TaxTMI 
TaxTMI 
2026 (7) TMI 618
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....and the impugned appellate orders are summarised as under: Assessment Year Assessment order Section under which assessment order passed Assessed income CIT(A) order 2015-16 27.05.2023 Section 147 read with section 144B Rs.11,74,06,057/- 05.02.2026 under section 250 2016-17 25.05.2023 Section 147 read with section 144B Rs.11,36,56,863/- 05.02.2026 under section 250 2017-18 27.05.2023 Section 147 read with section 144B Rs.11,73,94,320/- 05.02.2026 under section 250 3. The assessment orders themselves record that they were passed under section 147 read with section 144B of the Act. The learned CIT(A), however, proceeded on the premise that the assessments were best judgment assessments passed under section 144 and invoked the proviso to section 251(1)(a), inserted by the Finance Act, 2024 with effect from 01.10.2024, to set aside the assessments for fresh adjudication. Common Factual Background 4. The assessee is a resident private limited company engaged, inter alia, in providing digital cinema solutions on rent and rendering advertising-related services. Information was received from the Central Economic Intelligen....
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.... Due date for reply under section 148A(b) 11.06.2022 11.06.2022 14.06.2022 Date of order under section 148A(d) 25.07.2022 27.07.2022 27.07.2022 Date of consequential notice under section 148 25.07.2022 27.07.2022 27.07.2022 Additions made Rs.11,74,06,057/- under section 69A Rs.6,56,05,078/- plus Rs. 3,93,00,000/- Rs.7,13,97,135/- plus Rs. 3,93,00,000/- plus Rs. 50,000/- Assessed income Rs.11,74,06,057/- Rs.11,36,56,863/- Rs.11,73,94,320/- 9. For Assessment Year 2015-16, the Assessing Officer recorded that the assessee had allegedly undertaken high-value transactions and earned receipts or income amounting to Rs. 19,71,00,000/-. During the assessment proceedings, the Assessing Officer noticed an amount of Rs. 7,96,93,943/- disclosed by the assessee and treated the difference of Rs. 11,74,06,057/- as unexplained money under section 69A, taxable under section 115BBE. 10. For Assessment Year 2016-17, the Assessing Officer compared the receipts of Rs. 9,21,94,922/- reflected in the profit and loss account with estimated receipts of Rs. 15,78,00,000/-, and treated the difference of Rs. 6,56,05,078/- as unexplained income. A....
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....le to be quashed. 16. For Assessment Year 2016-17, the learned AR submitted that the original notice was issued on 30.06.2021 and only one day of the extended limitation remained. The information was supplied on 28.05.2022 and the time granted to reply expired on 11.06.2022. According to the calculation furnished by the assessee, the last permissible date for issuing the consequential notice under section 148 was 18.06.2022. The notice issued on 27.07.2022 was, therefore, beyond the surviving period. 17. For Assessment Year 2017-18, he submitted that the original notice was issued on 17.06.2021 and thirteen days of the limitation period remained as on that date. The information was supplied on 31.05.2022 and the due date for filing the reply was 14.06.2022. According to the assessee, the last permissible date for issuing the consequential notice under section 148 was 27.06.2022. The notice issued on 27.07.2022 was thus time-barred. 18. In respect of Assessment Years 2016-17 and 2017-18, the learned AR also submitted that the reassessments were initiated after the expiry of three years from the end of the respective assessment years and, therefore, the sanction was required....
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....respond to the show cause notice has to be excluded for computing the period of limitation. In Ashish Agarwal (supra), this Court provided two weeks to the assesses to reply to the show cause notices. This period of two weeks is also liable to be excluded from the computation of limitation given the third proviso to Section 149. Hence, the total time that is excluded for computation of limitation for the deemed notices is: (i) the time during which the show cause notices were effectively stayed, that is, from the date of issuance of the deemed notice between 1 April 2021 and 30 June 2021 till the supply of relevant information or material by the assessing officers to the assesses in terms of the directions in Ashish Agarwal (supra); and (ii) two weeks allowed to the assesses to respond to the show cause notices. 108. The Income Tax Act read with TOLA extended the time-limit for issuing reassessment notices under Section 148, which fell for completion from 20 March 2020 to 31 March 2021, till 30 June 2021. All the reassessment notices under challenge in the present appeals were issued from 1 April 2021 to 30 June 2021 under the old regime. Ashish Agarwal (supra) deemed thes....
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....tices. After the receipt of the reply, the assessing officer had to perform the following responsibilities: i. consider the reply of the assessee under Section 148A(c); ii. take a decision under Section 148A(d) based 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 required to complete these procedures within the surviving time-limit. The surviving time-limit, as prescribed under the Income Tax Act read with TOLA, was available to the assessing officers to issue the reassessment notices under Section 148 of the new regime." 24. The Hon'ble Supreme Court thereafter held as under: "113. In the instant appeals, the reassessment notices pertain to the assessment years 2013-14 to 2017-18. To assume jurisdiction to issue notices under Section 148 with respect to the relevant assessment years, an assessing officer has to: (i) issue the notices within the period prescribed under Section 149(1) of the new regime read with TOLA; and (ii) obtain the previous approval of the authority specified under S....
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....he reassessment notice under Section 148 of the new regime within the time-limit surviving under the Income Tax Act read with TOLA. All notices issued beyond the surviving period are time barred and liable to be set aside." 25. The ratio emerging from the aforesaid judgment is that the limitation clock stopped on the date on which the original notice was issued between 01.04.2021 and 30.06.2021. The number of days remaining between the date of such notice and 30.06.2021 constituted the surviving period. The period from the date of the original or deemed notice until the supply of information and material was to be excluded. The period of two weeks allowed for filing the response was also to be excluded. Once the excluded period came to an end, the Assessing Officer was required to consider the reply, pass the order under section 148A(d), and issue the consequential notice under section 148 within the surviving period. 26. Applying the aforesaid principle to the facts before us, the computation is as under: Assessment Year Date of original or deemed notice Surviving period up to 30.06.2021 Date of supply of information as per section 148A(b) Due date for reply ....
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....Chief Commissioner or Director General. 31. The learned AR submitted that the sanction was obtained from the Principal Commissioner of Income Tax. This factual assertion and the supporting statutory records placed in the paper books were not controverted by the Revenue. The orders under section 148A(d) and the notices under section 148 were admittedly issued on 27.07.2022. 32. The issue is now directly covered by the judgment of the Hon'ble jurisdictional High Court in Ramesh Bachulal Mehta v. Income Tax Officer [2025] 177 taxmann.com 606 (Bom.). The said decision also related to Assessment Year 2016-17. In that case, the order under section 148A(d) was passed on 13.07.2022 and the consequential notice under section 148 was issued on 15.07.2022 after obtaining approval from the Principal Commissioner. The Hon'ble Bombay High Court held that approval was required from the higher authority specified under section 151(ii). 33. The relevant findings recorded in paragraphs 8 to 13 of the said judgment are reproduced: "8. On bare reading of the above extract of the judgment of Hon'ble Supreme Court in the case of Rajeev Bansal (supra), we find that the Hon'ble Supreme C....
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....ome Tax (Respondent No.2). Since the aforesaid order was passed after the expiry of three years from the end of the Assessment Year 2016-17, as per the substituted provisions of re-assessment, the authority specified under Section 151(ii) of the Act (i.e. Principal Chief Commissioner or Chief Commissioner) was required to grant approval. Accordingly, we conclude that in the present case the approval has been obtained from the authority specified under Section 151(i) of the new regime instead of the authority specified under Section 151(ii) of the new regime. 10. The Hon'ble Supreme Court in the above case has drawn an illustration in paragraph 78 of it"s order in the context of Assessment Year 2017-18, wherein it is categorically held that the authority specified under section 151(i) can accord sanction only upto 30.06.2021. This illustration makes it absolutely clear that when the period of three years from end of relevant Assessment Year expired between 20.03.2020 and 31.03.2021, the extension by virtue of TOLA was upto 30.06.2021 and not beyond. Thus, it can be said that the period of three years from the end of the relevant Assessment Year (here AY 2016-17) expired on ....
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....ose considered by the Hon'ble jurisdictional High Court in Ramesh Bachulal Mehta. In fact, in the cited case, the order under section 148A(d) was passed on 13.07.2022 and the notice under section 148 was issued on 15.07.2022, whereas in the present case both actions were undertaken even later, on 27.07.2022. Respectfully following the binding judgment of the Hon'ble jurisdictional High Court, we hold that the order under section 148A(d) and the consequential notice under section 148 for Assessment Year 2016-17 are vitiated for non-compliance with section 151(ii). 37. The position for Assessment Year 2017-18 stands on an even clearer footing. Three years from the end of Assessment Year 2017-18 expired on 31.03.2021. In paragraph 78 of Rajeev Bansal, the Hon'ble Supreme Court itself gave an illustration concerning Assessment Year 2017-18 and held that the authority specified under section 151(i) could grant sanction only up to 30.06.2021. 38. Paragraph 78 of Rajeev Bansal, as reproduced by the Hon'ble Bombay High Court, reads as under: "78. For example, the three year time limit for assessment year 2017-2018 falls for completion on 31st March 2021. It falls during the ....