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Facts
The assessee's appeals relate to AY 2013-14, 2014-15, and 2015-16, where assessments were reopened based on information regarding alleged bogus accommodation entry activities. The Assessing Officer (AO) issued notices under Section 148, which were upheld by the CIT(A).
Held
The Tribunal held that the notices issued under Section 148 and the consequential assessment orders were null and void as they were issued beyond the 'surviving period' for limitation, as per the Supreme Court's decisions in Rajeev Bansal and Ashish Agarwal. Consequently, the appeals were allowed on legal grounds.
Key Issues
Validity of Section 148 notices due to being time-barred and issued beyond the surviving period, considering Supreme Court rulings on limitation for reassessment.
Sections Cited
147, 148, 148A, 149, 151A
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Page 2 ITA No. 7298, 7299& 7300/Mum/2025 A.Y. 2013-14, 2014-15 & 2015-16 Impressive Trading Pvt Ltd., Mumbai [A.Ys.] 2013-14, 2014-15 & 2015-16.Since the issues are common and also the fact that appeals were heard together, they are being taken up together for adjudication vide this composite order for the sake of brevity. We take up appeal in ITA No. 7298/Mum/2025 first.
The grounds of appeal are as under:-
On the facts and under the circumstances of the case and in law the Ld. Commissioner of Income Tax (Appeals) has erred in confirming the reopening of the assessment by the ld. A.O. merely on the basis of vague information received from the Investigation Wing and no independent inquiry was made by him.
On the facts and under the circumstances of the case and in law the Ld. Commissioner of Income Tax (Appeals) has erred in confirming the conclusion of the Ld. A.O. that income chargeable to tax has escaped assessment.
On the facts and under the circumstances of the case and in law the Ld. Commissioner of Income Tax (Appeals) has erred in confirming the reopening of the assessment for this year 2013-14 by the Ld. A.O. ignoring the fact that last date for issue notice u/s 148 for this year expired long back on 31.03.2020 and therefore the notice issued u/s 148 is time barred, illegal and void abinitio and the impugned reassessment is bad in law.
On the facts and under the circumstances of the case and in law the Ld. Commissioner of Income Tax (Appeals) has erred in confirming the order passed u/s 148A(d) and notice issued u/s 148 after 29.03.2022 by the Ld. Juri ictional A.O. which is invalid as the same is contrary to the provisions contained in the section 151A of the Act read with notification issued on 29.03.2022 regarding e-Assessment of Income Escaping Assessment Scheme, 2022. 5. On the facts and under the circumstances of the case and in law the Ld. Commissioner of Income Tax (Appeals) has erred in confirming the assessment order passed u/s 147 by the Juri ictional Assessing Officer which is invalid as the same is contrary to the provisions contained in the section 151A of the Act read with notification issued on 29.03.2022 regarding e-Assessment of Income Escaping Assessment Scheme, 2022. आयकर अपीलीय अधिकरण INCOME TAX APPELLATE TRIBUNA Page 3 ITA No. 7298, 7299& 7300/Mum/2025 A.Y. 2013-14, 2014-15 & 2015-16 Impressive Trading Pvt Ltd., Mumbai
On the facts and under the circumstances of the case and in law the Ld. Commissioner of Income Tax (Appeals) has erred in confirming addition of Rs. 1,39,86,758/- as undisclosed commission (being estimation at the rate 3 percentage of credit entries amounting to Rs. 46,62,25,272/- in the bank account) made by the Ld. A.O. merely on conjectures & surmises. ITA N0.7299/MUM/2025
On the facts and under the circumstances of the case and in law the Ld. Commissioner of Income Tax (Appeals) has erred in confirming reopening the assessment under section 148 of the Income Tax Act.
Therefore impugned re-assessment order is bad in law and void abinitio.
On the facts and under the circumstances of the case and in law the Ld. Commissioner of Income Tax (Appeals) has erred in confirming issuing notice u/s 148 which is barred by limitation and hence the impugned reassessment order is also bad in law & void ab initio& needs to be quashed & annulled.
On the facts and under the circumstances of the case and in law the Ld. Commissioner of Income Tax (Appeals) has erred in confirming in reopening the assessment merely on the basis of vague information received from the Investigation Wing and no independent inquiry was made by him. Therefore impugned re-assessment order is bad in law and void abinitio.
On the facts and under the circumstances of the case and in law the Ld. Commissioner of Income Tax (Appeals) has erred in confirming in coming to conclusion that income chargeable to tax has escaped assessment without appreciating the reply submitted in response to show cause notice during assessment proceedings.
On the facts and under the circumstances of the case and in law the Ld. Commissioner of Income Tax (Appeals) has erred in confirming the assessment order passed u/s 147 by the Juri ictional Assessing Officer which is invalid as the same is contrary to the provisions contained in the section 151A of the Act read with notification issued on 29.03.2022 regarding e-Assessment of Income Escaping Assessment Scheme, 2022. 6. On the facts and under the circumstances of the case and in law the Ld. Commissioner of Income Tax (Appeals) has erred in confirming the addition of Rs. 114,16,52,457/- (new issue) for total sales shown in books of account during the year ignoring the fact that no addition was made for the amount of Rs. 3,42,79,573/- (being 3 percentage of Rs. 114,16,52,457/-) as undisclosed commission which was the reason for reopening the assessment. When no addition is made for the original issue then no other addition can be made in law in reassessment. आयकर अपीलीय अधिकरण INCOME TAX APPELLATE TRIBUNA Page 4 ITA No. 7298, 7299& 7300/Mum/2025 A.Y. 2013-14, 2014-15 & 2015-16 Impressive Trading Pvt Ltd., Mumbai
On the facts and under the circumstances of the case and in law the Ld. Commissioner of Income Tax (Appeals) has erred in confirming the addition of Rs.3,42,49,574/- at the rate 3 percent of credit entries in bank account as commission income.
On the facts and under the circumstances of the case and in law the Ld. Commissioner of Income Tax (Appeals) has erred in confirming the deemed total income determined u/s 115JB of the Act at Rs. 12,17,459/- in tax calculation sheet whereas the income as per return of income is loss of Rs. 31,86,531/u/s 115JB of the Act.
On the facts and under the circumstances of the case and in law the Ld. Commissioner of Income Tax (Appeals) has erred in confirming the issuance of notice u/s 148 which is barred by limitation and therefore the consequent reassessment is void ability.
On the facts and under the circumstances of the case and in law the Ld. Commissioner of Income Tax (Appeals) has erred in confirming the reopening of the assessment merely on the basis of vague information received from the Investigation Wing and no independent inquiry was made by him.
On the facts and under the circumstances of the case and in law the Ld. Commissioner of Income Tax (Appeals) has erred in confirming
conclusion of the Ld. AO. that income chargeable to Re tax has escaped assessment.
On the facts and under the circumstances of the case and in law the Ld. Commissioner of Income Tax (Appeals) has erred in confirming the addition of Rs. 1,16,22,479/- as undisclosed commission.
On the facts and under the circumstances of the case and in law. the Ld. Commissioner of Income Tax (Appeals) has erred in confirming the order passed u/s 148A(d) and notice issued u/s 148 after 29.03.2022 by the Ld. Juri ictional A.O. which is invalid as the same is contrary to the provisions contained in the section 151A of the Act read with notification issued on 29.03.2022 regarding e-Assessment of Income Escaping Assessment Scheme, 2022. 6. On the facts and under the circumstances of the case and in law the Ld. Commissioner of Income Tax (Appeals) has erred in confirming the addition made of Rs. 1,16,22,479/- (being 36 percentage of credit entries in the appellants bank account amounting to Rs. 38,74,15,992/-)in view of the fact that no addition has been made on the issue of reopening of the assessment.
On the facts and under the circumstances of the case and in law the Ld. Commissioner of Income Tax (Appeals) has erred in confirming the आयकर अपीलीय अधिकरण INCOME TAX APPELLATE TRIBUNA Page 5 ITA No. 7298, 7299& 7300/Mum/2025 A.Y. 2013-14, 2014-15 & 2015-16 Impressive Trading Pvt Ltd., Mumbai
conclusion of the Ld.A.O. that income chargeable to tax has escaped assessment in view of the fact that tax is payable in the return of income u/s 115JB and even after the addition of commission income tax is payable under section 115JB and there is no change in tax liabilities.
Since the grounds of appeal in all the above assessment years are identical, we are adjudicating them vide this composite order for the sake of brevity. It is noticed that in all the impugned assessment years, the assessments were reopened on the basis of certain information received from theInvestigation Wing of the Department that the assessee was engaged in bogus accommodation entry activity to facilitate bogus sale and purchases without any actual movement of goods. Further,perusal of the current bank account statement of the assessee company maintained with Kotak Mahindra Bank Ltd. revealed circular movement of funds without having any actual trade as no supporting documents had been submitted in support of this transaction. Most of the related party transactions were between the 18 parties which were controlled by one Sharon Bio Medicine Limited(SBML) and assessee was one of such parties with whom this company had transacted with. Thus, the assessee was found to be one of the related parties used by SBML to inflate its sales and purchases through circular transactions of funds without actual movement of goods. The transactions were routed through the assessee's bank आयकर अपीलीय अधिकरण INCOME TAX APPELLATE TRIBUNA Page 6 ITA No. 7298, 7299& 7300/Mum/2025 A.Y. 2013-14, 2014-15 & 2015-16 Impressive Trading Pvt Ltd., Mumbai account maintained with Kotak Mahindra Bank. The assessee company was engaged in circular trading. Accordingly, certain part of the credit entries in bank account was determined as assessee's undisclosed commission on percentage basis in all the assessment years, based on the report of the Wing. The additions made were upheld by the ld.CIT(A).
At the very outset, the ld.AR has drawn attention of the Bench to the legal grounds relating to validity of the notices issued u/s 148 of the Act and the consequential assessment orders in all the above
assessment years. It is claimed that the notices issued were invalid and barred by time limitation in view of the ratio laid down by the hon'ble Apex Court in the case of Union of India v. Rajeev Bansal [2024] 167 taxmann.com 70 (SC) according to which the notice u/s. 148 of the Act could be issued within the 'Surviving Period', applying TOLA as per Para No. 108 to 114 of the judgment. If the notice is within surviving period, then it will be valid. If it is not within surviving period, it will be time barred.
1 It is submitted by the ld.AR that in all the assessment years under consideration,the AO was left with surviving period of only one day. Accordingly, the notices issued subsequently were apparently invalid and non est. He has furnished year wise chart alongwith factual आयकर अपीलीय अधिकरण INCOME TAX APPELLATE TRIBUNA Page 7 ITA No. 7298, 7299& 7300/Mum/2025 A.Y. 2013-14, 2014-15 & 2015-16 Impressive Trading Pvt Ltd., Mumbai Paper Book, giving datewise chronology of notices and response of the assessee, in support of this contention which is reproduced as below:
Assessment Year: 2013-14 Original Notice u/s. 148 issued on 29-6-2021 Surviving Period-1 Dayi.e. 30-6-2021 minus 29-6-2021 Fresh notice u/s 148A(b) 24-5-2022 Assessee filed reply on 1-6-2022 The clock starts ticking from 1-6-2022 .The AO could have issued 148 notice within surviving period from 1-6-2022 or from 7-6-2022 (due date to submit the response) Notice u/s. 148 issued on 19-7-2022-Beyond Surviving Period - Time barred
Assessment Year: 2014-15 Original Notice u/s. 148 issued on 29-6-2021 Surviving Period-1 Day-i.e. 30-6-2021 minus 29-6-2021 Fresh 148A(b)-Dt. 24-5-2022 Assessee filed reply on 1-6-2022 The clock starts ticking from 1-6-2022.The AO could have issued 148 Notice within surviving period from 1-6-2022 or from 7-6-2022 (due date to submit the response) Notice u/s. 148 issued on 19-7-2022-Beyond Surviving Period - Time barred
Assessment Year: 2015-16 Original Notice u/s. 148 issued on 29-6-2021 Surviving Period-1 Dayi.e. 30-6-2021 minus 29-6-2021 आयकर अपीलीय अधिकरण INCOME TAX APPELLATE TRIBUNA Page 8 ITA No. 7298, 7299& 7300/Mum/2025 A.Y. 2013-14, 2014-15 & 2015-16 Impressive Trading Pvt Ltd., Mumbai Fresh 148A(b)-Dt. 24-5-2022 Assessee filed reply on 1-6-2022 The clock starts ticking from 1-6-2022.The AO could have issued 148 Notice within surviving period from 1-6-2022 or from 7-6-2022 (due date to submit the response) Notice u/s. 148 issued on 19-7-2022-Beyond Surviving Period - Time barred
2 In view of the above dates, it is submitted that all the notices u/s 148 of the Act in above stated exhaustively dealt with quashing the notices u/s 148 of the Act by following the ratio of the judgment of hon'ble Apex Court in Rajeev आयकर अपीलीय अधिकरण INCOME TAX APPELLATE TRIBUNA Page 9 ITA No. 7298, 7299& 7300/Mum/2025 A.Y. 2013-14, 2014-15 & 2015-16 Impressive Trading Pvt Ltd., Mumbai Bansal(supra).Relevant parts of the order are extracted as under for the sake of brevity:
“2. The present petition has been filed primarily challenging the assessment order dated 17.10.2025 passed under Section 147 of the Act for the A.Y.2014- 15, and the consequential notice of demand and the penalty show cause notice. The Petitioner, without prejudice to the above challenge, also challenges, inter alia, the notice under Section 148 dated 25.07.2022 issued by Respondent No.1 seeking to reopen the Petitioner's assessment for the A.Y.2014-15 and the order disposing of the objections passed under Section 148A(d) of the Act by the Respondent No.1 dated 25.07.2022. 3. The Petitioner had filed his original Return of Income on 23.02.2016 declaring a total income of Rs. 3,38,520/-
Subsequently, the assessment of the Petitioner for the year under consideration i.e., A.Y.2014-15 was reopened vide notice dated 30.06.2021 issued under Section 148 of the Act. The said notice was undisputedly issued under the old regime i.e., under the law which was repealed by Finance Act, 2021. 5. In UOI V/S Ashish Agarwal [(2022) 444 ITR 1 (SC)], the Hon'ble Supreme Court held that notices of the present nature were deemed to be a notice under Section 148A(b) of the Act. This was by invoking Article 142 of the Constitution of India. Further, the Hon'ble Supreme Court in the said decision issued certain directions to be followed by the Assessing Officer by modifying the orders various High Courts. The relevant portion of the decision of the Hon'ble Supreme Court is reproduced hereunder: