DCIT vs Archana Saluja

“5.2

In Ground No. 2, the appellant has contended that the impugned assessment order dated 30.03.2024 passed under section 147 r.w.s 143(3) of the Act in the case of the Appellant for the AY 2015-16 is illegal, non est and void ab initio, because the assumption of jurisdiction under section 147 is illegal and bad in law, because the impugned notice under section 148 of the Act has been issued on 25.04.2022, which is after the expiry of limitation prescribed by 1 Proviso of section 149(1) of the Act.

5.2.1

The detailed submissions of appellant related to Ground No. 2 of appeal is reproduced below for ready reference:

"Ground No. 2:

That the impugned assessment order dated 30.03.2024 passed under section 147 read with section 143(3) of the Act in the case of the Appellant for the A.Y. 2015-16 is illegal, non est and void ab initio, because the assumption of jurisdiction under section 147 is illegal and bad in law, because the impugned notice under section 148 of the Act has been issued on 25.04.2022, which is after the expiry of limitation prescribed by 1st Proviso of section 149(1) of the Act.

11.

At the outset, it is submitted that that the notice dated 25.04.2022 issued under section 148 of the Act is barred by limitation prescribed under Ist Proviso to section 149(1) of the Act. The limitation of six years from the end of the assessment year expired on 31.03.2022, whereas the impugned notice has been issued on 25.04.2022. It is submitted that section 148A(d) does not override the provisions of section 149(1) of the Act.

12.

The First Proviso to section 149(1) of the Act provides as below: "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 1st 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:" [Emphasis added]

13.

From the above, it is evident that for any assessment year earlier than A.Y. 2021-22, the First Proviso of section 149 of the Act clearly forbids the issue of notice under section 148 of the Act at any time, if such notice could not have been issued at such time on account of being beyond the limit specified under the provisions of section 149(1)(b) as these stood prior to 01.04.2021. Prior to 01.04.2021, section 149(1)(b) provided for a maximum time limit of 6 years from the end of the relevant assessment year.

14.

In the case of the Appellant, notice under section 148 of the Act was issued for A.Y. 2015-16 on 25.04.2022. In terms of First Proviso to section 149(1), no notice under section 148 could be issued on 25.04.2022, if such notice could not have been issued on 25.04.2022 on account of being beyond the limit of 6 years from the end of the assessment year, which expired on 31.03.2022. Сopу of notice dated 25.04.2022 issued to the Appellant is enclosed as Annexure-4 at page 16 of Paper Book.

15.

Therefore, the notice dated 25.04.2022 issued to the Appellant under section 148 of the Act is barred by limitation prescribed by First Proviso to section 149(1) of the Act.

16.

Further, even though the Appellant duly filed reply dated 16.03.2024, yet the said reply was not considered and the issue of limitation raised by the Appellant has not been addressed during the assessment proceedings or in the assessment order. The Appellant submits that after expiry of limitation, the AO ceases to have lawful jurisdiction, and the issue of jurisdiction goes to the root of the matter. However, the same has been brushed aside and the impugned assessment order is therefore bad in law."

5.2.2 Assessing Officer's Comments on Ground No. 2

Accordingly, the comments of the assessing officer were sought regarding afore-said grounds raised by the appellant. The comment of the AO received vide letter dated 16.07.2025 is reproduced below for reference:

2.

"In this case assessment w/s 147 r.w.s.143(3) of the Act was completed on 30.03.2024, at the assessed income of Rs.7,27,57,400/- as against the returned income of Rs.4,97,61,650/-, after making the following additions/disallowances:

S. No. 1. Particulars Amount (in Rs.) Addition w/s 68 of the Act on account of 2,29,95,750/-amount earned by selling holding shares of M/s Pine Animation Ltd.

3.

The assessee aggrieved by the above additions made in the assessment order dated 30.03.2024 filed appeal before the CIT(A). During the appellate proceedings, the assessee has requested for considering the grounds of appeal. The report mentioning specific comments has been sought by examining admissibility of the issues raised by the assessee with reference to the grounds filed.

4.

In this regard, it is to bring to your kind notice that the assessment orderin the case has been passed /s 147 r.w.s. 143(3) of the Act on 30.03.2024 after offering sufficient opportunities to the assessee vide notices u/s 142(1) dated 29.11.2022, 23.02.2023 86 02.03.2023. Further, Show Cause Notice was issued on 26.02.2024 to which the assessee responded by filing reply/submission dated 16.03.2024.

5.

With regard to the additions made, the assessee has submitted following grounds of appeal:

(i)

That on the facts and circumstances of the case, the impugnedassessment order dated 30.03.2024 passed by the Deputy Commissioner of Income-tax, Central Circle-5, Delhi (hereinafter referred to as "AO") under section 147 read with section 143(3) of the Income-tax Act, 1961 (hereinafter referred to as the "Act") in the case of the Appellant for the Assessment Year (hereinafter referred to as "A.Y.") 2015-16 is erroneous and has been passed without proper appreciation of facts. The assessment order passed u/s 143(3) dated 13.05.2021 of 1961 Act by AO is void ab initio as is based upon invalid assessment order without having DIN Number.

(ii)

That the impugned assessment order dated 30.03.2024 passed under section 147 read with section 143(3) of the Act in the case of the Appellant for the A.Y. 2015-16 is illegal, non-est and void ab initio, because the assumption of jurisdiction under section 147 is illegal and bad in law, because the impugned notice under section 148 of the Act has been issued on 25.04.2022, which is after the expiry of limitation prescribed by 1st Proviso of section 149(1) of the Act.

(iii)

That the Ld. AO erred in making the addition of Rs. 2,29,95,750/-under section 68 of the Act without considering the reply filed by the Appellant and without appreciating the facts of the case.

(iv)

That the appellant craves leave to add, alter, amend, modify or delete any of the above grounds.

6.

In view of the above, following are the point wise views comments to evaluate the admissibility of the grounds filed by the assessee during the course of appellate proceedings:

(1). Ground I and 4 are generic in nature and does not require evaluate n and hence no comments are offered.

(ii). With respect to Ground No. 2, it is submitted that the second explanation to Section 148 provides that information flagged in the case of the assessee for the relevant assessment year under the risk management strategy or based on audit objection/other credible data sources can constitute valid "information" to initiate proceedings under Section 148. The scope of reassessment under the new law is materially different and broader in certain contexts, and the AO is empowered to initiate proceedings accordingly. The assessee's reading of the first proviso to Section 149(1) is incomplete. The limitation period under the old law (i.e., 4 years from the end of the assessment year) is applicable only where there is no failure to disclose material facts truly and fully. If the escapement of income exceeds Rs. 50 lakhs and is represented in the form of an asset, the time limit under Section 149(1)(b) extends to 10 years under the new regime. In such a case, the first proviso does not apply. If the reassessment is based on such information, limitation under the new law is validly attracted.

(iii)(a). With respect to Ground No. 3, it is submitted that vide para 17 of the written submission before your goodself, it is mentioned that an addition of Rs.2,29,982/-has been made on account of non-compliance of TDS provisions by the assessee and that the reply of the assessee dated 09.03.2024 in response to Show Cause Notice dated 05.03.2024 has not been considered. However, on perusal of records, no Show Cause Notice dated 05.03.2024 and reply of the assessee in respect of such SCN dated 09.03.2024 has not been found on record. Further, no addition to the tune of Rs.2,29,982/-has been made in the assessment order. (iii) (b). Furthermore, the other contentions of the assessee as presented had already been considered during the assessment proceedings, no additional comments/contentions are presented. Here emphasis is laid on the fact that the basis of addition of Rs.2,29,95,750/ - is human probabilities. The investment made by the assessee in M/s Pine Animation Ltd. is beyond any human probabilities as she invested in a scrip with weak fundamentals and it can't be a coincidence that she earned such huge capital gains from a scrip that is devoid of any merits. On the basis of analysis, documentary evidences, circumstantial evidences, human conduct, it is deduced that it is not a normal behavior on part of the assessee and the facts does not qualify the test of human probabilities as mentioned in the ruling of apex court in the case of Sumati Dayal vs. Commissioner of Income Tax [1995] 214 ITR 801 (SC). Thus, what is apparent in this case is not real, and these financial transactions were sham ones and entire transaction amounting to Rs.2,29,95,750/- was only a colorable device used to evade tax. Nothing has been said by the assessee on this aspect.

7.

Hence, ground no. 2 and 3 raised by the assessee are not acceptable asthe same does not challenge the merits of the additions made by the AO. Therefore, the addition w/s 68 of the Act on account of amount earned by selling holding shares of M/s Pine Animation Ltd. To the tune of Rs.2,29,95,750/- has been rightly made.

DECISION:

5.2.3

In this case, the appellant has taken a legal plea before me that the notice u/s 148 of the IT Act, 1961 dated 25.04.2022 to the appellant is barred by limitation prescribed under 1st Proviso to section 149(1) of the IT Act, 1961. It is the contention of appellant that the limitation of six years from the end of the assessment year expired on 31.03.2022, whereas the impugned notice was issued on 25.04.2022.

5.2.4

In this context, an examination of 1" Proviso to section 149(1) of the IT Act, 1961 from the above perspective very clearly reveals that the contention of appellant is factually and legally correct, as can be deciphered from the bare provisions of section 149(1) of the IT Act,1961:

"149. Time limitfor notice.

(1)

No notice under section 148 shall be issued for the relevant assessment year,-(a)if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b); [(b) ifthree years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income chargeable to tax, represented in the form of-(ijan asset; (ii)expenditure in respect of a transaction or in relation to an event or occasion; or(iii)an entry or entries in the books of account, which has escaped assessment amounts to or is 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 Ist 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:

5.2.5

It is therefore evident that for any assessment year earlier than A.Y. 2021-22, the First Proviso of section 149 of the Act clearly forbids the issue of notice under section 148 of the Act at any time, if such notice could not have been issued at such time on account of being beyond the limit specified under the provisions of section 149(1)(b) as these stood prior to 01.04.2021. Prior to 01.04.2021, section 149(1)(b) provided for a maximum time limit of 6 years from the end of the relevant assessment year. In the case of the Appellant, notice under section 148 of the Act was issued for A.Y. 2015-16 on 25.04.2022. Thus, in terms of First Proviso to section 149(1), no notice under section 148 could be issued on 25.04.2022, if such notice could not have been issued on 25.04.2022 on account of being beyond the limit of 6 years from the end of the assessment year, which expired on 31.03.2022.

5.2.6

Therefore, view of factual and legal matrix discussed above, the Ground No-2 stands ALLOWED.”