GARJE RUDRAPPA JAYANNA ,MANDYA vs. INCOME TAX OFFICER, WARD-1 & TPS , MANDYA

Considering the rival submissions and on perusal of the entire material available on record and Orders of authorities below, from the Paper Book filed by the assessee and case law relied on by the learned Counsel, I noted that notice under section 148A(b) of the Act was issued to the assessee on 15.03.2022 and copy of Order passed under section 148A(b) of the Act on 19.04.2022. Immediately on the same day the AO has issued notice under section 148 of the Act dated 29.04.2022 noted supra. The Hon’ble Apex Court has put to rest for the Assessment Year 2015-16 for issuance of notice under section 148 of the Act in the case of UOI v. Rajeev Bansal (supra) and the Co-ordinate Bench of the ITAT, Bangalore, in similar issue in the case of Tuffwud India Pvt. Ltd., Vs. DCIT in referring to the judgment of Hon’ble Apex Cort in the case of UOIvs Rajeev Bansal noted supra, Order dated 20.08.2025, held as under:

The learned counsel appearing for the revenue with his usual fairness invited the attention of this Court to a three judge bench decision of this Court in Union of India and ors. v. Rajeev Bansal, reported in 2024 SCC OnLine SC 2693, more particularly, paragraph 19(f) which reads thus:- "19. (f) The Revenue concedes that for the assessment year 2015-2016, all notices issued on or after April 1, 2021 will have to be dropped as they will not fall for completion during the period prescribed under the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020."

Respectfully following the above judgment, we hold that the notice issued by the AO under section 148 of the Act dated 29.04.2022 for the AY 2015-16 is barred by limitation. Therefore, the AO has no jurisdiction to pass the Order under section 147 r.w.s. 144B of the Act. Accordingly, I quash the Assessment Order.

In the result, appeal in is allowed.

Briefly stated the facts of the case are that income tax department had information that assessee has deposited huge cash of Rs.1,12,95,185/- in his bank account. In spite of that assessee had not filed return of income. Accordingly, notice under section 148A(b) of the Act dated 29.03.2022 vide DIN No.ITBA/AST/7/148A(SCN)/2021-22/10411110175(1) was issued. Assessee furnished reply after following the due procedure. In response to the above notice assessee filed reply on 06.04.2022 wherein he has stated that he is rendering online tender services to several contractors. The deposits made are the amounts collected from the contractors which needs to be transferred to the government account in lieu of tender deposit on behalf of contracts. For this service, assessee is getting fee, the quantum of which assessee has not furnished. Accordingly, the explanation offered by the assessee was not accepted and notice under section 148 of the Act dated 25.04.2022 was issued to the assessee. Thereafter, other statutory notices were issued to the assessee. Assessee , 1079/Bang/2025 Page 11 of 17 furnished reply dated 18.04.203, 18.07.2023 and 04.10.2023 and submitted that assessee is engaged as daily wages based employee working in Cauvery Neeravai Nigama Ltd., a Karnataka State Government Undertaking, had received salary of Rs.2,44,332/-, during the year, assessee offered the same for taxation. In compliance to the above notice under section 148 of the Act, assessee filed return of income on 21.06.2022 vide acknowledgment No.689453810210622. In addition to employment as part time business, he assists several contractors in online filing of tender application for various government contracts and for that assessee charges fees which is around Rs.500 per application. He has shown income from this activity as Rs.5,78,433/- which is also offered for taxation under section 44AD of the Act of Rs.86,765/-. Assessee filed copy of bank statement of account No.4472000100010401 in which it was noted that majority of cash deposits have been reported during the Financial Year 2014-15. However, in some urgent requirements he had made tender payments from his other 2 accounts maintained with Karnataka Bank account No.447250010064001 and State Bank of India account No.0064034088210. The stated cash deposits of Rs.1,12,95,185/- represents amount received in cash from contractors and deposited into his bank account to make payment of tender application fees and earnest money deposit on behalf of contractors. After considering the entire submissions, the AO noted that there is failure on part of the assessee to discharge primary onus of satisfactory explanation. The commission and other receipts were not explained properly. Accordingly, the AO treated 10% of total cash deposits of Rs.1,12,95,185/- as undeclared commission income.

Aggrieved from the above Order, assessee filed appeal before the Tribunal. The learned Counsel reiterated the submissions made before the lower authorities and the learned Counsel strongly contested that notice issued , 1079/Bang/2025 Page 13 of 17 under section 148 of the Act for the Assessment Year 2018-19 is beyond the period of 3 years as per section 1491(b) of the Act. In this case, escapement of income is less than 50 lakhs. Therefore, the period of more than three years will not apply in this case and learned Counsel strongly relied on the judgments noted below :

Further, the learned Counsel raised issue by way of additional grounds as noted supra that the AO has not issued notice under section 143(2) of the Act after filing of return of income by the assessee. Therefore, AO had no jurisdiction to make reassessment under section 147 of the Act and relied on the following judgments:

Further, assessee submitted that on merits of the case that the assessee filed return under section 44AD of the Act after taking into account the gross commission received from the contractors of Rs.5,78,433/- in which assessee has declared income of Rs.86,765/- which is more than quantum prescribed under section 44AD of the Act filed on 21.06.2022. During the course of reassessment proceedings, the entire details were produced of 56 contractors from whom assessee has received gross commission of Rs.5,78,433/- and in this , 1079/Bang/2025 Page 14 of 17 regard no further questions were asked by the AO. Therefore, income reported by the assessee must be considered.

On the other hand, learned DR relied on the Order of lower authorities and submitted that notice issued under section 148 of the Act dated 25.04.2022 is correct. At the time of issue of notice, the AO is not required to quantify for considering the period if prima facie it appears that assessee has escapement of income which is more than Rs.50 lakhs then the period of more than three years are very much available to the AO for issue of notice and he further submitted that before the issue of notice under section 148 of the Act, assessee furnished reply which was incomplete. He did not submit complete confirmation to whom the services have been rendered and how much of fee received from the concerned contractors. Even before 148A(b) of the Act proceeding the details of the contractors, their address, PAN, contract number, etc., were not given to the AO. Therefore, at the time of disposing off of the objection of the assessee, the AO had no credible information about the contractors so that he could conclude that the actual commission received is correct or not. The case laws relied on by the learned Counsel are not applicable to the present facts of the case. He further submitted that the assessee did not file return of income within the due time as time allowed under section 148 of the Act to the assessee. The AO had given 30 days time to file return of income. However, assessee did not file return of income within the due date. Therefore, the return filed by the assessee is nonest(defective), the notice cannot be issued on such return filed by the assessee. This issue is also not sustainable in the eyes of law. It was further submitted that in respect of merits of the issue, The provision of section 44AD is not applicable to the assessee and he relied on the Order of lower authorities are correct and therefore Order should not be disturbed.

Considering the rival submissions and on perusal of entire material available on record and Orders of authorities below, we noted that first contention raised by the assessee is that notice issued under section 148 of the Act is barred by limitation. I am in agreement with the arguments of the learned DR that the notice was validly issued beyond the period of 3 years. Before issue of notice under section 148 of the Act, during the course of proceedings under section 148A(b)/148A(d) of the Act against which the reply submitted by the assessee is not complete to satisfaction of the AO. Therefore, at the time of issue of notice, prima facie opinion of the AO was that amount escaped is Rs.1,12,95,185/-. In fact assessee is facilitating the contractors but for want of details the AO has rightly issued notice under section 148 of the Act which is within limitation period of more than six years years because the escapement of income is more than Rs.50 lakhs. The notice issued is within the prescribed time as per provision of section 149(1)(b) of the Act. The notice issued under section 148 of the Act is within the time prescribed under section 149b of the Act. Therefore I reject the arguments of the learned Counsel on this point. Even during the course of proceedings u/s 148A9b) of the Act the objection filed by the assessee could not correlate the transaction with the concerned contractors and no other documents were produced by the assessee except bank statement and self-serving documents prepared by him. Therefore, at the stage of issue of notice, the escapement of income was more than Rs.50 lakhs. Therefore, the period of 6 years will apply for issue of notice under section 148 of the Act. Therefore, this issue raised by the assessee and the case laws relied on by the learned Counsel are not applicable to the present facts of the case and the case law relied on by the learned Counsel has been rightly distinguished by the , 1079/Bang/2025 Page 16 of 17 learned DR. Further, in case of additional grounds raised by the assessee in respect of notice issued under section 143(2) of the Act for taking jurisdiction by the AO, in this regard I noted that from the statement of facts submitted by the assessee before the ld. CIT(A) which is placed at appeal set page No. 36 at point No. 8 in which himself stated that the notice u/s 143(2) was issued on 28.06.2023 Therefore, this legal ground rised by the assessee is dismissed.

In the result, this ground is also rejected.

Further, in the case on merits of the case, assessee is facilitating to contractors and charging fee for the services rendered to the contractors. As per the computation made by the assessee, the total fee charged is Rs.5,78,433/- on which assessee has offered taxation under section 44AD of the Act of Rs.86,765/- which is also not correct. The AO has considered 10% of income on adhoc basis on total cash deposits. However, he has also noted that the assessee is providing/ facilities to his contractors for payment of contract fee, SDMD, etc. Therefore, 10% income offered by the AO on the total receipt is also not justified. Therefore, I consider that the gross income shown by the assessee of Rs.5,78,433/- is considered as gross receipt from the business carried out by the assessee. Since from the provision of section 44AD of the Act, assessee is not covered under the eligible business and eligible assessee. Therefore, computation made by the assessee is also not correct. During the course of assessment proceedings as well as appellate proceedings before the learned CIT(A), assessee could not furnish any detail of the expenditures incurred. No doubt that in every business for earning income some expenditures are required to be incurred by the entrepreneur (assessee), The assessee was providing service to the contractor himself . therefore, considering the facts of the case, from the total receipts of Rs.5,78,433/- Rs. 1,00,000/- is allowed for the expenditures and the rest amount of Rs.4,78,433/- is confirmed. I further clarify that from the above confirmed amount of Rs.4,78,433/-, the AO is , 1079/Bang/2025 Page 17 of 17 directed to give credit of whatever income is offered by the assessee in his return of income of Rs.86,765/-. Accordingly, a sum of Rs.3,91,668/- is confirmed (Rs.5,78,433 – Rs.1,00,000 – Rs.86,765).

In the result, appeals filed by the assessee are partly allowed.

A common Order passed shall be kept in respective case files.