KAMLESH KUKREJA, RAIPUR,RAIPUR vs. INCOME TAX OFFICER, WARD-1(1), RAIPUR, RAIPUR

4. On the facts and circumstances of the case and in law, CIT(A) has erred in sustaining addition of Rs.2,29,87,000 on disallowance of business expenditure i.e., purchases of goods, is unjustified; assessment made u/s143(3); books of account has been accepted; sales of Rs.13,48,22,653 & purchases of Rs.12,54,31,935 has been accepted; resultant GP would be 23.28% from GP shown at 6.23% (i.e., GP would increase by 17.05%) which is impossible in the 'trading business' of assessee; addition is liable to be deleted; relied on Smt Sudha Loyalka (2018) (Del-Trib).

5. On the facts & circumstances of the case and in law, CIT(A) has erred in sustaining addition of Rs.2,29,87,000 treating it as unexplained business income; while it is purchase of material ofRs.2,29,87,000 from 8 parties & it is included in total purchases of Rs.12,54,31,935 which is accepted by the AO; corresponding sales has been accepted by the AO; addition made merely on presumption & surmises without bringing any material / evidence on record, is unjustified & is liable to be deleted.

6. The appellant craves leave, to add, urge, alter, modify or withdraw any grounds before or at the time of hearing.

Kamlesh Kukreja Vs. ITO, Ward-1(1), Raipur 2.1 Further, the assessee had furnished following additional grounds stating that these are legal grounds raised first time before us, which goes to the root of matter, therefore, the assessee is entitled to urge these grounds in terms of judgment by the Hon’ble Apex Court in the case of NTPC Ltd. (1998) (SC):

Addl. Gr. No. 1 "On the facts and circumstances of the case and in law, order u/s148A(d) dt.26-7-22 and reopening u/s148 dt.29-7-22 for AY15-16 under new regime are invalid; it is barred by !imitation i.e., beyond the period of 6 years as first proviso of secl49(1)(b) of new regime; reopening u/sl48A(d) & u/sl48 are invalid and is liable to be quashed; relied on Rajeev Bansal (2024) (SC)."

Addl. Gr. No. 2 "On the facts and circumstances of the case and in law, notice u/s148 dt.29-7-22 is invalid, issued by lT0-1(1), Raipur ('Jurisdictional AO'), while it ought to have been made by 'faceless AO' after the scheme framed u/s151A dt.29-3-22/ CBDT Notification No.18 dt.29-3-22; notice u/s 148 dt.29-7-22 issued by the JAO in violation of scheme framed u/s151A dt.29-3-22, would be in valid; hence, assessment made u/sl47 rws.143(3) rws.1448 dt.30-5-23 would be invalid and is liable to be quashed."

Addl. Gr. No. 3 "On the facts & circumstances of the case and in law, CIT(A) has erred in sustaining addition of Rs.2,29,87,000 i.e., alleged bogus purchase of 'goods' from 8 parties; assessee is 'trader in goods'; 'corresponding sales' of such trading items has been accepted by AO; addition of Rs.2,29,87,000 is unjustified; is liable to be deleted; relied on Nitin Ramdeoji Lohia (2022) (Born HC)."

Addl.Gr.No.4 "On the facts and circumstances of the case and in law, ClT(A) has erred in sustaining addition of Rs.2,29,87,000 on disallowance of business expenditure i.e., purchases of goods, is unjustified; assessment made u/s143(3); books of account has been accepted; sales ofRs.13,48,22,653 & purchases of Rs.12,54,31,935 has been accepted; resultant GP would be 23.28% from GP shown at 6.23% (i.e., GP would increase by 17.05%) which is impossible in the 'trading business' of Addl.Gr.No.5 On the facts & circumstances of the case and in law, CIT(A) has erred in sustaining addition of Rs.2,29,87,000 creating· it as unexplained business income; while it is purchase of material of Rs.2,29,87,000 from 8 parties & it is included in total purchases of Rs.12,54,31,935 which is accepted by the AO; corresponding sales has been accepted by the AO; addition made merely on presumption & surmises without bringing any material/ evidence on record, is unjustified & is liable to be deleted."

Kamlesh Kukreja Vs. ITO, Ward-1(1), Raipur 7. Dissatisfied with the aforesaid order Ld. CIT(A), assessee preferred an appeal before the Tribunal, which is under consideration in the present case.

(i) Notice issued u/s 148 (old regime) for AY 2015-16 – 30.06.2021, which is considered to be deemed notice u/s 148A(b) in terms of order of Hon’ble Apex Court in the case of UOI Vs Ashish Agrawal (2022) 444 ITR 1 dated 04.05.2022. (Copy placed before us at page no. 1 of the APB-relevant portion extracted).

(ii) As per provisions of the Act, the time limit for reopening u/s 148 for AY 2015-16, for 6 years, as per 1st proviso to section 149(1)(b) was available up to 31.03.2022. (iii) As per judgment in the case of Ashish Agrawal (supra), the Show Cause Notice (SCN), u/s 148A(b) was to be issued within 30 days from 04.05.2022, i.e., up to 03.06.2022, whereas the notice u/s 148A(b) in the instant case was issued on 26.05.2022, which is within 30 days, however the same remains undelivered. Thereafter, another SCN u/s 148A(b) was issued on 08.06.2022, which is beyond the period of 30 days permitted by the Hon’ble Apex Court as per judgment in the case of Ashish Agrawal (supra). (Copy placed before us at page no. 2 & 3 of the APB-relevant portion extracted).

(iv) The order u/s 148A(d) was issued on 26.07.2022 (Copy placed before us at page no. 4 to 6 of the APB-relevant portions extracted hereunder).

(v) It was the contention that taking the dates from first SCN u/s 148A(b) dated 26.05.2022, which was validly issued though was not delivered and no response was furnished by the assessee. Adding 14 days from the date of issuance of notice u/s 148A(b) for response by the assessee as permitted by the Hon’ble Apex Court in Ashish Agrawal (supra), the time available to issue order u/s 148 was arrived at 09.06.2022 Kamlesh Kukreja Vs. ITO, Ward-1(1), Raipur (26.05.2022 + 14 days). It was the submission that as the notice u/s 148 (old regime) was issued on 30.06.2021, therefore, there was no / “Zero”, surviving period left to be added, in terms of order of Hon’ble Apex Court in the case of UOI Vs Rajeev Bansal (2024) 167 taxmann.com 70 (SC) (03.10.2024) (Para 112).

(vi) In terms of aforesaid submissions, it is further clarified by the Ld. AR that the notice u/s 148 (under new regime) was also required to be issued on or before 09.06.2022, whereas the same was issued on 29.07.2022. (Copy placed before us at page no. 7 & 8 of the APB- relevant portion extracted).

Kamlesh Kukreja Vs. ITO, Ward-1(1), Raipur 10. To support the aforesaid contentions, Ld. AR placed his reliance on the order of Coordinate Bench of ITAT, Raipur in the case of kachrulal Jitendra Kumar Vs. ITO in for the AY 2014-15 vide order dated 05.02.2025, wherein the aforesaid issue raised in the present case has been delt with and deliberated by the Tribunal and have held as under:

16. The Finance Act, 2021 had substituted the entire scheme of reassessment under Sections 147 to 151 of the Income Tax Act w.e.f 1st April 2021. Broadly speaking, the changes made available on the statute by the legislature in all its wisdom are, viz. (i) Section 148 now mandates the assessing officer to initiate proceedings only based on prior information and with the prior approval of the specified authority; (ii) Section 148A requires the A.O to provide an opportunity of being heard to the assessee before deciding to issue a reassessment notice u/s. 148 of the Act; (iii) Section 148A requires the A.O to, viz. (a) conduct any enquiry, if required, with the prior approval of the specified authority; (b) provide an opportunity of being heard to the assessee, with the prior approval of the specified authority; (c) consider the reply furnished by assessee, if any, in response to the show-cause notice; and (d) decide on the basis of material available on record including reply of the assessee, whether or not it is a fit case to issue a notice u/s.148 of the Act by passing an order; (iv) Further, the time limit under Section 149 has been reduced from four years to three years from the end of the relevant assessment year for all situations. However, an exception has been carved out, as per which, an assessment can be reopened beyond three years but within ten years from the end of the relevant assessment year if the income chargeable to tax which has escaped assessment amounts to or is likely to amount to Rupees fifty lakhs or more; (v) The "1st proviso" to Section 149 prohibits the issuance of a reassessment notice under the new regime if such notice have become time-barred under the old regime; and (vi) the sanctioning authorities specified under Section 151 of the new regime are different from those specified under the old regime.

Kamlesh Kukreja Vs. ITO, Ward-1(1), Raipur 17. Also, Section 151 of the new regime specifies the following authorities for Sections 148 and 148A of the Act, viz. (i) Principal Commissioner or Principal Director or Commissioner or Director if three years or less have elapsed from the end of the relevant assessment year; and (ii) Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General if more than three years have elapsed from the end of the relevant assessment year.

19. As the notifications dated March 31, 2021 and April 27, 2021 issued by the Central Government under Section 3(1) of TOLA, 2020 contained an explanation declaring that the provisions under the old regime shall apply to the reassessment proceedings initiated under them, therefore, the A.Os had accordingly issued Kamlesh Kukreja Vs. ITO, Ward-1(1), Raipur reassessment notices between April 1, 2021 and June 30, 2021 by relying on the provisions under Section 148 of the old regime. These reassessment notices issued between April 1 2021 and June 30, 2021 under the old regime were challenged by the assessee's before various High Courts, which quashed the same for the reasons, viz.(i) Sections 147 to 151 stood substituted by the Finance Act, 2021 from April 1, 2021; (ii) that in the absence of any saving clause, the department could initiate reassessment proceedings after April 1, 2021 only in accordance with the provisions of the new regime since they were remedial, beneficial, and meant to protect the rights and interests of the assessees; and (iii) the Central Government could not exercise its delegated authority to re-activate the pre- existing law.

"8. However, at the same time, the judgments of the several High Courts would result in no reassessment proceedings at all, even if the same are permissible under the Finance Act, 2021 and as per substituted sections 147 to 151 of the IT Act. The Revenue cannot be made remediless and the object and purpose of reassessment proceedings cannot be frustrated. It is true that due to a bonafide mistake and in view of subsequent extension of time vide various notifications, the Revenue issued the impugned notices under section 148 after the amendment was enforced w.e.f. 01.04.2021, under the unamended section 148. In our view the same ought not to have been issued under the unamended Act and ought to have been issued under the substituted provisions of sections 147 to 151 of the IT Act as per the Finance Act, 2021. There appears to be genuine non-- application of the amendments as the officers of the Revenue may have been under a bonafide belief that the amendments may not yet have been enforced. Therefore, we are of the opinion that some leeway must be shown in that regard which the High Courts could have done so. Therefore, instead of quashing and setting aside the reassessment notices issued under the unamended provision of IT Act, the High Courts ought to have passed an order construing the notices issued under unamended Act/unamended provision of the IT Act as those deemed to have been issued under section 148A of the IT Act as per the new provision section 148A and the Revenue ought to have been permitted to proceed further with the reassessment proceedings as per the substituted provisions of sections 147 to 151 of the IT Act as per the Finance Act, 2021, subject to compliance of all the procedural Kamlesh Kukreja Vs. ITO, Ward-1(1), Raipur requirements and the defences, which may be available to the assessee under the substituted provisions of sections 147 to 151 of the IT Act and which may be available under the Finance Act, 2021 and in law. Therefore, we propose to modify the judgments and orders passed by the respective High Courts as under:

(i) The respective impugned section 148 notices issued to the respective assessees shall be deemed to have been issued under section 148A of the IT Act as substituted by the Finance Act, 2021 and treated to be show cause notices in terms of section 148A(b). The respective assessing officers shall within thirty days from today provide to the assessees the information and material relied upon by the Revenue so that the assessees can reply to the notices within two weeks thereafter; (ii) The requirement of conducting any enquiry with the prior approval of the specified authority under section 148A(a) be dispensed with as a onetime measure vis à vis those notices which have been issued under Section 148 of the unamended Act from 01.04.2021 till date, including those which have been quashed by the High Courts; (iii) The assessing officers shall thereafter pass an order in terms of section 148A(d) after following the due procedure as required under section 148A(b) in respect of each of the concerned assessees; (iv) All the defences which may be available to the assessee under section 149 and/or which may be available under the Finance Act, 2021 and in law and whatever rights are available to the Assessing Officer under the Finance Act, 2021 are kept open and/or shall continue to be available and; (v) The present order shall substitute/modify respective judgments and orders passed by the respective High Courts quashing the similar notices issued under unamended section 148 of the IT Act irrespective of whether they have been assailed before this Court or not."

(i) the notices issued u/s. 148 of the Act to the respective assessees under the old regime during the period 01.04.2021 to 30.06.2021 shall be deemed to have been issued u/s.148A of the Income Tax Act as substituted by the Finance Act, 2021 and treated to be show cause notices in terms of Section 148A(b) of the Act; (ii) the A.O shall within thirty days from the date of order of the Hon'ble Apex Court in the case of Union of India & Ors Vs. Ashish Agrawal (supra) i.e. 04.05.2022 provide to the assessee information/material that was relied upon by the department which suggested that his income chargeable to tax had escapement; (iii) that a period of two weeks shall thereafter be allowed to the assessee's to file reply in response to the notice issued u/s. 148A(b) of the Act; (iv) the A.O shall, thereafter, pass an order u/s. 148A(d) of the Act with the prior approval of the specified authority, within one month from the end of the month, in which, the assessee's reply is received by him; or where no such reply is furnished, within one month from the end of the month in which time or extended time allowed to furnish the aforesaid reply expires.

(i) The A.O is required to obtain prior approval of the specified authority according to section 151 of the new regime before passing an order under section Kamlesh Kukreja Vs. ITO, Ward-1(1), Raipur 148A(d) or issuing a notice under section 148 of the Act which were required to be issued within the time limit specified under section 151 of the new regime r.w. TOLA, 2020, where applicable; (ii) that the directions issued by the Hon'ble Apex Court in the case of Union of India & Ors Vs. Ashish Agrawal (supra) applied PAN-India including all the 90,000 reassessment notices issued under section 148 of the old regime during the period April 1, 2021 to June 30, 2021.

(iii) the department was directed to provide all the relevant material or information to the assessee's and thereafter, allow the assessee's to respond to the "Show cause notices" by availing all the defences including those available under Section 149 of the Act.

(iv) that as per Section 148A(b) of the Act, the A.O. had to comply with two requirements, viz. (i) issuance of a show cause notice; and (ii) supply of all the relevant information which formed the basis of the show-cause notice.

(v) the total time that was excluded for computation of limitation for the deemed notices is, viz. (i) the time during which the show-cause notices were effectively stayed, that is, from the date of issuance of the deemed notice between 1st April, 2021 and 30th June, 2021 till the supply of relevant information or material by the assessing officers to the assesses in terms of the directions in Union of India & Ors Vs. Ashish Agarwal (supra); and (ii) two weeks allowed to the assesses to respond to the show-cause notices.

(vi) that the time surviving under the Act read with TOLA, 2020 that would be available to the department to complete the remaining proceedings in furtherance Kamlesh Kukreja Vs. ITO, Ward-1(1), Raipur of the deemed notices, including issuance of reassessment notices u/s. 148 of the new regime could be calculated by computing the number of days between the date of issuance of the deemed notice and June 30, 2021. For the sake of clarity, the observations of the Hon'ble Apex Court in the case of Union of India & Ors. Vs. Rajeev Bansal (supra) are culled out as under:

114. In view of the above discussion, we conclude that: a. After 1 April 2021, the Income Tax Act has to be read along with the substituted provisions; b. TOLA will continue to apply to the Income Tax Act after 1 April 2021 if any action or proceeding specified under the substituted provisions of the Income Tax Act falls for completion between 20 March 2020 and 31 March 2021; c. Section 3(1) of TOLA overrides Section 149 of the Income Tax Act only to the extent of relaxing the time limit for issuance of a reassessment notice under Section 148; d. TOLA will extend the time limit for the grant of sanction by the authority specified under Section 151. The test to determine whether TOLA will apply to Section 151 of the new regime is this: if the time limit of three years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under Section 151(i) has extended time till 30 June 2021 to grant approval; e. In the case of Section 151 of the old regime, the test is: if the time limit of four years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under Section 151(2) has extended time till 31 March 2021 to grant approval; f. The directions in Ashish Agarwal (supra) will extend to all the ninety thousand reassessment notices issued under the old regime during the period 1 April 2021 and 30 June 2021; g. The time during which the show cause notices were deemed to be stayed is from the date of issuance of the deemed notice between 1 April 2021 and 30 June 2021 till the supply of relevant information and material by the assessing officers to the assesses in terms of the directions issued by this Court in Ashish Agarwal (supra), and the period of two weeks allowed to the assesses to respond to the show cause notices; and h. The assessing officers were required to issue the reassessment notice under Section 148 of the new regime within the time limit surviving under the Income Tax Act read with TOLA. All notices issued beyond the surviving period are time barred and liable to be set aside;

 Notice u/s. 148 of the Act under the old regime (deemed notice u/s 148A) was issued by the A.O to the assessee firm on 30.06.2021;  show-cause notice u/s 148A(b) of the Act was issued by the A.O to the assessee firm on 26.05.2022; Kamlesh Kukreja Vs. ITO, Ward-1(1), Raipur  the time period of two weeks (14 days) from the date of issuing of notice u/s. 148A(b) dated 26.05.2022 [as per the judgment of the Hon'ble Apex Court in the case of Union of India & Ors Vs. Ashish Agrawal (supra)] lapsed on 08.06.2022;  the balance/surviving period available with the A.O to issue notice u/s 148 of the Act (under new regime) was 1 day [time between 30.06.2021 (the date of issuance of notice u/s.148A of the Act) AND 30.06.2021 i.e. (extended time period under TOLA, 2020);  as the balance/surviving period available with the A.O for passing an order under clause (d) of 148A of the Act was 1 day i.e. less than 7 days, therefore, as per the "fourth proviso" to Section 148A of the Act, the period of limitation so available would stand extended to 7 days;  the A.O could have validly issued notice u/s. 148 of the Act (under the new regime) latest by 14.06.2022; 24. As the A.O in the present case had issued notice u/s. 148 of the Act, dated 25.07.2022 i.e. much subsequent to lapse of the period of limitation as was available with him upto 13.06.2022, therefore, as stated by the Ld. AR (subject to correction of the date by the Ld. AR as 16.06.2022), and rightly so, the same is found to be barred by limitation. Accordingly, the assessment order passed by the A.O u/s. 147 r.w.s. 144B of the Act, dated 29.04.2013 in absence of a valid notice issued u/s. 148 of the Act cannot be sustained and, is quashed.

Kamlesh Kukreja Vs. ITO, Ward-1(1), Raipur 13. Based on aforesaid submissions, Ld. Sr. DR argued that, in terms of directions of Hon’ble Apex Court in the case of Ashish Agrawal (supra), the first notice u/s 148A(d) was issued on 26.05.2022 (within 30 days from 04.05.2022 the date of order by Hon’ble Apex Court), however, the same remain undelivered, therefore, another letter was sent on 08.06.2022 through email which was duly delivered to the assessee on 08.06.2022 seeking reply in response to notice u/s 148A(b). The assessee was allowed to file his reply with other relevant material within two weeks from the date of said letter. However, no reply was filed by the assessee. Presuming that the assessee has nothing to say in compliance an order u/s 148A(d) was passed on 26.07.2022 and notice u/s 148 was issued on 29.07.2022 with prior approval of the specified authority i.e., Chief Commissioner of Income Tax, Raipur. Ld. Sr. DR further submitted that as the reopening proceedings are completed in accordance with the directions of Hon’ble Apex Court the order u/s 148A(d) was well within time as per the Act. In terms of aforesaid submissions and contentions, it was the prayer that the contention of assessee regarding failure on the part of AO to issue SCN u/s 148(b), passing of order u/s 148A(d) and issuance of notice u/s 148 are barred by limitation, is not maintainable and deserves to be rejected.

Kamlesh Kukreja Vs. ITO, Ward-1(1), Raipur 14. We have considered the rival submissions, perused the material available on record and case laws placed before us to support the contentions by the Ld. AR. After having given a thoughtful consideration to the aforesaid facts, circumstances, observations and judicial pronouncements, we are of the firm conviction that the case of assessee is squarely covered by the decision of this tribunal in the case of Kachrulal Jitendra Kumar Vs. ITO (supra).

15. Our aforesaid view is further fortified by the judgment of Hon’ble Delhi High Court in the case of Ram Balram Buildhome (P.) Ltd. Vs. Income Tax Officer (2025) 171 taxmann.com 99 (Delhi), wherein under the similar facts and circumstances Hon’ble High Court has held as under:

Analysis – In the Factual Context

Kamlesh Kukreja Vs. ITO, Ward-1(1), Raipur 71. It is contended on behalf of the Revenue that the AO is required to pass an order under Section 148A(d) of the Act by the end of the month following the month on which the reply to the notice under Section 148A(b) of the Act was received. Thus, the order under Section 148A(d) of the Act as well as the notice under Section 148 of the Act (both dated 30.07.2022) are within the prescribed period. This contention is without merit as it does not take into account that proceedings under Section 148A of the Act necessarily required to be completed within the period available for issuing notice under Section 148 of the Act, as prescribed under Section 149 of the Act. Thus, the time available to the AO to pass an order under Section 148A(d) of the Act was necessarily truncated and the same was required to be passed on or before 12.07.2022. The fourth proviso to Section 149 of the Act did not come into play as the time period available for the AO to pass an order under Section 148A(d) of the Act was in excess of the seven days.

18. In backdrop of aforesaid facts of the present case, as the order u/s 148A(d) of the Act was issued on 26.07.2022 and the notice u/s 148 (new regime) of the Act was issued on 29.07.2022, much beyond the period of limitation as was available with him up to 14.06.2022, therefore, the contentions raised by Ld. AR found to be of substance that the order u/s 148A(d) as well as the notice u/s 148 (new regime) are barred by limitation, accordingly, the assessment order passed by the Ld. AO u/s 147 r.w.s. 144B of the Act dated 30.05.2023, dehors a valid notice issued u/s 148 of the Act cannot be sustained, liable to be quashed, and we do so.

Order pronounced in the open court on 14/02/2025.

Sd/- Sd/- (RAVISH SOOD) (ARUN KHODPIA) �ाियक सद� / JUDICIAL MEMBER लेखा सद� / ACCOUNTANT MEMBER रायपुर/Raipur; िदनांक Dated 14/02/2025 Vaibhav Shrivastav आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : अपीलाथ� / The Appellant- Kamlesh Kukreja 1. 2. ��थ� / The Respondent- ITO, Ward-1(1), Raipur 3. The Pr. CIT, Raipur (C.G.) िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, रायपुर/ DR, ITAT, 4. Raipur 5. गाड� फाईल / Guard file. // स�ािपत �ित True copy //