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Facts
The assessee challenged the order of the CIT(A) for A.Y. 2015-16, primarily on the jurisdictional ground that the reopening of assessment under sections 147/148 of the Income Tax Act was bad in law and barred by limitation. Other grounds related to disallowance of short-term capital gain, application of Section 115BBE, and levy of interest and penalty. The assessee contended that the reassessment notice was issued beyond the permissible period under TOLA, rendering it invalid.
Held
The Tribunal, relying on Supreme Court judgments in Ashish Agrawal and Rajeev Bansal cases and a prior ITAT decision, noted that the Revenue had conceded that reassessment notices for A.Y. 2015-16 issued after April 1, 2021, under TOLA were invalid and time-barred. Accordingly, the reopening of assessment and the consequent assessment order for A.Y. 2015-16 were held to be bad in law and quashed, making other grounds of appeal infructuous.
Key Issues
Validity of reopening of assessment for A.Y. 2015-16 under section 148 of the Income Tax Act, read with TOLA, on grounds of limitation as per Supreme Court pronouncements.
Sections Cited
Section 250 of the Income Tax Act, 1961, Section 147 of the Income Tax Act, 1961, Section 148 of the Income Tax Act, 1961, Section 148A(b) of the Income Tax Act, 1961, Section 149 of the Income Tax Act, 1961, Section 115BBE of the Income Tax Act, 1961, Section 68 of the Income Tax Act, 1961, Section 234A/B/C of the Income Tax Act, 1961, Section 271(1)(c) of the Income Tax Act, 1961, Section 3(1) of Taxation and Other Laws (Relaxation of certain provisions) Ordinance, 2020 (TOLA)
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Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD
Before: SHRI SANJAY GARG & SMT. ANNAPURNA GUPTA
The present appeal has been filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (hereinafter referred to as “NFAC”), Delhi (hereinafter referred to as “CIT(A)”) dated 29.05.2025 passed under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) and relates to Assessment Year (A.Y.) 2015-16.
“1. The Ld. CIT(A) has erred in law and on facts of the case in upholding reopening of assessment u/s. 147 of the Act which is bad in law and without jurisdiction.
2. The learned CIT(A) erred in law and on facts in confirming disallowance of short-term capital gain of Rs. 68,15.352/- arising from sale of shares of M/s Looks Health Services Limited and adding it back to the total income u/s 68 of the Act.
3. The learned CIT(A) has erred in confirming the action of the Ld. A.O which is purely based on surmises and conjectures that the difference in purchase and sale price of the share is unusually high, though the revenue has not brought any material on record to support its finding that there has been collusion between the broker and the appellant for the introduction of his undisclosed money.
4. The learned CIT(A) has erred in law and on facts of the case in confirming invoking of provisions of Section 115BBE of the Act.
5. The learned CIT(A) and Ld. AO have passed the order without properly appreciating the facts and they further erred in grossly ignoring various submissions, explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impugned order. Their action is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed.
6. The learned CIT(A) has erred in law and on facts of the case in confirming action of the Id. AO in levying interest u/s. 234A/B/C of the Act.
7. The learned CIT(A) has erred in law and on facts in confirming action of Ld.AO in initiating penalty proceedings under Section 271(1)(c) of the Act.
8. The appellant craves leave to add, amend, alter. edit, delete, modify or change all or any of the grounds of appeal at the time of or before the hearing of the appeal.”
3. At the outset itself, Ld. Counsel for the assessee stated that on the legal ground raised by the assessee in Ground No.1, the issue stands covered in favour of the assessee vide judgment of the ITAT in in case of DCIT vs. Hindva Builders, dated 01.01.2026. Copy of the order was placed before Arya vs. DCIT] A.Y. 2015-16 - 3 – us. Ld. Counsel for the assessee stated that the challenge to the validity of the assessment framed in the present case was on the ground of limitation. He contended that the impugned assessment year was A.Y. 2015-16 and originally, notice for reopening of the case of the assessee was issued u/s.148 of the Act on 09.06.2021, within the extended time period as per Taxation and Other laws (Relaxation of certain provisions) Ordinance, 2020 (in short, “TOLA”). That pursuant to the judgment of the Hon’ble Supreme Court in the case of Union of India and Ors. Vs. Ashish Agrawal, [2022] 444 ITR
01. (SC), the notice issued u/s.148 of the Act was deemed to be notice u/s.148A(b) of the Act as per the amended provisions (new regime) relating to the reopening of assessment which had come into operation w.e.f. 01.04.2021. That, thereafter, in accordance with the directions issued by the Hon’ble Supreme Court in the case of Ashish Agrawal (supra), the notice u/s.148 of the Act in this case was issued on 30.08.2022. Ld. Counsel for the assessee pointed out that in the case of Hindva Builders (supra), the ITAT noted that Hon’ble Supreme Court in the case of Union of India vs. Rajeev Bansal, [2024] 469 ITR
46. (SC) had noted that the Revenue had conceded before the Hon’ble Apex Court to the effect that so far as the A.Y. 2015-16 is concerned, the Revenue could not have issued the notices u/s.3(1) of TOLA considering the time period as prescribed u/s.149 of the Act w.e.f. 01.04.2021. He pointed out that in the said case, i.e Hindva (supra) the DR had conceded that as per the said judgment of the Hon’ble Apex Court in the case of Rajeev Bansal (supra), the reopening of assessment for A.Y. 2015-16 in the extended time period by TOLA between 01.04.2021 to 30.06.2021 was bad in law and barred by [Vineet Arya vs. DCIT] A.Y. 2015-16 - 4 – limitation. Our attention was drawn to the findings of the ITAT in this regard at para 3 to para 4 of the order as under:
“3. At the outset, the Ld. Counsel for the assessee has raised the legal/jurisdictional issue that the impugned addition was made by the Assessing Officer (AO) by way of reopening of the assessment u/s.147/148 of the Act. That pursuant to the judgement of Hon’ble Supreme Court in the case of “Union of India and Ors. vs. had Ashish Agrawal (2022) 444 ITR 01 (SC)” notice issued u/s.148 between 01/04/2021 to 30/06/2021 for AY 2015- 16 was deemed to be notice u/s.148A(b) of the Act as per the amended provisions (new regime) relating to the reopening of assessment which has come into operation w.e.f. 01/04/2021. That, thereafter, as per directions issued by the Hon’ble Supreme Court in the case of “Ashish Agrawal (supra)”, the notice u/s.148 of the Act, in this case, was issued on 30/08/2022. The Ld. Counsel has further submitted that this issue was also dealt with by the Hon’ble Supreme Court in the case of “Union of India vs. Rajeev Bansal (2024) 469 ITR 46 (SC)” and the Revenue therein, had conceded to the effect that so far as AY 2015-16 is concerned, the Revenue could not have issued the notices u/s.3(1) of “Taxation and other laws” (Relaxation of certain provisions) Ordinance, 2020 (in short, “TOLA”) as considering the time period as prescribed u/s.149 of the Act, with effect from 01.04.2021, three years would be over on 31/03/2019, which is prior to coming into force of “TOLA” and six years would be completed on 31/03/2022 which is after operation of “TOLA”. In such circumstances, notices for AY 2015-16 were held to be invalid by the Hon’ble Supreme Court in the case of “Rajeev Bansal (supra)”. The Ld. Counsel has, therefore, submitted the reassessment notice issued u/s.148 of the Act for AY 2015- 16, as per concession given by the Revenue before the Hon’ble Supreme Court, was invalid and, therefore, the notice issued u/s 148 of the Act for the assessment for AY 2015-16 after coming into operation of the provisions of section 147 of the Act under new regime, w.e.f. 01/04/2021, was invalid and, therefore, the very reopening of the assessment was bad in law. 3.1. The Ld. DR has also fairly conceded that as per the judgement of the Hon’ble Supreme Court in the case of “Union of India vs. Rajeev Agrawal (supra)”, the reopening of the assessment for AY 2015-16 was bad in law being barred by limitation. 3.2. The Ld. Counsel, in this respect, has relied upon the decision of Hon’ble Gujarat High Court dated 14/07/2025 with the lead case in R/Special Civil Application No.17443/2022 along with various other petitions, wherein, the Hon’ble Jurisdictional High Court on identical issue has made the following observation: “11. During the course of hearing before the Hon'ble Apex Court, Revenue conceded to the effect that so far as Assessment Year 2015-2016 is concerned, Revenue could not have issued the notices under section 3(1) of TOLA as considering the time period as prescribed under section 149 of the Act with effect from 01.04.2021, three years would be over on 31.03.2019 which is prior to coming into force of TOLA and six years Arya vs. DCIT] A.Y. 2015-16 - 5 – would be completed on 31.03.2022 which is after operation of TOLA. In such circumstances, notices for Assessment Year 2015-2016 are held to be invalid by Hon'ble Apex Court in case of Rajeev Bansal (supra).
The Hon'ble Apex Court followed the decision of Rajeev Bansal (supra) in case of Deepak Steel and Power Ltd vs. Central Board of Direct Taxes reported in [2025] 174 taxmann.com 144 (SC) and after recording the concession of the learned advocate for the department and in view of the concession given before the Apex Court by learned advocate appearing for the Revenue as recorded in para 19(f) of the judgment in case of Rajeev Bansal (supra), has quashed and set aside the notice issued after 31.03.2021 under TOLA for Α.Υ. 2015-16 as under: "1. Leave granted.
2. These appeals arise from the order passed by the High Court of Orissa at Cuttack in Writ Petition (C) Nos. 2446 of 2023, 2543 of 2023 dated 1.2.2023 and 2544 of 2023 dated 10.02.2023 respectively by which the High Court disposed of the original writ petitions in the following terms: - "1. The memo of appearance filed by Mr. S. S. Mohapatra, learned Senior Standing Counsel Department for Revenue on behalf of Opposite Parties is taken on record.
In view of the order passed by this Court on 1st December, 2022 in a batch of writ petitions of which W.P. (C) No.9191 of 2022 (Kailash Kedia v. Income Tax Officer) was a lead matter and the subsequent order dated 10th January, 2023 passed in W.P.(C) No.36314 of 2022 (Shiv Mettalicks Pvt. Ltd., Rourkela v. Principal Commissioner of Income Tax, Sambalpur), the Court declines to entertain the present writ petition, but leaves it open to the Petitioner to raise all grounds available to the Petitioner in accordance with law including the in grounds urged the present petition at the appropriate stage as explained by the Court in those orders.
3. The writ petition is disposed of in the above terms."
We heard Mr. Saswat Kumar Acharya, the learned counsel appearing appellants(assessee) and Mr. Chandrashekhar, the learned counsel appearing for the revenue.
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 in Union of India and Ors. v. Rajeev Bansal, reported in 2024 SCC OnLine SC 2693, more particularly, paragraph 19(f) which reads thus:-
Arya vs. DCIT] A.Y. 2015-16 - 6 – "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."
5. 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 completion during the prescribed under the taxation and other period 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 25.6.2021. is concerned is dated 25.6.2021.
6. In view of the aforesaid, in such circumstances referred to above the original writ petition nos.2446 of 2023, 2543 of of 2023 and 2544 of 2023 respectively filed before the High Court of Orissa at Cuttack stands allowed.
The impugned notice therein stands quashed and set aside.” ………. ……… ……… ”19. In view of above, for the foregoing reasons, these petitions are also allowed. The impugned notices issued under section 148 of the Act for the Assessment Year 2015-16 are held to be invalid as same were issued during the extended period from 01/04/2021 to 30/06/2021 under TOLA.”
4. In view of the above stated legal position, since notice issued u/s.148 of the Act for AY 2015-16 has been held to be not valid being barred by limitation, therefore, the very reopening of the assessment in the year under consideration is also bad in law and the same is hereby quashed. Accordingly, the impugned assessment order is not legally sustainable and hence, the same is quashed. Therefore, without going into the merits of the case, the appeal of the revenue (ITA No.1450/Ahd/2024 for AY 2015-16) is hereby dismissed on this legal ground itself.”
Ld. DR fairly agreed with the above. He was unable to point out any distinguishing facts before us.
In view of the above, the legal ground raised by the assessee vis-a-vis the reassessment being invalid on account of the notice issued u/s 148 of the Act being barred by limitation, admittedly stands covered in favour of the assessee by the decision of the Arya vs. DCIT] A.Y. 2015-16 - 7 – ITAT in the case of Hindva Builders(supra). The reopening of the assessment in the present case, relating to A.Y 2015-16, is therefore held to be bad in law and the order passed accordingly u/s 147 of the Act is hereby quashed.
Ground of appeal no.1 is, therefore, allowed.
7. Since, we have quashed the assessment order passed the additions made to the income of the assessee and confirmed by the Ld.CIT(A) do not survive and the remaining grounds raised on the merits of the addition made therefore require no adjudication.
In the result, the appeal of the asessee is allowed in above terms.
This Order pronounced on 03/02/2026 Sd/- Sd/- (SANJAY GARG) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 03/02/2026 S. K. SINHA True Copy आदेश क� �ितिल�प अ�े�षत/Copy of the Order forwarded to : अपीलाथ� / The Appellant 1. 2. ��यथ� / The Respondent. संबंिधत आयकर आयु� / Concerned CIT 3. 4. आयकर आयु�(अपील) / The CIT(A)- �वभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 5. गाड� फाईल / Guard file. 6. आदेशानुसार/ BY ORDER,