ANSHOYABEN BHAGVANJIBHAI BHOJANI,MORBI vs. INCOME TAX OFFICER, WARD-1, MORBI, MORBI

On the facts and circumstances of the case as well as law on the subject, the Ld. CIT(A) has erred in drawing adverse inference for non-compliance, without appreciating the assessee's bona fide reasons and absence of mala fide intention.

On the facts and circumstances of the case as well as law on the subject, the Ld. CIT(A) has erred in invoking provisions of section 115BBE of the Act.

On the facts and circumstances of the case as well as law on the subject, the Ld. CIT(A) has erred in confirming the levy of interest u/s 234A, 234B, 234C and 234D of the Act without properly appreciating the facts of the case.

On the facts and circumstances of the case as well as law on the subject, the Ld. CIT(A) has erred in confirming initiation of penalty proceedings u/s 271AAC(1) of the Act.

It is prayed that the addition made by the Assessing Officer may kindly be deleted considering the facts and evidence on record.

Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal.

The facts of the case which can be stated quite shortly are as follows: The assessee had filed return of income for the relevant assessment year, on 13.02.2018, declaring therein total income at Rs.2,53,790/- in addition to exempt income of Rs. 43,146/-. Thereafter, assessing officer was in receipt of credible information to the effect that during the previous year corresponding to the relevant assessment year 2017-18, the assessee has made an investment of Rs.24,00,000/- by way of partner's capital in a partnership firm namely M/s. Polo Sanitarywares (PAN-AASFP9112G) (i.e. investee firm). However, on going through the particulars of return of income filed by the assessee for the relevant year, it appears that the said investment does not commensurate with her return profile. In view of the same, order u/s 148A (d) of the Income Tax Act, 1961 was passed on 14/07/2022 considering the amount of 24,00,000/- as escaped income for the year under consideration and notice u/s 148 of the Act was issued and served upon the assessee on 14/07/2022, after due approval of the competent authority. The notice u/s 143(2) of the Act was issued to the assessee electronically through ITBA on 11/05/2023. In this case, the assessee has filed return of her income for the relevant assessment year on 13.02.2018, declaring therein total income at Rs.2,53,790/-, in addition to exempt income of Rs.43,146/-.

During the assessment proceedings, the assessee filed her reply before the assessing officer along with document evidences. However, the assessing officer rejected the contention of the assessee and held that the party had not the capacity to give loan to the assessee- company. Moreover, the assessee has not proved the creditworthiness of the lenders as required within the meaning of provision of section 68 of the Act. In absence of these indispensable details, the contention of the assessee regarding the source of such investment cannot be relied upon without any concrete evidence and if the assessee had any concrete evidence in this regard, he Page 3 of 10 would have definitely furnished it. Therefore, assessing officer held that transactions is nothing but a string of accommodation entries. Hence, it was concluded that assessee routed his own cash in the guise of shame transactions involving unsecured loan in order to avoid paying taxes on his unaccounted income. Accordingly, an amount of Rs.24,00,000/- was treated as unexplained income as per the provisions of section 68 of the I.T. Act, 1961 and added to the total income of the assessee.

Aggrieved by the order of the assessing officer, the assessee carried the matter in appeal before the Ld.CIT(A), who has confirmed the action of the assessing officer.

Further, aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before this Tribunal.

The Ld. Counsel for the assessee, at the outset submitted that assessee’s case, under consideration, is squarely covered by the judgment of the Hon’ble jurisdictional High Court of Gujarat in the case of Dhanraj Govindram Kella (2025) 177 taxmann.com 194 (Gujarat), wherein it was held that where the notice under Section148 of the Act, was issued beyond the surviving period, as per the direction of the Hon’ble Supreme Court, in the case of Rajeev Bansal 166 taxmann.com 74, then such notices would be invalid.

On the other hand, Ld. DR for the revenue relied on the findings of the Assessing Officer.

We have heard both the parties and perused the material available on record. Before us, Ld. Counsel for the assessee has submitted a chart showing the surviving period and sequences of the various dates, which are reproduced below :

We have gone through the above chart of events and also verified the various dates mentioned in the above chart with help of the various notices under Section148 of the Act. We find that notice under section148 of the Act was issued by the Department on dated 19.07.2022. However, last date for issuance of notice under Section148 of the Act, as per surviving time (date of reply + 7-days) is dated 18.06.2022, therefore, the notice under section148 of the Act, is barred by limitation. For that reliance is placed on the judgment of the jurisdictional High Court of Gujarat in the case of Dhanraj Govindbhai Kella 177 taxmann.com 194 (Gujarat), wherein it was held as follows: 59. Having heard the learned advocates for the respective parties and having considered the rival submissions and on perusal of decisions in cases of Ashish Agarwal (supra) and Rajeev Bansal (supra) of the Hon'ble Apex Court, short questions which arise for consideration is Page 5 of 10 (i) whether the approval granted by the Principal Commissioner of Income Tax for passing of order under section 148A(d) and issuance of notice under section 148 under the new regime is valid or not considering the provision of section 151 which has been amended with effect from 1st April, 2021 and(if) whether notice issued under section 148 of the Act would be time barred and invalid or not.

In order to answer the above issues, it would be germane to summarise the undisputed facts emerging from the record. 1) For Assessment Years 2013-2014 to 2017-2018 admittedly notices under section 148 was issued after 1st April, 2021 by respondent authority by taking recourse to the provisions of TOLA. 2) With effect from 1 April, 2021 the entire procedure for issuance of reassessment notice under section 148 has undergone a change by replacing the old procedure under sections 147 to 151 by new procedure under section 147 to 151 including the insertion provision of section 148A providing an opportunity of hearing to the petitioners in consonance with the decision of the Hon'ble Apex Court in case of GKN Driveshafts India Ltd. v. ITO reported in [2002] 125 Taxman 963/259 ITR 19 (SC). 3) The Hon'ble Apex Court in case of Ashish Agarwal (supra) has come to the conclusion that notices issued under TOLA under provision of section 148 of old regime would be an invalid notice and therefore, by exercise of jurisdiction under Article 142 of the Constitution of India, and in order to save 90,0000 such notices issued by the Revenue, the Hon'ble Apex Court directed to consider such notices as notices issued under section 148A(b) of the Act under new regime with further direction to provide necessary information within 30 days from the date of decision ie. 04.05.2022 to the respective assessees so as to enable them to file objections as provided under the section 148A(b) of the Act and thereafter directed the Revenue to pass order under section 148A(d) and iss e notice under section 148 of the Act under the new regime. 4) The Hon'ble Apex Court at the time of issuance of directions also directed that such issuance of notices shall be governed by the time limit prescribed in section 149(1) which has been amended with effect from 1st April, 2021 under the new regime. 5) Therefore, assessee raised objections that such notice issued under section 148 of the Act pursuant to the directions issued by Hon'ble Apex Court in case of Ashish Agarwal (supra) would be time barred and such notices also would be without valid approval of the specified authority as per provision of section 151 which has been amended with effect from 1st April, 2021 under the new regime. 6) On challenge to such notices, various High Courts have held that such notices would be tir..e barred considering the same being hit by the provisions of section 149 of the Act under the new regime and some of the High Courts also held that notices were invalid for want of approval by the specified authority as required under section 151(ii) of Act under the new regime, as such notices were admittedly issued beyond the period of three years from the end of relevant assessment year. 7) The Hon'ble Apex Court was therefore, once again approached by the Revenue challenging such orders passed by several High Courts. The Hon'ble Apex Court in order to resolve the issues raised with regard to considering as to whether the notices issued under section 148 under new regime pursuant to the directions issued by Hon'ble Apex Court in Page 6 of 10 case of Ashish Agarwal (supra) would be time barred or not and whether such notices would be valid or invalid notice for want of approval of the specified authority as per provision of section 151 of Act under the new regime or not and by order passed in case of Rajeev Bansal (supra), the Hon'ble Apex Court has issued the direction and in compliance to such directions, this group of petitions which were awaiting decision of Hon'ble Apex Court are now required to be disposed of.

Therefore, in view of above dictum of law, the directions issued by the Hon'ble Apex Court in case of Ashish Agarwal (supra) and further explained in case of Rajeev Bansal (supra) are to be followed and implemented in letter and spirit.

Therefore, taking the first issue raised by the petitioners for consideration that there is no approval of the specified authority as per provision of section 151 of the new regime is required to be considered in light of the decision in case of Rajeev Bansal (supra).

Contention of the petitioners that date of notices under section 148 issued as per the direction of Hon'ble Apex Court in case of Ashish Agarwal(supra) is to be considered as the relevant date to apply the provisions of section 151 for approval of the specified authority seems to be very attractive at the first blush however, if decision of Hon'ble Apex Court in case of Rajeev Bansal (supra) is read and re-read, in detail comprehensively and in wholesome manner, we are of the opinion that such contentions raised on behalf of the petitioners is required to be rejected outright for the following reasons: 1) Hon'ble Apex Court in case of Rajeev Bansal (supra) has considered the aspect of sanction of the specified authority in paragraph nos. 73 to 81 in detail. On perusal of paragraph no. 73 to 81, Hon'ble Apex Court has referred to notice under section 148 of Act under the new regime pursuant to the directions issued in case of Ashish Agarwal (supra) and has considered the same along with the provisions of TOLA. 2) After considering the mandatory requirement of grant of sanction by the appropriate authority which is a precondition for the Assessing Officer to assume jurisdiction under section 148 of the Act to issue notice for reassessment, in paragraph no. 77, Hon'ble Apex Court referred to the provisions of TOLA wherein it is categorically observed that: "The test to determine whether Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 will apply to section 151 of the new regime is this if the time limit of three years from the end of an assessment year falls between March 20, 2020 and March 31, 2021, then the specified authority under section 151(i) has an extended time till June 30, 2021 to grant approval. In the case of section 151 of the old regime, the test is if the time limit of four years from the end of an assessment year falls between March 20, 2020 and March 31, 2021, then the specified authority under section 151(2) has time till March 31, 2021 to grant approval. The time limit for section 151 of the old regime expires on March 31, 2021 because the new regime comes into effect on April 1, 2021." 3) In view of above observations there is no confusion as tried to have been raised on behalf of the petitioners that the date of notice under section 148 i.e. 29.07.2022 issued between July, 2022 and September, 2022 has to be considered being notice issued beyond three years forgetting the fact that such notices have the genesis in notice issued on or before 30.06.2021 under TOLA and when Hon'ble Apex Court has observed as above and further explained in Page 7 of 10 paragraph no.78 by giving example for Assessment Year 20172018 for obtaining approval of the specified authority by observing that "...three years time limit for Assessment Year 2017-2018 falls for completion on March 31, 2021 which falls during the time period of March 20,2020 and March, 31, 2021 contemplated under section 3(1) of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 and as such, authority specified under section 151(1) of the new regime can grant sanction till June 30, 2021." Therefore, notice issued under section 148 issued between July, 2022 and September, 2022 is nothing but substitution of the notices which were issued under TOLA by the respondent between 1st April, 2021 and 30th June, 2021. This is further fortified by directions of the Hon'ble Apex Court to exclude the period from 30th June, 2021 till 4th May, 2022 date of decision in case of Ashish Agarwal (supra) and exclusion of the time till the information is provided to the assessees as required under section 148A(b) of the Act and further exclusion of 15 days for filing reply or raising objections by the assessee so as to see that order under section 148A(d) and notice under section 148 is issued between surviving time as per TOLA i.e. from the date of issuance of notices under TOLA till 30th June, 2021 as explained by Hon'ble Apex Court in paragraph nos. 94 to 112 in case of Rajeev Bansal (supra).

Considering the observations and directions issued by the Hon'ble Apex Court in case of Rajeev Bansal (supra)and applying the same to the facts of the case, we are of the opinion that approval granted by the specified authority as per section 151(i) of the Act for issuance of order under section 148A(d) and notice under section 148 of the Act is valid and therefore, contention of the petitioners is not tenable in view of facts of the case.

The alternative contention of the petitioner as to whether notices would be valid notice or invalid notice considering 'surviving time' between the date of the issuance of notices under TOLA and 30th June, 2021 or not is required to be considered and for that each matter has to be considered separately on the basis of the facts of case considering the date of issuance of notices under section 148 under TOLA by the Revenue and thereafter date of supplying information to the assessee and date of passing of order under section 148A(d) and date of issuance of notice under section 148 of the Act so as to consider whether issuance of notice under section 148 of the Act is within 'surviving time' as per the direction of Hon'ble Apex Court in case of Rajeev Bansal (supra) or not.

So far as Assessment Years 2013-2014 and 2014-2015 are concerned, the period of three years from the end of the assessment year would be over prior to 20.03.2020 and the period of six years would be over between 20.03.2020 and 30.06.2021. Therefore, the notices issued under section 148 of the Act under old regime between 01.04.2021 and 30.06.2021 as per TOLA, will be a valid notice if the notice under section 148 of the Act under new regime is issued within the period of 'surviving time' as per the directions issued by Hon'ble Apex Court in case of Rajeev Bansal (supra). For the Assessment Years 2016-2017 and 2017-2018 are concerned, the notice issued under section 148 of the Act under old regime between 01.04.2021 and 30.06.2021 under TOLA would be considered to be issued within three years from the end of the relevant assessment year as three years would complete within the period of 20.03.2020 and 30.06.2021.

It is apparent from the above details that impugned notice under section 148 of the Act is issued beyond the period of 'surviving time' as per the direction of Hon'ble Apex Court in case of Rajeev Bansal (supra)and therefore, such notices would be invalid notices.

The impugned notices issued under section 148 of the Act are accordingly quashed and set aside being invalid having been issued beyond the 'surviving time'. Accordingly, impugned orders passed under section 148A(d) of the Act would also not survive and are accordingly, quashed and set aside. Subsequent proceedings, if any, undertaken by the respondent would not survive and are also quashed and set aside.

Rule is made absolute to the aforesaid extent. No order as to costs”. 11. As the issue is squarely covered in favour of the assessee by the judgment of the jurisdictional High Court of Gujarat in the case of Dhanraj Govindram Kella (supra) therefore respectively following the binding precedent of Hon’ble High Court of Gujarat (supra), we quash the assessment order and allow the appeal of the assessee.

As the reassessment itself is quashed, all other issues on merits of the additions, in the impugned assessment proceedings, are rendered academic and infructuous.

In the result, appeal filed by the assessee, is allowed.