GEMINI DYEING AND PRINTING MILLS LIMITED ,MUMBAI vs. ASST. COMMISSIONER OF INCOME TAX CIRCLE 7(1)(1), MUMBAI

a) On the facts and in the circumstances of the case and in law, the Id. CIT(A) erred in confirming the action taken by the AO in re-opening the assessment u/s.147 of the Income Tax Act, 1961 inspite of the fact the prescribed conditions are not satisfied.

Brief facts pertaining to AY 2015-16 is that the assessee filed the return of income for AY 2015-16 on 30.09.2015 declaring a total income of Rs. 2,11,08,240/-. The assessment under section 143(3) of the Income Tax Act (the Act) was completed on 13.06.2017 assessing the income at Rs.2,11,14,030. The Assessing Officer (AO) reopened the assessment by issuing notice under section 148 of the Act dated 26.04.2021 for the reason that the assessee has made certain deposits and withdrawals in the account belonging to M/s.Stargate Consultancy LLP and the source of the transaction is not explained. The said notice become deemed to be a notice issued under section 148A(b) of the Act, as per the directions of the Hon'ble Supreme Court in the case of Union of India vs Ashish Agrawal (Civil appeal No.3005/2022). The AO subsequently passed the order under section 148A(d) on 26.07.2022 after rejecting the objections raised by the assessee with regard to the impugned transactions. The AO also issued notice under section 148 of the Act on 26.07.2022. The assessment was completed under section 147 of the Act in which the AO made an addition of Rs. 1,39,00,000 treating the net amount of deposits and withdrawals as addition under section 56(2)

There is a delay of 59 days in filing the appeal before the Tribunal and the assessee filed a petition for condonation of delay along with an affidavit explaining the reasons for the delay. 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 & Ors., (167 ITR 471) (SC) we condone the delay of 59 days in filing the appeal and admit the appeal for adjudication.

Through Ground No.1, the assessee pertain to the notice under section 148 being time barred as per the provisions of section 149 as confirmed by the Hon'ble 8629 of 2024). The relevant provisions of section 149 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 April, 2021, if such notice could not have been issued at that time on account of being beyond the time

The contention of the ld. AR is 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. The ld. AR submitted that 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 further submitted that the relaxation under the TOLA is not applicable in assessee's case for AY 2015-16 for the reason that TOLA provisions are applicable only to cases where the time limit for issuing notices expired on or before 20.03.2020 or 31.03.2021 as has been held by the Hon'ble Supreme in the case of Rajeev Bansal (supra). The ld. AR also submitted that the similar issue has been considered by the Co-ordinate Bench in various cases has been consistently holding that the notice issued under section 148 of the Act beyond 31.03.2022 issued for AY 2015- 16 is barred by limitation. Accordingly the ld. AR submitted that in assessee's case the notice under section 148 is dated 26.07.2022 is covered by the decision of the Co-ordinate Bench.

The ld. DR on the other hand submitted that the time limit of 4 years from the end of the relevant AY for AY 2015-16 fell on 31.03.2020 and therefore it squarely falls within the relaxation given by TOLA extending the time till 30.06.2021. The ld. DR further submitted that the original notice under section 148 was issued by the AO on 26.04.2021 and therefore it is not barred by limitation as contended by the assessee.

We heard the parties and perused the material on record. In assessee's case, the AO issued the original notice under section 148 dated 26.04.2021 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 26.07.2022. 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) as has been 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. 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 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

We further notice that the issue of notice under section 148 issued for 2015- 18 being time barred is considered by the coordinate bench in the case of ACIT vs Nilesh Haresh Parwani (ITA No.266 & CO No.46/Mum/2025 dated 24.04.2025) and it is held that 11. We have considered the submissions of both sides and perused the material available on record. We, at the outset, find that similar issue pertaining to the challenge against notices issued under section 148 of the Act for the assessment year 2015-16 on the basis that same are beyond the limitation period prescribed under section 149 of the Act has been decided in favour of the taxpayers after noting the submission of the Revenue before the Hon’ble Supreme Court in Rajeev Bansal (supra), wherein it was conceded by the Revenue that for the assessment year 2015-16, all notices issued on or after 1st April, 2021 will have to be dropped as they will not fall for completion during the period prescribed under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (“the TOLA”). We find that the Hon’ble Delhi High Court in Pratishtha Garg vs. ACIT, reported in (2015) 171 taxmann.com 264 (Delhi), allowed the writ petition filed by the taxpayer and set aside the notice issued under section 148 of the Act for the assessment year 2015-16, by observing as follows: - “2. Learned counsel for the Revenue fairly states that the prayers made by the petitioner are required to be allowed as the same are covered by the concession made by the Revenue before the Supreme Court in Union of India and Others v. Rajeev Bansal: 2024 SCC OnLine SC 2693, 2024 INSC 754, as recorded in paragraph 19 (f) of the said decision. He also submits that the Coordinate Bench of this Court had, after not ing the aforesaid concession, allowed a similar petition - Ibibo Group Pvt. Ltd. v. Assistant Commissioner of Income Tax Circle: W.P.(C) 17639/2022 by order dated 13.12.2024. 3. It is relevant to note paragraph 19 (e) and (f) of the decision of the Supreme Court in Union of India and Others v. Rajeev Bansal; 2024 SCC OnLine SC 2693. The same are set out as under: "(e) The Finance Act, 2021 (2021) ((2021) 432 ITR (Stat) 52) substituted the fold regime for reassessment with a new regime. The first proviso to section 149 does not expressly bar the application of Taxation and other Laws (Relaxation and Amendment of Certain

Respectfully following the above judicial precedence we hold that in assessee's case the notice issued for AY 2015-16 dated 26.07.2022 is barred by limitation and consequently the assessment done is liable to be quashed.

In result the appeal of the assessee is allowed.