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Judgment
O R D E R
PER S.RIFAUR RAHMAN,AM:
The assessee has filed appeal against the order of the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi [“Ld. CIT(A)”, for short] dated 05.12.2025 for the Assessment Year 2015-16.
Brief facts of the case are, for the year under consideration, the assessee filed its return of income, declaring total income of Rs 95,19,080/- on 30.01.2017. Subsequently, the case was reopened by issuing notice u/s 148 of the Income-tax Act, 1961 (erstwhile provisions applicable prior to amendment by Finance Act 2021) on 09.04.2021. In the assessment order itself, the AO noted that Hon’ble Supreme Court, vide its judgment dated 04th May 2022 reported in 441 ITR 1(SC) in the case of Union of India v. Ashish Agarwal has adjudicated on the issue of reassessment notices and held that reassessment notices issued under the old provisions shall be deemed to be the show cause notices issued under clause (b) of section 148A of the Act introduced under Finance Act, 2021 and all requirements of new provisions prior to that show cause notice shall be deemed to have been compiled with. Therefore, considering the directions of Hon'ble Supreme Court, the reassessment notice u/s 148 of the Act dated 09.04.2021 was treated as notice issued under clause (b) of section 148A of the Act. The relevant information leading to issuance of notice u/s 148 was forwarded to the assessee by the AO vide letter/notice dated 20.052022. Thereafter, the assessee filed its objections to proposed action u/s 148 vide letter dated 07.06.2022 which were rejected by the AO vide order passed u/s 148A(d) of the Act on 13.07.2022. Accordingly, a notice u/s 148 dated 13.07.2022 was issued by the AO which has subsequently culminated in passing of an order of assessment u/s 147 r.w.s 144B of the Act on 29.05.2023. In this order of assessment, the AO has assessed the total income of the assessee at a sum of Rs.2,12,08,665/- after making an addition u/s 69A of Rs.1,14,60,378/-and an addition u/s 69C of Rs 2,29,207/-.
Aggrieved with the above order, assessee preferred an appeal before the NFAC, Delhi and filed detailed submissions. Ld. CIT (A) vide impugned appellate order dated 05.12.2025 upheld the issue of assumption of jurisdiction u/s 147 of the Act as well as the issues on merits of additions made by the AO u/s 69A and 69C of the Act.
Aggrieved with the above order, assessee is in appeal before us raising following grounds of appeal :-grounds
“1.That on facts and in law the impugned order dated 05-12-2025 passed by the National Faceless Appeal Centre {hereinafter referred to as the “CIT(A)”} and order dated 29-05-2023 passed by the Assessment Unit, Income Tax Department {hereinafter referred to as the “AO”} are bad in law and void ab initio.
1.1That on facts and in law the AO and CIT(A) have erred in violating principles of natural justice rendering orders passed as void in law.
1.2That on facts and in law the AO and CIT(A) have erred in:
(a)relying upon material / information not relevant to assessee
(b)relying upon material / information collected on back of assessee,
(c)denying opportunity to cross-examine.
(d)holding that an accommodation entry was obtained by assessee in from of transaction for purchase and sale of shares.
2.That on facts and in law the CIT(A) has erred in sustaining assuming jurisdiction by the AO to assess invoking provisions of section 147 of the Act.
2.1That on facts and circumstances of the case and in law assumption of jurisdiction to assess by the AO is bad in law as:
(a)Notice issued u/s 148A of the Act,
(b)Order passed u/s 148A(d) of the Act, and
(c)Notice issued u/s 148 of the Act, are bad in law and void ab initio, inter alia, barred by limitation, violative to provisions of section 151A of the Act.
2.2That on facts and in law in absence of a valid sanction u/s 151 of the Act the assessment order dated 29-05-2023 is bad in law and void ab initio.
3.That on facts and in law the CIT(A) has erred in upholding the action of AO by sustaining an addition to Total Income of Rs 1,07,31,800/- by treating the transaction of “Long Term Capital Loss” as Sham and Bogus.
4.That on facts and in law the CIT(A) has erred in upholding that the assessee had availed an accommodation entry through Mr Jignesh Shah in form of bogus LTCG on account of sale of Penny Stock of M/s Safal Herba Limited.
5.That on facts and in law the CIT(A) has erred in sustaining / making additions of Rs 1,07,31,800/- and Rs 2,14,636/- premised conjectures and surmises and without any “Relevant Material”.
6.That on facts and in law the CIT(A) has erred in sustaining additions to total income invoking provisions of section 69A of the Act.
7.That on facts and in law the CIT(A) has erred in upholding applicability of provisions to section 115BBE of the Act.”
At the time of hearing, ld. AR of the assessee submitted that post decision of Hon’ble Apex Court in case of Rajeev Bansal reported in 469 ITR 46(SC), the Hon'ble Delhi High Court and several other Hon’ble High Courts have held that as regards AY 2015-16, notices issued under section 148 on or after 1st April 2021 would have to be dropped as they would not fall for completion during period prescribed under TOLA. Ld AR further submitted that Hon'ble High Courts in these decisions has held that since Revenue had categorically made a concession before Hon'ble Supreme Court in case of Rajeev Bansal (supra) that for AY 2015-16 it would drop all notices issued under section 148 after 01.04.2021, the impugned notice dated 13.07.2022 and all consequential orders/notices would not survive. In this regard Ld AR relied upon following judicial precedents:
Decision of Hon’ble Delhi High Court in case of Makemytrip India Pvt Ltd reported in (2025) 173 taxmann.com 497(Del)
Decision of Hon’ble Delhi High Court in case of Bhagwan Sahai Sharma reported in (2025) 174 taxmann.com 14(Del)
Decision of Hon’ble Delhi High Court in case of Pratishha Garg reported in (2025) 171 taxmann.com 264(Del)
Decision of Hon’ble Supreme Court in case of ACIT vs Nehal Ashit Shah in SLP (Civil) Diary No. 57209/2024 dated 09th May 2024
On the other hand, ld. DR of the Revenue heavily relied on the orders of the lower authorities.
Considered the rival submissions and material placed on record. We observed that the main issue to be decided in this case at the outset is as to whether the notice issued u/s 148 of the Act for the assessment year 2015-16 on 13.07.2022 is a valid notice or not. We find an identical issue had come up before the Hon'ble Delhi High Court in the case of Makemytrip India Pvt Ltd (supra) wherein the Hon'ble High Court has held that for assessment year 2015-16, notices issued under section 148 on or after 01st April 2021 would have to be dropped as they would not fall for completion during period prescribed under TOLA. The relevant observations of Hon'ble High Court read as under :
“2.The petitioner impugns a notice dated 27.07.2022 [the impugned notice] issued under Section 148 of the Income Tax Act, 1961 [the Act] in respect of the Assessment Year [AY] 2015-2016 and contends that the same is barred by limitation.
3.The petitioner had filed its return of income for AY 2015-2016 on 28.11.2015. Thereafter, on 25.10.2017, the petitioner entered into an Advance Pricing Agreement [APA]. Consequently, its return of income was required to be modified for the said year. The return as modified was selected for scrutiny. The said proceedings culminated in an assessment order dated 29.12.2018 passed under Section 143(3) of the Act whereby the petitioner's income was assessed at Rs.1,90,02,11,840/-.
4.Aggrieved by the same, the petitioner filed an appeal before the Commissioner of Income Tax (Appeals), the said appeal was allowed by an order dated 24.06.2019 and the additions made by the Assessing Officer were set aside. 5. Thereafter on 21.04.2021, the AO issued a notice under Section 148 of the Act seeking to reopen the assessment for the AY 2015-16. The said notice was issued under the provisions relating to reassessment of income (Sections 147 to 151) of the Act as were in force on 31.03.2021 and prior thereto. The petitioner filed its return of income in response to the said notice and also sought reasons for re-opening of the assessment.
6.In the meanwhile, several petitions were filed assailing such notices that were issued under Section 148 of the Act after 31.03.2021 but following the statutory regime for reassessment as was in force prior to the said date. Some of these petitions were allowed on 15.12.2021 by a decision in Mon Mohan Kohli v. ACIT [2021] 133 taxmann.com 166/[2022] 441 ITR 207 (Delhi) and other connected matters. Similar decisions were rendered by some other High Courts.
7.These decisions were appealed by the Revenue before the Hon’ble Supreme Court. In Union of India v. Ashish Agarwal [2022] 138 taxmann.com 64/286 Taxman 183/444 ITR 1 (SC) (2023) 1 SCC 617, the Hon’ble Supreme Court issued certain directions in exercise of powers its under Article 142 of the Constitution of India including the direction to treat such notices issued under Section 148 of the Act as notices under Section 148A(b) of the Act. The AO was also directed to furnish such material and information to the assessees as were required to accompany a notice under Section 148A(b) of the Act.
8.In a subsequent decision in Union of India v. Rajeev Bansal [2024] 167 taxmann.com 70/301 Taxman 238/469 ITR 46 (SC) /2024 INSC 754, the Hon’ble Supreme Court considered the manner of applicability of the provisions of Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 [TOLA]. During the said proceedings. it was conceded on behalf of the Revenue that TOLA was not applicable for reopening the assessments for AY 2015-16. The said concession was recorded in paragraph 19(f) of the said decision. Paragraphs 19 (e) and 19(f) of the said decision are relevant and are set out below: -
"(e)The Finance Act 2021 substituted the old regime for re-assessment with a new regime. The first proviso to Section 149 does not expressly bar the application of TOLA. Section 3 of the TOLA applies to the entire Income Tax Act, including Sections 149 and 151 of the new regime. Once the first proviso to Section 149(1)(b) is read with TOLA, then all the notices issued between 1 April 2021 and 30 June 2021 pertaining to the assessment years 2013-2014, 2014-2015, 20152016, 2016-2017, and 2017-2018 will be within the period of limitation as explained in the tabulation below:
Assessment Within 3 Years Year (1) (2) read with TOLA Years (4) Limitation read for (2) (3) with TOLA for (4) (5)
2013-2014 31.03.2017 2013-2014 31.03.2017 TOLA not applicable 31.03.2020 30.06.2021 2014-2015 31.03.2018 2014-2015 31.03.2018 TOLA not applicable 31.03.2021 30.06.2021 2015-2016 31.03.2019 2015-2016 31.03.2019 TOLA not applicable 31.03.2022 TOLA not applicable 2016-2017 31.03.2020 2016-2017 31.03.2020 30.06.2021 31.03.2023 TOLA not applicable 2017-2018 31.03.2021 2017-2018 31.03.2021 30.06.2021 31.03.2024 TOLA not applicable (f)The Revenue concedes that for the assessment year 2015-2016, all notices issued on or after 1 April 2021 will have to be dropped as they will not fall for completion during the period prescribed under the TOLA."
9.Following the aforesaid concession, the Hon’ble Court in Ibibo Group (P.) Ltd. v. Asstt. CIT [W.P.(C) 17639 of 2022 order dated 13-12-2024 allowed the petition challenging a similar notice for AY 2015-16 which was issued beyond the period of limitation as concededly TOLA was not applicable. Similar orders have also been passed by other courts as well.
10.In ITO v. R.K. Build Creations (P.) Ltd [Special Leave Petition (Civil) Diary No. 59625/2024] the Supreme Court dismissed the SLP arising from a similar decision rendered by the Hon'ble Rajasthan High Court in DBCWP No.14414/2022. The said order is set out below: -
" Delay condoned.
Having regard to the concession made by the petitioner-Department in the case of Union of India v. Rajeev Bansal, Civil Appeal no. 8629 of 2024 on 03.10.2024 (2024 SCC ONLINE 754), this Special Leave Petition would not survive for further consideration.
Hence, the Special Leave Petition is dismissed.
Pending application(s), if any, shall stand disposed of."
11.In the present case, the impugned notice was issued on 22.07.2022, which was admittedly beyond the period of limitation as prescribed under Section 149(1) of the Act. Since TOLA was not applicable in respect of the said notices under Section 148 of the Act for AY 2015-16 as conceded by the Revenue in the case of v. Rajeev Bansal (supra), the impugned notice is liable to be set aside.
12.Accordingly, the impugned notice and proceedings emanating from the said notice are set aside.”
The various other decisions relied on by the Ld. AR for the assessee also supports his case to the above proposition. Since the facts of the instant case are identical to the facts of the cases decided by the Hon'ble Delhi High Court respectfully following the decisions cited (supra), we quash the notice issued u/s 148 of the Act dated 13.07.2022 issued in the present case. Accordingly, we set aside the orders of the lower authorities and allow the appeal only on Ground No. 2.1 raised before us.
Since we have quashed the assumption of jurisdiction on the above issue itself, the other grounds are no adjudicated and kept the same open.
In the result, the appeal filed by the assessee is allowed.