BILLAPATI MOHAN REDDY,NALGONDA vs. ITO, WARD -1, NALGONDA

PDF · subscribers
ITA 238/HYD/2026Status: DisposedITAT Hyderabad24 June 2026AY 2016-178 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the AO had considered incorrect information regarding cash deposits, leading to an erroneous calculation of income escaping assessment. Consequently, the notice issued under Section 148 beyond three years from the end of the assessment year was found to be barred by limitation.

What were the facts?

The assessee's assessment was reopened for AY 2016-17, with a notice under Section 148 issued on April 1, 2023. The Assessing Officer (AO) considered cash deposits totaling Rs. 51,48,400 as income escaping assessment. The assessee argued that the notice was time-barred as the actual income escaping assessment was less than Rs. 50 lakhs.

What were the issues?

Whether the notice issued under Section 148 was valid and within the limitation period prescribed by Section 149, considering the quantum of income escaping assessment.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 148A,Section 149,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘A’ Bench, Hyderabad

Before: SHRI VIJAY PAL RAO, HON’BLE & SHRI MANJUNATHA.G, HON’BLE

Hearing: 24.06.2026

आदेश / O R D E R PER MANJUNATHA.G, AM:

This appeal filed by the assessee is directed against the order of the

Commissioner of Income Tax (Appeals), National Faceless Appeal Centre

(NFAC), Delhi, dated 28.11.2025, and pertains to assessment year 2016-

17.

2.

The assessee has raised the following grounds of appeal:

1.

Ground The Assessment order passed U/s 147 rws 144 and Sec 144B determining the assessed income at Rs 51,48,400 and determining the taxes and other liabilities at Rs 48,67,904 is void ab initio as the notice U/s 148 and the order U/s 148A(d) were issued OR passed by the Jurisdictional Assessing Officer which is in contravention of the provisions of E-Assessment Scheme

2.

Ground The Ld. CIT-A of the NFAC erred in dismissing the Appeal filed by the Appellant on the ground that the Appeal was filed before it with a delay of 146 days without properly appreciating the fact that there is a sufficient and valid reason for such delay

3.

Ground The CIT-A of NFAC and the AO erred in confirming / bringing to tax the amount of Rs 51,48,400 invoking the provisions of Sec 69A without properly appreciating the fact that the sources of the deposits were explained

4.

Ground The CIT-A OR the assessing officer erred in denying the TDS amount of Rs 3,983 before quantifying the final demands in the assessment order

5.

Ground The CIT-A OR the assessing officer erred in demanding the interest amount of Rs 16,06,708 U/s 234A and interest amount of Rs 16,70,340 U/s 234B

6.

Ground The Appellant craves leave to add, amend, alter, vary and OR withdraw any OR all the above grounds of appeal

3.

The assessee has also filed a petition for admission of additional

grounds by raising a legal ground challenging validity of notice issued

u/s.148 of the Act dated 01.04.2023 in light of income escaped

assessement and argued that the additional ground filed by the assessee

is purely on legal ground which can be filed at any time including pending

proceedings before the appellate authorities and thus, in view of decision

of the Hon’ble Supreme Court in the case of NTPC Ltd. v. CIT reported in

[1998] 229 ITR 383 (SC), the additional ground filed by the assessee may

be admitted for adjudication.

:: 3 :: 4. The Ld.Sr.AR has not seriously raised objection for admitting

additional ground filed by the assessee.

5.

We have heard both the parties, and considered relevant petition

filed by the assessee for admission of additional ground and upon

considering relevant ground, we find that the assessee has taken a legal

ground challenging notice issued by the AO u/s.148 of the Act dated

01.04.2023 in light of limitation provided for issuing notice u/s.149 of the

Act. Further, the ground taken by the assessee is a legal ground which

can be taken at any time of proceedings as held by the Hon’ble Supreme

Court in the case of NTPC Ltd. (supra). Therefore, we admit the additional

ground filed by the assessee.

6.

The Ld. Counsel for the assessee, referring to additional ground

submitted that the AO issued notice u/s.148 of the Act on 01.04.2023

which is beyond three years from the end of the relevant assessement

year and in such case, re-assessement notice can be issued if income

escaping assessement is more than Rs.50 lakhs for any assessement

year. In the present case, going by the notice issued by the AO

u/s.148A(b) of the Act dated 18.03.2023, the AO was considered the cash

deposits of Rs.49,45,400/- as per the AIR information and cash deposits

of Rs.2,03,000/- as per the CIB information, however, the subsequent

cash deposits of Rs.2,03,000/- considered by the AO is already included

in total cash deposits of Rs.49,45,400/- and therefore, income escaping :: 4 :: assessement for the year under consideration as per the information with

the AO is less than Rs.50 lakhs and thus, the AO ought not to have issued

notice u/s.148 of the Act on 01.04.2023, because, it is clearly barred by

limitation as per Section 149(1)(b) of the Act.

7.

The Sr.AR, on the other hand, submitted that the assessee has not

explained his case in response to notice issued u/s.148A(b) of the Act.

Further, the AO has considered the information available with the

department which clearly shows income escaping assessement of

Rs.51,48,400/-. At the time of initiation of re-assessement proceedings,

the AO not required to prove escapement of income and what is required

to be seen is prima facie material which suggest escapement of income.

In the present case, material available with the AO clearly shows income

escaping assessement of more than Rs.50 lakhs and since the assessee

has not responded to notice u/s.148A(b) of the Act, the reopening of

assessement can’t be challenged at this stage. Therefore, the additional

ground filed by the assessee should be rejected.

8.

We have heard both the parties, perused the materials available on

record and had gone through orders of the authorities below. There is no

dispute with regard to the fact that the assessement has been reopened

u/s.147 of the Act for AY 2016-17 and the AO has issued notice u/s.148

of the Act on 01.04.2023 which is beyond three years from the end of the

relevant assessement year. The provisions of Sec.149 of the Act deals :: 5 :: with limitation of notice u/s.148 of the Act and as per section 149(1)(b) of

the Act, no notice u/s.149 of the Act shall be issued for relevant

assessement year, if three years but not more than ‘10’ years have been

lapsed from the end of the relevant assessement year, unless the AO has

in his possession books of accounts or other documents or evidences

which reveals that the income chargeable to tax in the form of asset or

expenditure or entry in the books of accounts which is escaping

assessement amounts to Rs.50 lakhs or more. In the present case, as

per the notice issued by the AO u/s.148A(b) of the Act, the AO has

considered cash deposits into savings bank account of Rs.51,48,400/- and

claimed income escaping assessement is more than Rs.50 lakhs and

issued notice u/s.148 of the Act beyond three years from the end of the

relevant assessement year. However, going by the information considered

by the AO, in our considered view, the AO had considered total cash

deposits into Union Bank of India savings a/c for the period from

01.04.2015 to 31.03.2016 and as per the bank account submitted by the

assessee, the total cash deposits into bank for the entire Financial Year

was at Rs.49,45,400/- and the same has been reported under AIR-001

code in the category of cash deposits of Rs.10 lakhs or more in savings

bank account. The other cash deposits of Rs.2,03,000/- considered by

the AO under the code CIB-410 in the category deposit in cash aggregate

Rs.2 lakhs or more with a banking company is already included in total

cash reported under AIR-001 code amounting to Rs.49,45,400/- which is :: 6 :: evident from the relevant bank statement filed by the assessee where the

assessee has made cash deposits of Rs.2,03,000/- into savings bank

account on 23.08.2015. From the above information, it appears that the

AO had considered cash deposits of Rs.2,03,000/- on 23.08.2015 into

savings bank account two times as per the information reported under

different codes which results in considering incorrect information or non-

existing information for the purpose of determining the quantum of

income escaping assessement so as to consider whether notice can be

issued u/s.148 of the Act or not. Since the AO has considered incorrect

information or non-existing information, in our considered view,

reopening of assessement in the given facts of the present case, amounts

to reopening of assessement without any valid information which suggest

escapement of assessement income in excess of the specified limit for

issue of notice u/s.148 of the Act as per Section 149(1)(b) of the Act

beyond three years. Therefore, in our considered view, notice issued

u/s.148 of the Act dated 01.04.2023 on the basis of incorrect information

or not existing information can’t be considered as a valid notice in view of

specific provisions of Sec.149(1)(b) of the Act, where the law is very clear

in as much as beyond the three years from the end of the relevant

assessement year, notice u/s.148 of the Act can be issued only in a case

where income escaping assessement is likely to be more than Rs.50

lakhs. In the present case, going by the information available with the

AO, in our considered view, although, the AO has considered the bank :: 7 :: account of the assessee for the purpose of reopening of assessement, but

failed to verify relevant bank account to ascertain the correct amount of

cash deposits into bank account which resulted in considering incorrect

information for the purpose of issuing notice u/s.148 of the Act. Thus, we

are of the considered view that notice issued by the AO u/s.148 of the Act

dated 01.04.2023 for AY 2016-17 is barred by limitation, because, said

notice has been issued beyond a period of three years from the end of the

relevant assessement year. Thus, we quashed notice issued by the AO

u/s.148 of the Act dated 01.04.2023 and consequent assessement order

passed by the AO u/s.147 r.w.s.143(3) of the Act dated 02.01.2025.

9.

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

Order pronounced on the 24th day of June, 2026, in Hyderabad. Sd/- Sd/- (िवजय पाल राव) (मंजूनाथा. जी) (VIJAY PAL RAO) (MANJUNATHA.G) उपा�� /VICE-PRESIDENT लेखा सद�/ACCOUNTANT MEMBER

Hyderabad, dated 24.06.2026. TLN

आदेशकी �ितिलिप अ�ेिषत/ Copy of the order forwarded to:

िनधा�रती/The 1 : Billapati Mohan Reddy, 1-95, Thelakantigudem, Charlagowraram, Nalgonda- Assessee 508 004. राज�/ The Revenue 2 : The ITO, Ward-1, Nalgonda.

The Principal Commissioner of Income Tax, Hyderabad. 3 िवभागीय�ितिनिध, आयकर अपीलीय अिधकरण, हैदराबाद / DR, ITAT Hyderabad. 4 गाड�फ़ाईल / Guard file 5

आदेशानुसार / BY ORDER TUMMALACHARLA Digitally signed by TUMMALACHARLA LAKSHMI NARAYANA DN: cn=TUMMALACHARLA LAKSHMI LAKSHMI NARAYANA, c=IN, o=INCOME TAX APPELLATE TRIBUNAL, ou=INCOME TAX NARAYANA APPELLATE TRIBUNAL, CHENNAI BENCH Date: 2026.06.24 12:48:27 +05'30'

Sr. Private Secretary ITAT, Hyderabad

More judgments on Section 147

All 49,210 judgments and leading authorities on Section 147 →

Recent GST High Court judgments

Search GST case law →