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Facts
The assessee, a non-filer, sold an immovable property for Rs. 81,50,000. The Assessing Officer (AO) issued a notice under Section 148. The assessee claimed deduction under Section 54 for reinvestment in a house property, but the AO denied this. The assessee's appeal to CIT(A) was dismissed.
Held
The Tribunal held that the notice issued under Section 148 of the Income Tax Act, 1961, was barred by limitation. The re-assessment proceedings initiated were consequently quashed.
Key Issues
Whether the notice issued under Section 148 of the Income Tax Act, 1961, for reassessment is barred by limitation as per the Hon'ble Supreme Court's decision in Rajiv Bansal (supra).
Sections Cited
148, 148A, 143(2), 142(1), 54, 149, 147
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI
PER YOGESH KUMAR, U.S. JM: The present appeal is filed by the Assessee against the order of Ld.
Commissioner of Income Tax (Appeals/ National Faceless Appeal Centre (‘Ld. CIT(A)/NFAC’ for short), New Delhi dated 27/12/2024 pertaining to Assessment Year 2014-15.
Brief facts of the case are that, the Assessee is a non-filer. The assessing officer had information that the Assessee had sold an immovable property-a plot measuring 500 square yards for a consideration of Rs.81,50,000/-. Accordingly, a notice under Section 30/06/2021. Following the directions of the Hon’ble Supreme Court of India in the case of Ashish Agarwal and others, the assessing officer proceeded under Section 148A of the Act and issued a fresh notice under Section 148 of the Act on 08/07/2022. In response, the Assessee filed a return of income on 02/08/2022, declaring a total income of Rs.1,33,780/-, after claiming a deduction under Section 54 of the Act of Rs.74,55,000/- against the capital gain of Rs.75,88,778/-. Thereafter, the assessing officer issued a notice under Section 143(2) of the Act and a notice under Section 142(1) of the Act. In response to the above notices, the Assessee submitted that he had sold the plot on 15/3/2014 for a consideration of Rs.81,50,000 and reinvested the same in the purchase of a house property for Rs.67,00,000 on 24/12/2013, which was registered by a general power of attorney. The assessing officer, however, considering the fact that the investment was claimed to have been made by acquiring the property through a general power of attorney and the claim of utilization of money received on the sale of the plot on 15/3/2014 for the purchase of property on 24/12/2013, denied the benefit of deduction under Section 54 of the Act and assessed the capital gain of Rs.77,07,798/- vide assessment order dated 29/05/2023.
Assessee preferred an Appeal before the Ld. CIT(A). The Ld. CIT(A) vide order dated 27/12/2024, dismissed the Appeal filed by the Assessee by confirming the additions made by the A.O. As against the order of the Ld. CIT(A) dated 27/12/2024, the Assessee preferred the present Appeal.
The Ld. Counsel for the Assessee addressing on Ground No. 1, vehemently submitted that the notice issued u/s 148 of the Act dated 08/07/2022 is barred by limitation in view of ratio laid down by the Hon'ble Supreme Court in the case of Union of India vs. Rajiv Bansal reported in (2024) 469 ITR 46 (S.C). The Ld. Counsel for the Assessee has provided the date and event chart and sought for allowing the Ground No.1 of the Assessee.
5. Per contra, the Ld. Departmental Representative submitted that Ground No. 1 of the Assessee that notice issued u/s 148 of the Act is barred by limitation does not have merit. Further submitted that, issuing of the notice and the initiation of re-assessment proceedings are well within the limitation, thus relying on the order of the Lower Authorities, sought for dismissal of the Appeal. on record. The Ld. Assessee's Representative submitted a table/chart of date and events for the purposes of calculating the period of limitation in issuing the for notice u/s 148 of the Act, which is reproduced for the purpose of convenience:
S. Particulars Reference No. 1 Assessment Year 2014-15 2 Period of Limitation u/s 149[3 Years or 6 6 years years] 3 Original period of Limitation u/s 149 31.03.2021 4 30.06.2021 Extended Period of Limitation as per IT Act read with TOLA 5 Date of original notice u/s 148 under 30.06.2021 Notice u/s unamended Act 148A(b) and order u/s 148A(d) 6 Time surviving from date of issuance of O days deemed SCN till expiry of period as extended by TOLA [from 30.06.2021] 7 Date of issue of notice u/s 148A(b) 25.05.2022 8 Due date for filing of reply to notice issued 09.06.2022 u/s 148A(b)
9 Reply/objection filed on - 10 09.06.2022 Extended date by which notice should have been issued u/s 148 (10+7)
11 Actual date of issuance of notice u/s 148 08.07.2022 Act was issued on 30.06.2021, which can be corroborated from the order dated 08.07.2022 passed u/s 148A(d) of IT Act. The provision of Section 148 of the Act has been substituted by Finance Act. 2021 w.e.f 01.04.2021, wherein notice u/s 148 of the Act as per the old provisions of Section 148 of the Act applicable upto 31.03.2021 could not have been issued after 31.03.2021. This issue per se was subject matter of various writ petitions filed in various High Courts and ultimately got settled by the Hon'ble Supreme Court in the case of Union of India Vs. Ashish Agarwal reported in 444 ITR 1 (SC) dated 04.05.2022. After the Judgment of the Hon'ble Supreme Court in the case of Ashish Agarwal (supra), the Id AO issued letter u/s 148A(b) of the Act on 25.05.2022 fixing date for compliance on 09.06.2022, which fact is evident from notice u/s 148A(b) of IT Act. The assessee has not made compliance of the said notice as same was never served as per the Assessee. The Ld. AO passed an order u/s 148A(d) of the Act on 08.07.2022 and proceeded to issue notice u/s 148 of the Act on 08.07.2022. Now the question that arises for consideration as to whether the subsequent notice issued u/s 148 of the Act on 08.07.2022 is to be treated as time barred or not in the light of decision of Hon'ble Supreme Court in the case of Union of India Vs. Rajeev Bansal reported in 469 ITR 46 (SC). the case of Tyagi Pipe Craft Ltd. Vs. ITO in vide order dated 23/07/2025, held as under:-
Hence, in view of the observation of the Hon'ble Supreme Court in the case of Rajeev Bansal (supra), the extended due date for issuance of notice u/s 148 of the Act expired on 26.06.2022 and since, the notice u/s 148 of the Act is issued on 23.07.2022, the said notice is to be treated as barred by limitation and consequentially reassessment proceedings would be liable to be quashed as void ab initio. This issue was also subject matter of consideration by the Hon‟ble Jurisdictional High Court in the case of Ram BalramBuildhomeVs. ITO &Anr reported in 445 ITR 1 (Del) dated 30.01.2025. Relevant operative portion of the said order is reproduced herein below:-
“65. Thus, in the facts of the present case, the last date for issuance of notice under Section 148 of the Act for AY 2013-14 under the statutory framework, as was existing prior to 01.04.2021 was 31.03.2020, that is, six years from the end of the relevant assessment year.
By virtue of Section 3 (1) of TOLA time for completion of specified acts, which fell during the period 20.03.2020 to 31 12.2020 were extended till 30.06.2021 [Notification No.38/21 dated 27.04.2021]. Thus, the notice dated 01.06.2021 was issued twenty-nine days prior to the expiry of period of limitation for issuing a notice under Section 148 of the Act as was extended by TOLA. As noted above, the period from 01.06.2021, the date of issuance of notice, and 04.05.2022, being the date of decision of the Supreme Court in Union of India &Ors. v. Ashish Agarwal is required to be excluded by virtue of the third proviso to Section 149 (1) of the Act.
Additionally, the period from the date of decision in Union of India &Ors. v. Ashish Agarwal2 till the date of providing material, as required to the accompanied with a notice under Section 148A (b) of the Act. is required to be excluded. Thus, the period between 04.05.2022 to 30.05.2022, the date on which the AO had issued the notice under Section 148A (b) of the Act in furtherance of his earlier notice dated 01.06.2021, is also required to be excluded by virtue of the third proviso to Section 149 (1) of the Act as held by the Supreme Court in Union of India &Ors. v. Rajeev Bansal 4.
In addition to the above, the time granted to the petitioner to respond to the notice dated 30.05.2022-the period of two weeks-is also required Mukesh Vs. ITO to be excluded by virtue of the third proviso to Section 149 (1) of the Act. The petitioner had furnished its response to the notice under Section 148A (b) of the Act on 13.06.2022. Thus, the period of limitation began running from that date.
As noted above, by virtue of TOLA, the AO had period of twentynine days limitation left on the date of commencement of the reassessment proceedings, which began on 01.06.2021, to issue a notice under Section 148 of the Act. The said notice was required to be accompanied by an order under Section 148A (d) of the Act. Thus, the AO was required to pass an order under Section 148A (d) of the Act within the said twenty- nine days notwithstanding the time stipulated under Section 148A (d) of the Act. This period expired on 12.07.2022.
Since the period of limitation, as provided under Section 149 (1) of the Act, had expired prior to issuance of the impugned notice on 30.07.2022. The said is squarely beyond the period of limitation.
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.
In view of the above, we find merit in Mr. Sehgal's contention that the impugned notice dated 30.07.2022 has been issued beyond the period of limitation.
The petition is accordingly allowed and the impugned order dated 30.07.2022 passed under Section 148A (d) of the Act; the impugned notice dated 30.07.2022 issued under Section 148 of the Act; and the assessment order dated 30.05.2023 framed under Section 147 of the Act pursuant to the notice dated 30.07.2022 for AY 2013-14, are set aside. Pending application is also disposed of.” 6. Respectfully following the said decision, we hold that the notice issued u/s 148 of the Act on 23.07.2022 is barred by limitation. Accordingly, ground No. 1 raised by the assessee is allowed.” down by the Hon'ble Supreme Court in the case of Rajiv Bansal (supra), we are of the opinion that notice issued u/s 148 of the Act dated 08/07/2022 is barred by the period specified u/s 149 of the Act, consequently, the re-assessment proceedings initiated thereupon is hereby quashed.
In the result, Appeal of the Assessee is allowed.