Loading judgment…
Facts
The assessee's case for A.Y. 2015-16 was reopened under Section 147, and a notice under Section 148 was issued on 28.06.2021, followed by another on 20.07.2022. An addition of Rs. 2.50 crore was made as unexplained investment under Section 69, concerning a loan advanced by the assessee. The CIT(A) dismissed the appeal on a technical ground related to the non-payment of advance tax under Section 249(4).
Held
The Tribunal determined that the reopening notice issued under Section 148 on 28.06.2021 was beyond the extended time limit of 31.03.2021 as per the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act (TOLA) and the Supreme Court's decision in Union of India vs. Rajeev Bansal. Consequently, the initiation of reopening based on this invalid notice rendered all subsequent assessment actions void ab initio. The assessment order was therefore quashed.
Key Issues
Whether the reopening of assessment under Sections 147/148 for A.Y. 2015-16 was valid, considering the time limitation, the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act (TOLA), and the precedent set by the Supreme Court in Union of India vs. Rajeev Bansal.
Sections Cited
147, 148, 69, 254(1), 249(4)
AI-generated summary — verify with the full judgment below
Detected automatically from the text. The count shows how many other judgments on BharatTax rely on the same authority.
PER PAWAN SINGH, JUDICIAL MEMBER;
This appeal by assessee is directed against the order ofld. CIT(A) dated 18.02.2024 for A.Y. 2015-16. The assessee has raised following grounds of appeal:
“1. The Ld. Assessing Officer has erred in reopening the case u/s 147 of the Act and in issuing the notice u/s 148 of the Act and also the Ld. CIT(A) has erred in confirming the same.
2. The Ld. Assessing Officer has erred in applying section 69 of the Act and also the Ld. CIT(A) has erred in confirming the same.
3. The Ld. Assessing Officer has erred in making addition of Rs. 2,50,00,000/- as unexplained investment u/s 69 of the Act without verifying the return of income and without bringing any material on record and also the Ld. CIT(A) has erred in confirming the same.
4. The appellant reserves the right to add, alter, amend or withdraw any grounds of appeal.”
Rival submissions of both the parties have been heard and record perused.
The learned Authorised Representative (ld. AR) of the assessee submits that he has challenged the validity of reopening being barred by limitation. The ld. AR of the assessee submits that case of assessee for AY 2015-16 was reopened under section 147. Initial notice under section 148 was issued on 28.06.2021. Subsequently, the AO also notice under section 148 dated 20.07.2022. The time limit for issuance of notice under section 148 was upto 31.03.2021 i.e. within six years. Thus, the notice could be issued upto 31.03.2021. The period covered under Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act (TOLA) was from 20.03.2020 to 31.03.2021, thus, the notice under section 148 was issued beyond the prescribed period under TOLA. Notice issued under old section 148 on 28.06.2021 was not valid and could be issued on or before 01.04.2021. The ld. AR further submits that case of assessee is otherwise also covered by the decision of Hon’ble Apex Court in Union of India vs. Rajeev Bansal (2024)
167 taxmann.com 70 (SC). In the said case, revenue fairly accepted before Hon’ble Supreme Court as recorded in para 19(f) for dropping all the notices issued on or after 01.04.2021 for A.Y. 2015-16. The Judgment of Rajeev Bansal (supra) followed by various High Courts including Delhi High Court in Genpact India Privates Limited vs. ACIT, W.P.(C) 17364/2022 dated 09.09.2024 and IBIBO Group Pvt. Ltd. vs. ACIT, WP© 17639 of 2022 dated 13.12.2024. Mumbai Tribunal in Mark Foods vs. ITO in ITA No. No. 4102/M/2024 dated 09.04.2025 also followed the same ratio.
The ld. AR further submits that ld. CIT(A) dismissed his appeal on technical issue that no advance tax has been paid as per section 249(4). Section 249(4) speaks about tax on returned income; the assessing officer in assessment order recorded that assessee filed return of income on 30.09.2015 declaring total income of Rs. 11.64 lacs. No such issue was raised by assessing officer that assessee has not paid advance tax. The assessee while filing appeal, in para 9 of Form 35 mentioned that assessee has filed original return of income. The ld. AR further submits that even on merit, he has good case. The assessee advanced loan of Rs. 2.50 crore to Jalaram Builders & Developers. The case of assessee was reopened that assessee has not provided the source of funds nor charged any interest. Such reason cannot be a valid reason for reopening when return was supported audited financial statement. Case cannot be reopened on non-charging of interest on loan.
On the other hand, the learned Senior Departmental Representative (ld. DR) for the revenue supported the order of lower authorities.
We have considered the rival submissions of both the parties and perused the order of lower authorities carefully. We have also deliberated on various case laws relied by ld. AR of the assessee. It is an admitted fact that case of assessee for A.Y. 2015-16 was reopened by issuing notice under section 148 dated 28.06.2021. Such notice was issued beyond six years from the end of relevant assessment year. Such notice is not sustainable as per the ratio of decision of Hon’ble Apex Court in Rajeev Bansal which has been followed by Hon’ble Delhi High Court in IBIBO Group Pvt. Ltd. (supra). The Hon’ble Supreme Court also consider the issue whether the TOLA will extend the time period for issuance of notice under section 148 and held that extended time period is covered upto 31.03.2021. Hence, notice under section 148 issued initially on 28.06.2021 was not a valid notice. As the initiation of reopening is based on invalid notice, therefore, subsequent action thereto is void ab initio.
Therefore, the assessment order completed in pursuance of notice under section 148 is quashed/set aside. In the result, the assessee succeeded on primary submission of assessee. Considering the fact that appeal of assessee is allowed on preliminary submission of ld. AR of the assessee, therefore, adjudication on other submission have become academic.
In the result, the appeal of assessee is allowed.