Loading judgment…
Facts
The Revenue filed appeals against the orders of CIT(A) for AY 2015-16 and 2016-17. The Assessee filed cross objections challenging the validity of notices issued under Section 148 of the Income Tax Act, 1961, on grounds of limitation and improper sanction.
Held
The Tribunal held that the notice issued under Section 148 for AY 2015-16 was barred by limitation, following the Supreme Court's decision in UOI vs. Rajeev Bansal. For AY 2016-17, the notice was deemed invalid due to improper sanction as per Section 151 of the Act.
Key Issues
Whether the notice issued under Section 148 for reassessment proceedings was barred by limitation and whether the sanction for issuing such notice was valid.
Sections Cited
148, 149, 143(3), 148A, 151
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘G’ NEW DELHI
Before: SHRI MAHAVIR SINGH & SHRI KRINWANT SAHAY
ORDER PER MAHAVIR SINGH, VP: These appeals filed by the Revenue and Cross Objections by the Assessee are directed against the respective orders passed by the Ld. CIT(Appeals) for the assessment years 2015-16 & 2016-17. Since these appeals and Cross Objections are inter-connected, hence, the same were heard together and disposed of by this common order for the sake of convenience.
First we deal with Assessee’s Cross Objection No. 219/Del/2025 (AY 2015-16).
At the outset, Ld. Counsel for the assessee stated that the assessee has raised jurisdictional issue in the cross objection no. 219/Del2025 for assessment year 2015-16 that the notice u/s. 148 of the Act is barred by limitation. For this, assessee has only raised the following Ground No. 1 :
That the AO has erred in law and on facts in initiating the reassessment proceeding by issuing notice under section 148 of the Act whereas the same is barred by limitation as specified under section 149 of the Act.
Brief facts of the case are that the assessee company filed its return of income for the relevant assessment year 2015-16 and consequently assessment was framed u/s. 143(3) of the Act vie order dated 21.09.2017. Subsequently, the Directorate of Income Tax (Systems), CBDT categorized the assessee as a “High Risk CRI/VRU cases” and thereafter noted that the assessee is an entry provider providing accommodation entries through many firms controlled by him i.e. M/s SS Enterprises, M/s Om Traders, M/s Bansal Traders, M/s Seher Agro India and M/s VS Agro Foods. Thereafter, notice u/s. 148 of the Act was issued on 30/06/2021. The background of this notice u/s. 148 was the extended time limitation according to AO, was the CBDT Notification No. 20 dated 31.3.2021 and subsequent Notification No. 38 dated 24.7.2021 according to which the time limit for issue of notice u/s. 148 was extended to 30.4.2021 and 30.6.2021 respectively. The AO gave reasons for issuance of notice u/s. 148 of the Act vide para no. 1.4 & 1.5 as under:-
“1.4 Subsequently, the Hon’ble Supreme Court in Civil Appeal No. 3055/2022 in the case of Union of India & others vs. 2
Ashish Agarwal and others, in its landmark judgement dated 04.05.3033 inter-alia directed that the notice issued u/s. 148 of the Act (As per the provisions of Section 148 as they stood before being amended by the Finance Act, 2021) between 01.04.2021 to 30.06.201 to be treated as notice u/s. 148A(b) of the Act. The Hon’ble Apex court further directed to provide the information and material relied upon the revenue to the assessee for issue of such notice and to provide two weeks’ time to the assessee for filing of reply and thereafter to pass order u/s. 148 of the Act or not. For uniform implementation of the aforementioned judgment of the Hon’ble Apex Court, the Hon’ble CBDT issued instruction no. 01/2022 on 11.05.2022 wherein certain directions / instructions were issued to the lower authorities by the Hon’ble CBDT in this regard.
1.5 Following the above referred judgement of the Hon’ble Apex Court and Hon’ble CBDT’s instruction, the notice issued u/s. 148 of the Act dated 28.06.2021, was treated as notice to show cause u/s. 148A(b) of the Act and the material underlying was provided to the assessee requiring therein to furnish his response within two weeks’ time in the matter. Thereafter, considering all the material available before him, the jurisdictional assessing officer found the case fit for issuance of notice u/s. 148 of the Act and passed order 148A(d) of the Act dated 29.06.2022 vide [DIN: ITBA/COM/F/17/2022-23/1043667578(1)] accordingly within the stipulated time frame. Thereafter, a fresh notice u/s. 148 of the Act was issued to the assessee on 29.06.2022.
Accordingly, notice u/s. 148 of the Act dated 30.06.2021 was issued. Ld. Counsel for the assessee stated that this issue is barred by limitation, in view of the provisions of section 149 and the decision of the Hon’ble Supreme Court in the case of UOI vs. Rajeev Bansal (Civil Appeal No. 8629 of 2024), the time limitation for issuance of notice u/s. 148 is not more than 6 years. Here is the relevant assessment year 2015-16 and notice u/s. 148 of the Act is dated 30.6.2021 which is clearly beyond the period of 6 years. Ld. Counsel for the assessee drew our attention to the relevant para in the case of UOI vs. Rajeev Bansal (supra). When these facts were confronted, Ld. Sr. DR stated that the notice is a valid notice in view of the decision of the Hon’ble Supreme Court in Hon’ble Supreme Court in Civil Appeal No. 3055/2022 in the case of Union of India & others vs. Ashish Agarwal and others. When it was confronted to Ld. Sr. DR that this issue has already been adjudicated by the Hon’ble Supreme Court finally in the case of Rajiv Bansal (supra), he has not controverted the same. The Hon’ble Supreme Court in the case of UOI vs. Rajeev Bansal (Supra) has observed as under:-
* Regarding period of limitation of issuance of statutory notice us 148 of the new law, it has been stated that in view of third proviso to section 149 of the new law, the period between date of issuance of original notice issued us 148 of the old law and due date or extended due date of filing of response to communication issued by assessing officer in pursuance of judgement of Hon'ble Apex Court in the case of UOI vs. Ashish Agarwal (Supra) shall be deemed to be excluded from the period of limitation for issuance of notice u/s 148 of the new law.
* Also, in view of fourth proviso to section 149 of the new law, in peculiar cases, where immediately after exclusion of said period to be excluded from the period of limitation for issuance of notice us 148 of the new law, the period available with assessing officer for issuance of notice u/s 148 of the new law is less than 7 days, then the assessing officer shall be legally allowed to issue such statutory notice within 7 days from the end of said exclusion
* Summarily, the surviving time period for issuance of valid notice u/s 148 of the new law, where original notice u/s 148 of the old law issued between 01.04.2021 to 30.06.2021 subsequently considered as show cause notice issued us 148A(b) of the new law in pursuance of judgement of Hon'ble Apex Court in the case of UOI vs. Ashish Agarwal (Supra), would be the time period between 30.06.2021 and the date of issuance of original notice u/s. 148 of the old law. And, where the aforesaid surviving period is less than 7 days, the same would be extended to 7 days. Thereby, such surviving period or extended surviving period shall be added to the due date or extended due date of filing response to communication issued in pursuance of judgement of Hon’ble Apex Court in the case of UOI vs. Ashish Agarwal (Supra) furnishing all material being relied upon by the Assessing Officer.
* 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.
Since the notice u/s. 148 dated 30.06.2021 is beyond the period of 6 years, hence, this issue is squarely covered by the decision of the Hon’ble Supreme Court of India in the case of UOI vs. Rajeev Bansal (supra), accordingly, we hold that consequent reassessment and the order of the CIT(A) both are bad in law and therefore, the same are hereby quashed.
In the result, the cross objection filed by the assessee stands allowed.
As regards Revenue’s Appeal No. 1758/Del/2025 is concerned, since we have already decided the Assessee’s cross objection on the jurisdictional issue in favour of the Assessee by quashing the assessment order and the consequent appellate order, as a result thereof, the issues raised in the Revenue’s appeal have become academic, hence, need not be adjudicated.
In the result, Assessee’s cross objection is allowed and Revenue’s appeal is dismissed in the above terms.
Coming to Cross Objection No. 220/Del/2025 (AY 2016-17), at the outset, Ld. Counsel for the assessee submitted that the first jurisdictional issue in this Cross Objection raised by the assessee is as regards to validity of notice issued u/s. 148 of the Act dated 29.06.2022. Ld. Counsel for the assessee drew our attention to the notice u/s. 148 which is enclosed in Assessee’s Paper Book at Page No. 7 & 8 and particularly drew our attention to Para No. 3 of the Notice which reads as under:-
“3. This notice is being issued after obtaining the prior approval of the Pr. CIT, Delhi accorded on date 25.06.2022 vide Reference No. 25062022.” 10.1 Ld. Counsel for the assessee stated that the relevant assessment year is 2016-17 and approval dated 25.6.2022 for issuance of notice u/s. 148 of the Act dated 29.06.2022. He stated that it is beyond 3 years and once the notice u/s. 148 is to be issued, which is beyond 3 years, approval as per the provisions of Section 151 of the Act is to be obtained from the Principal Chief Commissioner of Income Tax (PCCIT) and not from the PCIT. Ld. Counsel for the assessee referred the provisions of Section 151 of the Act which reads as under:-
“151. Sanction for issue of notice – Specified authority for the purposes of section 148 and section 148A shall be –
(i) Principal Commissioner or Principal Director or Commissioner or Director, if three years or less than three years have elapsed from the end of the relevant assessment year;
(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:
Provided that the period of three years for the purposes of clause (i) shall be computed after taking into account the period of limitation as excluded by the third or fourth or fifth provisos or extended by the sixth proviso to sub-section (1) of section 149.”
10.2 When the above position was confronted to the Ld. CIT(DR), he could not controvert the above fact position and even could not make any argument on the approval granted by the Ld. Pr. CIT.
After hearing the rival contentions and gone through the facts and legal position, it is clear from the provisions of Section 151 of the Act that the approval for issuance of notice u/s. 148 of the Act beyond 3 years is to be granted by the Pr. CCIT and not by the PCIT. As in the present case the approval was granted by the PCIT which is bad in law and hence, the notice itself issued u/s. 148 of the Act dated 29.06.2022 is bad in law and consequent assessment and the order of the CIT(A) both are bad in law and therefore, the same are hereby quashed.
In the result, the cross objection filed by the assessee stands allowed.
As regards Revenue’s appeal No. 1753/Del/2025 (AY 2016-17) is concerned, since we have already decided the Assessee’s cross objection on the jurisdictional issue in favour of the Assessee by quashing the assessment order and the consequent appellate order, as a result thereof, the issues raised in the Revenue’s appeal have become academic, hence, need not be adjudicated.
In the result, both the cross objections filed by the assessee are allowed and revenue’s appeals stand dismissed.
Order pronounced in the Open Court on 14.11.2025.