R1589 UYYAKONDAN TIRUMALAI PRIMARY AGRICULTURAL COOPERATIVE SOCIETY LIMITED,TRICHY vs. INCOME TAX OFFICER, WARD 2(1), TRICHY, TRICHY

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ITA 2597/CHNY/2026Status: DisposedITAT Chennai02 July 2026AY 2015-169 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the notice for reassessment under Section 148 was issued beyond the limitation period prescribed under the unamended Section 149(1) for AY 2015-16. Consequently, the reassessment proceedings and the assessment order were quashed as invalid.

What were the facts?

The assessee, a co-operative society, did not file its return of income for AY 2015-16. The AO initiated reassessment proceedings under Section 147 based on cash deposits in the assessee's bank account, treating them as unexplained money and disallowing a deduction under Section 80P.

What were the issues?

Whether the reassessment proceedings initiated by issuing a notice under Section 148 were barred by limitation, rendering the entire proceedings invalid.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 149,Section 69A,Section 115BBE,Section 80P

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘D’ BENCH, CHENNAI

Before: SHRI GEORGE GEORGE K & SHRI S.R. RAGHUNATHA

Hearing: 18.06.2026Pronounced: 02.07.2026

आयकर अपीलीय अधिकरण, ‘डी’ न्यायपीठ, चेन्नई IN THE INCOME TAX APPELLATE TRIBUNAL ‘D’ BENCH, CHENNAI श्री जॉजज जॉजज के, उपाध्यक्ष एवं श्री एस.आर.रघुनाथा, लेखा सदस्य के समक्ष BEFORE SHRI GEORGE GEORGE K, VICE PRESIDENT AND SHRI S.R. RAGHUNATHA, ACCOUNTANT MEMBER आयकर अपील सं./ITA Nos. 2597/Chny/2026 ननिाारण वर्ा / Assessment Years : 2015-16 R1589 Uyyakondan Tirumalai The Income Tax Officer Primary Agricultural Co- vs. Ward 2(1) operative Society Limited Trichy. Nachikuruchi, Somarasampettai Post, Srirangam Trichy, Tiruchirappalli – 620 102. [PAN: AABAR2093Q] (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) अपीलार्थी की ओर से/Appellant by : Shri. R.Venkataraman, CA प्रत्यर्थी की ओर से/Respondent by : Shri. Manjunath H.S., Addl.CIT सुनवाई की तारीख/Date of Hearing : 18.06.2026 घोर्णा की तारीख/Date of Pronouncement : 02.07.2026 आदेश /O R D E R PER S. R. RAGHUNATHA, AM : The present appeal has been preferred by the assessee against the order dated 11.02.2026 passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi (hereinafter referred to as "the Ld. CIT(A)"), arising out of the assessment order dated 12.03.2024 passed by the Assessing Officer, Assessment Unit, National Faceless Assessment

:-2-: ITA. No:2597/Chny/2026 Centre, Delhi (hereinafter referred to as "the AO") u/s.147 of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), for the Assessment Year 2015-16.

2.

The assessee has raised the following grounds of appeal:

1.

That the Learned Commissioner of Income Tax (Appeals), NFAC, Delhi (“Ld. CIT(A)”) erred in law and on facts in failing to appreciate that the notice issued u/s.148 of the Income-tax Act, 1961 (“the Act”) dated 09.04.2022 was issued beyond the prescribed limitation period of six years under the first proviso to the unamended section 149(1) of the Act and is therefore time- barred; consequently, the reassessment proceedings initiated thereunder and the assessment order dated 12.03.2024 passed by the Assessing Officer u/s.147 of the Act are without jurisdiction, invalid, and liable to be quashed as void ab initio. Without prejudice to the above, the following grounds of appeal are raised: 2. That the Ld.CIT(A) erred in law and on facts in confirming the addition of Rs.1,27,34,672/- made by the Assessing Officer u/s.69A r.w.s 115BBE of the Act, by wrongly treating the cash deposits in the Appellant’s bank accounts as unexplained money, without properly appreciating the facts, circumstances, and evidence on record. 3. That the Ld.CIT(A) failed to appreciate that the provisions of section 69A of the Act are not applicable to the facts and circumstances of the case of the Appellant. 4. That the Ld.CIT(A) erred in law and on facts in failing to appreciate that the cash deposits made in the Appellant’s bank accounts represented realizations from the Appellant’s regular business activities, duly arising in the normal course of business, and therefore the same could not be treated as unexplained money u/s.69A r.w.s 115BBE of the Act. 5. That the Ld.CIT(A) erred in law and on facts in upholding the action of the Assessing Officer in disallowing the Appellant’s claim for deduction u/s.80P of the Act, amounting to Rs. 90,76,563/-. 3. The brief facts of the case, as borne out from the assessment records, are that the assessee is a co-operative society. It is an admitted position that the assessee did not file its return of income for the impugned assessment year within the time prescribed u/s.139(1) of the Act. Subsequently, based on information available on the Insight Portal of the Income-tax Department indicating cash deposits aggregating to Rs.1,27,34,672/- in the savings bank account maintained with Trichy District Central Co-operative Bank Ltd., Ramalinga Nagar Branch, the AO formed a prima facie belief that income chargeable to tax had escaped assessment. Accordingly, after following the

:-3-: ITA. No:2597/Chny/2026 procedure prescribed under the Act, an order u/s.148A(d) of the Act dated 09.04.2022 was passed holding that it was a fit case for issuance of notice u/s.148 of the Act, and consequently, notice u/s.148 of the Act was issued on the same date. In response to the said notice, the assessee furnished its return of income on 23.02.2023 declaring 'Nil' income after claiming deduction of Rs.90,76,563/- u/s.80P of the Act.

4.

During the course of reassessment proceedings, the assessee explained that it is a primary agricultural co-operative credit society engaged in providing short-term and medium-term credit facilities to its members, who are predominantly agriculturists residing in rural areas. It was submitted that the loans are extended exclusively to the members of the society for agricultural purposes and that the society also carries on the activity of distribution of essential commodities under the Public Distribution System of the Government of Tamil Nadu. With regard to the cash deposits reflected in the bank account, the assessee contended that the said deposits represented repayments of agricultural loans collected in cash from its members in the ordinary course of its business and, therefore, did not constitute unexplained money.

5.

The AO, however, observed that the assessee had failed to substantiate the aforesaid explanation by producing the cash book and other supporting records. Being unconvinced with the explanation offered, the AO rejected the same and treated the cash deposits amounting to Rs.1,27,34,672/- as unexplained money u/s.69A of the Act and subjected the same to tax in accordance with the provisions of section 115BBE of the Act. The AO further disallowed the deduction of Rs.90,76,563/- claimed by the assessee u/s.80P of the Act. Consequently, the assessment was completed u/s.147 of the Act vide order dated 12.03.2024, determining the total income at Rs.1,27,34,672/- by making the addition towards unexplained money u/s.69A of the Act and by denying the deduction claimed u/s.80P of the Act.

:-4-: ITA. No:2597/Chny/2026 6. Aggrieved of the above assessment order, assessee carried the matter in appeal before the Ld.CIT(A), who vide the impugned appellate order dated 11.02.2026 dismissed the appeal of the assessee.

7.

Aggrieved of the order of the Ld.CIT(A), assessee is in appeal before this Tribunal.

8.

At the outset, the assessee sought to raise a legal ground challenging the validity of the reassessment proceedings on the basis that the reopening of the assessment was barred by limitation. The relevant ground of appeal raised by the assessee reads as under:

1.

That the Learned Commissioner of Income Tax (Appeals), NFAC, Delhi (“Ld. CIT(A)”) erred in law and on facts in failing to appreciate that the notice issued u/s.148 of the Income-tax Act, 1961 (“the Act”) dated 09.04.2022 was issued beyond the prescribed limitation period of six years under the first proviso to the unamended section 149(1) of the Act and is therefore time-barred; consequently, the reassessment proceedings initiated thereunder and the assessment order dated 12.03.2024 passed by the Assessing Officer u/s.147 of the Act are without jurisdiction, invalid, and liable to be quashed as void ab initio. 9. The Ld. AR assailed the validity of the reassessment proceedings initiated u/s. 147 of the Act, contending that the assumption of jurisdiction by the AO was wholly without sanction of law and, consequently, the entire reassessment proceedings are liable to be declared void ab initio. It was submitted that the notice issued u/s. 148 of the Act dated 09.04.2022 is ex facie barred by limitation and, therefore, incapable of conferring valid jurisdiction upon the AO to reopen the assessment.

10.

Elaborating the aforesaid contention, the Ld. AR submitted that, in respect of A.Y. 2015-16, the period of limitation prescribed under the erstwhile provisions of section 149(1) of the Act, as they stood prior to their substitution by the Finance Act, 2021, expired on 31.03.2022. Admittedly, the impugned notice u/s. 148 was issued only on 09.04.2022, i.e., subsequent to the expiry of the limitation period available under the unamended provisions. It was argued that the Revenue cannot seek refuge under the amended provisions introduced

:-5-: ITA. No:2597/Chny/2026 by the Finance Act, 2021, in view of the express mandate contained in the first proviso to section 149 of the Act, which protects cases where the limitation had already expired under the erstwhile regime. According to the Ld. AR, once the Revenue's right to issue a notice u/s. 148 stood extinguished on 31.03.2022, the same could not be revived by operation of the amended statutory framework. Consequently, the notice dated 09.04.2022 being hopelessly barred by limitation is invalid in law, and all proceedings emanating therefrom, including the reassessment order, are liable to be annulled. In support of the aforesaid proposition, reliance was placed on the decisions of the Co-ordinate Bench of this Tribunal in ITA Nos. 3188/Chny/2025 dated 27.01.2026 and 866/Chny/2026 dated 08.06.2026.

11.

Per contra, the Ld. Departmental Representative ("Ld. DR") strongly relied upon the orders of the lower authorities and submitted that the notice issued u/s. 148 of the Act on 09.04.2022 is duly protected by the amended provisions of section 149. It was contended that the reassessment proceedings were initiated strictly in accordance with the substituted statutory scheme and, therefore, cannot be regarded as time-barred. The Ld. DR accordingly submitted that the reassessment proceedings are legally valid and the preliminary ground raised by the assessee deserves to be rejected.

12.

We have carefully considered the rival submissions, perused the orders of the authorities below, and examined the material placed on record. We have also duly considered the judicial precedents cited before us. Upon a careful consideration of the matter, we find substantial force in the preliminary legal ground raised by the assessee challenging the very assumption of jurisdiction u/s. 147 and 148 of the Act. The relevant facts are undisputed. The assessment year under consideration is A.Y. 2015-16. It is an admitted position that, under the erstwhile provisions of section 149 of the Act, the period available to the Revenue for issuance of notice u/s. 148 expired on 31.03.2022. Equally undisputed is the fact that the impugned notice u/s. 148 came to be issued only on 09.04.2022. In our considered opinion, the issue is no longer res integra and

:-6-: ITA. No:2597/Chny/2026 stands concluded by the express provisions of the first proviso to section 149 of the Act, inserted by the Finance Act, 2021, as well as by the authoritative pronouncements of the Hon'ble Supreme Court. The first proviso to section 149 categorically stipulates that no notice u/s. 148 shall be issued at any time in a case pertaining to an assessment year beginning on or before 01.04.2021 if such notice could not have been issued on account of being beyond the time limit prescribed under clause (b) of subsection (1) of section 149, as it stood immediately prior to the commencement of the Finance Act, 2021.The legislative intent is thus manifest. Where the limitation prescribed under the erstwhile provisions had already expired, the amended regime does not authorize the revival of a proceeding that had become barred by time. The substituted provisions cannot be invoked to resurrect a jurisdiction which stood extinguished under the earlier statutory framework.

13.

The aforesaid legal position now stands authoritatively settled by the Hon'ble Supreme Court in the case of The Income Tax Officer & Anr. vs. Sri Sai Kumar Mateti & Ors., Civil Appeal No. … of 2026 arising out of SLP (Civil) No. 8682 of 2024, order dated 04.05.2026. While dealing with a batch of reassessment matters, the Hon'ble Apex Court specifically recorded the concession of the Revenue that notices issued for A.Y. 2015-16 would be barred by limitation in view of the judgment rendered in Union of India & Ors. vs. Rajeev Bansal, 2024 SCC OnLine SC 2693. The Hon'ble Supreme Court further observed that, insofar as reassessment proceedings pertaining to A.Y. 2015-16 are concerned, the notices are liable to be struck down as time-barred and no further adjudicatory exercise would be necessary except to declare such notices invalid. The relevant observations of the Hon'ble Supreme Court are reproduced hereunder:

:-7-: ITA. No:2597/Chny/2026

O R D E R 1. Delay condoned. 2. Leave granted. 3. This batch of civil appeals comprising 103 cases is slightly different than those cases which came to be disposed of by a three Judge Bench of this Court, including both of us (Surya Kant, CJI. And Joymalya Bagchi, J.), vide order dated 10.04.2026 passed in Civil Appeal No. 4716 of 2026 and connected matters. 4. The instant cases were segregated through the above-mentioned order on the premise that they may be pertaining to Assessment Year 2015-16. It is fairly conceded by Mr. N. Venkataraman, ld. Additional Solicitor General of India, representing the Revenue, that in the assessment cases pertaining to the year 2015-16, the notices issued/proposed to be issued for reassessment would stand barred by time in light of the view taken by this Court in Union of India & Ors. v. Rajeev Bansal, 2024 SCC OnLine SC 2693. 5. There is no quarrel that if the instant cases are found to pertain to Assessment Year 2015-16, then the impugned notices are liable to be struck down outrightly in terms of the concession on behalf of the Department recorded in paragraph 19(f) of Rajeev Bansal (supra) and reiterated before us by the ld. Additional Solicitor General of India 6. However, if it is found that these cases pertain to an assessment year other than 2015-16, the respondent-assessees shall be entitled to raise all the contentions that have been permitted by this Court vide order dated 10.04.2026. Ordered accordingly. 7. Consequently, keeping in mind the reasons set out in order dated 10.04.2026, the impugned judgment in each appeal is set aside and the instant appeals are disposed of by remitting the matters to the jurisdictional High Courts for redetermination of the issues. As observed above, the High Courts shall firstly determine whether the matters pertain to Assessment Year 2015-16. If it is found to be so, no further adjudicatory exercise shall be required to be undertaken by the High Court, except to declare the notices as being time-barred in light of Rajeev Bansal (supra). However, if it is found that the case does not pertain to Assessment Year 2015 16, then all the issues shall be resolved in terms of the order dated 10.04.2026 passed in Civil Appeal No. 4716 of 2026. 8. Pending application(s), if any, including application(s) for substitution and impleadment/intervention stand closed. ..........................CJI. (SURYA KANT) ..........................J. (JOYMALYA BAGCHI) NEW DELHI; MAY 04, 2026. 14. The legal position emerging from the aforesaid decisions of the Hon'ble Supreme Court admits to no ambiguity. In the present case, it is an undisputed fact that the assessment year involved is A.Y.2015-16 and that the notice u/s.

:-8-: ITA. No:2597/Chny/2026 148 of the Act was issued on 09.04.2022, i.e., after the expiry of the period of limitation on 31.03.2022 as prescribed under the erstwhile provisions of section 149 of the Act. Consequently, the impugned notice is clearly barred by limitation and, therefore, suffers from an inherent lack of jurisdiction.

15.

Respectfully following the precedent laid down by the Hon'ble Supreme Court in Sri Sai Kumar Mateti & Others (supra) and Rajeev Bansal (supra), we hold that the notice issued u/s. 148 of the Act dated 09.04.2022 for A.Y. 2015- 16 is invalid in law and void ab initio, having been issued beyond the period of limitation prescribed under the Act. The very assumption of jurisdiction by the AO u/s.147 of the Act is, therefore, unsustainable and without the authority of law. As a necessary consequence, all proceedings initiated pursuant to such invalid notice, including the reassessment order dated 12.03.2024 passed u/s. 147 of the Act, stand vitiated and are accordingly quashed.

16.

Having annulled the reassessment proceedings on the preliminary jurisdictional issue, any adjudication on the merits of the additions made therein would be merely academic and devoid of practical consequence.

17.

In the result, the appeal filed by the assessee is allowed.

Order pronounced in the court on 02nd July, 2026 at Chennai.

Sd/- Sd/- (जॉजा जॉजा के) (एस. आर. रघुनार्था) (GEORGE GEORGE K) (S. R. RAGHUNATHA) उपाध्यक्ष /VICE PRESIDENT लेखा सदस्य/ACCOUNTANT MEMBER चेन्नई/Chennai, ददनांक/Dated, the 02nd July, 2026. Devadas

:-9-: ITA. No:2597/Chny/2026 आदेश की प्रनतललपप अग्रेपर्त/Copy to: 1. अपीलार्थी/Appellant 2. प्रत्यर्थी/Respondent 3.आयकर आयुक्त/CIT– Chennai/Coimbatore/Madurai/Salem 4. पवभागीय प्रनतननधि/DR 5. गाडा फाईल/GF DEVADAS Digitally signed by DEVADAS GOPALANACHARY GOPALANACHARY Date: 2026.07.07 18:15:27 +05'30'

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