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Facts
The assessee filed a return of income declaring Rs. 2,83,490/-. Information was received that the assessee deposited Rs. 2,05,80,344/- in cash. The case was reopened by issuing a notice u/s 148 on 08.04.2021 under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA). The assessee failed to comply, and the Assessing Officer passed an order u/s 148A(d) and completed the assessment u/s 144, making an addition of Rs. 2,05,80,344/- as unexplained investment.
Held
The Tribunal held that the notice u/s 148 of the Act was issued after the statutory due date, as per the decision of the Hon'ble Supreme Court in Union of India vs. Rajeev Bansal. Therefore, the notice for reopening was barred by limitation and had to be quashed. Consequently, the reassessment notice was quashed, and the grounds challenging the addition on merit were not adjudicated as they became academic.
Key Issues
Whether the reassessment proceedings initiated by issuing notice u/s 148 are barred by limitation in light of the Supreme Court decision in Union of India vs. Rajeev Bansal, considering the applicability of TOLA.
Sections Cited
139, 148, 148A, 144, 69, 115BBE, 147, 149, 151
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE
Before: SHRI R. K. PANDA & SHRI VINAY BHAMORE
This appeal filed by the assessee is directed against the order dated 15.10.2024 of the Ld. CIT(A) / NFAC, Delhi relating to assessment year 2015-16.
Facts of the case, in brief, are that the assessee is an individual and has filed his return of income u/s 139 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) on 05.04.2016 declaring total income of Rs.2,83,490/-. Information was received that the assessee has deposited cash amounting to Rs.2,05,80,344/- in his account maintained with Shri Renuka Mata Multi State Urban Co-operative Credit Society Ltd. Accordingly, the case was reopened by issuing a notice u/s 148 of the Act on 08.04.2021 by following the provisions of Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (hereinafter referred to as ‘TOLA’). However, the assessee failed to make any compliance to the said notice. Thereafter, the Jurisdictional Assessing Officer passed the order u/s 148A(d) of the Act on 18.07.2022 which was duly served upon the assessee. As per the said notice the assessee was required to deliver within 30 days from the service of the notice a return in the prescribed form for the said assessment year which was not done. Since the assessee did not respond to the said notice, the Assessing Officer proceeded to complete the assessment u/s 144 of the Act. Since the assessee failed to explain the source of the cash deposit of Rs.2,05,80,344/-, the Assessing Officer, invoking the provisions of section 69 r.w.s. 115BBE of the Act, made addition of the same to the returned income as unexplained investment.
Before the Ld. CIT(A) / NFAC the assessee apart from challenging the addition on merit, challenged the validity of re-assessment proceedings. However, the Ld. CIT(A) / NFAC was not satisfied with the arguments advanced by the assessee and dismissed the appeal.
4. Aggrieved with such order of the Ld.CIT(A) / NFAC, the assessee is in appeal before the Tribunal by raising the following grounds: 1. On facts and circumstances prevailing in the case and as per provisions and scheme of the Act it be held that the Ld. AO erred in assuming jurisdiction u/s. 147 of the Act for the assessment year under consideration. The assessment framed by the Ld. AO and confirmed the Ld. First Appellate Authority be set aside. The addition so made be deleted. Just and proper relief be granted to the Appellant in this respect.
2 Without prejudice to Ground no. 1 and on facts and circumstances prevailing in the case and as per provisions and scheme of the Act it be held that, the proper authority as per provisions of the Act has not issued the notices. The assessment framed by the Ld. AO and confirmed the Ld. First Appellate Authority be set aside. The addition so made be deleted. Just and proper relief be granted to the Appellant in this respect. 3 Without prejudice to Ground no. 1 and 2 and on facts and circumstances prevailing in the case and as per the provisions of law, it be held that notice u/s. 148 of the Act issued by the Ld. AO, is in violation of the express instructions issued by CBDT circular. The assessment order made in pursuance of such a notice and confirmed the Ld. First Appellate Authority be quashed and the addition made be deleted. The Appellant be granted just and proper relief in this respect.
Without prejudice to Ground no. 1, 2 and 3 and on facts and circumstances prevailing in the case and as per the provisions of law, it be held that the addition of Rs. 2,05,80,344/- u/s. 69 of Income Tax Act, 1961 made by the Ld. AO and further upheld by the Ld. First Appellate Authority is improper, unjustified and contrary to the provisions and scheme of the Act and facts prevailing in the case. The addition made be deleted. Just and proper relief be granted to the Appellant in this respect.
5. The Appellant prays to be allowed to add, amend, modify, rectify, delete, and raise any grounds of appeal at the time of hearing.
The Ld. Counsel for the assessee at the outset drew the attention of the Bench to the decision of Hon'ble Supreme Court in the case of Union of India vs. Rajeev Bansal (2024) 167 taxmann.com 70 (SC), copy of which is placed at pages 1 to 42 of the paper book. He submitted that in the instant case notice u/s 148 of the Act is dated 08.04.2021. Referring to the decision of Hon'ble Supreme Court in the case of Union of India vs. Rajeev Bansal (supra), he submitted that as per the said decision the due date of issuing notice u/s 148 of the Act for assessment year 2015-16 in the instant case is 31.03.2021. Referring to the said decision, he drew the attention of the Bench to para 19 of the order and submitted that the Revenue in that case has conceded that for the assessment year 2015-16, all notices issued on or after 1st April 2021 will have to be dropped as they will not fall for completion during the period prescribed under TOLA. He submitted that the second notice issued by the JAO u/s 148A(d) is 18.07.2022. Referring to the decision of Hon'ble Supreme Court in the case of Union of India vs. Rajeev Bansal (supra), he submitted that as per the said order, the due date for issue of notice is 31.03.2022. Therefore, the second notice is also beyond the statutory period. He further drew the attention of the Bench to para 46 of the order of Hon'ble Supreme Court cited (supra) which reads as under:
“46. The ingredients of the proviso could be broken down for analysis as follows: (i) no notice under Section 148 of the new regime can be issued at any time for an assessment year beginning on or before 1 April 2021; (ii) if it is barred at the time when the notice is sought to be issued because of the “time limits specified under the provisions of” 149(1)(b) of the old regime. Thus, a notice could be issued under Section 148 of the new regime for assessment year 2021-2022 and before only if the time limit for issuance of such notice continued to exist under Section 149(1)(b) of the old regime.”
The Ld. Counsel for the assessee also relied on the following decisions: i) Integrated Core Strategies (Asia) Pte. Ltd. Vs. DCIT (IT) [2025] 171 taxmann.com 388 (Mumbai Trib.) ii) Adhir Sachdeva Vs. ACIT [WP(C) 17647/2024] (Delhi HC), order dated 20.12.2024 iii) Pratishtha Garg Vs. ACIT [WP(C) 16878/2024] (Delhi HC), order dated 19.12.2024 iv) Neera Gupta Vs. ITO [WP(C) 17352/2024] (Delhi HC), order dated 17.12.2024 v) IBIBO Group Pvt. Ltd. Vs. ACIT [WP(C) 17639/2022] (Delhi HC), order dated 13.12.2024
He accordingly submitted that the notice issued by the Assessing Officer being barred by limitation, the re-assessment proceedings have to be quashed.
The Ld. DR on the other hand fairly conceded that the issue stands squarely covered in favour of the assessee by the decision of Hon'ble Supreme Court in the case of Union of India vs. Rajeev Bansal (supra).
We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. It is an admitted fact that the first notice u/s 148 of the Act was issued by the Assessing Officer on 08.04.2021 by following the provisions of TOLA. Subsequently, the JAO passed the order u/s 148A(d) of the Act on 18.07.2022. So, under these circumstances, we have to see as to whether the notice issued by the Assessing Officer for reopening of the assessment is valid or not.
We find the Hon'ble Supreme Court in the case of Union of India vs. Rajeev Bansal (supra) has observed 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 benefits 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, PART C 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 2013-2014, 2014-2015, 2015-2016, 2016-2017, and 2017-2018 will be within the period of limitation as explained in the tabulation below:
Assessment Within 3 Expiry of Within six Expiry of Year Years Limitation Years Limitation read read with with TOLA for TOLA (or (2) (4) (1) (2) (3) (4) (5) 2013-2014 31-3-2017 TOLA not 31-3-2020 30-6-2021 applicable 2014-2015 31-3-2018 TOLA not 31-3-2021 30-6-2021 applicable 2015-2016 31-3-2019 TOLA not 31-3-2022 TOLA not applicable applicable 2016-2017 31-3-2020 30-6-2021 31-3-2023 TOLA not applicable 2017-2018 31-3-2021 30-6-2021 31-3-2024 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).
Similarly, at para 46 of the order the Hon'ble Supreme Court has observed as under:
“46. The ingredients of the proviso could be broken down for analysis as follows: (i) no notice under Section 148 of the new regime can be issued at any time for an assessment year beginning on or before 1 April 2021; (ii) if it is barred at the time when the notice is sought to be issued because of the “time limits specified under the provisions of” 149(1)(b) of the old regime. Thus, a notice could be issued under Section 148 of the new regime for assessment year 2021-2022 and before only if the time limit for issuance of such notice continued to exist under Section 149(1)(b) of the old regime.”
Finally, the Hon'ble Supreme Court at para 114 of the order has observed as under: “G. Conclusions 114. In view of the above discussion, we conclude that: a. After 1 April 2021, the Income Tax Act has to be read along with the substituted provisions; b. TOLA will continue to apply to the Income Tax Act after 1 April 2021 if any action or proceeding specified under the substituted provisions of the Income Tax Act falls for completion between 20 March 2020 and 31 March 2021;
c. Section 3(1) of TOLA overrides Section 149 of the Income Tax Act only to the extent of relaxing the time limit for issuance of a reassessment notice under Section 148; d. TOLA will extend the time limit for the grant of sanction by the authority specified under Section 151. The test to determine whether TOLA will apply to Section 151 of the new regime is this: if the time limit of three years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under Section 151(i) has extended time till 30 June 2021 to grant approval; e. In the case of Section 151 of the old regime, the test is: if the time limit of four years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under Section 151(2) has extended time till 31 March 2021 to grant approval; f. The directions in Ashish Agarwal (supra) will extend to all the ninety thousand reassessment notices issued under the old regime during the period 1 April 2021 and 30 June 2021; g. The time during which the show cause notices were deemed to be stayed is from the date of issuance of the deemed notice between 1 April 2021 and 30 June 2021 till the supply of relevant information and material by the assessing officers to the assesses in terms of the directions issued by this Court in Ashish Agarwal (supra), and the period of two weeks allowed to the assesses to respond to the show cause notices; and h. The assessing officers were required to issue the reassessment notice under Section 148 of the new regime within the time limit surviving under the Income Tax Act read with TOLA. All notices issued beyond the surviving period are time barred and liable to be set aside;”
We find since the notice u/s 148 of the Act has been issued after the statutory due date as per the decision of the Hon'ble Supreme Court in the case of Union of India vs. Rajeev Bansal (supra), therefore, such notice for reopening being barred by limitation has to be quashed. We accordingly, quash the re- assessment notice issued by the Assessing Officer. Since the assessee succeeds on this legal ground i.e. validity of re-assessment proceedings, therefore, the grounds challenging the addition on merit are not being adjudicated being academic in nature. The grounds raised by the assessee are accordingly allowed.
In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open Court on 25th April, 2025.
Sd/- Sd/- (VINAY BHAMORE) (R. K. PANDA) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; दिन ांक Dated : 25th April, 2025 GCVSR आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: अपीलार्थी / The Appellant; 1. 2. प्रत्यर्थी / The Respondent 3. The concerned Pr.CIT, Pune 4. DR, ITAT, ‘B’ Bench, Pune 5. गार्ड फाईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अधिकरण ,पुणे / ITAT, Pune
S.No. Details Date Initials Designation 1 Draft dictated on 24.04.2025 Sr. PS/PS 2 Draft placed before author 24.04.2025 Sr. PS/PS Draft proposed & placed before the 3 JM/AM Second Member Draft discussed/approved by Second 4 AM/AM Member 5 Approved Draft comes to the Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr. PS/PS 7 Date of uploading of Order Sr. PS/PS 8 File sent to Bench Clerk Sr. PS/PS Date on which the file goes to the Head 9 Clerk 10 Date on which file goes to the A.R. 11 Date of Dispatch of order