LUCENT GLOBAL,GANDHIDHAM vs. INCOME TAX OFFICER, WARD-1, GANDHIDHAM, GANDHIDHAM

Brief facts qua the issue are that assessee filed return of income u/s 139 of the Act, on 04.09.2017 showing total income of Rs.70,18,240/-. The case has been selected for scrutiny through 148 notice after obtaining necessary satisfaction/approval of the specified authority as per section 151 of the Act. As per the investigation/enquiry carried out by the Investigation Wing, the assessee had entered into transaction of Rs.53,30,555/-, in the garb of unsecured loan made with M/s Aneri Fincap Ltd, during the year under consideration. The assessee had entered into transaction of Rs.53,30,555/- in the garb of unsecured loan made with M/s Aneri Fincap Ltd, during the year under consideration. Keeping in view the above stated facts and pursuant to the direction of the Hon'ble Supreme Court dated 04.05.2022 (2022 SCC Online SC 543) (Union of India Vs Ashish Agarwal), a show cause notice u/s 148 A(b) of the Income Tax Act, 1961 along with complete information & material available with the Department was provided to assessee by the concerned JAO and served through mail, requesting therein to make compliance by submitting complete reply along with necessary supporting documents. The assessee submitted the reply. However, in response to the said notice, assessee submitted reply on 27.05.2022 which was duly examined by the concerned JAO on merit and after taking into consideration of all issues raised in the said reply, order u/s 148A(d) has been passed. It is important to mention here that after enactment of section 148A of the Act, all the issues related to issuance of notice u/s 148 are to be considered by the concerned JAO at the time of passing of order u/s 148A(d) of the Act. In view of this, after taking into account of all the issues raised by assessee, it has been observed by the JAO in the order passed u/s 148A(d) of the Act that total transaction of amounting to Rs.53,30,555/- in the garb of unsecured loan made with M/s Aneri Fincap Ltd, during the year under consideration after taking into account of all the issues raised by assessee. Accordingly, the concerned JAO has considered assessee’s case fit for issuance of notice u/s 148 of the Act on account of unsecured loan to the tune of Rs.53,30,555/- and the same has been considered as escaped income for the previous year 2016-17 relevant to A.Y. 2017-18. Taking into consideration of said escaped income, notice u/s 148 of the Act for the A.Y. 2017-18 has been issued on 29.07.2022 and sent to assessee’s registered E-mail id with the Department along with an order passed u/s 148A(d) passed under DIN & Document ITBA/COM/F/17/2022-23/1044360710(1).

The assessing officer noticed that as per insight portal, the assessee had entered into transaction of Rs.53,30,555/- in the garb of unsecured loan with M/s Aneri Fincap Ltd, during the year under consideration. The assessee has submitted its reply vide letter dated 18.05.2023, and has also sought an opportunity to appear through video conferencing. The assessing officer noted that information and materials available on record suggests that the assessee is one of the beneficiaries of the accommodation entries of Rs. 53,30,555/-received from a paper company namely, Aneri Fincap Ltd (PAN: AAACF4897R) in the form of unsecured loan during the year under consideration. The submission made by the assessee in response to notice u/s 142(1) as well as SCN has been duly perused and examined w.r.t. the finding during the course of search and post search enquires carried out by the Investigation Wing and then assessing officer concluded that the credit entry of Rs. 53,30,555/- recorded by the assessee- company in the books of account for FY 2016-17 in the garb of unsecured loan form M/s Aneri Fincap Limited represents nothing but accommodation entries received from the said paper company, therefore, assessing officer held that assessee had failed to explain the source and true nature of credit entry of Rs.53,30,555/- in the books of account. Hence, the unexplained credit entry of Rs.53,30,555/- -in respect of bogus loan shown by the assessee in its books of account was treated as deemed income in terms of section 68 of the Act r.w.s. 115BBE and added to the income of the assessee under the provisions of section 68 r.w.s. 115BBE of the I. T. Act.

Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the Ld. CIT(A), who has confirmed the action of the Assessing Officer. The ld.CIT(A) observed that assessee is one of the beneficiaries of accommodation entries provided by Sri Rajesh G. Mehta through his paper company, M/s Aneri Fincap Ltd. The assessee- company involved in the impugned transaction of Rs.53,30,555/- with such paper company in the garb of accepting loan and repayment thereof cannot be regarded as genuine transactions even though it has been routed through banking channel. The assessee claimed that entire transactions are genuine but failed to provide it by furnishing relevant details and evidences. Therefore, ld.CIT(A) held that AO has rightly added the amount as unexplained cash credit u/s 68 of I.T. Act.

Aggrieved by the order of Ld. CIT(A), the assessee is in further appeal before this Tribunal.

Learned Counsel for the assessee, argued that the issue under consideration is squarely covered in favour of the assessee, by the judgment of the Hon’ble Supreme Court of India in the case of Rajeev Bansal 166 taxmann.com 70, as the notice u/s 148 was not issued within the surviving period, therefore reassessment order framed by the Assessing Officer may be quashed.

On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity.

We have heard, the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position.We note that assessment is reopened by issuing notice u/s 148 of the Act dated 29/06/2021.Thereafter, based on the Supreme Court Judgment in the case of UOI v. Ashish Agarwal a notice u/s 148A(b) of the Act has been issued on 30/05/2022 and order u/s 148A(d) of the Act has been passed on 30/07/2022 and the notice u/s 148 of the Act has been issued on 30/07/2022. The copy of return of income filed in response to notice u/s 148 of the Act submitted before the Bench. The Income-tax Act read with TOLA extended the time limit for issuing reassessment notices u/s 148 of the Act, which fell for completion from 20 March 2020 to 31 March 2021, till 30 June 2021.Therefore, the notices issued u/s 148 of the Act under old regime between 01/04/2021 and 30/06/2021 as per TOLA, will be a valid notice, if the notice u/s 148 of the Act under new regime is issued within the period of 'surviving time' as per the directions issued by Hon'ble Apex Court in case of Rajeev Bansal (supra). The 'surviving time' computed by the assessee is reproduced below:

From the above chart, it is vivid that notice under section 148 of the Act ought to have been issued on or before 20.06.2022, however, notice under section 148 of the Act, was actually issued on 30.07.2022, therefore, notice under section 148 of the Act, is time barred. Since the notice u/s 148 of the Act is barred by limitation, the assessment is required to be quashed. Therefore, the issue is duly covered by the judgment of Hon'ble Supreme Court in the case of Rajeev Bansal (supra), and the findings of the Hon’ble Court are reproduced below: “110. The effect of the creation of the legal fiction in Ashish Agarwal (supra) was that it stopped the clock of limitation with effect from the date of issuance of Section 148 notices under the old regime [which is also the date of issuance of the deemed notices]. As discussed in the preceding segments of this judgment, the period from the date of the issuance of the deemed notices till the supply of relevant information and material by the assessing officers to the assesses in terms of the directions issued by this Court in Ashish Agarwal (supra) has to be excluded from the computation of the period of limitation. Moreover, the period of two weeks granted to the assesses to reply to the show cause notices must also be excluded in terms of the third proviso to Section 149. 111. The clock started ticking for the Revenue only after it received the response of the assessee to the show causes notices. After the receipt of the reply, the assessing officer had to perform the following responsibilities: (i) consider the reply of the assessee under section 149A(c); (ii) take a decision under section 149A(d) based on the available material and the reply of the assessee; and (iii) issue a notice under section 148 if it was a fit case for reassessment. Once the clock started ticking, the assessing officer was required to complete these procedures within the surviving time limit. The surviving time limit, as prescribed under the Income-tax Act read with TOLA, was available to the assessing officers to issue the reassessment notices under section 148 of the new regime. 112. Let us take the instance of a notice issued on 1 May 2021 under the old regime for a relevant assessment year. Because of the legal fiction, the deemed show cause notices will also come into effect from 1 May 2021. After accounting for all the exclusions, the assessing officer will have sixty-one days [days between 1 May 2021 and 30 June 2021] to issue a notice under section 148 of the new regime. This time starts ticking for the assessing officer after receiving the response of the assessee. In this instance, if the assessee submits the response on 18 June 2022, the assessing officer will have sixty-one days from 18 June 2022 to issue a reassessment notice under section 148 of the new regime. Thus, in this illustration, the time limit for issuance of a notice under section 148 of the new regime will end on 18 August 2022”.

The issue is also covered by the Jurisdictional High Court of Gujarat in the case of Dhanraj Govindram Kella v. ITO [2025] 177 taxmann.com 194 (Gujarat), wherein it was held as follows: “Section 149, read with section 148, of the Income-tax Act, 1961 Income escaping assessment Time limit for issuance of notice (Reassessment) Assessment years 2013-14, 2014-15, 2016-17 and 2017-18 Assessing Officer for relevant assessment years issued notices under section 148 (old regime) between 1-4-2021 and 30-6-2021-Assessing Officer issued show cause notice under section 148A(b) Thereafter, Assessing Officer, after considering replies furnished by petitioner, passed order under section 148A(d) along with notices issued under section 148 under new regime between July, 2022 and September, 2022 Petitioner challenged validity of said notices on ground that same were barred by limitation It was noted that for assessment years 2013-14, 2014-15, 2016-17 and 2017-18, date of notice under section 148 under TOLA were 17-6-2021, 9-06-2021, 30-06-2021 and 30-06-2021 and date of order under section 148A(d) and notice under section 148 were 29-7-2022, 27-7-2022, 30-7-2022 and 19-7-2022 respectively However, last date for issuance of notice under section 148 as per surviving time were 22-6-2022, 27-6-2022, 14-6-2022 and 18-6-2022 respectively - Whether since impugned notices under section 148 were issued beyond period of 'surviving time' as per direction of Supreme Court in Union of India v. Rajeev Bansal [2024] 167 taxmann.com 70/301 Taxman 238/469 ITR 46 (SC), such notices would be invalid - Held, yes [Para 68] [In favour of assessee]”

Therefore, we note that in the assessee’s case under consideration, the notice under section 148 of the Act would be invalid notice, as said notice was issued beyond 'surviving time' as held by Apex Court in case of Union of India v.

In view of the reasons set out above, as also bearing in mind entirety of the case, we are of the considered view that the reasons recorded by the Assessing Officer, as set out earlier, were time barred. We, therefore, quash the reassessment proceedings. As the reassessment itself is quashed, all other issues on merits of the additions, in the impugned assessment proceedings, are rendered academic and infructuous.

In the result, the appeal of the assessee is allowed in the terms indicated above. Order is pronounced in the open Court on 14/10/2026.