TaxTMI 
TaxTMI 
2026 (3) TMI 1223
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....ioner of Income Tax (Appeals) ought to have considered the grounds of appeal judiciously, in the interests of justice. 3. The learned Commissioner of Income Tax (Appeals) is not justified in sustaining the addition of Rs. 89,57,554/- made by the Assessing officer u/s 69A r.w.s 115BBE of the I T.Act towards unexplained cash deposits in the Bank Account are not at all warranted in view of the facts and circumstances of the case. 4. The learned Commissioner of Income Tax (Appeals) ought to have held that the provisions of 115BBE are not applicable to the case of Appellant. 5. The learned Commissioner of Income Tax (Appeals) ought to have appreciated the fact that the so called impugned aggregate cash deposits of Rs. 89,57,554/-was fully explainable sources, as the said fully explainable sources which represents sales turnover of the appellant who is engaged in textile business. So the appellant has got no objection to assess his business income at 8% on the impugned aggregate cash deposits of Rs. 89,57,554/- which represented nothing but his sales turnover on presumptive basis u/s. 44AD of the I.T.Act, in the interests of justice. 6. The learned Com....
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.... of 150 days in filing the appeal before the Tribunal. Explaining the reasons for the delay in filing of the appeal, the Ld. AR had drawn our attention to the "affidavit" filed by the assessee along with a petition seeking for condonation of the delay involved in filing the present appeal, which reads as under:- "1. The order of the learned Commissioner of Income Tax (Appeals) in the case of the appellant was passed on 20.12.2024. This order was served on 01.01.2025. As such, the appeal against this order ought to have been filed on or before 02.03.2025. However, the appeal could be filed only on 28.07.2025 resulting in a delay of 148 days in filing the appeal. 2. The appellant is a patient of buccal mucosa cancer i.e. cancer in the inner lining of cheeks. He underwent surgery on 08.10.2014 and thereafter radiotherapy from 06.11.2014 to 02.01.2015 in Mahatma Gandhi Caner Hospital and Research Institute in Visakhapatnam. The cancer was cured but the appellant suffered for a long time with wound infection, digestion issues, fever, difficulty in swallowing and jaw pain and was hospitalized frequently for treatment of these problems. The appellant was not well during ....
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.... of the appellant was completed u/s 147 r.w.s. 144 r.w.s 144B vide order dt.21.02.2024. This is a case of reassessment and the same was initiated by notice u/s 148 of the Act issued on 03.04.2022. 2. The above mentioned notice dt.03.04.2022 issued u/s 148 is invalid for the following reasons: a) Firstly, the impugned assessment year is A.Y.2015-2016 and the notice u/s 148 was issued on 03.04.2022 which falls after expiry of 6 years from the end of the relevant assessment year. As such, the notice is barred by limitation by virtue of 1" proviso to S.149(1) of the Act. b) Thirdly, the notice was issued by the JAO. After the introduction of 'E-Assessment of Income Escaping Assessment Scheme, 2022' w.e.f. 29.03.2022, the notice u/s 148 shall be issued in faceless manner by the FAO. However, the notice in the case of the appellant was issued by the JAO. Hence, the notice is invalid. 3. The above legal issues were not raised before the lower authorities due to inadvertence. However, all the issues are purely legal in nature and the relevant facts are already on record. Hence, the appellant prays the hon'ble ITAT Visakhapatnam Bench to kindl....
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....uck down on account of invalid assumption of jurisdiction. The Ld. AR to buttress his contention had drawn our attention to section 149(1) of the Act - "first proviso" (as was made available on the statute by the Finance Act, 2021, w.e.f. 01/04/2021). 13. Carrying his contention further, the Ld. AR submitted that though the "fifth" and "sixth" provisos of the post amended section 149 of the Act provide for excluding certain periods while computing the period of limitation, viz., (i) the time or extended time allowed to the assessee, as per show cause notice (SCN) issued under clause (b) of section 148A of the Act or the period during which the proceedings under section 148A is stayed by an order or injunction of any Court (as per "fifth proviso"); and (ii) that where immediately after the exclusion (period referred to in "fifth proviso") of the period of limitation available to the AO for passing an order under clause (d) of section 148A of the Act does not exceed seven days, such remaining period shall be extended to seven days and the period of limitation under sub-section (1) of section 149 shall be deemed to be extended accordingly (as per "sixth proviso"), but both the afor....
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....sustainability of the impugned order of assessment passed by the AO under section 147 r.w.s. 144 r.w.s. 144B of the Act, dated 21.02.2024, which in turn is based on the notice issued under section 148 of the Act, dated 03.04.2022, for the AY 2015-16. 16. Admittedly, it is a matter of fact borne from record that the impugned notice under section 148 of the Act, dated 03.04.2022 had been issued beyond the time limit specified under the provisions of clause (b) of sub-section (1) of section 149 of the Act as they stood immediately before the commencement of the Finance Act, 2021. We say so, for the reason that as per the pre-amended section 149(1)(b) of the Act a notice under section 148 of the Act for the AY 2015-16 could have been issued by the AO latest by 31.03.2022. 17. Considering the aforesaid factual position, we find substance in the Ld. AR's contention that as the notice under section 148 of the Act, dated 03.04.2022 had been issued beyond the time period specified under the provisions of clause (b) of sub-section (1) of section 149 of the Act, as was available on the statute prior to the commencement of the Finance Act, 2021, therefore, the same could not have been is....
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....t the case of Godrej Industries Ltd., (supra) which relates to the Assessment Year 2014-15. 7. On the second issue, reliance has been placed on the decision of the Apex Court in the case of S.M. Overseas (P) Ltd., v. Commissioner of Income-tax. Learned Senior Counsel for the petitioner has distinguished the decision rendered by the High Court of Patna in Chandra Shekhar v. Principal Commissioner of Income-tax as it relates to the Assessment Year 2020-21 where the application of the first proviso to the amended Section 149 of the Act introduced with effect from 01.04.2021 cannot be applied. Based on the said submissions, the learned Senior Counsel for the petitioner has prayed that the impugned notice under Section 148 of the Act may be quashed and the order passed under Section 148A(d) of the Act may also be set aside. 8. On behalf of the Revenue, learned Senior Counsel for the Department has taken us to the chronology of dates and events as referred to hereinabove and thereby drawn the attention of this Court to the notice under Section 148A(b) of the Act dated 26.03.2024. It is submitted that the instant notice was issued prior to the expiry of six years period ....
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....der section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before 1" day of April, 2021, if a notice under section 148 or section 153A or section 153C could not have been issued at that time on account of being beyond the time limit specified under the provisions of clause (b) of sub-section (1) of this section or section 153A or section 153C, as the case may be, as they stood immediately before the commencement of the Finance Act, 2021: Provided also that for the purposes of computing the period of limitation as per this section, the time or extended time allowed to the assessee, as per show-cause notice issued under clause (b) of section 148A or the period during which the proceeding under section 148A is stayed by an order or injunction of any court, shall be excluded: Provided also that where immediately after the exclusion of the period referred to in the immediately preceding proviso, the period of limitation available to the Assessing Officer for passing an order under clause (d) of section 148A does not exceed seven days, such remaining period shall be extended to seven days and the period of limitation under thi....
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....t year, (a) if four years have clapsed from the end of the relevant assessment year, unless the case falls under clause (b) or clause (c); (b) if four years, but not more than six years, have elapsed from the end of the relevant assessment year unless the mome chargeable to tax which has escaped assessment amounts to or is likely to amount to one lakh rupees or more for that year. I if four years, but not more than sixteen years, have elapsed from the end of the relevant assessment year unless the income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment. Explanation In determining income chargeable to tax which has escaped assessment for the purposes of this sub-section, the provisions of Explanation 2 of section 147 shall apply as they apply for the purposes of that section (2) The provisions of sub-section (1) as to the issue of notice shall be subject to the provisions of section 151. (3) If the person on whom a notice under section 148 is to be served is a person treated as the agent of a non-resident under section 163 and the assessment, re....
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....ion 149 of the Act for issuance of such notice and undertake the procedure before issuance of notice under Section 148A of the Act. 13. In this regard, it is apposite to refer to opinion of the Delhi High Court. Paragraphs 15 and 16 of Godrej Industries Ltd., (supra) are extracted hereunder: "15. The validity of a notice must be judged on the basis of the law existing as on the date on which the notice is issued under Section 148 of the Act, which in the present case is 31 July 2022, by which time the Finance Act, 2021 is already on the statute and in terms thereof, no notice under Section 148 of the Act for AY 2014-15 could be issued on or after 1" April 2021 based on the first proviso to Section 149 of the Act. Therefore, the fifth proviso cannot apply in a case where the first proviso applies because, if a notice under Section 148 of the Act could not be issued beyond the time period provided in the first proviso, then the fifth proviso could not save such notices. The fifth proviso can only apply where one has to determine whether the time limit of three years and ten years in Section 149(1) of the Act are breached. 16. The sixth proviso to Section 14....
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....the fifth and/or the sixth proviso cannot apply at this stage to extend the period of restriction as per first proviso. Hence, if a notice is not within the time prescribed under first proviso to Section 149(1) of the Act, then such period cannot be extended by fifth or sixth proviso. In Hexaware Technologies Ltd. (supra), the Court had relied upon another judgment of Bombay High Court in Godrej Industries Ltd. V. Assistant Commissioner of Income-tax [2024] 160 taxmann.com 13 (Bombay)/(2024) 338 CTR (Bom) 25, which was also authored by one of us (the Chief Justice), where paragraph No.15 reads as under: "15. The validity of a notice must be judged on the basis of the law existing as on the date on which the notice is issued under Section 148 of the Act, which in the present case is 31" July 2022, by which time the Finance Act, 2021 is already on the statute and in terms thereof, no notice under Section 148 of the Act for AY 2014-15 could be issued on or after 1 April 2021 based on the first proviso to Section 149 of the Act. Therefore, the fifth proviso cannot apply in a case where the first proviso applies because, if a notice under Section 148 of the Act could not be iss....
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....pplies to past assessment years; (i) The time limit of four years is now reduced to three years for all situations. The Revenue can issue notices under s. 148 of the new regime only if three years or less have elapsed from the end of the relevant assessment year; (iii) the proviso to s. 149(1)(b) of the new regime stipulates that the Revenue can issue reassessment notices for past assessment years only if the time limit survives according to s. 149(I)(b) of the old regime, that is, six years from the end of the relevant assessment year; and (iv) all notices issued invoking the time limit unders. 149(I)(b) of the old regime will have to be dropped if the income chargeable to tax which has escaped assessment is less than rupees fifty lakhs. (ii) Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 can extend the time limit till 31st June, 2021. 60. The above principles can be applied as follows to the factual situation in the present appeals : (i) The Finance Act, 2021(2021) 432 ITR (St.) 52) substituted ss. 147 to 151 of the IT Act w.e.f. 1st April, 2021; (ii) ss. 147 to 151 of the old law ceased to operate from 1st April, 2021; (iii) ....
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....r s. 149(l)(b) of the old regime continues to exist for the asst. yr. 2021-22 and before. Resultantly, a notice under s. 148 of the new regime cannot be issued if the period of six years from the end of the relevant assessment year has expired at the time of issuance of the notice. This also ensures that the new time limit of ten years prescribed under s. 149(I)(b) of the new regime applies prospectively. For example, for the asst. yr. 2012-13, the ten year period would have expired on 31st March, 2023, while the six year period expired on 31st March, 2019. Without the proviso to s. 149(I)(b) of the new regime, the Revenue could have had the power to reopen assessments for the year 2012-13 if the escaped assessment amounted to Rupees fifty lakhs or more. The proviso limits the retrospective operation of s. 149()(b) to protect the interests of the assesses." 7. In view of the above, the present petition is allowed. The impugned order dt. 1st May, 2024 as well as the notice issued under s. 148 in respect of the asst. yr.2017-18 are set aside. 8. Pending applications also stand disposed of." 6. In the light of the issues standing covered on all its fours, th....