RAVI DHARAMPAL KHANNA ,MUMBAI vs. INCOME TAX OFFICER WARD 2(1), THANE

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ITA 1431/MUM/2025Status: DisposedITAT Mumbai06 May 2025AY 2015-167 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the impugned notice under Section 148 is set-aside and the resultant order is quashed. The Tribunal relied on the Hon'ble Supreme Court's decisions in Union of India v. Rajeev Bansal and Deepak Steel and Power Limited, which acknowledged the revenue's concession that for Assessment Year 2015-16, all notices issued on or after April 1, 2021, would have to be dropped as they would not fall for completion during the period prescribed under the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. Consequently, the additional ground raised by the assessee regarding the invalidity of the re-opening was allowed. As the assessment order was quashed, the Tribunal did not delve into the merits of the case. The operative direction is to quash the notice and the assessment order.

What were the facts?

The assessee, Ravi Dharampal Khanna, is in appeal against the order dated 20/12/2024 by the NFAC, Delhi, for Assessment Year 2015-16. The Income Tax Department disallowed transactions totaling Rs. 91,80,554/- which included sale of immovable property (Rs. 65,00,000/-), credit card payments (Rs. 10,88,110/-), sale of shares (Rs. 14,97,411/-), and interest income (Rs. 95,033/-). The assessee had not filed a return of income. Proceedings under Section 148 of the Income Tax Act were initiated after issuing a show-cause notice under Section 148A(b) and passing an order under Section 148A(d). A notice under Section 148 was issued on 04/04/2022.

What were the issues?

1. Whether the re-opening of the assessment under Section 148 read with Section 148A of the Income Tax Act is bad-in-law and void-ab-initio, turning on the validity of the notice issued under Section 148. Assessee's Contention: The assessee argued that the re-opening of the assessment is bad-in-law and void-ab-initio. The assessee also raised grounds regarding the disallowance of specific transactions and the computation of total income, stating they had followed valid procedures and that the demand was prejudicial. The assessee also sought an opportunity to file the return due to technical errors. Revenue's Contention: The judgment does not explicitly record the revenue's arguments on the merits of the disallowances. However, the revenue's submissions before the Supreme Court in the cited cases, particularly regarding the applicability of the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) and the time limits for issuing notices, are discussed.

Which sections of the Income-tax Act were involved?

Section 148,Section 148A,Section 147,Section 149,Section 151

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI

Before: SHRI SAKTIJIT DEY, HONBLE & SHRI NARENDRA KUMAR BILLAIYA, HONBLE

For Appellant: Shri Shailesh M. Bandhi, A/R
Hearing: 01/05/2025Pronounced: 06/05/2025

ORDER \nPER NARENDRA KUMAR BILLAIYA, AM:\nThis appeal by the assessee is preferred against the order dated\n20/12/2024 by NFAC, Delhi [hereinafter “the ld. CIT(A)”]\npertaining to AY 2015-16.\n2.\nThe grievance of the assessee reads as under:-\n\"1.\nWe are not agreeing with the computation of total income made by assessing\nofficer.\nIncome Tax Department has disallowed following transactions,\n2.\nSr.no\n1\nNature of Transactions\nSold of immovable\nproperty\nAmount\n65,00,000/-\nGrounds of Appeal

\nAlready shown in profit\nand loss account under the\nhead sale. As assesse is\nbuilder.\n2\nPayments through\ncredit card\n10,88,110/-\nCredit card statement\nsubmitted to the\ndepartment and assesse has\nnot claim expenses through\ncredit card 1 under profit\nand loss account.\n3\nSales of Shares\n14,97,411/-\nAssesse has incurred 1 loss\nform sale of shares during\nthe year and assesse has 1\nsubmitted shares profit and\nloss statement\ndepartment.\nto\n4\nInterest income\n95,033/-\nInterest income already\nshown under the head other\nsources of computation of\ntotal income.\nTotal\n91,80,554/-\n3. Demand calculated by assessing officer is prejudicial to me and, if appeal is not\nallowed proceeded it amounting to against the law.\n4. I am genuine in the eye of law and followed valid procedure for computation of total\nincome.\n5. Assesse has try to filed income tax return against notice but return was not filed due\nto technical error so assesse has submitted computation of total income and Balance\nsheet also request us to give chance to file income tax return.”\nThe assessee raised the following additional ground of appeal:-\n3.\n“On the facts and Circumstances of the case and in law, the re-opening of the\nAssessment u/s 148 r.w.s 148A of the I.T. Act is Bad-in-Law and thus Void-ab-initio.\"\n4.\nSince the additional ground goes to the root of the matter and since\nit raises an issue which is a pure question of law and does not need any\ninvestigation into facts, the same is admitted for adjudication.\n5. Briefly stated the facts are that the assessee did not file his return of\nincome and as per the information available with the Department, it is\nfound that during the year under consideration, the assessee has made\nthe following transactions:-\nS. No.\nNature of transactions\nAmount in Rs.\n1\nSold of immovable property\nRs.65,00,000\n2\nPayments through credit card\nRs.10,88,110\n3\nSale of shares\nRs.14,97,411\n4\nInterest Income\nRs.95,033\nTotal\nRs.91,80,554/-\n6. On the basis of the aforementioned information, proceedings u/s\n148 of the Act were initiated and the showcause notice u/s 148A(b) was\nissued to the assessee. Subsequently, the order u/s 148A(d) of the Act was\npassed treating the case of the assessee as a fit case for issue of notice u/s\n148 of the Act. Accordingly, notice u/s 148 of the Act was issued, which\nreads as under:-\nGOVERNMENT OF INDIA\nMINISTRY OF FINANCE\nINCOME TAX DEPARTMENT\nOFFICE OF THE INCOME TAX\nOFFICER\nWARD 2(1), THANE/\nINCOME TAX DEPARTMENT\nTo,\nRAVI DHARAMPAL KHANNA\nFLAT 104 C/23/SECTOR 11, SHANTI\nNAGAR MIRA ROAD\nTHANE 401107, Maharashtra\nIndia\nPAN:\nARCPK8223G\nA.Y:\n2015-16\nDated:\n04/04/2022\nDIN & Notice No:\nITBA/AST/S/148_1/2022-\n23/1042494828(1)\nSir/Madam/ M/s.\nNotice under section 148 of the Income-tax Act, 1961\n2.\nI have the following information in your case or in the case of the person in respect of which you\nare assessable under the Income tax Act, 1961 (here in after referred to as “the Act") for\n Assessment Year 2015-16\ninformation flagged by the risk management strategy formulated in this regard\nsuggesting that income chargeable to tax has escaped assessment within the meaning of\nsection 147 of the Act. Order under sub-section (d) of section 148A of the Act has been passed\nin such case vide DIN ITBA/AST/F/148A/2022-23/1042472228(1) dated 04/04/2022 and\nannexed herewith for reference,\n3.\nI, therefore, propose to assess or reassess such income or recompute the loss or the\ndepreciation allowance or any other, allowance or deduction for the Assessment Year 2015-16\nand I, hereby, require you to furnish, within 30 days from service of this notice, a return in the\nprescribed form of the Assessment Year 2015-16.\nThis notice is being issued after obtaining the prior approval of the PCCIT, PUNE accorded on\ndate 02/04/2022 vide Reference No. 100000028941716.\nSHIVJEE SINGH\nWARD 2(1), THANE/\n(In case the document is digitally signed please\nrefer Digital Signature at the bottom of the page)\nNote: If digitally signed, the date of digital signature may be taken as date of document.\nASHAR IT PARK, 6TH FLOOR, ROAD NO. 16Z, WAGLE INDUSTRIAL ESTATE, THANE (WEST), THANE, Maharashtra,\n400604\nEmail: THANE.ITO2.1@INCOMETAX.GOV.IN,\nNote:- The website address of the e-filing portal has been changed from www.incometaxindiaefiling.gov.in to www.incometax.gov.in.\nDIN-Document identification No.\nSigner: SHIVJEE SI\nDate: Monday, Apr\n7:24 PM\nLocation: PUNE, In\n7.\nThe entire quarrel revolves around the aforementioned notice.\n8.\nAt the outset, we find that this issue has been settled in the case of\nUnion of India v. Rajeev Bansal [2024] 167 taxmann.com 70 (SC) wherein\nreference is made to the submissions made on behalf of the Revenue vide\npara 19 which is relevant and the same is reproduced hereunder:-\n"19. Mr N Venkataraman, learned Additional Solicitor General of India, made the\nfollowing submissions on behalf of the Revenue:\na. Parliament enacted TOLA as a free-standing legislation to provide relief and\nrelaxation to both the assessees and the Revenue during the time of COVID-

19. TOLA\nseeks to relax actions and proceedings that could not be completed or complied with\nwithin the original time limits specified under the Income Tax Act.\nb. Section 149 of the new regime provides three crucial benefits to the assesses: (i) the\nfour-year time limit for all situations has been reduced to three years, (ii) the first\nproviso to Section 149 ensures that re-assessment for previous assessment years cannot\nbe undertaken beyond six years, and (iii) the monetary threshold of Rupees fifty lakhs\nwill apply to the re- assessment for previous assessment years.\nc. The relaxations provided under Section 3(1) of TOLA apply \"notwithstanding\nanything contained in the specified Act.\" Section 3(1), therefore, overrides the time\nlimits for issuing a notice under Section 148 read with Section 149 of the Income Tax\nAct;\nd. TOLA does not extend the life of the old regime. It merely provides a relaxation for\nthe completion or compliance of actions following the procedure laid down under the\nnew regime;\ne. The Finance Act 2021 substituted the old regime for re-assessment with a new\nregime. The first proviso to Section 149 does not expressly bar the application of TOLA.\nSection 3 of TOLA applies to the entire Income Tax Act including Sections 149 and\n151 of the new regime. Once the first proviso to Section 149(1)(b) is read with TOLA,\nthen all the notices issued between 1 April 2021 and 30 June 2021 pertaining to\n assessment years 2013-2014, 2014-2015, 2015-2016, 2016-2017 and 2017-2018 will\nbe within the period of limitation as explained in the tabulation below:\n Assessment Year Within 3 Years Expiry of Within six Years (4) Expiry of Limitation\n(1) (2) Limitation read with TOLA for (4) (5)\n2013-2014 31.03.2017 TOLA not 31.03.2020 30.06.2021\napplicable\n2014-2015 31.03.2018 TOLA not 31.03.2021 30.06.2021\napplicable\n2015-2016 31.03.2019 TOLA not 31.03.2022 TOLA\napplicable\napplicable\nnot\n2016-2017 31.03.2020 30.06.2021 31.03.2023 TOLA\napplicable\nnot\n2017-2018 31.03.2021 30.06.2021 31.03.2024 TOLA\napplicable\nnot\nf. The Revenue concedes that for the assessment year 2015-16, all notices issued on or\nafter 1 April 2021 will have to be dropped as they will not fall for completion during\nthe period prescribed under TOLA;\ng. Section 2 of TOLA defines \"specified Act\" to mean and include the Income Tax Act.\nThe new regime, which came into effect on 1 April 2021, is now part of the Income Tax\nAct. Therefore, TOLA continues to apply to the Income Tax Act even after 1 April\n2021; and\nh. Ashish Agarwal (supra) treated Section 148 notices issued by the Revenue between\n1 April 2021 and 30 June 2021 as show-cause notices in terms of Section 148A(b).\nThereafter, the Revenue issued notices under Section 148 of the new regime between\nJuly and August 2022. Invalidation of the Section 148 notices issued under the new\nregime on the ground that they were issued beyond the time limit specified under the\nIncome Tax Act read with TOLA will completely frustrate the judicial exercise\nundertaken by this Court in Ashish Agarwal (supra).\"\n8.

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