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Facts
The assessee filed a return of income. Information regarding accommodation entries/bogus billing of Rs. 1,41,68,122/- led to reopening of assessment, and the amount was treated as unexplained cash credit under Section 68 of the Act. The Commissioner of Income Tax (Appeals) dismissed the assessee's appeal.
Held
The tribunal found that the notice under Section 148, though dated 31.03.2021, was effectively issued and served via e-mail on 01.04.2021, thus being time-barred as the limit for AY 2014-15 expired on 31.03.2021. Relying on judicial precedents, the tribunal held that a time-barred notice renders the subsequent assessment proceedings without jurisdiction, making the impugned assessment order bad in law and void ab-initio.
Key Issues
Whether the notice issued under Section 148 for reopening assessment was time-barred if issued/served on 01.04.2021 for AY 2014-15, and consequently, whether the assessment order passed based on such notice was valid.
Sections Cited
68, 147, 148, 148A, 143(1), 143(2), 143(3), 292BB, Rule 127, Rule 127A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “D” BENCH: KOLKATA
Before: Shri Rajesh Kumar&Shri Pradip Kumar Choubey]
ORDER / आदेश Per Pradip Kumar Choubey, JM:
This is the appeal preferred by the assessee against the order of Commissioner of Income Tax (Appeals), -NFAC, Delhi (hereinafter referred to as the Ld. CIT(A)] dated 28.12.2024 for AY 2014-15.
Assessment Year: 2014-15 M/s RKR Graphite Pvt. Ltd.
Brief facts of the case of the assessee are that the assessee filed return of income declaring total income at Rs. 24,84,990/-. Subsequently, on an information received from Investigation Wing that the assessee had taken accommodation entry in form of bogus billing amounting to Rs. 1,41,68,122/- through sham transaction with paper entities, proposal for reopening of assessment was put up before the CCIT-2 and after getting approval a notice us/ 148 of the Act dated 31.03.2021 was issued requiring the assessee to file return of income. The assessee filed return of income declaring total income at the same as above. The AO perused the submission made by the assessee and held that the assessee received accommodation entries through dubious / shell entities to bring back its unaccounted fund totaling to Rs. 1,41,68,122/- and treated the same as unexplained cash credit u/s 68 of the Act.
Aggrieved by the said order, the assessee preferred an appeal before the Ld. CIT(A) wherein the appeal of the assessee has been dismissed.
Being aggrieved and dissatisfied the assessee preferred an appeal before us.
4. The Ld. A.R challenges the impugned order on legal grounds thereby submitting that notice issued u/s 148 of the Act is barred by limitation as it was issued and served through e-mail on 01.04.2021 which ought to be issued up to 31.03.2021. He cited a decision of the Hon’ble Calcutta High Court passed in Marudhar Vintrade in WPA NO. 4382 of 2022 and also placed reliance of the Hon’ble ITAT order passed in Mamta Chouraria in ITA No. 214/Kol/2024. His further submission is that in this case assessment order has been passed by faceless AO on 29.03.2024 when the faceless assessment scheme was notified according to notice u/s 143(2) dated 03.03.2023 as well as show cause notice dated 27.02.2022 has also been issued by the faceless AO, so the entire assessment is liable to be quashed. He placed his reliance on the Hon’ble ITAT Bench passed in the case of Nabiul Industrial Metal Pvt. Ltd. in on 15.10.2024.
5. Contrary to that the Ld. D.R supports the impugned order.
Assessment Year: 2014-15 M/s RKR Graphite Pvt. Ltd.
6. Upon hearing the submission of the respective parties, we have perused the order as well as documents filed by the assessee. The case of the assessee has been reopened for the assessment year 2014-15 by issuing notice u/s 148 of the Act. For reopening the case for AY 2014-15-time limit of six year from the end of assessment year i.e ends on 31.03.2021. Notice u/s 148 of the Act has been issued and through e-mail and the date has been mentioned on 01.04.2021. The Ld. A.R filed copy of screenshot of IT portal showing that the notice has been issued on 01.04.2021 which is as under:
The Ld. A.R has also filed copy of notice u/s 148 of the Act dated 31.03.2021 which is as under:
Now going over the cited decision of the Hon’ble Calcutta High Court in the aforesaid judgment has clearly held thus:
“Heard learned advocates appearing for the respective parties.
Assessment Year: 2014-15 M/s RKR Graphite Pvt. Ltd. Petitioner in this writ petition is aggrieved by the issuance of impugned notice under section 148 of the Income Tax Act, 1961 on the grounds that the same is barred by limitation and that the respondent-income tax authority concerned, before issuing the impugned notices under section 148 of the 1961 Act, has not observed the statutory formalities under section 148A of the 1961 Act as prescribed by the Finance Act, 2021 which are applicable with effect from 1st April 2021 before issuance of notices under section 148 of the 1961 Act on or after 1st April 2021. Learned advocate for the respondent was asked as to whether final assessment order has already been passed or not in this case to which he submits that final assessment order has already been passed. He further submits on the basis of record that the impugned notice under section 148 of the 1961 Act, though it bears date and signature of the authority showing that it was singed on March 31, 2021, but it was actually uploaded for communication on April 1, 2021 at 3 a.m. which has to be treated as date of issuance of the impugned notice. Considering these facts, I am of the considered view that this case clearly falls under the amended Act relating to proceedings under section 147 of the Act under which issuance of notice under section 148A of the Act is mandatory before issuing any notice under section 148 of the amended Act which has not been complied with in this case. Considering the above facts and circumstances of the case and in view of the order of this court in the case of Bagaria Properties and Investment Private Limited & Anr. v. Union of India & Ors. reported in (2022) 134 taxman.com 196 (Calcutta) and also in the case of Monoj Jain v. Union of India reported in (2022) 134 taxman.com 173 (Calcutta), the impugned notice under section 148 of the Act and all subsequent proceedings are not sustainable in law and the same are quashed. However, quashing of the impugned notice and proceeding will not debar the respondent- authority concerned to issue any fresh notice in future in accordance with law. With the above observations, WPA No.4382 of 2022 stands disposed of.”
We have also gone through the order passed by ITAT, Kolkata in for AY 2014-15 dated 01.05.2024. The relevant portion of the order are hereby reproduced herein below:
4. We have heard rival contentions and perused the record placed before us. Case of the assessee has been reopened for Assessment Year 2014-15 by issuance of notice u/s 148 of the Act. For re-opening the case of the assessee for Assessment Year 2014-15, the time limit of six year from the end of the assessment year ends on 31/03/3021. So, the notice u/s 148 of the Act is to be issued and served upto 31/03/2021. Now, in the instant case, the notice via e-mail was sent to the assessee along with the attachment of notice u/s 148 of the Act on 01/04/2021. Copy of the e-mail is at page 56 of the paper book, which is reproduced below:-
Dear MAMTA CHORARIA, Assessment Year: 2014-15 Mamta Choraria Please find attached the Notice u/s 148 for PAN: ACZPC6470F and AY:2014-15. Please quote your PAN in all future correspondences. Note: - This communication is computer generated and may not contain signature.
Assessment Year: 2014-15 M/s RKR Graphite Pvt. Ltd. - This communication may be treated as compliant with the requirements of Income Tax Rules 127 and 127A. - Signed copy may be sent separately if not already digitally signed. - Please quote your PAN in all communications. - Income Tax Department does not seek any taxpayer information like user name, password, details of ATM, credit cards, etc. Taxpayers are advised not to part with such information on the basis of emails." 4.1. We further note that though the notice issued u/s 148 of the Act is dt. 31/03/2021 and has been e-mailed to the assessee on 01/04/2021, but even in the e-proceedings, available on the income-tax portal under the login-id of the assessee, notice u/s 148 of the Act is stated to have been issued on 01/04/2021.
From perusal of the above, it remains an admitted fact that the notice was served upon the assessee on 01/04/2021. Now, under these given facts and circumstances, where the issuance of notice u/s 148 of the Act is barred by limitation, the re-assessment proceedings deserves to be quashed in view of the settled judicial precedents. The ITAT Kolkata Bench, while dealing with identical set of facts in the case of Sandeep Kumar Shah vs. ITO, Wd-50(1), Kolkata in order dt. 30/11/2023, has held as under:- "5. We have heard rival contentions and perused the record placed and carefully gone through the decision relied upon by the assessee. The legal issue raised by the assessee in the additional ground is that notice u/s 148 of the Act is time barred and, therefore, the reassessment proceedings carried out are without jurisdiction and liable to be quashed. We notice that the assessee, who is an individual, filed his return of income for Assessment Year 2010-11 on 29/07/2010 declaring income of Rs.6,24,228/-. The return was processed u/s 143(1) of the Act and thereafter the ld. Assessing Officer received certain information from DDIT Assessment Year: 2014-15 Mamta Choraria (Inv.) and proceeded to reopen the assessment proceedings by way of issuance of notice u/s 148 of the Act. The time limit for issuing notice for Assessment Year 2010-11 was expiring on 31/03/2017. After obtaining the necessary approval of ld. Pr. CIT - 17, Kolkata, notice dt. 31/03/2017 was issued but it was served on 01/04/2017 at 01:06 A.M.. Copy of the notice dt. 31/03/2017 and the email addressed to the assessee for serving notice are reproduced below:- ................
6. Now, the ld. Counsel for the assessee has pleaded that the notice was served on 01/04/2017 and, therefore, it is time barred which renders the assessment proceedings without jurisdiction. Reliance was placed on the judgment of the Hon'ble Jurisdictional High Court in the case of M/s. Marudhar Vintrade Pvt. Ltd. (supra), wherein the Hon'ble Court while examining the issue of issuance of notice u/s 148 of the Act observed that the last date for issuing and serving the notice was 31/03/2021 but though the notice was dt. 31/03/2021 but it was actually uploaded for communication on 01/04/2021 at 03:00 A.M.. The Hon'ble Court held that since the provisions w.e.f. 01/04/2021 has been amended issuing of notice u/s 148A of the Act was mandatory before issuing notice u/s 148 of the Act, and in absence thereof all subsequent proceedings are not sustainable in law and same are quashed. We further notice that this Tribunal in the case of Osian Stock Broking Pvt. Ltd. (supra) considering similar type of issue pertaining to the issue of notice u/s 143(2) of the Act being time barred has held as follows:-
Assessment Year: 2014-15 M/s RKR Graphite Pvt. Ltd. "3. The assessee has contested the impugned addition on various ground, inter alia, that the Assessing Officer had no reason to believe that the income of the assessee has escaped assessment; that the concerned Assessing Officer did not have territorial jurisdiction to frame the assessment and further that the notice issued u/s 143(2) of the Act was time barred and, therefore, the assessment framed was void ab initio.
At the outset, the ld. counsel for the assessee has submitted that since the question relating to the issue of notice u/s 143(2) of the Act hits at the very validity of the assessment order, therefore, the said issue may be adjudicated first. The ld. counsel has further submitted that the last date for issue of notice u/s 143(2) was on 30.09.2015. He has further submitted that though the notice has been shown to be signed on 30.09.2015 itself however, the same was sent at the email address of the assessee 03.11.2015. He, therefore, has submitted that by mere signing of the notice by the concerned Assessing Officer, it would not mean that the same was issued on the said date. That the date of issue of the said notice would be the date on which the email was sent on 03.11.2015. He, in this respect, has relied upon the decision of the Hon'ble Jurisdictional High Court in the case of 'Marudhar Vintrade Pvt. Ltd. vs. Union of India & Ors.' in WPA No.4382 of 2022 order dated 12.04.2022.
5. The ld. DR, on the other hand, has submitted in this case the notice for reopening of the assessment u/s 148 of the Act was issued within the time. That once the notice u/s 148 of the Act was issued, there was no relevance of delayed issuance of notice u/s 143(2) of the Act. He has further submitted even otherwise the identity of issuance of notice will be the date on which the Assessing Officer signed the said notice which was on 30.09.2015 and hence it cannot be said that the notice u/s 143(2) of the Act was time barred.
We have heard the rival contentions and gone through the records. The notice in this case has been shown to be signed on 30.09.2015, however, the same was emailed to the assessee on 03.11.2015. The Hon'ble Jurisdictional Calcutta High Court in the case of Marudhar Vintrade Pvt. Ltd. vs. Union of India & Ors.' (supra) considering the facts that the notice u/s 148 of the Act was signed on March 31 2021, however, it was actually Assessment Year: 2014-15 Mamta Choraria uploaded for communication on April 1 2021 at 3 a.m. thereby treating the 1st April 2021 as issuance of impugned notice u/s 148 of the Act, quashed the reassessment proceedings holding that the provisions of Finance Act 2021 would be applicable from 01.04.2021 and therefore, before issuance any notice u/s 148 of the Act, the Assessing Officer was required to observe the statutory formalities u/s 148A of the Act. In the case in hand also, the notice was set in motion only on 03.11.2015, in our humble view, signing of the notice would not constitute as issuance of notice. The date of issuance of notice would be when it is set in motion for delivery to the assessee. So far as the contention of the ld. counsel that the issue of notice u/s 143(2) of the Act within the prescribed period in relation to the reassessment proceedings u/s 147/148 was not mandatory, we find that the issue has been settled by the various High Courts holding that even in the case of reassessment proceedings u/s 147/148 of the Act, the issuance of notice within the specified period u/s 143(2) of the Act is mandatory and that the Assessing Officer cannot assume jurisdiction u/s 143(3) of the Act without issuance of notice u/s 143(2) of the Act and this defect cannot be cured by taking recourse to the deeming fiction provided u/s 292BB of the Act. Reliance in this respect can be placed on the decision of the Delhi High Court in the case of PCIT vs. Shree Jai Shiv Shankar Traders Pvt. Ltd. IT Appeal No.1068 of 2013 dated 18.02.2015; Hon'ble Madras High Court in the case of Sapthagiri Finance & Investment vs. ITO reported in (2013) 90 DTR (Mad) 289); Hon'ble Delhi High Court in the case of DIT vs. Society for Worldwide Interbank Financial Telecommunications reported in (2010) 323 ITR 249 (Del); Hon'ble Allahabad High Court in the case of CIT vs. Solarpur Cold Storage P Ltd (2014) 50 Taxmann.com 105 (All); Hon'ble Allahabad High Court in the case of CIT vs. Rajeev Sharma reported in [2011] 336 ITR 678 (All.). Since the Assessing Officer did not issue notice u/s 143(2) of the Act within the specified time period, therefore, the Assessing Officer could not have assumed jurisdiction to frame the assessment u/s 143(3) of the Assessment Year: 2014-15 M/s RKR Graphite Pvt. Ltd. Act and, therefore, the impugned assessment order is bad in law and the same is accordingly held to be non-est. Since we have allowed the appeal of the assessee on the aforesaid legal ground, therefore, at this stage, the other grounds raised
by the assessee have been rendered academic in nature.
7. In the result, the appeal of the assessee stands allowed."
7. From perusal of the above judgments and decisions it remains a legally settled position that the notice should not only be issued but also be served before the expiry of time limit provided under the Act. In other words, if the last date for issuing notice u/s 148 of the Act is 31/0/2017, then the notice should be served on or before 31/03/2017. In the instant case, the ld. Assessing Officer was required to serve notice on the assessee on or before 30/03/2017 but it was finally served on 01/04/2017 and, therefore, since the notice u/s 148 of the Act was not issued within the specified time period, the Assessing Officer could not have assumed jurisdiction to frame the reassessment order u/s 147/143(3) of the Act. Therefore, the impugned assessment order dt. 22/12/2017 is bad in law and non-est. Additional ground raised by the assessee is allowed. Since we have allowed the additional ground and quashed the assessment order, the remaining legal grounds as well as the grounds raised on merits are rendered academic in nature.
8. In the result, appeal of the assessee is allowed.”
10. Keeping in view the fact as discussed above and going over the cited judicial pronouncement, we are inclined to hold that the impugned assessment order dated 29.03.2022 are bad in law and void ab-initio. Since we quash the impugned assessment by allowing first legal ground raised by the assessee challenging the validity of the notice u/s 148 of the Act. It is needless to adjudicate the other ground raised by the assessee.
In the result, the appeal filed by the assessee is allowed.
Order is pronounced in the open court on 30th June, 2025 Sd/- Sd/- (Rajesh Kumar/राजेश कुमार) (Pradip Kumar Choubey /�द�प कुमार चौबे) Accountant Member/लेखा सद�य Judicial Member/�या�यक सद�य Dated: 30th June, 2025 SM, Sr. PS Copy of the order forwarded to: 1. Appellant- M/s RKR Graphite Pvt. Ltd., 1, A. J. C. Bose Road, 4th Floor, Kolkata-700020 2. Respondent – ITO, Ward- 12(1), Kolkata 3. Ld. CIT(A)-NFAC, Delhi 4. Ld. PCIT- , Kolkata 5. DR, Kolkata Benches, Kolkata (sent through e-mail)