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Judgment
O R D E R
PER MANISH AGARWAL, AM:
This appeal is filed by the Assessee against the order of Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A) in short], dated 15.10.2025 in Appeal No. NFAC/2014-15/10120435 arising out of the order passed u/s 147 r.w.s. 144 of the Income Tax Act, 1961 (the Act, in short) for Assessment Year 2015-16.
The assessee has challenged the appellate order only on the following grounds of appeal:
“JURISDICTION GROUNDS (IMPUGNED REOPENING ACTION U/s 148 IS TOTALLY INVALID)
10.1That Impugned order passed u/s 250 by NFAC/CIT(A), dismissing appeal of assessee and sustaining Impugned assessment order of Ld. AO are totally unlawful as notice u/s 148 is issued under old law on 01-04-2021 for all practical purposes after enactment of new law from 01-04-2021 which is held as invalid as per jurisdictional high court decision of Sumanjeet Aggarwal (2022) 449 ITR 517;
10.2That impugned order passed u/s 250 by NFAC/CIT(A), dismissing appeal of assessee and sustaining impugned assessment order of Ld. AO are totally unlawful as reasons recorded u/s 148(2) are completely vague regarding nature of subject transactions and merely recorded on stereotype language without own independent findings.
10.3That Impugned order passed u/s 250 by NFAC/CIT(A), dismissing appeal of assessee and sustaining impugned assessment order of Ld. AG are totally unlawful as reopening is made on basis of borrowed satisfaction without Independent satisfaction as required in terms of section 148(2) of unamended act;
10.4That Impugned order passed u/s 250 by NFAC/CIT(A), dismissing appeal of assessee and sustaining Impugned assessment order of Ld. AG are totally unlawful as complete reasons to believe along with stated back material forming part of reasons to believe is never confronted to the appellant in violation of settled precedents of the jurisdictional high court and supreme court;
10.5That Impugned order passed u/s 250 by NFAC/CIT(A), dismissing appeal of assessee and sustaining Impugned assessment order of Ld. AO are totally unlawful as sanction obtained u/s 151 is very mechanical without any whisper of independent reasons;
10.6That impugned order passed u/s 250 by NFAC/CITA, dismissing the appeal of the assesse and sustaining Impugned assessment order of Ld. AO (NFAC) Is unlawful as in violation of principles of natural justice:-
i)That there is no supply of relied upon material as per section 142 before passing assessment order and taking adverse view against the assessee.
ii) That there is no draft assessment order confronted or supplied to the assesse before passing final assessment order.
iii) That there is no opportunity of cross-examination provided to the assesse on specific request of the assesse despite reliance of the statement of third party le Bharat Bansal.
10.7That Impugned order passed u/s 250 by NFAC/CIT(A), dismissing appeal of assesse and sustaining Impugned assessment order of Ld. AO (NFAC) are unlawful as there is no draft assessment order served on the assessee as per section without which entire assessment order passed is in teeth of section 1448 and therefore invalid
10.8That Impugned order passed u/s 250 by NFAC/CIT(A), dismissing the appeal of the assesse and sustaining Impugned assessment order of Ld. AO (NFAC) is unlawful as no valid show cause notice has been issued before passing assessment order without which entire order has been passed in arbitrary and whimsical manner without authority of law.
That the appellant craves leave to add add/alter any/all grounds of appeal before or at the time of hearing of the appeal.”
Before us ld. AR submits that notice u/s 148 was issued on 31.03.2021 and digitally signed on the same date however, this notice was served upon the assessee through mail on 1st April, 2021. In this regard our attention is invited to the paper book page 3 which is the mail received by the assessee alongwith notice us/ 148 of the Act on 01.04.2021. In the said mail it is clearly stated that said mail contained notice u/s 148 and the same is sent on 1st April, 2021 at 7.06 A.M., therefore, the notice issued dated 31.03.2021 u/s 148 is served upon the assessee on 1st April, 2021. With effect from 01.04.2021, provisions of section 148A and 148 were amended vide Finance Act, 2021 according to which first notice is to be given u/s 148A(a) and after providing the information u/s 148A(b), assessee could file objections u/s 148A(c) and order u/s 148A(d) has to be passed disposing the objections raised by the assessee and thereafter notice u/s 148 could be issued.
The Ld. AR further submits that in terms of the order of Hon’ble Supreme Court in the case of Union of India & Ors. Vs. Ashish Agarwal [2022] 444 ITR 1 (SC), hon’ble Supreme Court held that all the notices issued u/s 148 during the period from 1st April, 2021 to 30th June, 2021 be treated as notices issued u/s 148A(b) of the Act and, thereafter, the AO has to complete the proceedings u/s 148A by passing the order u/s 148A(d) of the Act and, thereafter the notice u/s 148 could be issued. As per ld. AR since in the instant case, notice u/s 148 was received/served upon the assessee on 01.04.2021 therefore, the procedure as provided u/s 148A of the Act should be followed before the issue of notice u/s 148 which has not been done. Therefore, according to ld. AR, consequent reassessment proceedings based on such invalid notice deserves to be held bad in law and liable to quashed. Reliance is also placed on the judgment of the Hon’ble Supreme Court in the case of Union of India vs. Rajiv Bansal [2024] 469 ITR 46 (SC). Further reliance is placed on the judgment of the Hon’ble jurisdictional high Court in the case of Suman Jeet Agarwal and Ors. vs. ITO & Ors. Reported in [2022] 449 ITR 517 (Del.) and in the case of Makemytrip India Private Limited vs. DCIT & Anors. reported in [2025] 4 TMI 46 (Delhi).
On the other hand, the Ld. Sr. DR relied upon the orders of lower authorities and submits that this issue is discussed by CIT(A) at length while dismissing the grounds taken by assessee. She, therefore, prayed that the order of Ld. CIT(A) on this score deserves to be upheld.
Heard both the parties and perused the materials available on record. It is seen from the perusal of the page 3 of the PB which is the copy of the mail alongwith which the notice u/s 148 was served upon the assessee on 1st April, 2021. The fact of issue of notice u/s 148 on 01.04.2021 is further evident from the screenshot of the e-filing portal, according to which the notice u/s 148 was issued on 01.04.2021. The same are reproduced as under:
From the perusal of the above, it is observed that notice u/s 148 was served upon the assessee on 1st April, 2021, therefore, the reassessment proceedings must be initiated only after following the provisions of section 148 and section 148A of the Act as amended by the Finance Act, 2021. The Hon’ble Supreme Court in the case of Union of India vs. Ashish Agarwal (supra) held that all the notices issued between period from 01.04.2021 to 30.06.2021 be treated as notice issued u/s 148A(b) of the Act and directions were given to the AO’s to follow the procedure as prescribed u/s 148A before issue of notice u/s 148 of the Act.
The Hon’ble Jurisdictional High Court in the case of Suman Jeet Agarwal and Ors. vs. ITO & Ors. [2022] 449 ITR 517 (Del.) under identical circumstances has held that the notice issued u/s 148 prior to amendment and was served upon the assessee after the amendment, therefore, the same has to be treated as notice u/s 148A(b) and if the said procedure is not followed, the same is liable to be quashed. The relevant extract of the Hon’ble Jurisdictional High Court has contained in para 31 are as under:
“31.For the reason and principles that we have laid down, we dispose of these Writ Petitions with the following directions.
31.1Category ‘A’,: The Notices falling under category 'A', which were digitally signed on or after 14 of Apr, 2021 are held is bear the date on which Notices were digitally signed and not 31st March 2021. The said petitions are disposed of with the direction that the said Notices are to be considered as show cause-notices under Section 148A (h) of the Act as per the directions of the apes Court in the Ashish Agarwal (Supra) judgment.
31.2Category ‘B’,: The Notices falling under category ‘B' which were sent through the registered e-mal ID of the respective JAOs. Though not digitally singed are held to be valid. The said petitions are disposed of with the direction to the JAOs to verify and determine the date and time of is despatch as recorded in the ITBA portal in acceptance with the law laid down in this judgment as the date of issuance. If the date and time of despatch recorded is on or after of 2021 the Notices are to be considered as show-cause-notices under Section 148A (b) as per the directions of the apex Court in the Ashish Agarwal (Supra) judgment.
31.3Category ‘C’: The petitions challenging Notices falling under category. C' which were digitally signed on 31st of March 2021 to the JAOs to verify and determine the date and time of despatch as recorded in the ITIBA portal in accordance with the law laid down in the of issuance. If the date and time of despatch recorded is on or before 1st of April, 2021, the Notices are in be considered as show cause notes under Section 1464 (b) as per the directions of the apex Court in the Ashish Agarwal (Supra) judgment.
31.4.Category ‘D’: The petitions challenging Notices falling under category D' which were only uploaded in the E-filing portal of the assesses without any re alert, are disposed of with the direction to the JAOs to determine the date and time when the assessees viewed the Notices in the E-f-ling portal, as recorded in the ITBA portal and conclude such date as the date of issuance in accordance with the law laid down in this judgment. If such date of issuance is determined to be on or after 1st of April 2021, the Notices will be construed as issued under Section 1484 (b) of the Act of 1961 as per the Ashish Agarwal (Supra) judgment.
31.5Category ’E’: The petitions challenging Notices falling under category which manually despatched. disposed of with the direction to the JAD determine in accordance with the law laid down in this judgment, the date and time when the Notices were delivered to the post office for despatch and consider the date and time of despatch recorded is on or after. 1st of April, 2021, the Notices are to be construed as show-cause-notices under Section 148A (b) as per the directions of the apex Court in the Ashish Agarwal (Supra) judgment.
31.6.Notices sent to unrelated e-mail addresses. The petitions challenging Notices which were sent to unrelated e-mail addresses are disposed of with the direction the JAOs to verify the date on which the Notice was first viewed by the assessee on the E-filing portal and consider the same as the date of issuance. If such date of Issuance is determined to be on or after 01st April, 2021, the Notices will be construed issued under Section 148A (b) of the Act of 1981 as per judgment in Ashish Agarwal (Supra)
31.7.We may note that in the writ petitions, the petitioners have raised additional defenses to challenge the impugned Notices. Such additional defenses have not been considered by this Court and the petitioners shall be at liberty to raise all such additional defenses as available in law
31.8.We are conscious that the time granted by the Supreme Court in Ashish Agarwal to the Department has since expired on 3rd June, 2022 however, the proceedings in the present wit petitions were stayed on 24th March, 2022 until the pronouncement of this judgment. Therefore, we grant the JACs in the instance eight (8) weeks time from today to determine the date of issuance of the Notices as per the law laid down in this judgment.
31.9.The Notices which in accordance with the law laid down in this judgment has been verified by the JAOs to have been issued on or after 01st April 2021 and until 30th June, 2021 shall be deemed to have been issued under Section 148A of the Act of 1961 as substituted by the Finance Art, 2021 and construed to be show-cause notices in terms of Section 148A(b) as per the judgment of the apex Court in Ashish Agarwal (Supra) and the JAOs shall thereafter follow the procedure set down by the Supreme Court in the said judgment which reads as follows:
“26 In view of the above and for the reasons stated above, the present Appeals are ALLOWED IN PART. The impugned common judgments and orders passed by the High Court of Judicature at Allahabad in WT. No. 624/2021 and other allied tax appeals/petitions, is/are hereby modified and substituted as under:-
(i)The impugned section 148 notices issued to the respective assessees which were issued under unamended section 148 of the IT Act, which the subject matter of wit petitions before the various respective High Courts shall be deemed to have been issued under section 148A of the IT Act as substituted by the Finance Act, 2021 and construed or treated to be show cause notices in terms of section 148A(b) The assessing officer that within thirty days from today provide to the respective assessee’s information and material relied upon by the Revenue, so that the assessee can reply to the show-cause notices within two weeks thereafter;
(ii)The requirement of conducting any enquiry, if required, with the prior approval of specified authority under section 148A(a) is hereby dispensed wit as a one-time measure vis-à-vis those notices which have been issued under section 148 of the unamended Act from 1-4-2021 till date, including those which have been quashed by the High Courts. Even otherwise as observed hereinabove holding any enquiry with the prior approval of specified authority is not mandatory but it is for the concerned Assessing Officer to hold any enquiry, if required.
(iii)The assessing officer shall thereafter pass orders in terms of section 148A(d) in respect of each of the concerned assessee’s; Thereafter, after following the procedure required under section 148A may issue notice under section 148 (as substituted);
(iv)All defences which may be available to the assesses including those available under section 149 of the IT Act and all nights and contentions which may be available to the concerned assessees and Revenue under the Finance Act, 2021 and in law shall continue to be available.”
This view is also expressed by the Hon’ble jurisdictional High Court in the case of Makemytrip India Private Limited (supra).
In view of the above facts, in our considered opinion, in the instant case, the reassessment order passed u/s 147 of the Act based on the notice issued u/s 148 dated 31.03.2021 which was served upon the assessee on 1st April, 2021 is bad in law as the said order was passed without following the due procedure as provided under the amendment section 148 and 148A of the Act and thus the same is hereby quashed. Ground of appeal No.1 of the assessee is thus allowed.
Since we have allowed the legal ground of appeal taken by the assessee and quashed the reassessment order, therefore, the remaining grounds of appeal taken by the assessee become academic.
In the result, the appeal of the assessee is allowed.