KANTILAL RANCHHODBHAI NAKUM,JAMNAGAR vs. ITO WARD - 1(3), JAMNAGAR

The Hon’ble CIT(A) has erred in law as well as in fact in confirming addition of entire cash deposit of Rs.3,65,95,312/- without considering the fact that only profit element of the business can be taxed and not the entire deposits.

3. At the outset, Learned Counsel for the assessee, informs the Bench that assessee does not wish to press ground Nos.3 to 11, therefore, we dismiss ground Nos. 3 to 11, as not pressed.

When this appeal was called out for hearing, learned counsel for the assessee invited our attention to the Judgment dated 03.10.2024, of Hon’ble 2 (A.Y. 15-16) Kantilal R Nakum Supreme Court in case of Union of India vs. Rajeev Bansal [2024] 167 taxmann.com 70 (SC), and stated that issue involved in the assessee case under consideration, is squarely covered by this judgement of the Hon’ble Supreme Court. The learned Counsel submitted that all the notices for assessment year (AY) 2015-16, are time-barred and have to be dropped, specifically conceded and accepted by ASG on behalf of Revenue in said judgment. Therefore, learned Counsel contended that appeal of the assessee for assessment year 2015–16 should be allowed on this technical issue.

We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record.We note that assessee’s case was re-opened u/s 148A(d) of the Act, on 23.07.2022, vide DIN & Order No. ITBA/COM/F/17/2022-23/1044031932(1) which is available on ITBA. The matter has been taken up by the revenue u/s 148(A)(d) as per the decision of Hon'ble Supreme Court in civil Appeal No.3005/2022 in the case of Ashish Agarwal, vide judgement dated 04.05.2022. The notices under section 148 of the Act issued to the assessee after 01/04/2021 under un-amended provisions, and shall be deemed to have been issued under section 148A of the I.T. Act, as substituted by the Finance, 2021 and construed or treated to be show cause notices in terms of section 148A(b) of the I.T. Act, 1961. In view of this order pronounced by the Hon'ble Supreme Court, notice under section 148 already issued in assessee’s case is treated as show cause notice issued under section 148A(b) of the Act. However, for assessment year 2015-16, the time limit to reopen the assessment is up to 3 years, that is, on or before 31.03.2019 and the time limit to (A.Y. 15-16) Kantilal R Nakum reopen the assessment up to 6 years is 31.03.2022, however, in assessee’s case under consideration, the notice under section148A(d) of the Act, was issued on 23.07.2022, which is clearly time barred.

We note that Hon’ble Supreme Court in case of Union of India vs. Rajeev Bansal [2024] 167 taxmann.com 70 (SC), has categorically held and which is even accepted by the Income Tax Department (Revenue) itself that all the notices for assessment year (AY) 2015-16 are time-barred and have to be dropped (specifically conceded and accepted by ASG on behalf of Revenue in said judgment). The important dates in the assessee’s case under consideration are as follows: Particulars date Relevant assessment year 2015-16 First notice u/s 148 without following amended provision of the 21.04.2021 Act Subsequent notice u/s 148A(d) 23.07.2022 8. We note that in assessee’s case the original notice u/s 148 of the Act was issued on 21.04.2021, for which the time limit was up to 31.03.2019. We note that notice issued on or after 01.04.2021 would be time barred, as three years from assessment year (AY) 2015-16, got expired on 31.03.2019, as per amended section 149(1)(a) of the Act, as applicable from 01.04.2021. Therefore, we find that notice u/s 148 of the Act was beyond time allowed as held in the decision of UOI vs. Rajeev Bansal, (2024) 469 ITR 46 (SC), dated 03.10.2024. The revenue made a concession in the aforesaid decision at Para ‘f’ therein, that for AY. 2015- 16, all notices issued on or after 01.04.2021 would have to be dropped as they would not fall for completion during period prescribed under TOLA.

We note that even if the time limit of six years from the end of assessment year 2015–16, is considered, then also the notice issued under section 148A(b) is time barred. That is, the time limit of 6 years from the end of assessment year 2015-16, bearing in mind Section 149(1)(b) of the Act, as it existed prior to (A.Y. 15-16) Kantilal R Nakum 01.04.2021, then notice u/s 148A(b) would be time barred by 31.03.2022. The decision of Hon’ble Supreme Court in case of Ashish Agarwal would not apply to the case of assessee as it would only apply to judgments and orders passed by different High Courts where similar notices issued after 01.04.2021 u/s 148 are set aside, (2025) 474 ITR 48 (Delhi HC).We find the order u/s 148A(d) of the Act was passed on 23.07.2022 and the actual notice u/s 148 of the Act was issued on 23.07.2022, which is clearly barred by limitation, as the actual notice u/s 148 of the Act should have issued on or before 31.03.2022, however, it was issued by the assessing officer on 23.07.2022, therefore, it is clearly barred by limitation, hence, the reassessment order framed by the assessing officer should be quashed.

Therefore, we find that based on the above facts, the issue under consideration is squarely covered in favour of the assessee by the judgment of Hon’ble Supreme Court in case of Rajeev Bansal (Supra), wherein it was held as follows:

We note that in the case of Deepak Steel and Power Ltd. (2025) 174 taxmann.com 144 (SC), the revenue made a concession, for Assessment Year (AY) 2015-16 and stated that all notices issued on or before 01.04.2021 would have to be dropped. For that, reliance is placed on the decision of the Hon’ble Supreme Court in case of Deepak Steel and Power Ltd. (supra), wherein it was held as follows:

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 for completion during the period prescribed under the taxation and other 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 is concerned is dated 25.6.2021.

We also find that issue under consideration is also covered in favour of the assessee by the judgment of the Hon’ble jurisdictional High Court of Gujarat in case of Sorathia Mahesh Veljibhai HUF (2025) 179 taxmann.com 54, wherein it was held as follows:

Hence, respectfully following the judgement of Hon’ble Supreme Court in case of Rajeev Bansal (supra) and judgement of jurisdictional High Court of Gujarat(supra), we find that notice u/s 148A(b) being time barred deserves to be quashed and the consequent order passed u/s 147 r.w.s. 144B of the Act dated 12.05.2023 is also quashed.

As the reassessment itself is quashed, all other issues on merits of the additions, in the impugned assessment proceedings, are rendered academic and infructuous.

In the result, appeal filed by the assessee is allowed.