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Facts
The assessee filed their return declaring an income of Rs. 1,95,33,460. The AO reopened the case under Section 147 and completed the assessment at Rs. 2,89,32,370, alleging the assessee had claimed a fictitious short-term capital loss from trading in penny scrips. The CIT(A) dismissed the assessee's appeal.
Held
The Tribunal held that the notice issued under Section 148 of the Act for AY 2015-16 on 29.07.2022 was barred by limitation, as the period for issuing such notice had expired on 31.03.2022. Relying on Supreme Court decisions, the Tribunal quashed the reassessment proceedings and the assessment order.
Key Issues
Whether the notice issued under Section 148 for AY 2015-16 was issued beyond the prescribed limitation period, rendering the reassessment proceedings void ab initio.
Sections Cited
147, 143(3), 148, 148A(b), 148A(d), 149, 151
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AHMEDABAD “C” BENCH, AHMEDABAD
Before: MS. SUCHITRA KAMBLE & SHRI NARENDRA PRASAD SINHA
O R D E R
PER SHRI NARENDRA PRASAD SINHA, AM:
This appeal is filed by the assessee against the order of National Faceless Appeal Centre (NFAC) [hereinafter referred as ‘the CIT(A)’] dated 20.02.2025 for the Assessment Year (A.Y.) 2015-16 in respect of order under Section 147 read with Section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).
The brief facts of the case are that the assessee had filed return of income for the A.Y. 2015-16 on 31.08.2015 declaring total income of Rs.1,95,33,460/-. The Assessing Officer (AO) had received an information that the assessee was beneficiary of accommodation entry in the form of fictitious short term capital loss in equity/derivative trading in Ahd 2025 Assessment Year: 2015-16 Anisha Raoof Dhanani vs. ACIT Page 2 of 7 penny scrip JRI Industries & Infrastructure Limited and had booked loss of Rs.93,03,935/- which was adjusted with taxable income. On the basis of this information, the case of the assessee was reopened under Section 147 of the Act and the assessment was completed under Section 147 read with Section 144B of the Act on 10.05.2023 at a total income of Rs.2,89,32,370/-.
Aggrieved with the order of the Assessing Officer, the assessee had filed an appeal before the First Appellate Authority which was decided vide the impugned order and the appeal of the assessee was dismissed.
4. Now the assessee is in second appeal before us. The following grounds have been taken by the assessee in this appeal: -
1. The Ld. CIT(A)-NFAC erred on facts and in law in upholding order passed u/s.147 r.w.s. 144B of the Act without appreciating that time limit to issue notice u/s.148 had already been expired on the date of issuance of notice u/s. 148 of the Act and therefore, notice issued u/s.148 was not valid.
2. The Ld. CIT(A)-NFAC erred on facts and in law in upholding initiation of reassessment proceedings without appreciating that no notice u/s.143(2) was issued on return furnished in response to notice u/s.148 dated 18-05-2021 within the permissible time limit. 3 The Ld. CIT(A)NEFC erred on facts and in law in upholding initiation of re-assessment proceedings without appreciating that on the date of issuance of second notice u/s.148 i.e. 29.07.2022, time period to issue notice u/s.148 for A.Y. 2015-16 had already expired and till that date proceedings with reference to notice u/s.148 dated 18.05.2021 were live and not closed. 4. The Ld. CIT(A)/NFAC erred on facts and in law in upholding assessment order passed u/s.147 r.w.s. 144B of the Act without appreciating that there was no compliance of provisions of section 148, 149, 151 of the Act and that the 5. The Ld. CIT(A)-NFAC erred on facts and in law in confirming disallowance of short term capital loss of Rs.93,98,910/- incurred on sale of shares of JRI Industries & Infrastructure Limited.
Ahd 2025 Assessment Year: 2015-16 Anisha Raoof Dhanani vs. ACIT Page 3 of 7 5. The first four grounds taken by the assessee pertain to reopening of the case and issue of notice under Section 148 of the Act. Shri Sakar Sharma, Ld. AR of the assessee explained that the notice under Section 148 of the Act was issued in this case on 18.05.2021. Subsequently, in view of the decision of Hon’ble Supreme Court in the case of Union of India vs. Ashish Agarwal, reported in 444 ITR 1 (SC), the original notice issued under Section 148 of the Act on 18.05.2021 was deemed to be issued under Section 148A(b) of the Act. The AO vide show cause notice dated 27.05.2022 had intimated this fact to the assessee and also provided the information and material relied upon by the revenue with a direction to respond within 14 days, in terms of provision of Section 148A(b) of the Act. Thereafter, an order under Section 148A(d) of the Act was passed by the AO on 29.07.2022, after taking into account the reply of the assessee, informing that it was a fit case for issuance of notice under Section 148 of the Act. A notice under Section 148 of the Act was also issued by the AO on 29.07.2022 with prior approval of the PCCIT.
5.1 In the course of hearing, Shri Sakar Sharma, the Ld. AR, submitted that the year under consideration was A.Y. 2015-16 and, therefore, the limitation period available with the AO under Section 149 of the Act for issuance of notice under Section 148 of the Act was till 31.03.2022 only. Therefore, the notice issued under Section 148 of the Act on 29.07.2022 was barred by limitation. The Ld. AR submitted that the order under Section 147 read with Section 144B of the Act was void ab initio for this reason. In this regard, he placed reliance on the following decisions:
1) Deepak Steel and Power Limited vs. CBDT in Civil Appeal No.5177 of 2025 dated 02.04.2025 (SC). 2) SLP (Civil) Diary No.57209/2024 dated 04.04.2025 in the case of ACIT vs. Nehal Ashit Shah (SC).
ITA No.744 Ahd 2025 Assessment Year: 2015-16 Anisha Raoof Dhanani vs. ACIT Page 4 of 7 3) IBIBO Group Private Limited vs. ACIT – W.P. (C) 17639/2022 dated 13.12.2024 (Delhi High Court). 4) ITO vs. Sumitra Rajeshbhai Jain – dated 06.03.2025 – ITAT Mumbai. 5) Shatakshi Mudra Investment Private Limited – dated 10.03.2025 – ITAT Kolkata. 5.2 The Ld. AR further submitted that in all the above referred cases, the assessment year involved was 2015-16 and the issue was decided in favour of the tax payer by considering the submission of the Revenue before the Hon’ble Supreme Court in the case of Union of India vs. Rajeev Bansal reported in (2024) 469 ITR 46 (SC).
On the other hand, Shri S.K. Agal, Sr. DR submitted that the Revenue’s submission before the Hon’ble Supreme Court in the case of Rajeev Bansal (supra) cannot be considered as decision of the Hon’ble Supreme Court. The Ld. Sr. DR submitted that in the light of the decision of Hon’ble Supreme Court in the case of Ashish Agarwal (supra), the AO had followed the directions and issued notice within the time period as allowed by the Apex Court. Further, the notice was also issued with the approval of the competent authority i.e. the PCCIT. The Ld. Sr. DR submitted that the limitation period for issuance of notice under Section 148 of the Act was governed by the provisions of the Act, as amended by Finance Act 2021 read with the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act 2020 (“the TOLA”).
We have considered the rival submissions and perused the material brought on record. We find that similar issue pertaining to the challenge of notice issued under Section 148 of the Act for the A.Y. 2015-16, on the ground that the same was beyond the limitation period prescribed under Section 149 of the Act, was decided in favour of the tax payer in the Ahd 2025 Assessment Year: 2015-16 Anisha Raoof Dhanani vs. ACIT Page 5 of 7 various cases as relied upon by the assessee, after noting the submissions of the Revenue before the Hon’ble Supreme Court in the case of Rajeev Bansal (supra). In the case of Rajeev Bansal (supra), the finding as recorded by the Hon’ble Supreme Court in paragraph no.19(f) was as under:-
“f. The Revenue concedes 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;”
7.1 The Hon’ble Supreme Court in the case of Deepak Steel and Power Limited (supra) had considered the above submission of the Revenue in the case of Rajeev Bansal (supra) and had given the following finding: -
The learned counsel appearing for the revenue with his usual fairness invited the attention of this Court to a three judge bench decision of this Court in Union of India and Ors. v. Rajeev Bansal, reported in 2024 SCC OnLine SC 2693, more particularly, paragraph 19(f) which reads thus:- "19. (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."
As the revenue made a concession in the aforesaid decision that is for the assessment year 2015-2016, all notices issued on or after 1 April, 2021 will have to be dropped as they would not fall for completion during the period prescribed under the taxation and other laws (Relaxation and Amendment of certain Provisions Act, 2020). Nothing further is required to be adjudicated in this matter as the notices so far as the present litigation is concerned is dated 25.06.2021.” On the basis of the above finding the Hon’ble Supreme court had quashed and set aside the notice issued u/s 148 of the Act for the A.Y. 2015-16. Thus, even if the Revenue’s contention that submission before the Hon’ble Supreme Court in the case of Rajeev Bansal (supra) was not the Ahd 2025 Assessment Year: 2015-16 Anisha Raoof Dhanani vs. ACIT Page 6 of 7 decision of the Hon’ble Supreme Court is considered, the fact remains that on the basis of that submission the Apex Court had subsequently decided the issue in favour of the taxpayer. And following the judicial discipline the decision of the Supreme Court is the law of the land on the issue involved.
7.2 In the case of Nehal Ashit Shah (supra), the Hon’ble Supreme Court has held as under:-
“5. In this regard, reference could also be made to paragraph 19(e) and (f) in the case of Union of India vs. Rajeev Bansal, Civil Appeal No.8629 of 2024 on 03.10.2024 (2024 SCC ONLINE 754) under which the learned Additional Solicitor General for India has made a concession insofar as the assessment year 2015-16 is concerned.” 7.3 In the case of IBIBO Group Private Limited (supra), similar finding was rendered by the Hon’ble Delhi High Court. Further, the Co-ordinate Bench of Kolkata Tribunal in the case of Shatakshi Mudra Investment Pvt. Ltd. (supra) and Bombay Tribunal in the case of Sumitra Rajeshbhai Jain (supra) also have held that the notice issued under Section 148 of the Act on 23.07.2022 and 29.07.2022 respectively for A.Y. 2015-16 was void-ab- initio and bad in law.
7.4 In the present case also, the notice under Section 148 of the Act was issued on 29.07.2022. In view of the principles laid down by the Hon’ble Supreme Court in the case of Rajeev Bansal (supra) as well as in the case of Deepak Steel and Power Limited (supra), it is held that the notice issued on 29.07.2022 under Section 148 in this case for the A.Y. 2015-16 was void ab initio and bad in law. As the notice was barred by limitation, accordingly, the entire reassessment proceeding and the assessment order passed under Section 147 read with Section 144B of the Act, is quashed.
Ahd 2025 Assessment Year: 2015-16 Anisha Raoof Dhanani vs. ACIT Page 7 of 7 7.5 In view of the relief granted to the assessee, on the judicial aspect of reopening of the case, the other grounds taken by the assessee in respect of addition on merit is academic in nature and is treated as infructuous.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open Court on this 13th June, 2025.