INCOME TAX OFFICER WARD 3, SATARA, INCOME TAX OFFICE SATARA vs. NANDKUMAR DATTATRAY KHOT, DAHIWADI MAN

1.2 The Assessee has raised following Legal Ground in Cross Objection : “On the facts and circumstances of the case and in Law, The Learned Assessing Officer (Ld.AO) erred in initiating the reassessment proceedings for AY 2015-16 vide notice under section 148A(b) dated 24/05/2022, which is beyond the time limit prescribed under the Income-tax Act, 1961. as per the provisions of section 149. Therefore, the present reassessment proceedings initiated beyond the prescribed period of limitation are bad in law and void ab initio.” Written submission of ld.AR : 2. “A search action under Section 132 was conducted in the case of Shri Renuka Mata Multi State Urban Co-operative Credit Society Ltd. (SRMUCS). During the search proceedings, the department conducted a comprehensive verification of various bank accounts maintained by account holders Through this investigation, the department gathered information about the assessee (Respondent) regarding cash deposits across multiple locations during the Financial Year 2014-15. The case of the assessee was therefore reopened primarily on the basis of information related to (i) Cash deposit made at home branch of customers (ii) Cash deposit made at other than home branch of customers' accounts (iii) Transfer from other customers of SRMUCS or cash withdrawals. Even though the complete details of cash deposits as well as cash withdrawals were available with the department prior to issue of notice, without considering the nature of business of the assessee and without independently verifying the escapement of income, the AO has issued a notice under the presumption that all the cash deposits are the income of the assessee The assessee however faced certain procedural difficulties in filing objections due to portal issues Therefore, there was non-compliance in respect to filing of return in response to notice u/s 148. However, the assessee (Respondent) eventually succeeded in filing objections on February 24, 2023. The same difficulty was also communicated to AO. (# Page 12 of Order) The Assessing Officer however, dismissed these objections on March 13, 2023 without providing specific reasons. The assessee's request for document verification through a Verification Unit was rejected.

On May 22, 2023, the AO issued a final assessment order under Section 147 read with Section 1448 of the Income Tax Act. The AO arbitrarily added the entire cash deposit amount of 4,36,38,812/as the appellant's income under Section 69A, categorizing these as "unexplained deposits" The sequence of proceedings in this case is as under : Notice u/s 148 07/04/2021 (This notice was subsequently withdrawn vide communication dated 16/01/2023) Proceedings u/s 148A(b) 24/05/2022 Notice u/s 148A(d) 26/07/2022 Notice u/s 148 27/07/2022 Order u/s 147 read with 22/05/2023 section 144B of the Income Tax Act Against the order u/s 147 rws 1448, dated 22/05/2023, the assessee preferred an appeal before CIT(A) The assessee took around 12 grounds before CIT(A) as mentioned in the page 3 of the Ld CIT(A)'s order. The assessee also took additional ground based on the decision of Telangana HC in the case of Konkanala Ravindra Reddy 156 taxmann.com 178, wherein the notice u/s 148 issued by JAD has been held as invalid. Subsequently, the Hon'ble Bombay High Court also upheld the said decision in the case of Hexaware Technologies Ltd. v. Asstt. CIT [2024] 162 taxmann.com 225/464 ITR 430. The Learned Commissioner of Income Tax (Appeals] (CIT(A)) allowed the assessee's appeal, substantiating the decision with reference to the landmark judgment of the Bombay High Court in the case of Hexaware Technologies. The order, detalled on Page 45, encompasses the following key observations: in view of the above discussion, the facts of the appeal and the binding decision of the jurisdictional High Court of Bombay in the case of Hexaware Technologies Ltd vs ACIT dated 03.05 2024, it is held that the initiation of reassessment proceedings by order/notice u/s 148A(d) and 148 is bad in nature being issued by the jurisdictional AO and not the faceless AO. Hence, the appellant succeeds on the additional ground of appeal and thereby the notice u/s 148 is held to be invalid for the reasons stated above. Due to the initiation of the proceeding being wrong, the subsequent order u/s 147 r.w.s. 1448 dated 22.05.2023 gets nullified accordingly. As a result, the additional grounds of appeal are hereby allowed.

5.17 Since the appellant has already got relief in terms of the quashing of the reassessment proceedings in para 5.16 above, the other grounds of appeal are hereby rendered academic in nature and are not being adjudicated separately. However, for statistical purposes they are hereby dismissed.

6. In the result, the appeal filed by the appellant is treated as Partially Allowed.” 2.1 The ld.AR relied on the following decisions : (i) Union of India Vs. Rajeev Bansal [2024] 167 taxmann.com

70. (SC)

(ii) Ibibo Group Private Limited Vs ACIT Circle 10(1), Delhi-WP(C) 17639/2022

(iii) Neera Gupta Vs ITO Ward 46(4), New Delhi - W.P.(C) 17352/2024, CM APPL 73891/2024 & CM APPL. 73892/2024

(iv) Pratishtha Garg Vs ACIT Circle 25, Delhi-W.P (C) 16878/2024 CM APPL 71476/202 (v) Adhir Sachdeva Vs ACIT & Ors W.P(C) 17647/2024 and CM APPLS 75054-55/2024 (vi) Pushpak Realities Pvt. Ltd. and ITA No.4816/Mum/2024-(AY 2013-14, 2014-15 & 2015-16)

(vii) Manish Financial-ITA. No.5055/Mum/2024 and (Assessment Year: 2015-16 & 2016-17)

Findings & Analysis : 3. We have heard both the parties and perused the records. The C.O. No.11/PUN/2025 were heard together and decided by this common order. We will take up first the Cross Objection Appeal.

C.O.No.11/PUN/2025 : 3.1 The Assessee had filed return of Income on 05/08/2017 for A.Y.2015-16. The Assessing officer, Income Tax Officer, Ward-3, Satarareceived certain information from ACIT, Central Circle-4(4), Mumbai vide letter dated 12/03/2021 in the context of search carried out u/s.132 of the Income tax Act in the case of Shri. Renuka Mata Multi State Urban Cooperative Society Ltd. TheAssessing Officer issued Initial Notice u/s.148 on 07/04/2021 for A.Y.2015-16. Subsequently, the proceedings-initiated u/s.148 vide notice dated 07/04/2021 was closed, the relevant part of the impugned order is reproduced here as under :

3.2 The Income Tax Officer,Ward-3, Satara issued communication dated 24/05/2022 for A.Y.2015-16 treating the earlier notice as Notice u/s.148A(b) of the Act and shared the information with the Assessee. The order u/s.148A(d) was passed on 26/07/2022 for A.Y.2015-16.

3.3 Before the Hon’ble Supreme Court in the case of UoI Vs. Rajeev Bansal 469 ITR 46(SC), Mr.N.Venkataraman, learned Additional Solicitor General of India, made the following submissions on behalf of the Revenue: Quote, “a. Parliament enacted TOLA as a free-standing legislation to provide relief and relaxation to both the assesses and the Revenue during 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: (1) 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 sic years; and (iii) the monetary threshold of Rupees fifty lakhs will apply to the re assessment for previous assessment years; 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;” Unquote.

3.4 Thus, the Ld.Additional Solicitor General of India submitted before the Hon’ble Supreme Court that for A.Y.2015-16 all the notices issued after 01/4/2021 will have to be dropped.

3.5 In the case under consideration, we have already mentioned that the initial notice u/s.148 was issued 07/04/2021, which is after 01/04/2021. Thus, as submitted by Ld.ASG the proceedings initiated for A.Y.2015-16 after 01/04/2021 needs to be dropped. However, in this case the AO has not dropped the proceedings initiated after 01/04/2021 for A.Y.2015-16, which should have been dropped as submitted by Ld.ASG.

3.6 The Hon’ble Delhi High Court had considered this issue in the case of Pratishta Garg Vs. ACIT WP(C) 16878/2024 order dated 19/12/2024. The relevant paragraphs of the order of the Hon’ble Delhi High Court is reproduced here as under : Quote, “1. The petitioner has filed the present petition, inter alia, praying asunder: "A. Issue a writ in the nature of Certiorari to quash the impugned notice dated 22.06.2021 issued under section 148 of the Act, and the consequential notice 25.05.2022 issued under section 148A(b) of the Act; the impugned order dated 19.07.2022 passed under section 148A(d) of the Act and the impugned notice dated 19.07.2022 issued under section 148 of the Act in the case of the petitioner for AY 2015- 16; D. Issue any other Writ, order, or Direction which this Hon'ble Court may deem fit and proper in the facts and circumstances of the case, and E. To allow the writ petition with cost in favor of the Petitioner and against the Respondent."

2016-2017 31.03.2020 TOLA not 31.03.2023 TOLA not applicable. applicable. 2017-2018 31.03.2021 TOLA not 31.03.2024 TOLA not applicable. applicable. (f) The Revenue concedes that for the assessment year 2015-2016, all notices issued on or after April 1, 2021 will have to be dropped as they will not fall for completion during the period prescribed under the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020."

5. The petition is allowed in the aforesaid terms.

3.8 The facts of the Pratishta Garg case(supra) and Neera Gupta Case (supra) are identical to the assessee under consideration. In the case of the Pratishtha Garg the Order u/s.148A(d) was passed on 19/07/2022 and notice u/s 148 was issued on 19/07/2022 for A.Y.2015-16. In the case of the Assessee Nandkumar Khot also the order u/s.148A(d) was passed on 26/07/2022 and notice u/s.148 was issued on 27/07/2022 for AY 2015-16.

3.9 No decision of Hon’ble Jurisdictional High Court has been brought to our notice. Therefore, in absence of decision of Hon’ble Jurisdictional High Court the law laid down by Hon’ble Delhi High Court is binding on us.

3.10 Therefore, respectfully following the decision of Hon’ble Delhi High Court(supra) and the submission made by Ld. Additional Solicitor General before Hon’ble Supreme Court, the Order u/s.148A(d) and the notice u/s 148 are quashed.

3.11 Accordingly, the legal ground raised by the assessee in C.O.No.11/PUN/2024 is allowed in above terms.

Condonation of Delay : 4. There was a delay of 44 days in filling the CO by the assessee. The assessee is a senior citizen staying in a village.The Assessee has filed an affidavit explaining the elaborate reasons. We are convinced that there was sufficient reason hence we condone the delay.

(Revenue) : 6. Since we have already quashed the notice u/s.148 and order u/s.148A(d) of the Act,the grounds raised by the revenue becomes academic and hence we do not intend to adjudicate. Accordingly, Grounds raised by the revenue are dismissed as unadjudicated.