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Facts
The assessee, an individual, did not file an income tax return for A.Y. 2015-16. The Assessing Officer (AO) reopened the case based on cash deposits of Rs. 78,51,300/- in the assessee's bank accounts, treating the amount as unexplained money under section 69A of the Income Tax Act. The CIT(A) dismissed the assessee's appeal against this assessment, leading to the current appeal before the Tribunal.
Held
The Tribunal held that the reassessment proceedings initiated for A.Y. 2015-16 were without jurisdiction. The notice issued under section 148 of the Act dated 03.04.2022 was barred by limitation as per the un-amended provisions of section 149(1)(b), as the six-year period expired on 31.03.2022. Consequently, the assessment completed under section 147 based on this invalid notice was quashed, relying on Supreme Court judgments.
Key Issues
Whether the reassessment notice issued under section 148 for A.Y. 2015-16 was valid and within the limitation period, considering the amendments by the Finance Act, 2021, and the applicability of TOLA.
Sections Cited
147, 144, 139, 148A(b), 148A(d), 148, 69A, 149(1)(b), 151, Finance Act, 2021, Taxation and other Laws (Relaxation of Certain Provisions) Ordinance, 2020, 3(1) of TOLA
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Income Tax Appellate Tribunal, VISAKHAPATNAM “DIVISION” BENCH, VISAKHAPATNAM
Before: SHRI RAVISH SOOD, HONBLE & SHRI S BALAKRISHNAN, HONBLE
आदेश /O R D E R
PER SHRI S BALAKRISHNAN, ACCOUNTANT MEMBER:
This appeal is filed by the assessee against order passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal centre, Delhi [hereinafter in short “Ld.CIT(A)”] vide DIN & Order
I.T.A.No.510/VIZ/2025 Bhargav Ram Munagapati No.ITBA/NFAC/S/250/2024-25/1073096685(1) dated 10.02.2025 for the A.Y.2015-16 arising out of order passed under section 147 r.w.s. 144 of Income Tax Act, 1961 (in short ‘Act’) dated 23.01.2024.
Brief facts of the case are that, assessee being an individual and has not filed return of income for the assessment year under consideration under section 139 of the Act. As per the information available with the department, the assessee has made cash deposits of Rs.61,11,900/- in State Bank of Hyderabad and Rs.17,39,400/- in HDFC Bank Limited, in his bank accounts during the period relevant to A.Y.2015-16. Thereafter, Ld. Assessing Officer [hereinafter in short “Ld. AO"] issued show-cause notice under section 148A(b) of the Act. In response, assessee failed to furnish any information. Accordingly, the case was reopened by issue of notice under section 148 of the Act dated 03.04.2022 after passing order under section 148A(d) of the Act. The assessee has not filed return of income in response to notice issued under section 148 of the Act and also no submission is made in response to other notices issued by the Assessing Officer. Thereafter, Assessing Officer proceeded to complete the assessment and accordingly treated the amount of Rs.78,51,300/- as unexplained money under section 69A of the Act and determined the total income of the assessee at Rs.78,51,300/-.
On being aggrieved by the order of the Ld. AO, assessee filed an appeal before Ld. CIT(A). Before Ld. CIT(A), assessee has raised various grounds Page. No 2
I.T.A.No.510/VIZ/2025 Bhargav Ram Munagapati challenging the assessment order. After considering the submissions of the assessee, Ld.CIT(A) dismissed the appeal of the assessee.
Being aggrieved by the order of the Ld. CIT(A), assessee filed an appeal before the Tribunal by raising following grounds of appeal: -
1. The Ld. CIT(A) ought to have held that the assessment order suffers from jurisdictional infirmities, therefore, the Ld. CIT(A) further ought to have held that the notice issued u/s 148A(d) and 148 by the jurisdictional ITO, Ward-2(1), Vijayawada on dt.17.03.2022 are contrary to the provisions of sections 144B, 130, and 151A of the Act and hence are invalid.
2. The notice issued u/s 148 dt. 03.04.2022 is barred by limitation as per section 149(1)(b) read with the proviso thereto, having been issued beyond the prescribed period of six years. In view of this the reassessment order passed u/s 147 r.w.s 144 r.w.s. 144B dt. 23.01.2024 is bad in law, void ab initio, and liable to be quashed.”
5. Assessee also raised the following additional grounds and prayed for admitting the same, since it is legal in nature and goes to the root of the matter.
“The notice issued u/s 148 dt. 03.04.2022 is barred by limitation as per section 149(1)(b) read with the proviso thereto, having been issued beyond the prescribed period of six years. In view of this the reassessment order passed u/s 147 r.w.s 144 r.w.s. 144B dt. 23.01.2024 is bad in law, void ab initio, and liable to be quashed.”.
6. We admit the legal grounds raised by the assessee as additional ground, since it challenges the assessment and goes to the root of the matter.
At the outset, Ld. Authorised Representative [hereinafter “Ld.AR”] submitted that notice under section 148 of the Act for the A.Y.2015-16 was issued on 03.04.2022 without following the procedure prescribed by the new
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I.T.A.No.510/VIZ/2025 Bhargav Ram Munagapati provision inserted on 01.04.2021. Ld.AR also submitted that notice under section 148 of the Act dated 03.04.2022 is barred by limitation as per the first proviso to section 149(1)(b) of the Act w.e.f 01.04.2021. Ld.AR pleaded that the legal ground raised by the assessee as above, shall first be addressed before adjudicating the other grounds raised on merits. On this issue, Ld.AR placed heavy reliance on the decision of Co-ordinate Bench in the case of Vaka Ghanta Nageswara Rao v. ITO in dated 10.07.2025.
Ld.AR by relying on the decision of the Hon’ble Supreme Court in the case of Union of India & Ors. v. Ashish Agarwal [(2002) 444 ITR 0001 (SC)] submitted that the new procedure prescribed under section 148(A) under Finance Act, 2021 was not followed by the Ld. AO prior to issuance of notice under section 148 of the Act. Ld.AR also submitted that after passing the order u/s.148(A)(d) of the Act, notice under section 148 of the Act was issued on 03.04.2022 for the A.Y. 2015-16 wherein the limitation expires on 31.03.2022 as per section 149(1)(b) of the un-amended provisions. Ld.AR further submitted that as held in the case of Union of India & Ors. v. Rajeev Bansal [(2024) 8 NYPCTR 1291 (SC)], that the relaxation under Taxation and other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (“TOLA”) are not applicable for the A.Y. 2015-16 and are applicable in the case for the time limit for issuing notices expired between 20.03.2020 and 31.03.2021. Further, the Ld.AR also submitted that the time limit for the notice issued under the Page. No 4
I.T.A.No.510/VIZ/2025 Bhargav Ram Munagapati unamended provisions u/s. 149 of the Act expired on 31.03.2022 i.e., 6 years from the end of relevant assessment year for the escaped assessment amounts to or is likely to more than one lakh rupees or more for that year. Ld.AR also referred to Question No. 5 raisedbefore the Hon’ble Karnataka High Court in the case of CIT v. Micro Labs Ltd., [(2012) 348 ITR 0075] wherein it was held that the matter cannot be remitted back to the file of the Ld. AO for passing fresh order of assessment by holding that the notice is invalid. Ld.AR therefore pleaded that notice issued under section 148 of the Act dated 03.04.2022 is invalid and consequently assessment order passed in accordance with the invalid reassessment notice issued under section 148 of the Act is void-ab-initio.
Per contra, Ld. Departmental Representative [hereinafter in short “Ld.DR”] submitted that the mere procedural mistake cannot invalidate the assessment proceedings. Ld. DR also made written submissions regarding the non-applicability of the period of limitation for the instant case. She therefore prayed for upholding the order of the Ld.CIT(A).
We have heard both the sides and perused the material available on 10. record and thoughtfully gone through the written submissions. It is an undisputed fact on record that the assessment was reopened by issuance of notice under section 148 of the Act dated 03.04.2022. The grievance of the Ld.AR is since the notice has been issued after the commencement of new regime wherein the Finance Act, 2021 amended the provisions of section 147 to Page. No 5
I.T.A.No.510/VIZ/2025 Bhargav Ram Munagapati 151 of the Act, the Ld. AO ought to have followed the procedure prescribed as per the new regime. Ld.AR placed heavy reliance on the decision of the Hon’ble Supreme Court in the case of Union of India & Ors. v. Ashish Agarwal [444 ITR 001(SC)] wherein the Hon’ble Supreme Court has directed vide its order dated 04.05.2022 to treat the notice issued under section 148 of the Act as per the amended provisions of the I.T.Act, r.w. section 3(1) of TOLA as deemed to be a show-cause notice under the provisions of section 148A of the Act. The Hon’ble Supreme Court concluded that section 3(1) of the TOLA overrides section 149 of the Act only to the extent of relaxing the time limit for issuance of the re-assessment notice under section 148 of the Act. TOLA will continue to apply to the Act after 01.04.2021 if any action or proceeding specified under the substituted provisions of the Act falls for completion between 20.03.2020 and 31.03.2021. In the instant case, the time limit as per the provisions of unamended Act for the A.Y.2015-16 as the income is considered as escaping assessment of more than Rs.1,00,000/-the term expires on 31.03.2022.
Further, we also observe that in the case of Vaka Ghanta Nageswararao v. ITO in the Co-ordinate Bench of Visakhapatnam held as follows: -
“9. We have heard both the sides and perused the material available on record including the case laws cited by the Ld.AR. It is not in dispute that the date of the order u/s 148A(d) is 07.04.2022 and that of the consequential section 148 notice is also dated post 31.03.2022. In the instant case the notice under section 148 was issued on 07.04.2022 for the Page. No 6 I.T.A.No.510/VIZ/2025 Bhargav Ram Munagapati A.Y. 2015-16. It is the contention of the assessee that the said notice is barred by limitation as per the first proviso of the unamended proviso to section 149(1)(b) of the Act which has been confirmed by the Hon’ble Supreme Court in the case of UOI v. Rajeev Bansal (supra). The Hon’ble Supreme Court in the case of UOI v. Rajeev Bansal (supra) held as follows: - “19. Mr N Venkataraman, learned Additional Solicitor General of India, made the following submissions on behalf of the Revenue: (a) to (e)** (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; ** 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.”
The first proviso of section 149(1)(b) prescribed under section 149(1)(a) of the old regime continues to exist for the A.Y. 2021-2022 and before. Consequently, notice under section 148 of the Act as per amended provisions cannot be issued for the period beyond six years from the end of the relevant assessment year has expired at the time of issuance of notice. In the instant case, the time limit of six years expires on 31.03.2022 and the notice u/s 148 issued on 07.04.2022 is not valid notice for the re assessment proceedings. From the observations of the Hon’ble Supreme Court and also by the Co-ordinate Bench of the Tribunal, it is clear that for the purpose of checking of the validity of the notices issued under section 148 of the Act under the new regime for the A.Y. 2021-2022 or prior years is whether the period of six years has expired at the time of issuance of such notice as per the unamended section to determine the validity of the notice under section 148 of the Act under the amended section. In the assessee’s case, the period of six years expires on 31.03.2022 and therefore notice dated 07.04.2022 under section 148 of the Page. No 7
I.T.A.No.510/VIZ/2025 Bhargav Ram Munagapati Act for the A.Y. 2015-16 is invalid and barred by limitation. In view of the above findings and in light of binding judicial precedents, we hold that the reassessment proceedings initiated for AY 2015-16 are without jurisdiction, and hence the notice issued under section 148 and subsequent proceedings are quashed. Accordingly, the assessment completed under section 147 of the Act is liable to quashed. Thus the ground raised by the assessee is allowed.”
Further, the Hon’ble Supreme Court in the case of Deepak Steel and Power Ltd., v. Central Board of Direct Taxes [2025] 174 taxmann.com 144 (SC) held as follows: - “4. 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 inUnion 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 1st 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 25.6.2021.
In view of the aforesaid, in such circumstances referred to above the original writ petition nos.2446 of 2023, 2543 of 2023 and 2544 of 2023 respectively filed before the High Court of Orissa at cuttack stands allowed.”
Respectfully following the decision of the Hon’ble Supreme Court in Deepak Steel and Power Ltd., v. Central Board of Direct Taxes (supra) and consistently following the view taken in we are of the Page. No 8
I.T.A.No.510/VIZ/2025 Bhargav Ram Munagapati view that re-assessment proceedings initiated for the A.Y. 2015-16 in the instant case are without jurisdiction and hence assessment completed u/s. 147 of the Act consequent to the notice issued u/s. 148 of the Act dated 03.04.2022 cannot be sustained and liable to be quashed. Since the legal grounds are adjudicated in favour of the assessee by quashing the re-assessment order the other grounds raised by the assessee on merits are not adjudicated.
In the result, appeal of the assessee is allowed.
Order pronounced in the open court on 21st November, 2025.
Sd/- Sd/- (रिीश सूद) (एस बालाकृष्णन) (RAVISH SOOD) (S. BALAKRISHNAN) न्याधयक सदस्य/JUDICIAL MEMBER लेखा सदस्य/ACCOUNTANT MEMBER Dated 21.11.2025 Giridhar, Sr.PS आदेश की प्रतततलतप अग्रेतषत/ Copy of the order forwarded to:- 1. तिर्ााररती/ The Assessee : Bhargav Ram Munagapati 33-26-13, Kaasthuribaipet Suryaraopet S.O. Vijayawada (urban) Krishna – 520002 Andhra Pradesh 2. राजस्व/ The Revenue : Income Tax Officer – Ward – 2 C.R. Building Vijayawada- 520002 Andhra Pradesh 3. The Principal Commissioner of Income Tax 4. तिभागीयप्रतततितर्, आयकरअपीलीयअतर्करण, तिशाखापटणम /DR,ITAT, Visakhapatnam 5. The Commissioner of Income Tax गार्ाफ़ाईल / Guard file 6. आदेशािुसार / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam
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