MUSARRAT NASARIN,ETAWAH vs. INCOME TAX OFFICER, WARD - 2(2)(5), ETAWAH, ETAWAH

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ITA 82/AGR/2026Status: DisposedITAT Agra02 June 2026AY 2015-1611 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the Assessing Officer's assumption of jurisdiction for reopening was flawed because the alleged escaped income of Rs. 33 lakhs was below the statutory threshold of Rs. 50 lakhs for reassessment beyond three years. Consequently, the reassessment proceedings were quashed.

What were the facts?

The assessee's reassessment proceedings for AY 2015-16 were initiated based on cash deposits of Rs. 33 lakhs and a CIB transaction of Rs. 40 lakhs. The assessee argued that the CIB transaction was non-existent and the total escaped income was only Rs. 33 lakhs, which was below the Rs. 50 lakhs threshold for reassessment beyond three years.

What were the issues?

Whether reassessment proceedings initiated beyond three years are valid when the alleged escaped income is below the statutory threshold of Rs. 50 lakhs. Whether the reassessment proceedings are vitiated due to incorrect facts forming the basis of initiation.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 148A,Section 149

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AGRA BENCH “SMC”: AGRA

For Appellant: Shri Ashish Bansal, Adv
For Respondent: Shri Anil Kumar, Sr. DR
Hearing: 19/05/2026Pronounced: 02/06/2026
1.

The appeal in ITA No. 82/AGR/2026 for AY 2015-16, arises out of the order of the ld National Faceless Appeal Centre, Delhi [hereinafter referred to as ‘ld. CIT(A)’, in short] dated 27.11.2025 against the order of assessment passed u/s 147 r.w.s. 144B of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 15.03.2023 by the Assessing Officer, Assessment Unit, Income Tax Department (hereinafter referred to as ‘ld. AO’).

2.

At the outset, I find that the assessee has raised additional grounds before this Tribunal as under : –

“Additional legal /jurisdictional ground sought to be raised before this hon'ble ITAT:

On basis of material available on case file, based on admitted and undisputed factual position, pure question of law, being jurisdictional issue, going to the root of the matter, is sought to be raised, under rule 11 of ITAT rules, "18. BECAUSE the reassessment proceedings initiated under section 147 of the Act by issuance of notice dated 29.03.2022 under section 148 for A.Y. 2015-16 (beyond three years) are solely predicated on cash deposits of Rs.33,00,000/- in the appellant's bank account. The said amount is below the statutory threshold prescribed under section 149(1)(b) of the Act. Consequently, the initiation of proceedings is barred by limitation and stands vitiated in law.

19.

BECAUSE the flagged information which forms the basis of reassessment proceedings under section 147 of the Act being;

Information Description Source Amount (Rs.) Cash deposit in Saving Bank Account BankofBaroda Rs.33,00,000/- CIB Transaction Bank ofBaroda Rs.40,00,000/- Total Amount Rs.73,00,000/-

is either repetition or based on non-existing data, accordingly, the said amount is below the statutory threshold prescribed under section 149(1)(b) of the Act. Consequently, the initiation of proceedings is barred by limitation and stands vitiated in law. 20. BECAUSE there existed no such transaction of Rs.40,0,000/-alleged to be reported as the "CIB transaction" in the notice dated 15.03.2022 issued under section 148A(b) and order dated 29.03.2022 passed under section 148A(d), the initiation of proceedings under section 147 of the Act against the appellant is based on incorrect facts and therefore is liable to be set aside and the consequential proceedings against the appellant are not maintainable both on facts as well as in law. ) Support: For raising above legal/jurisdictional ground, reliance is placed on: Hon'ble SC decisions in cases of NTPC Ltd 229 ITR 383; Singhad Technical Education Society 397 ITR 344 and Hon'ble SC 4 Jugde bench decision in case of Raza Textiles us ITO 1973 87 ITR 539 SC: "The question whether the jurisdictional fact has been rightly decided or not is a question that is open for examination by the High Court in an application for a writ of certiorari. If the High Court comes to the conclusion, as the learned single Judge has done in this case, that the Income-tax Officer had clutched at the jurisdiction by deciding a jurisdictional fact erroneously, then the assesses was entitled for the writ of certiorari prayed for by him. It is incomprehensible to think that a quasi-judicial authority like the Income-tax Officer can erroneously decide a jurisdictional fact and thereafter proceed to impose a levy on a citizen" & Hon'ble SC 4 Judge bench decision in Karan Singh vs Chaman singh Paswan AIR 1954 SC 340.: "It is a fundamental principle well-established that a decree passed by a court without jurisdiction is a nullity, and that its invalidity could be set up whenever and wherever it is sought to be enforced or relied upon, even at the stage of execution and even in collateral proceedings. A defect of jurisdiction, whether it is pecuniary or territorial, or whether it is in respect of the subject-matter of the action, strikes at the very authority of the court to pass any decree, and such a defect cannot be cured even by consent of parties. If the question now under consideration fell to be determined only on the application of general principles governing the matter, there can be no doubt that the District Court of Monghyr was coram non judice, and that its judgment and decree would be nullities. The question is what is the effect of Section 11 of the Suits Valuation Act on this position" (SC latest order in RAVI RANJAN DEVELOPERS PVT LTD VS ADITYA KUMAR CHATTERJEE REPORTED AT 2022 SCCONLINE 568 (para 18 &19)) and Hon'ble Madras high court in case of Charu K Bagadia vs ACIT (27.06.2022) Writ Appeal No. 2493 of 2021 448 ITR 563: hon'ble madras high court decision in case of Virtusa Consulting services pvt ltd vs dispute resolution panel 446 ITR 454; hon'ble Allahabad high court leading /detailed decision in case of Md Rizwan case (appeal no.100/2015 dated 30.03.2017) and Hon'ble Allahabad high court in case of CIT vs Dalipur Construction Pvt Ltd ITA 43/2015 ORDER DATED 13.01.2017.”

3.

These additional grounds go to the root of the matter and the facts relevant for its adjudication are already on record. Hence, in view of the decision of the Hon’ble Supreme Court in the case of NTPC Ltd reported in 229 ITR 383, I am inclined to admit the appeal aforesaid additional grounds and take up first for adjudication.

4.

I have heard the rival submissions and perused the material available on record. The assessee is an individual and had not filed return of income for AY 2015-16. The ld AO based on the information in the Insight Portal noted that assessee had made cash deposit of Rs. 33 lakhs in Saving Bank Account maintained with Bank of Baroda and there was further information of CIB transaction of Rs. 40 lakhs in AY 2015-16. Since, the alleged escapement of income was more than Rs. 50 lakhs, proceeding u/s 148A of the Act stood initiated on the assessee and order u/s 148A(d) of the Act was passed on 29.03.2022, further followed by issuance of notice u/s 148 of the Act on 29.03.2022. In response to the said notice, the assessee filed return of income for AY 2015-16 on 30.04.2022 declaring total income of Rs. 2,49,490. The assessee claimed that she is involved in the business of trading of wheat, rice, bajra, etc. in the name and style. M/s Kishan Sewa Kendra. The assessee also clarified before the ld AO that the total cash deposits was only Rs. 33 lakhs and there was no transaction carried out for Rs. 40 lakhs as mentioned in the information provided in the Insight Portal of the revenue.

The assessee vide reply filed in ITBA portal on 24.10.2022 submitted profit and loss account, balance sheet for 31.03.2015 together with cash book from May 2014 to March 2015 and Bank book of Bank of Baroda for the whole year. Vide reply filed in ITBA portal on 08.01.2023, the assessee submitted ledger account of parties from whom cash was received. Vide reply filed in ITBA portal on 13.02.2023, the assessee filed the name of the parties with their address from whom cash was received, which was in turn deposited in the bank. The ld AO proceeded to frame the reassessment vide order dated 15.03.2023 disbelieving the existence of the business carried out by the assessee and by concluding that assessee had made cash deposit of Rs. 33 lakhs in bank account, which remain unexplained and added the same to the total income. This action of the AO was upheld by the ld CIT(A).

5.

The following facts are not in dispute: –

a. the assessee had made cash deposit of Rs. 33 lakhs in bank account during the year; b. the reopening notice u/s 148 was issued on 29.03.2022, which is beyond the period of three years from the end of the relevant assessment year; c. the escaped income is only Rs. 33 lakhs as no addition was even contemplated by the ld AO in the reassessment proceedings for Rs. 40 lakhs based on CIB information mentioned in the Insight Portal. This clearly goes to prove that CIB information of Rs. 40 lakhs was provided in Insight Portal does not pertain to the assessee at all and further the assessee had also pleaded that there was no transaction carried out by her for Rs 40 lacs. This has been accepted by the ld AO .

Hence, the income alleged to have escaped assessment, even at the 6. time of reopening was only Rs. 33 lakhs which is less than Rs. 50 lakhs. Now, the provisions of section 149(1)(b) of the Act would get triggered wherein no notice u/s 148 of the Act could be issued if the escapement of income is less than Rs. 50 lakhs and where the reopening is sought to be made beyond three years, but less than 10 years from the end of the relevant assessment year. This issue is no longer res integra in view of the decision of the Hon’ble Rajasthan High Court, Jaipur Bench in DB Civil Writ Petition No. 3466/2023 dated 04.01.2024 in the case of Bijender Singh Vs. ITO, Ward-1(1). For the sake of convenience, the entire order of the Hon’ble High Court is reproduced below:

“1. This writ petition has been filed by the petitioner aggrieved of the order dated 31.03.2022 passed under Section 148A(d) of the Income Tax Act, 1961 (‘the Act of 1961’), the notice dated 31.03.2022 issued under Section 148 of the Act of 1961 and consequential assessment order dated 27.03.2023 passed for the assessment year 2015-16.

2.

It is inter-alia indicated that the petitioner was issued a notice under Section 148A(b) of the Act of 1961 inter-alia indicating that the information annexed with the notice suggest that income chargeable to tax for the assessment year 2015-16 has escaped assessment under the meaning of Section 147 of the Act of 1961.

3.

The annexure to the notice disclosing information inter-alia indicated that the petitioner had deposited cash of Rs.10,00,000/- or more in the same bank account amounting to Rs.33,62,000/-. It was further indicated that cash amounting to Rs.2,00,000/- or more was deposited to the tune of Rs.26,13,000/- during the said assessment year in Punjab National Bank.

4.

The petitioner filed reply to the show cause notice (Annexure-2) inter- alia indicating that during the year 2015-16, a sum of Rs.33,62,000/- was deposited in cash and not Rs.59,75,000/- and as the amount was less than Rs.50,00,000/-, the extended period of limitation available under Section 149(1) (b) of the Act of 1961 was not available and therefore, the proceedings be dropped.

5.

The assessee also enclosed the statements of account of his bank accounts indicating the said cash transactions. The Assessing Authority passed the order under Section 148A(d) of the Act on 31.03.2022 (Annexure-3) inter- alia rejecting the contentions of the petitioner and found the same to be a fit case for issuance of notice under Section 148 of the Act of 1961. A notice under Section 148 of the Act of 1961 (Annexure-4) was issued on the same day.

6.

Pursuant to the said notice, the assessment proceeded and on 06.03.2023 (Annexure-4A) after considering the submissions made, the authority show caused the petitioner indicating that why the cash deposited to the tune of Rs.33,62,000/- in the bank be not treated as unexplained money of the assessee and he was asked to show cause under Section 69A read with Section 115BBE of the Act of 1961.

7.

To which show cause notice, a response was filed by the petitioner, which ultimately resulted in passing of the assessment order dated 27.03.2023 (Annexure-4C) by the Assessing Authority.

8.

The petitioner raised objections about maintainability of the proceedings relying on judgement in Abdul Majeed vs. ITO: CWP No.7853/2022, decided on 29.06.2022 by this Court. However, the authority indicating lack of jurisdiction to question the validity of the proceedings under Section 148A of the Act of 1961, refused to drop the proceedings and consequently determined the income of the petitioner at Rs.15,18,900/-.

9.

Though, initially petition was filed questioning the validity of the order passed under Section 148A(d) of the Act of 1961. However, as assessment order under Section 148 of the Act of 1961 was passed during pendency of the petition, the petition was permitted to be amended qua the said orders to be questioned by the petitioner.

10.

Learned counsel for the petitioner made submissions that the show cause notice was issued on the premise that the cash transactions of the petitioner were about Rs.50,00,000/- and extended period of limitation was invoked. However, as admittedly, it was found that the transactions were only of Rs.33,62,000/-, the issuance of notice itself is wholly without jurisdiction being barred by limitation and the authority while passing the order under Section 148(d) of the Act of 1961 could not have found it a fit case for issuance of notice under Section 148 of the Act of 1961.

11.

Further submissions have been made that the trigger for the purpose of initiating the proceedings against the petitioner has been alleged unexplained money deposited and the notice was issued under Section 148A of the Act of 1961 and during those proceedings the issuance of show cause notice purportedly under Section 69A read with Section 115BBE of the Act of 1961 is wholly baseless as independent of Section 148A of the Act of 1961 the powers could not have been invoked by the authorities and, therefore, the entire exercise of issuance of notice under Section 148A of the Act of 1961 upto passing of the assessment order under Section 148 of the Act of 1961, deserves to be quashed and set aside.

12.

Reliance has been placed on judgement passed in the case of Abdul Majeed (supra). 13. Learned counsel appearing for the respondent made submissions that once the order of the assessment was issued, the petitioner is to avail the alternate remedy. However, submissions have been made that it has been found as a fact that the petitioner could not explain cash transactions to the tune of Rs.15,00,000/- and therefore, no case for interference is made out. However, it is not denied, based on the orders passed by the authorities, that the cash transactions were amounting to Rs.33,62,000/- only.

14.

We have considered the submissions made by learned counsel for the parties and perused the material available on record.

15.

The facts are not in dispute, wherein, the notice under Section 148A of the Act of 1961 for assessment year 2015-16 was issued on 17.03.2022 i.e. by revoking the extended period of limitation purportedly on the ground that the cash transactions were amounting to Rs.59,75,000/-.

16.

The petitioner promptly responded to the said notice by specifically indicating that the sum of cash transactions was Rs.33,62,000/- only i.e. less than Rs.50,00,000/- and as the notice was issued after three years from the assessment year, the same was barred by limitation.

17.

The order under Section 148A(d) of the Act of 1961, on the said aspect reads as under:

“As per the specific information assessee deposited cash of Rs. 26,13,000/- and 33,62,000/- in Punjab National Bank. As per specific information assessee is cash deposit of Rs. 26,13,000/- in Punjab National Bank, above information uploaded by TAN(JPR02089D) and assessee is also cash deposit of Rs. 33,62,000/- in Punjab National Bank above information uploaded by TAN(DELP09943D) As per reply filed by assessee and material available on record assessee total amount deposited in cash or Rs. 59,75,000 during the financial year 2014-15. Therefore, total income of Rs. 59,75,000 left from escape the assessment for assessment year 2015-16. Thus it is logical to conclude that the assessee has no proper explanation with respect to the above mentioned escapement of income in his case for AY 2015-16.”

18.

A perusal of the above would reveal that the authority despite the specific indications made by the petitioner, without application of mind and in a wholly mechanical manner came to the conclusion that the amount deposited in cash was Rs.59,75,000/- and consequently, found it a fit case under section 148 of the Act of 1961.

19.

During the pendency of assessment proceedings pursuant to notice under Section 148 of the Act of 1961, a show cause notice dated 06.03.2023 (Annexure-4A) was issued to the petitioner inter-alia observing as under:

“Thus in the light of the above reasons, you are showcaused as to why the cash deposited to the tune of Rs. 33,62,000 in the Bank shouldn’t be treated as unexplained money of the assessee under section 69A rws 115BBE of the IT Act and taxed accordingly as assessee has failed to disclose with documentary evidence the source of the cash deposited in the bank account 261800010002577 in PNB.” (emphasis supplied)

20.

It would seem that the assessing authority accepted the plea of the petitioner regarding the cash deposits of Rs.33,62,000/- only. However, choose to issue a show cause notice purportedly under Section 69A read with Section 115BBE of the Act of 1961 to the petitioner, to which the petitioner filed response and raised objections about the jurisdiction to proceed further in the matter/issue show cause notice during pendency of the proceedings under Section 148 of the Act of 1961.

21.

However, the assessment order dated 27.03.2023 (Annexure-4C) was issued, wherein, the authority on the law cited by the petitioner in the case of Abdul Majeed (supra) observed that he had no jurisdiction to come to a conclusion based on the said judgement and determined the total income as Rs.15,18,900/-.

22.

From the above it is apparent that though the notice was issued on the assumption that the cash deposits were Rs.59,75,000/- by invoking extended period of limitation, as a fact, it was found that the same was Rs.33,62,000/- only and once, the said aspect was clear to the authority, the authority lost its jurisdiction to further continue with the proceedings as the limitation under Section 149(1)(a) of the Act of 1961 of three years would trigger and the authority would lose the jurisdiction on account of limitation, as the amount was less than Rs.50,00,000/-.

23.

However, the authority while passing the order under Section 148A(d) of the Act of 1961, in a wholly mechanical manner rejected the plea and proceeded to issue notice under Section 148 of the Act of 1961. Whereafter, proceedings were sought to be converted into notice under Section 69A read with Section 115 BBE of the Act of 1961, which action also is wholly impermissible. Once the notice under Section 148A of the Act of 1961 is found to be barred by limitation, no further proceedings could be initiated under any of the provisions of the Act of 1961 and the purported exercise of jurisdiction pursuant to notice under Section 148A of the Act of 1961 could not be initiated or proceeded with.

24.

A Co-ordinate Bench of this Court in the case of Abdul Majeed (supra) inter-alia laid down as under:

“On conjoint reading of the provisions contained in Section 148A of the Act and what has been provided under Section 149 of the Act, it is vividly clear that in order to initiate proceedings under Section 148A of the Act, it is not enough that in case where notice is proposed to be issued under Section 148 of the Act after three years have elapsed from the end of the relevant assessment year that there should exist material available on record to reach to conclusion that some income chargeable to tax has escaped assessment, but the amount should be more than Rs.50,00,000/-. Only on the basis that the cash deposits of Rs.19,39,000/- chargeable to tax have escaped assessment, without anything more, the authority was not justified in jumping to the conclusion that the assessee may have more bank accounts. If such an interpretation is placed on the provision of Section 148A(d) of the Act with reference to expression ‘material available on record’, then in that case, it will open flood gate and even without availability of any material, the authority would be initiating proceedings under Section 148 of the Act, which will completely frustrate the object of incorporation of Section 148A in the Act. It is well settled principle of interpretation that the taxing statute is required to be construed strictly. The interpretation as has been suggested by the learned counsel for the revenue cannot be placed upon the expression ‘material available on record’ to include possibility of collection of any relevant or tangible material for opening of proceedings under Section 148A of the Act.”

25.

In view of above discussion and following the dictum of this Court in case of Abdul Majeed (supra), the action of the respondent being barred by limitation cannot be sustained. 26. Consequently, the writ petition filed by the petitioner is allowed. The show cause notice dated 17.03.2022 issued under Section 148A(b) of the Act of 1961 (Annexure-1) and all consequential proceedings and assessment order are quashed and set aside.”

7.

Respectfully following the same, I hold that the assumption of jurisdiction by the ld AO for reopening is flawed and consequential framing of reassessment proceedings are hereby quashed as void ab initio. Accordingly, the additional grounds raised by the assessee are allowed. Since, the reassessment is quashed, the adjudication of other factual and legal grounds become academic in nature and they are left open.

8.

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

Order pronounced in the open court on 02/06/2026.

-Sd/- (M. BALAGANESH) ACCOUNTANT MEMBER Dated: 02/06/2026 A K Keot

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