DONKALA CHENCHU NARASIMHA RAO,NELLORE vs. THE DCIT, CENTRAL CIRCLE-1, GUNTUR

PDF · subscribers
ITA 31/VIZ/2026Status: DisposedITAT Visakhapatnam24 June 2026AY 2014-1539 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the reassessment notice issued under Section 148 without following the procedure under Section 148A was invalid. Regarding the addition for unexplained investment, the Tribunal sustained an addition of Rs. 15 lakhs and deleted the balance.

What were the facts?

The assessee challenged additions made by the Assessing Officer and confirmed by the CIT(A) regarding unexplained investment and the validity of the reassessment notice. The reassessment notice was issued under the old Section 148 without following the new procedure under Section 148A.

What were the issues?

Whether the reassessment notice issued under Section 148 without following the procedure under Section 148A is valid. Whether the addition made on account of unexplained investment is justified.

Which sections of the Income-tax Act were involved?

Section 148,Section 148A,Section 69

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, VISAKHAPATNAM DB-BENCH, VISAKHAPATNAM

Before: SHRI VIJAY PAL RAO & SHRI OMKARESHWAR CHIDARA

Pronounced: 24.06.2026

आदेश / ORDER

PER VIJAY PAL RAO, VICE PRESIDENT :

These two appeals by the assessee are directed against two separate Orders of the learned CIT(A), Visakhapatnam-3, Visakhapatnam dated 19.11.2025 and dated 24.11.2025 for the assessment years 2014-2015 and 2017-2018, respectively.

2.

For the assessment year 2014-2015, the Assessee has raised the following grounds of appeal:

1.

“The learned CIT (Appeals) has erred in facts and law while passing the order. 2. On the facts and circumstance of the case, the Learned CIT(A) is not justified in sustaining the addition made of Rs.20,00,000/- as unexplained investment u/s.69 of the Act under substantive basis. 3. On the facts and circumstances of the case, the Learned CIT(A) erred confirming the addition even though no relevant material or any corroborative evidence found during the course of survey proceedings which indicates that the assessee has paid on money over and above the purchase consideration. 4. On the facts and circumstances of the case, the assessment finalized by the Learned Assessing is invalid without intimating the reasons for reopening in spite of specific request made vide letter dated 28-2-2022.

5.

On the facts and circumstances of the case, the decision of the Learned CIT(A) is not acceptable that the assessment as valid in absence of supply of the reasons for reopening on the ground that that the return was filed before reasons sought for and on mentioning the reasons in the notice issued u/s.142(1) of the Act.

6.

On the facts and circumstances of the case, reopening of the assessment u/s.147 of the Act by the Learned Assessing Officer without following the new procedure introduced in Finance Act w.e.f 01-04-2021 is invalid.

7.

On the facts and circumstances of the case, the notice issued by the Learned Assessing Officer u/s.148 of the Act consequent to such invalid reopening of assessment also to be treated as invalid. 8. On the facts and circumstances of the case, The assessment finalized consequents to issued of such invalid notice u/s.148 of the Act also to be considered as invalid and void ab intio. 9. On the facts and circumstances of the case, the decision of the Learned CIT(A) is not acceptable that the assessment made by the Assessing Officer is valid since the same was completed before the outcome of the decision of the Hon’ble Supreme Court in the case of Ashish Agarwal.

10.

On the facts and circumstances of the case, the Learned CIT(A) he would have appreciated that the notice issued u/s.148 of the Act issued after 01- 04-2021 without following the amended procedure of Finance Act 2021 are to be treated as invalid in view of the decisions delivered by various High Courts till the decision of Hon’ble Supreme Court and hence would have held the assessment as invalid and void ab intio.

11.

On the facts and circumstances of the case, the Learned CIT(A) is not justified in holding that the case laws relied upon by the appellant are not applicable without considering that the facts of the appellant case are similar to that of the facts of cases which were referred to in those relevant cases. 12. The appellant may add, alter, modify or substitute any other points to the grounds of appeal at any time before or at the time of hearing of the appeal.”

3.

In ground nos.6 to 10, the assessee has challenged the validity of the notice issued under section 148 dated 28.06. 2021 on the ground that the Assessing Officer has issued notice under the old provisions of section 148 without following the amended provisions of section 148A of the Act.

4.

The learned Authorised Representative of the Assessee has submitted that the copy of the notice issued by the Assessing Officer under section 148 is placed at page-5 of the paper book which shows that even after 01.04.2021 the Assessing Officer has issued the notice under the old provisions for section 148 of the Act, whereas after the amendment of the provisions under section 148A, the Assessing Officer was required to follow the procedure provided under the new regime for reopening of the assessment. He has then referred to the reply of the assessee dated 28.02.2022 and submitted that the assessee has objected to the validity of the notice issued under section 148 of the Act before the Assessing Officer. However, the Assessing Officer has not disposed of the objections filed by the assessee before passing the re-assessment order. Therefore, the re-assessment is otherwise not maintainable and liable to be quashed on this ground alone. He has further submitted that the assessee has also requested the Assessing Officer vide letter/reply filed on 28.02.2022 for supplying the reasons recorded for reopening of the assessment. However, the Assessing Officer failed to supply the reasons and therefore, the non-supply of the reasons and non-disposing of the objections filed by the assessee renders the re-assessment order as invalid. The learned Authorised Representative of the Assessee has referred to Para-3 of the assessment order and submitted that the Assessing Officer has admitted this fact that the assessee raised an objection against the notice issued under section 148 of the Act but the same was not dispose of vide separate order. He has then referred to the Para-6.4 of the CIT(A) order and submitted that the CIT(A) has held that notice issued by the Assessing Officer under section 148 on 28.06.2021 is within the limitation as held by the Hon'ble Supreme Court in the case of Union of India vs. Ashish Agarwal [2022] 138 taxmann.com 64 (SC). He has submitted that the Assessing Officer has not followed even the judgement of Hon'ble Supreme Court by treating the notice issued under section 148 of the Act as notice under section 148A(b) of the Act. Thus, the learned Authorised Representative of the Assessee has submitted that the notice issued by the Assessing Officer under section 148 of the Act without following the procedure under the new regime for reopening of the assessment with effect from 01.04.2021 is invalid and liable to be quashed. In support of his contention, he has relied upon various judgements of Hon’ble High Courts including the judgement of Telangana High Court as well as the Orders of this Tribunal.

5.

On the other hand, the learned DR has relied upon the impugned order of the CIT(A) and submitted that in view of TOLA the limitation expired on 15.3.2020 onwards was extended up-to 30.06.2021. Even the Hon'ble Supreme Court in the case of Union of India vs. Ashish Agarwal (supra), has held that all notices issued during the period under the amended provisions of section 148 of the Act are deemed to be the notices issued under section 148A(b) of the Act.

6.

We have considered the rival submissions as well as relevant material on record. The Assessing Officer has issue notice under section 148 of the Act on 28.06.2021 placed at Page-5 of the paper book as under:

6.1. It is an undisputed fact that the notice was issued by the Assessing Officer after the new regime of reopening of the assessment brought in statute with effect from 01.04.2021 but without following the procedure provided under section 148A of the Act. Further the Assessing Officer has also not followed the Judgement of Hon'ble Supreme Court in the case of Union of India vs. Ashish Agarwal (supra) as assessment order itself was passed by the Assessing Officer before the Judgement of Hon'ble Supreme Court. Therefore, the fact remains that the Assessing Officer has issued notice under section 148 of the Act without following the procedure as applicable for reopening of the assessment with the effect from 01.04.2021. The learned CIT(A) has decided this issue in Para-6.4 of the Order as under:

“6.4. I have considered the appellant's jurisdictional objections raised in Grounds 3, 4, 7 and 8. The notice under section 148 was issued on 28-06-2021, i.e., within the period 01-04-2021 to 30-06-2021. As held by the Hon'ble Supreme Court in Union of ndia v. Ashish Agarwal (2022 SCC OnLine SC 543), all notices issued during this period under the unamended section 148 are deemed to be notices under section 148A(b) of the amended Act.

Although this decision was rendered after the assessment order was passed, it declares the legal position retrospectively. Accordingly, the notice is valid in law. The appellant contends that the AO neither passed an order under section 148A(d) nor furnished the reasons for reopening. However, the record shows that the appellant filed a return on 04- 01-2022 in response to the notice u/s 148 well before requesting reasons on 28-02-2022. The appellant thereafter responded to notices, furnished submissions, and participated in the reassessment proceedings. It is also admitted by the appellant that the notice issued under section 142(1) dated 10.01.2022, at point no. 5, clearly conveyed the very basis for reopening. The appellant further submits that the ratio of Ashish Agarwal and CBDT Instruction No.1/2022 was not followed which mandated to follow the procedure prescribed u/s 148A. In the present case, there is no dispute that the reassessment order was passed on 20/03/2022, i.e., before the judgment and instruction were issued. Therefore, this argument too is misconceived. Considering the survey-based information, the retrospective regularisation mandated by the Hon'ble Supreme Court, the fact that the return was filed before reasons were sought, the disclosure of reasons in the section 142(1) notice, and the appellant's full participation in the proceedings, the jurisdictional conditions for reopening are satisfied. Grounds 3, 4, 7 and 8 are therefore dismissed. The matter is therefore examined on merits.”

6.2. Thus, the CIT(A) has also not disputed that the notice was issued under provisions of section 148 but referring the judgement of Hon'ble Supreme Court in the case of Union of India vs. Ashish Agarwal (supra), the learned CIT(A) has dismissed the grounds raised by the assessee challenging the validity of the notice issued by the Assessing Officer under section 148 of the Act. It is pertinent to note that even the Hon'ble Supreme Court in the case of Union of India vs. Ashish Agarwal (supra) has not held that notice under un-amended provisions of section 148 of the Act after 01.04.2021 is a valid notice but the Hon'ble Supreme Court has allowed the Department to follow the procedure provided under section 148A of the Act as per the new regime of reopening of assessment and thereby, the notice issued under section 148 to be deemed as notice issued under section 148A(b) of the Act so as to follow the procedure provided u/sec.148 of the Act. However, in the case of the assessee no such procedure was followed by the Assessing Officer by treating the notice issued under section 148 as deemed to be the notice under section 148A(b) of the Act. This issue has been considered in a series of Judgements including the Judgment of Hon’ble Bombay High Court as well as Delhi High Court and further it has been considered by the Telangana High Court in the case of Kalyan Chillara v. DCIT (2024) 465 ITR 729 (Telangana). By following the various Judgments, ITAT, Hyderabad Bench in the case of Sama Sangeeta Reddy [GPA Holder Sama Sunil Reddy], Hyderabad vs. DCIT, Central Circle-3(2), Hyderabad in ITA.No.680/Hyd./2025 vide Order dated 24.09.2025 has considered and decided this issue in Para nos.7 to 12 as under: “7. We have heard both the parties, perused the material on record and had gone through the orders of the authorities below. We had also carefully considered the relevant notice issued by the Assessing Officer. Going by the screen-shot taken from ITBA portal and relevant case laws referred to by the Learned Counsel for the Assessee in support of their contentions, no dispute with regard to the fact that, notice issued under section 148 of the Act dated 31.03.2021 was issued on 01.04.2021 at 6.03 hours which is evident from email sent from HYDERABAD.ITO9.1@ incometax.gov.in to the email ID of the assessee krishna efiling @ gmail.com. Although, the learned Sr. AR for the Revenue refers to the digitally signed notice under section 148 of the Act which was on 31.03.2021 at 6.40 hours, in our considered view, the mere generation of notice on the ITBA portal and signing the same, is not sufficient for satisfying the test of issue and it is only when the notice has been dispatched, it would be declared to be issued. In the present case, there is no dispute with regard to the fact that, as per the email communication from the Department, the notice has been sent to the assessee on Thursday i.e., on 01.04.2021 at 6.03 hours and from the above, it is very clear that, notice under section 148 of the Act has been issued and served on the assessee on 01.04.2021. This legal principle is supported by the decision of Hon’ble High Court for the State of Telangana in the case of Kalyan Chillara vs., DCIT (supra) wherein in Para-26.9 of the Order it was clearly held that, “in order to determine when does "dispatch", i.e., the transmission of electronic record or the notices in the present case, from the Department occur, we may first note the precedence set by several High Courts in the context of Income Tax Business Application portal. Under section 13 of the Act of 2000, various High Courts have concluded that, the dispatch of an electronic record occurs when it enters a computer resource outside the control of the originator, i. e, when the Income Tax Business Application's e-mail system is triggered and the e-mail leaves the Income Tax Business Application servers”. In the present case, since the email from the Department i.e., Assessing Officer was triggered on Thursday i.e., on 01.04.2021 at 6.03 hours, in our considered view, it cannot be said that, notice under section 148 of the Act has been issued on 31.03.2021.

8.

Having said so, let us come back, whether notice issued under section 148 of the Act dated 01.04.2021 and subsequent procedure followed by the Assessing Officer including re- assessment order passed under section 143(3) r.w.s.147 of the Act dated 29.03.2022 is in accordance with section 148 and 148A of the Act ? Admittedly, the provisions of section 148 has been amended w.e.f. 01.04.2021 and as per the said amended provisions, any notice issued u/sec.148 of the Act on or after 01.04.2021 should be in accordance with the procedure laid down under section 148A of the Income Tax Act, 1961 and this fact has been reiterated by the Hon’ble Supreme Court in the case of Union of India vs., Ashish Agarwal [2022] 444 ITR 1 (SC). Further, as per section 148A of the Act, the Assessing Officer shall, before issuing any notice under section 148, conduct any enquiry, if required, with the prior approval of the specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment. Further, the Assessing Officer shall provide an opportunity of being heard to the assessee by serving upon him a notice under section 148A(b) of the Income Tax Act, 1961. Further, consider the reply of the assessee furnished, if any, in response to show cause notice referred to in clause (b) of section 148A of the Income Tax Act, 1961. Thereafter, pass an order under section 148A(d) of the Income Tax Act, 1961 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 and issue notice under section 148 of the Act. In the present case, going by the facts available on record, the Assessing Officer has issued notice under section 148 of the Act without following the due procedure provided under section 148A of the Income Tax Act, 1961, which is evident from the notice issued under section 148 of the Act dated 01.04.2021 and subsequent assessment order passed by the Assessing Officer under section 147 r.w.s.144B of the Income Tax Act, 1961 dated 29.03.2022. Further, the Assessing Officer has taken approval from the Pr. CIT instead of from the Pr. CCIT as required u/sec.151 of the Income Tax Act, 1961, where the assessment has been reopened beyond 3 years from the end of the relevant assessment year. Therefore, in our considered view, notice issued u/sec.148 of the Act on 01.04.2021 without due procedure provided u/sec.148A of the Act is illegal, void and thus, consequential assessment order passed by the Assessing Officer u/sec.147 r.w.s.144B of the Income Tax Act, 1961, dated 29.03.2022 is void abinitio and liable to be quashed.

9.

The assessee has relied upon various judicial precedents in support of his contentions. The assessee had relied upon decision of Hon’ble High Court for the State of Telangana in the case of Kalyan Chillara vs., DCIT (supra). We find that, the Hon’ble High Court for the State of Telangana under identical set of facts has held that, where last date for service of notice and initiating proceedings u/sec.148 under the un-amended provisions of Income Tax Act, 1961 coming to an end on 31.03.2021, but, notice had been issued from O/o. the Department either on 01.04.2021 or on subsequent dates, the impugned notice were barred by limitation under section 148 and 149 of the Income Tax Act, 1961. The Hon’ble Supreme Court has upheld the view taken by the Hon’ble High Court for the State of Telangana in the case of Kalyan Chillara by dismissing the SLP filed by the Revenue reported in [2025] 175 taxmann.com 688 (SC). From the ratio laid down by the Hon’ble Supreme Court and Hon’ble High Court of Telangana, it is undisputedly clear that, once notice issued under section 148 of the Act after 01.04.2021, then, it should be as per the new regime of re-assessment proceedings provided under section 148 and 148A of the Income Tax Act, 1961, otherwise, the notice issued under section 148 of the Income Tax Act, 1961 as per old regime is barred by limitation. Therefore, in our considered view, the notice issued under section 148 of the act dated 01.04.2021 without due procedure as per Section 148A of the Act is certainly void abinitio and liable to be quashed. 10. Coming back to the arguments of the Learned Counsel for the Assessee. Learned Counsel for the Assessee argued that, once notice issued under section 148 of the Act was held to be as per new regime of re-assessment under section 148 and 148A of the Income Tax Act, 1961, then, the approval for issue of such notice should be from the Pr. Chief Commissioner of Income Tax as

per section 151 of the Income Tax Act, 1961, whereas in the present case, the Assessing Officer has obtained approval from the Pr. Commissioner of Income Tax, Hyderabad-4, Hyderabad for issuance of notice under section 148 of the Act, which invalidates the said notice. We find that, as per the provisions of section 151 of the Act as amended from 01.04.2021, the Component Authority for sanction of issue of notice under section 148 at the Act is Pr. Chief Commissioner of Income Tax, if more than 3 years have elapsed from the end of the relevant assessment year. In the present case, there is no dispute with regard to the fact that, notice issued for the assessment year 2016-2017 on 01.04.2021 is beyond 3 years from the end of the relevant assessment year and consequently, the Assessing Officer ought to have taken sanction from the Pr. Chief Commissioner of Income Tax instead of Pr. Commissioner of Income Tax, Hyderabad-4, Hyderabad. Therefore, on this count also, notice issued under section 148 of the Income Tax Act, 1961 on 01.04.2021 is invalid and consequent assessment proceedings are bad in law and liable to be quashed. 11. The assessee has relied upon the decision of ITAT, Hyderabad Bench, Hyderabad in the case of Iqbal Ali Jaweed, Hyderabad vs., ITO [INT. TAXN]-1, Hyderabad (supra), in support of his contention. The Coordinate Bench of Hyderabad Tribunal on identical set of facts has held as under : “11. We have heard both the parties, perused the material on record and the orders of the authorities below. There is no dispute with regard to the fact that, reopening in the present case has been taken-up as per the amended provisions of sec.147, 148, 149, 151 of the Income Tax Act, 1961. As per the amended provisions of sec.148 of the Act which is evident from subsequent notices issued by the Assessing Officer u/sec.148 of the Act dated 27.07.2022 where the Assessing Officer in light of the decision of Hon’ble Supreme Court in the case of Union of India vs., Ashish Agarwal (supra), has considered the earlier notice issued u/sec.148, as fresh notice in light of provisions of sec.148A(d) of the Act. Therefore, it is necessary for us to examine the validity of notice issued by the Assessing Officer u/sec.148 of the Act, after obtaining prior approval of the Commissioner of Income Tax [International Taxation]-2, Mumbai accorded on 25.07.2022. Admittedly, the Assessing Officer issued notice u/sec.148 of the Act, after obtaining prior approval of the Commissioner of Income Tax [International Taxation]-2, Mumbai, dated 25.07.2022, but, as per the amended provisions of sec.151(ii) of the Act, the Competent Authority for granting sanction u/sec.151(ii) of the Act, in a case where the assessment has been reopened after 3 years from the end of the relevant assessment year is Pr. CCIT or Pr. Director General of Income Tax, but, not CIT as considered by the learned Assessing Officer. This legal principle is supported by the decision of ITAT, Hyderabad in the case of Raziulla Syed, Hyderabad vs., ITO [Intl. TAXN]-2, Hyderabad in ITA.No.986/Hyd./2024, dated 11.03.2025 for the assessment year 2017-2018, where under identical set of facts, the Tribunal by following certain judicial precedents including the decision of Hon’ble Bombay High Court in the case of Siemens Financial Services (P.) Ltd., vs., DCIT [2023] 457 ITR 647 (Bom.) held as under “7. We have heard the rival submissions of both the parties and perused the material available on record. There is no dispute between the parties that the assessee is a Non-Resident Indian. Admittedly, in the instant case, the assessment has been reopened u/sec.147 of the Act by issuance of notice u/sec.148 of the Act dated 23.04.2021 and by virtue of the order of Hon’ble Supreme Court in the case of Union of India vs. Ashish Agarwal reported in 2022-SC-Online-SC-543, re-assessment notice issued has been treated as notice issued u/sec.148A of the Act and after due procedure final notice u/sec.148 of the Act dated 30.07.2022 was issued. The assessee contends that any re-assessment notice issued u/sec.148 of the Act after 1st April, 2021 falls under New Scheme of re-assessment proceedings and as per sec.151, the approval of the Specified Authority as specified therein should be obtained. According to the assessee, under New Scheme of re-assessment proceedings, the Specified Authority u/sec. 151(ii) of the Act, in case an assessment is reopened after a period of three years from the end of the relevant assessment year, the Principal Chief Commissioner or Principal Director General are the Specified Authority(ies). Since in the present case, the Assessing Officer has issued notice u/sec.148 of the Act dated 30.07.2022 after approval from Principal Commissioner of Income Tax-1, Hyderabad, the said approval is not in accordance with provision of sec.151(ii) of the Act and consequently, the notice issued by the Assessing Officer and assessment order passed u/sec.147 r.w.s.144C(13) of the Act dated 02.03.2024 is illegal, void abinitio and liable to be quashed.

7.1. There is no dispute with regard to the fact that the Assessing Officer issued original notice u/sec.148 of the Act for the assessment year in question on 23.04.2021 and as per new scheme of re-assessment procedure, the same has been treated as notice issued u/sec.148A of the Act in light of decision of Hon’ble Supreme Court in the case of Union of India vs. Ashish Agarwal (supra) and finally re-assessment notice u/sec.148 was issued to the assessee on 30.07.2022 after approval from the Principal Commissioner of Income Tax- 1, Hyderabad dated 27.07.2022. As per the provisions of sec.151(ii) of the Act, if the reopening of the assessment is after three years from the end of the relevant assessment year, then the Specified Authority for grant of approval is Principal Chief Commissioner of Income Tax or Principal Director General of Income Tax and this legal principle is supported by the decision of Hon’ble Supreme Court in the case of Union of India vs. Rajeev Bansal [2024] 167 taxmann.com 70 (SC) wherein the Hon’ble Supreme Court has analysed the issue in light of decision of Hon’ble Supreme Court in the case of Union of India vs. Ashish Agarwal (supra), relevant Circulars/Notifications issued by CBDT and provisions of Taxation and Other Laws Amendment Act, 2021 [in short “TOLA”] and after considering relevant facts held that after 01.04.2021, the New Regime has specified different authorities for granting sanction u/sec.151(ii) of the Act and in case the assessment is reopened after three years from the end of the relevant assessment year, then the Specified Authority to grant sanction is the Principal Chief Commissioner of Income Tax or Principal Director General of Income Tax. In the present case, there is no dispute with regard to the fact that the Assessing Officer issued notice u/sec.148 of the Act dated 30.07.2022 with the prior approval of Principal Commissioner of Income Tax-1, Hyderabad accorded on 27.07.2022 vide Ref.F.No.Pr.CIT-1/Hyd/ 147/2022-23. Therefore, in our considered view, notice issued by the Assessing Officer u/sec.148 of the Act dated 30.07.2022 with the approval of Principal Commissioner of Income Tax-1, Hyderabad dated 27.07.2022 is not in accordance with the provisions of sec.151(ii) of the Act and consequently, the re-assessment order passed by the Assessing Officer u/sec.147 r.w.s.144C(13) of the Act is illegal, void abinitio and liable to be quashed.

7.2. The assessee has relied upon the decision of ITAT, Mumbai in the case of ACIT vs. Manish Financial ITA.No.5055/Mum./2024 wherein the Tribunal after considering the relevant provisions of law and also by following decision of Hon’ble Supreme Court in the case of Union of India vs., Rajeev Bansal (supra) held as under :

"In assessee's case from the perusal of para 3 of the notice issued under section 148 for AY 2016-17 we notice that the same is issued with the prior approval of Pr.CIT- 19 Mumbai accorded on 29.07.2022 vide reference No.Pr.CIT-19/148/2022-23 and this fact is not contravened by the ld DR. For AY 2016-17, the period of three years have elapsed as of 31.03.2020 and the notice is issued beyond three years on 30.07.2022. Therefore as per the decision of the Hon'ble Supreme Court, the approval should have been obtained under the amended provisions of section 151(ii) of the Act i.e. the approval should have been obtained from the Principal Chief Commissioner whereas the approval has been obtained from Pr. CIT as stated in the notice under section 148 itself. Therefore we see merit in the contention of the assessee that the notice under section 148 for AY 2016- 17 is issued without obtaining the prior approval from the appropriate authority. Accordingly we hold that the notice under section 148 is invalid and the consequent assessment under section 147 is liable to be quashed."

7.3. The assessee also relied upon the decision of ITAT, Mumbai Bench in the case of Manish Jagdish Joshi vs. CIT ITA.No.1617/Mum./2024 and the Mumbai Bench of the Tribunal by following the decision of Hon’ble Bombay High Court in the case of Siemens Financial Services (P.) Ltd., vs. DCIT [2023] 457 ITR 647 (Bom.) held as under :

“We find that while considering the similar issue and similar submissions the Hon'ble Jurisdictional High Court in Siemens Financial Services (P.) Ltd. v/s DCIT, (2023) 457 ITR 647 (Bom.) held that TOLA would not affect the scope of section 151 and sanction of Specified Authority was to be obtained in accordance with the law existing when the sanction was obtained. It was further held that where the Assessing Officer issued a reopening notice beyond the period of three years, approval was required to be taken as per provisions of amended section 151 from the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General.

Therefore, respectfully following the aforesaid decision of the Hon'ble Jurisdictional High Court we find no merits in the reliance placed by the Revenue on the provisions of TOLA. As, in the present case, the period of three years has elapsed from the end of the relevant assessment year and the order dated 23/05/2022 was passed under section 148A(d) of the Act after obtaining the approval of the Principal CIT-1, Mumbai vide letter dated 15/07/2022, we are of the considered view that the Revenue has not followed the mandatory provisions of the Act while initiating the reassessment proceedings and sanction of the Specified Authority is not in conformity with the law prevalent at the time of grant of sanction." 7.4. In this view of the matter and by respectfully following the decision of Hon’ble Supreme Court in the case of Union of India vs. Rajeev Bansal (supra) and also the decisions of ITAT, Mumbai Benches, Mumbai in the cases of ACIT vs. Manish Financial and Manish Jagdish Joshi vs. CIT (supra), we are of the considered view that the notice issued by the Assessing Officer u/sec.148 of the Act dated 30.07.2022 by obtaining prior approval from the Principal Commissioner of Income Tax-1, Hyderabad dated 27.07.2022 and consequential final assessment order dated 02.03.2024 passed by the Assessing Officer u/sec.147 r.w.s.144C(13) of the Act is illegal, void abinitio and thus, we quash the final assessment order dated 27.07.2022 passed by the Assessing Officer.” 12. In this view of the matter and considering the facts and circumstances of the present case and also by following the decision of ITAT, Hyderabad Bench, Hyderabad in the case of Raziulla Syed, Hyderabad vs., ITO [Int. TAXN]-2, Hyderabad (supra), we are of the considered view that the notice issued u/sec.148 of the Act dated 27.07.2022 by obtaining prior approval from the Commissioner of Income Tax [International Taxation]-2, Mumbai dated 25.07.2022 is not in accordance with sec.151(ii) of the Income Tax Act, 1961 as applicable from 01.04.2021 onwards. Therefore, we quash the notice issued u/sec.148 of the Act dated 01.04.2021 and 27.07.2022 and consequent Final Assessment Order dated 13.03.2024 passed by the Assessing Officer u/sec.147 r.w.s.144C(13) of the Income Tax Act, 1961. Accordingly, the grounds raised by the assessee for the assessment year 2016-2017 are allowed”.

12.

In this view of the matter and considering the facts of the case and also by following judicial precedents discussed hereinabove, we are of the considered view that, the notice issued under section 148 of the Income Tax Act, 1961 dated 01.04.2021 and consequent assessment order passed by the Assessing Officer under section 147 r.w.s.144B of the Income Tax Act, 1961 dated 29.03.2022 is bad in law, void abinitio and liable to be quashed. We, thus, quash the assessment order passed by the Assessing Officer.”

6.3. Thus, the Tribunal has held that the notice issued on or after 01.04.2021 shall be as per the procedure provided under section 148A of the Act as well as amended provisions of section 151 of the Act. Therefore, the Tribunal has taken a consistent view that the notice issued under section 148 of the Act after 01.04.2021 shall be as per the new reassessment regime and by following the procedure under section 148A of the Act. A notice issued under section 148 after 01.04.2021 without following the new regime is invalid and liable to be quashed. We order accordingly.

7.

Since we have quashed the notice issued under section 148 of the Act being invalid which vitiates the re- assessment order passed by the Assessing Officer. Therefore, we do not propose to take up the other grounds raised by the assessee being academic and infructuous.

8.

In the result appeal ITA.No.31/Vizag./2026 of the assessee is allowed.

ITA.No.32/Viz./2026 – A.Y. 2017-2018 :

9.

The assessee has raised the following grounds of appeal:

1.

“The learned CIT (Appeals) has erred in facts and law while passing the order. 2. On the facts and circumstance of the case, the Learned CIT(A) is not justified in sustaining the addition made of Rs.1,48,64,000/- as unexplained investment u/s.69 of the Act under substantive basis. 3. On the facts and circumstances of the case, the Learned CIT(A) erred confirming the addition made even though no relevant material or any corroborative evidence were found during the course of survey proceedings indicating payment of on money over and above the purchase consideration.

4.

On the facts and circumstance of the case, the Learned CIT(A) ought to have appreciated that the Assessing Officer failed to made enquiry in order to prove that on money has been passed on between the two parties and therefore, would have deleted the addition made. 5. In the facts and circumstance of the case, the Learned CIT(A) ought to have considered that the Assessing Officer has failed to prove the nexus between the notings in the impounded dairy and the alleged on money payment and would have deleted the addition. 6. On the facts and circumstances of the case, the Learned CIT(A) erred in confirming the addition made by the Assessing Officer on the ground that one entry in the dairy notings is matching with the amount paid of Rs.70,00,000/- as per the sale deed and hence the provisions of Section 292 of the Act are applicable. 7. On the facts and circumstances of the case, the Learned CIT(A) ought to have noticed that the appellant has rebutted the contents of the impounded Annexure SLC/A/7 even at the time of survey operation and hence would have examined the other contents of such material in order to verify the genuineness of the transaction. 8. On the facts and circumstances of the case, the Learned CIT(A) erred in not considering the plea of the appellant that there were no such transactions as mentioned in the impounded material in the account of Bank of India held by the assessee during the month of transaction and also the plea that no bank account has been held with SBI.

9.

On the facts and circumstances of the case, the Learned Commissioner of Income Tax (Appeals) is not justified in not appreciating that the reopening the assessment u/s.147 of the I.T.Act without proving that the income assessable to tax has escaped assessment and issue of notice U/s 148 is bad in law.

10.

On the facts and circumstances of the case, the Learned CIT(A) is not justified in holding that the case laws relied upon by the appellant are not applicable without considering the facts that the facts of the appellant case are similar to that of the facts of cases which were referred to in those relevant cases. 11. The appellant may add, alter, modify or substitute any other points to the grounds of appeal at any time before or at the time of hearing of the appeal.”

10.

The learned Authorised Representative of the Assessee has submitted that the assessee is an individual and engaged in the business of electric contract works and also Managing Partner of M/s. Sri Lakshmi Constructions, a partnership firm. The assessee filed his return of income for the assessment year under consideration on 31.12.2017 declaring total income of Rs.46,09,590/-. Thereafter, there was a survey under section 133A of the Act conducted on 19.02.2020 in the business premises of the partnership firm M/s. Sri Lakshmi Constructions, during which, diaries, loose sheets and other material were impounded. Based on the impounded material, the Assessing Officer reopened the assessment by issuing the notice under section 148 of the Act on 30.03.2021. In response to the said notice, the assessee filed his return of income on 20.04.2021 admitting total income of Rs.46,09,590/- as it was admitted in the original return of income. The Assessing Officer has made two additions on account of unexplained cash credit under section 68 of the Act and on account of on-money payment for purchase of property. The assessee challenged the action of the Assessing Officer before the learned CIT(A) who has deleted the addition made by the Assessing Officer under section 68 of the Act however, the addition made on account of cash payment for purchase of property is sustained.

11.

The learned Authorised Representative of the Assessee has submitted that the Assessing Officer has made this addition on the basis of the jottings in the TTD diary impounded which includes various transactions and except one transaction clearly mentioned in the name of the assessee and his wife of Rs.70 lakhs, the other transactions do not related to the assessee. He has further submitted that the assessee has explained this fact in the statement under section 131 of the Act recorded post-survey and submitted that except the transaction of Rs.70 lakhs which is also recorded in the sale deed for purchase of property, the other transactions are not related to the assessee in respect of the purchase of property. He has referred to the impounded material which is placed at Page no.104 of the paper book and submitted that there are five notings, out of which, only one noting regarding Rs.70 lakhs is specifically in the name of the assessee and his wife and pertains to purchase of property whereas the remaining 4 notings are neither related to the assessee nor representing the cash payment for purchase of the property. He has submitted that even from the impounded material itself except an amount of Rs.25 lakhs no other noting is mentioned about any cash rather the two transactions shown through Bank of India and State Bank of India. Therefore, the same cannot be the transaction representing cash payment. He has also referred to the bank account of the assessee with Bank of India and submitted that no such transaction of Rs.1,13,50,000/- is reflected in the bank account of the assessee. Further he has submitted that assessee is not having any bank account in State Bank of India. Therefore, this transaction cannot be imputed to the assessee and specifically representing cash payment for purchase of the land. He has further submitted that in order to buy peace, the assessee now admits the first noting of advance of Rs.15 lakhs as it is also recorded in the sale deed and already declared by the assessee. However, the other notings are not related to the assessee or representing the cash payment for purchase of the property. The learned Authorised Representative of the Assessee has referred to the bank account statement of M/s. Sri Lakshmi Constructions, a partnership firm and submitted that the transaction of Rs.1,13,50,000/- is RTGS transfer by the said firm to Sai Balaji Constructions and therefore, this transaction cannot be treated as cash payment for purchase of property. Thus, the learned Authorised Representative of the Assessee has submitted that the said page of the diary contains the various notings but not all the notings are related to the assessee because some of the notings are related to the partnership firm as reflected from the bank account of the partnership firm. Thus, he has submitted that taking all the figures from the said page of the impounded diary as cash payment by the assessee to the seller is highly arbitrary and unjustified. He has also referred to the statement of the assessee recorded on 28.02.2020 and submitted that the assessee has explained that except noting of Rs.70 lakhs which is the consideration paid by the assessee and his wife for purchase of property and duly recorded in the sale deed as well as in the books of accounts of the assessee no other noting belongs to the assessee. The Assessing Officer has made the addition only on the basis of assumptions without any material to show that any of the other noting in the impounded material belongs to the assessee. The property purchased by the assessee was duly accounted for in the books of accounts of the assessee and his wife at the value as per the registered document only. The noting in the impounded materials are only rough calculations and except the noting of Rs.70 lakhs no other noting is related to the transaction of property purchased. The Assessing Officer has added all the figures in the said page to arrive at the imaginary figure of Rs.2.34 crores as purchase consideration and after deducting the amount as reflected in the sale deed, the balance is treated as on-money/cash payment as unexplained investment. He has further submitted that when the property was purchased in the joint name then, the entire alleged cash payment cannot be added in the hand of the assessee. Thus, the learned Authorised Representative of the Assessee has submitted that the addition made on the basis of presumption and surmises is not sustainable when there is nothing brought on record to show that the fair market value of the property was more than the consideration paid by the assessee and his wife as recorded in the sale deed. Ine support of his contention, he has relied upon the Judgement of Hon'ble Supreme Court in the case of K.P. Varghese vs. ITO [1981] 131 ITR 597 (SC) as well as in the case of CIT vs. P V Kalyanasundaram [2007] 294 ITR 49 (SC).

12.

On the other hand, the learned DR has submitted that the Assessing Officer has clearly given the details of the amounts found recorded in the impounded material which includes one transaction of Rs.70 lakhs admitted by the assessee as payment made through cheque for purchase of property. Therefore, the impounded material cannot be denied as belongs to the assessee. Further, the figures as noted in the impounded material include the TDS which matches with the total consideration paid by the assessee. Hence, the balance amount as calculated by the Assessing Officer is based on all the transactions recorded in the impounded material. Once the Assessee has accepted the part of the impounded document, he cannot dispute the other transaction as recorded in the impounded material. He has relied upon the orders of the authorities below.

13.

We have considered the rival submissions as well as relevant material on record. The Assessing Officer has made addition of Rs.1,48,64,000/- on account of cash payment for purchase of the property by assessee along with his wife as unexplained investment. The relevant findings of the Assessing Officer in Para nos.4.2 and 4.3 are as under:

“4.2 The reply of the assessee is considered and found to be not acceptable. The impounded material i.e., TTD Diary for 2017 vide Annexure SLC/A/7 of the page with date 17.03.2017 there are contents written in his handwriting wherein it was mentioned that Rs.1,48,64,000/- of cash was paid over and above the sum reflected in the registered deed. The noting is as follows:

"Advance. 1500000-00 Cash 2500000- DCN-Jyothi 7000000- Bol 11350000 Rs. SBI 508000- 234-00 228.58 TDS- 2.42 230.98” 4.3. As stated earlier, the amount paid over and above the sale consideration, as per the notings in the dairy is Rs.1,48,64,000/-. The same has been confronted vide Q. No.50 of his deposition dated 28.02.2020 for which the assessee has not furnished any plausible explanation. The reply given by the assessee was found to be not tenable due to the fact that the diary noting found in the page dated 22.01.2015 is very clear leading to a conclusion that he had paid consideration over and above the sale consideration as per the registered deeds for purchasing the immovable property. It is verified from the registered deed (sale deed no. 1395/2017)

and observed that the assessee paid Rs.35 lakh, Rs.6.68 lakh and his wife Smt D Jyothi paid Rs.35 lakh through cheques. A cash of Rs.2 lakh was also paid. Thus, total consideration paid as per the registered deed was Rs.85,36,000/-. The payment of Rs.70,00,000/- mentioned in the dairy noting is matching with the amount mentioned in the registered deed as being paid by the assessee and his wife. Thus, it is obvious that the assessee noted down the details of the transactions on the day of the registration in real terms in his dairy so as to admittedly memorise the details. Total amount paid as per the noting in the dairy is Rs.2.34 crore. The denial on part of the assessee is only shows his incapacity to prove source and to avoid payment concomitant taxes. Hence, the assessee's contentions are rejected and the on-money payment of Rs.1,48,64,000/- is treated unexplained investment for addition u/s 69. The addition for the whole of the on-money payment is considered in the case of the assessee as his wife, Smt D Jyothi is not having an independent source of business income and the proof pertaining to the transaction was found and impounded in the case of the assessee. Tax rates prescribed u/s. 115BBE are applied and penalty proceedings u/s 271AAC are initiated.”

13.1. Thus, the Assessing Officer has taken the notings in the impounded material which includes advance of Rs.15 lakhs, cash of Rs.25 lakhs and noting in the name of assessee and his wife for a sum of Rs.70 lakhs which is not in dispute as sale consideration paid through cheques by the assessee and his wife of Rs.35 lakhs each. Another two transactions are only bank transactions. Therefore, except for the amount of Rs.25 lakhs shown as cash, no other transaction is shown or marked as cash payment. The Assessing Officer has assumed that all these figures recorded in the impounded material are cash transactions towards purchase of property. On appeal the learned CIT(A) has confirmed the addition made by the Assessing Officer on the ground that when the diary is admitted as belonging to the assessee then, as per section 292 to 292C the other transactions also presume to be relating to the assessee unless rebutted with cogent evidence. It is pertinent to note that the assessee has brought out this fact that this noting of Rs.1,13,50,000/- is a transaction of partnership firm through its bank account which is also placed in the paper book showing a transfer entry dated 16.03.2017 through RTGS to Sai Balaji Constructions. This transaction is clearly reflected in the bank account of the partnership firm with Bank of India. The relevant entry is reproduced as under: SNO TRAN DATE INST NO DESCRIPTION DEBITS CREDITS BALANCE RTGS/SAI 4,99,90,782.48 883 16-03-2017 BALAJI 1,13,50,000 Dr. CONSTRUCT

13.2. We further note that the said noting in the impounded material is also part of the books of accounts of the partnership firm as reflected in the ledger account of Sai Balaji Construction at Page no.149 of the paper book as under:

13.3. Thus when the assessee has produced the material and evidence to show that these transactions do not relate to the assessee and further have no connection with the transaction of purchase of property in question then, taking all the notings by the Assessing Officer to arrive to the conclusion that except the cheque payment of Rs.70 lakhs the balance amount is paid by the assessee as cash is only a presumption on the part of the Assessing Officer which is otherwise contrary to the material and facts evident from the record. The Assessing Officer has not taken any steps to examine the relevant record produced by the assessee to find out which of the transactions relates to the assessee and which of the transactions as found in the impounded material is not related to the assessee. It is also pertinent to note that the assessee being the Managing Partner of the partnership firm and this diary was found during the survey at the business premises of the partnership firm then, the entries in the diary may not be exclusively belonging to the assessee as it is also evident from the record that some of the transactions are pertaining to the partnership firm and duly recorded in the books of accounts and payment was through banking channel. Therefore, this presumption of the Assessing Officer that all the transactions pertain to the purchase of property by the assessee and his wife is highly arbitrary and without any basis. Even otherwise the Assessing Officer has made an addition on protective basis on this account which shows that the Assessing Officer was not sure about the unexplained investment and was of the view that the additions were made in the hand of the partnership firm and assessee is also having the share in the profits of the partnership firm thereby allowed the benefit of telescoping and made only a protective addition. Without going into the issue of telescoping, we find that there is nothing coming out from the record that except a transaction of Rs.70 lakhs which is directly against the name of the assessee and his wife, no other transaction is marked or reflecting any co-relation either with the assessee or with the transaction of purchase of property by the assessee and his wife. Further we find that as per the sale deed through which the assessee has purchased the property the total consideration is shown at Rs.85,36,000/- out of which only a sum of Rs.70 lakhs was paid by the assessee and his wife through cheque and therefore, the balance amount of Rs.15 lakhs is admitted by the learned Authorised Representative of the Assessee being an advance payment in cash. Therefore, he has submitted that to buy peace the assessee admitted this amount as paid in cash though the assessee had enough source for the said payment. Accordingly, in the facts and circumstances of the case, we sustain the addition to the extent of Rs.15 lakhs and delete the balance addition made by the Assessing Officer to the extent of Rs.1,33,64,000/-.

14.

In the result appeal ITA.No.32/Viz./2026 of the assessee is partly allowed.

15.

To sum-up, the appeal for the assessment year 2014-2015 of the assessee is allowed and the appeal for the assessment year 2017-2018 of the assessee is partly allowed. A copy of this common order be placed in the respective case files

Order pronounced in the open Court on 24.06.2026.

Sd/- Sd/- OMKARESHWAR CHIDARA VIJAY PAL RAO ACCOUNTANT MEMBER VICE PRESIDENT Visakhapatnam, dated 24th June, 2026 VBP Copy to: DONKALA CHENCHU NARASIMHA RAO, D. NO. 25-11-1688, UMMAREDDY GUNTA, 1 KONDAYAPALEM GATE, AK NAGAR POST,, NELLORE-524004, ANDHRA PRADESH THE DCIT, CENTRAL CIRCLE-1, THE ASSISTANT COMMISSIONER OF INCOME TAX, 2 CENTRAL CIRCLE-1, C R BUILDINGS, KANNAVARI THOTA, GUNTUR-522001, ANDHRA PRADESH 3 THE Pr. CIT, Nellore. 4 THE D.R., ITAT, VISAKHAPATNAM DB-BENCH, VISAKHAPATNAM. 5 GUARD FILE TRUE COPY VADREVU Digitally signed by VADREVU PRASADA PRASADA RAO ASSISTANT REGISTRAR / Date: 2026.06.24 RAO I.T.A.T., VISAKHAPATNAM 14:19:40 +05'30'

More judgments on Section 148

All 35,022 judgments and leading authorities on Section 148 →

Recent GST High Court judgments

Search GST case law →