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Facts
The assessee did not file a return of income. Information was received about cash deposits and sale of property. The AO reopened the case and passed a best judgment assessment order. The CIT(A) set aside the assessment order for de novo assessment.
Held
The Tribunal held that the reassessment notice issued u/s 148 was time-barred by 46 days, as per the decision of the Hon'ble Apex Court in the case of Rajeev Bansal. Consequently, the assessment order was deemed bad in law.
Key Issues
Whether the reassessment notice issued u/s 148 of the Income Tax Act is time-barred by 46 days as per the decision of the Hon'ble Apex Court, thereby rendering the assessment order invalid.
Sections Cited
250, 148, 142(1), 133(6), 147, 144, 144B, 69A, 115BBE, 48, 251(1)(a), 148A(b), 149(1)
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Income Tax Appellate Tribunal, “A” BENCH, MUMBAI
O R D E R Per Kavitha Rajagopal, J M: This appeal has been filed by the assessee, challenging the order of the learned Commissioner of Income Tax (Appeals) Delhi (‘ld. CIT(A)’ for short), National Faceless Appeal Centre (‘NFAC’ for short) passed u/s.250 of the Income Tax Act, 1961 (‘the Act'), pertaining to the Assessment Year (‘A.Y.’ for short) 2014-15 2. The assessee has raised the grounds of appeal
challenging the validity of the assessment order on various grounds which are reproduced as under:
1. 1. On the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals) erred in not treating the reassessment process as invalid as the notice issued u/s 148 of the Act dated 25/07/2022 had been issued by the Jurisdictional assessing officer (JAO) and not by faceless officer (NFAC) and also erred in not following the applicable Jurisdiction decision of Hon'ble Bombay High (A.Y. 2014-15) Arunkumar Mithalal Soni Court in case of Hexaware Technologies Ltd. (Bombay HC)- Writ Petition No. 1778 of 2023 dated 03/05/2024.
2. On the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals) erred in not treating the reassessment process as invalid as the notice issued u/s 148 of the Act dated 25/07/2022 has been time barred by 46 days in view of the calculation provided in decision of Hon'ble Supreme Court of India in case of Union of India & Ors. Versus Rajeev Bansal (Civil application no. 8629 of 2024) dated 03.10.2024.
3. On the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals) erred in not treating the reassessment process as invalid as the notice issued u/s 148 of the Act dated 25/07/2022 had been issued without mentioning the DIN number on the face of the notice and only provided DIN afterwards through separate communication letter [Ought to be invalid as per decision of Hon'ble Bombay High Court in case of Hexaware Technologies Ltd. (Bombay HC)-Writ Petition No. 1778 of 2023 dated 03/05/2024].”
Brief facts of the case are that the assessee is an individual and had not filed his return of income for the year under consideration. Based on the information received from DDIT (Investigation), Unit 8(1), Mumbai that the assessee had deposited cash amounting to Rs. 8,00,000/- in Abhyudaya Cooperative Bank & Rs.10,00,000/- in HDFC Bank and had also sold immovable property for a consideration of Rs. 1,10,69,440/- dated 02.09.2013, the ld. AO reopened the assessee’s case vide notice u/s. 148 dated 25.07.2022, which was issued but not received by the assessee. It is observed that the ld. AO has also issued notice u/s. 142(1) of the Act on several dates which again was not received by the assessee. The assessee did not file the return of income in response to notice u/s. 148 of the Act. The ld. AO also issued notice u/s. 133(6) to the Abhyudaya Cooperative Bank, where it was found that the assessee had deposited Rs. 46,00,000/- in Abhyudaya Cooperative Bank, A/C No. 45659 which was not disclosed as the returns were not filed by the assessee. The ld. AO passed the (A.Y. 2014-15) Arunkumar Mithalal Soni assessment order u/s. 147 r.w.s. 144 r.w.s. 144B of the Act, as best judgement assessment, determining total income at Rs. 1,74,59,840/-, after making addition of Rs. 61,00,000/- towards unexplained cash credits u/s. 69A r.w.s. 115BBE of the Act and undisclosed capital gains u/s. 48 of the Act amounting to Rs. 1,10.69,440/-.
Aggrieved the assessee was in appeal before the first appellate authority, who had then set aside the assessment order to the ld. AO for de novo assessment, for the reason that the ld. AO passed an ex parte order and the assessee is said to have filed application for admission of additional evidence under Rule 46A before the appellate authority in terms of Proviso to Section 251(1)(a) of the Act inserted w.e.f. 01.04.2024, where the ld. CIT(A) can set aside the assessment to the ld. AO in case of assessment made u/s. 144 of the Act.
The assessee is in appeal before us, challenging the order of the ld. CIT(A).
The learned Authorised Representative ('ld. AR' for short) for the assessee contended that the assessee has raised the legal ground challenging the validity of the notice issued u/s. 148, dated 25.07.2022 by the JAO on various ground, where the ld. AR argued extensively on ground no.2 stating that the impugned notice is time barred by 46 days as per the decision of the Hon'ble Apex Court in the case of Union of India & Ors. vs. Rajeev Bansal (Civil Application No. 8629 of 2024), dated 03.10.2024. The ld. AR contended that the time limit for issuance of notice u/s. 148 was only till 30.06.2021, where the date of first notice was issued u/s. 148 of the Act which was deemed to be notice issued u/s. 148A(b) of the Act as per the decision of the Hon'ble Apex Court in the case of Ashish Agarwal (Civil Appeal No.3005/2022 dated 04.05.2022), which was (A.Y. 2014-15) Arunkumar Mithalal Soni on 28.06.2021. Further, the remaining days left to issue final notice u/s. 148 after the receipt of reply of 148A(b)(C) of the Act was 2 days and the date of supply of information by the ld. AO as per the direction of the Hon'ble Supreme Court in Ashish Agarwal (supra) was 24.05.2022 and the 2 weeks due date to submit reply as per above information letter dated 24.05.2022 was on 07.06.2022. After excluding the period for calculation of surviving time limit, the last date of passing of the order u/s. 148A(d) of the Act, then the issue of final notice u/s. 148 and the date of passing of the order u/s. 148A(d) of the Act and subsequently the final notice u/s. 148 of the Act was reckoned to be 48 days, thereby making reassessment notice dated 30.07.2022 time barred by 46 days. The ld. AR relied on the decision of the Hon'ble Apex Court in the case of Rajeev Bansal (supra) and prayed that the impugned notice be quashed in terms of the proposition laid down by the Hon'ble Apex Court in the case of Rajeev Bansal (supra).
The learned Departmental Representative ('ld. DR' for short) for the revenue on the other hand controverted the same and stated that the assessee has failed to raise the grounds before the first appellate authority and objected to the admission of the said ground. The ld. DR relied on the order of the lower authorities.
We have heard the rival submissions and perused the materials available on record. We hereby proceed to dispose off ground no. 2 raised by the assessee on the legal issue challenging the impugned notice as being barred by limitation in terms of the decision of the Hon'ble Apex Court in the case of Rajeev Bansal (supra). It is observed that the first notice u/s. 148 was issued on 28.06.2021 by the ld. AO and subsequent notice u/s. 148A(b) of the Act, dated 24.05.2022 was issued pursuant to the direction of the (A.Y. 2014-15) Arunkumar Mithalal Soni Hon'ble Apex Court in the case of Ashish Agarwal (supra) and order u/s. 148A(d) of the Act pursuant to which the final notice u/s. 148 of the Act was issued on 25.07.2022, where the assessee was given two weeks time to furnish details and since the assessee had failed to submit any reply, the ld. AO proceeded to pass the impugned assessment order ex parte making addition on unexplained cash deposits and capital gains. The ld. AR’s contention that the final notice dated 25.07.2022 is time barred by 46 days for the reason that the time limit allowed for notice u/s. 148 was 30.06.2021 in assessee’s case, the date of first notice u/s. 148 pursuant to the decision of Ashish Agarwal (supra), where the said notice was deemed as notice u/s. 148A(b), dated 28.06.2021. In the present case, the ld. AR contends that the remaining days left for issue of final notice u/s. 148 was only two days and the date of supply of information by the ld. AO as per the decision of the Ashish Agarwal (supra) was 24.05.2022 and two weeks due date to submit their reply as per the information letter dated 24.05.2022.
The sequence of events are tabulated herein under for ease of reference: Time limit allowed upto which notice u/s 148 to be issued (A) 30/06/2021 Date of first notice issued u/s 148 (later on deemed as notice 28/06/2021 u/s 148A(b) as per direction of Hon'ble Supreme Court in case of Ashish Agarwal) (B) Remaining days left to issue final notice u/s 148 after receipt 02 of reply of 02 148A(b) (C) (B)-(A) Date of supply of information by AO as per direction of SC in 24/05/2022 case of Ashish Agarwal Due date (i.e two weeks) to submit reply as per above 07/06/2022 information letter dated 24.05.2022 as mentioned in the letter (D) Date of submission of reply NA Period to be excluded from calculation of surviving time limit From 29/06/2021 as per Apex court's order: Period from date of issuance of the to deemed notice between 1 April 2021 and 30 June 2021 till the 07/06/2022 supply of relevant information and material by the AO+ two weeks time allowed to assessees to reply.
(A.Y. 2014-15) Arunkumar Mithalal Soni Last date of passing of order u/s 148A(d) and issue of final 09/06/2022 notice u/s 148 of the Act as per SC judgement (E) Date of passing of order u/s 148A(d) and issue of final notice 25/07/2022 u/s 148 of the Act (F) No. of days taken for passing order u/s 148A(d) and 48 reassessment notice u/s 148 after expiry of excluded period (G) (F)-(D) Reassessment notice dated 30.07.2022 time barred by no. of 46 days (H) = (F)-(E) 10. From the above, it is observed that the ld. AO has issued the first notice u/s. 148 on 28.06.2021 along with order passed u/s. 148A(b) of the Act which is deemed to be the show cause notice which is 2 days prior to the expiry of limitation period extended by the TOLA (The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020) which implies that for issuance of notice u/s. 148 after receiving the reply from the assessee, the ld. AO had 2 days time to issue notice u/s. 148 which was less than 7 days as per the 4th proviso to Section 149(1) of the Act i.e., 7 days to pass order u/s. 148A(d), While computing the surviving time limit as per the decision of the Hon'ble Apex Court in the case of Rajeev Bansal (supra), the final notice u/s. 148 of the Act was issued on 25.07.20225 was 46 days after the surviving time period which according to the decision of the Hon'ble Supreme Court in Rajeev Bansal (supra) was barred by limitation. We therefore are of the considered view that the impugned notice u/s. 148 of the Act is time barred and hence, liable to be quashed and the resultant assessment order is held to be bad in law. We therefore allow ground no. 2 raised by the assessee. As we have already held the assessment order to be null and void, the other ground of appeal raised by the assessee requires no further adjudication and is rendered academic in nature.