SANKET KEDARKUMAR AGARWAL ,MUMBAI vs. DCIT, CIRCLE 41(1)(1), MUMBAI

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ITA 9001/MUM/2025Status: DisposedITAT Mumbai14 October 2026AY 2019-209 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the reassessment proceedings initiated under Section 147 read with Section 148 of the Act for Assessment Year 2019-20 are bad in law and quashed. The Tribunal noted that the assessment was reopened based on search and seizure action under Section 132 of the Act in the RUPPs Group. The Ld. Counsel for the assessee argued that the proviso to Section 148A(c) specifically excludes the applicability of Section 148A when information is obtained from a search under Section 132 in the case of another person and pertains to the assessee. In such cases, the procedure under Section 148A becomes unnecessary and without the authority of law. The Tribunal, respectfully following the decision of its Coordinate Bench in Amit Pahuja v. DCIT, held that once the case falls within the exception provided in the proviso to Section 148A, the issuance of a notice under Section 148A(b) and the passing of an order under Section 148A(d) are wholly unnecessary and without the authority of law. Consequently, the notice issued under Section 148 and the consequential reassessment proceedings were quashed. The Tribunal also noted that the alleged escapement of income was below the threshold limit for invoking the extended period of limitation under Section 149(1)(b). The appeal of the assessee was allowed.

What were the facts?

The assessee, Sanket Kedarkumar Agarwal, filed an appeal against the order of the National Faceless Appeal Centre (NFAC), Delhi, for Assessment Year 2019-20. The appeal challenges the reassessment proceedings initiated under Section 147 read with Section 148 of the Income Tax Act, 1961. The reassessment was triggered by search proceedings in the RUPPs Group on September 7, 2022, which allegedly yielded incriminating evidence pertaining to the assessee. A notice under Section 148A(b) was issued on March 29, 2023, followed by an order under Section 148A(d) on April 21, 2023, and a notice under Section 148 on the same date. The assessee filed a return of income declaring ₹51,13,160/- after claiming a deduction under Section 80GGC. The assessee's primary contention is that the reassessment proceedings, particularly the invocation of Section 148A, are bad in law.

What were the issues?

1. Whether the appellate order passed by the Ld. CIT (A) is bad in law, illegal, and without jurisdiction, in breach of statutory provisions and principles of natural justice, including the failure to grant a fair opportunity of hearing and personal hearing? (Mixed question of law and fact, relating to Section 250 of the Act). 2. Whether the reassessment proceedings initiated by the Assessing Officer (AO) and confirmed by the Ld. CIT (A) by invoking Section 147 read with Section 148 of the Act are bad in law, illegal, and without jurisdiction, as the necessary preconditions were not satisfied? (Mixed question of law and fact, relating to Sections 147, 148, 148A, 149, and 151 of the Act). 3. Whether the Ld. CIT (A) erred in confirming the disallowance of Rs. 12,00,000/- claimed as deduction under Section 80GGC of the Act, by basing the action on surmises, suspicion, conjecture, irrelevant considerations, and ignoring relevant material? (Mixed question of law and fact, relating to Section 80GGC of the Act). Assessee's Contentions: - The reassessment proceedings initiated under Section 148A are bad in law as any proceedings initiated after April 1, 2021, should be conducted under Section 148, not by invoking Section 148A(b) and 148A(d). - The proviso to Section 148A, specifically sub-clause (c), excludes the operation of Section 148A when information is seized in a search under Section 132 in the case of another person and pertains to the assessee. Therefore, the AO should have proceeded only under Section 148. - Relied on the decision in Amit Pahuja v. DCIT [2026] 187 taxmann.com 961 (Mum. Tribunal). - The disallowance of Rs. 12,00,000/- under Section 80GGC was based on surmises and conjecture. Revenue's Contentions: - Relied on the orders of the authorities below.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 148A,Section 149,Section 151,Section 132,Section 80GGC,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI

Before: CHALLA NAGENDRA PRASAD & SHRI MAKARAND VASANT MAHADEOKAR

Pronounced: 14/10/2026

PER CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER: This appeal is filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)-NFAC, Delhi dated 08.10.2025 for the assessment year 2019-20.

2.

The assessee has raised the following grounds of appeal:

“THE ORDER IS BAD IN LAW, ILLEGAL AND WITHOUT JURISDICTION 1.1 In the facts and the circumstances of the case, and in law, the appellate order u/s. 250 of the Income tax Act, 1961 ['the Act'] framed and passed on 08.10.2025 by the Commissioner of Income - tax (Appeals), National Faceless Appeal Centre ['Ld. CIT (A)'] is bad in law, illegal and without jurisdiction, as the same is framed in breach of the statutory provisions of the Act and the scheme and as otherwise also is not in accordance with the law. 1.2 Without prejudice to the generality of the above, the appellate order so passed is bad in law, illegal and void as the same is arbitrary and perverse. 2. VIOLATION OF PRINCIPLES OF NATURAL JUSTICE 2.1 In the facts and the circumstances of the case, and in law, the appellate order so framed in bad in law and illegal, as the same is framed in breach of the principles of Natural Justice. 2.2 Without prejudice to the generality of the above ground, in the facts and the circumstances of the case, the Ld. CIT (A) erred in - (i) not granting proper, sufficient, reasonable and fair opportunity of being heard to the Appellant while passing the appellate order; and (ii) not granting an opportunity of personal hearing. WITHOUT PREJUDICE TO THE ABOVE: 3. CHALLENGE TO REASSESSMENT 3.1 The Ld. CIT (A) erred in confirming the action of the A.O. in initiating the reassessment proceeding and framing the assessment of the Appellant by invoking the provisions of section 147 r.w.s. 148 of the Act. 3.2 While doing so, the Ld. CIT (A) failed to appreciate that:

(i) The case of the Appellant did not fall within the parameters laid down by section 147 r.w.s. 151A, 148, 149 & 151 of the Act; and (ii) The necessary preconditions for initiating the reassessment proceeding and completion thereof were not satisfied. 3.3 It is submitted that in the facts and the circumstances of the case, and in law, the reassessment framed was bad in law, illegal and without jurisdiction. WITHOUT PREJUDICE TO THE ABOVE: 4. DISALLOWANCE OF RS. 12,00,000/- CLAIMED AS DEDUCTION U/S. 80GGC OF THE ACT 4.1 It is submitted that, in the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming the action of the A.O. in disallowing the amount of Rs. 12,00,000/- claimed as deduction u/s. 80GGC of the Act by the Appellant, being donation given to Yuva Jana Jagriti Party claimed, as alleged bogus donation. While doing so, the Ld. CIT(A) erred in - (i) Basing his action only on surmises, suspicion and conjecture; (ii) Taking into account irrelevant and extraneous considerations; and (iii) Ignoring relevant material and considerations as submitted by the Appellant. 4.3 It is submitted that in the facts and the circumstances of the case, and in law, no such disallowance was called for. 4.4 Without prejudice to the above, in the alternative, assuming - but not admitting - that some disallowance was called for, the Ld. CIT (A) failed to appreciate that the computation of the disallowance made by the A.O. was arbitrary, excessive and not in accordance with the law.” 3. The Ld. Counsel for the assessee at the outset referring to Ground No. 3 of the grounds of appeal, submitted that the Ld.

CIT(A) erred in confirming the action of the Assessing Officer in initiating the reassessment and framing the assessment by invoking the provisions of section 147 read with section 148 of the Act. In other words, the assessee is challenging the reopening of the assessment as bad in law. The Ld. Counsel for the assessee submitted that the assessment was reopened pursuant to search proceedings in the RUPPs Group on 07.09.2022. Pursuant to such action in the RUPPs Group and based on certain incriminating evidence, the case of the assessee was reopened u/s. 148 of the Act and a notice u/s. 148 was issued on 21.04.2023 along with an order u/s. 148A(d) of the Act. In response to the said notice, the assessee filed a return of income on 20.05.2023, declaring income of ₹51,13,160/- after claiming deduction u/s. 80GGC of the Act.

4.

The Ld. Counsel for the assessee submitted that as the assessment in the case of the assessee was reopened pursuant to the action in the case of the RUPPs Group by issuance of a notice u/s. 148A(b) dated 29.03.2023 and an order u/s. 148A(d) of the Act dated 21.04.2023, such action is bad in law. The Ld. Counsel submitted that any proceedings initiated after 01.04.2021 should be conducted u/s. 148 of the Act and not by invoking the provisions of section 148A(b) and section 148A(d) of the Act.

5.

The Ld. Counsel for the assessee further referring to the proviso to section 148A of the Act submitted that the statute specifically excludes the provisions of section 148A of the Act in the situations provided in sub-clauses (a) to (d) of the proviso. The Ld. Counsel for the assessee submitted that in the assessee’s case the proviso to sub-clause (c) applies, wherein the statute provides that if the Assessing Officer is satisfied with the prior approval of the Principal Commissioner or Commissioner of Income Tax, that any books of account or documents seized in a search u/s. 132 of the Act or requisitioned u/s. 132A of the Act in the case of any other person on or after the first day of April 2021 pertains or pertain to, or any information contained therein relates to the assessee, the proviso to section 148 excludes the operation of the provisions of section 148A in such a situation. Therefore, the Assessing Officer since reopened the assessment of the assessee based on the search materials in the case of the RUPPs Group, the only course of action should have been pursued u/s. 148 of the Act and not u/s. 148A of the Act. The Ld. Counsel for the assessee placed reliance on the decision of the Coordinate Bench of the Tribunal in the case of Amit Pahuja v. DCIT [2026] 187 taxmann.com 961 (Mum. Tribunal) dated 23.06.2026.

6.

On the other hand, the Ld. DR placed reliance on the orders of the authorities below.

7.

Heard rival contentions and perused the orders of the authorities below. Undisputedly, the assessment in the case of the assessee was reopened based on the search and seizure action conducted u/s. 132 of the Act on 07.09.2022 in the RUPPs Group. Based on certain seized materials, a notice u/s. 148A(b) was issued to the assessee on 29.03.2023 and after considering the reply dated 17.04.2023 filed by the assessee, an order u/s. 148A(d) of the Act was passed on 21.04.2023. Subsequently, a notice u/s. 148 of the Act was also issued on the very same date.

8.

On identical facts, the Coordinate Bench of the Tribunal held that once the case of the assessee falls within the exception provided in the proviso to section 148A of the Act, issuance of a notice u/s. 148A(b) and passing of an order u/s. 148A(d) becomes wholly unnecessary and without the authority of law. Accordingly, it was held that the notice issued u/s. 148 of the Act and the consequential reassessment proceedings were without jurisdiction and barred by limitation and the same were quashed, observing as under:-

“8. Upon a careful consideration of the facts and the statutory provisions, it is evident that the reopening of the assessment was initiated on the basis of information allegedly emanating from a search and seizure action conducted under section 132 of the Act in the case of RSP(S) on 07.09.2022. The Ld. AO himself has recorded that the information regarding the alleged bogus donation claimed by the assessee under section 80GGC was received pursuant to the said search proceedings. The proviso to section 148A specifically excludes from its ambit cases where the Assessing Officer is satisfied that any books of account, documents, or information found during a search conducted in the case of another person relate to the assessee. Therefore, once the revenue seeks to rely upon information emanating from a search conducted under section 132 in the case of a third party, the case falls within the exception carved out under clauses (b) and (c) of the proviso to section 148A. Consequently, the procedure prescribed under section 148A is not applicable to such cases. In the present case, however, the Ld. AO proceeded to issue a notice under section 148A(b), passed an order under section 148A(d), and thereafter issued a notice under section 148 on dated 21/04/2023. The revenue cannot derive any advantage or immunity from the proceedings initiated under section 148A of the Act when the statute itself excludes the applicability of such proceedings. Once the case falls within the exceptions provided in the proviso to section 148A, the issuance of a notice under section 148A(b) and the passing of an order under section 148A(d) become wholly unnecessary and without the authority of law. Therefore, the Ld. AO cannot seek to validate the reassessment proceedings or overcome the bar of limitation merely on the ground that proceedings under section 148A were undertaken. An action which is not contemplated or required under the Act cannot confer jurisdiction upon the Ld. AO nor can it cure the inherent defect in the assumption of jurisdiction. Thus, the very assumption of jurisdiction under section 148A was contrary to the statutory framework and suffers from a fundamental jurisdictional defect.

9.

Even otherwise, the alleged escapement of income in the present case is only Rs. 2,00,000/-, being the deduction claimed under section 80GGC. The said amount is admittedly far below the threshold limit of Rs. 50,00,000 prescribed under section 149(1)(b) of the Act for invoking the extended period of limitation beyond three years. For AY 2019-20, the period of three years had already expired on the date of issuance of notice under section 148. Therefore, in the absence of escapement of income represented in the form of an asset amounting to Rs. 50,00,000 or more, the reassessment proceedings could not have been validly initiated beyond the prescribed period of limitation.” 9. The facts being identical, respectfully following the said decision, we hold that the notice issued u/s. 148 of the Act and the consequential reassessment made u/s. 147 read with section 144B of the Act for the assessment year 2019-20 are bad in law and accordingly, the same are quashed.

10.

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

Order pronounced in the open court on 14/10/2026

Sd/- Sd/-

MAKARAND VASANT MAHADEOKAR CHALLA NAGENDRA PRASAD ACCOUNTANT MEMBER JUDICIAL MEMBER

Mumbai Dated: 14/10/2026 Prabhat Copy to: SANKET KEDARKUMAR AGARWAL , 303, APHRODITE DEONAR PADA ROAD, 1 RAHEJA ACROPOLIS II CHEMBUR, MUMBAI-400088, MAHARASHTRA

DCIT, CIRCLE 41(1)(1), ROOM NO 623, 6TH FLOOR, KAUTILYA 2 BHAVAN, BKC, MUMBAI-400051, MAHARASHTRA

3 THE PCIT / CIT, 4 THE D.R., ITAT, MUMBAI BENCH 5 GUARD FILE

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