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Facts
The assessee filed its return of income on 09.09.2015. The case was reopened, and a notice under Section 148 was issued. The AO made an addition of Rs. 11,59,70,000/-. The CIT(A) dismissed the assessee's appeal.
Held
The Tribunal held that the notice issued under Section 148 was beyond the period of limitation, as TOLA was not applicable for AY 2015-16 in this case, as conceded by the Revenue. Therefore, the notice is liable to be set aside.
Key Issues
Whether the notice under Section 148 for AY 2015-16 was issued within the prescribed period of limitation, considering the applicability of TOLA.
Sections Cited
139(1), 147, 144, 144B, 250, 148, 148A(d), 142(1), 144, 148A(b), 151, 153C, 133(6), 131, 149(1)
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Income Tax Appellate Tribunal, DELHI BENCH “B”: NEW DELHI
Before: SHRI S RIFAUR RAHMAN & SHRI VIMAL KUMAR
O R D E R
PER VIMAL KUMAR, JUDICIAL MEMBER:
1. The appeal of assessee is against order dated 16.10.2024 of Learned Commissioner of Income-Tax (Appeals)/National Faceless Assessment Centre (NFAC), Delhi (hereinafter referred as “the Ld. CIT(A)”) under Section 250 of the Income Tax Act, 1961 ( hereinafter referred as “the Act”) arising out of assessment order dated 16.05.2023 of the Learned Assessing Officer/Assessment Unit, Income Tax Department, Delhi (hereinafter referred as “Ld. AO") under Section 147 read with section 144 r.w.s. 144B of the Act for assessment year 2015-16.
Brief facts of case are that assessee filed return of income under Section 139(1) disclosing income of Rs.32,87,600 on 09.09.2015. The case was reopened. Notice under Section 148 dated 30.06.2022 was issued on basis of order under Section 148A(d) dated 30.06.2022. The assessee didn’t file ITR and failed to make compliance under Section 148 of the Act. Notice under Section 142(1) of the Act dated 06.02.2023 was issued. Centralized communication letter dated 10.04.2023 was issued. Notice under Section 144 dated 20.04.2023, show-cause-notice dated 30.04.2023 and notice under Section 142(1) dated 07.05.2023 were issued. Assessee failed to submit reply. On completion of proceedings, Ld. AO vide order dated 16.05.2023 made addition of Rs.11,59,70,000/-.
Against order dated 16.05.2023 of Ld. AO, the appellant/assessee preferred appeal before the Ld. CIT(A) which was dismissed vide order dated 16.10.2024.
Being aggrieved, the appellant/assessee preferred appeal with following grounds:
“1. On the facts and circumstances of the case, the order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (hereinafter referred to as CIT(A), NFAC) is bad, both in the eyes of law and on facts.
2. On the facts and circumstances of the case, the order passed by the learned CIT(A), NFAC is bad in law having been passed exparte without providing the assessee reasonable opportunity of being heard in clear violation of the principles of natural justice.
3. On the facts and circumstances of the case, the CIT(A), NFAC has erred in confirming the action of the AO despite the fact that show-cause notice issued under Section 148A(b) of the Act, order passed under Section 148A(d), notice issued under section 148 and consequent reassessment order passed by AO under Section 147/144 of the Act are illegal and void-ab-initio as the same have been issued and passed without following the statutory conditions and procedures prescribed under the Income Tax Act.
4. On the facts and circumstances of the case, the CIT(A), NFAC has erred both on facts and in law in confirming the reassessment order passed by the AO despite the fact that the notice issued under section 148 is itself is invalid, illegal, non-est and liable to be quashed as the same has been issued beyond the prescribed time limits.
On the facts and circumstances of the case, the CIT(A), NFAC has erred both on facts and in law in confirming the action of AO despite the fact that the order under Section 147/144 has been passed ignoring the first proviso to section 148 which provides that notice under section 148 shall not be issued unless there is "information" [as defined under Explanation 1 to section 148] with the assessing officer which suggests that income chargeable to tax in the case of assessee for the relevant assessment year has escaped assessment.
6. On the facts and circumstances of the case, the CIT(A), NFAC has erred both on facts and in law in confirming the assessment, despite the fact that the reassessment proceedings initiated and consequent reassessment order passed by AO are bad in the eye of law as the information on the basis of which notice under Section 148 issued are vague and there is no live nexus between the information and the belief formed by the Assessing Officer.
On the facts and circumstances of the case, the CIT(A), NFAC has erred both on facts and in law in confirming the action of the AO, despite the fact that reassessment order under section 147/144 is illegal and liable to be quashed since show cause notice under Section 148A(b) of the Act, order under Section 148A(d) and notice under section 148 by the AO have been issued and passed without obtaining valid statutory prior approval from the specified authority as provided under section 151 of the Act.
8. On the facts and circumstances of the case, the learned CIT(A), NFAC has erred both on facts and in law in confirming the action of the AO, despite the fact that where the assessment of the assessee has been made on the basis of any material found during the course of search of other person, then assessment of the assessee shall be completed by following the procedure prescribed under section 153C of the Act and not under section 148 of the Act and therefore, the impugned assessment order passed by the AO under section 147/144 of the Act is invalid, void-ab- initio and therefore liable to be quashed.
9. On the facts and circumstances of the case, the learned CIT(A), NFAC has erred both on facts and in law in confirming the addition made by the AO despite the fact that the assessee has been maintaining regular books of accounts and financial statement are audited as per law and nothing adverse has been pointed out by the AO. 10. On the facts and circumstances of the case, the CIT(A), NFAC has erred both on facts and in law in confirming the order of the AO in reopening of the reassessment proceedings, despite the fact that the same has been made by the AO on the basis of borrowed satisfaction without independent application of his mind. 11. On the facts and circumstances of the case the CIT(A), NFAC has erred both on facts and in law in confirming the reopening of the assessment proceedings despite the fact that notice under section 148 has been issued without there being any books of accounts, evidence or other documents in his possession revealing any income represented in the form of any asset/expenditure/entry in books of accounts has escaped assessment. 12. On the facts and circumstances of the case, the CIT(A), NFAC has erred both on facts and in law in confirming the reopening of the assessment proceedings despite the fact that notice issued under Section 148 of the Act by the AO is invalid and void-ab-initio as the same have been issued violating the procedures prescribed under e-Assessment of Income Escaping Assessment Scheme, 2022.
On the facts and circumstances of the case, the CIT(A), NFAC has erred both on facts and in law in confirming the reopening of the assessment proceedings despite the fact that notice under section 148 has been issued without there being valid Document Identification Number (DIN) quoted on the body of the notice violating the CBDT Circular No.19/2019.
On the facts and circumstances of the case, the CIT(A), NFAC has erred both on fact and in law, in confirming the addition of Rs. 11,59,70,000/- made by the AO treating the purchases made by the assessee as not genuine.
On the facts and circumstances of the case, the Ld. CIT(A), NFAC has erred both on facts and in law, in confirming the above said addition despite the fact that the same has been made by the AO relying upon the statement of the third party recorded at the back of the assessee without providing opportunity to the assessee to cross examine the same.
On the facts and circumstances of the case, the learned CIT(A), NFAC has erred both on facts and in law in confirming the addition despite the fact that the addition has been made by the AO without conducting the independent enquiry u/s 133(6)/131 of the Act during the course of assessment proceedings.
On the facts and circumstances of the case, the learned CIT(A), NFAC has erred both on facts and in law in ignoring the settled position of law that when the sales are not doubted, the purchases corresponding to those sales cannot be treated as bogus.
On the facts and circumstances of the case, the CIT(A), NFAC has erred both on fact and in law, in confirming the addition despite the fact that the same has been made by the AO indulging in surmises without bringing on any direct evidence against the assessee, only on the basis of presumptions and assumptions.
Without prejudice to the above, on the facts and circumstances of the case, the CIT(A), NFAC has erred both on facts and in law in confirming the entire addition despite the fact that only the profit embedded in these alleged transactions can only be added in the hands of the assessee and not the entire purchases.
That the appellant craves leave to add, amend or alter any of the grounds of appeal
.”
4. Learned Authorized Representative for the appellant/assessee submitted that assessee company has filed its ITR dated 09.09.2015, declaring total income of Rs. 32,87,600/- . The initial notice under the un-amended Section 148 was issued on 30.06.2021. In view of the Hon'ble Supreme Court's decision in Union of India vs. Ashish Agarwal, the notice u/s 148 dated 30.06.2021 is deemed to have been issued u/s 148A(b) of the amended law. The said notice is invalid, illegal, non-est, and liable to be quashed as it has been issued beyond the prescribed time limits. Further, via notice under Section 148A(b) dated 16.05.2022, assessee was served with the material and information relied upon by Ld. AO as per the directions of Hon'ble Supreme Court in the case of Union of India & Ors. vs. Ashish Agarwal. Thereafter, notice under section 148 was issued along with the order passed u/s 148A(d) dated 30.06.2022 with the prior approval from the Principal Chief Commissioner of Income Tax, New Delhi.
4.1 Learned Authorized Representative, further submitted that notice issued under Section 148 of the Act dated 30.06.2022 is barred by limitation and therefore, the reassessment order is liable to be quashed, as A.Y. 2015-16 is otherwise time-barred in view of the decision of the Hon'ble Supreme Court in Union of India & Ors. Vs. Rajeev Bansal, 2024 (10) TMI 264-SC (LB) dated 03.10.2024, wherein the Hon'ble Apex Court, noting the statement of the Ld. ASG, recorded the concession that notices issued on or after 01.04.2021 for A.Y. 2015-16 will not survive, even after applying the extended time limits under TOLA. Said judgment has been applied by the jurisdictional High Court in the case of Makemytrip India Pvt. Ltd. Vs. DCIT, Circle 16(1), Delhi & Anr., 2025 (4) TMI 46 – Delhi High Court dated 24.03.2025. Reliance was placed on following decisions:
ITO, Ward-62(1) Vs. Girish Kumar Gupta, Delhi and (Vice- Versa), 2025(7) TMI 506 – Income Tax Appellate Tribunal Delhi, dated May 27,2025; 2. Pritam Kumar Vs. DCIT, Central Circle-19(1) New Delhi. 2025(7) TMI 1748 – ITAT, Delhi, dated 18.07.2025; 3. ACIT, Circle 19(1) & Ors. Vs. Nehal Ashit Shah, 2025(4) TMI 1095 – SC Order, dated 04.04.2025; 4. Pratishtha Garg Vs. ACIT, Central Circle-25, Delhi, 2024 (12) TMI 1540 – Delhi High Court, Dated 19.12.2024; 5. M/s. H.A. Share And Brokers Pvt.Ltd. Vs. ITO, Ward-11(1) & Ors. 2025 (7) TMI 1056 – Delhi High Court, Dated July 4, 2025; 5. Learned Authorized Representative for the Department of Revenue submitted that the appellant/assessee has been habitual defaulter.
From examination of record in light of aforesaid rival contentions, it is crystal clear that initial notice dated 30.06.2021 under Section 148 of the Act was issued which is on page 37 of the paper books. Notice under Section 148A(b) of the Act dated 16.05.2022 at pages 40 and 41 of the paper books were issued as per directions of Hon'ble Supreme Court. Notice under Section 148 of the Act was issued along with order dated 30.06.2022 under Section 148A(d) of the Act with prior approval of Ld. PCIT at pages 62 to 67 of the paper books. Notice under Section 148 dated 30.06.2022 was barred by limitation as per decision of Hon'ble Supreme Court in UOI vs. Rajeev Bansal, cited supra.
6.1 Hon'ble Delhi High Court in the case of Makemytrip India Pvt. Ltd. vs. DCIT, decided on 24.03.2025 in paras 8, 11 & 12 held as under:
“8. In a subsequent decision in Union of India and Others v. Rajeev Bansal: 2024 INSC 754, the Supreme Court considered the manner of applicability of the provisions of Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 [TOLA]. During the said proceedings it was conceded on behalf of the Revenue that TOLA was not applicable for reopening the assessments for AY 2015-16. The said concession was recorded in paragraph 19 (f) of the said decision. Paragraphs 19 (e) and 19 (f) of the said decision are relevant and are set out below: - "(e) The Finance Act 2021 substituted the old regime for re- assessment with a new regime. The first proviso to Section 149 does not expressly bar the application of TOLA. Section 3 of the TOLA applies to the entire Income Tax Act, including Sections 149 and 151 of the new regime. Once the first proviso to Section 149 (1) (b) is read with TOLA, then all the notices issued between 1 April 2021 and 30 June 2021 pertaining to the assessment years 2013- 2014, 2014-2015, 2015-2016, 2016-2017, and 2017-2018 will be within the period of limitation as explained in the tabulation below:
Assessment Within 3 Expiry Within six Expiry of Years (4) Year (1) Years (2) Limitation Limitation read with read with TOLA for (2) TOLA for (4) (3) (5)
2013-2014 31.03.2017 TOLA not 31.03.2020 30.06.2021 applicable 2014-2015 31.03.2018 TOLA not 31.03.2021 30.06.2021 applicable 2015-2016 31.03.2019 TOLA not 31.03.2022 TOLA not applicable applicable 2016-2017 31.03.2020 30.06.2021 31.03.2023 TOLA not applicable 2017-2018 31.03.2021 30.06.2021 31.03.2024 TOLA not applicable (f) The Revenue concedes that for the assessment year 2015-2016, all notices issued on or after 1 April 2021 will have to be dropped as they will not fall for completion during the period prescribed under the TOLA.
11. In the present case the impugned notice was issued on 27.07.2022, which was admittedly beyond the period of limitation as prescribed under Section 149 (1) of the Act. Since TOLA was not applicable in respect of the said notices under Section 148 of the Act for AY 2015-16 as conceded by the Revenue in the case of Union of India v. Rajeev Bansal: 2024 INSC 754 (supra), the impugned notice is liable to be set aside. 12. ………………………..” 7. A Co-ordinate Bench of the ITAT in in the case of Pritam Kumar Vs. DCIT, Central Circle-19(1), New Delhi has held as under:
“9. We have heard the revival contention of the parties and gone through the material available on record.In, the present case the notice was issued for the A.Y. 2015-2016 on 23-07-2022 beyond the period of limitation. Respectfully following the decision of the Hon’ble Supreme Court, we hold that the notice issued to the assessee dated 23-07-2022 u/s 148 of the Act for the A.Y.2015-16 is time barred. The legal issue raised by the assessee is allowed. 10 Since we have decided the legal ground in favour of the assessee, the other grounds have become academic and keep them open for adjudication.
In the result the appeal of the assessee is allowed”.
In view of above material facts and judicial precedents, respectfully following the same, it is held that the impugned notice was issued on 30.06.2022, which was admittedly beyond the period of limitation as prescribed under Section 149(1) of the Act. Since TOLA was not applicable in respect of the said notices under Section 148 of the Act for the assessment year 2015-16 as conceded by the Revenue in the case of UOI vs. Rajeev Bansal 2024 INSC 754 (supra), the impugned notice is liable to be set aside. Accordingly, ground of appeal no.3 is allowed.
In view of decision of ground no.3 in favour of assessee, the other grounds of appeal
being academic in nature, need not be adjudicated upon.