SUDESH DHANRAJ MURPANA (HUF),MUMBAI vs. THE INCOME TAX OFFICER, WARD 23(3)(1, MUMBAI

5. That in the facts and circumstances of the case and in law, the Id. AO failed to provide the Assessee a copy of the statement made under oath by the alleged operators/exit providers/other parties

related to the alleged entity making confessional statement, which specifically states that the Assessee had procured bogus entries. 6. That in the facts and circumstances of the case and in law, the Ld. AO failed to take into consideration that no new material has come on record. There is total absence of any 'tangible material' to justify the conclusion that income had escaped assessment.

C. Addition of Rs. 53,27,727/- u/s 68 as unexplained cash credits 7. That in the facts and circumstances of the case and in law, the Ld. AO erred in holding that the LTCG Rs. 53,27,727/- disclosed are not genuine and represent unexplained cash credits in the Appellant's books of account and that he has resorted to preconceived scheme to procure LTCG, although the Appellant has submitted all the relevant documents to show that the purchase and sale of shares were genuine transactions.

8. That in the facts and circumstances of the case and in law, the Ld. AO erred in alleging that the Appellant has indulged in bogus transactions by indulging in penny stock shares of M/s. ACI Infocom although the same had been done on the floor of the stock exchange.

9. That on the facts and circumstances of the case and in law, the Ld. AO has erred in making addition u/s. 68 when the appellant has already discharged its onus by proving the genuineness of the transaction by submitting all the necessary documents and evidences in support of his explanations.

D. Ld. CIT(A) erred in not adjudicating the grounds of appeal on merits

10. That the Ld. CIT(A) erred in not adjudicating the grounds of appeal on merits and dismissing the same without rendering any findings on the substantive issues raised.

3. Assessee has also raised additional grounds challenging the jurisdictional issues. The said two additional grounds are reproduced as under: 1. On the facts and circumstances of the case and law, the Ld. CIT (A) failed to appreciate that the impugned notice u/s 148 dated 20.07.2022 is invalid, bad in law and liable to be quashed as the same does not contain DIN in the entire body of the notice and also does not mention the reasons for not containing DIN and is accordingly in violation of CBDT Circular No.19/2019 dated 14.08.2019.

2. On the facts and circumstances of the case and law, the Ld. CIT (A) failed to appreciate that Ld. ITO erred in issuing the re-opening notice u/s 148 dated 20.07.2022 as is violative of the CBDT Notification No. 18/2022 dated 29.03.2022, as the same should have been issued by a faceless Assessing Officer.

4. In the present appeal, essentially, the issue to be decided is on the legal ground challenging the validity of notice under section 148 of the Act, on account of being barred by limitation and consequent reassessment order passed under section 147 r.w. section 143(3), being bad in law.

4.1 There is a delay of one day in filing the present appeal for which petition seeking condonation is placed on record. The due date on which limitation expired was not a working day. Assessee filed the appeal on the next working day and thus explained the delay of one day. Considering the submissions on record, the delay is condoned to take up the matter for adjudication.

5.1 For taking up this reassessment proceedings, notice under section 148A(b) was issued on 18.06.2022, for which order under section 148A(d) was passed on 20.07.2022. Subsequently, notice under section 148 was issued on 20.07.2022. Computation of limitation as per decision of, Hon’ble Supreme Court in the case of, UOI vs. Rajeev Bansal [2024] 167 taxmann.com 70 (SC) for AY 2013-14 as relied on by the assessee is tabulated below:

Sl. Event Description Date/Remarks No. 1 Period of limitation u/s 149 [ 3 6 years or 6 years] 2 Extended period of limitation as per 30.06.2021 IT Act read with TOLA 3 Sanction to be obtained u/s 151 till PCIT 30.06.2021 [within 6 years] 4 21.06.2021 Date of original notice u/s 148 – deemed SCN u/s 148A (b) 5 9 Days Time surviving from the date of issuance of deemed SCN till expiry of period as extended by TOLA [from 15.06.2021 till 30.06.2021] 6 Period of deemed stay to be 30.06.2021 excluded as per 3rd proviso to To section 149 [Date of Original 148 25.06.2022 till date allowed to file reply to assessee] 7 Last date for issuing notice u/s 148 04.07.2022 [i.e., 25.06.2022 + 9 days] 8 Actual date of issuance of notice u/s 20.07.2022 148

(a) if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b) [ (b) if three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income chargeable to tax, represented in the form of-

(1) an asset; ii) expenditure in respect of a transaction or in relation to an event or occasion; or (iii) an entry or entries in the books of account, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more:] Provided that no notice under section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before 1st day of April, 2021, if 28[a notice under section 148 or section 153A or section 153C could not have been issued at that time on account of being beyond the time limit specified under the provisions of clause (b) of sub-section (1) of this section or section 153A or section 1530, as the case may be], as they stood immediately before the commencement of the Finance Act, 2021:

Provided further that the provisions of this sub-section shall not apply in a case, where a notice under section 153A, or section 153C read with section 153A, is required to be issued in relation to a search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A, on or before the 31st day of March, 2021

[Provided also that for cases referred to in clauses (i), (iii) and (iv) of Explanation 2 to section 148, where, -

(a) a search is initiated under section 132; or b) a search under section 132 for which the last of authorisations is executed; or (c) requisition is made under section 132A, after the 15th day of March of any financial year and the period for issue of notice under section 148 expires on the 31st day of March of such financial year, a period of fifteen days shall be excluded for the purpose of computing the period of limitation as per this section and the notice issued under section 148 in such case shall be deemed to have been issued on the 31st day of March of such financial year:

Provided also that where the information as referred to in Explanation 1 to section 148 emanates from a statement recorded or documents impounded under section 131 or section 133A, as the case may be, on or before the 31st day of March of a financial year, in consequence of,-

(a) a search under section 132 which is initiated; or (b) search under section 132 for which the last of authorisations is executed; or (c) a requisition made under section 132A, after the 15th day of March of such financial year, a period of fifteen days shall be excluded for the purpose of computing the period of limitation as per this section and the notice issued under clause (b) of section 148A in such case shall be deemed to have been issued on the 31st day of March of such financial year:]

Provided also that for the purposes of computing the period of limitation as per this section, the time or extended time allowed to the assessee, as per show-cause notice issued under clause (b) of section 14SA or the period during which the proceeding under section 148A is stayed by an order or injunction of any court, shall be excluded:

Provided also that where immediately after the exclusion of the period referred to in the immediately preceding proviso, the period of limitation available to the Assessing Officer for passing an order under clause (d) of section 148A 30[does not exceed seven days), such remaining period shall be extended to seven days and the period of limitation under this sub-section shall be deemed to be extended accordingly

Explanation. For the purposes of clause (b) of this sub-section, "asset" shall include immovable property, being land or building or both, shares and securities, loans and advances. deposits in bank account.

((1A) Notwithstanding anything contained in sub-section (1). where the income chargeable to tax represented in the form of an asset or expenditure in relation to an event or occasion of the value referred to in clause (b) of sub-section (1), has escaped the assessment and the investment in such asset or expenditure in relation to such event or occasion has been made or incurred, in more than one previous years relevant to the assessment years within the period referred to in clause (b) of sub-section (1), a notice under section 148 shall be issued for every such assessment year for assessment, reassessment or recomputation, as the case may be.]

(2) The provisions of sub-section (1) as to the issue of notice shall be subject to the provisions of section 151.)

8.1 Finance Act, 2021 amended re-assessment related provisions w.e.f. 01.04.2021. These amended provisions made a significant change in the way re-assessment proceedings are initiated and the limitation period in relation thereto. One of the key amendments is introduction of section 148A. Pursuant to section 148A, it is mandatory for the Assessing Officer to provide an opportunity of being heard to the assessee by serving a notice of show cause as to why the notice u/s. 148 should not be issued. Further, Assessing Officer is required to consider reply, if any, filed by the assessee in response to the said show cause notice. The procedural requirement contained in section 148A, for the Assessing Officer to comply with, mentions that – i. Assessing Officer shall conduct any enquiry, if required, with the approval of the specified authority, with respect to information which suggests that income chargeable to tax has escaped assessment. ii. He shall provide an opportunity of being heard to the assessee with the prior approval of the specified authority. iii. He shall consider the reply of the assessee furnished, if any in response to the show cause notice. iv. He shall decide on the basis of material available on record and after considering the reply of the assessee as to fitness of the case to issue a notice u/s.148 for which a specific order shall be passed within the stipulated time. v. Thus, section 148A under the new regime of re- assessment is a provision brought on the statute which is in the nature of condition precedent to issuing of notice u/s.148.

8.2 Also, first proviso to section 149 under the new regime introduced by the Finance Act, 2021 prescribed limitation on issuance of notice by taking into consideration the time limit available under the old regime for the relevant assessment year. First proviso to section 149 states, “Provided that no notice u/s.148 shall be issued at any time in a case for the relevant Assessment Year beginning on or before 1st day of April, 2021, if a notice under section 148 or section 153A or section 153C could not have been issued at that time on account of being beyond the time limit specified under the provisions of clause (b) of sub-section (1) of this section or section 153A or section 153C, as the case may be, as they stood immediately before the commencement of the Finance Act, 2021”

8.3 This proviso to section 149 provided a defense and limitation on issuance of notices under the new regime of re- assessment relating to the Assessment Years covered by the old regime. Thus, first proviso to section 149 under the new regime limits the retrospective operation to protect the interest of assessee. Section 149(1)(b) of the old regime provided a time limit of six years from the end of the relevant assessment year for issuing notice under Section 148 of the Act. For the relevant assessment year, being Assessment Year 2013-2014, 6th year expired on 31.03.2020. The notice under Section 148 of the Act, in the present case, is issued on 20.07.2022, i.e., clearly beyond the period of limitation prescribed in Section 149 read with the first proviso to the said section as per the old regime.

8.4 In the present context, we need to deliberate on the purpose of first proviso to section 149 under the new regime so as to decide on the issue raised by the assessee in the present appeal. The first proviso to Section 149 of the Act provides that no notice under Section 148 shall be issued at any point of time in a case for a relevant assessment year beginning on or before the 1st day of April 2021, if a notice under Section 148 could not have been issued at that time on account of being beyond the time limit specified under the provision of clause (b) of sub-section (1) of this Section, as it stood immediately before the commencement of the Finance Act, 2021. The purpose of the first proviso to Section 149 of the Act is consistent with the stated object of the government to make prospective amendments in the Act. Accordingly, the proviso provides that up to Assessment Year 2021-22 (period before the amendment), the period of limitation as prescribed in the erstwhile provisions of Section 149(1)(b) of the Act would be applicable and only from Assessment Year 2022-23, the period of ten years as provided in Section 149(1)(b) of the Act, would be applicable.

46. The ingredients of the proviso could be broken down for analysis as follows: (1) 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. Thus, a notice could be issued under Section 148 of the new regime for assessment year 2021-2022 and before only if the time limit for issuance of such notice continued to exist under Section 149(1)(b) of the old regime. …………….

Rupees fifty lakhs.

10.1 Hon'ble Court took into consideration the stand of the Revenue to interpret the first proviso to section 149 of the Act to be applicable only for Assessment Years 2013-14 and 2014-15, i.e., for the Assessment Years where the period of limitation has already expired on 01.04.2021 which was held to be not correct because that would render the first proviso to section 149 under a new regime redundant and otiose. According to the Hon'ble Court, if such a stand of the Revenue is accepted then, it would amount to re-writing the proviso to section 149(1)(b). Hence such an interpretation as canvassed by the Revenue is clearly not permissible in law. Hon'ble Court thus, concluded that the first proviso to section 149(1)(b) is an exception to the period of limitation and provides for a restriction on the notices issued u/s.148 which are issued for Assessment Years up to 2021-22 beyond a certain date. It also took into account the extension of time as contained in fifth and sixth proviso to section 149(1)(b) while concluding on the period of limitation available for issuing the notice u/s.148. Hon'ble Court, thus concluded that if a notice is not issued within the time prescribed under the first proviso to section 149(1)(b) then, such period cannot be extended by fifth proviso and sixth proviso. Relevant paragraph is extracted below: “30. With respect to applicability of the fifth proviso and the sixth proviso to Section 149(1)(b) of the Act for extension of limitation for issuing the notice under Section 148 of the Act, fifth and sixth provisos are only applicable with respect to the period of limitation prescribed in Section 149(1) of the Act, i.e., three years or ten years, as the case may be. Fifth proviso or sixth proviso extend limitation for issuing notice under Section 149 of the Act, however, the first proviso is an exception to the period of limitation and provides for a restriction on the notices under Section 148 being issued for Assessment Years upto 2021-22 beyond a certain date. Therefore, the way the Section would operate, is first to decide whether a notice issued under Section 148 of the Act is within the period of limitation in terms of Section 149(1)(a) or (b) of the Act. To decide whether the notice is within the period of limitation under Section 149(1)(a) or (b) of the Act, the extension of time as per the fifth and/or sixth proviso would be considered. Once, the notice is otherwise within the period of limitation, thereafter one has to see whether the said time limit is within the restriction provided in the first proviso or not. If the notice is beyond the restriction period, the notice is invalid. The fifth and/or the sixth proviso cannot apply at this stage to extend the period of restriction as per the first proviso. Hence, if a notice is not within the time prescribed under the first proviso to Section 149(1) of the Act, then such period cannot be extended by fifth proviso and sixth proviso.

In this background, from the perusal of provisions 11. contained in section 149(1), we note that no notice u/s.148 shall be issued for the relevant Assessment Year prescribing the conditions and time limit. It does not refer to show cause notice/s.148A(b). The first proviso to section 149(1)(b) also carves out an exception to the limitation in respect of notice u/s.148 and not under section 148A(b). Further, Hon'ble High Court of Bombay in the case of Hexaware Technologies Ltd. (supra) in para-30 has categorically held that if a notice u/s.148 is not with the time prescribed under the first proviso to section 149(1)(b) then, such period cannot be extended by fifth proviso and sixth proviso to the said section.

11.1 Admittedly, the undisputed fact in the present case is that impugned notice issued u/s.148 is dated 20.07.2022 which is after the limitation expired on 31.03.2020 within the meaning of first proviso to section 149(1)(b). In view of the above stated deliberations, on the factual matrix of the present case and the applicable law including the jurisprudence discussed above, we hold that notice for Assessment Year 2013-14 issued on 20.07.2022 u/s.148 of the new regime is barred by limitation and hence bad in law, liable to be quashed, resulting in impugned re- assessment proceedings as well as the impugned assessment order bad in law.

12.1 Hon'ble Supreme Court while dismissing the SLP filed by Revenue in the case of ACIT vs. Nehal Ashit Shah in SLP (Civil) Diary No(s). 57209/2024, dated 04.04.2025 held that it does not survive for further consideration. While holding so, Hon'ble Court noted in para 5 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.”

12.2 In view of above stated deliberation, both on facts and law including the applicable jurisprudence, we hold that notice for A.Y. 2013-14 issued on 20.07.2022 u/s 148 of the new regime is barred by limitation and hence bad in law, liable to be quashed, resulting in impugned reassessment proceedings as well as the impugned reassessment order bad in law. Accordingly, ground no. 01 raised by the assessee is allowed.

12.3 Since, the impugned order itself has been held to be bad in law in terms of our above stated observations and findings, grounds raised by the assessee in Form 36, and additional grounds are rendered academic and therefore, not adjudicated upon.

Order is pronounced in the open court on 28 January, 2026