SHRI SWASHRAI MAHILA NAGRIK DHIRAN SEWA CO. OPERATIVE MANDALI LIMITED,VADODARA vs. THE DY. CIT, CIRCLE-1(1)(1), VADODARA

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ITA 1886/AHD/2025Status: DisposedITAT Ahmedabad16 June 2026AY 2017-185 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that interest received from a co-operative bank is allowable as per jurisdictional High Court precedent. It also found that cash deposits were from loan repayments and thus not taxable. The remaining interest income was also held to be allowable under Section 80P(2)(a).

What were the facts?

The assessee's appeal concerns reassessment proceedings initiated for AY 2017-18. The Assessing Officer made additions on account of cash deposits and interest income, which were partly confirmed and partly remanded by the CIT(A). The assessee argued that the reassessment was time-barred and procedurally flawed.

What were the issues?

The key issues were the validity of reassessment proceedings due to alleged time-barring and procedural non-compliance, and the allowability of deductions for interest income and cash deposits.

Which sections of the Income-tax Act were involved?

Section 148,Section 148A,Section 149,Section 151,Section 154,Section 80P

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH, AHMEDABAD

For Appellant: Shri Rupesh Shah, AR
For Respondent: Shri Abhijit, Sr. DR
Hearing: 16.06.2026Pronounced: 16.06.2026

PER DR. B.R.R. KUMAR, VICE-PRESIDENT:

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This appeal has been filed by the assessee against the order dated 08.09.2025 passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as ‘Ld. CIT (A)’ in short), under Section 250 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’ in short) for Assessment Year 2017-18. 2. The assessee has raised following grounds of appeal:-

“1. Invalid Reassessment - Time-barred: The Ld. AO grossly erred in issuing notice u/s 148 beyond 3 years from the end of the relevant assessment year, when the alleged escapement of income was less than Rs. 50 lakh. As per proviso to section 149(1)(a), such reopening was barred by limitation and the notice itself is invalid, rendering the reassessment void ab initio.

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2.

Failure to follow mandatory procedure u/s.148A: The Ld. AO failed to comply with the mandatory procedure laid down u/s 148A by: - Issuing notice u/s 148 without passing a speaking order u/s 148A(d); - Failing to record and communicate reasons to believe; - Issuing notice u/s 148A(b) mechanically without application of mind. Therefore, the entire reassessment proceedings are bad in law.

3.

Time-Limitation under the new law (post 1 April 2021 regime) / Section 149 a) By virtue of the Finance Act, 2021, effective 1st April 2021, the provisions governing reassessment / reopening have been substituted. Under the new regime, the limitation period for issue of notice under Section 148 / reopening under Section 147 is three years from the end of the relevant assessment year, except in cases where the escaped income is Rs. 50 lakhs or more 148A(b) Since in the present case, the alleged income escapement is less than 50 lakhs, the AO is bound by the 3-year limitation period. Any notice / order beyond 3 years is time-barred and without juri iction.

4.

Rajeev Bansal judgment - saving of TOLA / COVID extension only to extent applicable The Rajeev Bansal (2024) Supreme Court judgment clarified that while the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 ("TOLA") extends statutory timelines, it does not revive or sustain a legal regime that has been replaced by the Finance Act, 2021 beyond its life.

5.

In particular, Rajeev Bansal holds that from 1 April 2021, only the substituted provisions - i.e. those introduced by Finance Act, 2021-are applicable. The period permitted by TOLA for extension is strictly for those actions which fall for completion between 20 March 2020 to 31 March 2021; it does not allow extension of old/repealed law beyond that.

6.

Notice issued / proceedings / order beyond time limit

7.

Lack of Approval u/s 151: The reassessment proceedings are invalid as the Ld. AO has not obtained and recorded sanction/approval from the specified authority u/s 151 of the Act before issuing notice u/s 148, making the entire reassessment without juri iction.

8.

Impermissible Review of Own Orders: The Ld. AO had already passed a regular assessment order u/s 143(3) dated 01-12-2019 disallowing Rs.26,994 under section 80P. Subsequently, he passed a rectification order u/s 154 after 3 years and one month making a further disallowance of Rs.2,69,714. Thereafter, he again issued notice u/s - 3– 148 on the very same issue of section 80P deduction. Such repeated review of own orders is not permissible under law, and the reassessment is illegal, beyond juri iction, and amounts to change of opinion.

9.

No Income Escaping Assessment:

The alleged escapement of Rs.2,47,000 is factually incorrect and untenable, as the deduction u/s 80P claimed by the Appellant is fully allowable. The reassessment additions made are unjustified and deserve to be deleted in full.

10.

Violation of Principles of Natural Justice: The Ld. AO erred in completing the reassessment without providing proper opportunity of hearing and without considering the detailed submissions and evidences filed by the Appellant.”

3.

In this case, the assessment u/s 143(3) of the Act has been passed on 01.12.2019 disallowing the interest of Rs.26,994/- received from Bank of Baroda. The interest being received from nationalized bank is taxable as per the provisions of the Act. Subsequently, proceedings u/s 148 of the Act have been initiated on the assessee by issuance of notice dated 26.06.2021. Consequently, notice u/s 148(b) of the Act has been issued on 26.05.2022. The assessment subsequent to the issue of notice u/s 148(b) of the Act has been culminated in passing of an assessment order on 20.05.2023, with additions of Rs.2,47,000/- on account of cash deposited during demonetization period and on account of the gross interest received of Rs.59,06,464/-.

4.

Another fact to be considered is that notice u/s 154 of the Act was issued to the assessee on 03.12.2021 culminating in passing of an order on 10.01.2023 disallowing the interest received from co-operative bank of Rs.2,69,714/-.

5.

Aggrieved by the assessment order, the assessee went in appeal before the Ld. CIT(A). The Ld. CIT(A), vide order dated 08.09.2025, confirmed the addition of Rs.2,47,000/- and remanded the issue of interest to the Assessing Officer for verification.

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6.

Aggrieved by the order of the Ld. CIT(A), the assessee filed an appeal before the Tribunal.

7.

We have heard the arguments of both parties and adjudicate as under:-

(i) The interest received from the Co-operative Bank of Rs.2,69,714/- is an allowable deduction in view of the judgement of the Hon’ble Juri ictional High Court in the case of Surat Vankar Sahakari Sangh Ltd. v. ACIT (421 ITR 134). (ii) With regard to the addition of Rs.2,47,000/-, this amount has been deposited into the account of the Co-operative Society out of cash received against the repayment of the loans. Hence, we hold that no addition on account of the cash deposited in the Bank of Baroda amounting to Rs.2,47,000/- is called for. (iii) With regard to the interest earned by the assessee of Rs.59,06,464/-, excluding the amount mentioned above, this interest is allowable u/s. 80P(2)(a) of the Act.

8.

Since the matter on merits has been adjudicated as above, the technical grounds raised by the assessee are not being adjudicated, being academic in nature.

9.

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

The order is dictated and pronounced in the open Court on 16.06.2026 (RAHUL CHAUDHARY) VICE-PRESIDENT Ahmedabad; Dated 16.06.2026 **btk - 5–

आदेश की "ितिलिप अ"ेिषत / Copy of the Order forwarded to : अपीलाथ"/ The Appellant

1.

""थ"/ The Respondent. 2. संबंिधतआयकरआयु"/ Concerned CIT 3. 4. आयकरआयु"(अपील) /The CIT(A)- 5. िवभागीय"ितिनिध, आयकरअपीलीयअिधकरण, अहमदाबाद/ DR, ITAT, Ahmedabad 6. गाड"फाईल /Guard file. आदेशानुसार/ BY ORDER,सहायकपंजीकार (Dy./Asstt.

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