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Judgment
PER SUDHIR KUMAR JM:
The assessee preferred the appeal, challenging the order dated 26-02-2025 passed by National Faceless Appeal Centre Delhi (in short NFAC) arising out from the assessment order dated 30-05-2023 passed by the Assessing Officer for A.Y. 2015-16 under the section 147 r.w.sc144B of the Income Tax Act, 1961(In short “the Act”).
The assessee has raised the legal grounds in appeal that the notice issued u/s 148 of the Act is barred by limitation. This goes to root the matter and hence, is taken up first for adjudication.
The brief facts of the case are that the assessee has filed the return of income Rs.61.45.650/- claiming Rs.64,56,546/- as exempt income from LTCG from transactions on which STT was paid. The exempt income of Rs.64,56,546/- is claimed u/s 10(38) out of trade value of Rs. 65,32,626/-. During the investigation , the Department came across some BSE listed penny stocks which have been used for providing bogus long–term capital gain, to various beneficiaries, through misuse of section 10(38) of the Act. Two of such penny stocks namely, Goenka Business and Finance Limited and Ejecta Marketing Ltd. have been identified as bogus penny stocks used for providing bogus LTCG. The case of assessee was re-opened and notice u/s 148 of the Act was issued to the assessee on 23-04-2021. Subsequently as per the decision of the Hon’ble Supreme Court’s order in the case of Union of India v. Ashish Agarwal dated 04-05-2022 notice u/s 148A(b) of the Act dated 27-05-2022 was issued. The assessee was filed the detailed response on 07-06-2022and the detail order was passed on 28-07-2022and notice u/s 148 of the Act dated 29-07-2022 was issued. The AO completed the assessment and assed the income of Rs.1,26,78,276/- after making the addition of Rs.65,32,626/- u/s 69A of the Act.
Aggrieved the order of the AO the assessee preferred the appeal before the NFAC who vide order dated 26-02-2025 dismissed the appeal of the assessee. Being aggrieved the order of the Ld. NFAC the assessee is in appeal before the Tribunal.
Ld. AR for the assessee has raised the legal issue and stated that the notice dated 29-07-2022 issued by AO u/s 148 of the Act is time barred
In consequence to the directions issued by the Hon’ble Supreme court in the case of Union of India vs. Ashish Agarwal dated 04-05-2022 the Assessing Officer issued the fresh notice u/s 148 of the Act on 29-07-2022. He further submitted that as per the section 149 of the Act the notice u/s 148 of the Act could be issued within a period of six years from the end of the relevant assessment year i.e 2015-2016. The limitation of issuing notice expired on 31-03-2021. In the present case the notice u/s 148 of the Act was issued on 29-07-2022 which is beyond time. Reliance has placed on the decisions of Union of India & Ors. Vs. Rajeev Bansal 2024 (10) TMI 264 Supreme Court (LB) and relevant parts whereof are reproduced as under:
“e” The Finance Act 2021 (2021) 432 ITR (Stat) 52) substituted the old regime for reassessment with a new regime. The first proviso to section 149 does not expressly bar the application of Taxation and other Laws ( Relaxation and Amendment of Certain Provision) Act,2020 Section 3 of the Taxation and other Laws ( Relaxation and Amendment of Certain Provision) Act, 2020 applies to the entire Income Tax Act, including section 149 and 151 of the new regime. Once the first proviso to section 149(1) (b) is read with Taxation and other Laws ( Relaxation and Amendment of Certain Provision) Act, 2020 then all the notices issued between April1,2021 and June 30,2021 pertaining to the 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:
Assessment
year
Within 3
years
Expiry of Limitation read with TOLA for (2) (3) Within six
years(4)
Expiry of Limitation read with TOLA for (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 assessment year 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”
“110.The effect of the creation of the legal fiction in Ashish Agarwal (Supra) was that it stopped the clock of limitation with effect from the date of issuance of section 148 notices under the old regime {Which is also the date of issuance of the deemed notices}. As discussed in the preceding segment of the judgment, the period from the date of the issuance of the deemed notices till the supply of relevant information and material by the assessing officer to the assessee in terms of the direction issued by this court in Ashish Agarwal (Supra) has to be excluded from the computation of the period of limitation. Moreover, the period of two weeks granted to the assessee to reply to the cause notices must be excluded in terms of the third proviso to section 149.
111.The clock started ticking for the Revenue only after it received the response of the assessee to the show cause notices. After the receipt of the reply, the assessing officer had to perform the following responsibilities; (i) consider the reply of the assessee under section 149A(C );(ii) take a decision under section 149A(d ) based on the available material and the reply of the assessee; and (iii) issue a notice under section 148 if it was a fit case for reassessment. Once the clock started ticking, the assessing officer was see State of AP v. AP Pensioners Association, (2005) 13 SCC 161 [28]. [This court observed that the “legal fiction undoubtedly is to be construed in such a manner so as to enable a person, for whose benefit such legal fiction has been created, to obtain all consequences flowing there form.”] PART F required to complete these procedures within the surviving time limit. The surviving time limit, as prescribed under the Income Tax Act read with TOLA, was available to the assessing officers to issue the reassessment notices under section 148 of the new regime. 112. Let us take the instance of a notice issued on 1 May 2021 under the old regime for a relevant assessment year. Because of the legal fiction, the deemed show cause, notice will also come into effect from 1 May 2021. After accounting for all the exclusions, the assessing officer will have sixty –one days [days between 1 May 2021 and 30 June 2021] to issue a notice under section 148 of the new regime. This time starts ticking for the assessing officer after receiving the response of the assessee. In this instance, if the assessee submits the response on 18 June 2022, the assessing officer will have sixty-One days from 18 June 202 to issue a reassessment notice under section 148 of the new regime. Thus, in this illustration, the time limit for issuance of a notice under section 148 of the new regime will end on 18 August 2022.”
In the above sited case, the revenue concedes that for the assessment year 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.
The Ld. DR relied upon the orders of the lower authorities.
We have heard the revival contention of the parties and gone through the material available on record. In view of the observation of the Hon’ble Supreme Court in the case of Rajeev Bansal (Supra) insofar as assessment year 2015-16 is concerned, the Hon’ble Supreme Court has noticed that Revenue concedes that in respect of the A.Y.205-16 , all re-assessment notices issued on or after 01-04-2021 will have to be dropped. We thus find that the notice in the present case issued on 29-07-2022 was invalid, since, the notice is u/s 148 of the Act is issued on 29-07-2022 is invalid, consequentially reassessment proceedings would be liable to be quashed as void ab initio. Respectfully following the decision of the Hon’ble Supreme Court, we allowed the legal issue raised by the assessee.
10 Since we have decided the legal ground in favour of the assessee, the other grounds have become academic and keep them open for adjudication.
In the result the appeal of the assessee is allowed.