A of the Act. She also was unable to controvert the fact before us that in the present case the AO had followed the procedure prescribed u/s 148A of the Act and also the fact that the notice issued u/s 148 of the Act was beyond the prescribed period of three years from the end of the relevant assessment year. She admitted to the fact that the income escaping assessment in the present case was less than 50 lacs, being Rs.1 lacs. She was also unable to controvert the law of limitation applicable to reopening of cases u/s 149 of the Act, that for income escaping assessment less than Rs.50 lacs, reopening could not be resorted to beyond three years from the end of the relevant assessment year. 12. In effect, Ld. DR was unable to controvert both the facts of the case and the law applicable and it is abundantly clear therefore that in the facts of the present case where reopening was resorted to on the basis of information procured during search conducted on a third party, the procedure for reopening the case as prescribed u/s 148A of the Act was wrongly followed by the AO. That the notice issued u/s 148 of the Act by the AO by following the procedure u/s 148A of the Act therefore was to be considered on a standalone basis, de hors the earlier notices issued u/s 148A of the Act. That considering so, the notice issued u/s 148 of the Act on 12.04.2023 was beyond three years from the end of the relevant assessment year i.e. AY 2019-20. The income

P a g e | 11 ITA No. 381/JPR/2026 & CO No.09/JPR/2026 Mayank Khandelwal escaping assessment being less than Rs. 50 lacs i.e. Rs. 1 lac, undoubtedly, the notice u/s 148 of the Act, being the jurisdictional notice for framing assessment u/s 147 of the Act, was issued beyond the period prescribed u/s 149(1)(a) of the Act. 13. In the light of the above, we have no hesitation in holding that the jurisdiction assumed by the AO to frame assessment u/s 147 of the Act was not as per law and was invalid. The assessment order passed by the AO therefore was not sustainable in law. The ground of appeal raised by the assessee in its cross-objection accordingly is allowed. 14. Since we have allowed the legal ground raised by the assessee in its cross objection and held the assessment order to be invalidly passed, the grounds raised by the Department, are not being adjudicated since they are mere academic in nature. 15. In the combined result, the appeal filed by the Revenue is dismissed and the CO filed by the assessee is allowed. Order pronounced in the Open Court on 25.08.2026.

Sd/- Sd/- (Kuldip Singh) (Annapurna Gupta) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated 25.08.2026 Mittali, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent

P a g e | 12 ITA No. 381/JPR/2026 & CO No.09/JPR/2026 Mayank Khandelwal 3. CIT 4. CIT(Appeals) 5. DR: ITAT By Order, Asst. Registrar ITAT, Jaipur