ACIT-19(3), MUMBAI, MUMBAI vs. RAJESH MANGALCHAND JHAVERI, MUMBAI

The grounds of appeal raised by the revenue are as under:

Facts of the case, in brief, are that the assessee filed return of income for the AY 2015-16 on 30.09.2015 declaring total loss of Rs.11,18,777/-. Assessment order u/s 143(3) was passed on 09.11.2017 accepting the returned income. Subsequently, the case was reopened by issue of notice u/s 148 dated 21.06.2021. Vide communication dated 25.05.2022, it was informed by AO that notice u/s 148 dated 21.06.2021 under the old regime may be treated as show-cause notice u/s 148A(b) of the Act in view of the decision of Hon’ble Supreme Court in case of UOI vs. Ashish Agarwal (2022) 138 taxmann.com 64 (SC). Subsequently, order u/s 148A(d) and notice u/s 148 of the Act for AY 2015-16 were issued on 25.07.2022. Thereafter, various notices were issued and assessment u/s 147 r.w.s. 144 r.w.s. 144B was passed on 27.05.2023 adding Rs.78,51,087/- and determining total income at Rs.1,44,18,184/-. 4. Aggrieved by the order of AO, the assessee filed appeal before the CIT(A). The CIT(A) has relied upon the decision of coordinate Bench in case of Mohamedali Shabanali Badami Badami & Son in ITA No.913/Mum/2025 dated 16.06.2025, which in turn has followed the decision of Hon’ble Supreme Court in case of UOI vs. Rajeev Bansal (2024) 167 taxmann.com 70 (SC) and decided the issue in favour of the assessee. The CIT(A) has also followed the decision of the Hon’ble Bombay High Court in case of Hexaware Technologies Ltd. vs. ACIT in Writ Petition No. 1778 of 2023 dated 03.05.2024 and allowed the appeal of the assessee by observing as under: “Thus, in view of facts of the case and respectfully following the decision of Hon'ble Jurisdictional ITAT Mumbai in the case of Mohamedali Shabanali Badami Badami & Son (supra), which has, inter alia, placed reliance on the decision of Hon'ble Supreme Court in the case of Rajeev Bansal (supra) and the decision of Hon'ble Jurisdictional High Court of Mumbai in the case of Hexaware Technologies Ltd. (supra), I hold that the notice issued u/s 148 is not valid, since, the same has been issued beyond that statutory period ending on 31/03/2022. The said notice is, thus, 3 barred by limitation of time. The assessment order is, therefore, liable to be quashed. Ground is, thus, allowed.” 5. Aggrieved by the order of CIT(A), the revenue has filed appeal before the Tribunal. The Ld. Sr. DR submitted that the assessee has referred to an earlier notice allegedly issued u/s 148 of the Act, dated 21.06.2021. However, no copy of the said notice has been placed on record either before the Hon'ble Commissioner of Income-tax (Appeals) or before Tribunal. He, however, submitted that the records indicate that the assessee filed a return of income on 21.07.2021. In the absence of the said notice dated 21.06.2021, no reliance may be placed upon such alleged issuance of notice u/s 148 of the Act for adjudication of the present matter, and the validity of reassessment proceedings may kindly be examined on the basis of the documents actually available on record. He submitted that the revenue's case is independently sustainable on the basis of the notice issued u/s 148A(b) dated 25.05.2022, which forms part of the assessment records leading to the subsequent order u/s 148A(d) and the notice u/s 148 both issued on 25.07.2022. 6. On the other hand, the Ld. AR has filed a small paper book of 14 pages and submitted that notice u/s 148 was originally issued on 21.06.2021. Copy of the said notice is at page 4 of the paper book. In reply assessee filed return on 21.07.2021, which has been noted by the AO in the impugned assessment order. The assessee received communication dated 25.5.2022 stating that the notice u/s 148 of the I.T. Act, 1961 issued to assessee on 21/6/2021 (old regime) be treated as a show cause notice u/s 148A(b) (new regime) by virtue of the Supreme Court decision in UOI vs Ashish Agarwal [2022] 138 taxmann.com 64 (SC). The AO 4 passed order u/s. 148A(d) and issued notice u/s 148 on 25.07.2022 for AY 2015- 2016. As per the 1st proviso to section 149, for AYs prior to 01.04.2021, the limitation to issue notice would be six years from the end of the relevant AY. Thus, the last date for issuing notice u/s 148 for AY 2015-16 is 31.03.2022. As the notice u/s. 148 is issued on 25.07.2022, reopening is barred by limitation. The LD. AR further submitted that the revenue in Union of India v. Rajeev Bansal [2024] 167 taxmann.com 70 (SC) has conceded before the Hon'ble Supreme Court in para 19(f) for dropping all the notices issued on or after 01.04.2021 for A.Y. 2015-16 as they will not fall for completion during the period prescribed under TOLA. Based on this concession and limitation, the ITAT Mumbai in ITO (Int. Taxation) v. Shapoorji Pallonji Mistry Sterlin Bay [2025] 180 taxmann.com 870 (Mum) has quashed notice u/s 148 for AY 2015-2016. In this case also original 148 notice for A.Y. 2015-16 was issued on 21/6/2021 and thereafter pursuant to decision of Supreme Court in UOI vs. Ashsih Agarwal (supra), notice u/s. 148 was issued under new regime on 30/07/2022. It was held that notice u/s. 148 dated 30/07/2022 is barred by limitation by virtue of first proviso to section 149 and also the issue is covered by the concession of the revenue. The aforesaid concession is reiterated recently in the Supreme Court Decision in ITO & Anr v Sri Sai Kumar Mateti SLP No 8682 of 2024 dated 4/5/2026 (SC). Hence, the CIT(A) has rightly quashed the notice u/s 148 for AY 2015-2016 by relying on the decision of Mumbai ITAT in Mohamedali Shabanali Badami Badami & Son (supra). In this case also, notice u/s. 148 for A.Y. 2015-16 was issued on 19.04.2022, which was held to be time barred by virtue of 1st proviso to Section 149. 5

We have heard both sides and perused the materials on record. The objection of the Ld. Sr. DR is not acceptable because assessee has filed copy of the notice u/s 148 issued on 21.06.2021. This is also supported by the fact that the assessee has filed return of income on 21.07.2021 in response to notice u/s 148 of the Act. There was no occasion to file return of income after filing the original return of income for AY 2015-16 on 30.09.2015. Be that as it may, we find that this is recurring issue and has been decided in a number of cases by the Tribunal and Hon’ble High Courts. In case of Shapoorji Pallonji Mistry Sterlin Bay (supra), the co-ordinate Bench held that where notice u/s 148 was issued under new regime on 30.07.2022 for AY 2015-16, being beyond six years from end of relevant AY, such notice was barred by limitation, rendering both notice and consequential reassessment order bad in law and liable to be quashed. As in the present case, the year under consideration is the AY 2015-16, and the notice u/s 148 of the Act was issued on 25.07.2022, respectfully following the decision of the Hon'ble Jurisdictional High Court in Hexaware Technologies Ltd. (supra) and the other decisions cited supra, we are of the considered view that the said notice is barred by limitation, and thus, the same is quashed. Consequently, the entire reassessment proceedings culminating in the assessment order passed u/s 147 r.w.s. 144 r.w.s. 144B of the Act are also quashed. 8. Since relief has been granted to the assessee on the afore-noted jurisdictional aspect, the other grounds raised by the assessee in this appeal are rendered academic, and therefore, are kept open.

In the result, the appeal by the revenue is allowed.