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Facts
The assessee filed its return of income for AY 2015-16. Subsequently, reassessment proceedings were initiated under Section 147 based on information regarding alleged bogus unsecured loans and share capital. Notices under Section 148 were issued, and a reassessment order was passed with additions under Sections 68 and 69C.
Held
The Tribunal held that the notices issued under Section 148 for Assessment Year 2015-16, dated 29.06.2021 and 29.07.2022, were barred by limitation. The Tribunal followed the pronouncements of the Supreme Court in Rajiv Bansal (supra) and other High Court judgments, and quashed the reassessment order.
Key Issues
Whether the notices issued under Section 148 for reassessment for AY 2015-16 were barred by limitation, considering the provisions of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, and subsequent judicial pronouncements.
Sections Cited
139(1), 147, 148, 153C, 68, 69C, 234A, 234B, 234C, 148A, 149, 151, 3(1), 153(92), 139
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B’’ BENCH: BANGALORE
Before: SHRI GEORGE GEORGE K & SHRI SOUNDARARAJAN K
PER LAXMI PRASAD SAHU, ACCOUNTANT MEMBER:
The present appeal is filed by the Assessee against the orders of the Ld. Commissioner of Income Tax (Appeals) ['CIT(A)' in short), National Faceless Appeal Centre (NFAC), Delhi in Appeal No. NFAC/S/259/2024-25/1072078461/1 dated 10.01.2025 for Assessment Year 2015-16 on the following grounds of appeal:-.
1. The order passed by the learned Commissioner of Income Tax, Appeals, NFAC under section 250 of the Act in so far as it is against the Appellant is opposed to law, weight of evidence, natural justice, probabilities, facts and circumstances of the Appellant's case.
2. The appellant denies itself to be assessed at Rs.6,56,53,040/- as against the returned income of Rs.40,47,080/- for the impugned assessment year 2015-16, on the facts and circumstances of the case.
3. The learned CIT(A) ought to have directed the learned assessing officer to provide the appellant an opportunity to cross examine the person from whom statement was recorded and relied by the learned assessing officer and consequently the assessment order is bad in law on the facts and circumstances of the case.
4. The learned CIT(A) has failed to appreciate that the assessment ought to have been initiated under section 153C of the Act when the assessing officer clearly avers that reopening is made on the basis of materials seized during search proceedings of a third party, on the facts and circumstances of the case. 5. Grounds on addition made u/s 68, Rs.6,o9,96,000/-: a. The learned Assessing officer is not justified in law in making an addition of Rs.6,o9,96,000/- under section 68 of the Act on the facts and circumstances of the case. The assesse has filled additional grounds of appeal
which are as under vide dated 17.03.2025 b. The authorities below have failed to appreciate that the appellant has transacted through banking channels and no instance of cash transaction was discernable to infer any dubious transaction of share issuance on the facts and circumstances of the case. c. The learned assessing officer has not brought any evidence to remotely indicate the movement of the alleged cash to the subscriber of shares on the facts and circumstance of the case. d. The learned assessing officer reliance on unsubstantiated statement makes the addition made a nullity in law on the facts and circumstance of the case.
6. Grounds on addition made u/s 69C, Rs.6,o9,96o/-: a. The authorities below have failed to appreciate that the appellant has not incurred any commission expenditure for issuing shares and accordingly the provisions of section 69C of the Act finds no applicability on the facts and circumstances of the case.
7. The appellant denies the liability to pay interest under section 234A, 234B and 234C of the Act in view of the fact that there is no liability to additional tax as determined by the learned assessing officer. Without prejudice the rate, period and on what quantum the interest has been levied are not in accordance with law and further are not discernable from the order and hence deserves to be cancelled on the facts and circumstances of the case.
8. The appellant craves leave to add, alter, delete or substitute any of the grounds urged above.
9. In view of the above and other grounds that may be urged at the time of the hearing of the appeal, the appellant prays that the appeal may be allowed and appropriate relief be granted in the interest of justice and equity.
2. The assesse has filled additional grounds of appeal
which are as under vide dated 17.03.2025
1. The assessment order framed in accordance with the TOLA provisions is invalid as the notice issued for reopening of assessment for the impugned year does not fall for completion during the period prescribed under TOLA and accordingly TOLA is not applicable for the impugned year, on the facts and circumstances of the case.
2. Grounds on reopening based on 148 notice dt:29.o6.2o21: a. The notice issued under section 148 of the Act dt:29.o6.2o21 is bad in law. b. The sanction accorded under section 151 of the Act, is bad in law, on the facts and circumstances of the case. c. The order of assessment passed on 25.05.2023 is barred by limitation as the same ought to have been passed on or before 31.03.2023, on the facts and circumstances of the case. d. The order of assessment passed by the learned assessing officer under Section 147 r.w.s 144 of the Act is bad in law since the mandatory conditions as envisaged in the Act to assume jurisdiction under section 148 did not exist or having not been complied with and consequently, the reassessment requires to be cancelled on the facts and circumstances of the case.
3. Grounds on reopening based on 148 notice dt:29.07.2022:- a, The notice issued under section 148 of the Act, dt:29.o7.2022 is bad in law. b. The notice issued under section 148 of the Act is invalid as it does not bear Document Identification Number ("DIN") on its body, on the facts and circumstances of the case. c. Without foregoing the contention that TOLA is not applicable for AY 2015-16, the 148 notice dt:29.o7.2022 is barred by limitation and consequently has to be disregarded for the assumption of jurisdiction to pass assessment order for the impugned assessment year on the facts and circumstances of the case. d. The learned assessing officer has failed to obtain sanction under section 151 of the Act. Without prejudice, the sanction obtained, if any, is invalid, mechanical and without application of mind on the facts and circumstances of the case.
4. The appellant craves leave to add, alter, delete or substitute any of the grounds urged above.
5. In view of the above and other grounds that may be urged at the time of the hearing of the appeal, the appellant prays that the appeal may be allowed and appropriate relief be granted in the interest of justice and equity.”
3. Since, the additional grounds raised by the assessee do not involve any investigation of any facts otherwise on the record of the department and are also pure question pf law. Considering the grounds raised in additional grounds for the advancement of substantial cause of justice and relying on the judgment of the decision of the Hon’ble Apex court in the case of NTPC Ltd. Vs CIT reported in 229ITR383 (SC) the additional grounds are admitted for adjudication.
Brief facts of the case are that the assessee is a Company and filed its return of income u/s 139(1) of the Income Tax Act, 1961 declaring total income at Rs.40,47,080/-. As per the information received from the DCIT, Central cercial 2 (2) Kolkata through the insight portal it was observed that during the relevant AY , the assesse has received accommodation entry in the form of bogus unsecured loan and share capital/premium to Rs. 5,04.15.000/- through the entity M/s Bhanupriya Vincome Ltd. a shell company and, therefore, reassessment proceedings u/s 147 of the Act were initiated and notice u/s 148 was issued on 29.06.2021. Thereafter, following the judgment of Hon'ble Supreme Court in the case of Union of India v. Ashish Agarwal [2022] 138 taxmann.com 64/286 Taxman 183/444 ITR 1 (SC)/(2002) SCC Online SC 543), the notice issued u/s 148 dated 02.06.2022 was treated as notice u/s 148A(a) of the Act and information was supplied u/s 148A(b) of the Act. After considering the submissions of assessee, order u/s 148A(d) was passed and, thereafter, notice 148 of the Act was issued on 29.07.2022.pursuant to the notice issued u/s 148 the assesse filed its return of income on 20.08.2022 declaring the same income as declared in return filed u/s 139(1) of Rs. 40,47,080/- subsequently other statutory notices were issued to the assessee and part compliances were made and finally the reassessment order was passed u/s 147 r.w.s 144B of the Act dated 25.05.2023 by making addition of Rs 6,09,96,000/- as unexplained cash credit u/s 68 of the Act as source were not explained and further addition of Rs.6,09,960/- was made u/s 69C of the Act on account of unexplained expenditure incurred to obtain such unexplained cash credit.
5. Against such order, the assessee preferred the appeal before the CIT(A) who vide impugned order dated 10.01.2025 dismissed the appeal of the assessee against which the assessee is in appeal before Income Tax Appellate Tribunal 6. During the course of hearing, the Ld. AR of the assessee submitted that the impugned year is Asst. Year 2015-16, for which notice u/s 148 of the Act was originally issued on 29.06.2021 and, thereafter, following the judgment of Hon'ble Supreme Court in the case of Ashish Agarwal (supra), the fresh notice u/s 148 of the Ace was issued on 29.07.2022 following the procedure for the issue of notice as per the Instruction No. 01/2022dated 11.05.2022 pursuant to the judgment of Hon’ble Apex Court in the case of UOI vs Ashish Agrawal dated 04.05.2022 reported in (2022SCC Online SC 543). As per Ld. AR of the assessee, the notice so issued u/s 148 of the Act dated 29/07/2022 is barred by limitation. According to the time limit provided in the old provisions of section 149 of the Act, notice u/s 148 of the Act could be issued within a period of six years from the end of relevant assessment year which limitation expired on 31/03/2022. In the instant case, the notice u/s 148 of the Act was issued on 29/07/2022, however, the time limit available as per erstwhile section 149 of the Act expired on 31/03/2022 thus is beyond the period of limitation and provisions of TOLA are not applicable. Ld. AR further submits that during the course of hearing in the case of Union of India v. Rajiv Bansal [2024] 167 taxmann.com 70/301 Taxman 238/469 ITR 46 (SC)/Civil Appeal No.8629 of 2024, the Learned Additional Solicitor General of India, Mr. N. Venkataraman has made a statement at a Bar that the Revenue will drop all the notices issued on or after 1st April, 2021 related to Assessment Year 201516. It is, thus, prayed by the Ld. AR that the notices issued in the instant case for Asst. Year 2015-16 u/s 148 being after 1st April, 2021, therefore, the same deserves to be dropped and consequently the re-assessment order be quashed.
He further submitted that the order passed by AO u/s 147 r.w.s.144B of the Act dated 25.05.2023 is not in consonance in terms of section 15392) of the Income Tax Act and it is barred by limitation.
On the other hand, the Ld. Sr. DR vehemently supported the orders of the lower authorities and submitted that the matter be decided in terms of the judgment of Hon'ble Supreme Court in the case of Rajiv Bansal (supra).
We have heard the rival submissions and perused the materials available on record. In the instant case, the appeal of the assessee was dismissed by Ld. CIT(A) against which the Assessee vide an appeal, however, since, the legal issue is raised with regard to the limitation of procedure initiated u/s 147 of the Act filed by assessee, therefore, we proceed to decide the legal issue raised by assesse first.
It is an admitted fact that earlier, the notice u/s 148 in the case of assessee was issued on 29/06/2021 which was dropped and proceedings u/s 148A of the Act were initiated in terms of order of Hon'ble Supreme Court in the case of Ashish Agarwal (supra) and finally the notice u/s 148 was issued on 29/07/2022. The Ld. Additional Solicitor General of India in the case of Rajiv Bansal (supra) has made categorical statement at Bar before the Hon'ble Supreme Court that all the notices issued for Asst. Year 2015-16 on or after 1st April 2021 will be dropped, however, in the instant case, no such action was taken and re-assessment order was framed in the case of the assessee on the basis of the notice issued u/s 148 of the Act on 29/07/2022. The relevant extract of the assertion made by the Ld. Additional Solicitor General of India before the Hon'ble Supreme Court as contained in para 19(f) of the said order are reproduced as under:
"19. Mr. N. Venkataraman, learned Additional Solicitor General of India, made the following submissions on behalf of the Revenue: a. Parliament enacted TOLA as a free-standing legislation to provide relief and relaxation to both the assesses and the Revenue during the time of COVID-19. TOLA seeks to relax actions and proceedings that could not be completed or complied with within the original time limits specified under the Income Tax Act; b. Section 149 of the new regime provides three crucial be nefits to the assesses: (i) the four-year time limit for all situations has been reduced to three years; (ii) the first proviso to Section 149 ensures that re-assessment for previous assessment years cannot be undertaken beyond six years; and (iii) the monetary threshold of Rupees fifty lakhs will apply to the re-assessment for previous assessment years; c. The relaxations provided under Section 3(1) of TOLA apply "notwithstanding anything contained in the specified Act." Section 3(1), therefore, overrides the time limits for issuing a notice under Section 148 read with Section 149 of the Income Tax Act; d. TOLA does not extend the life of the old regime. It merely provides a relaxation for the completion or compliance of actions following the procedure laid down under the new regime; e. The Finance Act 2021 substituted the old regime for re-assessment with a new regime. The first proviso to Section 149 does not expressly bar the application of TOLA. Section 3 of TOLA applies to the entire Income Tax Act, Including Sections 149 and 151 of the new regime. Once the first proviso to Section 149(1)(b) is read with TOLA, then all the notices issued between 1 April 2021 and 30 June 2021 pertaining to assessment years 20132014, 2014- 2015, 2015-2016, 2016-2017, and 2017-2018 will be within the period of limitation as explained in the tabulation below:
Assessment year Within 3 Years (2) Expiry of Limitation read with Within six Years Expiry of Limitation read (1) TOLA for (2) (3) (4) with TOLA for (4) (5) 2013-2014 31.03.2017 TOLA not applicable 31.03.2020 30.06.2021 2014-2015 31.03.2018 TOLA not applicable 31.03.2021 30.06.2021 2015-2016 31.03.2019 TOLA not applicable 31.03.2022 TOLA not applicable 2016-2017 31.03.2020 30.06.2021 31.03.2023 TOLA not applicable 2017-2018 31.03.2021 30.06.2021 31.03.2024 TOLA not applicable f. The Revenue concedes that for the assessment year 2015-16, all notices issued on or after 1 April 2021 will have to be dropped as they will not fall for completion during the period prescribed under TOLA; g. Section 2 of TOLA defines "specified Act" to mean and include the Income Tax Act. The new regime, which came into effect on 1 April 2021, is now part of the Income Tax Act. Therefore, TOLA continues to apply to the Income Tax Act even after 1 April 2021; and h. Ashish Agarwal (supra) treated Section 148 notices issued by the Revenue between 1 April 2021 and 30 June 2021 as show-cause notices in terms of Section 148A(b). Thereafter, the Revenue issued notices under Section 148 of the new regime between July and August 2022. Invalidation of the Section 148 notices issued under the new regime on the ground that they were issued beyond the time limit specified under the Income Tax Act read with TOLA will completely frustrate the judicial exercise undertaken by this Court in Ashish Agarwal (supra).
Looking to the facts and considering the assessment year involved is 2015 16, notice issued in the case of originally on 29/06/2021 and later on 29/07/2022 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 29/07/2022 is barred by limitation.
This view is supported by the order of Hon'ble Delhi High Court in the case of Ibibo Group Pvt. Ltd. v. Asstt. CIT [W.P.(C) No. 17639 of 2022, dated 13- 12-2024] wherein vide order dated 13.12.2024, the Hon'ble Jurisdictional High Court after relying upon the decision of Hon'ble Supreme Court in the case of Rajiv Bansal (supra) has quashed the notice issued u/s 148 of the Act. Further, the Hon'ble Delhi High Court in the case of Pratishtha Garg v. Asstt. CIT [2025] 171 taxmann.com 264 (Delhi)/W.P.(C)-16878/2024 vide order dated 19/12/2024 has expressed the same view. Further, the Hon'ble DElhi High Court in the case of Makemytrip India Pvt. Ltd. v. Dy. CIT [2025] 173 taxmann.com 497 (Delhi)/W.P.(C) 2557/2023 vide order dated 24.03.2025 has also expressed the same view.
It is also relevant to mention that the Hon'ble Supreme Court in Deepak Steel & Power Ltd. v. CBDT [2025] 174 taxmann.com 144/476 ITR 369 (SC)/Civil Appeal No. 5177/2025 vide its order dated 2nd April, 2025 in the case of Deepak Steel & Power Ltd. (supra) in identical fact has allowed by SLP field by the Revenue and disposed of the appeal by making following observations:
2. These appeals arise from the order passed by the High Court of Orissa at Cuttack in Writ Petition (C) Nos. 2446 of 2023, 2543 of 2023 dated 1.2.2023 and 2544 of 2023 dated 10.02.2023 respectively by which the High Court disposed of the original writ petitions in the following terms:-
1. The memo of appearance filed by Mr. S. S. Mohapatra, learned Senior Standing Counsel for Revenue Department on behalf of Opposite Parties is taken on record.
In view of the order passed by this Court on 1st December, 2022 in a batch of writ petitions of which W.P. (C) No.9191 of 2022 (Kailash Kedia v. Income Tax Officer) was a lead matter and the subsequent order dated 10th January, 2023 passed in W.P. (C) No.36314 of 2022 (Shiv Mettalicks Pvt. Ltd., Rourkela v. Principal Commissioner of Income Tax, Sambalpur), the Court declines to entertain the present writ petition, but leaves it open to the Petitioner to raise all grounds available to the Petitioner in accordance with law including the grounds urged in the present petition at the appropriate stage as explained by the Court in those orders.
3. The writ petition is disposed of in the above terms."
We heard Mr. Saswat Kumar Acharya, the learned counsel appearing for the appellants (assessee) and Mr. Chandrashekhar, the learned counsel appearing for the revenue.
4. 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."
As the revenue made a concession in the aforesaid decision that is for the assessment year 2015-2016, all notices issued on or after 1" April, 2021 will 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). Nothing further is required to be adjudicated in this matter as the notices so far as the present litigation is concerned is dated 25.6.2021.
In view of the aforesaid, in such circumstances referred to above the original writ petition nos. 2446 of 2023, 2543 of 2023 and 2544 of 2023 respectively filed before the High Court of Orissa at Cuttack stands allowed." Further, the Hon'ble Supreme Court has dismissed the SLP filed by the Revenue in Asstt.CIT v. Nehal Ashit Shah [SLP (CIVIL) Diary No (s) 57209 of 2024, dated 4- 4-2025] has dismissed the application filed by the Revenue by relying upon the paragraph 19E and 19F of Hon'ble Supreme Court in the case of Rajiv Bansal (supra). Further, the Hon’ble Jurisdictional high Court of Karnataka quashed the notice issued u/s 148 on 01.04.2022 in the case of Mohammed Yasen vs ITO in Writ Petition No. 26080 of 2024 (T-IT) reported in (2025) 175 taxmann.com (Karnataka) in this case it was held that In the instant case, it is an undisputed fact that the impugned proceedings is relating to the assessment year 2015-16, while the impugned notice under section 148 dated 1-4-2022 was issued beyond/after 1- 4-2021 which is impermissible in law and barred by limitation and consequently, the impugned orders/notices etc., deserve to be quashed.
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 (supra), and Nehal Ashit Shah (supra), (SC, 2025), we hold that the notice issued u/s 148 on 29.07.2022 is barred by limitation and, therefore, the same is quashed.
Since the additional ground filed by the assessee is allowed in above terms , we further consider that no need to decide other legal grounds raised and on the merits of the additions .
In the result, the appeal of the filed by is allowed in above terms Order pronounced in the open court on 20th August, 2025.