M/S KALADHAR IMPEX & TRADERS PVT. LTD,DELHI vs. INCOME TAX OFFICER WARD-14(1), DELHI

The assessee preferred the appeal, challenging the order dated 13- 01-2025passed by National Faceless Appeal Centre Delhi (in short NFAC) passed by the Assessing Officer for A.Y. 2014-15 under the section 147 and144 of the Income Tax Act, 1961(In short “the Act”). 1 2025 SmtDeveshi Sharmw vs. ITO Ward 14(1) 2. The assessee has raised the legal grounds in appeal that the notice issued u/s 148 of the Act is barred by limitation. This goes to root the matter and hence, is taken up first for adjudication.

The brief facts of the case are that the assessee is a company, has filed the return of income by declaring income of Rs. 1,12,009/- on 29- 09-2014.The return was processed u/s 143(1) of the Act and intimation was received to the assessee. Subsequently information was received from the office of DDIT(Inv.) unit -8 (43) Delhi through Insight Portal of the department and same was analyzed. A survey action was conducted on 27-04-2028 on M/s Sarvroopey Vyapar Pvt.Ltd. at Dwarks and M/s Shashi sales marketing Pvt. Ltd., Astrol food Pvt. Ltd. & rabik Export Ltd. Padama tower Rajendra place Delhi. During the course of survey proceedings, it was found that assessee have received the accommodation entries from M/s Ahy Foods Product Pvt Ltd. Notice u/s 148 of the Act was issued to the assessee and assessee has filed the return on 06-08-2021 declaring the same as originally in the compliance of the notice. The assessee challenged the said notice before the Hon’ble High Court in W. P. ( C) N0. 9251 of 2021, and court was pleased to quash the notice vide order dated 15-12-202. The AO completed the assessment by making the additions.

Aggrieved the order of the AO the assessee preferred the appeal before the NFAC who vide order dated 13-01-2025 dismissed the 2025 SmtDeveshi Sharmw vs. ITO Ward 14(1) appeal. Being aggrieved the order of the Ld. NFAC the assessee is in appeal before the Tribunal.

Ld. AR for the assessee has raised the legal issue and stated that the notice dated 23-07-2022 issued by AO u/s 148 of the Act is time barred. In this regard he has submitted as under : original notice u/s 148 of the Act was issued on 28-06-2021 Time remaining till 30-06-2021 2 days Letter issued by AO supplying information with reference to section 148A(b) in consequence to Hon’ble Supreme Court Order in Ashish Agarwal dated 04-05-2022 19-05-2022 & 21-05-2022 Replied filed before AO 13 -06-2022 Extended date by which notice should have 15-06-2022 been issued u/s 148 Order u/s 148 A(d) 20-07-2022 Notice u/s 148 of the Act 20-07-2022 6. In consequence to the directions issued by the Hon’ble Supreme court in the case of Union of India vs. Ashish Agarwal dated 04-05- 2022 the Assessing Officer issued the fresh notice u/s 148 of the Act on 20-07-2022. He further submitted that as per the section 149 of the Act the notice u/s 148 of the Act could be issued within a period of six years from the end of the relevant assessment year i.e 2014-2015. The limitation of issuing notice expired on 31-03-2021. In the present case the notice u/s 148 of the Act was issued on 20-07-2022 which is beyond time. Reliance has placed on the decisions of Union of India & Ors Vs. Rajeev Bansal 2024 (10) TMI 264 Supreme Court (LB) in this Case the Hon’ble Supreme Court held as under:

The clock started ticking for the Revenue only after it received the response of the assessee to the show cause notices. After the receipt of the reply, the assessing officer had to perform the following responsibilities; (i) consider the reply of the assessee under section 149A(C );(ii) take a decision under section 149A(d ) basd on the available material and the reply of the assessee; and (iii) issue a notice under section 148 if it was a fit case for reassessment. Once the clock started ticking, the assessing officer was see State of AP v. AP Pensioners Association, (2005) 13 SCC 161 [28]. [This court observed that the “legal fiction undoubtedly is to be construed in such a manner so as to enable a person, for whose benefit such legal fiction has been created, to obtain all consequences flowing there form.”] PART F required to complete these procedures within the surviving time limit. The surviving time limit, as prescribed under the Income 4 2025 SmtDeveshi Sharmw vs. ITO Ward 14(1) Tax Act read with TOLA, was available to the assessing officers to issue the reassessment notices under section 148 of the new regime.

Let us take the instance of a notice issued on 1 May 2021 under the old regime for a relevant assessment year. Because of the legal fiction, the deemed show cause, notice will also come into effect from 1 May 2021. After accounting for all the exclusions, the assessing officer will have sixty –one days [days between 1 May 2021 and 30 June 2021] to issue a notice under section 148 of the new regime. This time starts ticking for the assessing officer after receiving the response of the assessee. In this instance, if the assessee submits the response on 18 June 2022, the assessing officer will have sixty-One days from 18 June 202 to issue a reassessment notice under section 148 of the new regime. Thus, in this illustration, the time limit for issuance of a notice under section 148 of the new regime will end on 18 August 2022.”

In the above sited case, the revenue concedes that for the assessment year 2014-15, all notices issued on or after 1st April 2021 will have to be dropped as they will not fall for completion during the period prescribed under TOLA. Ld. AR also relied on the following decision: i. ITO vs Pushpak Realities Pvt Ltd. decided on 07-11-2024

The Ld. DR relied upon the orders of the lower authorities.

We have heard the revival contention of the parties and gone through the material available on record. In view of the observation of 2025 SmtDeveshi Sharmw vs. ITO Ward 14(1) 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 15-06-2022 and since, the notice is u/s 148 of the Act is issued on 20- 07-2022 the said notice is to be treated as time barred by limitation and consequentially reassessment proceedings would be liable to be quashed as void ab initio. Respectfully following the decision of the Hon’ble Supreme Court, we hold that the notice issued u/s 148 of the Act on 20-07-2022 is time barred by limitation. Accordingly 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. Order pronounced in the open court on 17/09/2025.