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Judgment
PER SANJAY AWASTHI, ACCOUNTANT MEMBER:
This appeal arises from order dated 23.01.2026, passed u/s 250 of the Income Tax Act, 1961 (hereafter as “the Act”), by NFAC.
In this case, the Ld. AO initiated proceedings u/s 147 by issuing a notice u/s 148, under the new regime, on 28.07.2022. Thereafter, an addition of Rs. 641,00,000/- was made on account of alleged accommodation entries.
The assessee approached the Ld. CIT(A) whereby he filed the appeal with a delay of 204 days. This delay was not condoned and the appeal was dismissed inlimine.
The aggrieved assessee has approached the ITAT initially with five grounds challenging the impugned actions of the authorities below and later on filed two additional grounds as under: -
1.“On the facts and circumstances of the case, the Ld. CIT(A) has erred both on facts and in law in confirming addition made by AO against the time barred notice issued u/s 148 dated 28.07.2022 and time barred order u/s 148A(d) dated 28.07.2022.
2.On the facts and circumstances of the case, the Ld. CIT(A) has erred both on facts and in law in confirming the addition made by AO despite approval by Ld. PCCIT being defective and mechanical in nature while approving notice u/s 148 and order u/s 148A(d).”
Before us the Ld. AR requested for admitting the additional grounds since the facts to adjudicate the same were already on record and following the judgment of the Hon’ble Apex Court in the case of National Thermal Power Company Limited reported in 229 ITR 383 (SC), the additional grounds deserved to be admitted. The Ld. AR argued that the basic relevant dates in the case were as under:
Notice issued u/s 148 (old regime)- 28.06.2021;
This was thereafter converted to a notice under the new regime following the case of Ashish Agarwal reported in 444 ITR 1 (SC), vide letter dated 25.05.2022;
The assessee filed his response on 10.06.2022;
Order u/s 148A(d) of the Act and notice u/s 148 both were issued on 28.07.2022.
It was argued that since this matter pertained to AY 2015-16 then the notice issued on 28.07.2022 was clearly time barred. The Ld. AR relied on the case of Rajeev Bansal reported in 469 ITR 46 (SC) to canvass the point that any notice for AY 2015-16 issued on or after 1st April, 2021 needed to be dropped following paragraph 19F of this judgment. It was the submission that since this notice was issued on 28.07.2022, hence, it was clearly time barred.
The Ld. DR relied on the orders of the authorities below and stated that this matter should be remanded back to the file of Ld. CIT(A) since the appeal was dismissed inlimine.
We have considered the rival submissions and have gone through the records before us. The additional grounds are admitted following the case of NTPC (supra). We need to recapitulate the chronology of dates as under: -
| Assessment Year | 2015-16 |
| Last date to issue notice u/s 148 as per amended Law s. 149 and as per 1st proviso to amended s. 149 | 31.03.2022 [TOLA not applicable] |
| Notice u/s 148 issued under Old Law | 28.06.2021 |
| Notice providing material in pursuance of Hon’ble Supreme Court’s order in Ashish Agarwal’s case. | 25.05.2022 |
| Reply filed by the assessee on | 10.06.2022 |
| Date of notice u/s 148 | 28.07.2022 |
At this stage, we may also refer to the relevant portion of the judgment in the case of Rajeev Bansal (supra) as under:
“19.Mr. N Venkataraman, Learned Additional Solicitor General of India, made the following submissions on behalf of the Revenue:
a)Parliament enacted TOLA as a free-standing legislation to provide relief and relaxation to both the assesses and the Revenue during the time of COVID-19. TOLA seeks to relax actions and proceedings that could not be completed or complied with within the original time limit a specified under the Income-tax Act;
b)Section 149 of the new regime provides free crucial benefits to the assessee: (1) the four-year time limit for all situations has been reduced to three years; (ii) the first proviso to Section 149 ensures that re-assessment for previous assessment years cannot be undertaken beyond six years; and (iii) the monetary threshold of Rupees fifty lakhs will apply to the re assessment for previous assessment years;
c)The relaxations provided u/s 3(1) of TOLA apply “notwithstanding anything contained in the specified Act”. Section 3(1), therefore, overrides the time limits for issuing a notice u/s 148 r.w.s. 149 of the Income Tax Act;
d)TOLA does not extend the life of the old regime. It merely provides a relaxation for the completion or compliance of actions following the procedure laid down under the new regime;
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 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)(6) is read with TOLA, then all the notices issued between 1 April 2021 and 30 June 2021 pertaining to assessment years 2013-14, 2014-15, 2015-16, 2016-17, and 2017-18 will be within the period of limitation as explained in the tabulation below:
AY Within 3 years Expiry of Limitation read with TOLA for (2) Within six years Expiry of Limitation read with TOLA for (4) (1) (2) (3) (4) (5) 2013-14 31.03.2017 TOLA not applicable 31.03.2020 30.06.2021 2014-15 31.03.2018 TOLA not applicable 31.03.2021 30.06.2021 2015-16 31.03.2019 TOLA not applicable 31.03.2022 TOLA not applicable 2016-17 31.03.2020 30.06.2021 31.03.2023 TOLA not applicable 2017-18 31.03.2021 30.06.2021 31.03.2024 TOLA not applicable f)The Revenue concedes that for the AY 2015-16, all notices issued on or after 1st April, 2021 will have to be dropped as they will not fall for completion during the period prescribed under TOLA; [Emphasis added]
g)Section 2 of TOLA defines “specified Act” to mean and include the Income Tax Act. The new regime, which came into effect on 1st April, 2021, is now part of the Income Tax Act. Therefore, TOLA continues to apply to the Income Tax Act even after 1st April, 2021; and
h)Ashish Agarwal (supra) treated Section 148 notices issued by the Revenue between 1st April, 2021 and 30th June 2021 as show-cause notices in terms of Section 148A(6). Thereafter, the Revenue issued notices u/s 148 of the new regime between July and August 2022. Invalidation of the Section 148 notices issued under the new regime on the ground that they were issued beyond the time limit specified under the Income-tax Act read with TOLA will completely frustrate the judicial exercise undertaken by this Court in Ashish Agarwal (supra)”.
Accordingly, there is no hesitation in holding that the notice issued on 28.07.2022 is barred by limitation. Consequently, the assessment order following this notice is also not tenable in the eyes of law.
In the result, the appeal of the assessee is allowed.