NAGAIAH MALLAVARAPU,PRAKASAM vs. ITO, WARD-1, ONGOLE

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ITA 695/HYD/2026Status: DisposedITAT Hyderabad14 October 2026AY 2015-1626 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 quashed the assessment order passed by the AO under Section 147 r.w.s 144 r.w.s. 144B of the Act, dated 10.01.2024, for want of valid assumption of jurisdiction. The primary reason for this decision was that the notice issued by the AO under Section 148 of the Act, dated 09.04.2022, was found to be barred by limitation as per the mandate of the 'first proviso' to Section 149 of the Act, as amended by the Finance Act, 2021. The Tribunal relied on judicial pronouncements, including those from the Bombay High Court in Hexaware Technologies Ltd. and Godrej Industries Ltd., which clarified that the first proviso to Section 149 restricts the issuance of notices under Section 148 for assessment years up to 2021-22 beyond a certain date, and subsequent provisos (fifth and sixth) cannot extend this restriction. Since the notice was issued beyond the period prescribed by the first proviso, it was deemed invalid. Consequently, the assessment order passed based on this invalid notice had to be quashed. The Tribunal explicitly stated that as the assessment order was quashed for want of jurisdiction, it refrained from adjudicating the other contentions raised by the assessee, leaving them open. The appeal was allowed in terms of these observations.

What were the facts?

The assessee, Nagaiah Mallavarapu, filed an appeal against the order of the CIT(A), NFAC, Delhi, dated 24.09.2025, which upheld the reassessment order passed by the AO under Section 147 r.w.s 144 r.w.s. 144B of the Income Tax Act, 1961, dated 10.01.2024, for Assessment Year 2015-16. The AO initiated reassessment proceedings based on information that the assessee sold immovable property for Rs. 57,50,000/- but had not filed a return. A notice under Section 148 was issued on 09.04.2022. The assessee filed a return declaring income of Rs. 9,36,590/-. The AO subsequently determined the income at Rs. 66,86,590/-, adding Rs. 57,50,000/- as short-term capital gains. The CIT(A) dismissed the assessee's appeal. The assessee is now appealing this order before the ITAT.

What were the issues?

1. Whether the CIT(A) ought to have granted another opportunity of hearing before dismissing the appeal (Question of procedure). 2. Whether the reassessment proceedings initiated under Section 147 of the Act, based on the notice under Section 148 dated 09.04.2022, are illegal and void ab initio (Question of law, concerning Section 147 and Section 148). 3. Whether the reopening of assessment for AY 2015-16 is barred by limitation under Section 149 of the Act, as more than three years had elapsed and the alleged escapement of income was less than Rs. 50,00,000/- (Question of law, concerning Section 149). 4. Whether the reassessment was valid despite non-compliance with the mandatory procedure under Section 148A, including valid service of show cause notice and grant of an effective opportunity of being heard (Question of mixed law and fact, concerning Section 148A). 5. Whether the order passed under Section 148A(d) was made in haste without considering the assessee's explanation and evidence, vitiating the reassessment (Question of mixed law and fact, concerning Section 148A). 6. Whether the CIT(A) failed to adjudicate jurisdictional defects related to improper service of notices under Section 282, violating principles of natural justice (Question of law, concerning Section 282). 7. Whether the approval under Section 151A was mechanical, without due application of mind, rendering the reassessment liable to be quashed (Question of law, concerning Section 151A). 8. Whether there was a live link or rational nexus between the information for the show cause notice and the conclusions in the order under Section 148A(d), making the reassessment unsustainable (Question of law, concerning Section 148A). 9. Whether the addition of Rs. 57,50,000/- as undisclosed STCG was erroneous, considering the sale consideration in the registered sale deed was Rs. 22,51,500/- (Question of mixed law and fact). 10. Whether the assessee had duly accounted for the sale transaction with valid documentary evidence, which was ignored (Question of mixed law and fact). 11. Whether the addition resulted in double taxation, as the income was already considered in the return filed in response to the Section 148 notice (Question of mixed law and fact). 12. Whether the CIT(A) erred in dismissing the appeal without adjudicating the jurisdictional grounds (Question of procedure). Assessee's Contentions: The assessee argued that the reassessment proceedings and the notice under Section 148 were barred by limitation under Section 149, specifically referencing the first proviso to Section 149 brought by the Finance Act, 2021. The assessee also contended procedural irregularities in the issuance of notices under Section 148A and Section 282, lack of opportunity, and mechanical approval under Section 151A. The assessee further argued that the addition of STCG was erroneous and led to double taxation. The assessee also raised issues regarding the CIT(A)'s dismissal of the appeal without adjudicating key grounds. Revenue's Contentions: The judgment does not explicitly record the revenue's contentions on the merits of the reassessment or the grounds of appeal. However, the revenue's representative argued for the upholding of the CIT(A)'s order.

Which sections of the Income-tax Act were involved?

Section 147,Section 144,Section 144B,Section 148,Section 148A,Section 149,Section 282,Section 151A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, HYDERABAD BENCHES, HYDERABAD

Before: SHRI RAVISH SOOD, HON’BLE & SHRI MADHUSUDAN SAWDIA, HON’BLE

PER RAVISH SOOD, JM:

The present appeal filed by the assessee is directed against the order passed by the CIT(A), NFAC, Delhi, dated 24.09.2025, which in turn arises from the order passed by the AO under Section 147 r.w.s 144 r.w.s. 144B of the Income Tax Act, 1961 (for short, “the Act”), dated 10.01.2024 for the assessment year 2015-16. The assessee has assailed the impugned order on the following grounds of appeal before us:

“1. The CIT(A) ought to have given another opportunity of hearing before proceeding to dismiss the appeal. 2. The order dated 24.09. 2025 passed by the Learned Commissioner of Incorrect Tax (Appeals), National Faceless Appeal Centre is bad in law erroneous on facts and law, and liable to be set aside. 3. The Learned CIT(A) erred in confirming the reassessment proceedings initiated under section 147 of the Income-tax Act, 1961, when the very assumption of jurisdiction by issuance of notice under section 148 dated 09 04 2022 is illegal void ab initio and without authority of law 4. The Learned CIT(A) failed to appreciate that the reopening of assessment for Assessment Year 2015-16 is barred by limitation under section 149 of the Act as more than three years had elapsed from the end of the relevant assessment year and the alleged escapement of income is less than 50.00.000/ thereby rendering the notice issued under section 148 invalid 5. The Learned CIT(A) erred in upholding the reassessment despite ror compliance with the mandatory procedure prescribed under section 148A of the Act, inasmuch as the show cause notice under section 148A(b) was never validly served on the appellant and no effective opportunity of being heard was granted 6. The Learned CIT(A) failed to appreciate that the order passed under section 148A(d) was made in haste and without considering the explanation and documentary evidence of the appellant, thereby vitiating the entire reassessment proceedings. 7. The Learned CIT(A) erred in not adjudicating the jurisdictional defects relating to Improper service of notices under section 282 of the Act resulting in gross violation of the principles of natural justice 8. The Learned CIT(A) failed to consider that the approval granted under section 151A of the Act by the Principal Chief Commissioner of Income Tax was mechanical, without due application of mind, and therefore the reassessment proceedings are liable to be quashed 9. The Learned CIT(A) erred in ignoring the fact that there is no live link or rational nexus between the information forming the basis of the show cause notice under section 148A(b) and the conclusions drawn in the order passed under section 148A(d), rendering the reassessment unsustainable in law

10.

The Learned CITIA) erred in confirming the addition of 257 50.000/- by treating the same as undisclosed short-term capital gain merely on the basis of TDS information, without appreciating that the actual sale consideration as per the registered sale deed dated 24.02.2014 is only 22.51.500/- 11. The Learned CIT(A) failed to appreciate that the appellant had duly accounted for the sale transaction and was in possession of valid documentary evidence, which was ignored without proper verification or enquiry. 12. The Learned CIT(A) erred in confirming an addition which resulted in double taxation, as the income from the alleged transaction had already been considered while filing the return of income in response to notice under section 148 of the Act. 13. The Learned CIT(A) erred in dismissing the appeal primarily on the ground of alleged non-submission, without adjudicating the legal and jurisdictional grounds which go to the root of the matter and are required to be decided independently. 14. The appellant craves leave to add alter amend or withdraw any of the above grounds at the time of hearing of the appeal.”

2.

Succinctly stated, the AO, based on information that the assessee had during the subject year, sold immovable property for Rs.57,50,000/- but had not filed his return of income for the year under consideration, initiated proceedings under section 147 of the Act. Thereafter, the AO issued notice under section 148 of the Act, dated 09/04/2022. In response, the assessee filed his return of income on 03/05/2022, declaring an income of Rs.9,36,590/-. Thereafter, the AO vide his order passed under section 147 r.w.s 144 r.w.s 144B of the Act, dated 10/01/2024, determined the income of the assessee at Rs.66,86,590/-, after making an addition of Rs.57,50,000/- towards short term capital gains (STCG) on sale of property, viz., Plot No.187 Southern Part, Hemanagar Colony, Boduppal, Ghatkesar Mandal, Rr District-500039, Andhra Pradesh.

3.

Aggrieved, the assessee carried the matter in appeal before the CIT(A) but without success.

4.

The assessee, aggrieved with the order of the CIT(A) has carried the matter in appeal before us.

5.

We have heard the Learned Authorized Representatives of both parties, perused the orders of the authorities below and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the Ld. AR to drive home his contentions.

6.

Shri M V Anil Kumar, Advocate, Learned Authorized Representative (for short, “Ld. AR”) for the assessee, at the threshold of hearing of the appeal submitted that the present appeal involves a delay of 90 days. Elaborating on the reason leading to the delay, the Ld. AR submitted that the assessee, being a semi-educated person without computer knowledge, was dependent on a part-time accountant who used to have his accounts audited and file the return of income. The Ld.AR submitted that the assessee had remained dependent on his accountant and had been unaware of the emails and notices sent by the Department to the email ID provided by the accountant, viz., sathya.s2k14@gmail.com. It was submitted that the email ID registered in the assessee's e-filing portal with the Department was not the assessee's but his accountant's. It was submitted that the AO thereafter issued notices in the course of the assessment proceedings at the aforesaid email account, of which the assessee remained unaware, as a result whereof he suffered an ex parte assessment under section 144 of the Act. Also, the Ld. AR submitted that the assessee only learned about the framing of the assessment in his case when the income tax officials handed over to him his assessment order alongwith demand notice on 10/01/2024. It was submitted that the assessee, upon learning of the framing of the aforesaid assessment in his case, when he enquired about the same from his accountant, the latter expressed his inability to file an appeal against the impugned order. It was submitted that the aforesaid accountant had thereafter absconded and was untraceable, and, as a result thereof, the assessee engaged a new consultant and filed the appeal before the CIT(A) on 11/02/2024.

7.

Elaborating further on his contention, the Ld. AR submitted that the new consultant who had filed the appeal before the CIT(A) changed the old email ID with the personal email ID of the assessee appellant, but the assessee had continued to remain under a bona fide belief that as and when the fixation of the appeal would take place, the new tax consultant would inform him about the same. The Ld. AR submitted that the assessee, not being acquainted with computers, remained unaware of the notices, while the consultant also failed to check the portal from time to time and remained oblivious of the notices issued by the CIT(A) office. The 5 Ld. AR submitted that due to the aforesaid inadvertent mistake, the proceedings before the CIT(A) were left unattended and the appeal was dismissed.

8.

Carrying his contention further, the Ld. AR submitted that it was only when the assessee, in the first week of February, 2026, had received a call from the Department about the outstanding demand that he had learned about the dismissal of his appeal and, involving no further loss of time, had engaged another tax consultant, viz., Mr. M V Anil Kumar, Advocate, who had filed the present appeal before the Tribunal, which by the time involved a delay of 92 days. The Ld. AR, to buttress the aforesaid facts that had led to the failure on the part of the assessee to participate in the assessment proceedings followed by the failure to prosecute the appeal before the CIT(A) as well as the present delay in filing of the present appeal, had drawn our attention to the petition filed by the assessee seeking condonation of the delay alongwith supporting affidavit of the assessee. The Ld. AR submitted that, as the delay in filing the appeal arose from bona fide reasons, the same, in all fairness and in the interest of justice, be condoned.

9.

Shri K Prasad, Learned Senior Departmental Representative (for short, “Ld. Sr-DR”) objected to the seeking of condonation of delay in filing the present appeal. It was submitted that as the assessee had consistently, right from the failure on his part to file his return of income under section 139 of the Act, followed by an ex-parte assessment under section 144 of the Act and the dismissal of the appeal vide an ex-parte order for want of prosecution, had adopted a lackadaisical approach regarding his income tax matters. The Ld. Sr. DR submitted that, as the assessee has come forth with an unsubstantiated explanation for the delay in filing the appeal, the same does not merit condonation and is liable to be dismissed on the ground of limitation.

10.

We have given thoughtful consideration and find substance in Ld. AR’s claim that the delay of 90 days involved in filing the present appeal had crept in because of bona fide reason, which primarily was prompted by the unawareness of the assessee about the ongoing income tax proceedings, as well as the failure on the part of his accountant/consultant on whom he was dependent for filing of his income tax return, etc. In our view, as the assessee has duly explained the reasons for the delay in filing the appeal before us by filing an affidavit, which we find has not been rebutted by the Department, we are of the view that the same merits being condoned. Our aforesaid view is fortified by the recent decision of the Hon'ble Supreme Court in the case of Vidya Shankar Jaiswal vs. ITO (2025) 305 Taxman 83 (SC). The Hon'ble Apex Court, while setting aside the order of the Hon'ble High Court of Chhattisgarh, which had approved the declining of the condonation of delay of 166 days by the Tribunal, had 7 observed that a justice-oriented and liberal approach should be adopted while considering the application filed by an appellant seeking condonation of the delay involved in filing the appeal.

11.

Coming to the merits of the case, Shri M V Anil Kumar, Advocate, Learned Authorized Representative (for short, “Ld. AR”) for the assessee, at the threshold of hearing of the appeal, submitted that the AO had grossly erred in law and facts of the case in assuming jurisdiction for framing the impugned assessment vide his order passed under section 147 r.w.s. 144 r.w.s. 144B of the Act, dated 10/01/2024. Elaborating on his contention, the Ld. AR submitted that as the AO as per “first proviso” to section 149(1) of the Act (post amended) as was applicable at the time of issuing the notice under section 148 of the Act, dated 09/04/2022 was divested of his jurisdiction to issue any such notice seeking to reopen the case of the assessee for the subject year AY 2015-16 beyond 31/03/2022, i.e., beyond the time limit specified under the clause (b) of sub-section (1) of section 149 of the Act as was available in the statute before commencement of the Finance Act, 2021, therefore, the initiation of the impugned proceedings and the consequential framing of the assessment by him based on the said notice cannot be sustained and is liable to be struck down on account of invalid assumption of jurisdiction. The Ld. AR, to buttress his contention, had drawn our attention to section 149(1) of the Act - “first proviso” (as was made available on the statute by the Finance Act, 2021, w.e.f. 01/04/2021).

12.

Carrying his contention further, the Ld. AR submitted that though the fifth and sixth provisos of the post amended section 149 of the Act provide for excluding certain periods while computing the period of limitation, viz., (i) the time or extended time allowed to the assessee, as per show cause notice (SCN) issued under clause (b) of section 148A of the Act or the period during which the proceedings under section 148A is stayed by an order or injunction of any Court (as per “fifth proviso”); and (ii) that where immediately after the exclusion (period referred to in “fifth proviso”) of the period of limitation available to the AO for passing an order under clause (d) of section 148A of the Act does not exceed seven days, such remaining period shall be extended to seven days and the period of limitation under sub-section (1) of section 149 shall be deemed to be extended accordingly (as per “sixth proviso”), but both the aforementioned provisos, i.e., “fifth proviso” and “sixth proviso” qualify the substantive amended section 149 of the Act and do not relate to the un-amended section 149 of the Act, which in turn is taken care of exclusively by the “first proviso” to section 149(1) of the Act. Accordingly, the Ld. AR based on his aforesaid contentions submitted that the time spent from the issuance of notice under section 148A(b) of the Act up to the passing of the order under section 148A(d) of the Act in terms of “fifth proviso” and “sixth proviso” 9 cannot be excluded for reckoning the limitation period for issuance of notice under section 148 of the Act. Elaborating on his contention, the Ld. AR submitted that as the notice under section 148 of the Act, dated 09/04/2022 for the AY 2015-16 had been issued beyond the time limit specified under the provisions of clause (b) of sub-section (1) of section 149 of the Act as was available on the statute before the commencement of the Finance Act, 2021, which expired as on 31/03/2022 (six years from the end of the assessment year, i.e., AY 2015-16), therefore, the same cannot be sustained and is liable to be quashed. The Ld. AR, to buttress his contention, had relied upon the judgment of the Hon’ble High Court of Telangana in the case of Cyberabad Citizens Health Services Private Limited vs. DCIT, Circle-1(1), Writ Petition No. 25121 of 2024, dated 17/11/2025.

13.

Per contra, Shri K Prasad, Learned Senior Departmental Representative (for short, “Ld. Sr-DR”) relied upon the orders of the authorities below. The Ld. Sr-DR submitted that the Hon’ble High Court of Patna in its recent order passed in the case of Chandra Shekhar vs. Principal Commissioner of Income Tax (2025) 173 taxmann.com 591 (Patna) had observed that on a combined reading of the “fifth proviso” and “sixth proviso” to section 149(1) of the Act, the period of limitation for issuing notice under section 148 of the Act is to be reckoned in reference to the notice issued by the AO under section 148A(b) of the Act. 10 Elaborating on his contention, the Ld. DR submitted that the aforesaid order of the Hon’ble High Court was thereafter approved by the Hon’ble Supreme Court, which observed that, as there was no good ground to interfere with the impugned order passed by the High Court, it dismissed the Special Leave Petition (SLP) filed by the assessee. The Ld. DR had filed before us a written submission/synopsis wherein he has referred to the aforesaid judicial pronouncements, and submitted that as the notice under section 148A(b) of the Act in the case of the present assessee was issued on 21/03/2022, i.e., with the time period of six years from the end of the assessment year, thus, no infirmity emerges from the jurisdiction assumed by the AO for framing the assessment. The Ld. DR had further relied upon the judgment of the Hon’ble High Court of Delhi in the case of BKR Capital (P.) Ltd. vs. Income Tax Officer (2026) 187 taxmann.com 10 (Delhi) and Rajmani Securities (P.) Ltd vs. Income Tax Officer (2026) 187 taxmann.com 101 (Delhi), wherein the Special Leave Petitions (SLPs) filed in the said cases too had been dismissed by the Hon’ble Supreme Court as BKR Capital (P.) Ltd vs. ITO (2026) 187 taxmann.com 1073 (SC) and Rajmani Securities (P.) Ltd vs. ITO (2026) 187 taxman.com 1077 (SC). The Ld. DR submitted that in both the aforementioned cases, the Hon’ble High Court had observed that the extended time period taken by the assessee for furnishing the reply to the notice issued under section 148A(b) of the Act is to be excluded while considering as to whether or not the notice issued under section 148 of the Act is within limitation. Carrying his contention further, the Ld. DR submitted that both the aforementioned orders of the Hon’ble High Court of Delhi in the case of BKR Capital (P.) Ltd vs. ITO (supra) and Rajmani Securities (P.) Ltd vs. ITO (supra) have been upheld by the Hon’ble Supreme Court and the respective Special Leave Petitions (SLPs) had been dismissed.

14.

The Ld. DR based on his aforesaid contentions and drawing support from the above mentioned judicial pronouncements submitted that as in the case of the present assessee, the AO had issued notice under section 148A(b) of the Act on 21/03/2022, i.e., before lapse of the time period of six years from the end of the assessment year, therefore, the notice under section 148 of the Act could safely be held to have been issued within the prescribed time period contemplated under the pre-amended section 149(1) of the Act.

15.

We have given thoughtful consideration to the contentions advanced by the Ld. Authorized Representatives for both parties in the backdrop of the orders of the authorities below.

16.

Admittedly, it is a matter of fact borne from record that the impugned notice under section 148 of the Act, dated 09/04/2022, has been issued beyond the time limit specified under the provisions of clause (b) of sub- section (1) of section 149 of the Act as they stood immediately before the commencement of the Finance Act, 2021. We say so, for the reason that as per the pre-amended section 149(1)(b) of the Act, a notice under section 148 of the Act for the AY 2015-16 could have been issued by the AO latest by 31/03/2022. At this stage, we deem it apposite to observe that the Hon’ble Supreme Court in its recent order passed in BKR Capital (P.) Ltd v. Income-tax Officer, [2026] 187 taxmann.com 1073 (SC), dated 29/05/2026 and Rajmani Securities (P.) Ltd. v. Income-tax Officer [2026] 187 taxmann.com 1077 (SC), dated 24/06/2026 has dismissed the SLP’s filed by the respective assessee’s arising from the common order passed by the Hon’ble High Court of Delhi in BKR Capital (P.) Ltd. v. Income-tax Officer, 4(1), Delhi, in W.P.(C) 19738/2025 and Rajmani Securities (P.) Ltd. v. Income-tax Officer, W.P.(C) 19769/2025, dated 26/02/2026, wherein it was held that the extension of the time period sought by an assessee for furnishing the reply to the notice issued by the AO under section 148A(b) of the Act is to be excluded while considering as to whether the notice under section 148 of the Act is issued within the time limits specified under Section 149 of the Act (as was available in the statute prior to its amendment vide Finance Act, 2021, w.e.f. 01/04/2021). For the sake of clarity, we deem it appropriate to cull out the observations of the Hon’ble High Court of Delhi in its aforesaid common order, which read as under:

“30. The period between 28.03.2024 and 15.04.2024, during which the matter remained pending on account of adjournments sought by the petitioner, is liable to be excluded in terms of the statutory proviso. Consequently, the notice dated 15.04.2024 cannot be held to be barred by limitation.” (emphasis applied by us) However, in the case before us, as the assessee appellant has not sought any extension in the time limit as was made available to him for furnishing the reply to the notice under section 148A(b) of the Act, dated 21/03/2022, therefore, the ratio of the aforementioned judgments in the case of BKR Capital (P.) Ltd. v. Income-tax Officer (supra) and Rajmani Securities (P.) Ltd. v. Income-tax Officer (supra) will have no bearing on the adjudication of the present appeal before us.

17.

Apropos the order of the Hon’ble Supreme Court in the case of Chandra Sekhar vs. Principal Commissioner of Income Tax (2025) 179 taxmann.com 341 (SC), as has been relied upon by the Ld. Sr. DR, we find that the same is merely an order dismissing the Special Leave Petition (SLP) in limine. For the sake of clarity, we deem it apposite to cull out the order of the Hon’ble Supreme Court, as under:-

“We do not find good ground to interfere with the impugned judgment and order of the High Court. Hence, the Special Leave Petition is dismissed.” (emphasis supplied by us) In our view, the declaration of law continues to be that of the Hon’ble High Court of Patna in Chandra Sekhar vs. Principal Commissioner of Income Tax (2025) 173 taxmann.com 591 (Patna), wherein it was observed that for the purpose of limitation under sections 148 and 149 of the Act, the relevant date is the date of initial notice under section 148A(b) of the Act and not the subsequent notice issued seeking information. We are of the view that the Hon’ble Supreme Court, on an SLP having been filed, had not affirmed the view taken by the Hon’ble High Court by a speaking order, but had simply declined to grant leave. We are of the view that the aforesaid order of the Hon’ble Supreme Court, which is a dismissal of the SLP by a non-speaking order, would not amount to affirmation of the High Court’s reasoning, as a result whereof the doctrine of merger does not get attracted. Our aforesaid view is fortified by the judgments of the Hon’ble Supreme Court in Kunhayammed v. State of Kerala (2000) 245 ITR 360 (SC) and Khoday Distilleries Ltd. v. Sri Mahadeshwara Sahakara Sakkare Karkhane Ltd. (2019) 4 SCC 376. We find that the Hon’ble Apex Court in the case of Khoday Distilleries Ltd. v. Sri Mahadeshwara Sahakara Sakkare Karkhane Ltd. (supra) has, after a cumulative reading of the various judgments, affirmed the conclusions rendered by the three- Judge Bench of the Court in Kunhayammed v. State of Kerala (supra), and observed as under:

“27) From a cumulative reading of the various judgments, we sum up the legal position as under:

(a) The conclusions rendered by the three Judge Bench of this Court in Kunhayammed and summed up in paragraph 44 are affirmed and reiterated. (b) We reiterate the conclusions relevant for these cases as under: "(iv) An order refusing special leave to appeal may be a non- speaking order or a speaking one. In either case it does not attract the doctrine of merger. An order refusing special leave to appeal does not stand substituted in place of the order under challenge. All that it means is that the Court was not inclined to exercise its discretion so as to allow the appeal being filed. (v) If the order refusing leave to appeal is a speaking order, i.e., gives reasons for refusing the grant of leave, then the order has two implications. Firstly, the statement of law contained in the order is a declaration of law by the Supreme Court within the meaning of Article 141 of the Constitution. Secondly, other than the declaration of law, whatever is stated in the order are the findings recorded by the Supreme Court which would bind the parties thereto and also the court, tribunal or authority in any proceedings subsequent thereto by way of judicial discipline, the Supreme Court being the Apex Court of the country. But, this does not amount to saying that the order of the court, tribunal or authority below has stood merged in the order of the Supreme Court rejecting the special leave petition or that the order of the Supreme Court is the only order binding as res judicata in subsequent proceedings between the parties. (vi) Once leave to appeal has been granted and appellate jurisdiction of Supreme Court has been invoked the order passed in appeal would attract the doctrine of merger; the order may be of reversal, modification or merely affirmation. (vii) On an appeal having been preferred or a petition seeking leave to appeal having been converted into an appeal before the Supreme Court the jurisdiction of High Court to entertain a review petition is lost thereafter as provided by sub-rule (1) of Rule 1 of Order 47 CPC.” Further, we find that the Hon’ble Supreme Court in the case of Khoday Distilleries Ltd. vs. Sri Mahadeshwara Sahakara Sakkare Karkhane Ltd. (supra), referring to a similar dismissal, has observed that the SLP was dismissed in limine and without any speaking order, and observed as under:

“Civil appeal arising out of Special Leave Petition (Civil) No.13792 of 2013: In this case, we find that the Special Leave Petition was dismissed with the following order passed on January 05, 2012:- “We find no ground to interfere with the impugned order. The Special Leave Petition is dismissed.” Here also, the Special Leave Petition was dismissed in limine and without any speaking order.” (emphasis supplied by us)

We thus, based on our aforesaid observations, are of the view that the dismissal of the Special Leave Petition (SLP) by the Hon’ble Supreme Court in Chandra Sekhar vs. Principal Commissioner of Income Tax (2025) 179 taxmann.com 341 (SC), dated 06/10/2025 is a dismissal of the Special Leave Petition (SLP) in limine, and the same will not attract the doctrine of merger.

18.

Coming to the facts involved in the present case, we have heard the Learned Authorized Representatives of both parties and given thoughtful consideration to the issue in hand before us, i.e., sustainability of the impugned order of assessment passed by the AO under section 147 r.w.s 144 r.w.s 144B of the Act, dated 10/01/2024, which in turn is based on the notice issued under section 148 of the Act, dated 09/04/2022, for the AY 2015-16.

19.

Admittedly, it is a matter of fact borne from record that the impugned notice under section 148 of the Act, dated 09/04/2022, has been issued beyond the time limit specified under the provisions of clause (b) of sub- section (1) of section 149 of the Act as they stood immediately before the commencement of the Finance Act, 2021. We say so, for the reason that as per the pre-amended section 149(1)(b) of the Act, a notice under section 148 of the Act for the AY 2015-16 could have been issued by the AO latest by 31/03/2022.

20.

Considering the aforesaid factual position, we find substance in the Ld. AR’s contention that as a notice under section 148 of the Act, dated 09/04/2022 has been issued beyond the time period specified under the provisions of clause (b) of sub-section (1) of section 149 of the Act, as was available on the statute prior to the commencement of the Finance Act, 2021, therefore, the same could not have been issued as per the clear mandate of the “first proviso” to section 149 of the Act as had been made available on the statute by the Finance Act, 2021. Also, we concur with the Ld. AR that the period sought to be excluded for the purpose of computing the period of limitation as contemplated in the “fifth proviso” of section 149(1) of the Act (post amended) and also the extension of time limit to seven days in a case where after the exclusion of the time limit contemplated in the “fifth proviso” to seven days (as per the “sixth proviso”) of section 149(1) of the Act cannot be read into for the purpose of computing the period of limitation for issuance of notice under section 148 of the Act as contemplated in the “first proviso” of post amended section 149(1) of the Act. Our aforesaid view is fortified by the judgment of the 18 Hon’ble High Court of Telangana in the case of Cyberabad Citizens Health Services Private Limited vs. DCIT (supra), wherein, based on exhaustive deliberations, it was observed as under:- “6. According to the learned Senior Counsel for the petitioner, notice under Section 148 of the Act is barred by limitation. As per the first proviso to the amended Section 149 of the Act, the impugned notice is beyond the period of six years from the Assessment Year 2017-18. The reopening of assessment proceedings have also been challenged on the ground that during pendency of the proceedings under Section 154 of the Act on the same issue, it cannot be made. The attention of this Court has been drawn to the notice dated 20.01.2022 issued for rectification of mistake and the order under Section l48A(d) of the Act passed on 22.04.2024. Reliance has been placed on the following decisions rendered by the Apex Court in Union of India v. Rajiv Bansal; High Court of Delhi in Sheetal international (P) Ltd v. Chief Commissioner of Income-tax, Central-2z; High Court of Karnataka at Bengaluru in Tarish Investment and Trading Company (P) Ltd., v. Union of India3; High Court of Rajasthan in Shree Cement Ltd., v. Assistant Commissioner of Income Tax; High Court of Bombay in Godrej Industries Ltd., v. The Assistant Commissioner of Income Tax, Circle 14(1X2), Mumbai, and by a coordinate Bench of this Court in M/s. Sri Sai Dhurga Balaji Health and Educational Welfare Society v. the Income Tax Officer6. All these decisions relate to the Assessment Year 2017-18 except the case of Godrej Industries Ltd., (supra) which relates to the Assessment Year 2014-15. 7. On the second issue, reliance has been placed on the decision of the Apex Court in the case of S.M. Overseas (P) Ltd., v. Commissioner of Income-tax. Learned Senior Counsel for the petitioner has distinguished the decision rendered by the High Court of Patna in Chandra Shekhar v. Principal Commissioner of Income-tax as it relates to the Assessment Year 2020-21 where the application of the first proviso to the amended Section 149 of the Act introduced with effect from 01.04.2021 cannot be applied. Based on the said submissions, the learned Senior Counsel for the petitioner has prayed that the impugned notice under Section 148 of the Act may be quashed and the order passed under Section 148A(d) of the Act may also be set aside. 8. On behalf of the Revenue, learned Senior Counsel for the Department has taken us to the chronology of dates and events as referred to hereinabove and thereby drawn the attention of this Court to the notice under Section 148A(b) of the Act dated 26.03.2024. It is submitted that the instant notice was issued prior to the expiry of six years period for reopening the assessment proceedings under the un-amended Section 149 of the Act for the Assessment Year 2017-18. The order under Section 148A(d) of the Act was passed on 22.04.2024. Further, the petitioner took time to file its reply on the date fixed as 10.04.2024. It is submitted that therefore, the benefit of the fifth and sixth provisos to amended Section 149 of the Act come into play. Therefore, the impugned notice under Section 148 of the Act dated 22.04.2024 is not barred by limitation.

9.

Upon consideration of the rival submissions and the materials referred to hereinabove placed on record, we are of the considered view that the impugned notice under Section 148 of the Act dated 22.04.2024 relating to the Assessment Year 2017-18 is barred by limitation as per the first proviso to Section 149 of the Act brought into effect from 01.04.2021. The relevant part of amended Section 149 and the first, fifth and sixth provisos are extracted in the footnote”. 10. This, we say so for the following reasons: In the case of Rajeev Bansal (supra), the position of law stands clear as regards the operation of amended Section 149(1) of the Act. The relevant paragraphs 49 and 53 thereof are extracted hereunder: “49 The first proviso to Section 149(1)(b) requires the determination of whether the time limit prescribed under Section 149(1)(b) of the old regime continues to exist for the assessment year 2021-2022 and before. Resultantly, a notice under Section 148 of the new regime cannot be issued if the period of six years from the end of the relevant assessment year has expired at the time of issuance of the (a) if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b); (b) if three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income chargeable to tax, represented in the form of- (i) an asset; (ii) expenditure in respect of a transction or in relation to an event or occasion; or (iii) an entry or entries in the books of account, Which has escaped assessment amounts to or in likely to amount to fifty lakh rupees or more: Provided that no notice under section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before 1” day of April, 2021, if a notice under section 148 or section 153A or section 153C could not have been issued at that time on account of being beyond the time limit specified under the provisions of clause (b) of sub-section (1) of this section or section 153A or section 153C, as the case may be, as they stood immediately before the commencement of the Finance Act, 2021: Provided also that for the purposes of computing the period of limitation as per this section, the time or extended time allowed to the assessee, as per show-cause notice issued under clause (b) of section 148A or the period during which the proceeding under section 148A is stayed by an order or injunction of any court, shall be excluded: Provided also that where immediately after the exclusion of the period referred to in the immediately preceding proviso, the period of limitation available to the Assessing Officer for passing an order under clause (d) of section 148A does not exceed seven days, such remaining period shall be extended to seven days and the period of limitation under this sub-section shall be deemed to be extended accordingly.

Notice. This also ensures that the new time limit of ten years prescribed under Section 149(1)(b) of the new regime applies prospectively. For example, for the assessment year 2012-2013, the ten year period would have expired on 31 March 2023, while the six year period expired on 31 March 2019. Without the proviso to Section 149(1)(b) of the new regime, the Revenue could have had the power to reopen assessments for the year 2012-2013 if the escaped assessment amounted to Rupees fifty lakhs or more. The proviso limits the retrospective operation of Section 149(1)(b) to protect the interests of the assessees.” “53 The position of law which can be derived based on the above discussion may be summarized thus: (10) Section 149(1) of the new regime is not prospective. It also applies to past assessment years; (ii) The time limit of four years is now reduced to three years for all situations. The Revenue can issue notices under Section 148 of the new regime only if three years or less have clapsed from the end of the relevant assessment year, (iii) the proviso to Section 149(1)(b) of the new regime stipulates that the Revenue can issue reassessment notices for past assessment years only if the time limit survives according to Section 149(1)(b) of the old regime, that is, six years from the end of the relevant assessment year; and (iv) all notices issued invoking the time limit under Section 149(1)(b) of the old regime will have to be dropped if the income chargeable to tax which has escaped assessment is less than Rupees fifty lakhs.” 11. The first proviso) to the amended Section 149 of the Act prescribes that no notice under Section 148 of the Act shall be issued at any time in a case for the relevant assessment year beginning on or before 01.04.2021, if a notice under Section148 of the Act could not have been issued at that time on account of being beyond the time limit specified under the provisions of clause (b) of sub- section (1) of Section 149 of the Act or as they stood immediately before the commencement of the Finance Act, 2021. For the purposes of appreciating the first proviso, the un-amended Section 149 of the Act is also extracted in the foot note10 Time limit for notice. 149. (1) No notice under section 148 shall be issued for the relevant assessment year, (a) if four years have clapsed from the end of the relevant assessment year, unless the case falls under clause (b) or clause (c); (b) if four years, but not more than six years, have elapsed from the end of the relevant assessment year unless the mome chargeable to tax which has escaped assessment amounts to or is likely to amount to one lakh rupees or more for that year. I if four years, but not more than sixteen years, have elapsed from the end of the relevant assessment year unless the income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment. Explanation In determining income chargeable to tax which has escaped assessment for the purposes of this sub-section, the provisions of Explanation 2 of section 147 shall apply as they apply for the purposes of that section (2) The provisions of sub-section (1) as to the issue of notice shall be subject to the provisions of section 151. (3) If the person on whom a notice under section 148 is to be served is a person treated as the agent of a non-resident under section 163 and the assessment, reassessment or recomputation to be made in pursuance of the notice is to be made on him as the agent of such non-resident, the notice shall not be issued after the expiry of a period of six years from the end of the relevant assessment year. Explanation For the removal of doubts, it is hereby clarified that the provisions of sub-sections (1) and (3), as amended by the Finance Act, 2012, shall also be applicable for any assessment year beginning on or before the 1 day of April, 2012. 12. Apparently, the fifth and sixth provisos of the amended Section 149 of the Act extracted hereinabove provide for excluding certain periods while computing the period of limitation as per the amended Section. It prescribes the time or extended time allowed to the assessee as per the show cause notice under clause (b) of Section 148 of the Act or the period during which the proceeding under Section 148A of the Act is stayed shall be excluded. The sixth proviso to the amended Section 149 of the Act also deals with exclusion of the period referred to in the fifth proviso i.e., the period of limitation available to the Assessing Officer for passing an order under clause (d) of Section 148A of the Act if it does not exceed seven days. In that event, such remaining period shall be extended to seven days and the period of limitation under this sub-section shall be deemed to be extended. Accordingly, both the fifth and sixth provisos in the first place do not amount to clarification of the first proviso. These two provisos qualify the substantive amended Section 149 of the Act and do not relate to the un-amended Section 149 of the Act for which the first proviso takes care of. The contention of the learned counsel for the Revenue that the time spent from the issuance of notice under Section 148A(b) of the Act up to the passing of the order under Section 148A(d) of the Act in terms of the fifth and sixth provisos stands excluded for reckoning the limitation period for issuance of notice under Section 148 of the Act is not worth acceptance. Section 148A of the Act lays down the procedure for issuance of notice under Section 148 of the Act whereas Section 149 of the Act prescribes strict time limit within which notice under Section 148 of the Act can be issued in the prescribed circumstances. The Revenue is therefore obliged to adhere to the timeline prescribed under Section 149 of the Act for issuance of such notice and undertake the procedure before issuance of notice under Section 148A of the Act. 13. In this regard, it is apposite to refer to opinion of the Delhi High Court. Paragraphs 15 and 16 of Godrej Industries Ltd., (supra) are extracted hereunder: “15. The validity of a notice must be judged on the basis of the law existing as on the date on which the notice is issued under Section 148 of the Act, which in the present case is 31 July 2022, by which time the Finance Act, 2021 is already on the statute and in terms thereof, no notice under Section 148 of the Act for AY 2014-15 could be issued on or after 1” April 2021 based on the first proviso to Section 149 of the Act. Therefore, the fifth proviso cannot apply in a case where the first proviso applies because, if a notice under Section 148 of the Act could not be issued beyond the time period provided in the first proviso, then the fifth proviso could not save such notices. The fifth proviso can only apply where one has to determine whether the time limit of three years and ten years in Section 149(1) of the Act are breached. 16. The sixth proviso to Section 149 of the Act has no impact as it only provides a situation where after exclusion of the time period referred to in the fifth proviso, the time available with the Assessing Officer for passing an order under Section 148A(d) of the Act is less than 7 days, then the remaining time frame shall be extended to 7 days and limitation also stands extended by 7 days.” 14. Paragraph 12 of Shree Cement Ltd., (supra) is also extracted hereunder. “12. In this case, as it pertains to Assessment Year 2017-18, six years period would have expired on 31” March 2024. Whereas notice under Section 148 of the Act itself came to be issued on 1” May 2024. Mr. Siddharth Bapna, counsel for Revenue, made an attempt to argue that fifth and sixth provisos to Section 149(1)(b) of the Act would save the period of limitation for issuing notice under Section 148 of the Act. We are afraid we do not agree with him. Same argument was raised in Hexaware Technologies Ltd. (supra) and was rejected. The Court held, with respect to applicability of fifth and sixth provisos to Section 149(1)(b) of the Act for extension of limitation for issuing notice under Section 148 of the Act, fifth and sixth provisos are only applicable with respect to the period of limitation prescribed under Section 149(1) of the Act ie, three years or ten years, as the case may be. The Court also held that fifth and sixth provisos extend limitation for issuing notice under Section 149 of the Act, however, first proviso is an exception to the period of limitation and provides for a restriction on the notices under Section 148 of the Act being issued for assessment years up to 2021-22 (in this case, it is Assessment Year 2017-18) beyond a certain date. Therefore, the way the section would operate, is to fira decide whether a notice issued under Section 148 of the Vet is within the period of limitation under Section 149(1)(2) or (b) of the Act. To decide whether the notice is within the period of limitation under Section 149(1)(a) or (b) of the Act, the extension of time as prescribed in fifth and/or sixth proviso would be considered. The Court further held once. The notice is otherwise within the period of limitation, thereafter one has to see whether the said limit is within the prescribed restriction provided in first proviso or not. If the notice is beyond the restriction period, the notice is invalid, and the fifth and/or the sixth proviso cannot apply at this stage to extend the period of restriction as per first proviso. Hence, if a notice is not within the time prescribed under first proviso to Section 149(1) of the Act, then such period cannot be extended by fifth or sixth proviso. In Hexaware Technologies Ltd. (supra), the Court had relied upon another judgment of Bombay High Court in Godrej Industries Ltd. V. Assistant Commissioner of Income-tax [2024] 160 taxmann.com 13 (Bombay)/(2024) 338 CTR (Bom) 25, which was also authored by one of us (the Chief Justice), where paragraph No.15 reads as under: “15. The validity of a notice must be judged on the basis of the law existing as on the date on which the notice is issued under Section 148 of the Act, which in the present case is 31” July 2022, by which time the Finance Act, 2021 is already on the statute and in terms thereof, no notice under Section 148 of the Act for AY 2014-15 could be issued on or after 1 April 2021 based on the first proviso to Section 149 of the Act. Therefore, the fifth proviso cannot apply in a case where the first proviso applies because, if a notice under Section 148 of the Act could not be issued beyond the time period provided in the first proviso, then the fifth proviso could not save such notices. The fifth proviso can only apply where one has to determine whether the time limit of three years and ten years in Section 149(1) of the Act are breached.” 15. The reliance placed by the Revenue on the decision rendered by Patna High Court in the case of Chandra Shekhar (supra) is distinguishable as it relates to the Assessment Year 2020-21 in respect of which the notice under Section 148A(b) of the Act was issued on 28.03.2024. The petitioner therein had assailed the notice on the ground that the Assessing Officer had no jurisdiction to undertake the assessment for the Assessment Year 2020-21 after 31.03.2024 with reference to the second notice issued on 22.04.2024 as it was beyond the time limit stipulated under Section 149(1)(a) of the Act. In the aforesaid facts, the learned Court held that the combined reading of the fifth and sixth provisos meant that the first notice dated 28.03.2024 was issued well within the time limit stipulated. Therefore, the Assessment Officer has jurisdiction. 16. In view of the above discussion, the initiation of reopening of assessment by the impugned notice dated 22.04.2024 is barred by limitation being beyond the period of six (6) years reckoned from the relevant Assessment Year 2017-18 as per the un-amended Section 149 of the Act read with the first proviso thereof brought into effect from 01.04.2021.”

21.

We thus, in terms of our aforesaid deliberations, find substance in the Ld. AR’s contention that as the notice issued by the AO under section 148 of the Act, dated 09/04/2022 is barred by limitation as per the mandate of the “first proviso” to section 149 of the Act as had been made available on the statute by the Finance Act, 2021, therefore, the same cannot be sustained and also, the consequential assessment order passed by the AO on the basis of the same vide his order under section 147 r.w.s 144 r.w.s. 144B of the Act, dated 10/01/2024 has to meet the same fate and is liable to be quashed.

22.

We thus, in terms of our aforesaid deliberations, quash the assessment order passed under section 147 r.w.s. 144 r.w.s. 144B of the Act, dated 10/01/2024 for want of a valid assumption of jurisdiction.

23.

As we have quashed the assessment order passed by the AO under section 147 r.w.s 144 r.w.s. 144B of the Act, dated 10/01/2024; therefore, we refrain from adverting to the other contentions on which the impugned order of assessment has been assailed by the assessee before us, which are thus left open.

24.

In the result, the appeal filed by the assessee is allowed in terms of our aforesaid observations.

Order pronounced in the open court on 14th October, 2026. Sd/- Sd/- MADHUSUDAN SAWDIA RAVISH SOOD ACCOUNTANT MEMBER JUDICIAL MEMBER Hyderabad Dated:14th October, 2026. **OKK/SPS Copy to: NAGAIAH MALLAVARAPU, H.NO 4-192, RAMALAYAM, 1 ZARUGUMALLI, ONGOLE-523274, ANDHRA PRADESH ITO, WARD-1, O/O ITO, WARD-1, ROSHAN PLAZA, 8TH 2 LINE, RAM NAGAR, ONGOLE-523001, ANDHRA PRADESH 3 THE PCIT, GUNTUR. 4 THE D.R., ITAT, HYDERABAD BENCH 5 GUARD FILE

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