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Facts
The revenue filed an appeal against the order of the CIT(A) deleting additions made by the Assessing Officer (AO). The assessee also filed a Cross Objection (CO). A key issue was the validity of the notice issued under Section 148 of the Income-tax Act, 1961, due to alleged delay.
Held
The Tribunal held that the notice issued under Section 148 of the Act was beyond the time limit available, as per Supreme Court and High Court decisions. Therefore, the notice and the consequential reassessment order were considered bad in law.
Key Issues
Whether the notice issued under Section 148 of the Income-tax Act, 1961, was within the prescribed time limit, and if not, whether it renders the subsequent assessment order invalid.
Sections Cited
147, 148, 144, 144B, 250(2), 48
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Before: SHRI DINESH MOHAN SINHA & SHRI BIJAYANANDA PRUSETH
आदेश / O R D E R
PER BIJAYANANDA PRUSETH, AM:
This appeal by the revenue and Cross Objection (CO) by the assessee therein emanate from the order passed under section 250 of the Income-tax Act, 1961 (in short, 'the Act’) dated 08.08.2024 by the National Faceless Appeal Centre (NFAC), Delhi/Commissioner of Income-tax (Appeals) [in short, ‘the CO.9/Srt/25 A.Y 16-17 Ambubbhai T Patel CIT(A)’] for the assessment year (AY) 2016-17, which in turn arises out of assessment order passed by the Assessing Officer (in short, ‘AO’) u/s. 147 r.w.s 144 r.w.s 144B of the Act on 24.05.2023.
2. Grounds of appeal raised by the revenue are as under: “i. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.1,47,38,784/- made on account of amount received over and above the sale consideration as per registered deed and has not appreciated that the said addition is based on the incriminating evidence seized during the course of search in the case of K Star Group by the Investigation Wing. ii. On the facts and circumstances of the case and law, the Ld. CIT(A) has erred in deleting the addition of Rs.75,55,051/- made on account of LTCG as the assessee has not produced any cogent evidences to establish the claim of deductions u/s.48 of the Act. iii. On the facts and circumstances of the case and in law, the Ld. CIT(A) has violated the principles of natural justice while admitting the additional evidences and not providing opportunity of being heard to the Assessing Officer as per the provisions of section 250(2) of the Income tax Act, 1961 and Rule 46A(3) of the Income tax Rules, 1962. iv. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in admitting the additional evidences, which were not produced before the AO during the course of the assessment proceedings, without appreciating the fact that the assessee has not satisfied the basic conditions laid down under Rule 46A(1) of the Income tax Rules, 1962. v. On the basis of the facts and circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the Assessing Officer. vi. It is, therefore, prayed that the order of the Ld. CIT(A) may kindly be set aside and that of the AO be restored. vii. The appellant craves leave to add, alter, amend and/or withdraw any grounds of appeal either before or during the course of hearing of the appeal.”
On service of notice of revenue’s appeal, the assessee filed CO raising 3. following grounds:
CO.9/Srt/25 A.Y 16-17 Ambubbhai T Patel “1. On the facts & circumstances of the case as well as law on the subject, the Ld. CIT(A), NFAC has erred in confirming the action of AO in issuing notice u/s.148 of the IT Act, 1961 although the same is invalid.
On the facts and circumstances of the case as well as law on the subject, even otherwise also, issue of notice u/s.148 of the I T Act is invalid as Ld. AO has erred in obtaining the approval of the Pr. CIT instead of the Pr. Chief CIT, while issuing notice u/s.148 of the I.T. Act.
Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal.”
Since jurisdictional and legal issue are involved in the CO, the same is first taken up for decision before deciding the issues on merit.
There is delay of 317 days in filing CO before Tribunal. The appellant has filed application supported by an affidavit for condonation of delay in filing CO. It is submitted that due to non-receipt of Form-36, the appellant could not file the CO within the prescribed time before Tribunal. When the hearing of appeal took place before ITAT, Surat appellant learnt about the appeal by the revenue. Hence, the delay was caused by circumstances beyond the control of the appellant. The Ld. AR submitted that the delay was neither intentional nor deliberate. He requested to condone the delay and admit the CO in the interest of natural justice, equity and fair play. 5.1 On the other hand, Ld. Sr-DR for the Revenue submitted that the Tribunal may be decided as it thinks fit. 5.2 We have considered the reasons given by the Ld. AR and perused the accompanied documents along with the affidavit. We find that the delay of 317 days in filing the CO was not deliberate and intentional on the part of CO.9/Srt/25 A.Y 16-17 Ambubbhai T Patel assessee. Moreover, assessee is not going to be benefited by filing CO belatedly. It is now fairly settled that when technical consideration and cause of substantial justice are pitted against each other, the cause of substantial justice may be preferred. Hence, the delay in filing the CO is condoned and we proceed to decide the case on merit.
At the outset, Ld. AR of the appellant submitted that the issue of notice u/s 148 of the Act was invalid in view of the decisions of the Hon’ble Supreme Court in case of Union of India vs. Rajeev Bansal, (2024) 469 ITR 46 (SC), Union of India vs. Ashish Agarwal (2022) 44 ITR 1 (SC) and decision of the Hon’ble jurisdictional High Court in case of Saroj Predhiman Kaw vs. DCIT (2025) 176 taxmann.com 76 (Guj). The appellant submitted a detailed calculation of the surviving period for issue of notice u/s 148 of the Act which is reproduced below for ready reference: SC-eg. Assessee’s (para 112) case Because of the legal fiction, the deemed show 28.06.2021 01 cause notice will also come into effect from 01.05.2021 (notice issued u/s 48 under old regime – deemed to be SCN under new regime) 02 After accounting for the exclusions, the Assessing 61 days 2 days Office will have surviving time calculated from the date of issue of notice u/s 148 till 30.06.2021 Time starts ticking for the Assessing Officer after 18.06.2022 19.06.2022 03 receiving the response of the assessee which is on 04 The Assessing Officer will have to issue notice u/s 148 of the Act on or before surviving time limit 18.08.2022 21.06.2022 available as per Sl. No.2 above after receipt of reply from assessee 05 Notice u/s 148 of the Act is issued on 31.07.2022 06 Issue of notice u/s 148 of the Act is delayed by 40 days 07 Status of notice u/s 148 of the Act Time barred 08 Status of order u/s 148A((d) of the Act Time barred CO.9/Srt/25 A.Y 16-17 Ambubbhai T Patel 6.1 The Ld. AR submitted that the notice issued u/s 148 of the Act on 31.07.2022 is barred by limitation by 40 days and hence, the order passed by the AO is bad in law.
The Ld. Sr-DR for the revenue could not controvert the submission and evidences submitted by the Ld. AR.
We have heard both the parties and perused the materials available on record. We have also deliberated the decisions relied upon by the Ld. AR. We find that the AO was required to issue notice u/s 148 of the Act on or before 21.06.2022 but he issued the notice u/s 148 of the Act on 31.07.2022. It is, therefore, evident that the notice was beyond the time available as per the decision of the Hon’ble Supreme Court in case of Rajeev Bansal (supra) and decision of Hon’ble jurisdictional High Court in case of Saroj Predhiman Kaw (supra). Since the new notice u/s 148 of the Act was issued beyond the surviving period, as explained by the Hon’ble Supreme Court in case of Rajeev Bansal (supra), the notice u/s 148 of the Act as well as the consequential re- assessment order u/s 147 of the Act are bad in law. Accordingly, the appeal of the revenue is dismissed and CO of assessee is allowed.
8.1 As we are allowing the appeal on the legal issue, we are not adjudicating other grounds raised on merits.
CO.9/Srt/25 A.Y 16-17 Ambubbhai T Patel 9. In the result, the appeal of the Revenue is dismissed and the CO of the assessee is allowed. Order pronounced in accordance with Rule 34 of ITAT Rules, 1963 on 17/10/2025 in the open court.