Loading judgment…
Facts
The assessee's assessment for A.Y. 2016-17 was reopened based on information regarding accommodation entries from Maa Sharda Vincom Pvt. Ltd. and Manak Estate and Finance Pvt. Ltd. totaling Rs.7,75,00,000/-. The Assessing Officer made additions of Rs.2,83,25,000/-, which was later allowed by the CIT(A). The Revenue appealed this decision, and the assessee filed a cross-objection challenging the reassessment notice as time-barred and the approval from the competent authority as incorrect.
Held
The Tribunal, relying on the Supreme Court's decision in Union of India vs. Rajeev Bansal, held that the reassessment notice issued under Section 148 on 29-07-2022 was time-barred as the extended due date was 13-06-2022. It further noted that approval for reassessment after three years was not obtained from the correct competent authority as required by Section 151(ii). Consequently, the reassessment order was quashed.
Key Issues
Whether the reassessment notice issued under Section 148 of the Income Tax Act for A.Y. 2016-17 was time-barred, and whether the requisite prior approval from the competent authority under Section 151(ii) was correctly obtained.
Sections Cited
147, 144B, 143(3), 132(4), 68, 148, 148A(b), 148A(d), 149, 151(ii)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH “B”NEWDELHI
Before: SHRI SUDHIR KUMAR & SHRI MANISH AGARWAL
Begwani and his associates were engaged in facilitating and providing accommodation entries of Loans, Share Capital/ Share Premium Bogus long term capital gain carrying out hawala transaction. From the analysis it was found that the assessee has taken accommodation entries from Maa Sharda Vincm Pvt. Ltd. and Manak Estate and finance Pvt. Ltd. of Rs.7,75,00,000/-. After recorded the reasons to believe a notice u/s 148 of the Act was issued to the assesse on 28-06- 2021. In the compliance of the direction of the Hon’ble Supreme Court in the case of Asish Agarwal again notice dated 20-05-2022 was issued. In the compliance of the notice the assessee filed the objection on 06-06-2022 and the Assessing Officer passed the order u/s 148A(b) of the Act and the notice was issued with prior approval of Pr. CIT-4 Delhi dated 22-07-2022. The Assessing Officer completed the assessment after making the addition of Rs.2,83,25,000/- on the various heads.
Being aggrieved with the order of the AO, the assessee filed the appeal before the Ld. CIT(A), who vide his order dated 22-04-2025 allowed the appeal of the assessee.
Aggrieved the order of the Ld. CIT(A), the Revenue is in appeal before the tribunal. The assessee also filed the cross objection in the appeal.
Cross Objection No. 285/Del/2025 In the cross objection has filed on the following grounds:
(i) Because on facts and in law, the CIT(A) erred in not holding that the order passed under section 148A(d) and notice issued under section 148 both dt. 29-07-2022 were invalid and bad in law being time barred as per the provisions of section 149 of the Act as laid down by the Hon’ble Supreme Court in the case of Union of India vs. Rajeev Bansal [2024] 469 ITR
46. SC. Accordingly the impugned assessment order is liable to be quashed. (ii) Because on facts and in law, the CIT(A) erred in not annulling the reassessment as order under section 148A(d) and notice issued under section 148 both dt. 29-07-2022 for assessment year 2016-17 were beyond the period of three years approval was required to be obtained as per the amended provision of section 151(ii) of the Act from the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General instead of Principal Commissioner of Income-tax-4 Delhi.
(iii) Because the order appealed against (filed by revenue) to the extent mentioned above is contrary to law and facts of the case.
The assessee has moved an application to condone the delay in filing the cross objection. The assessee stated that the assessee has received the papers of the appeal on 19-08-2025 then in the month of, November the assessee company approached the CA to file the cross objections before the tribunal The assessee company has shown the sufficient cause not to file the cross objection within time. Therefore, the delay is condoned and cross objection is admitted.
Firstly we take the ground of the cross objection which is legal. The Ld. AR for the assessee has raised the legal issue and stated that the notice dated 27-07-2022 issued by AO u/s 148 of the Act is time barred. In this regard he has submitted as under : Assessment year 2016-17 First notice issued u/s 148 of the Act old Regime (pg.4 of PB) 28-06-2021 Extended deadline to issue notice u/s 148 of the Act old regime 30-06-2021 As per TOLA and notification issued Surviving Time Limit 30-06-2021 Date of SC order in Ashish Agarwal’s case 04-05-2022 Date of providing information/notice u/s 148A(b) in pursuance of Ashish Agarwal (pg.5-9 of PB) 20-05-2022 Time limit to file the reply as u/s 148A(b) i.e within 2 week 06-06-2022 Replied file by the assessee (pg.1023) 06-06-2022 Time excluded as per Rajeev Bansal’s Case 28-06-2021-to 6-06-2022 Time that was available /left to issue notice u/s 148 AS TOLA limit 2 days Extended time to be given as per fourth Proviso to section 149(1) 7 days Time limit to issue notice u/s 148 as per section 149(as amended by Finance Act, 2021 and as per Rajeev Bansal’s case ) i.e. 7 days from 13-06-2022 Order passed u/s 148 A(d) (pg. 24-29) 29-07-2022 Notice u/s 148 of the Act with prior approval of Pr. CIT-4 Delhi(pg.30-32 of PB) 29-07-2022
The Ld. AR submitted that in consequence to the directions issued by the Hon’ble Supreme court in the case of Union of India vs. Ashish Agarwal dated 04-05-2022 the Assessing Officer issued the fresh notice u/s 148 of the Act on 29-07-2022. He further submitted that as per the section 149 of the Act the notice u/s 148 of the Act could be issued within a period of three years from the end of the relevant assessment year i.e 2016-17 with the prior approval of Principal Commissioner of Income –tax who was not the competent authority for approval. In the present case the notice u/s 148 of the Act was issued on 29-07-2022 which is beyond time. Reliance has placed on the decisions of Union of India & Ors. Vs. Rajeev Bansal 2024 (10) TMI 264 Supreme Court (LB) in this Case the Hon’ble Supreme Court held as under: “110. The effect of the creation of the legal fiction in Ashish Agarwal (Supra) was that it stopped the clock of limitation with effect from the date of issuance of section 148 notices under the old regime {Which is also the date of issuance of the deemed notices}. As discussed in the preceding segment of the judgment, the period from the date of the issuance of the deemed notices till the supply of relevant information and material by the assessing officer to the assessee in terms of the direction issued by this court in Ashish Agarwal (Supra) has to be excluded from the computation of the period of limitation. Moreover, the period of two weeks granted to the assessee to reply to the cause notices must be excluded in terms of the third proviso to section 149.
The clock started ticking for the Revenue only after it received the response of the assessee to the show cause notices. After the receipt of the reply, the assessing officer had to perform the following responsibilities; (i) consider the reply of the assessee under section 149A(C );(ii) take a decision under section 149A(d ) based on the available material and the reply of the assessee; and (iii) issue a notice under section 148 if it was a fit case for reassessment. Once the clock started ticking, the assessing officer was see State of AP v. AP Pensioners Association, (2005) 13 SCC 161 [28]. [This court observed that the “legal fiction undoubtedly is to be construed in such a manner so as to enable a person, for whose benefit such legal fiction has been created, to obtain all consequences flowing there form.”] PART F required to complete these procedures within the surviving time limit. The surviving time limit, as prescribed under the Income Tax Act read with TOLA, was available to the assessing officers to issue the reassessment notices under section 148 of the new regime.
Let us take the instance of a notice issued on 1 May 2021 under the old regime for a relevant assessment year. Because of the legal fiction, the deemed show cause, notice will also come into effect from 1 May 2021. After accounting for all the exclusions, the assessing officer will have sixty –one days [days between 1 May 2021 and 30 June 2021] to issue a notice under section 148 of the new regime. This time starts ticking for the assessing officer after receiving the response of the assessee. In this instance, if the assessee submits the response on 18 June 2022, the assessing officer will have sixty-One days from 18 June 202 to issue a reassessment notice under section 148 of the new regime. Thus, in this illustration, the time limit for issuance of a notice under section 148 of the new regime will end on 18 August 2022.”
Reliance is also placed on the judgment of the Jurisdictional High Court of Delhi in the case of Communist Party of India (Marxist) v. Income Tax Department [2025] 174 taxmann.com 925 (Delhi) dated 28-04-2025.
The Ld. DR has submitted that assessee, company has never raised this issue that the assessment, is time barred before the Ld.AO during the re-assessment proceedings. The notice was issued within time in the pursuant to the judgment of the Hon’ble Supreme Court in Union of India v. Ashish Agarwal after complying the all conditions. She relied the order of the Assessing Officer.
We have heard the parties and perused the material available on record. In view of the observation of the Hon’ble Supreme Court in the case of Rajeev Bansal (Supra) the extended due date for issuance of notice u/s 148 of the Act expired on 13-06-2022 and since, the notice u/s 148 of the Act was issued on 29-07-2022 the said notice is to be treated as time barred by limitation. In the present case notice u/s 148 of the Act was issued on 29-07-2022 i.e. 3 years have lapsed from the end of the relevant assessment year, thus prior approval from the competent authority was needed but the competent authority in the case of assessee should have been Principal Chief Commissioner of Income Tax, whereas approval has been taken from the Principal Commissioner of Income Tax-4, Delhi. Respectfully following the decision of the Hon’ble Supreme Court, we allow the grounds raised
in cross objection by quashing the reassessment order. As a result the appeal of the revenue is dismissed.
13. In the result the appeal of the Revenue is dismissed and the cross objection of the Assessee is allowed. Order pronounced in the open court on 18/03/2026.