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Facts
The assessee filed a return of income, and the case was reopened under Section 147 after receiving information about cash credits. The Assessing Officer (AO) issued notices and treated Rs. 26,55,600/- as unexplained credit/deposit, adding it to the assessee's income. The NFAC dismissed the assessee's appeal due to delay.
Held
The Tribunal held that the notice issued under Section 148A(b) was bad in law as it provided less than the mandatory seven days for compliance. Following the Bombay High Court's judgment, the reassessment notice, the order under Section 148A(d), and the subsequent order under Section 147 were quashed.
Key Issues
Whether the reassessment proceedings and notices issued were valid, considering the short compliance period provided to the assessee?
Sections Cited
147, 148, 133(6), 69A, 144, 144B, 272A(1)(d), 271AAC(1), 148A(b), 148A(d)
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Income Tax Appellate Tribunal, SMC BENCH, LUCKNOW
Before: SHRI. SUDHANSHU SRIVASTAVA
O R D E R This appeal has been preferred by the Assessee against the order dated 22.04.2025, passed by the National Faceless Appeal Centre, Delhi (NFAC) for Assessment Year 2018-19.
2.0 The brief facts of the case are that the assessee filed his return of income for the year under consideration on 16.08.2018, declaring a total income of Rs.5,42,050/-. The case of the assessee was reopened under section 147 of the Income Tax Act, 1961 (hereinafter called “the Act’) after issuing notice under section 148 of the Act, on the basis of the information that the assessee had received cash credit of Rs.14,21,000/- during the year under consideration. The Assessing Officer (AO) issued statutory notices to the assessee, requiring the assessee to furnish details of the aforesaid cash credit with documentary evidences. However, no details were furnished by the assessee in this regard. The AO, therefore, issued notice under section 133(6) of the Act to The Federal Bank Limited and Kotak Mahindra Bank Limited, requiring them to furnish the details of credits/deposits by the assessee during the year under consideration. As per details furnished by them, the assessee had credits/deposits of Rs.14,15,700/- in bank account No.12300100137819 maintained with The Federal Bank of India and Rs.12,30,900/- in bank account No.7011279678 maintained with Kotak Mahindra Bank Limited, totaling to Rs.26,55,600/- during the year under consideration. Since the assessee failed to explain the source and nature of the aforementioned credits/deposits, the AO treated the amount of Rs.26,55,600/- as unexplained credit/deposit of the assessee and added the same to the income of the assessee under section 69A of the Act. The AO completed the assessment under section 147 read with 144 and 144B of the Act, assessing the total income of the assessee at Rs.31,97,650/-.
2.1 The AO also initiated penalty proceedings under sections 272A(1)(d) and 271AAC(1) of the Act, separately.
2.2 Aggrieved, the Assessee preferred an appeal before the NFAC, which dismissed the appeal of the assessee for the reason of delay in filing the appeal by the assessee before the NFAC and confirmed the order of the AO.
2.3 Now, the assessee has approached this Tribunal challenging the orders of the AO as well as the NFAC, by raising the following grounds of appeal:
1. Because the entire proceeding initiated u/s.147/148 right from processing of information (in sight portal), issue of notice u/s.148A(b), Order u/s.148A(d) and notice u/s.148 being vague and ambiguous, directly violating the provisions of the sections meant for reassessment, the notice as well as the order passed without jurisdiction, bad in law be quashed.
Because the notice issued u/s.148A(b) dated 17.03.2022 to file response by 21.03.2023, is in violation to the said section, in as much as the time being less than the statutory time of seven days, the notice issued and the reassessment both are bad in law be quashed.
Because the reasons/information as mentioned in the annexure to the notice u/s.148A(b) speak of non-disclosure of cash credits in the return of income whereas the, assessment framed is on account of unexplained income u/s.69A, the very basis on which the reassessment proceedings have been initiated and the assessment framed altogether materially differ, the order passed being bad in law be quashed.
Because the CIT(A)/NFAC has erred on facts and in law in upholding the addition of Rs.26,55,600/- being unexplained credit/deposit in the bank accounts, under section 69A of the Act, which addition being contrary to the provisions of law, bad be deleted.
5. Because the CIT(A)/NFAC has failed to appreciate the facts and circumstances of the case, and has erred in not appreciating the explanation furnished by the assessee, which explanation has neither been found to be false nor untrue and has arbitrarily proceeded to uphold the addition of Rs.26,55,600/- as unexplained income under section 69A, as made by the AO, which amount is neither unexplained, nor undisclosed, the addition made by the AO and upheld by the CIT(A) be deleted.
6. Because the CIT(A) has failed to appreciate that the amount credited/deposited in bank account, being sale proceeds of the business of trading of pulses and other household materials, the addition made by the AO and upheld by CIT(A) as unexplained cash/income, is totally unwarranted, erroneous and be deleted. 3.0 At the outset, the Ld. Authorized Representative for the assessee (Ld. A.R.), referring to grounds No.1 to 3 of the appeal, submitted that the notice under section 148A(b) of the Act was issued by the AO on 17.03.2022 for compliance on 21.03.2023. It was further submitted that as per Section 148A(b) of the Act, the Assessing Officer was mandatorily required to provide the assessee a minimum period of 7 days but not exceeding 30 days to file a reply to the show-cause notice issued under section 148A(b) of the Act. Since the notice under section 148A(b) of the Act issued by the AO on 17.03.2022 provided only four days whereas the law requires a minimum of seven days’ notice to be given, the notice itself was bad in law and, therefore, the reassessment framed on the basis of such notice is liable to be quashed. The Ld. A.R., placing reliance on the judgment of the Hon'ble Bombay High Court in the case of Mukesh J Ruparel vs. Income Tax Officer reported in [2023] 153 taxmann.com 70 (Bombay), submitted that since the mandatory requirement of giving minimum seven days of time to the assessee to furnish reply to the notice under section 148A(b) of the Act, was not fulfilled, the impugned notice under section 148A(b) of the Act dated 17.03.2022 and further order under section 148A(d) of the Act dated 27.03.2022 along with notice under section 148 of the Act dated 27.03.2022 needed to be quashed.
4.0 Per contra, the Ld. Sr. D.R. submitted that the assessee had not raised any objection in this regard before either of the authorities below and, therefore, raising this ground before the Tribunal should not be permitted. The Ld. Sr. D.R. prayed that the appeal of the assessee either be dismissed or should be set aside to the file of the AO.
5.0 I have heard the rival submissions and have also perused the material on record. It is a fact that in this case, the notice under section 148A(b) of the Act was issued by the AO on 17.03.2022 for compliance on 21.03.2023. As per Section 148A(b) of the Act, (as it stands in November, 2025), the Assessing Officer was mandatorily required to provide the assessee a minimum period of 7 days but not more than 30 days to file a reply to the show-cause notice issued under section 148A(b) of the Act. For clarity, the exact wording of the proviso to Section 148A(b) is reproduced hereunder:
"provide an opportunity of being heard to the assessee, by serving upon him a notice to show cause within such time, as may be specified in the notice, being not less than seven days and but not exceeding thirty days from the date on which such notice is issued, or such time, as may be extended by him on the basis of an application in this behalf, as to why a notice under section 148 should not be issued on the basis of information which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year and results of enquiry conducted, if any, as per clause (a)." 6.0 If the Department gives less than seven clear days’ time in the section 148A(b) notice, the entire reassessment proceedings, including the notice under section 148 of the Act become null and void on the ground of violation of natural justice and mandatory statutory procedure. This position is now very well settled by the judgment of the Hon'ble Bombay High Court in the case of Mukesh J Ruparel vs. Income Tax Officer (supra), wherein the Hon'ble High Court quashed and set aside the notice issued by the AO under section 148A(b) of the Act wherein the assessee had been provided with less than seven days for compliance, and had further quashed the order under section 148A(d) of the Act along with notice under section 148 of the Act.
6.1 Respectfully following the judgment of the Hon'ble Bombay High Court in the case of Mukesh J Ruparel vs. Income Tax Officer (supra), the re-assessment notice dated 17.03.2022, and further order under section 148A(d) of the Act along with notice under section 148 of the Act are quashed. Consequently, the order dated 15.03.2022 passed under section 147 of the Act read with sections 144 and 144B is also quashed.
6.2 Since the assessee has already been granted relief on the legal ground, other grounds raised by the assessee on merits of the case become academic in nature and are being not adjudicated upon.