MAHAMAYO POLYMERS PRIVATE LIMITED,BANGALORE vs. INCOME TAX OFFICER WARD 4(1)(3), BANGALORE

ITA 2322/BANG/2026Status: DisposedITAT Bangalore09 October 2026AY 2018-199 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal allowed the appeal on legal grounds. It held that the AO failed to comply with the mandatory procedures under Section 148A of the Act. Specifically, the notice under Section 148A(b) was issued on a wrong premise that the assessee had not filed its return, which could have been verified through inquiry. The AO also failed to properly consider the assessee's objections and documents before passing the order under Section 148A(d), merely stating they needed to be examined. This failure to apply his mind and pass a speaking order meant the Section 148A(d) order was bad in law. Consequently, the consequential notice under Section 148 and the assessment proceedings under Section 147 were also deemed bad in law, rendering the AO without jurisdiction. The Tribunal also found that the disallowance of interest under Section 24(1)(b) was made without putting the assessee on notice during the Section 148A proceedings, and therefore, this addition was deleted. The Tribunal relied on the Bombay High Court's decision in Narendra Kumar Shah vs. ACIT.

What were the facts?

The assessee, M/s. Mahamayo Polymers Pvt. Ltd., is appealing against an order of the NFAC, Delhi for Assessment Year 2018-19. The Assessing Officer (AO) initiated reassessment proceedings under Section 147, proposing to reopen the assessment based on information regarding rental income and turnover from services reported in Service Tax Returns, which were allegedly not satisfactorily explained. A notice under Section 148A(b) was issued, stating the assessee had not filed its return of income, which the assessee contested. Subsequently, a notice under Section 148 was issued, and the assessee filed a return. The AO proposed additions for short reporting of rental income and disallowed interest on housing loan due to lack of explanation. The CIT(A) confirmed these additions. The assessee is now before the ITAT.

What were the issues?

1. Whether the proceedings initiated under Section 147 of the Income Tax Act, 1961, are bad in law due to non-compliance with the mandatory procedures prescribed under Section 148A of the Act? - Assessee's contention: The AO erred by issuing a notice under Section 148A(b) on the incorrect premise that the assessee had not filed its return of income. The AO failed to consider the assessee's objections filed in response to the Section 148A(b) notice before passing the order under Section 148A(d). No proper inquiry was conducted, and no personal hearing was granted as required. The rental income was already declared in the return, thus no escaped income existed. The disallowance of interest under Section 24(1)(b) was made for the first time in the assessment order without prior notice. - Revenue's contention: The orders of the AO and CIT(A) were based on material evidence, and the appeal should be dismissed. 2. Whether the disallowance of interest claimed under Section 24(1)(b) of the Act is valid? - Assessee's contention: The disallowance was not part of the notices issued under Section 148A(b) or 148A(d), nor was it mentioned in the Section 148 notice or the show cause notice dated 02/02/2024, making it invalid.

Which sections of the Income-tax Act were involved?

Section 147,Section 148A,Section 148,Section 139(1),Section 143(2),Section 142(1),Section 24(1)(b)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, BANGALORE BENCHES, BANGALORE

Before: SHRI BALAKRISHNAN S. & SHRI SOUNDARARAJAN K.

PER SHRI SOUNDARARAJAN K., JUDICIAL MEMBER:

This is an appeal filed by the assessee challenging the order of the NFAC, Delhi dated 05/03/2026 in respect of the A.Y. 2018-19. 1 M/s. Mahamayo Polymers Pvt. Ltd.

2.

The brief facts of the case are that the assessee is a private limited company and filed their return of income. Based on the information that the assessee had effected transactions in respect of the rent

The order continues below.

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