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Judgment
PER MADHUMITA ROY, JM:
The instant appeal filed by the Revenue is directed against the order dated 12.11.2025 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), [hereinafter referred to as ‘the Ld. CIT(A)] against the assessment order passed u/s 147 r.w.s 144B of the Income Tax Act, 1961 (hereinafter referred as ‘the Act’) for Assessment Year 2013-14.
None appeared on behalf of the assessee in spite of notices have been sent.
The issue before us is as to whether there is assessment proceedings initiated in the assessee’s case and finalized upon making additions u/s 68 and 69C is sustainable. In view of the limitation period u/s 149 of the Act. The accommodation entries in the form of bogus Long Term Capital Gain (LTCG) of Rs.99,98,686/- on sale of shares of Indusland Bank Ltd. and the corresponding unexplained expenditure of Rs.1,99,974/- was the basis of reopening of assessment upon issuing of notice dated 21.06.2021 u/s 148 of the Act the order passed by the authorities below is found to be barred by limitation and, therefore, liable to be quashed as of the view of the Ld. CIT(A) and the assessment order was, therefore, quashed with the following observations:
“It is observed that the relevant assessment year is 2013-14. The normal time limit for issuance of notice u/s 148 as per section 149(1)(b) (post Finance Act, 2021) is ten years only if the income escaping assessment represented in the form of asset amounts to Rs. 50 lakhs or more; otherwise, the limitation is three years from the end of the relevant assessment year. The "First Proviso" to section 149(1) explicitly provides that no notice under section 148 shall be issued for any assessment year beginning on or before 1st April 2021 if such notice could not have been issued at that time on account of being beyond the limitation under the then existing provisions of section 149(1)(b).
In the appellant's case, as on 01.04.2021, the permissible limitation under the unamended law (six years from the end of the relevant assessment year) had already expired on 31.03.2020. The subsequent issuance of notice on 21.06.2021, though sought to be justified by the department on the basis of judicial extensions granted under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 and CBDT Instruction No. 01/2022, cannot override the substantive statutory bar contained in the First Proviso to section 149(1).
The Hon'ble Madhya Pradesh High Court in Durlabhji Developers v. Union of India [2023] 149 taxmann.com 388 (MP), whereby where under notice issue after 01.04.2021 for assessment years where the time limit under the unamended section 149 had already expired cannot be revived or validated through delegated instructions or relaxation notifications as held. The First Proviso to section 149(1) is a substantive bar, and once limitation has expired. Subsequent notification or instruction can extend such period and as the outer limitation for reopening under the erstwhile section 149(1)(b) for Assessment Year 2013-14 expired on 31.03.2020 the notice issued u/s 148 dated 21.06.2021, in our considered opinion is rightly found as barred by limitation, and, therefore, without jurisdiction and thus, order allowing appeal passed by the First Appellate Authority, in our considered opinion is just and proper so as not to warrant interference. The appeal preferred by the Revenue is therefore, rejected.
In the result, the appeal filed by the Revenue is dismissed.