JOTHIRAJAN SATHIYAMOORTHY,CHENNAI vs. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 2(1) TRICHY, TRICHY

ITA 4203/CHNY/2026Status: DisposedITAT Chennai06 October 2026AY 2014-1528 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal allowed the appeal for AY 2015-16, quashing the reassessment proceedings and the consequential assessment order. The Tribunal held that the notice under Section 148 dated 27.07.2022 was issued beyond the permissible period of limitation for AY 2015-16, as the outer limitation expired on 31.03.2022. Relying on the Supreme Court's decisions in Union of India v. Rajeev Bansal and ITO v. Sri Sai Kumar Mateti, the Tribunal clarified that the directions in Ashish Agarwal, issued under Article 142 of the Constitution, cannot override the substantive provisions of the Income-tax Act governing limitation. The defence of limitation available under Section 149 of the Act remains open. The Tribunal found that the notice was issued after the expiry of the period prescribed under Section 149, rendering it invalid and without jurisdiction. Consequently, the reassessment proceedings and the order dated 29.05.2023 were quashed. The grounds challenging the additions on merits became academic and were not adjudicated. The appeal for AY 2014-15 was not explicitly detailed in the provided extract, but the final order states both appeals are allowed. The stay applications were dismissed as infructuous.

What were the facts?

The assessee, engaged in small-scale money lending, filed returns for Assessment Years (AY) 2014-15 and 2015-16. The Assessing Officer (AO) reopened the assessment for AY 2014-15, issuing a notice under Section 148 on 23.06.2021, which was later treated as a show-cause notice under Section 148A(b) following the Supreme Court's decision in Union of India v. Ashish Agarwal. An order under Section 148A(d) was passed on 27.07.2022, followed by a notice under Section 148 on the same date. The reassessment culminated in an order dated 29.05.2023, treating cash deposits and other credits aggregating to Rs. 3,26,24,050/- as unexplained under Section 69A. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld the reassessment and additions. The assessee appealed to the Income Tax Appellate Tribunal (ITAT).

What were the issues?

1. Whether the reassessment proceedings for AY 2014-15, initiated by a notice under Section 148 dated 27.07.2022, are valid, considering the limitation period, in light of the Supreme Court's decisions in Union of India v. Ashish Agarwal and Union of India v. Rajeev Bansal? Assessee's contentions: - The notice under Section 148 dated 27.07.2022 is barred by limitation. The original notice under the erstwhile Section 148 was issued on 23.06.2021. The extended period under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) expired on 30.06.2021, leaving only eight days of limitation. The Supreme Court in Union of India v. Rajeev Bansal held that the deeming fiction in Ashish Agarwal does not grant a fresh or unrestricted period of limitation, and only the surviving period is available. The notice dated 27.07.2022 was issued beyond this surviving period of eight days, making it time-barred. - The CIT(A)'s reasoning that the notice was a continuation and that timelines were directory was contrary to the Supreme Court's pronouncements. Revenue's contentions: - Not recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 148,Section 148A,Section 148A(b),Section 148A(d),Section 147,Section 69A,Section 149

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI

Before: SHRI ABY T VARKEY & SHRI S. R. RAGHUNATHA

Hearing: 23.09.2026Pronounced: 06.10.2026

PER S. R. RAGHUNATHA, AM : These appeals, along with the corresponding stay applications, filed by the Assessee are directed against two separate orders, both dated 15.07.2026, passed by the Learned Commissioner of Income Tax (Appeals), National

:-2-: ITA. Nos:4203 & 4204/Chny/2026 SA Nos.169 & 170/Chny/2026. Faceless Appeal Cen

The order continues below.

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