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Facts
The assessee filed an appeal against the CIT(A)'s order, which had sustained an addition of Rs.3,71,367/- under Section 28(iv) and affirmed the validity of a reassessment notice issued under Section 148. The primary contention was that the reassessment notice under Section 148 was issued beyond the legally permissible time frame.
Held
The Tribunal found that the new notice under Section 148 was issued beyond the 'surviving period' as defined by precedents from the Supreme Court and Gujarat High Court. Consequently, both the notice issued under Section 148 and the subsequent reassessment order under Section 147 were declared bad in law and void ab initio, as the Revenue failed to controvert the assessee's evidence.
Key Issues
The key legal issue was the validity and timeliness of the reassessment notice issued under Section 148 and the resultant reassessment order under Section 147. A secondary issue involved the sustenance of an addition made under Section 28(iv) of the Income Tax Act.
Sections Cited
148, 147, 28(iv), 149(1)
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Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: DR. B.R.R. KUMAR, VICE-Ms SUCHITRA KAMBLE
O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT:- The captioned appeal has been filed by the assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, Delhi, vide order dated 04.07.2025 relevant to the Assessment Year 2016-17. 2. The assessee has raised the following grounds of appeal:
Notice issued u/s.148 as well as consequential reassessment order passed u/s.147 are bad in law as the notice is issued beyond three years from the end of assessment year without fulfilling requisite conditions. Asst. Year : 2016-17 - 2– 2. The Ld.CIT(A) erred in law and on facts of the case in sustaining the addition of Rs.3,71,367/- on account of benefit of tour package as business income of the assessee firm u/s.28(iv). 3. The appellant craves leave to add, amend alter or delete the grounds of appeal at the time of hearing, if need arise.
The assessee submitted a detailed calculation of Surviving Period For Issuance of Notice u/s.148 of the Act, which is reproduced as below:
Particulars Reference Date/Days Date of original notice issued u/s 148 A 30.06.2021 Extended time limit to issue notice u/s 148 B 30.06.2021 under TOLA Date of letter supplying C 26.05.2022 information/material to the assessee as per the direction of the Hon'ble Supreme Court in UOI v. Ashish Agarwal Last date to file reply for the assessee as D 12.06.2022 per the above letter Date of filing reply by the assessee E 01.06.2022 Surviving time period for issuing new F=(B-A) or 7 days notice u/s 148 (Third Proviso to section 7 days, 149(1) provides minimum 7 days) whichever is higher Surviving time limit for issuing new notice G=D or E, 19.06.2022 u/s 148 whichever is later) + G Date of new notice issued u/s 148. 27.07.2022 H Asst. Year : 2016-17 - 3– Note: Since the new notice u/s 148 is issued beyond the surviving period as explained by the Hon'ble Supreme Court in the case of UOI v. Rajeev Bansal -(2024) 469 ITR 46 (SC), the notice u/s 148 as well as the consequential reassessment order u/s 147 are bad in law. Reliance is further placed on the judgment of the Hon'ble Gujarat High Court in the case of Uday Dilipbhai Shah v. ITO in SCA No. 24695 of 2022.
The Revenue could not controvert the evidence submitted by the assessee. Accordingly, the appeal of the assessee is allowed, and the assessment is held to be void ab initio.
In the result, the appeal of the assessee is allowed.