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Facts
The assessee company filed its return for AY 2014-15, which was revised. An assessment was framed, and subsequently, based on information, the AO treated a loss from a transaction with a paper company as bogus and made an addition for commission expenditure. The CIT(A) deleted these additions.
Held
The Tribunal held that the notice under section 148A(d) was issued beyond the time limit prescribed, making it time-barred and invalid. Consequently, the reassessment proceedings initiated are void ab initio, and the additions made have no legal basis.
Key Issues
Whether reassessment proceedings initiated beyond the extended limitation period, considering the Rajesh Bansal judgment, are valid and not void ab initio.
Sections Cited
143(3), 148, 148A, 148A(b), 148A(d)
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Income Tax Appellate Tribunal, “B” BENCH, KOLKATA
CO No. 33/Kol/2025 M/s Dalmia Impex Private Limited Date of concluding the hearing : 10.09.2025 Date of pronouncing the order : 27.10.2025 O R D E R PER SONJOY SARMA, JUDICIAL MEMBER: These two matters—one appeal filed by the Revenue and the corresponding Cross Objection filed by the assessee arise out of the same appellate order passed by the Ld. CIT(A) dated 06.08.2024. Hence, both are heard together and disposed of by this common order for the sake of convenience.
Brief facts of the case are that the assessee-company filed its return of income for the assessment year 2014–15 declaring a total income of ₹1,57,07,120, which was subsequently revised to ₹ 1,52,74,460/-. The case was selected for scrutiny and an assessment was framed under section 143(3) of the Act determining total income at ₹1,53,83,680. Subsequently, based on information received from the Directorate of Investigation, Mumbai under “Project Falcon,” it was noted that the assessee had entered into transactions with M/s Gee Bee Securities Pvt. Ltd. and booked a loss of ₹1,36,14,400/-. The said entity was identified as a paper company controlled by one Shri Pankaj Agarwal, a known entry operator. The Assessing Officer, being unsatisfied with the explanation of the assessee, treated the loss as bogus and further made an addition of ₹2,72,288 on account of alleged commission expenditure for obtaining accommodation entries.
On appeal, the Ld. CIT(A) deleted the additions, granting full relief to the assessee. Aggrieved, the Revenue has preferred the present appeal. The assessee, in turn, filed a Cross Objection challenging the very validity of the reassessment proceedings on legal grounds, contending that the notice issued under section 148 and the subsequent proceedings are barred by limitation and bad in law.
CO No. 33/Kol/2025 M/s Dalmia Impex Private Limited 4. At the outset, the Ld. Counsel for the assessee submitted that the reassessment notice under section 148 was issued on 26.06.2021 under the old regime. As per the judgment of the Hon’ble Supreme Court in Union of India v. Rajesh Bansal & Ors. [(2024) 469 ITR 321 (SC)], notices issued under the old provisions between 01.04.2021 and 30.06.2021 are to be treated as show-cause notices under section 148A(b) of the Act. The Court also clarified that the extended time limit allowed under the TOLA notification cannot be stretched beyond 30.06.2021. In the present case, though the original notice dated 26.06.2021 was issued within the permissible window, the subsequent notice under section 148A(b) was issued only on 28.05.2022, allowing the assessee 14 days to respond, i.e., up to 11.06.2022. Even after adjusting the remaining four days available within limitation as per Rajesh Bansal (supra), the last permissible date for issuance of a valid notice under section 148 would have been 15.06.2022. However, the Assessing Officer issued the fresh notice under section 148A(d) only on 29.07.2022, which is clearly beyond the limitation period prescribed under law.
This view finds support from the decisions of various High Courts, including the Hon’ble Delhi High Court in ADM Agro Industries Latur & Vizag Pvt. Ltd. (2025) and Ram Balaram Build Home Pvt. Ltd. [(2024) 171 taxmann.com 99 (Del)], as well as the coordinate benches of the Tribunal in G.D. Mother Educational Society v. ITO [ITA Nos. 309–312/Pat/2023, order dated 20.11.2024]. These authorities have consistently held that any notice issued under the new regime beyond the extended limitation period calculated in line with Rajesh Bansal (supra) is invalid and without jurisdiction.
The assessee’s cross objection raises a pure legal ground challenging the validity of the notice issued under section 148 read with section 148A of the Act, which goes to the root of the matter. As such, the legal issue deserves to be adjudicated first before going into the merits of the additions.
CO No. 33/Kol/2025 M/s Dalmia Impex Private Limited 7. On the other hand, the Ld. DR stated that the notice u/s 148A(d) of the Act was issued within time frame prescribed under law. Therefore, CO filed by the assessee liable to be dismissed.
We after hearing the rival submission of parties and respectfully following the ratio laid down by the Hon’ble Supreme Court in Rajesh Bansal (supra) and the consistent view of various High Courts and coordinate benches, we hold that the notice under section 148 A(d) issued on 29.07.2022 is time-barred and therefore, invalid in law. Consequently, the reassessment proceedings initiated and completed pursuant to such notice are void ab initio. Since the reassessment itself is held to be invalid, the additions made therein have no legal basis to survive. Accordingly, the Cross Objection filed by the assessee is allowed and the appeal filed by the Revenue is dismissed as infructuous.