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Judgment
O R D E R
PER SANJAY AWASTHI, ACCOUNTANT MEMBER:
This appeal arises from order dated 12.11.2025, passed u/s 250 of the Income Tax Act, 1961 (hereafter as “the Act”), by Ld. CIT(A)-NFAC, Delhi. In this case, the assessee did not file its return of income for AY 2015-16. However, there was information available with the Assessing Officer that the assessee was an alleged beneficiary of accommodation entries from one Shri Joginder Pal Gupta. The extent of such allegedly bogus entries was a sum total of Rs.103,08,250/-. On the basis of this information the Ld. AO initiated proceedings u/s 148A of the Act and thereafter notice u/s 148 was issued on 27.07.2022. The assessee filed its return of income on 24.08.2022, declaring a loss of Rs.14,641/-. Thereafter, the Ld. AO added amounts shown received from three parties (totaling to Rs.94,77,375/-) u/s 68 of the Act.
Aggrieved with this action of Ld. AO the assessee approached the Ld. CIT(A) where the assumption of jurisdiction by the Ld. AO was challenged and also the addition made on merits. The assessee raised the issue of an illegal assumption of jurisdiction whereby, allegedly, the notice u/s 148 of the Act was not issued within the time prescribed. The Ld. CIT(A) is seen to have summarily dismissed the many grounds on the assumption of jurisdiction and had proceeded ahead to dismiss the appeal on merits also.
Further aggrieved the assessee has approached the ITAT with the following grounds: -
1.“Because, the order of Ld. Lower Authority is bad in law & against the facts and circumstances of the case.
2.Because, the Ld. CIT(A), grossly erred in dismissing the ground challenging the validity of the notice u/s 148 dated 25.06.2021 under old provision for AY 2015-16, which is specifically barred by limitation u/s 149 as pronounced by the Apex Court in case of Rajeev Bansal-167 taxmann.com 70, hence the notice u/s 148 is void ab initio and proceedings/order are illegal.
3.Because, Ld. CIT(A) grossly erred in sustaining the impugned order and validity of proceedings as ‘information’ became non-existent and admittedly Ld. AO has made no addition on the reason for issuance of notice u/s 148, hence subsequent proceedings/other additions are illegal in view of ration of PCIT vs. Lark Chemicals (P.) Ltd. – 99 taxmann.com 312 (SC), Oriental Bank of Commerce – 49 taxmann.com 485 (DEL) etc.
4.Because, Ld. CIT(A) erred in sustaining the validity of notice u/s 148, which is issued mechanically without any enquiry, verification of information etc. with non existing information without any application of mind and satisfaction of Ld. AO as well as of approving authority u/s 151 and hence is beyond jurisdiction.
5.Because, proceedings u/s 147/148 are beyond the scope of provisions as case is initiated based on search operation carried out on DAG group as 23.12.2019, therefore, jurisdiction exclusively fall u/s 153C thus, notices issued u/s 148A(b)/148 and whole assessment proceeding is null and void.
6.Because, without prejudice to above, in alternative, even on merits, Ld. Commissioner of Income Tax(Appeals), erred in sustaining addition of Rs.94,77,375/- u/s 68 being short-term advances received from 3 parties through proper banking channel duly repaid within 2-3 days, solely relying on a statement recorded behind the back of assessee/AO that too without providing any opportunity to cross the same and in any case, said statement is not even linking to the addition made, thereby addition was without any material.
7.Therefore, it is prayed that notice/order under question may kindly be quashed, however, only as an alternative it is prayed that addition may kindly be quashed.”
Before us the Ld. AR drew our attention to ground nos. 1, 2, 3 & 4 which challenge the assumption of jurisdiction and requested that these grounds may be adjudicated before proceeding any further on the merits of the case. Right at the outset, the Ld. AR drew our attention to the case of Rajeev Bansal reported in 469 ITR 46 (SC), where it had been conceded on behalf of the Revenue that notices u/s 148 issued for AY 2015-16 after 01.04.2021 would not be sustainable for proceeding ahead with the assessment. The Ld. AR placed on record the case of Deepak Steel and Power Limited reported in 476 ITR 369 (SC) where the following has been mentioned: -
“4.The Learned Counsel appearing for the Revenue with his usual fairness invited the attention of this Court to a three judge bench decision of this Court in Union of India vs. Rajeev Bansal [2024] SCC OnLine SC 2693/[2024] 167 taxmann.com 70/301 Taxman 238/469 ITR 46 (SC), more particularly, paragraph 19(f) which reads thus: -
“19(f) The Revenue concedes that for the AY 2015-16, all notices issued on or after April 1, 2021 will have to be dropped as they will not fall for completion during the period prescribed under the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020”. [Emphasis added]
5.As the revenue made a concession in the aforesaid decision that is for the AY 2015-16, all notices issued on or after 1st April, 2021 will have to be dropped as they would not fall for completion during the period prescribed under the taxation and other laws (Relaxation and Amendment of certain Provisions Act, 2020). Nothing further is required to be adjudicated in this matter as the notices so far as the present litigation is concerned is dated 25.06.2021.”
It was the submission that considering this case law the notice in the present case, which pertains to AY 2015-16, could not legally survive.
The Ld. DR relied on the orders of the authorities below.
We have carefully considered the submissions of Ld. AR/DR and we have gone through the case of Rajeev Bansal (supra) and the case of Deepak Steel & Power Limited (supra). In this case, the notice u/s 148 of the Act was issued on the basis of the old regime on 25.06.2021. Thereafter, another notice under the new provisions was issued on 27.07.2022. Considering the case of Rajeev Bansal (supra) and its operative portion regarding AY 2015-16 extracted in the case of Deepak Steel and Power Limited (supra), it deserves to be held that the assessee deserves relief on the basis of an illegal assumption of jurisdiction where the notice u/s 148 of the Act has been issued on or after 01.04.2021.
In the result, the appeal of the assessee is allowed.