SAPANA RAJENDRA KUMAR MARATHE ,MUMBAI vs. ITO WARD 23(3)(1), MUMBAI

The Ld. Commissioner of Income Tax (Appeals) -NFAC erred in adjudicating on the ground of claim of deduction of Rs. 1,60,000/- under Chapter VI-A of the Income-tax Act, 1961 that was not allowed.”

The assessee is an individual and filed the return of income for AY 2015-16 on 09.08.2015 declaring income at Nil. The Assessing Officer (AO) received information that the assessee is a member of Middle Income Group (MIG) CHS Ltd. which is entered into redevelopment agreement. The AO further noticed that 3 ITA 4363/Mum/2025 Sapana Rajendrakumar Marathe the assessee during the year under consideration has received a sum of Rs. 1,48,47,992/- as hardship allowance along with a new flat in the newly developed building in lieu of her old flat. Since the assessee has not offered the monetary consideration received, the AO reopened the assessment by issue of notice under section 148 of the Act between 01.04.2021 to 30.06.2021. In view of the decision of the Hon'ble Supreme Court in the case of Union of India vs. Ashish Aggarwal [2022] SCC online SC 543 dated 04.05.2022 the notice issued under section 148 is treated as notice under section 148A(b) of the Act and the assessee was required to respond to the said notice. Since the assessee did not respond the AO passed an order under section 148A(d) and also issued a notice under section 148 on 16.07.2022. The AO completed the assessment under section 147 r.w.s. 144 of the Act i.e. ex-parte for the reason that the assessee did not respond to the notices calling for details and the AO made an addition treating the monetary consideration received at Income from Other Sources. The CIT(A) set-aside the order of the AO and restored the same back to the AO for making fresh assessment.

There is a delay of 32 days in filing the appeal before the Tribunal and the assessee filed a petition seeking condonation of delay along with the an affidavit. Having heard both the parties and perused the material on record, we are of the view that there is a reasonable and sufficient cause for the delay in filing the appeal before the Tribunal. Therefore following the Hon’ble Supreme Court decision in the case of Collector, Land Acquisition Vs. MST.Katiji & Ors., (167 ITR 471) (SC) we condone the delay of 32 days in filing the appeal and admit the appeal for adjudication.

The ld. DR on the other hand relied on the order of the lower authorities.

We heard the parties and perused the material on record. In assessee's case, it is an admitted fact that the AO issued the original notice under section 148 between 01.04.2021 to 30.06.2021 for AY 2015-16 and consequent to the directions given by the Hon'ble Supreme Court in the case of Ashish Agrawal (supra), the said notice was deemed as notice issued under section 148A(b). The AO after passing the order under section 148A(d) issued the notice under section 148 dated 16.07.2022. The contention of the assessee is that the said notice is barred by limitation as per the first proviso to the un-amended provisions of section 149(1) which read as under – Time limit for notice. 149. (1) No notice under section 148 shall be issued for the relevant assessment year,— (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 asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more for that year: 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 1st day of 5 ITA 4363/Mum/2025 Sapana Rajendrakumar Marathe April, 2021, if such notice 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, as they stood immediately before the commencement of the Finance Act, 2021: 7. From the plain reading of the above section we notice that the first proviso to section 149 clearly stipulates that notices under section 148 of the Act cannot be issued, if the time limit prescribed under the un-amended provisions of section 149 as applicable prior to 01st April 2021 had already expired. This is confirmed by the decision of the Hon'ble Supreme Court in the case of Rajeev Bansal (Supra). The relevant observations of the Hon'ble Supreme Court reads as under – 19. Mr N Venkataraman, learned Additional Solicitor General of India, made the following submissions on behalf of the Revenue: (a) to (e)**** (f). The Revenue concedes that for the assessment year 2015-16, all notices issued on or after 1 April 2021 will have to be dropped as they will not fall for completion during the period prescribed under TOLA; ****** 46. The ingredients of the proviso could be broken down for analysis as follows: (i) no notice under section 148 of the new regime can be issued at any time for an assessment year beginning on or before 1 April 2021; (ii) if it is barred at the time when the notice is sought to be issued because of the "time limits specified under the provisions of" 149(1)(b) of the old regime. Thus, a notice could be issued under section 148 of the new regime for assessment year 2021-2022 and before only if the time limit for issuance of such notice continued to exist under section 149(1)(b) of the old regime.

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 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 6 ITA 4363/Mum/2025 Sapana Rajendrakumar Marathe the retrospective operation of Section 149(1)(b) to protect the interests of the assesses.

In assessee's case for AY 2015-16 the time limit for issue of notice under the un-amended provisions of section 149 expired on 31.03.2022 i.e. six years from the end of the relevant assessment year where the escaped assessment amounts to or is likely to amount to one lakh rupees or more for that year. The ld. AR during the course of hearing brought to attention the list of various decisions of the Hon'ble Delhi High Court and Co-ordinate Bench where it has been consistently held that the notice issued under section 148 of the Act beyond 31.03.2022 issued for AY 2015-16 is barred by limitation. Considering the facts and circumstances of the present case and respectfully following the various judicial precedence we hold that the notice under section 148 dated 16.07.2022, is barred by limitation and consequently the assessment done is liable to be quashed.

In result appeal of the assessee is allowed.