TaxTMI 
TaxTMI 
2026 (8) TMI 1169
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....n 147 R.W.S. 144 of the Income-tax Act, 1961. The appellant denies all additions and disallowances made therein. 2. Validity of Assessment The learned CIT(A) NFAC erred in upholding the assessment order which is bad in law, void ab initio, without proper jurisdiction, and contrary to the provisions of the Act. 3. Violation of Natural Justice The learned authorities below erred in completing the assessment without providing adequate opportunity of being heard, and without furnishing complete documents, thereby violating principles of natural justice. 4. Incorrect Addition / Disallowance The learned CIT(A), NFAC erred in confirming the addition of Rs. 8793853/- made towards undisclosed business/other income. The addition is arbitrary, excessive, unjustified and based on mere assumptions and presumptions. 5. Penalty Proceedings The learned CIT(A) NFAC erred in sustaining initiation of penalty proceedings under sections 271 (1) C, 271A, 271B of the Act. The penalty Initiated is unjustified and deserves to be deleted. 6. Interest Charging The learned CIT(A)NFAC erred in upholding the levy of intere....
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....ted at Rs. 33,98,810/- (8% of its turnover of Rs. 4,23,49,050/- + commission income of Rs. 1,36,086/- totaling Rs. 4,24,85,136/-). As the assessee society had declared business income of Rs. 4,85,028/-, it was called upon to explain as to why an amount of Rs. 29,13,782/- may not be treated as its undisclosed business income. Apart from that, the AO observed that though the assessee society, in addition to its aforesaid sales/turnover, had in its return of income declared interest on FD of Rs. 8,683/- and grant of Rs. 58,71,388/-under the head "Other income", the said income was not offered for tax under the head 'Income from other sources'. Accordingly, the AO, based on the aforesaid facts, called upon the assessee society to explain as to why the amount of Rs. 58,80,071/- (Rs.58,71,388/- + Rs. 8,683/-) may not be treated as its undisclosed income from other sources. 3. As is discernible from the record, the assessee society failed to respond to the multiple notices issued under section 142(1) of the Act; thus, the AO was constrained to proceed with and frame the assessment to the best of his judgment under section 144 of the Act. Thereafter, the AO based on his aforesaid observ....
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....f the Finance Act, 2021, therefore, the initiation of the impugned proceedings and the consequential framing of the assessment by him based on the said notice cannot be sustained and is liable to be struck 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). 9. 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, suc....
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....ed that, as there was no good ground to interfere with the impugned order passed by the High Court, dismissed the Special Leave Petition (SLP) filed by the assessee. The Ld. DR had filed before us a written submission/synopsis wherein he had referred to the aforesaid judicial pronouncements, and submitted that as the notice under section 148A(b) of the Act in the case of the present assessee society was issued on 26/03/2022, i.e., with the time period of six years from the end of the assessment year, thus, no infirmity emerges from the jurisdiction assumed by the AO for framing the assessment. The Ld. DR had further relied upon the judgment of the Hon'ble High Court of Delhi in the case of BKR Capital (P.) Ltd. vs. Income Tax Officer (2026) 187 taxmann.com 10 (Delhi) and Rajmani Securities (P.) Ltd vs. Income Tax Officer (2026) 187 taxmann.com 101 (Delhi), wherein the Special Leave Petitions (SLPs) filed in the said cases too had been dismissed by the Hon'ble Supreme Court as BKR Capital (P.) Ltd vs. ITO (2026) 187 taxmann.com 1073 (SC) and Rajmani Securities (P.) Ltd vs. ITO (2026) 187 taxman.com 1077 (SC). The Ld. DR submitted that in both the aforementioned cases, the Hon'ble Hi....
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....jmani Securities (P.) Ltd. v. Income-tax Officer, W.P.(C) 19769/2025, dated 26/02/2026, wherein it was held that the extension of the time period sought by an assessee for furnishing the reply to the notice issued by the AO under section 148A(b) of the Act is to be excluded while considering as to whether the notice under section 148 of the Act is issued within the time limits specified under Section 149 of the Act (as was available in the statute prior to its amendment vide Finance Act, 2021, w.e.f. 01/04/2021). For the sake of clarity, we deem it appropriate to cull out the observations of the Hon'ble High Court of Delhi in its aforesaid common order, which read as under: "30. The period between 28.03.2024 and 15.04.2024, during which the matter remained pending on account of adjournments sought by the petitioner, is liable to be excluded in terms of the statutory proviso. Consequently, the notice dated 15.04.2024 cannot be held to be barred by limitation." (emphasis applied by us) However, in the case before us, as the assessee appellant has not sought any extension in the time limit as was made available to him for furnishing the reply to the notice under section....
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....ing of the various judgments, we sum up the legal position as under: (a) The conclusions rendered by the three Judge Bench of this Court in Kunhayammed and summed up in paragraph 44 are affirmed and reiterated. (b) We reiterate the conclusions relevant for these cases as under: "(iv) An order refusing special leave to appeal may be a non-speaking order or a speaking one. In either case it does not attract the doctrine of merger. An order refusing special leave to appeal does not stand substituted in place of the order under challenge. All that it means is that the Court was not inclined to exercise its discretion so as to allow the appeal being filed. (v) If the order refusing leave to appeal is a speaking order, i.e., gives reasons for refusing the grant of leave, then the order has two implications. Firstly, the statement of law contained in the order is a declaration of law by the Supreme Court within the meaning of Article 141 of the Constitution. Secondly, other than the declaration of law, whatever is stated in the order are the findings recorded by the Supreme Court which would bind the parties thereto and also the court, tribunal or autho....
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....ilable on the statute prior to the commencement of the Finance Act, 2021, therefore, the same could not have been issued as per the clear mandate of "first proviso" to section 149 of the Act as has been made available on the statute by the Finance Act, 2021. Also, we find that the Ld. AR's contention that the period sought to be excluded for the purpose of computing the period of limitation as contemplated in the "fifth proviso" of section 149(1) of the Act (post amended) and also the extension of time limit to seven days in a case where after the exclusion of the time limit contemplated in the "fifth proviso" to seven days (as per the "sixth proviso") to section 149(1) of the Act cannot be read into for the purpose of computing the period of limitation for issuance of notice under section 148 of the Act as contemplated in the "first proviso" of post amended section 149(1) of the Act. Our aforesaid view is fortified by the judgment of the Hon'ble High Court of Telangana in the case of Cyberabad Citizens Health Services Private Limited vs. DCIT (supra), wherein, based on exhaustive deliberations, it was observed as under: "6. According to the learned Senior Counsel for the ....
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....f the Act dated 26.03.2024. It is submitted that the instant notice was issued prior to the expiry of six years period for reopening the assessment proceedings under the un-amended Section 149 of the Act for the Assessment Year 2017-18. The order under Section 148A(d) of the Act was passed on 22.04.2024. Further, the petitioner took time to file its reply on the date fixed as 10.04.2024. It is submitted that therefore, the benefit of the fifth and sixth provisos to amended Section 149 of the Act come into play. Therefore, the impugned notice under Section 148 of the Act dated 22.04.2024 is not barred by limitation. 9. Upon consideration of the rival submissions and the materials referred to hereinabove placed on record, we are of the considered view that the impugned notice under Section 148 of the Act dated 22.04.2024 relating to the Assessment Year 2017-18 is barred by limitation as per the first proviso to Section 149 of the Act brought into effect from 01.04.2021. The relevant part of amended Section 149 and the first, fifth and sixth provisos are extracted in the footnote". 10. This, we say so for the following reasons: In the case of Rajeev Bansal (....
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....oes not exceed 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. This also ensures that the new time limit of ten years prescribed under Section 149(1)(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 assessee's." "53 The position of law which can be derived based on the above discussion may be summarized thus: (10) Section 149(1) of the new regime is not prospective. It also applies to past assessment years; (ii) The time limit of four years is now reduced to three years for all situations. The Revenue can issue notices under Section 148 of the new regime only if three years or less have elapsed from t....
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.... to be served is a person treated as the agent of a non-resident under section 163 and the assessmem, 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 1 day of April, 2012. 12. Apparently, the fifth and sixth provisos of the amended Section 149 of the Act extracted hereinabove provide for excluding certain periods while computing the period of limitation as per the amended Section. It prescribes the time or extended time allowed to the assessee as per the show cause notice under clause (b) of Section 148 of the Act or the period during which the proceeding under Section 148A of the Act is stayed shall be excluded. The sixth proviso to the amended Section 149 of the Act also deals with exclusion of the period referred to in the fifth proviso i.e., the per....
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....ars and ten years in Section 149(1) of the Act are breached. 16. The sixth proviso to Section 149 of the Act has no impact as it only provides a situation where after exclusion of the time period referred to in the fifth proviso, the time available with the Assessing Officer for passing an order under Section 148A(d) of the Act is less than 7 days, then the remaining time frame shall be extended to 7 days and limitation also stands extended by 7 days." 14. Paragraph 12 of Shree Cement Ltd., (supra) is also extracted hereunder. "12. In this case, as it pertains to Assessment Year 2017-18, six years period would have expired on 31" March 2024. whereas notice under Section 148 of the Act itself came to be issued on 1" May 2024. Mr. Siddharth Bapna, counsel for Revenue, made an attempt to argue that fifth and sixth provisos to Section 149(1)(b) of the Act would save the period of limitation for issuing notice under Section 148 of the Act. We are afraid we do not agree with him. Same argument was raised in Hexaware Technologies Ltd. (supra) and was rejected. The Court held, with respect to applicability of fifth and sixth provisos to Section 149(1)(b) of the A....
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....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." 15. The reliance placed by the Revenue on the decision rendered by Patna High Court in the case of Chandra Shekhar (supra) is distinguishable as it relates to the Assessment Year 2020-21 in respect of which the notice under Section 148A(b) of the Act was issued on 28.03.2024. The petitioner therein had assailed the notice on the ground that the Assessing Officer had no jurisdiction to undertake the assessment for the Assessment Year 2020-21 after 31.03.2024 with reference to the second notice issued on 22.04.2024 as it was beyond the time limit stipulated under Section 149(1)(a) of the Act. In the aforesaid facts, the learned Court held that the combined reading of the fifth and sixth provisos meant that the first notice dated 28.03.2024 was issued well within the time limit stipulated. Therefore, the Assessm....