TaxTMI 
TaxTMI 
2026 (7) TMI 1079
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....lish language, computers, emails, electronic compliances and online procedures. The Ld. AR further submitted that during the relevant period, the assessee was suffering from serious and chronic medical ailments, including seizure disorder (epilepsy), on account of which he was medically declared unfit and his employment was terminated. It was also submitted that the assessee had undergone spinal surgery and continues to remain under neurological and orthopaedic treatment resulting in severe mobility restrictions. Further, the wife of the assessee had also undergone major medical treatment during the relevant period, thereby aggravating the personal difficulties and hardships faced by the assessee. In support of the aforesaid contentions, the assessee has placed on record various medical reports relating to himself as well as his spouse appearing at page nos. 102 to 132 of the paper book. The Ld. AR submitted that the delay was neither deliberate nor intentional and had occurred solely due to circumstances beyond the control of the assessee. Accordingly, it was prayed that the delay may be condoned and the appeal may be admitted for adjudication on merits. 3. Per contra, the Lear....
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....count of violation of section 151A of the Income-tax Act, 1961. 1.2 The Appellant submits that section 151A, read with the notification issued thereunder dated 29.03.2022, mandates that reassessment proceedings, including issuance of notice under section 148, shall be carried out strictly in accordance with the faceless and automated procedure notified by the Central Government. 1.3 In the present case, the notice under section 148 dated 04.04.2022, which constitutes the jurisdictional foundation for reassessment, was issued after the faceless scheme became mandatory and not in accordance with the procedure prescribed under section 151A. 1.4 The issuance of notice under section 148 in contravention of the mandatory faceless framework prescribed under section 151A renders the assumption of jurisdiction invalid and vitiates the reassessment proceedings at inception. 1.5 The fact that subsequent proceedings were conducted through faceless or NFAC mechanisms does not cure or legitimise a jurisdictional defect in the issuance of notice under section 148, which is incurable in law. 1.6 The Appellant therefore submits that the reassessment proc....
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....hallenge. 2.7 The Appellant submits that where the initiation of reassessment proceedings is barred by limitation and without jurisdiction, the entire proceedings are liable to be quashed in limine, and no remand or restoration to the Assessing Officer could have been directed. GROUND NO. 3 - INVALID AND MECHANICAL ORDER PASSED UNDER SECTION 148A(d) 3.1 The learned Commissioner of Income-tax (Appeals), NFAC erred in law and on facts in not adjudicating the ground challenging the validity of the order passed under section 148A(d) dated 03.04.2022, which forms the very foundation of the impugned reassessment proceedings. 3.2 The order under section 148A(d) was passed in a mechanical and perfunctory manner, without proper application of mind and without objectively considering the detailed reply dated 27.03.2022 filed by the Appellant along with supporting documentary evidences. 3.3 The Assessing Officer assumed escapement of income exceeding Rs.50,00,000 solely on the basis of an alleged information value reflected in Statement of Financial Transactions (SFT), without reconciling or eliminating duplication of the very same cash deposit tra....
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....e to the jurisdictional and procedural grounds raised hereinabove, the learned Commissioner of Income-tax (Appeals), NFAC erred in law and on facts in not adjudicating the grounds challenging the additions made by the Assessing Officer under section 69A of the Act. 5.2 The Assessing Officer erred in treating cash deposits of Rs.72,00,000 and time deposits of Rs.35,00,000 as unexplained, despite the Appellant having furnished a coherent and contemporaneous explanation supported by bank statements evidencing recycling of withdrawals, personal savings, and exempt retirement and terminal benefits. 5.3 The Assessing Officer failed to appreciate that the cash deposits and time deposits were inter-linked and sourced from the same explained funds, and that treating both independently as unexplained results in impermissible double addition of the very same money. 5.4 The Assessing Officer further erred in invoking section 69A mechanically on the basis of duplicated and unverified SFT information, without reconciling the same with bank records and without conducting any independent enquiry to establish that the deposits represented income chargeable to tax. ....
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....ection 144, once again proposing to complete the assessment on a best judgment basis. 6.6 The Appellant submits that jurisdictional defects relating to limitation and violation of mandatory statutory procedure are incurable and relate back to the inception of the proceedings, and the same cannot be cured or legitimised by an order giving effect, remand directions, or initiation of fresh proceedings pursuant thereto. 6.7 The continuation of proceedings without adjudication of the foundational jurisdictional issues has caused serious and recurring prejudice to the Appellant, resulting in prolonged and repetitive litigation, despite all relevant material being already available on record and no further fact-finding being required. 6.8 The Appellant submits that, in the facts and circumstances of the case, the learned CIT(A)'s order is vitiated by failure to exercise jurisdiction and is unsustainable in law, and this Hon'ble Tribunal, being the final fact-finding and appellate authority, may itself adjudicate the jurisdictional issues raised by the Appellant and grant appropriate relief, rather than remanding the matter for yet another round of procee....
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....quent proceedings; (e) Delete the additions made and consequential levy of interest and initiation of penalty proceedings, being wholly dependent upon and arising out of the impugned reassessment proceedings; (f) Grant such other or further reliefs as this Hon'ble Tribunal may deem fit and proper in the facts and circumstances of the case. The Appellant craves leave to add to, alter, amend, or withdraw any of the above grounds or prayers, strictly in accordance with law and as may be permitted by this Hon'ble Tribunal. The Appellant further submits that all material facts and documents necessary for adjudication of the jurisdictional issues are already on record and places himself at the disposal of this Hon'ble Tribunal to furnish any further clarification, if specifically called for, for the limited purpose of effective adjudication of this appeal. (Authorised representative) Name: Bhoopathi Yadagiri & Bandari Rajesham Designation: Chartered Accountant, Partner, Bandari and Associates. (Appellant) Name: Vykuntam Chanda PAN: ADIPC3323K 6. The brief facts of the case are that the assessee is an individual who had ....
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....of the Act is barred by limitation, the entire reassessment proceedings become void ab initio and the consequential assessment order is liable to be quashed. In support of the aforesaid proposition, reliance was placed on the decision of the Coordinate Bench of this Tribunal in the case of Afreed Mohammad Vs. ACIT in ITA No. 495/Hyd/2026 for Assessment Year 2015-16 dated 15.05.2026 and the decision in the case of Sudheer Parimala Vs. ITO in ITA No. 758/Hyd/2025 for Assessment Year 2015- 16 dated 17.04.2026. Accordingly, the Ld. AR prayed that the reassessment order be quashed. 9. Per contra, the Ld. DR relied upon the orders of the lower authorities. The Ld. DR submitted that while computing the period of limitation under section 149 of the Act, the period allowed to the assessee in response to the show cause notice issued under section 148A(b) of the Act is required to be excluded. According to the Ld. DR, after considering such exclusion, the notice issued under section 148 of the Act on 04.04.2022 falls within the permissible period and therefore the notice cannot be treated as barred by limitation. The Ld. DR accordingly supported the orders of the authorities below. 10. ....
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....32A, on or before the 31st day of March, 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 is less than seven days, such remaining period shall be extended to seven days and the period of limitation under this sub-section shall be deemed to be extended accordingly. Explanation .- For the purposes of clause (b) of this sub section, "asset" shall include immovable property, being land or building or both, shares and securities, loans and advances, deposits in bank account. (1A)Notwithstanding anything contained in sub-section (1), where the income chargeable to tax represented in the form of an asset or expenditure in relation to an ev....
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....sment, reassessment or recomputation to be made in pursuance of the notice is to be made on him as the agent of such non-resident, the notice shall not be issued after the expiry of a period of six years from the end of the relevant assessment year. Explanation .- For the removal of doubts, it is hereby clarified that the provisions of sub- sections (1) and (3), as amended by the Finance Act, 2012, shall also be applicable for any assessment year beginning on or before the 1st day of April, 2012". 13. On perusal of the above, it is evident that no notice under section 148 of the Act can be issued after the expiry of 6 years from the end of the relevant assessment year except the cases mentioned under section 149(1)(c) of the Act. Undisputedly, the case of the assessee does not fall under section 149(1)(c) of the Act. In the present case, the assessment year involved is Assessment Year 2015-16. Under the provisions of section 149 as applicable prior to the Finance Act, 2021, the period of limitation for issuance of notice under section 148 expired on 31.03.2022. Admittedly, the notice under section 148 of the Act has been issued only on 04.04.2022, which is after the limitation p....
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.... 5.2. At the outset, we note that the notice under section sec. 148 of the Act was issued by the Assessing Officer dated 13.04.2022 which is beyond 06 years from 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....
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....ed from the end of the relevant assessment yes unless the Assessing Officer has it his possession books of account or other documents or evidence which reveal that the income chargeable to 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 issue....
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....ion 148 of the Act 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 Section 149 of the Act 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 ta....
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....the passing of the order under Section 148A(d) of the Act in terms of the fifth and sixth provisos stands excluded for reckoning the limitation period for issuance of notice under Section 148 of the Act 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 ....
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....ed under Section 148 of the Net is within the period of limitation under Section 149(1)(2) (b) of the Act. To decide whether the notice is within the period of limitation under Section 149(1)(a) or (b) of the Act, the extension 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 taxmann.com 13 (Bombay)/ (2024) 338 CTR (Bom) 25, which was also authored by one of us (the Chief Justice), where paragraph No. 15 re....
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....ed 20.01.2022. It is pertinent to refer to the grounds taken in the rectification notice under Section 154 of the Act which are extracted hereunder: "1. On perusal of the assessment order u/s 143(3), it is seen that addition made of Rs. 40,00,00,000/- on unexplained cash credits with regard to shares allotment to M/s. Cancer Treatment Services Hyderabad Put. 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 t....
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....as prescribed/ provided under section 154(7) of the Act. It is required to be noted that the proceedings under section 154 of the Act were not the subject-matter before the High Court. Nothing was on record that, in fact, the notice under section 154 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....
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....t available for issuance of notice under Section 148 of the Act, as per the old regime of reassessment, was up to 31.03.2022, in our considered view, the A.O. cannot issue reassessment notice under Section 148 of the Act for the assessment year 2015-16 on or after 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....
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....(b) of the new regime applies prospectively. For example, for the assessment year 2012- 2013, the ten year period would have expired on 31 March 2023, while the six year period expired on 31 March 2019. Without the proviso to Section 149(1)(b) of the new regime, the Revenue 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 Put. 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 a....
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....he notice issued by the Assessing Officer u/sec. 148 of the Act dated 15.04.2022 is barred by limitation and the same is liable to be quashed. We Order accordingly. Since we have quashed the notice issued u/sec. 148 of the Act being invalid which also vitiates the re-assessment 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 under section 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 Citize....
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.... judgment of the Hon'ble Telangana High Court in the case of Cyberabad Citizens Health Services Pvt. Ltd. Vs. DCIT (supra), we hold that the notice issued under section 148 of the Act dated 04.04.2022 is barred by limitation and is therefore invalid in law. Once the notice issued under section 148 of the Act itself is held to be invalid, the reassessment proceedings initiated pursuant thereto cannot survive. Consequently, the assessment order passed by the Ld. AO under section 147 read with sections 144 and 144B of the Act on the basis of such invalid notice is liable to be quashed and is accordingly quashed. 15. Since we have decided the appeal of the assessee in his favour on the aforesaid legal issue, the other grounds raised by the assessee are not adjudicated and are kept open. 16. In the result, the appeal of the assessee is allowed. Order pronounced in the Open Court on 17^th June, 2026. ============= Document 1 GOVERNMENT OF INDIA MINISTRY OF FINANCE INCOME TAX DEPARTMENT OFFICE OF THE INCOME TAX OFFICER WARD-1, MANCHIRIYAL To. VYKUNTAM CHANDA D-37 A ZONE , RAMAKRISHNAPUR MANDAMARRI ADILABAD 504301 , Andhra Pradesh India PAN: ADIPC3....
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....nically 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. VURANDURŲ P NARASIMHA RAO WARD 10(1) HYDERABADI Document 3 GOVERNMENT OF INDIA MINISTRY OF FINANCE INCOME TAX DEPARTMENT OFFICE OF THE INCOME TAX OFFICER WARD 10[1), HYDERABAD/ năm 18 / //////// To, SUDHEER PARIMALA 7-1-59/7 DHARAM KARAN ROAD , AMEERPET HYDERABAD 500016, Andhra Pradesh India PAN: AHPPP7572E A.Y: 2015-16 Dated: 15/04/2022 DIN & Notice No: ITBAJAST/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 identi....