DEVESHI SHARMA,DELHI vs. INCOME TAX OFFICER, WARD 34(1), DELHI, DELHI

The assessee preferred the appeal, challenging the order dated 10- 02-2025passed by National Faceless Appeal Centre Delhi (in short NFAC) against the assessment order dated 30-05-2023 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”).

The brief facts of the case are that the assessee is an individual and filed return of income declaring at Rs. 4,22,080/- on 29-07-2016 u/s 139(1) of the act. The information received from INSIGHT portal by Investigation wing under high risk parameter that assessee has received long term capital gain relating to the sale of shares which has been found fictitious. It was found that income of Rs. 63,36,843/- chargeable to tax for A.Y.2016-17 had escaped assessment. In the view of this proceedings u/s 147 of the Act were initiated and the order u/s 148A(d) was passed on 21-07-2022. The AO completed the assessment by making the additions of Rs. 63,36,843/- treating the claim of long term Capital gain.

Aggrieved the order of the AO the assessee preferred the appeal before the NFAC who vide order dated 10-02-2025 dismissed the 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 21-07-2022 issued by AO u/s 148 of the Act for the A.Y. 2016-17 is time barred. In this regard he has submitted as under : original notice u/s 148 of the Act was issued on 29-06-2021 Time remaining till 30-06-2021 1 days Original period of limitation u/s 149 of the Act 31-03-2023 Extended period of limitation as per IT Act read with TOLA 30-06-2021 M/s Kaladhar Impex & Trades Pvt.Ltd. Vs, ITO Ward -14(1) NewDelhi Date of issuing notice under section 148A(b) in consequence to Hon’ble Supreme Court 22-05-2022 Due date for filing of reply to notice issued u/s148A(b) of the Act 06-06-2022 Replied filed before AO 06 -06-2022 Extended date by which notice should have 07 -06-2022 been issued u/s 148 Actual date of issuance of notice 21-07-2022 Notice u/s 148 of the Act 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 21-07-2022. Ld. AR submitted that under the un amended Act notice was issued on 29-06-2021 to the assessee. The section 148 0f 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 old provisions of section 148 of the Act applicable up to 31-03-2021 could have not been issued after 31-03- 2021. 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 22-05-2022. In the present case the notice u/s 148A(b) of the Act was issued on 22-05-2022 and assessee filed the reply on 06-06-2022. The AO passed an order u/s 148A(d) of the Act on 21-07-2022 rejecting the objection of the assessee and issued the notice u/s 148 of the Act on 21- 07-2022 which is to be treated time barred. 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 M/s Kaladhar Impex & Trades Pvt.Ltd. Vs, ITO Ward -14(1) NewDelhi 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 the decision Tyagi Pipe Craft P Ltd. Vs. ITO dated 23-07-2025 where the Hon’ble Delhi Bench relied on the decision of the Hon’ble Jurisdictional High Court in the case of Ram Balram Buildhome vs. ITO & Anr quashed the proceedings.

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