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Facts
The assessee filed an appeal against the order of the CIT(A) which was passed under section 250 of the Income Tax Act, 1961. This appeal emanated from an order under section 144 of the Income Tax Act, 1961. The assessee is stated to be a lower-middle-class person who purchased a small plot of land. The assessing officer had made an addition of Rs. 85,000/-.
Held
The Tribunal held that the notice issued under section 148 was bad in law as it was issued beyond the period of three years from the end of the assessment year, and the alleged escaped income was less than Rs. 50 lakhs. Consequently, the assessment order was also void ab initio. The addition of Rs. 85,000/- was also held to be bad in law as the assessee had duly explained the investment and was not provided with an opportunity for cross-examination.
Key Issues
Whether the reassessment proceedings initiated under Section 147 read with Section 148/148A were time-barred, and if the addition of Rs. 85,000/- was justified.
Sections Cited
147, 148, 148A, 144, 144B, 250, 149, 151, 132, 132A, 153A, 153C
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCHES “SMC” :: PUNE
Before: DR.DIPAK P. RIPOTE & SHRI VINAY BHAMORE
Assessment Year: 2016-17 Vikas Dattu Deokar, V The Income Tax Officer, S.N.126/1, Plat No.18A, s Ward-14(1), Pune. Z Corner, Matoshri Niwas, Manjari Bk, Manjari Budruk, PO: Manjari Farm, Dist: Pune, Maharashtra – 412307. PAN: AISPD7124N Appellant/ Assessee Respondent / Revenue Assessee by Smt. Deepa Khare – AR Revenue by Shri Eknath Abhang –Addl.CIT(DR) Date of hearing 24/07/2025 Date of pronouncement 30/07/2025 आदेश/ ORDER
PER DR. DIPAK P. RIPOTE, AM:
This is an appeal filed by Assessee against the order of ld.Commissioner of Income Tax(Appeal)[[NFAC], passed under section 250 of the Income Tax Act, 1961 for the A.Y.2016-17 dated 20.02.2025, emanating from order u/s.144 of the Income Tax Act, 1961, dated 17.05.2023. The Assessee has raised following grounds of appeal :
“1. Whether impugned Assessment Order u/s. 147 are time barred in view of the proviso to Section 149 as the notice u/s. 148 r.w.s 148A are issued beyond three years from the relevant assessment year in respect of income likely to be escaped is below Rs.50 Lakhs. Since the proceedings have been taken beyond the permitted time limit the assessment Order is null void.
Whether impugned Assessment Order u/s. 147 are time barred in view of the proviso to Section 149 as the notice u/s. 148 r.w.s 148A are issued beyond three years from the relevant assessment year in respect of income alleged to be escaped is not represent in the form of an asset specified in explanation to Section 149.
The ld CIT(A) erred in law and on facts in setting aside the addition of Rs.85000/- without deciding the legal issues regarding limitation and jurisdiction.
The appellant craves leave to add alter, modify or substitute any ground of appeal
at the time of hearing.” Submission of ld.AR :
2. Ld.AR for the Assessee explained that Assessee is a lower middle class person and has purchased a small plot of land of 1500 sq.fts jointly for Rs.8,25,000/- only.
2.1 The ld.AR for the Assessee submitted that this is the second round of appeal before this Pune Bench of Tribunal. Earlier, ITAT in for A.Y.2016-17 vide order dated 02.02.2024 had set-aside the appeal to ld.CIT(A) for denovo adjudication as the ld.CIT(A) vide its order dated 29.11.2023 had not condoned the delay of 17 days. ITAT directed the ld.CIT(A) to condone the delay and decide the appeal on merits. Accordingly, ld.CIT(A) has passed an order for A.Y.2016-17 on 20.02.2025 u/s.250 r.w.s 254 of Income Tax Act, 1961. Ironically, ld.CIT(A) has not bothered to decide the assessee’s appeal on merits, but, merely set it aside to Assessing Officer claiming that the Assessment Order was u/s.144 of the Income Tax Act. However, ld.CIT(A) has erred in not adjudicating the Assessee’s appeal on merits.
2.3 Ld.AR for the Assessee submitted that during the assessment proceedings, all the details were filed before the Assessing Officer. This fact is noted in the assessment order. Therefore, ld.CIT(A) was blatantly wrong in setting aside the appeal of the assessee without discussing the merits of the case. Ld.CIT(A) has not decided the legal ground of the assessee which is as under : “2. Whether impugned Assessment Order us 147 are time barred in view of the proviso to Section 149 as the notice us 148 r.w.s. 148A are issued beyond three years from the relevant assessment year in respect of income alleged to be escaped is not represented in the form of an asset specified in Explanation to Section 149.” 2.4 Ld.AR further submitted that it is mandatory for the ld.CIT(A) to decide the legal ground. Ld.AR for the assessee submitted that Assessee has raised this legal ground before this Hon’ble Tribunal also. Ld.AR submitted that the Legal Ground must be adjudicated by this Tribunal. Ld.AR submitted that Assessing Officer has passed an order u/s.148A(d) on 28.06.2022 alleging escapement of income of Rs.10 lakhs for A.Y.2016-17. Thus, the income alleged to have escaped assessment is less than Rs.50 lakhs and the notice u/s.148 was issued beyond the period of three years from the end of the A.Y.2016-17. Therefore, notice u/s.148 and consequential assessment is bad in law. This also explains that the Competent Authority who has approved the proceedings u/s.148A(d) has not applied his mind. Ld.AR further submitted that order u/s.148A(d) has been approved by Ld.Pr.CIT which is bad in Law as approval of Ld.Pr.CCIT was required.
Submission of ld.DR : 3. Ld.DR for the Revenue relied on the order of Assessing Officer and ld.CIT(A).
Findings & Analysis : 4. We have heard both the parties and perused the records. In this case, Assessment Order under section 147 r.w.s 144 r.w.s 144B of the Act, for A.Y.2016-17 was passed on 17.05.2023.
4.1 In this case, an order u/s.148A(d) was passed on 28.06.2022 for A.Y.2016-17. The reasons for reopening are as under :
“During the course of Survey proceeding in the case of Shri Smuit Tilekar certain incriminating documents were found and impounded from the premises of Shri Sumit Tilekar. These documents pertains to cash transaction between seller and purchaser of the immovable property. In his statement recorded during the survey proceeding Shri Sumit Tilekar accepted that he used to record all the transaction in his various diaries in his own hand writing. There was huge difference found in the transaction mentioned in the diary and actual transaction as per Index-2. Therefore it is clear that the difference amount was paid in cash Shri Vikas D Deokar had purchased a plot from Shri Tilekar for a consideration of Rs. 8,25,000/-. On the basis of incriminating documents impounded it was gathered that Shri Vikas D Deokar had made cash payment of Rs. 3,50,000/-on 04/06/2015, Rs. 3,00,000/- on 10/09/2015, Rs. 50,000/- on 08/01/2016 and Rs. 3,00,000/- on 06/01/2016 over and above the agreement value towards purchase consideration of plot. Thus the assessee paid total 10 lacs in cash and the same was accepted by Shri Sumit Tilekar during the survey proceeding and in his statement recorded. Therefore the cash payment of Rs. 10 lacs is unexplained and needs to be offered for taxation in the A.Y. 2016-17". 4.2 Thus, it can be noted that the Assessing Officer has alleged escapement of income of Rs.10 lakhs only for A.Y.2016-17. The order u/s.148A(d) was passed on 28.06.2022 and notice u/s.148 was issued on 29.06.2022.
4.3 The Section 149 of Income Tax Act, 1961 is reproduced here as under : Time limit for notice.
(1) No notice under section 148 shall be issued for the relevant assessment year,—
(a) if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b);
27[(b) if three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income chargeable to tax, represented in the form of—
(i) an asset;
(ii) expenditure in respect of a transaction or in relation to an event or occasion; or (iii) an entry or entries in the books of account, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more:]
Provided that no notice under section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before 1st day if 28[a of April, 2021, notice under section 148 or section 153A or section 153C could not have been issued at that time on account of being beyond the time limit specified under the provisions of clause (b) of sub-section (1) of this section or section 153A or section 153C, as the case may be], as they stood immediately before the commencement of the Finance Act, 2021:
Provided further that the provisions of this sub-section shall not apply in a case, where a notice under section 153A, or section 153C read with section 153A, is required to be issued in relation to a search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A, on or before the 31st day of March, 2021:”
4.3 Thus, as per Section 149, Sub-clause 1(b), no notice u/s.148 can be issued after a lapse of three years from the end of relevant assessment year, if alleged escapement is less than Rs.50 lakhs. In this case, admittedly, the alleged escapement of Income as noted by the AO in the reasons recorded for reopening is only Rs.10 lakhs which is below Rs.50 lakhs. The notice u/s.148 was issued on 29.06.2022 for A.Y.2016-17. Thus, the notice u/s.148 was issued for A.Y.2016-17 after a lapse of more than three years. Therefore, the notice u/s.148 is bad in law.
Since we have held that the notice u/s.148 is bad in law, the consequential assessment order passed u/s.147 r.w.s 144 r.w.s 144B dated 17.05.2023 is also void ab initio.
5.1 It is also noted that Order u/s.148A(d) and notice u/s.148 dated 29.06.2022 was approved by Pr.CIT-4, Pune, whereas, as per Section 151, the approving authority is Principal Chief Commissioner of Income Tax, when more than three years have lapsed from the end of Assessment Year.
5.2 Accordingly, for all the reasons mentioned above, the Ground No.1 and 2 raised by the assessee are allowed.
Ground No.3 : 6. It is noted that the Assessing Officer has made addition of Rs.85,000/- only in the assessment order passed u/s.147 r.w.s 144 r.w.s 144B dated 17.05.2023. We have perused the details filed by the assessee which includes copy of the Bank Statement and it is noted that Assessee has duly explained the investment made for purchase of said plot. The Assessee had requested Assessing Officer for cross-examination of Mr.Tilekar in whose case a Survey was conducted. The Assessing Officer has not provided opportunity of cross-examination. Assessing Officer has not even reproduced the contents of the statement given by Mr.Tilekar during the survey. The Assessing Officer has vaguely referred to the statement of Mr.Tilekar alleging cash payment of Rs.10 lakhs over and above agreement value. Assessing Officer has not even provided copy of the statement to the assessee. Assessing Officer has not relied on any document to prove cash payment over and above agreement only.
In these facts and circumstances of the case, the addition of Rs.85,000/- is bad in law, accordingly, we direct the AO to delete the addition. Accordingly, Ground No.3 raised by the assessee is allowed.
Ground No.4 : Assessee has not altered, amended any grounds, hence, ground no.4 is dismissed.
In the result, appeal of the assessee is partly allowed. Order pronounced in the open Court on 30 July, 2025.