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KARNATAKA TELECOM DEPARTMENT EMPLOYEES CO-OPERATIVE SOCIETY LIMITED,BANGALORE vs DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(4), BLR, BANGALORE | BharatTax

KARNATAKA TELECOM DEPARTMENT EMPLOYEES CO-OPERATIVE SOCIETY LIMITED,BANGALORE vs. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(4), BLR, BANGALORE

ITA 1080/BANG/2025Status: DisposedITAT Bangalore31 December 2025AY 2016-17Bench: SHRI WASEEM AHMED (Accountant Member), SHRI SOUNDARARAJAN K. (Judicial Member)1 pages

AI SummaryAllowed

Facts

The assessee filed its return declaring NIL income. The case was selected for scrutiny, and subsequently, for reassessment under Section 147, alleging income escaping assessment due to claimed deduction under Section 80(2)(a)(i). The assessee challenged the validity of the reassessment proceedings as being barred by time.

Held

The Tribunal held that the notice issued under Section 148 was beyond the limitation period as per Section 149 of the Act, especially after its substitution by the Finance Act, 2021. Reliance was placed on various Supreme Court and High Court judgments that have held similar notices to be time-barred.

Key Issues

Whether the notice issued under Section 148 for reassessment is barred by limitation, considering the provisions of Section 149 of the Income Tax Act and the impact of the Finance Act, 2021.

Sections Cited

147, 148, 148A, 250, 143(3), 80(2)(a)(i), 149, 3, 19(f)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘A’ BENCH: BANGALORE

Before: SHRI WASEEM AHMED & SHRI SOUNDARARAJAN K.

For Appellant: Shri PR Suresh, CA

For Respondent: Shri N Balusamy, JCIT-DR

PER WASEEM AHMED, ACCOUNTANT MEMBER

1.

The present appeal is filed by the assessee against the order of the Ld. CIT(A) passed u/s 250 of the Act dated 13.03.2025 for the assessment year 2016- 17.

2. The assessee in the additional ground of appeal has challenged the validity of the assessment framed under section 147 of the Act on the ground that the order passed under section 148A(d) of the Act and the notice issued under section 148 of the Act is barred by the time.

3.

The assessee M/s Karnataka Telecom Department Employees Cooperative Society Limited is a cooperative society in Bangalore and engaged in providing credit facilities to its members. The assessee filed its ROI for the subjected AY declaring a total income of Rs. NIL. The case was selected for scrutiny and order u/s 143(3) was passed on 02.11.2018 wherein returned income was equal to the assessed income.

3.1 Assessee’s case was selected for re-assessment for income escaping assessment. The reason for scrutiny was that the financial statements of the assessee was having associates’ members share capital amounting to Rs. 1,98,28,000 during the subjected AY. The assessee claimed deduction u/s 80(2)(a)(i) which was rejected by the Ld. AO citing the judicial precedence held in the case of Citizen Co-operative society, Hyderabad vs ACIT reported in CA 10245 of 2017 wherein the Hon’ble SC held that such deduction is admissible only when credit facility is extended only to the regular members of the society failing which the deduction is denied.

4. Being aggrieved by the order passed by the Ld. AO, the assessee preferred an appeal before the Ld. CIT(A) who dismissed the appeal of the assessee.

8.

We have considered the rival submissions and carefully perused the materials placed on record. The undisputed facts are that the impugned notice under section 148 of the Act was issued on 29.06.2021 for Assessment Year 2016-17. It is also not in dispute that the reopening has been initiated beyond a period of three years from the end of the relevant assessment year and, therefore, the validity of such reopening has to be examined in the light of section 149 of the Act, as substituted by the Finance Act, 2021. At the outset, we note that the issue on hand is squarely covered under the ITA 5536/DEL/2024, ITA 5537/DEL/2024, ITA 5538/DEL/2024 wherein ITAT rejected the appeal of revenue as the notice issued u/s 148 of the Act was beyond the limitation period and hence the assessment cannot be sustained. The Tribunal in its order has placed reliance on the decision of Hon’ble Apex Court in the case of Rajeev Bansal (2024) reported in 167 taxmann.com 70 (SC) wherein the issue has been decided in favour of the assessee. The relevant extract of the order of the Delhi Tribunal cited above is reproduced as under: Brief facts of the case are the original notice u/s 148 was issued on 30.06.2021 which was dropped. Thereafter in the light of the hon’ble Supreme Court decision in the case of Ashish Aggarwal 138 taxmann.com 64, proceedings u/s.148A was initiated and final/impugned notice u/s.148 was issued on 26.07.2022. The contention is that since in view of 1st Proviso to Sec. 149, limitation for issuance of notice U/s.148 expired on 31.03.2022, hence the impugned notice u/s.148 Dtd.26.07.2022 is barred by limitation since issued after 31.03.2022. 5. The ld. DR relied on the orders of the authorities below. 6. The ld. counsel for the assessee vehemently contended that thenotice u/s 148 of the Act dated 26.07.2022 is barred by limitation. The ld. counsel for the assessee heavily relied upon the decision of the Hon'ble Apex Court in Rajeev Bansal [2024] 167 taxmann.com 70 (SC).in ITO v. Girish Kumar Gupta [2025] 175 taxmann.com 1037 (Delhi - Trib.). 7. We have heard the rival submissions and have perused the relevant material on record. We find that the coordinate bench of ITAT in the case of Girish Kumar Gupta (supra) has discussed the issue hand at considerable length and has arrived at the following conclusion: 8. Looking to the facts and considering the assessment year involved is 2015- 16, notice issued in the case of originally on 13/04/2021 and later on 18/07/2022 which both the dates have fallen on or after 1st April, 2021, therefore, both the notice deserves to be dropped in view of the admission made by the Revenue before the Hon'ble Supreme Court. Further, for Assessment Year 2015-16, no notice u/s 148 of the Act could be issued after the expiring of six years from the end of the relevant assessment year which limitation expired on 31st March, 2022. Further, the Hon'ble Supreme Court in the case of Rajiv Bansal (supra) has observed that Tola is not applicable for Asst. Year 2015-16, therefore, even otherwise under the old provisions of section 149 of the Act, the notice issued u/s 148 of the Act for Asst. Year 2015-16 on 18/07/2022 is barred by limitation.

11.

In view of the above facts and by respectfully following the judgments of the Hon'ble Supreme Court in the case of Rajiv Bansal (supra) and in the case of Deepak Steel & Power Limited vs. CBDT & Ors., (SC, 2025), and ACIT, Circle- 19(1) & Ors. vs. Nehal Ashit Shah, (SC, 2025), we hold that the notice issued u/s 148 on 18.07.2022 is barred by limitation and, therefore, the same is quashed. The Cross Objections taken by taken by the assesse are allowed. 8. Following the above decision, we hold that the notice issued u/s 148 dated 26.07.2022 in the instant case, is barred by limitation and the same is therefore liable to be quashed. In light of the above, we also quash the assessment order emanating out of such notice u/s 148. Since the assessment order has been quashed, all the issues raised by the Revenue in its appeals which deal with the merits of stand taken by the Assessing Officer in the assessment order become academic and infructuous and require no separate adjudication. The grounds of the Revenue are dismissed while petition under Rule 27 of the assessee challenging the jurisdictional issue is allowed. 9. In the above two appeals, while the Revenue has challenged the quashing of proceedings for reassessment, the assessee has filed petition under ITAT Rule 27 that the issue of notice u/s 148 is barred by limitation. We find that for AY 2013-14 and for AY 2014-15, the notice u/s 148 was issued on 27.07.2022. The issue in these two appeals are that the notices u/s 148 are barred by limitation as they have been issued beyond the ‘surviving period’. 10. We find that the last date for issuance of notice u/s 148 for the both the AYs, under the unamended Act, was 31.03.2020. The period for extending the period of limitation as per TOLA in both the AYs, was 30.06.2021. 11. In both the AYs the original notice u/s 148 was issued on 30.06.2021. Thereafter, in AY 2013-14, in view of hon’ble Supreme Court’s decision in the case of Ashish Agarwal, the notice u/s 148A(b) was issued on 17.05.2022, 20.05.2022 and 06.07.2022 while for AY 2014-15, the notice u/s 148A(b) was issued on 18.05.2022, 23.05.2022 and 06.07.2022. The reply from the assessee for both the AYs were filed on 14.07.2022. In view of the decision of Supreme Court in the case of Rajeev Bansal (2024) 167 taxmann.com 70(SC), the “surviving period’ for issue of notice u/s 148, when calculated from the date of original notice u/s 148 dated 30.06.2021 till 30.06.2021, becomes “0” days. In view of the decision in Rajeev Bansal (supra), the order u/s 148A(d) and the new notice u/s 148 should have been issued up to the date of filing reply + surviving period. In the instant case, for the above two AYs, the date of reply being 14.07.2022 and the ‘surviving period’ being “0”, the notice should have issued on 14.07.2022. We find that the notice u/s 148 was issued, for AY 2013- 14 on 26.07.2022 and for AY 2014-15 on 27.07.2022 i.e., beyond the prescribed period. We are therefore of the considered view that the notices issued for both the AYs are issued beyond the limitation period and hence can not be sustained and are hereby quashed. The grounds of the Revenue are dismissed and the application of the assessee under Rule 27 of the ITAT Rules are allowed.

12.

We find support from the decision of the Hon'ble Delhi High Court in Ram Balram Buildhome Pvt. Ltd. Vs. ITO &Ors. [2025] 171 taxmann.com 99 (Delhi), wherein it is held as under: Sec.149, r.w.s.148A, of the Income-tax Act, 1961 and Sec.3 of the Taxation and Other Laws (Relaxation and Amendments of Certain Provisions) Act, 2020 - Income Escaping Assessment Time limit for 5537 and 5538/DEL/2024 issuance of notice (reasstt.) -A.Y.2013-14 - Assessee-company filed instant writ on ground that a notice dated 01-06-2021 issued U/s.148 and notice U/s.148A(b) issued on 30- 5- 2022 in furtherance of notice dated 1-6-2021 and impugned order passed U/s.148A(d) and noticeissued U/s.148 issued on 30-7-2022 were beyond period of limitation as provided U/s.149(1) It was noted that last date for issuance of notice U/s.148 for A.Y.2013-14 under statutory framework, as was existing prior to 1-4-2021 was 31-3-2020 and by virtue of Sec.3(1) of TOLA, it was extended till 30-6-2021 and, thus, notice dated 1-6-2021 was issued twenty- nine days prior to expiry of period of limitation for issuing a notice U/s.148 as was extended by TOLA – It was further noted that period from 1-6-2021 and date of Page 6 of decision of Supreme Court on 4-5-2022 in Union of India v. Ashish Agarwal [2022] 138 taxmann.com 64/286 Taxman 183/444 ITR 1 and period from date of said decision till date of providing material, as required to be accompanied with a notice U/s.148A(b), was required to be excluded by virtue of third proviso to Sec.149(1) - Further, time granted to assessee to respond to notice Dtd.30-5-2022 was also required to be excluded by virtue of third proviso to Sec.149(1) - Whether by virtue of TOLA, Assessing Officer had period of twenty-nine days limitation left on date of commencement of reasstt. proceedings, which began on 1-6-2021, to issue a notice U/s.148 and said notice was required to be accompanied by an order under section 148A(d), thus, an order U/s.148A(d) was required to be passed within said twenty-nine days notwithstanding time stipulated U/s.148A(d) - Held, yes – Whether since assessee had furnished its response to notice U/s.148A(b) on 13-6-2022, time available to A.O. to pass an order U/s.148A(d) was necessarily truncated and same was required to be passed on or before 12-7-2022 - Held, yes Whether thus, impugned notice dated 30-7-2022 had been issued beyond period of limitation and was to be set aside - Held, yes [Paras 69, 71 and 72] [In favour of assessee] 13. Similarly, the hon’ble Delhi High Court decided in the case of ADM Agro Industries Latur and Vizag (P.) Ltd vs ACIT 174 taxmann.com 725 (Delhi) wherein it held as under: Sec.149, r.w.s.148A, of the Income-tax Act, 1961 and section 3 of the Taxation and Other Laws (Relaxation and Amendments of Certain Provisions) Act, 2020 - Income Escaping Asstt. - Time limit for issuance of notice (Period of limitation) - Asstt. year 2013-14 A.O. issued notice U/s.148 (old regime) for relevant year on 30-6-2021 - Thereafter, A.O. issued show cause notice and provided information/material to assessee on 25-5-2022 - Assessee responded to said notice vide letter dated 9-6-2022 Thereafter, A.O. passed an order U/s.148A(d) on 19-7-2022 and issued notice U/s.148 on 20-7-2022 - It was noted that time period for issuing notice under section 148 expired on 16-6-2022 - Whether thus, impugned notice issued on 20-7-2022, was beyond period of limitation and was to be set aside - Held, yes [Para 8] [In favour of assessee] 14. Again, in Saroj Mehndi vs ITO 174 taxmann.com 278 (Delhi), it was held as under: Sec.149, r.w.s.148A, of the Income-tax Act, 1961 Income escaping assessment - Time limit for Issuance of notice (Period of limitation) - A.Y.2014-15 Assessee filed instant petition impugning notice issued under section 148 for relevant assessment year It was noted that Assessing Officer issued initial notice U/s.148 on 23-6-2021 and period of six years from end of assessment year for issuing a notice U/s.148 expired on 31.03.2021 and therefore, in terms of Sec.149, no notice U/s.148 could be issued - However, this period was extended by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 [TOLA], and as a result, time limit for issuing such a notice was extended to 30-6- 2021 Thus, in instant case, Assessing Officer had seven days to issue notice U/s.148A after receipt of assessee's reply and said period expired on 18-6-2022 - However, impugned notice was issued on 11-7-2022, which was beyond prescribed period of limitation Whether, therefore, notice issued was beyond period of limitation and same was to be set aside Held, yes [Paras 7 and 9] [In favour of assessee] 15. In the result, appeals of Revenue in 5537 and 5538/DEL/2024 stand dismissed.