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Judgment
PER SUDHIR KUMAR JM:
The assessee preferred these appeals, challenging the separate orders dated 26-11-2024 passed by National Faceless Appeal Centre Delhi (in short Ld. NFAC) arising out from the assessment order dated 11-05-2023 and 18-05-2023 passed by the Assessing Officer for A.Y. 2016-17 & 2015-16 under the section 147 r.w.s 144B of the Income Tax Act, 1961(In short “the Act”).Since the appeals are of the same assessee hence these appeals were heard together and are being disposed of by this common order.
Both the appeal are time barred by 168 days. In the condonation application the assessee has stated that he has given the email address and phone number of a n entrusted person before the Ld. NFAC. The entrusted person has never informed the order passed by the Ld. NFAC. The assessee also filed the affidavit in support of the contention. The assessee as shown the sufficient cause not to file the appeals within time therefore, we condone the delay and admit the appeals for adjudication.
The assessee has filed the applications in both appeals to raise the legal grounds. In the applications the assessee stated that the additional ground is pure question of law going to the root of jurisdiction. Heard. The additional ground raised by the assessee are allowed in the view of the judgement of National Thermal Power Co. Ltd. V. CIT (1998) 229 ITR 383(SC) and Jute Corporation of India Ltd. V. CIT (1991) 187 ITR 688(SC).
ITA No 4461/Del/2025 Assessment Year 2016-17
The assessee 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 is has filed return of income for AY 2016-17 declaring income of Rs.1,22,20,230/-. As per the information in possession of department the assessee claimed fictitious profit in the from Long Term Capital Gain by trading in a penny stock scrip named M/s Virtual Globel Education Limited. The assessee sold the 3,07,000/- shares in the relevant year of M/s Virtual Globel Education Limited and claimed long term capital gain of Rs.26,46,427/-. In the response of the notice dated 25-07-2022 under section 148 of the Act the assessee filed return of income declaring a total of Rs. 1,22,20,230/-. Again, notices under section 142(1) of the Act were issued and personal hearing was also provided through Video Conference, but no one attended the video conference on behalf of assessee. According to Assessing Officer the assessee received an amount of Rs.26,55,275/- in the books of account for the A.Y.2016-17 by showing the same as sales proceeds against sales of shares of M/s Virtual Globel Education Limited. The Assessing Officer completed the assessment after making the additions in various heads and assessed the income of the assessee at RS. 1,49,98, 980/- and penalty proceedings also initiated.
Aggrieved the order of the Assessing Officer the assessee preferred the appeal before the Ld. NFAC who vide order dated 26-11-2024 dismissed the appeal. 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 25-07-2022 issued by AO u/s 148 of the Act is time barred by 32 days. In this regard he has submitted as under :
Period of limitation u/s 149 of the Act (3year or 6 years) 3 years -escaped income of Rs. 26,55,275/- is less than Rs.50,00,000/- so the extended 6/10 years period is not attracted original notice u/s 148 of the Act(old Regime) was issued on 30-06-2021 Time remaining till 30-06-2021 30 days Letter issued by AO supplying information with reference to section 148A(b) in consequence to Hon’ble Supreme Court Order in Ashish Agarwal dated 04-05-2022 23-05-2022 Replied filed before AO 07-06-2022 & 16-06-2022 Extended date by which notice should have 23-06-2022 been issued u/s 148 Order u/s 148 A(d) passed on 25-07-2022 Notice u/s 148 of the Act 25-07-2022
The Ld. AR of the assessee has submitted that in the case of Union of India and Others vs. Rajeev Bansal [2024]469ITR 46 (SC) the revenue conceded for the A.Y. 2015-16 all notices under section 148 of the Act 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.the relevant extract is 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 Provisions) Act, 2020. Section 3 of the Taxation and other laws (Relaxation and Amendment of certain Provisions) Act, 2020 applies to the entire Income –tax Act, including sections 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 Provisions) Act, 2020 then all the notices issued between April 1,2021 and June 30,2021 pertaining to the assessment years 2013-14, 2014-15, 2015-16, 2016-17 and 2017-2018 will be within the period of limitation as explained in the tabulation below:
| Assessment year | Within Years | Expiry of Limitation read with TOLA for (2)(3) | Within Six Years(4) | Expiry of Limitation read with TOLA |
| 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 |
In the case of Union of India and Others vs. Rajeev Bansal [2024]469ITR 46 (SC) the Hon’ble Supreme Court held as under:
“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.”
The Ld. DR has submitted that assessee, has never raised this issue that the assessment, is time barred before the lower authorities. The notice was issued within time in the pursuant to the judgment of the Hon’ble Supreme Court in Union of India v. Ashish Agarwal after complying the all conditions. He relied the orders of the lower authorities.
We have heard the parties and perused the material available on record. In view of the observation of the Hon’ble Supreme Court in the case of Rajeev Bansal (Supra) the extended due date for issuance of notice u/s 148 of the Act expired on 11-06-2022 and since, the notice u/s 148 of the Act was issued on 25-07-2022 the said notice is to be treated as time barred by limitation. In the present case notice u/s 148 of the Act was issued on 25-07-2022 i.e 3 years have lapsed from the end of the relevant assessment year. Respectfully following the decision of the Hon’ble Supreme Court, we allow the additional ground raised by the assessee. As a result, the appeal of the assessee is allowed. The impugned reassessment order is quashed.
ITA NO. 4462/Del/2025, Assessment Year 2015-16
The Ld. AR of the assessee submitted that the notice issued for A.Y. 2015-16 is time barred because notice under old regime was issued on 30-06-2021. Again, notice under section 148(b) of the Act was issued in new regime on 23-05-2022 and order under section 148A9d) was passed on 29-07-2022 after that the Assessing Officer issued the time barred notice dated 29-07-2022 under section 148 of the Act. The Ld. DR relied upon the orders of the lower authorities. He further submitted that the assessee has not raised the legal issue before the Ld. NFAC, therefore tribunal has no power to decide the legal issue at this stage.
We have heard the revival contention of the parties and gone through the material available on record. Ld. DR submitted that the issue of time barred has not been taken before the Ld. NFAC then tribunal has no power to decide the issue at this stage. The assessee has the right to raise the legal issue during the appeal proceedings and the tribunal can decide this issue being legal issue. The argument of the Ld. Sr. DR is not tenable.
In view of the observation of the Hon’ble Supreme Court in the case of Rajeev Bansal (Supra) the revenue concedes that for the assessment year 2015-16 all notices on or after April1, 2021 will have to be dropped as they will not fall for completion during the period prescribed under the Taxation and other Laws, since, the notice is u/s 148 of the Act is issued on 29-07-2022 the said notice is to be treated as time barred by limitation and consequentially reassessment proceedings would be liable to be quashed as void ab initio. Respectfully following the decision of the Hon’ble Supreme Court, we hold that the notice issued u/s 148 of the Act on 29-07-2022 is time barred by limitation. Accordingly the legal issue raised by the assessee is allowed.
14 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 both the appeals of the assessee are allowed.