RAMAMURTHY MUDIYANUR SITARAMAAVADHANY,KOLAR vs. INCOME TAX OFFICER, WARD -1, KOLAR , KOLAR

PER KESHAV DUBEY, JUDICIAL MEMBER:

These appeals at the instance of the assessee are directed against the order of ld. CIT(A)/NFAC both dated 24.10.2024 vide DIN & Order No. ITBA/NFAC/S/250/2024-25/1069923276(1) for the AY 2015-16 and vide DIN & Order No. ITBA/NFAC/S/250/2024-25/1069922922 (1) for the AY 2016-17 passed u/s 250 of the Income Tax Act, 1961 (“The Act”).These two appeals are clubbed together, heard together and disposed of by this common order for the sake of convenience & brevity.

ITA Nos.2515 & 2516/Bang/2024 Ramamurthy MudiyanurSitaramaavadhany, Kolar Page 2 of 31

ITA Nos.2515 & 2516/Bang/2024 Ramamurthy MudiyanurSitaramaavadhany, Kolar Page 3 of 31

3.1. The AO observed that during the year under consideration, the assessee had sold two immovable properties for sale consideration of Rs.2,78,80,000/- and Rs.1,55,30,300/-. The assessee had not filed original return of income for the year under consideration. The assessee only filed return of income in response to notice u/s 148 of the Act by declaring total income of Rs.235/- and claimed refund of Rs.1,55,303/- along with interest u/s 244A of the Act thereon. During the entire course of assessment

ITA Nos.2515 & 2516/Bang/2024 Ramamurthy MudiyanurSitaramaavadhany, Kolar Page 4 of 31 proceedings, the assessee remained silent and miserably failed to adduce any justification in respect of sale of immovable properties during the year under consideration. The AO observed that the assessee had also not brought anything on record towards purchase consideration of the immovable property sold during the year as claimed in the return. In absence of any explanation/evidences in respect of capital gains from sale of immovable property, the total sales consideration of Rs.4,34,10,300/- (Rs.2,78,80,000/- + Rs.1,55,30,300/-) received from sale of two immovable properties were considered as short term capital gains and accordingly added to the total income of the assessee for the year under consideration.Thus,the AO completed the assessment proceedings u/s 147 r.w.s. 144B of the Act on a total assessed income of Rs.4,34,10,535/-.

ITA Nos.2515 & 2516/Bang/2024 Ramamurthy MudiyanurSitaramaavadhany, Kolar Page 5 of 31 6. Aggrieved by the aforesaid order of ld. CIT(A)/NFAC dated 24.10.2024, the assessee has filed the present appeal before this Tribunal. Before us, the assessee has also filed two paper books comprising 96 & 195 pages respectively along with case laws relied upon by the assessee.

ITA Nos.2515 & 2516/Bang/2024 Ramamurthy MudiyanurSitaramaavadhany, Kolar Page 6 of 31 148 of the Act under the erstwhile section 149(1)(b) of the Act for the AY 2015-16 was 31.3.2022 (6 years from the end of the assessment year). Now it is apposite here to note down the chronological date of event for a better appreciation of the fact which are detailed below:-

Sl.No. Particulars Date Reference 1 Last date for issuing 31.3.2022 Not applicable notice u/s 148 of the Act under the erstwhile section 149(1)(b) of the Act for the AY 2015-16 2 Issuance of show cause 21.3.2022 Page 1-2 of the notice u/s 148A(b) of the PB dated Act 10.3.2026 3 Due dates/time provide 28.3.2022 Approval by to respond to the show specified cause notice issued u/s authority of 148A(b) of the Act PCCIT, Karnataka & Goa. Page 1 of the PB dated 10.3.2026 4 Date of order u/s 148A(d) 31.3.2022 Pages 3-6 of the of the Act PB dated 10.3.2026 5 Issuance of notice u/s 6.4.2022 Page 7 of PB 148 of the Act dated 10.3.2026

Thus, the core issue involved around whether the issuance of notice u/s 148 of the Act on 6.4.2022 for the AY 2015-16 falls within the permissible time limit or not?

9.1 Under the similar facts and circumstances as well as for the same assessment year 2015-16, this coordinate bench of Tribunal in the case of Raghavan Nambath Menon Vs. ITO in IT(IT)A No.278/Bang/2025 dated 6.2.2026 has held as under:

ITA Nos.2515 & 2516/Bang/2024 Ramamurthy MudiyanurSitaramaavadhany, Kolar Page 7 of 31 “7.3 Before proceeding further, it is apposite here to mention the relevant provisions of the Act as it stood then which are as follows- Time limit for notice. 149. (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 asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more for that year: Provided that no notice under section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before 1st day of April, 2021, if such notice could not have been issued at that time on account of being beyond the time limit specified under the provisions of clause(b) of sub-section (1) of this section, as they stood immediately before the commencement of the Finance Act, 2021: Provided further that the provisions of this sub-section shall not apply in case, where a notice under section 153A, or section 153C read with section 153A, is required to be issued in relation to a search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A, on or before the 31st day of March, 2021: Provided also that for the purposes of computing the period of limitation as per this section, the time or extended time allowed to the assessee, as per show-cause notice issued under clause(b) of section 148A or the period during which the proceeding under section 148A is stayed by an order or injunction of any court, shall be excluded: Provided also that where immediately after the exclusion of the period referred to in the immediately preceding proviso, the period of limitation available to the Assessing Officer for passing an order under clause (d) of section 148A is less than seven days, such remaining period shall be extended to seven days and the period of limitation under this sub-section shall be deemed to be extended accordingly. Explanation.- For the purposes of clause (b) of this sub-section, “asset” shall include immovable property, being land or building or both, shares and securities, loans and advances, deposits in bank account. 7.4 On going through the above provisions, we take note of the fact that for the AY 2015-16, the old 6 years limit expired on March 31, 2022. Therefore, the notices issued between 01/04/2021 and 31/03/2022, for escaped income of Rs.

ITA Nos.2515 & 2516/Bang/2024 Ramamurthy MudiyanurSitaramaavadhany, Kolar Page 8 of 31 50lakhs or more, could be valid if section 148A procedures were followed and the notice was not time-barred under the old law as of 31/03/2021. However, the notices issued after 31/03/2022, would generally be invalid as they would have become time-barred under the old law, failing the test of the first proviso to section 149(1) of the Act. Thus, the validity of the notice issued u/s 148 of the Act on April 19, 2022, for AY 2015-16, is primarily governed by the first proviso to the substituted Section 149(1) of the Act. This proviso stipulates that no notice under Section 148 shall be issued for an assessment year beginning on or before April 1, 2021, if such notice could not have been issued under the time limits of the old regime (pre-Finance Act, 2021). It is an undisputed fact that for AY 2015-16, the last date for issuing a notice under the old regime was March 31, 2022. Since the notice was issued on April 19, 2022, it was issued after this cut-off date, rendering it time-barred under the old law. Consequently, the first proviso to the amended Section 149(1) acts as a bar, making the notice invalid, irrespective of the procedural compliance with Section 148A of the Act. We are also of the opinion that the exclusion of time under the 3rd& 4th provisos to Section 149(1) of the Act for Section 148A proceedings does not revive a notice that was already time- barred under the old regime as per the first proviso. We are of the considered opinion that the extended time limits of the new regime do not apply at all if the old limitation period had already expired as on 31/03/2022 & therefore the exclusions under the 3rd& 4th provisos to Section 149(1) of the Act does not arise at all. Thus, under the unamended Section 149(1)(b) of the Act, a notice under Section 148 of the Act could generally be issued within six years from the end of the relevant assessment year, provided the income escaping assessment amounted to or was likely to amount to one lakh rupees or more. Therefore, the last date for issuing a notice for AY 2015-16 under the old regime was March 31, 2022. Thus, the first proviso to amended section 149(1) acts as a statutory bar, preventing the issuance of a notice under Section 148 for an assessment year like AY 2015-16 (which began on or before April 1, 2021) if such notice could not have been issued under the time limits of the old law. As stated earlier, the time limit for issuing a notice for AY 2015-16 under the old law expired on March 31, 2022. The notice in question was issued on April 19, 2022, which is after March 31, 2022. Consequently, the condition precedent for issuing a notice for AY 2015-16 under the new regime, as laid down by the first proviso to Section 149(1), is not met. The notice, having been issued after the expiry of the time limit under the old law, is therefore invalid. 7.5 The Hon’ble Supreme Court in the case of Union of India and others vs. Rajeev Bansal reported in (2024) 469 ITR 46 meticulously analyzed the first proviso to Section 149(1)(b) of the new regime. The relevant paragraphs are reproduced below- “45. The first proviso to Section 149(1)(b) provides thus: "149. (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 possession of books of account or other documents or evidence which

ITA Nos.2515 & 2516/Bang/2024 Ramamurthy MudiyanurSitaramaavadhany, Kolar Page 9 of 31 reveal that the income chargeable to tax, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more for that year: Provided that no notice under section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before 1st day of April 2021, if such notice could not have been issued at that time on account of being immediately beyond the time limit specified under the provisions of clause (b) of sub-section (1) of this section, as they stood immediately before the commencement of the Finance Act, 2021:" [Emphasis supplied] 46. The ingredients of the proviso could be broken down for analysis as follows: (i) no notice under section 148 of the new regime can be issued at any time for an assessment year beginning on or before 1 April 2021; (ii) if it is barred at the time when the notice is sought to be issued because of the "time limits specified under the provisions of" 149(1)(b) of the old regime. Thus, a notice could be issued under section 148 of the new regime for assessment year 2021-2022 and before only if the time limit for issuance of such notice continued to exist under section 149(1)(b) of the old regime. 47. In CTO v. Biswanath Jhunjhunwalla 1996 taxmann.com 1141 (SC)/[1996] 5 SCC 626 the Bengal Sales Tax Rules 1941 empowered the Commissioner to revise any assessment within four years from the date of assessment. Subsequently, the State Government issued a notification following the law to extend the time limit from four years to six years from the date of assessment. The extension of the time limit was challenged by the respondents on the ground that the assessments which had attained finality because of the expiry of the period of four years could not be reassessed. This Court observed that it was the clear intention of the notification to permit the Commissioner to revise any assessment made or order passed, provided the assessment had not been made before six years. It was held that if the legislative intention is clear and the language is unambiguous, full effect must be given to the legislative intention by reading the notification as applying not only to the incomplete assessments but also to assessments that had reached finality because of lapse of the earlier prescribed period. The principle that emanates from Biswanath Jhunjhunwalla (supra) is that the courts should give full effect to the legislative intention of granting reassessment powers to assessing officers unless the legislature, by express provision, states otherwise. 48. Notices have to be judged according to the law existing on the date the notice is issued. Section 149 of the old regime primarily provided two time limits: (i) four years for all situations and (ii) beyond four years and within six years if the income chargeable to tax which escaped assessment amounted to Rupees one lakh or more. After 1 April 2021, the time limits prescribed under the new regime came into force. The ordinary time limit of four years was reduced to three years. Therefore,

ITA Nos.2515 & 2516/Bang/2024 Ramamurthy MudiyanurSitaramaavadhany, Kolar Page 10 of 31 in all situations, reassessment notices could be issued under the new regime if not more than three years have elapsed from the end of the relevant assessment year. For example, for assessment year 2018-2019, the four year period would have expired on 31 March 2023 under the old regime. However, if the notice is issued after 1 April 2021, the three year time limit prescribed under the new regime will be applicable. The three year time limit will expire on 31 March 2022. 49. The first proviso to Section 149(1)(b) requires the determination of whether the time limit prescribed under section 149(1)(b) of the old regime continues to exist for the assessment year 2021-2022 and before. Resultantly, a notice under Section 148 of the new regime cannot be issued if the period of six years from the end of the relevant assessment year has expired at the time of issuance of the notice. This also ensures that the new time limit of ten years prescribed under section 149(1)(b) of the new regime applies prospectively. For example, for the assessment year 2012-2013, the ten year period would have expired on 31 March 2023, while the six year period expired on 31 March 2019. Without the proviso to Section 149(1)(b) of the new regime, the Revenue could have had the power to reopen assessments for the year 2012-2013 if the escaped assessment amounted to Rupees fifty lakhs or more. The proviso limits the retrospective operation of Section 149(1)(b) to protect the interests of the assesses. 50. Another important change under section 149(1)(b) of the new regime is the increase in the monetary threshold from Rupees one lakh to Rupees fifty lakhs. The old regime prescribed a time limit of six years from the end of the relevant assessment year if the income chargeable to tax which escaped assessment was more than Rupees one lakh. In comparison, the new regime increases the time limit to ten years if the escaped assessment amounts to more than Rupees fifty lakhs. This change could be summarized thus:

Income chargeable to tax Regime Time limit which has escaped assessment Old Four years but not Rupees one lakh regime more than six years or more New Three years but not Rupees fifty lakhs regime more than ten years or more

ITA Nos.2515 & 2516/Bang/2024 Ramamurthy MudiyanurSitaramaavadhany, Kolar Page 11 of 31 52. In Ashish Agarwal (supra), this Court held that the benefit of the new regime must be provided for the reassessment conducted for the past periods. The increase of the monetary threshold from Rupees one lakh to Rupees fifty lakh is beneficial for the assesses. Mr Venkataraman has also conceded on behalf of the Revenue that all notices issued under the new regime by invoking the six year time limit prescribed under section 149(1)(b) of the old regime will have to be dropped if the income chargeable to tax which has escaped assessment is less than Rupees fifty lakhs. 53. The position of law which can be derived based on the above discussion may be summarized thus: (i) Section 149(1) of the new regime is not prospective. It also applies to past assessment years; (ii) The time limit of four years is now reduced to three years for all situations. The Revenue can issue notices under section 148 of the new regime only if three years or less have elapsed from the end of the relevant assessment year; (iii) the proviso to Section 149(1)(b) of the new regime stipulates that the Revenue can issue reassessment notices for past assessment years only if the time limit survives according to Section 149(1)(b) of the old regime, that is, six years from the end of the relevant assessment year; and (iv) all notices issued invoking the time limit under section 149(1)(b) of the old regime will have to be dropped if the income chargeable to tax which has escaped assessment is less than Rupees fifty lakhs. ii. TOLA can extend the time limit till 31 June 2021 54. The proviso to Section 149(1)(b) of the new regime uses the expression "beyond the time limit specified under the provisions of clause (b) of sub section (1) of this section, as they stood immediately before the commencement of the Finance Act, 2021." Thus, the proviso specifically refers to the time limits specified under section 149(1)(b) of the old regime……….” 7.6 Thus, the Apex Court held that "no notice under section 148 of the new regime can be issued at any time for an assessment year beginning on or before 1 April 2021; if it is barred at the time when the notice is sought to be issued because of the 'time limits specified under the provisions of' 149(1)(b) of the old regime" (Para 46). This means that for AY 2015-16, a notice under the new Section 148 could only be issued if it was not time-barred under the old regime's Section 149(1)(b) of the Act. Further, the Apex Court held that for the AY 2015-16, the six-year limitation period under the unamended Section 149(1)(b) expired on March 31, 2022 (six years from the end of the relevant assessment year, i.e., March 31, 2016). The Supreme Court explicitly stated that "a notice under Section 148 of the new regime cannot be issued if the period of six years from the end of the relevant assessment year has expired at the time of issuance of the notice" (Para 49). 7.7 Now, coming to the revenue’s reliance on the decision of Hon’ble High Court of Calcutta in the case of Manoj Kumar Bagree v. Income Tax Officer

ITA Nos.2515 & 2516/Bang/2024 Ramamurthy MudiyanurSitaramaavadhany, Kolar Page 12 of 31 reported in [2025] 176 taxmann.com 58 (Calcutta), we noted that the fact of that case are relatively distinguishable from the facts & issue involved in the present case. The Asst. year involved in the present case is AY 2015-16 whereas, the case relied upon by the revenue is related to AY 2019-20. Further, in the present case, the notice u/s 148 of the Act was issued after 6 years from the end of the AY by violating the provisions of unamended section 149(1)(b) of the Act, whereas in that case the notice u/s 148 was issued well within the 6 years as per the erstwhile unamended section 149(1)(b) of the Act. Further, specifically for the AY 2015-16, the Revenue has conceded that all the notices issued on or after 01/04/2021 will have to be dropped which is not so in the case of revenue relied for the AY 2019- 20. Therefore, we are not inclined to rely on the above case law cited by the Revenue. 7.8 Further, another contention of the Revenue is that the provisions of section 148A & section 149 require that the order u/s 148A(d) be passed within the stipulated time period prior to the issue of the notice u/s 148 of the Act & hence the order passed u/s 148A(d) of the Act is well within the time. In this regard we are of the considered opinion that section 149 of the Act stipulates the time limit to issue the notice u/s 148 of the Act& not the passing of the order u/s 148A(d) of the Act. This time limit has nothing to do with the issuance of show cause notice u/s 148A(b) of the Act & passing of the order u/s 148A(d) of the Act unlike in section 151 of the Act which categorically prescribed the specified authority for sanction for issue of notice for the purposes of both section 148 as well as section 148A of the Act. We are of the opinion that provisions of section 148A proceedings are completely different with that of the 148 proceedings. After the amendment in Finance Act, 2021 the proceedings u/s 148 of the Act can only be commenced after completion of 148A proceedings, however subject to certain exceptions. Before issue of the notice u/s 148 of the Act, the AO shall conduct an enquiry, provide an opportunity of being heard to the assessee by serving SCN and after considering the reply furnished if any, decide, on the basis of material available on record including the reply of the assessee whether or not it is a fit case to issue notice u/s 148 of the Act by passing an Order. Thus the section 148A of the Act is complete code in itself. The contention of the assessee is that the notice issued u/s 148 of the Act dated 19/04/2022 is barred by limitation as per the 1st proviso to amended section 149(1) of the Act. Further section 149 of the Act stipulates the time limit for issue of the notice u/s 148 of the Act & therefore the contention of the Revenue that the order u/s 148A(d) was passed within the stipulated time period prior to the issue of notice u/s 148 is not at all tenable. The procedural compliance with Section 148A, while necessary, cannot validate a notice issued u/s 148 of the Act that is fundamentally flawed due to being issued beyond the statutory period of limitation. 7.9 Now coming to another contention of the Revenue that the notice under section 148A(b) of the Act was issued on 26/03/2022 by which assessee was asked to give response/ objection to the same within 11/04/2022. In response to the same, assessee has filed its objection on 11/04/2022. On a plain reading of 5th proviso to Section 149, the time period of 16 days allowed to assessee to give response/ objection needs to be excluded. Further as per 6th proviso a period of 7 days need to be excluded. The assessing officer has passed the order u/s. 148A(d)

ITA Nos.2515 & 2516/Bang/2024 Ramamurthy MudiyanurSitaramaavadhany, Kolar Page 13 of 31 on 18/04/2022 and issued the notice u/s. 148 on 19/04/2022, which very well falls within the limitation period. In this regard we are of the considered opinion that undisputedly the erstwhile third proviso to amended section 149(1) of the Act allows for the exclusion of the time taken for Section 148A proceedings. However, this exclusion is for computing the period of limitation as per section 149 of the Act. It does not override the first proviso to Section 149(1) of the Act, which acts as a threshold condition for the applicability of the new regime to old assessment years. If a notice was already time-barred under the old law, the exclusion of time under the 3rd or 4th provisos cannot revive it. The exclusion cannot override the fundamental bar imposed by the first proviso to Section 149(1) of the Act. Asstated earlier the first proviso to amended section 149(1) acts as a statutory bar, preventing the issuance of a notice under Section 148 of the Act for the assessment year like AY 2015-16 (which began on or before April 1, 2021) if such notice could not have been issued under the time limits of the old law. We are of the considered opinion that first proviso to section 149(1) of the Act is a restriction and the erstwhile 3rd& 4th Provisos (which allow for exclusion of time for certain events) cannot override this fundamental restriction. The first proviso acts as a gatekeeper. This means that even if there were delays due to assessee’s response or court stays, these exclusions cannot revive a notice that is already time-barred by the first proviso. In Assistant Commissioner of Income-tax v. Godrej Industries Ltd. [2024] 160 taxmann.com 13 (Bombay), for AY 2014-15, the High Court held that the validity of a notice must be judged on the law existing on the date of issuance of the Section 148 notice. It emphasized that "the fifth proviso cannot apply in a case where the first proviso applies because, if a notice under section 148 could not be issued beyond the time period provided in the first proviso, then the fifth proviso could not save such notices" (Para 15). This means that if the notice is already time-barred under the old regime as per the first proviso, the exclusion of time for Section 148A proceedings under the 3rd proviso or 4th provisos cannot revive it. Further, the Hon’ble Gujarat High Court in the case of Assistant Commissioner of Income-tax v. Devika Fibres (P.) Ltd. [2023] 153 taxmann.com 18 (Gujarat) clearly stated that "the notice which could not have been issued in the old regime period due to becoming time barred as per then operating provision, would also not be permissible to be issued post 01-4-2021" (Para 5.4.6). Thus, the embargo of the six-year limitation under the old regime continues in the new regime for assessment years prior to 2021-22. 8. Further, under the similar facts & circumstance & for similar AY 2015-16, the Hon’ble Jurisdictional High Court of Karnataka in the case of Mohammed Yaseen v. Income Tax officer reported in [2025] 175 taxmann.com 280 (Karnataka) held as under- “5. As rightly contended by the learned counsel for the petitioner, the material on record discloses that the impugned proceedings is relating to the Assessment Year 2015-16 in respect of the petitioner; however, it is an undisputed fact that the respondents issued impugned notice at Annexure-A2 under Section 148 of the I.T.Act on 01.04.2022, beyond the period of limitation and the same has already been held not to be permissible by the Apex Court in Rajeev Bansal's case (supra), which reads as under:-

ITA Nos.2515 & 2516/Bang/2024 Ramamurthy MudiyanurSitaramaavadhany, Kolar Page 14 of 31

"19(e). The Finance Act, ([2021]) 431 ITR (St.) 52) substituted the old regime for reassessment with a new regime. The first proviso to Section 149 does not expressly bar the application of Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. Section 3 of Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 applies to the entire Income-Tax Act, including Sections 149 and 151 of the new regime. Once the first proviso to Section 149(1)(b) is read with Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, then all the notices issued between April 1, 2021 and June 30, 2021 pertaining to assessment years 2013-14, 2014-15, 2015-16, 2016-17, and 2017-18 will be within the period of limitation as explained in the tabulation below:

Assessment Within 3 Expiry of limitation Within six Expiry of limitation year (1) years (2) read with TOLA for years (4) read with TOLA for (3) (4) (5) 2013-2014 31-3- TOLA not 31-3-2020 30-6-2021 2017 applicable 2014-2015 31-3- TOLA not 31-3-2021 30-6-2021 2018 applicable 2015-2016 31-3- TOLA not 31-3-2022 TOLA not applicable 2019 applicable 2016-2017 31-3- 30-06-2021 31-3-2023 TOLA not applicable 2020 2017-2018 31-3- 30-06-2021 31-3-2024 TOLA not applicable 2021

19(f). The Revenue concedes that for the assessment year 2015-16, all notices issued on or after April 1, 2021 will have to be dropped as they will not fall for completion during the period prescribed under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020; 49. The first proviso to Section 149(1)(b) requires the determination of whether the time limit prescribed under Section 149(1)(b) of the old regime continues to exist for the assessment year 2021-22 and before. Resultantly, a notice under Section 148 of the new regime cannot be issued if the period of six years from the end of the relevant assessment year has expired at the time of issuance of the notice. This also ensures that the new time limit of ten-years prescribed under Section 149(1)(b) of the new regime applies prospectively. For example, for the assessment year 2012-13, the ten-year period would have expired on March 31, 2023, while the six-year period expired on March 31, 2019. Without the proviso to Section 149(1)(b) of the new regime, the Revenue could have had the power to reopen assessments for the year 2012-13 if the escaped assessment amounted to

ITA Nos.2515 & 2516/Bang/2024 Ramamurthy MudiyanurSitaramaavadhany, Kolar Page 15 of 31 Rupees fifty lakhs or more. The proviso limits the retrospective operation of Section 149(1)(b) to protect the interests of the assesses. 6. Subsequently, in Nehal Ashit's case (supra) also, the Apex Court reiterated the very same position and dismissed the appeal filed by the Revenue on the ground that the notice issued after 01.04.2022 was barred by limitation and the impugned proceedings are not permissible beyond period of limitation. In the instant case, it is an undisputed fact that the impugned proceedings is relating to the Assessment Year 2015-16, while the impugned notice under Section 148 of the Act dated 01.04.2022 was issued beyond/after 01.04.2021 which is impermissible in law and barred by limitation and consequently, the impugned orders/notices etc., deserve to be quashed. 7. In the result, I pass the following:- 'ORDER (i) Petition is hereby allowed. (ii) The impugned orders/Notices at Annexures-A1, A2, B, C1, D1 and E1 dated 01.04.2022, 01.04.2022, 15.03.2022, 09.03.2022, 27.08.2024 and 27.08.2024 respectively and subsequent orders/notices issued by the 1st respondent are hereby quashed. 8.1 In view of the above discussions & respectfully following the decision of the Hon’ble Apex Court as well as Jurisdictional High Court, we are of the considered opinion that the notice issued under Section 148 of the Income Tax Act, 1961, on April 19, 2022, for Assessment Year 2015-16, is invalid & bad in law. The first proviso to the substituted Section 149(1) acts as a statutory bar, as the six-year limitation period under the old regime for AY 2015-16 expired on March 31, 2022. The procedural compliance with Section 148A or the exclusion of time under the 3rd or 4th erstwhile provisos cannot override this fundamental jurisdictional defect of limitation. Since we have held the notice dated 19/04/2022 issued under section 148 of the Act to be barred by limitation & therefore the consequent order passed u/s 147 r.w.s 144C(13) of the Act deserve to be quashed. Further, since we have adjudicated the sole legal ground in favour of the assessee, the other grounds raised by the assessee becomes academic.”

9.2 Respectfully following the above decision of the coordinate bench, we are of the considered opinion that the notice issued u/s 148 of the Act for the AY 2015-16 on 6.4.2022 is illegal and bad in law as barred by limitation and accordingly the consequential order passed u/s 147 of the Act on 21/03/2024 deserves to be quashed & hence quashed. Since we have adjudicated the case on the legal ground as raised by the assessee, the other grounds raised becomes academic.

ITA Nos.2515 & 2516/Bang/2024 Ramamurthy MudiyanurSitaramaavadhany, Kolar Page 16 of 31 10. In the result, the appeal filed by the assessee in ITA No.2515/Bang/2024 for the AY 2015-16 is allowed.

ITA Nos.2515 & 2516/Bang/2024 Ramamurthy MudiyanurSitaramaavadhany, Kolar Page 17 of 31

12.1 After considering the detailed submissions as well as the copy of bank statements, copy of the sale deed dated 03.03.2016 & purchase deed dated 30.5.2014 filed by the assessee, the AO finally passed an order u/s 148A(d) of the Act on 30.03.2023 by observing that the mode of payment of Rs.1,46,00,000/- during sale of property is not mentioned in the sale deed and it is also mentioned that the payment had already been made by the purchaser M/s. Total Environment Constructions Pvt. Ltd. at the time of purchase by the assessee in 2014 and accordingly held that

ITA Nos.2515 & 2516/Bang/2024 Ramamurthy MudiyanurSitaramaavadhany, Kolar Page 18 of 31 the property was lying as unexplained investment with the assessee till the date of sale in March, 2016 as the assessee was not able to explain the sources for purchase of the property. Thereafter, the AO on the same day i.e. on 30.03.2023 also issued a notice u/s 148 of the Act requiring the assessee to furnish a return within 30 days from the service of the notice.

12.2 In response to the notice u/s 148 of the Act, the assessee filed his return of income on 25.4.2023 declaring total income of Rs.54,155/-. Thereafter, statutory notices u/s 143(2) of the Act, 142(1) of the Act, show cause notice u/s 144 of the Act as well as final show cause notice dated 12.3.2024 were issued to the assessee calling for the relevant details in respect of sale of immovable property for the year under consideation. However, the assessee miserably failed to adduce any justification in respect of sale of immovable property of Rs.1,48,00,000/-. The AO, on perusal of the copy of sale deed executed between assessee and the buyer M/s. Total Environment Construction Pvt. Ltd. observed that the assessee had initially agreed to sale the property for a consideration of Rs.1,60,00,000/- but later on it was negotiated for Rs.1,48,00,000/-. Further, the AO observed that the copy of the original purchase deed reveals that the assessee had purchased the said property from Mr. Marrapa along with other legal herirs for Rs.1,46,00,000/-. However, it was seen that the payment towards purchase of immovable property was not borne by the assessee but the payment of Rs.1,44,54,000/- was made from the Axis Bank account of M/s. Total Environment Construction Pvt. Ltd. on 2.6.2014 and accordingly the AO held that the purchase of property thus remained unexplained. The assessee had also not brought anything on record for purchase consideration of the said immovable property sold during the year. The ld. AO held that the assessee had failed to demonstrate the genuineness of the

ITA Nos.2515 & 2516/Bang/2024 Ramamurthy MudiyanurSitaramaavadhany, Kolar Page 19 of 31 purchase and sale of immovable property and accordingly concluded that the assessee had not offered the sales consideration received from sale of immovable property during the year under consideation. The AO in the absence of any justification in respect of receipts from sale of immovable property and also the payment towards cost of acquisition of the said property, treated the entire amount of Rs.1,48,00,000/- received from sale of immovable property as short term capital gain and added to the total income of the assessee. The AO completed assessment proceedings on a total assessed income of Rs.1,48,00,585/-.

ITA Nos.2515 & 2516/Bang/2024 Ramamurthy MudiyanurSitaramaavadhany, Kolar Page 20 of 31 rightly considered by the AO as short term capital gain. The ld. CIT(A)/NFAC also observed that the assessee had not filed any income tax return in the AY 2016-17 thereby failed to disclose the sales of the immovable property along with supporting bank statements. Accordingly, held that the AO had rightly concluded that a sum of Rs.1,48,00,000/- being the sales consideration of immovable property had escaped assessment.

ITA Nos.2515 & 2516/Bang/2024 Ramamurthy MudiyanurSitaramaavadhany, Kolar Page 21 of 31 in the case of Mr. Sanath Kumar Murali Vs. ITO reported in (2023) 455 IT 370.

ITA Nos.2515 & 2516/Bang/2024 Ramamurthy MudiyanurSitaramaavadhany, Kolar Page 22 of 31 Rs.1,46,00,000/- only [ Cheque of Rs.1,44,54,000/- vide cheque No.079896 dated 29/05/2014 + TDS of Rs.1,46,000/-]. The contentions of the ld. AR of the assessee is that the entire amount of purchase consideration amounting to Rs.1,46,00,000/- was paid by M/s Total Environment constructions Private Limited & for this reason when the said property was sold to M/s. Total Environment Construction Pvt. Ltd. (in short “M/s. TECPL”) on 03/03/2016 for a total consideration of Rs.1,48,00,000/-, the assessee had only received the balance amount of Rs. 2,00,000/- [ Cheque of Rs.52,000/- vide No.473141 + TDS of 1,48,000/-]. Further, the assessee had also obtained conversion of the said property from agricultural to non-agricultural residential use vide official memorandum dated 28/01/2015. Accoredingly, the assessee had declared short term capital gain of Rs.53,575/- in his return of income filed in response to notice u/s 148 of the Act.

18.1 On persusal of the purchase deed dated 30/05/2014 (placed at pages 11-22 of PB) as well as the sale deed dated 03/03/2016 (placed at pages 23-30 of PB) as well as computation of income submitted before the AO on 14/03/2023 during the 148A proceedings, we observed that the above contentions of the ld. AR of the assessee is absolutely correct. We take a note of the fact that the AO while passing the order u/s 148A(d) of the Act on 30.3.2023 without understanding the facts of the case had merely stated that the mode of payment of Rs.1,46,00,000/- during sale of property is not mentioned in the sale deed and it is also mentioned that the payment has already been made by the purchaser M/s. TECPL at the time of purchase by the assessee in 2014 and therefore, held that the assessee is not able to explain the sources for purchase of the property which in our opinion is completely non application of mind on the part of AO .

ITA Nos.2515 & 2516/Bang/2024 Ramamurthy MudiyanurSitaramaavadhany, Kolar Page 23 of 31

18.2 We are of the considered opinion that the AO had doubted the transaction only on the ground that mode of payment of Rs.1,46,00,000/- was not mentioned in the sale deed whereas we observed that as per the clause 1.1 of the Registered sale deed dated 03/03/2016, it is categorically mentioned that the purchaser M/s. TECPL has already paid a sum of Rs.1,46,00,000/- at the time the assessee acquired the property. It is an undisputed fact that during the course of proceedings u/s 148A of the Act, the assessee had submitted the copies of purchase deed, sale deed along with bank statement and also filed his return of income in response to notice u/s 148 of the Act by declaring total income of Rs.54,155/-. It appears that while considering the reply as well as evidences submitted by the assessee, a highly casual and perfunctory approach was adopted turning Nelson’s eye towards the pulpable and elementary aspect of sale & purchase of immovable property resulting in capital gain of Rs.53,575/-. We are of the considered opinion that merely because the assessee had sold an immovable property of a total sales consideration of Rs.1,48,00,000/-, that would not ultimately culminated into the income escaping assessment. The provisions u/s 148A of the Act were inserted in the Act w.e.f. 1.4.2021 to render the power of the revenue of reopening cases to more transperent so as to avoid casual invocation of sectons 147-148 of the Act. The insertion of section 148A of the Act not only saves the assessee from casual commencement of proceedings u/s 147-148 of the Act but also save the revenue of precious time and energy, which may be wasted pursuing fruitless, frivolous and vexatious cases.

18.3 The Hon’ble Madhya Pradesh High Court in the case of M/s. Amrit Homes Pvt. Ltd. Vs. DCIT & Anr. In WP No.15244/2023 dated 9.8.2023 has held as under:

ITA Nos.2515 & 2516/Bang/2024 Ramamurthy MudiyanurSitaramaavadhany, Kolar Page 24 of 31

“7.2 The object behind insertion of section 148A by the Legislature w.e.f. 01/04/2021 interalia appears as follows: - (a) To prevent rampant and casual issuance of notice u/s 148 by the Revenue; (b) To save unnecessary harassment to the assessee of being subjected to re- opening a case under section 148; (c) To save the Revenue of the time and energy which may be vested pursuing frivolous and fruitless proceedings u/s 148.”

18.4 We oberved that in fact when assessee filed his reply to the notices u/s 148A(b) of the Act on 14.03.2023 and 29.03.2023, it clearly revealed that the assessee had earned short term capital gain of Rs.53,575/- from the sale of the said property. Clearly when the procedure is followed culminating in an order passed u/s 148A(d) of the Act, the authority is required to apply his /her mind and consider the reply of the assessee and pass a speaking order. In the present cae, the AO had not applied his mind to the reply filed nor considered the copies of sale deed along with purchase deed produced during the proceedings u/s 148A of the Act while deciding as to the application of the extended period u/s 149(1)(b) of the Act.

18.5 The contention of the assessee that his income for the AY 2016-17 was way below the maximum amount which is not chargeable to income tax and for this reason he did not file his return of income appears to be genuine. This is also supported from the fact that even in response to notice u/s 148 of the Act, the assessee had filed his return of income by declaring total income of Rs.54,155/- only, which was completely ignored by the AO while passing the order u/s 148A(d) of the Act.

ITA Nos.2515 & 2516/Bang/2024 Ramamurthy MudiyanurSitaramaavadhany, Kolar Page 25 of 31 18.6 Before proceeding further, it is apposote here also to take note of the erstwhile section 149 of the Act as applicable at the time of issuing notice u/s 148 of the Act for the purpose of this case, which reads as under:-

2 [Time limit for notice. 149. (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 asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more for that year:

Provided that no notice under section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before 1st day of April, 2021, if such notice could not have been issued at that time on account of being beyond the time limit specified under the provisions of clause (b) of subsection (1) of this section, as they stood immediately before the commencement of the Finance Act, 2021:

Provided further that the provisions of this sub-section shall not apply in a case, where a notice under section 153A, or section 153C read with section 153A, is required to be issued in relation to a search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A, on or before the 31st day of March, 2021:

Provided also that for the purposes of computing the period of limitation as per this section, the time or extended time allowed to the assessee, as per showcause notice issued under clause (b) of section 148A or the period during which the

ITA Nos.2515 & 2516/Bang/2024 Ramamurthy MudiyanurSitaramaavadhany, Kolar Page 26 of 31 proceeding under section 148A is stayed by an order or injunction of any court, shall be excluded:

Provided also that where immediately after the exclusion of the period referred to in the immediately preceding proviso, the period of limitation available to the Assessing Officer for passing an order under clause (d) of section 148A is less than seven days, such remaining period shall be extended to seven days and the period of limitation under this sub-section shall be deemed to be extended accordingly. Explanation.—For the purposes of clause (b) of this sub-section, "asset" shall include immovable property, being land or building or both, shares and securities, loans and advances, deposits in bank account.

(2) The provisions of sub-section (1) as to the issue of notice shall be subject to the provisions of section 151.]

Thus, as per Section 149(1) of the Act substituted by the Finance Act, 2021 w.e.f 01/04/2021 “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 accounts or other documents or evidences which reveal that the income chargeable to tax, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more for that year.

ITA Nos.2515 & 2516/Bang/2024 Ramamurthy MudiyanurSitaramaavadhany, Kolar Page 27 of 31 18.7 Thus, section 149 of the Act stipulates restrictions on issuance of notice u/s 148 of the Act & not on conducting any enquiry with respect to the information which suggests that the income chargeable to tax has escaped assessment by providing an opportunity of being heard to the assessee as per the provisions contained u/s 148A(b) of the Act. Thus, there is a clear distinction between 148A proceedings and 148-147 proceedings. The Revenue is free to conduct enquiry based on the information, but once during the course of 148A proceedings, the AO found that the income which has escaped assessment amounts to or likely to amount to less than fifty lakh rupees, the AO should restrain himself to proceed further & drop the proceedings if three years have already elapsed from the end of the relevant assessment year. The AO cannot invoke the extended period thereafter for reopening the assessment by issuing the notice u/s 148 of the Act. We are of the considered opinion that in order to grab the extended period of 10 Years as per clause (b) of the Section 149 (1) of the Act, the AO has to satisfy the conditions enumerated as below-

• AO has in possession--------- Books of Accounts or other documents or evidence • Which reveal------------- Income Chargeable to Tax in the Form of Asset/Expenditure/entry(s) in books of A/c. • Which escaped Assessment……… Amounts to or is likely to amount to 50 lakhs or more

18.8 Further, we also rely upon the decision of Hon’ble Karnataka High Court in the case of Mr. Sanath Kumar Murali Vs. ITO reported in (2023) 455 IT 370, which is held as under:

“14. It is clear that the notice is issued in the context of sale consideration from sale of immoveable property for an amount of Rs.55,77,700/-. As noted above, the reply to the show cause notice, copy of which is enclosed at Annexure-'F1' would

ITA Nos.2515 & 2516/Bang/2024 Ramamurthy MudiyanurSitaramaavadhany, Kolar Page 28 of 31 reveal the details of sale consideration and the cost of acquisition would be the indexed cost of acquisition in light of the sale leads to accrual of long term capital gain.

"48. The income chargeable under the head "Capital gains" shall be computed, by deducting from the full value of the consideration received or accruing as a result of the transfer of the capital asset the following amounts, namely:- (i) expenditure incurred wholly and exclusively in connection with such transfer, (ii) the cost of acquisition of the asset and the cost of any improvement thereto; (iii)in case of value of any money or capital asset received by a specified person from a specified entity referred to in sub-section (4) of section 45, the amount chargeable to income-tax as income of such specified entity under that sub-section which is attributable to the capital asset being transferred by the specified entity, calculated in the prescribed manner: ... Provided further that where long- term capital gain arises from the transfer of a long-term capital asset, other than capital gain arising to a non-resident from the transfer of shares in, or debentures of, an Indian company referred to in the first proviso, the provisions of clause (ii) shall have effect as if for the words "cost of acquisition" and "cost of any improvement", the words "indexed cost of acquisition" and "indexed cost of any improvement" had respectively been substituted:.... ..."

"148A. The Assessing Officer shall, before issuing any notice under section 148, --

ITA Nos.2515 & 2516/Bang/2024 Ramamurthy MudiyanurSitaramaavadhany, Kolar Page 29 of 31

(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, with the prior approval of specified authority, 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 notice is issued, or such time, as may be extended by him on the basis of an application in 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 notice referred to in clause (b);

(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: ..." Clearly when the procedure is followed culminating in an order passed under Section 148(A)(d), the Authority is required to apply its mind and consider the reply of the assessee and pass a considered order. In the present case, the respondent Authority has not applied its mind to the reply filed, nor noticed the legal position while deciding as to the application of the extended period under Section 149(1)(b) of the I.T. Act.

ITA Nos.2515 & 2516/Bang/2024 Ramamurthy MudiyanurSitaramaavadhany, Kolar Page 30 of 31 2021 does not in any way lead to giving a different interpretation to the words, 'income chargeable to tax'. The words used under Section 149 for the purpose of extended time limit is to be interpreted in terms of the plain wordings of Section 149 and cannot be construed differently while relying on any executive instruction.

18.9 In view of the above, as well as relying upon the decision of the Hon’ble Karnataka High Court, the order passed u/s 148A(d) of the Act is hereby set aside and the notice issued u/s 148 of the Act for the AY 2016-17 is also quashed as barred by limitation and accordingly, the consequential assessment order passed u/s 147 of the Act dated 23.3.2024 is also qushed.

Order pronounced in the open court on 5th June, 2026

Sd/- Sd/- (Prashant Maharishi) (Keshav Dubey) Vice President Judicial Member

Bangalore, Dated 5th June,2026. VG/SPS

ITA Nos.2515 & 2516/Bang/2024 Ramamurthy MudiyanurSitaramaavadhany, Kolar Page 31 of 31

Copy to:

Asst. Registrar, ITAT, Bangalore.