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Facts
The assessee, Raj International Ltd., filed returns for AYs 2013-14 and 2014-15 declaring losses, which were subsequently subjected to scrutiny assessments under Section 143(3). The Assessing Officer (AO) received information regarding bogus accommodation entries and initiated reassessment proceedings by issuing a notice under Section 148 on 17.06.2021, which was later re-initiated under Section 148A(b) on 30.05.2022 following the Supreme Court's directives in Ashish Agarwal. The assessee did not respond, leading to a final Section 148 notice on 27.07.2022 and substantial additions confirmed by the CIT(A).
Held
The Tribunal, relying on its Co-ordinate Bench decision in Md. Salim Abdul Hakim Khan and the Supreme Court's rulings in Ashish Agarwal and Rajiv Bansal, found the Section 148 notice dated 27.07.2022 to be time-barred. It determined that, considering the surviving period available to the AO (13 days from 17.06.2021 to 30.06.2021) and the 15-day response time for the Section 148A(b) notice (issued 30.05.2022, expiring 13.06.2022), the Section 148 notice should have been issued by 26.06.2022. Since it was issued on 27.07.2022, the notice was invalid, and the consequent reassessment orders for AYs 2013-14 and 2014-15 were quashed.
Key Issues
Whether the Section 148 notice issued for reassessment for AYs 2013-14 and 2014-15 was time-barred as per the provisions of the Income Tax Act, 1961, and the pronouncements of the Hon'ble Supreme Court.
Sections Cited
250, 147, 143(3), 148, 148A(b), 148A(d), 144B, 151A, 69A, 115BBE, 69C, 271(1)(c), 149, 149(1), 149A(c), 149A(d), 151, 153A, 153C, 132, 132A
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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI PAWAN SINGH, JM &
(Assessment Year: 2014-15) Raj International Ltd., Deputy Commissioner of Income A-1803, Samarpan, Kanakia Spaces, Tax - Circle-4(3)(1), Western Express Highway, Vs. Aayakar Bhavan, M.K. Road, Kandivali East, Maharashtra-400101. Mumbai-400020. PAN: AAACR5092G Appellant) : Respondent) Appellant /Assessee by : Shri K. Gopal Adv. & Ms. Neha Paranjape, Adv. : Shri Leyaqat Ali Aafaqui, Sr. DR Revenue / Respondent by Date of Hearing : 10.07.2025 Date of Pronouncement : 18.08.2025 O R D E R Per Padmavathy S, AM: These appeals by the assessee are against the separate orders of the Commissioner of Income Tax (Appeals)/ National Faceless Appeal Centre (NFAC), Delhi [In short 'CIT(A)'] passed under section 250 of the Income Tax 2 ITA 6285 & 6286/Mum/2024 Raj International Ltd. Act, 1961 (the Act) both dated 03.10.2024 for Assessment Year (AY) 2013-14 & 2014-15 . The assessee raised the following grounds of appeal –
1. Under the facts and in law, the learned CIT(A) National Faceless Appeal Centre (hereinafter referred to as 'CIT(A)'), erred in confirming the reopening of assessment under section 147 of the Income Tax Act, 1961 ('the Act'). 1.1 Under the facts and in law, the learned CIT(A) failed to consider the fact that the reopening of assessment proceedings is bad in law, without jurisdiction and has no backing of the law. 1.2 Under the facts and in law, the learned CIT(A) erred in not considering the fact that the reopening is merely on the basis of change of opinion without any reason to believe that any income has escaped assessment. The learned CIT(A) failed to appreciate that instant case is of reason to suspect and not reason to believe that income has escaped assessment. 1.3 Under the facts and in law, the learned CIT(A) failed to consider the fact that the Learned A.O has no concrete evidence to reopen the case. The same has been reopened merely on the basis of newspaper cuttings and an allegation that director of the company, Mr. Jagdish Bodra, is arrested for loan taken by forging signature of other directors. Further, the learned A.O has also relied on findings of Investigation Wing that the appellant company is a bogus entity. 1.4 Under the facts and in law, the learned CIT(A) erred in confirming the reopening based on reasons recorded by the learned A.O which are vague and based on borrowed satisfaction, without having done any further enquiry or placing on record any material / evidences gathered during the course of proceedings.
2. Under the facts and in law, the learned CTT(A) failed to consider the fact that notice u/s 148 of the Act is bad in law as much as the same is time barred. Since the assessment has been completed u/s 143(3), the notice u/s 148 stands time barred on 31.03.2018. The notice has been issued on 17.06.2021, that is, after seven years from end of the assessment year and hence, the same is invalid and the consequential proceedings are void-ab-initio.
3. Under the facts and in law, the learned CIT(A) failed to consider the fact that order passed u/s 147 r.ws 144B of the Act is void-ab-initio as the notice u/s 148 was not issued in accordance with the provisions of Section 151A of the Income Tax Act, 1961.
3 ITA 6285 & 6286/Mum/2024 Raj International Ltd. 3.1 Under the facts and in law, the leaned CIT(A) erred in not considering that the provisions of Section 151A of the Act requires that notice u/s 148 is to be issued by the assessing officer completing assessment in Faceless manner, that is, Assessment Unit. However, in the present case of the appellant, notice is issued by the Jurisdictional Assessing Officer. Thus, the notice u/s 148 is without jurisdiction and hence, the same is bad in law.
4. Under the facts and in law, the learned CIT(A) erred in confirming addition of Rs. 33,00,000/-u/s69A r.w.s 115BBE of the Act on account of alleged deposit given to R.A Distributors Private Limited. 4.1 Under the facts and in law, the learned CIT(A) failed to consider the fact that the learned A.O has relied on investigation report uploaded on Insight Portal in the case of M/s. Nile Industries Private Limited for making addition of Rs. 33,00,000/-u/s 69A of the Act and not conducted any private / independent enquiry. The learned A.O has merely relied on borrowed satisfaction.
5. Under the facts and in law, the learned CIT(A) erred in confirming addition of Rs. 6,67,32,700/- being amount of secured loan outstanding, considering the same as income. 5.1 Under the facts and in law, the learned CIT(A) erred in considering the fact that the learned A.O has made the addition purely on the basis of its whims and presumptions, which is bad in law. The learned A.O claimed that the balance sheet reflected increase in assets which could be bogus in nature and have been utilized for siphoning of money or decrease in other liability which would also indicate siphoning of money. 5.2 Under the facts and in law, the learned CII(A) erred in considering the fact that the learned A.O has not placed any concrete material evidence on record to prove its contention and acted purely on speculation.
Under the facts and in law, the learned CIT(A) erred in confirming disallowance of Rs. 55,76,87,000/-being claim for bad and doubtful debts written off.
Under the facts and in law, the learned CIT(A) erred in confirming addition of Rs. 5,27,27,215/-u/s69C r.w.s 115BBE of the Act, considering the same as bogus purchase.
4 ITA 6285 & 6286/Mum/2024 Raj International Ltd. 7.1 Under the facts and in law, the learned CII(A) erred in confirming that the appellant is a beneficiary from Girish Karamshi Bodhra (brother of director) relating to fund transfer by way of bill payment for import on account of bogus purchases in relation to siphoning of loans and money.
8. Under the facts and in law, the learned CII(A) erred in confirming addition of Rs. 150,09,34,430/- to the income of appellant u/s 69C r.w.s 115BBE of the Act.
Under the facts and in law, the learned CIT(A) erred in confirming addition of Rs. 64,85,98,683/- to the income of the appellant for unsubstantiated interest income. 9.1 Under the facts and in law, the learned CIT(A) failed to consider the submission made by the appellant. The said interest income has been considered while filing return of income. 9.2 Under the facts and in law, the learned CIT(A) erred in considering the fact that the learned A.O has not passed any speaking order for said addition. Order passed devoid of reasons/conclusions cannot be sustained in law.
10. Under the facts and in law, the learned CIT(A) erred in making addition of Rs. 10,14,24,00,000/-, being Investment in Fixed Deposit, to the income of appellant u/s 69C r.w.s 115BBE of the Act. 10.1 Under the facts and in law, the learned CIT(A) failed to consider the submissions made by the appellant. 10.2 Under the facts and in law, the learned CIT(A) failed to appreciate that the Investment in Fixed deposit is made out of proceeds realized from the export sales, which have been duly disclosed in the financial statement and return of income filed. 10.3 Under the facts and in law, the learned CII(A) erred in confirming addition u/s 69C of the Act when the source of making investment has been duly disclosed by the appellant.
Under the facts and in law, the addition is made merely on the basis of presumptions, surmises and conjecture of the learned A.O.
Under the facts and in law, the learned CIT(A) erred in confirming initiation of penalty proceedings u/s 271(1)(c) of the Income Tax Act, 1961.
5 ITA 6285 & 6286/Mum/2024 Raj International Ltd.
All the aforesaid grounds are without prejudice to each other, independent and in the alternative.” 2. The assessee filed the return of income for AY 2013-14 on 01.10.2013 declaring a total loss of Rs. 56,57,04,996/-. The assessee filed the return of income for AY 2014-15 on 30.11.2014 declaring a loss of Rs. 29,14,01,965/-. The scrutiny assessment under section 143(3) was completed for both the AYs in which the loss was determined for AY 2013-14 at Rs. 45,58,89,450/- and for AY 2014-15 at Rs. 5,63,91,090/-. The Assessing Officer (AO) received information that the assessee is a beneficiary of bogus accommodation entry and accordingly issued a notice dated 17.06.2021 under section 148 of the Act. Pursuant to the directions of the Hon'ble Supreme Court in the case of Union of India vs. Ashish Agarwal [2022] 444 ITR 1 (SC), the AO issued a notice under section 148A(b) on 30.05.2022 providing two weeks time for the assessee to respond to the notice. The assessee did not respond to the notice and accordingly the AO passed an order under section 148A(d) and the notice under section 148 on 27.07.2022. The AO passed the final assessment order on 29.05.2023 assessing the income of the assessee at Rs. 1251,64,90,578/- for AY 2013-14 and at Rs. 109,73,25,547/- for AY 2014-15. On further appeal, the CIT(A) confirmed the additions / disallowances made by the AO. Though the assessee raised various grounds contenting the issue on merit during the course of hearing, the ld. AR submitted that if the legal ground with regard to notice under section 148 for both the AYs is consider and allowed then the rest of the grounds would become academic. Accordingly we will first proceed to adjudicate the legal contentions of the assessee.
The main contention of the ld. AR before us is that the notice under section 148 issued by the AO is barred by limitation. The ld. AR argued that as per the 6 ITA 6285 & 6286/Mum/2024 Raj International Ltd. decision of the Hon'ble Supreme Court in the case of Union of India vs. Rajiv Bansal [2024] 167 taxmann.com 70 (SC), the AO gets additional time for issue of notice under section 148 of the Act from the date of issue of original notice under section 148 till 30.06.2021. Accordingly, in assessee's case the AO has additional time from 17.06.2021 to 30.06.2021 i.e. 13 days to issue notice under section 148 under the new regime. The ld. AR drew our attention to the fact that in assessee's case, the notice under section 148A(b) was issued on 30.05.2022 providing two weeks time to the assessee to respond and the said time limits expires on 13.06.2022. The ld. AR accordingly argued that the AO ought to have issued a notice under section 148 on 26.06.2022 i.e. 13 days from 13.06.2022. The ld. AR submitted that the notice under section 148 under the new regime was issued on 27.07.2022 and is therefore barred by limitation. The ld. AR further submitted that the assessment done based on invalid notice is liable to be quashed. The ld. AR also submitted that the dates of issue of notice are common for both the AYs. The ld. AR in this regard relied on the decision of the Co-ordinate Bench in the case of Md. Salim Abdul Hakim Khan vs. ITO (ITA No. 6848/Mum/2024 dated 27.02.2025).
The ld. DR on the other hand vehemently argued that the example given by the Hon'ble Supreme Court in the decision of Rajiv Bansal (supra) is only a sample and cannot be applied literally in assessee's case. The ld. DR submitted that the assessee has not responded to the notice under section 148A(b) of the Act and therefore the time limit of 15 days cannot be strictly applied. The ld. DR further submitted that the AO in the order has recorded the fact that the assessee has not responded to the notice and after waiting for a reasonable period of time the AO proceeded to pass an order under section 148A(d) and notice under section 148 was issued on 27.07.2022.
7 ITA 6285 & 6286/Mum/2024 Raj International Ltd.
We heard the parties and perused the material on record. We notice that the Co-ordinate Bench in the case of Md. Salim Abdul Hakim Khan (supra) has considered a similar issue where it has been held that "7. We heard the parties and perused the material on record. The primary contention of the assessee is that the notice dated 28.07.2022 issued under section 148 of the Act is barred by limitation under section 149 of the Act. Therefore before proceeding further we will first understand legal position in this regard. Under the new regime of reassessment, the sequence of initiation of the proceedings is as under – (i) First the notice under section 148A(b) as why the notice under section 148 should not be issued based on the information that income has escaped assessment. The AO is required to give a period of not less than 7 days and not more than 30 days to the assessee to file the response (ii) Assessee files the response within the time specified or the time expired where the assessee has not filed any resply (iii) The AO passes an order under section 148A(d) within 30 days from the end of the month in which the reply is received by the AO or the time given in the notice under section 148A(b) expires (iv) The AO issues notice under section 148 initiating the reassessment proceedings. 8. In the cases where section 148 notices issued under the old regime between 01.04.2021 to 30.06.2021, by virtue of the decision of the Hon'ble Supreme Court in the case of Ashish Agarwal (supra) were deemed to be issued under section 148A of the Act. For such notices deemed as issued under 148A for AY 2013-14 and 2014-15, (where TOLA is applicable) the Hon'ble Supreme Court in the case Rajeev Bansal (supra), provided clarity as to the time limit available to the AO for completing the procedure under section 148A and for issuing of notice under 148. The relevant observations of the Hon'ble Supreme Court is extracted 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 8 ITA 6285 & 6286/Mum/2024 Raj International Ltd. 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.
The clock started ticking for the Revenue only after it received the response of the assesses 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.
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.
In Ashish Agarwal (supra), this Court allowed the assesses to avail all the defences, including the defence of expiry of the time limit specified under section 149(1). In the instant appeals, the reassessment notices pertain to the assessment years 2013-2014, 2014-2015, 2015-2016, 2016-2017, and 2017- 2018. To assume jurisdiction to issue notices under section 148 with respect to the relevant assessment years, an assessing officer has to: (i) issue the notices within the period prescribed under section 149(1) of the new regime read with TOLA; and (ii) obtain the previous approval of the authority specified under section 151. A notice issued without complying with the preconditions is invalid as it affects the jurisdiction of the assessing officer. Therefore, the reassessment notices issued under section 148 of the new regime, which are in pursuance of the deemed notices, ought to be issued 9 ITA 6285 & 6286/Mum/2024 Raj International Ltd. within the time limit surviving under the Income-tax Act read with TOLA. A reassessment notice issued beyond the surviving time limit will be time- barred. 9. To understand the ratio laid down by above observations of the Hon'ble Supreme Court it is important to look into the relevant provisions of section 149 which reads 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 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: Provided further that the provisions of this sub-section shall not apply in a case, where a notice under section 153A, or section 153C read with section 153A, is required to be issued in relation to a search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A, on or before the 31st day of March, 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 is less than 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.
10 ITA 6285 & 6286/Mum/2024 Raj International Ltd.
A combined reading of the observations of the Hon'ble Supreme Court and the provisions of section 149, it is clear that the surviving time limit available to the AO for issue of notice under section 148 is number of days from the date of the issuance of the deemed notices 148A(a) till 30.06.2021 besides the period granted to the assesses to reply to the show cause notices in terms of the third proviso to Section 149. Further as per the fourth proviso if the surviving time limit is less that 7 days then, such remaining period shall be extended to seven days for the purpose of period limitation.
11. In the background of the above legal position we will now examine the facts in assessee's case. In assessee's case the original notice under section 148 was issued on 30.06.2021 and said notice was deemed to be issued under section 148A by virtue of the decision of the Hon'ble Supreme Court in the case of Ashish Agarwal (supra). Accordingly, the surviving time limit as laid down by the Hon'ble Supreme Court in the case Rajeev Bansal r.w. fourth proviso to section 149 is 7 days. Further the AO in the notice under section 148A(b) dated 28.05.2022 has given 15 days time to respond i.e. by 12.06.2022. Therefore the time limit by when the AO out to have issued the notice is 19.06.2022. In the present case the AO has issued the notice under section 148 on 28.07.2022 and therefore in the light of the above discussion, we are of the considered view that the notice under section 148 is barred by limitation and invalid. Accordingly the re-assessment order is liable to quashed. " 6. In assessee's case the original notice under section 148 was issued on 17.06.2021 and therefore the surviving period available to the AO is 13 days i.e. from 17.06.2021 to 30.06.2021. When the time given by the AO in the notice under section 148A(b) dated 30.05.2022 i.e. 15 days expires on 13.06.2022 and considering the surviving period the AO ought to have issued the notice under section 148 by 26.06.2022. The AO however issued the notice under section 148 on 27.07.2022. From these facts it is clear that they are identical to the above case and hence respectfully following the above decision of the Co-ordinate Bench, we hold that the notice dated 27.07.2022 issued for AY 2013-14 & 2014-15 is barred by limitation and the assessment based on invalid notice is liable to be quashed.
11 ITA 6285 & 6286/Mum/2024 Raj International Ltd. 7. Since we have allowed the appeal considering the legal ground of the assessee, the grounds raised on merits have become academic not warranting any separate adjudication.
In result, appeal of the assessee for AY 2013-14 & 2014-15 are allowed.