TaxTMI 
TaxTMI 
2026 (6) TMI 340
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....If the credits are not inherently income, adding them is "bad in law" 2. Incorrect Additions treating all Bank Credits as Unexplained Income: a. The Ld. Assessing Officer (AO) has erred in law and on facts by treating bank credits of Rs. 30,44,917/- as unexplained money under Section 69A, without considering the nature and source of such deposits. b. The AO has erroneously treated the gross value of maturity proceeds as escaped income solely to artificially surpass the jurisdictional threshold of prescribed under Section 149(1)(b)." c. The additions made are based on mere suspicion, conjectures, and surmises, failing to recognize that bank entries alone do not constitute 'income' unless they have the character of income. 3. Incorrect Additions treating all Cash Deposits as Unexplained Income: a. The Cash deposits of Rs. 16,26,600/- represent re-cycling of past savings or stale cash held by the Family members, which does not amount to fresh income." 4. Additions of Capital Receipts: a. The Ld. Assessing Officer (AO) erred in treating the car down payment of Rs. 4,72,700/- as unexplained investment under ....
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....he amended provisions u/sec.149 of the Act under Clauses (a) and (b) of sub-sec.(1) of the said section. The learned DR has further submitted that as per the proviso to sec.149(1) of the Act, in a case where the limitation for issuing notice u/sec.148 already expired for the assessment year beginning on or before 01.04.2021, then the notice u/sec.148 of the Act cannot be issued under the new amended provisions extending the limitation from 06 years to 10 years. Thus, the learned DR has submitted that the proviso to sec.149(1) of the Act is applicable only in cases where the limitation of 06 years as per the un-amended provisions of reopening expired before 01.04.2021 and therefore, if the limitation for issuing the notice u/sec.148 of the Act was available as on 01.04.2021, then the limitation for issuing the notice u/sec.148 shall be as per the amended provisions of the Act. In support of his contention, he has relied upon the Judgment of Hon'ble Supreme Court in the case of Union of India vs. Rajeev Bansal [2024] 469 ITR 46 (SC) as well as Judgment of Hon'ble Delhi High Court in the case of Salil Gulati vs. ACIT [2023[ 455 ITR 24 (Del.) (HC). The learned DR has also relied up....
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....m the end of the assessment year under consideration. Hence, in view of the proviso to sec.149(1)(b) of the Act, the said notice is barred by limitation and therefore, liable to be set aside. We note that by following various decisions of Hon'ble Jurisdictional High Court, this Tribunal has taken a consistent view on this issue and in its recent decision dated 17.04.2026 in the case of Sudheer Parimala, Hyderabad vs. ITO, Ward-10(1), Hyderabad ITA.No.758/ Hyd./2025 held in Para nos.9 to 9.4 as under: "9. We have considered the rival submissions as well as relevant material on record. In the case in hand, the Assessing Officer has issued show cause notice u/sec.148A(b) of the Act on 19.03.2022 as under: 9.1. Thereafter, the Assessing Officer has passed an Order u/sec.148A(d) of the Act on 15.04.2022 and issued notice u/sec.148 of the Act dated 15.04.2022 as under: 9.2. Thus, the notice u/sec.148 of the Act was issued by the Assessing Officer on 15.04.2022 which is undisputedly beyond the period of 06 years from the end of the assessment year under consideration i.e., A.Y. 2015-2016. As per the unamended provisions of sec.148 of the Act, the notice u/sec.14....
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.... tax, represented in the form of- (i) an asset (ii) expenditure in respect of a transaction or in relation to an event of occasion; or (iii) an entry or entries in the books of account, Which has escaped assessment amounts to or in likely to amount to fifty lakh rupees or more; Provided that no notice under 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 er injunction of any court, shall be excluded: Provided also t....
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....t or as they stood immediately before the commencement of the Finance Act, 2021. For the purposes of appreciating the first proviso, the un-amended Section 149 of the Act is also extracted in the foot note. ------------------------- Time limit for notice. 149. (1) No notice under section 148 shall be issued for the relevant assessment year; (a) if four years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b) or clause (c); (b) if four years, but nor more than six years, have elapsed trees the end of the relevant assessment year unless the chargeable to tax which has escaped assessment amounts or is likely to amount to one lakh rupees or more for that year. (c) 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 city) 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 1....
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....ct is not worth acceptance. Section 148A of the Act lays down the procedure for issuance of notice under Section 148 of the Act whereas Section 149 of the Act prescribes strict time limit within which notice under Section 148 of the Act can be issued in the prescribed circumstances. The Revenue is therefore obliged to adhere to the timeline prescribed under Section 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 31st 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" 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....
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.... of time as prescribed in fifth and/or sixth proviso would be considered. The Court further held once, the notice is otherwise within the period of limitation. thereafter one has to see whether the said limit is within the prescribed restriction provided in first proviso or not. If the notice is beyond the restriction period, the notice is invalid, and 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 Lid. v. Assistant Commissioner of Income-tax (2024) 160 tasmann.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 31st July 2022, by which time the Finance Ac....
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....0,00,00,000/- on unexplained cash credits with regard to shares allotment to M/s. Cancer Treatment Services Hyderabad Pvt. Ltd. However, AO added only Rs. 40,00,000/- instead of Rs. 40,00,00,000/- in the computation of total income. This amounts to short addition made of Rs. 39,60,00,000/- having tax effect of Rs. 30,59,10,000/- excluding interest. 2. From the tax audit report in Farm 3CD, it is observed that the assessee's company has not paid employees contribution to PF within the due dates prescribed under the acts. In view of the same, the same has to be disallowed u/s 36(1)(va) of the Act. The AO has not made any disallowance u/s 35(1)(va). Hence, an amount of Rs. 6,35,949/- shall be disallowed u/s 36(1)(va). Tax effect (excluding interest) of disallowance u/s 36(1)(va) is Rs. 2,20,089/- 3. As verified from 3CD report, assessee was shown the an amount of Rs. 78,26,412/- additions to the block of assets. During the assessment proceedings, assessee has not given details and supporting evidences about additions to the block of assets. Hence, the AO has not verified the genuineness of the additions to the block of assets. Hence, the depreciation claimed of R....
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.... of the Act was withdrawn on the ground that the same was beyond the period of limitation prescribed under section 154(7) of the Act. In the absence of any specific order of withdrawal of the proceedings under section 154 of the Act, the proceedings initiated under section 154 of the Act can be said to have been pending. 5. In that view of the matter, during the pendency of the proceedings under section 154 of the Act, it was not permissible on the part of the Revenue to initiate the proceedings under section 147/148 of the Act pending the proceedings under section 154 of the Act. The High Court has erred in presuming and observing that the proceedings under section 154 were invalid because the same were beyond the period of limitation." 20. In the aforesaid facts and circumstances, we are satisfied that the second issue raised by the petitioner is also required to be answered in the affirmative. 21. Therefore, for the reasons recorded hereinabove, the proceedings initiated under Section 148 of the Act for reopening of the assessment relating to the Assessment Year 2017-18 are barred by limitation and accordingly, set aside." 9.3. Thus, the Hon'b....
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....ter 01.04.2022. In the present case, it is an undisputed fact that the A.O. has issued notice under Section 148 of the Act on 09.04.2022, which is beyond six years from the end of the relevant assessment year. Therefore, the notice issued by the A.O. under Section 148 of the Act dated 09.04.2022 is barred by limitation in view of the first proviso to Section 149(1)(b) of the Act and consequently the impugned assessment order passed by the A.O. dated 28.11.2023 is bad in law and liable to be quashed. 19. This legal proposition is supported by the decision of the Hon'ble High Court of Telangana in the case of Cyberabad Citizens Health Services Private Limited Vs. D.C.I.T. (supra). A similar view has been taken by the Coordinate Bench in the case of A.C.I.T. Vs. Manish Financial in ITA No. 5055/Mum/2024 (supra), wherein the coordinate Bench, after considering the decision of the Hon'ble Supreme Court in the case of Union of India Vs. Rajeev Bansal, held as under: "6. We heard the parties and perused the material on record. In assessee's case, the AO issued the original notice under section 148 dated 29.06.2021 for AY 2015-16 and consequent to the directio....
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....e could have had the power to reopen assessments for the year 2012-2013 if the escaped assessment amounted to Rupees fifty lakhs or more. The proviso limits the retrospective operation of Section 149(1)(b) to protect the interests of the assesses. 7. This issue of notice under section 148 issued for 2015-16 being time barred is considered by the coordinate bench in the case of Pushpak Realities Pvt. Ltd. (supra) and it is held that *****For the A.Y.2015-16, the Revenue itself has contended before the Hon'ble Supreme Court as noted above, all the notices issued on or after 01/04/2021 will have to be dropped as they will not fall for completion during the period prescribed under TOLA. Here notice w/s. 148 for the A.Y. 2015-16 has been issued on 28/07/2022 which is admittedly barred by limitation under the new provision of Section 149(1) and it is not covered under TOLA. Accordingly, all the notices are quashed being barred by limitation on the reasons given above and we are not going on the reasons given by the Id. CIT (A) for quashing the notice." 8. A combined reading of the above observations of the Hon'ble Supreme Court and the findings of coord....
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....ment order passed by the Assessing Officer, therefore, the other grounds raised by the assessee becomes infructuous." 5.3. Accordingly, by following the binding precedents as well as earlier decisions of this Tribunal, we hold that the notice issued by the Assessing Officer u/sec.148 of the Act dated 13.04.2022 is barred by limitation and the same is liable to be quashed. The decisions relied upon by the learned DR would not help the case of the Revenue in the facts of the present case. Since we have set aside the notice issued by the Assessing Officer u/sec.148 of the Act which also vitiates the re-assessment order passed by the Assessing Officer therefore, the other grounds raised by the assessee become infructuous and neither argued nor taken up for adjudication." 6.2. Thus, the Tribunal by following the Judgments of Hon'ble High Court of Telangana in the case of Cyberabad Citizens Health Services Private Limited vs. DCIT, AP & PCCIT, Hyderabad 2025 (11) TMI 1967 as well as other Orders of the Tribunal has held that notice u/sec.148 of the Act issued after 06 years from end of the assessment year beginning on or before 01.04.2021 is invalid being barred by limitation....
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....mit your response with supporting documents (if any) on the above mentioned issues electronically in 'e-proceeding' facility through your account in e- filing portal at your convenience on or before 23/03/2022. 4. This notice is being issued after obtaining the prior approval of the PCCIT, AP & TELANGANA accorded on date 19/03/2022 vide Reference No. 100000029533054. VURANDURU P NARASIMHA RAO WARD 10(1).HYDERABAD/ Document 2 To, SUDHEER PARIMALA 7-1-59/7 DHARAM KARAN ROAD , AMEERPET HYDERABAD 500016 , Andhra Pradesh India PAN: A.Y: Dated: DIN & Notice No: AHPPP7572E 2015-16 15/04/2022 ITBA/AST/F/148A/2022-23/1042746680(1) Name of the assessee SUDHEER PARIMALA Address of the assessee 7-1-59/7 DHARAM KARAN ROAD , AMEERPET HYDERABAD 500016, Andhra Pradesh India Resident/ Not Ordinarily Resident/ Non-Resident Date of order 15/04/2022 Specified authority approval Name PCCIT, AP & TELANGANA Reference No. 100000029533054 Date Order under clause (d) of section 148A of the Income-tax Act.1961 As per NMS module of Insight portal, for F.Y 2014-15 (A.Y 2015-16), it is noticed that your case is identified as Non-filer with potential tax liabilities by analyzin....