SRINIVASA RAO SIRIVURI PROPRIETOR,VIZIANAGARAM vs INCOME TAX OFFICER, VIZIANAGARAM

Income Tax Appellate Tribunal, VISAKHAPATNAM “DIVISION” BENCH, VISAKHAPATNAM

Before: SHRI RAVISH SOOD, HON’BLE & SHRI OMKARESHWAR CHIDARA, HON’BLE

For Appellant: Shri G.V.N. Hari, Advocate

Pronounced: 04.03.2026

आदेश /O R D E R

PER RAVISH SOOD, JM:

The present appeal filed by the assessee is directed against the order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi (for short “CIT(A)”), dated 20.12.2024, which in turn arises from the order I.T.A.No.459/VIZ/2025 Srinivasa Rao Sirivuri passed by the Assessing Officer (for short “A.O”) under section 147 r.w.s. 144 r.w.s. 144B of the Income-Tax Act, 1961 (for short, “the Act”), dated 21.02.2024 for the Assessment Year 2015-16. The assessee has assailed the impugned order on the following grounds of appeal before us:

“1. The impugned appellate order dated 20.12.2024 passed by the learned Commissioner of Income Tax (Appeals) NFAC, Delhi is unjust and uncalled for. 2. The learned Commissioner of Income Tax (Appeals) ought to have considered the grounds of appeal judiciously, in the interests of justice.

3. The learned Commissioner of Income Tax (Appeals) is not justified in sustaining the addition of Rs.89,57,554/- made by the Assessing officer u/s 69A r.w.s 115BBE of the I T.Act towards unexplained cash deposits in the Bank Account are not at all warranted in view of the facts and circumstances of the case.

4. The learned Commissioner of Income Tax (Appeals) ought to have held that the provisions of 115BBE are not applicable to the case of Appellant.

5. The learned Commissioner of Income Tax (Appeals) ought to have appreciated the fact that the so called impugned aggregate cash deposits of Rs.89,57,554/-was fully explainable sources, as the said fully explainable sources which represents sales turnover of the appellant who is engaged in textile business. So the appellant has got no objection to assess his business income at 8% on the impugned aggregate cash deposits of Rs.89,57,554/- which represented nothing but his sales turnover on presumptive basis u/s.44AD of the I.T.Act, in the interests of justice.

6. The learned Commissioner of Income Tax (Appeals) ought to have appreciated that the cash deposits mentioned in the proceedings issued under clause (d) of the Sec.148A of the Income tax Act were of Rs.72.85 lakhs and whereas the cash deposits assessed in the impugned Assessment Order were Rs.89.58 lakhs and hence there was a significant difference between these two amounts and this fact may kindly be considered in the interests of justice.”

Page. No 2 I.T.A.No.459/VIZ/2025 Srinivasa Rao Sirivuri 2. Succinctly stated, the A.O based on the information flagged as per Risk Management Strategy formulated by the CBDT, which revealed that the assessee during the subject year had made substantial cash deposits of Rs.72,85,010/- in his Current Account bearing number 225811100000034 maintained with Andhra Bank (now merged with Union Bank of India) but had not filed his return of income for the said year, initiated proceedings under section 147 of the Act. Thereafter, notice under section 148 of the Act, dated 03.04.2022 was issued by the A.O.

As the assessee had failed to file his return of income in compliance to the aforesaid notice issued under section 148 of the Act, dated 03.04.2022 nor complied with the notices issued under section 142(1) of the Act, therefore, the A.O was constrained to issue notice under section 144 of the Act dated 02.02.2024, wherein the assessee was called upon to explain as to why the assessment in his case may not be framed to the best of his judgment under section 144 of the Act. Thereafter, the A.O called for a copy of the assessee’s bank account number 225811100000034 held with Andhra Bank (now merged with Union Bank of India) under section 133(6) of the Act. The A.O on perusal of the copy of the bank account of the assessee as was made available to him, observed that he had during the subject year made cash deposits of Rs.89,57,554/-. As the assessee had failed to come forth with any explanation regarding the sources of the aforesaid cash deposits, therefore, the A.O held the entire amount as having

Page. No 3 I.T.A.No.459/VIZ/2025 Srinivasa Rao Sirivuri been sourced out of his unexplained money under section 69A of the Act and determined the income at Rs.89,57,554/-.

4. Aggrieved, the assessee carried the matter in appeal before the CIT(A) but without success.

5. The assessee, aggrieved with the order of the CIT(A) has carried the matter in appeal before the Tribunal.

6. At the outset, it is noticed from the record that there is a delay of 150 days in filing the appeal before the Tribunal. Explaining the reasons for the delay in filing of the appeal, the Ld. AR had drawn our attention to the “affidavit” filed by the assessee along with a petition seeking for condonation of the delay involved in filing the present appeal, which reads as under:- “1. The order of the learned Commissioner of Income Tax (Appeals) in the case of the appellant was passed on 20.12.2024. This order was served on 01.01.2025. As such, the appeal against this order ought to have been filed on or before 02.03.2025. However, the appeal could be filed only on 28.07.2025 resulting in a delay of 148 days in filing the appeal. 2. The appellant is a patient of buccal mucosa cancer i.e. cancer in the inner lining of cheeks. He underwent surgery on 08.10.2014 and thereafter radiotherapy from 06.11.2014 to 02.01.2015 in Mahatma Gandhi Caner Hospital and Research Institute in Visakhapatnam. The cancer was cured but the appellant suffered for a long time with wound infection, digestion issues, fever, difficulty in swallowing and jaw pain and was hospitalized frequently for treatment of these problems. The appellant was not well during the first week of January 2025 and suffered from throat pain and severe fatigue. He was under treatment during the period from 10.01.2025 to 10.07.2025 (Treatment record is enclosed herewith). Hence, he was not in a position to attend to any affairs during this period and hence he could

Page. No 4 I.T.A.No.459/VIZ/2025 Srinivasa Rao Sirivuri not file the appeal within the stipulated time. As soon as the condition was better, the appellant took necessary steps and filed the appeal on 28.07.2025.

3. Thus, the delay in filing the appeal was due to the reasons explained above which were beyond the control of the appellant. The delay is neither intentional nor deliberate. Therefore, the appellant prays the hon'ble ITAT to condone the said delay of 148 days in filing the appeal and pass appropriate orders in the interest of rendering substantial justice.”

7. On perusal of the contents of the “affidavit” filed by the assessee and the medical record in the backdrop of the submissions of the Ld. AR, we are of the view that as the assessee was prevented by a reasonable and sufficient cause in filing the appeal within the prescribed time limit, therefore, we hereby condone the same.

8. Our aforesaid view that a liberal approach should be adopted while considering an application filed by an appellant seeking condonation of the delay involved in filing the same is supported by the judgment of the Hon'ble Supreme Court in the case of Vidya Shankar Jaiswal vs. The Income Tax Officer, Ward-2, Ambikapur in Special Leave Petition (Civil) Nos. 26310- 26311/2024, dated 31st January, 2025, wherein the Hon'ble Apex Court while setting aside the order of the Hon'ble High Court of Chhattisgarh, which had approved the declining of the condonation of delay of 166 days by the Income Tax Appellate Tribunal, Raipur Bench, had observed, that a justice oriented and liberal approach should be adopted while considering the application filed by an appellant seeking condonation of the delay involved in the appeal. We thus, in Page. No 5 I.T.A.No.459/VIZ/2025 Srinivasa Rao Sirivuri terms of our aforesaid observations condone the delay of 150 days involved in filing of the present appeal by the assessee before us.

9. Shri G.V.N. Hari, Advocate, Learned Authorised Representative (for short “Ld.AR”) for the assessee, at the threshold of hearing of appeal sought for admission of additional grounds of appeal

, which are reproduced as below: “1. Assessment in the case of the appellant was completed u/s 147 r.w.s. 144 r.w.s 144B vide order dt.21.02.2024. This is a case of reassessment and the same was initiated by notice u/s 148 of the Act issued on 03.04.2022.

2. The above mentioned notice dt.03.04.2022 issued u/s 148 is invalid for the following reasons: a) Firstly, the impugned assessment year is A.Y.2015-2016 and the notice u/s 148 was issued on 03.04.2022 which falls after expiry of 6 years from the end of the relevant assessment year. As such, the notice is barred by limitation by virtue of 1" proviso to S.149(1) of the Act. b) Thirdly, the notice was issued by the JAO. After the introduction of 'E-Assessment of Income Escaping Assessment Scheme, 2022' w.e.f. 29.03.2022, the notice u/s 148 shall be issued in faceless manner by the FAO. However, the notice in the case of the appellant was issued by the JAO. Hence, the notice is invalid.

3. The above legal issues were not raised before the lower authorities due to inadvertence. However, all the issues are purely legal in nature and the relevant facts are already on record. Hence, the appellant prays the hon'ble ITAT Visakhapatnam Bench to kindly admit the following Additional Grounds of Appeal and pass appropriate orders in the interest of rendering substantial justice.”

Also, it was submitted by him that the Additional Ground of Appeal No. 2(b) is not being pressed.

Page. No 6 I.T.A.No.459/VIZ/2025 Srinivasa Rao Sirivuri 10. We have thoughtfully considered the above said additional grounds of appeal raised by the assessee. As the assessee by raising the aforesaid additional grounds of appeal has sought our indulgence for adjudicating the validity of the notice issued by the A.O under section 148 of the Act, dated 03.04.2022 on the ground that the same was barred by limitation by virtue of the “first proviso” to section 149(1) of the Act, which is purely a legal issue and would not require looking any further beyond the facts borne on record, therefore, we have no hesitation in admitting the same. Our aforesaid view is supported by the judgement of the Hon’ble Supreme Court in the case of National Thermal Power Co. Ltd. v. Commissioner of Income Tax [(1998) 229 ITR 383 (SC)].

11.

We have heard the Learned Authorized Representatives of both parties, perused the orders of the authorities below and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the Ld. AR to drive home his contentions.

12. Shri G.V.N. Hari, Advocate, Learned Authorized Representative (for short, “Ld. AR”) for the assessee, at the threshold of hearing of the appeal, submitted that the AO had grossly erred in law and the facts of the case in assuming jurisdiction for framing the impugned assessment vide his order passed under section 147 r.w.s. 144 r.w.s. 144B of the Act, dated 21.02.2024. Elaborating on his contention, the Ld. AR submitted that as the AO as per the “first proviso” to Page. No 7 I.T.A.No.459/VIZ/2025 Srinivasa Rao Sirivuri section 149(1) of the Act as was applicable at the time of issuing the notice under section 148 of the Act, dated 03.04.2022, was divested of his jurisdiction to issue any such notice seeking to reopen the case of the assessee for the subject year A.Y. 2015-16 beyond 31.03.2022, i.e., beyond the time limit specified under the clause (b) of sub-section (1) of section 149 of the Act as was available on the statute before commencement of the Finance Act, 2021, therefore, the initiation of the impugned proceedings and the consequential assessment framed by him based on the said notice cannot be sustained and is liable to be struck down on account of invalid assumption of jurisdiction. The Ld. AR to buttress his contention had drawn our attention to section 149(1) of the Act - “first proviso” (as was made available on the statute by the Finance Act, 2021, w.e.f. 01/04/2021).

13. Carrying his contention further, the Ld. AR submitted that though the “fifth” and “sixth” provisos of the post amended section 149 of the Act provide for excluding certain periods while computing the period of limitation, viz., (i) the time or extended time allowed to the assessee, as per show cause notice (SCN) issued under clause (b) of section 148A of the Act or the period during which the proceedings under section 148A is stayed by an order or injunction of any Court (as per “fifth proviso”); and (ii) that where immediately after the exclusion (period referred to in “fifth proviso”) of the period of limitation available to the AO for passing an order under clause (d) of section 148A of the Act does not Page. No 8 I.T.A.No.459/VIZ/2025 Srinivasa Rao Sirivuri exceed seven days, such remaining period shall be extended to seven days and the period of limitation under sub-section (1) of section 149 shall be deemed to be extended accordingly (as per “sixth proviso”), but both the aforementioned provisos, i.e., “fifth proviso” and “sixth proviso” qualify the substantive amended section 149 of the Act and do not relate to the un-amended section 149 of the Act, which in turn is taken care of exclusively by the “first proviso” to section 149(1) of the Act. Accordingly, the Ld. AR based on his aforesaid contentions submitted that the time spent from the issuance of notice under section 148A(b) of the Act upto the passing of the order under section 148A(d) of the Act in terms of “fifth proviso” and “sixth proviso” cannot be excluded for reckoning the limitation period for issuance of notice under section 148 of the Act. Elaborating further on his contention, the Ld. AR submitted that as the notice under section 148 of the Act, dated 03.04.2022 for the AY 2015-16 had been issued beyond the time limit specified under the provisions of clause (b) of sub-section (1) of section 149 of the Act as was available on the statute before the commencement of the Finance Act, 2021, which expired as on 31/03/2022 (six years from the end of the assessment year, i.e., AY 2015-16), therefore, the same cannot be sustained and is liable to be quashed. The Ld. AR to buttress his contention had relied upon the judgment of the Hon’ble High Court of Karnataka in the case of Independent & Public Spirited Media Foundation & Ors. v. ACIT (2025) 9 NYPCTR 1555 (Kar) and the Judgement of the Hon’ble Supreme Court in the case of Union of India & Ors v. Rajeev Bansal (2024) 8 NYPCTR 1291 (SC). The Ld.AR submitted that Page. No 9 I.T.A.No.459/VIZ/2025 Srinivasa Rao Sirivuri the Hon’ble High Court of Karnataka in the case of Independent & Public Spirited Media Foundation & Ors. v. ACIT (supra), had by relying on the judgement of the Hon’ble Supreme Court in Union of India & Ors v. Rajeev Bansal (supra) quashed the notice issued under section 148 of the Act, dated 10.04.2023 for A.Y.2016-17 by holding the same as barred by limitation as per the mandate of “1st Proviso” to section 149(1)(b) of the Act. Also, the Ld.AR had taken us through the order of the Hon’ble Apex Court in the case of Union of India & Ors v. Rajeev Bansal (supra).

14. Per contra, Shri D. Hema Bhupal, Learned Senior Departmental Representative (for short, “Ld. DR”) relied upon the orders of the authorities below.

15.

We have heard the Learned Authorized Representatives of both parties and given thoughtful consideration qua the issue in hand before us, i.e., sustainability of the impugned order of assessment passed by the AO under section 147 r.w.s. 144 r.w.s. 144B of the Act, dated 21.02.2024, which in turn is based on the notice issued under section 148 of the Act, dated 03.04.2022, for the AY 2015-16.

16. Admittedly, it is a matter of fact borne from record that the impugned notice under section 148 of the Act, dated 03.04.2022 had been issued beyond the time limit specified under the provisions of clause (b) of sub-section (1) of section 149 of the Act as they stood immediately before the commencement of the Page. No 10 I.T.A.No.459/VIZ/2025 Srinivasa Rao Sirivuri Finance Act, 2021. We say so, for the reason that as per the pre-amended section 149(1)(b) of the Act a notice under section 148 of the Act for the AY 2015-16 could have been issued by the AO latest by 31.03.2022.

17.

Considering the aforesaid factual position, we find substance in the Ld. AR’s contention that as the notice under section 148 of the Act, dated 03.04.2022 had been issued beyond the time period specified under the provisions of clause (b) of sub-section (1) of section 149 of the Act, as was available on the statute prior to the commencement of the Finance Act, 2021, therefore, the same could not have been issued as per the clear mandate of the “first proviso” to section 149 of the Act as had been made available on the statute by the Finance Act, 2021. Also, we concur with the Ld. AR that the period sought to be excluded for the purpose of computing the period of limitation as contemplated in the “fifth proviso” of section 149(1) of the Act (post amended) and also the extension of time limit to seven days in a case where after the exclusion of the time limit contemplated in the “fifth proviso” to seven days (as per the “sixth proviso”) of section 149(1) of the Act cannot be read into for the purpose of computing the period of limitation for issuance of notice under section 148 of the Act as contemplated in the “first proviso” of the post amended section 149(1) of the Act. Our aforesaid view is fortified by the judgment of the Hon’ble High Court of Telangana in the case of Cyberabad Citizens Health Services Private Limited

Page. No 11 I.T.A.No.459/VIZ/2025 Srinivasa Rao Sirivuri vs. DCIT (supra), wherein based on exhaustive deliberations, it is observed, as under:-

“6. According to the learned Senior Counsel for the petitioner, notice under Section 148 of the Act is barred by limitation. As per the first proviso to the amended Section 149 of the Act, the impugned notice is beyond the period of six years from the Assessment Year 2017-18. The reopening of assessment proceedings have also been challenged on the ground that during pendency of the proceedings under Section 154 of the Act on the same issue, it cannot be made. The attention of this Court has been drawn to the notice dated 20.01.2022 issued for rectification of mistake and the order under Section l48A(d) of the Act passed on 22.04.2024. Reliance has been placed on the following decisions rendered by the Apex Court in Union of India v. Rajiv Bansal; High Court of Delhi in Sheetal international (P) Ltd v. Chief Commissioner of Income-tax, Central-2z; High Court of Karnataka at Bengaluru in Tarish Investment and Trading Company (P) Ltd., v. Union of India3; High Court of Rajasthan in Shree Cement Ltd., v. Assistant Commissioner of Income Tax; High Court of Bombay in Godrej Industries Ltd., v. The Assistant Commissioner of Income Tax, Circle 14(1X2), Mumbai, and by a coordinate Bench of this Court in M/s. Sri Sai Dhurga Balaji Health and Educational Welfare Society v. the Income Tax Officer6. All these decisions relate to the Assessment Year 2017-18 except the case of Godrej Industries Ltd., (supra) which relates to the Assessment Year 2014-15.

On the second issue, reliance has been placed on the decision of the Apex Court in the case of S.M. Overseas (P) Ltd., v. Commissioner of Income-tax. Learned Senior Counsel for the petitioner has distinguished the decision rendered by the High Court of Patna in Chandra Shekhar v. Principal Commissioner of Income-tax as it relates to the Assessment Year 2020-21 where the application of the first proviso to the amended Section 149 of the Act introduced with effect from 01.04.2021 cannot be applied. Based on the said submissions, the learned Senior Counsel for the petitioner has prayed that the impugned notice under Section 148 of the Act may be quashed and the order passed under Section 148A(d) of the Act may also be set aside.

On behalf of the Revenue, learned Senior Counsel for the Department has taken us to the chronology of dates and events as referred to hereinabove and thereby drawn the attention of this Court to the notice under Section 148A(b) of the Act dated 26.03.2024. It is submitted that the instant notice was issued prior to the expiry of six years period for reopening the assessment proceedings under the un-amended Section 149 of the Act for the Assessment Year 2017-18. The order under Section 148A(d) of the Act was passed on 22.04.2024. Further, the petitioner took time to file its reply on the date fixed as 10.04.2024. It is submitted that therefore, the benefit of the fifth and sixth provisos to amended Section 149 of the Act

Page. No 12 I.T.A.No.459/VIZ/2025 Srinivasa Rao Sirivuri come into play. Therefore, the impugned notice under Section 148 of the Act dated 22.04.2024 is not barred by limitation.

9. Upon consideration of the rival submissions and the materials referred to hereinabove placed on record, we are of the considered view that the impugned notice under Section 148 of the Act dated 22.04.2024 relating to the Assessment Year 2017-18 is barred by limitation as per the first proviso to Section 149 of the Act brought into effect from 01.04.2021. The relevant part of amended Section 149 and the first, fifth and sixth provisos are extracted in the footnote”.

10.

This, we say so for the following reasons: In the case of Rajeev Bansal (supra), the position of law stands clear as regards the operation of amended Section 149(1) of the Act. The relevant paragraphs 49 and 53 thereof are extracted hereunder: “49 The first proviso to Section 149(1)(b) requires the determination of whether the time limit prescribed under Section 149(1)(b) of the old regime continues to exist for the assessment year 2021-2022 and before. Resultantly, a notice under Section 148 of the new regime cannot be issued if the period of six years from the end of the relevant assessment year has expired at the time of issuance of the (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- (i) 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 in 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 1” 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 Page. No 13 I.T.A.No.459/VIZ/2025 Srinivasa Rao Sirivuri 153C, as the case may be, as they stood immediately before the commencement of the Finance Act, 2021: 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 148A 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 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. Notice. This also ensures that the new time limit of ten years prescribed under Section 149(1)(b) of the new regime applies prospectively. For example, for the assessment year 2012-2013, the ten year period would have expired on 31 March 2023, while the six year period expired on 31 March 2019. Without the proviso to Section 149(1)(b) of the new regime, the Revenue could have had the power to reopen assessments for the year 2012-2013 if the escaped assessment amounted to Rupees fifty lakhs or more. The proviso limits the retrospective operation of Section 149(1)(b) to protect the interests of the assessees.” “53 The position of law which can be derived based on the above discussion may be summarized thus: (10) Section 149(1) of the new regime is not prospective. It also applies to past assessment years; (ii) The time limit of four years is now reduced to three years for all situations. The Revenue can issue notices under Section 148 of the new regime only if three years or less have clapsed from the end of the relevant assessment year, (iii) the proviso to Section 149(1)(b) of the new regime stipulates that the Revenue can issue reassessment notices for past assessment years only if the time limit survives according to Section 149(1)(b) of the old regime, that is, six years from the end of the relevant assessment year; and (iv) all notices issued invoking the time limit under Section 149(1)(b) of the old regime will have to be dropped if the income chargeable to tax which has escaped assessment is less than Rupees fifty lakhs.”

11. The first proviso) to the amended Section 149 of the Act prescribes that no notice under Section 148 of the Act shall be issued at any time in a case for the relevant assessment year beginning on or before 01.04.2021, if a notice under Section148 of the Act 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 Section 149 of the Act or as they stood

Page. No 14 I.T.A.No.459/VIZ/2025 Srinivasa Rao Sirivuri immediately before the commencement of the Finance Act, 2021. For the purposes of appreciating the first proviso, the un-amended Section 149 of the Act is also extracted in the foot note10 Time limit for notice. 149. (1) No notice under section 148 shall be issued for the relevant assessment year, (a) if four years have clapsed from the end of the relevant assessment year, unless the case falls under clause (b) or clause (c); (b) if four years, but not more than six years, have elapsed from the end of the relevant assessment year unless the mome chargeable to tax which has escaped assessment amounts to or is likely to amount to one lakh rupees or more for that year. I if four years, but not more than sixteen years, have elapsed from the end of the relevant assessment year unless the income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment. Explanation In determining income chargeable to tax which has escaped assessment for the purposes of this sub-section, the provisions of Explanation 2 of section 147 shall apply as they apply for the purposes of that section (2) The provisions of sub-section (1) as to the issue of notice shall be subject to the provisions of section 151. (3) If the person on whom a notice under section 148 is to be served is a person treated as the agent of a non-resident under section 163 and the assessment, reassessment or recomputation to be made in pursuance of the notice is to be made on him as the agent of such non-resident, the notice shall not be issued after the expiry of a period of six years from the end of the relevant assessment year. Explanation For the removal of doubts, it is hereby clarified that the provisions of sub-sections (1) and (3), as amended by the Finance Act, 2012, shall also be applicable for any assessment year beginning on or before the 1 day of April, 2012.

12.

Apparently, the fifth and sixth provisos of the amended Section 149 of the Act extracted hereinabove provide for excluding certain periods while computing the period of limitation as per the amended Section. It prescribes the time or extended time allowed to the assessee as per the show cause notice under clause (b) of Section 148 of the Act or the period during which the proceeding under Section 148A of the Act is stayed shall be excluded. The sixth proviso to the amended Section 149 of the Act also deals with exclusion of the period referred to in the fifth proviso i.e., the period of Page. No 15 I.T.A.No.459/VIZ/2025 Srinivasa Rao Sirivuri limitation available to the Assessing Officer for passing an order under clause (d) of Section 148A of the Act if it does not exceed seven days. In that event, 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, both the fifth and sixth provisos in the first place do not amount to clarification of the first proviso. These two provisos qualify the substantive amended Section 149 of the Act and do not relate to the un- amended Section 149 of the Act for which the first proviso takes care of. The contention of the learned counsel for the Revenue that the time spent from the issuance of notice under Section 148A(b) of the Act up to the passing of the order under Section 148A(d) of the Act in terms of the fifth and sixth provisos stands excluded for reckoning the limitation period for issuance of notice under Section 148 of the Act is not worth acceptance. Section 148A of the Act lays down the procedure for issuance of notice under Section 148 of the Act whereas Section 149 of the Act prescribes strict time limit within which notice under Section 148 of the Act can be issued in the prescribed circumstances. The Revenue is therefore obliged to adhere to the timeline prescribed under Section 149 of the Act for issuance of such notice and undertake the procedure before issuance of notice under Section 148A of the Act.

13.

In this regard, it is apposite to refer to opinion of the Delhi High Court. Paragraphs 15 and 16 of Godrej Industries Ltd., (supra) are extracted hereunder: “15. The validity of a notice must be judged on the basis of the law existing as on the date on which the notice is issued under Section 148 of the Act, which in the present case is 31 July 2022, by which time the Finance Act, 2021 is already on the statute and in terms thereof, no notice under Section 148 of the Act for AY 2014-15 could be issued on or after 1” April 2021 based on the first proviso to Section 149 of the Act. Therefore, the fifth proviso cannot apply in a case where the first proviso applies because, if a notice under Section 148 of the Act could not be issued beyond the time period provided in the first proviso, then the fifth proviso could not save such notices. The fifth proviso can only apply where one has to determine whether the time limit of three years and ten years in Section 149(1) of the Act are breached.

16. The sixth proviso to Section 149 of the Act has no impact as it only provides a situation where after exclusion of the time period referred to in the fifth proviso, the time available with the Assessing Officer for passing an order under Section 148A(d) of the Act is less than 7 days, then the remaining time frame shall be extended to 7 days and limitation also stands extended by 7 days.”

14.

Paragraph 12 of Shree Cement Ltd., (supra) is also extracted hereunder. “12. In this case, as it pertains to Assessment Year 2017-18, six years period would have expired on 31” March 2024. Whereas

Page. No 16 I.T.A.No.459/VIZ/2025 Srinivasa Rao Sirivuri notice under Section 148 of the Act itself came to be issued on 1” May 2024. Mr. Siddharth Bapna, counsel for Revenue, made an attempt to argue that fifth and sixth provisos to Section 149(1)(b) of the Act would save the period of limitation for issuing notice under Section 148 of the Act. We are afraid we do not agree with him. Same argument was raised in Hexaware Technologies Ltd. (supra) and was rejected. The Court held, with respect to applicability of fifth and sixth provisos to Section 149(1)(b) of the Act for extension of limitation for issuing notice under Section 148 of the Act, fifth and sixth provisos are only applicable with respect to the period of limitation prescribed under Section 149(1) of the Act ie, three years or ten years, as the case may be. The Court also held that fifth and sixth provisos extend limitation for issuing notice under Section 149 of the Act, however, first proviso is an exception to the period of limitation and provides for a restriction on the notices under Section 148 of the Act being issued for assessment years up to 2021-22 (in this case, it is Assessment Year 2017-18) beyond a certain date. Therefore, the way the section would operate, is to fira decide whether a notice issued under Section 148 of the Vet is within the period of limitation under Section 149(1)(2) 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 prescribed in fifth and/or sixth proviso would be considered. The Court further held once. The notice is otherwise within the period of limitation, thereafter one has to see whether the said limit is within the prescribed restriction provided in first proviso or not. If the notice is beyond the restriction period, the notice is invalid, and the fifth and/or the sixth proviso cannot apply at this stage to extend the period of restriction as per first proviso. Hence, if a notice is not within the time prescribed under first proviso to Section 149(1) of the Act, then such period cannot be extended by fifth or sixth proviso. In Hexaware Technologies Ltd. (supra), the Court had relied upon another judgment of Bombay High Court in Godrej Industries Ltd. V. Assistant Commissioner of Income-tax [2024] 160 taxmann.com 13 (Bombay)/(2024) 338 CTR (Bom) 25, which was also authored by one of us (the Chief Justice), where paragraph No.15 reads as under: “15. The validity of a notice must be judged on the basis of the law existing as on the date on which the notice is issued under Section 148 of the Act, which in the present case is 31” July 2022, by which time the Finance Act, 2021 is already on the statute and in terms thereof, no notice under Section 148 of the Act for AY 2014-15 could be issued on or after 1 April 2021 based on the first proviso to Section 149 of the Act. Therefore, the fifth proviso cannot apply in a case where the first proviso applies because, if a notice under Section 148 of the Act could not be issued beyond the time period provided in the first proviso, then the fifth proviso could not save such notices. The fifth proviso can only apply

Page. No 17 I.T.A.No.459/VIZ/2025 Srinivasa Rao Sirivuri where one has to determine whether the time limit of three years and ten years in Section 149(1) of the Act are breached.”

15. The reliance placed by the Revenue on the decision rendered by Patna High Court in the case of Chandra Shekhar (supra) is distinguishable as it relates to the Assessment Year 2020-21 in respect of which the notice under Section 148A(b) of the Act was issued on 28.03.2024. The petitioner therein had assailed the notice on the ground that the Assessing Officer had no jurisdiction to undertake the assessment for the Assessment Year 2020-21 after 31.03.2024 with reference to the second notice issued on 22.04.2024 as it was beyond the time limit stipulated under Section 149(1)(a) of the Act. In the aforesaid facts, the learned Court held that the combined reading of the fifth and sixth provisos meant that the first notice dated 28.03.2024 was issued well within the time limit stipulated. Therefore, the Assessment Officer has jurisdiction.

16.

In view of the above discussion, the initiation of reopening of assessment by the impugned notice dated 22.04.2024 is barred by limitation being beyond the period of six (6) years reckoned from the relevant Assessment Year 2017-18 as per the un-amended Section 149 of the Act read with the first proviso thereof brought into effect from 01.04.2021.”

18.

Also, we find that a similar view has been taken by the Hon’ble High Court of Karnataka in the case of Independent & Public Spirited Media Foundation & Ors. Vs. ACIT in W.P.No.8848 of 2023, dated 11.09.2025. As observed by us hereinabove, the Hon’ble High Court in its aforesaid order had after drawing support from the judgment of the Hon’ble Supreme Court in Union of India & Ors v. Rajeev Bansal (2024) 340 CTR 865 (SC), quashed the notice issued under section 148 of the Act, dated 10.04.2023 for the A.Y. 2016- 17 by treating the same as barred by limitation as per the “first proviso” to section 149(1)(b) of the Act. For the sake of clarity, we deem it apposite to cull out the observations of the Hon’ble High Court, as under:-

“53. The position of law which can be derived based on the above discussion may be summarized thus: (i)s. 149(1) of the new regime is not Page. No 18 I.T.A.No.459/VIZ/2025 Srinivasa Rao Sirivuri prospective. It also applies to past assessment years; (i) The time limit of four years is now reduced to three years for all situations. The Revenue can issue notices under s. 148 of the new regime only if three years or less have elapsed from the end of the relevant assessment year; (iii) the proviso to s. 149(1)(b) of the new regime stipulates that the Revenue can issue reassessment notices for past assessment years only if the time limit survives according to s. 149(I)(b) of the old regime, that is, six years from the end of the relevant assessment year; and (iv) all notices issued invoking the time limit unders. 149(I)(b) of the old regime will have to be dropped if the income chargeable to tax which has escaped assessment is less than rupees fifty lakhs. (ii) Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 can extend the time limit till 31st June, 2021.

60.

The above principles can be applied as follows to the factual situation in the present appeals : (i) The Finance Act, 2021(2021) 432 ITR (St.) 52) substituted ss. 147 to 151 of the IT Act w.e.f. 1st April, 2021; (ii) ss. 147 to 151 of the old law ceased to operate from 1st April, 2021; (iii) after 1st April, 2021, any reference to the IT Act means the IT Act as amended by the Finance Act 2021; (iv) the time limits prescribed for issuing reassessment notices under s. 149 operate retrospectively for three years for all situations and six years in case the escaped assessment amounts to or is likely to amount to more than rupees fifty lakhs." (Emphasis supplied) 5. The High Court of Delhi in two of the judgments has followed the said judgment of the Apex Court in Rajeev Bansal (supra). In Sheetal International (P) Ltd vs. Chief CIT (2024) 168 taxmann.com 308 (Del), it is held as under : "1. Issue notice.

Learned counsel appearing accepts notice. for the respondents 3. The petitioner has filed the present petition, inter alia, impugning an order dt. 1st May, 2024 (hereafter the impugned order) issued under s. 148A(d) of the IT Act, 1961 (hereafter the Act) for the asst. year 2017-18 as well as the notice dt. 1st May, 2024 issued unders. 148 of the Act.

The petitioner contends that the said notice was issued beyond the period of limitation as prescribed in first proviso to s. 149(1) of the Act.

The learned counsel appearing for the petitioner submits that the issue stands covered by the decision of this Court in Manju Somani vs. ITO (2024) 340 CTR (Del) 946 : (2024) 242 DTR (Del) 241 : (2024) 466 ITR 758 (Del) : (2024) 300 Taxman 516 (Del) : (2024)

Page. No 19 I.T.A.No.459/VIZ/2025 Srinivasa Rao Sirivuri 165 taxmann.com 675 (Del) : Neutral Citation : 2024:DHC:5411- DB.

It is also relevant to note that the Supreme Court in a recent decision of Union of India vs. Rajeev Bansal (supra) has observed as under : "46. The ingredients of the proviso could be broken down for analysis as follows : (i) no notice under s. 148 of the new regime can be issued at any time for an assessment year beginning on or before 1st 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 s. 148 of the new regime for asst. yr. 2021-22 and before only if the time limit for issuance of such notice continued to exist under s. 149(l)(b) of the old regime. ….

49.

The first proviso to s. 149(1 )(b) requires the determination of whether the time limit prescribed under s. 149(l)(b) of the old regime continues to exist for the asst. yr. 2021-22 and before. Resultantly, a notice under s. 148 of the new regime cannot be issued if the period of six years from the end of the relevant assessment year has expired at the time of issuance of the notice. This also ensures that the new time limit of ten years prescribed under s. 149(I)(b) of the new regime applies prospectively. For example, for the asst. yr. 2012-13, the ten year period would have expired on 31st March, 2023, while the six year period expired on 31st March, 2019. Without the proviso to s. 149(I)(b) of the new regime, the Revenue could have had the power to reopen assessments for the year 2012-13 if the escaped assessment amounted to Rupees fifty lakhs or more. The proviso limits the retrospective operation of s. 149()(b) to protect the interests of the assesses."

7. In view of the above, the present petition is allowed. The impugned order dt. 1st May, 2024 as well as the notice issued under s. 148 in respect of the asst. yr.2017-18 are set aside.

8. Pending applications also stand disposed of."

6. In the light of the issues standing covered on all its fours, the petition deserves to succeed and the action impugned and the orders impugned to be obliterated as admittedly the notice issued is beyond the period of limitation.

Page. No 20 I.T.A.No.459/VIZ/2025 Srinivasa Rao Sirivuri 7. For the aforesaid reasons, the following : ORDER (i) Petition is allowed. (ii) The impugned order dt. 7th May, 2024 bearing ITBA/AST/F/148A/2024-25/1064704419(1) passed by the 2nd respondent under s. 148A(d) of the IT Act, 1961 for asst. yr. 2017-18 (Annex. A-I), stands quashed. (iii) The impugned notice dt. 7th May, 2024 bearing ITBA/AST/S/148_I/2024-25/1064704431(I) issued by the 2nd respondent under s. 148 of the IT Act, 1961 for asst. yr. 2017-18 (Annex. A-2), stands quashed. (iv) The petitioner shall be entitled to all consequential benefits that would flow from the quashment of the order.

8. In the light of the issues standing answered, I deem it appropriate to follow suit and grant the relief that is granted in the aforesaid order.

For the aforesaid reasons, the following : ORDER (i) Petition is allowed. (ii) The impugned order under s. 148A(d) of the IT Act, 1961 dt. 10th April, 2023 bearing DIN ITBA/AST/F/148A/2023-24/2051990641(1) passed by the First respondent for the asst. yr. 2016-17 (Annex. A-1), stands quashed. (iii) The impugned notice under s. 148 of the IT Act, 1961 dt. 10th April, 2023 bearing DINITBA/AST/S/148_1/2023-24/1051990774(1) issued by the first respondent for the asst. yr. 2016-17 (Annex. A2), stands quashed. (iv) The petitioner shall be entitled to all consequential benefits that would flow from the quashment of the order. (v) Except the issue which has led to quashment of the impugned orders, any other issue is left open to be urged and considered by the petitioner and the respondent.”

19.

We thus, in terms of our aforesaid deliberations find substance in the Ld.AR’s contention that as the notice issued by the AO under section 148 of the Act, dated 03.04.2022 is barred by limitation as per the mandate of the “first

Page. No 21 I.T.A.No.459/VIZ/2025 Srinivasa Rao Sirivuri proviso” to section 149 of the Act as had been made available in the statute by the Finance Act, 2021, therefore, the same cannot be sustained and thus, the consequential assessment order passed by the AO on the basis of the same vide his order under section 147 r.w.s. 144 r.w.s. 144B of the Act, dated 21.02.2024 has to meet the same fate and is liable to be quashed.

20.

We thus, in terms of our aforesaid deliberations, quash the assessment order passed by the AO under section 147 r.w.s. 144 r.w.s. 144B of the Act, dated 21.02.2024 for want of valid assumption of jurisdiction.

21.

As we have quashed the assessment order passed by the AO under section 147 r.w.s. 144 r.w.s. 144B of the Act, dated 21.02.2024, therefore, we refrain from adverting to and adjudicating the other contentions based on which the impugned order of assessment has been assailed by the assessee before us, which, thus, are left open.

23.

In the result, appeal filed by the assessee is allowed in terms of our aforesaid observations.

Order pronounced in the open court on 04th March, 2026.

SRINIVASA RAO SIRIVURI PROPRIETOR,VIZIANAGARAM vs. INCOME TAX OFFICER, VIZIANAGARAM