Time-Barred Reassessment Notices Quashed: Limitation Period Enforced

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Seema Goel Vs CIT(A) (ITAT Delhi)

Strikes Down July 2022 Notices for AYs 2015-16 & 2016-17- No Escape from Limitation

Assessee, an individual, filed returns declaring incomes of ₹27.83 lakh for AY 2015-16 & ₹45.68 lakh for AY 2016-17. Reassessment proceedings were initiated u/s 147 by issue of notice u/s 148, which after the decision of SC in Union of India Vs Ashish Agarwal were deemed as notices u/s 148A(b). Orders u/s 148A(d) were thereafter passed, followed by notices u/s 148 in July 2022. AO completed reassessments making substantive & protective additions aggregating ₹59.95 crore treating alleged LTCG as unexplained money u/s 69A, besides additions for undisclosed STCG & consequential levy of interest & initiation of penalty u/s 271(1)(c). CIT(A) upheld the additions substantially.

Before Tribunal, Assessee raised legal grounds challenging the very validity of reassessments on account of limitation, absence of jurisdiction, non-application of mind in approval u/s 151, lack of valid DIN, borrowed satisfaction & violation of natural justice. It was urged that SC in Union of India Vs Rajeev Bansal (469 ITR 46) categorically held that for AY 2015-16, TOLA provisions would not extend limitation & that Revenue itself conceded before SC that all notices u/s 148 issued on or after 01.04.2021 for AY 2015-16 must be dropped. Reliance was also placed on Delhi HC in MakeMyTrip India Pvt. Ltd. Vs DCIT & ITAT rulings in Sunita Salhotra & Guru Charan Singh, where similar reassessments were quashed.

Tribunal observed that for AY 2015-16, the notice u/s 148 dated 28.07.2022 was beyond limitation since six years expired on 31.03.2022. Following SC in Rajeev Bansal & consistent ITAT view, the notice & consequent reassessment were quashed. For AY 2016-17, it was noted that the original notice dated 08.06.2021 left only 22 days of surviving limitation which expired on 02.07.2022. However, order u/s 148A(d) & notice u/s 148 were issued on 29.07.2022, clearly beyond the permissible time. Tribunal relied upon SC’s detailed analysis in Rajeev Bansal explaining the legal fiction created in Ashish Agarwal & limitation under TOLA, and Delhi HC in CPI(M) Vs CIT(Exemptions) which held that where surviving time expired before issue of notice, reassessment was barred. Accordingly, notices & consequential reassessments were held void-ab-initio for both years.

As the reassessments were quashed on legal grounds, other grounds on merits including additions of LTCG, STCG, levy of interest & penalty proceedings were rendered academic.

Reassessments for AYs 2015-16 & 2016-17 based on notices u/s 148 issued in July 2022 are barred by limitation in view of SC decision in Rajeev Bansal. TOLA does not extend limitation for AY 2015-16 & surviving period after deemed notices u/s 148A(b) must be strictly computed. Notices beyond the surviving time are invalid & reassessments stand quashed.

FULL TEXT OF THE ORDER OF ITAT DELHI

Both the appeals are filed by the assessee against the common order of Commissioner of Income Tax (Appeal), [“CIT(A)”, in short] National Faceless Appeal Centre (NFAC), Delhi dated 17.01.2025 passed u/s 250 of the Income Tax Act, 1961 (“the Act”) for Asst. Years 2015-16 and 2016-17 respectively.

2. Since, facts in both the appeals are similar except issues and grounds of appeal thus they are taken together and decided by a common order. We first take up the appeal in ITA No.2005/Del/2025 for Assessment Year 201516 for adjudication.

3. Brief facts of the case are that assessee is a resident individual and filed her return of income on 31.03.201 declaring total income of Rs.27,83,470/-. The case of the assessee was reopened u/s 147 of the Act by issue of notice u/s 148 on 19.04.2021, copy of the same is placed in PB-4 of the assessee. In terms of the decisions of Hon’ble Supreme Court in the case of Union of India and Ors. vs. Ashish Agarwal in Civil Appeal No.3005/2022 dated 04.05.2022, the said notice was deemed to have been issued as show cause notice u/s 148A(b) of the Act and consequently, after receiving the submission from the assessee, order u/s 148A(d) was passed on dated 28.07.2022 which was digitally signed on 29.7.2022 and notice u/s 148 was issued on 28.07.2022, copy of the same is placed at PB pages 25 to 26. Thereafter, the re-assessment proceedings were completed, and order was passed u/s 147 r.w.s. 144B of the Act wherein additions of Rs.59,95,80,000/- were made in the hands of the assessee by treating the long terms capital gains as unexplained. Against the said order an appeal was filed before the Ld. CIT(A) who dismissed the appeal of the assessee.

4. Aggrieved by the said order, assessee is in appeal before the Tribunal wherein the assessee has taken following grounds of appeal:

“1. Based on facts and circumstances of the case and in law, the assessment order of the Income-tax Act, 1961 (“Act’) dated 30.05.2023 passed by the Ld. AO is bad in law and same is liable to be caused to the extent is being arbitrary and against the principle of natural justice.

2. That having regard to the facts and circumstances of the case, Ld. Assessing Officer has assessed the income as per the provisions of section 144 by making additions u/s 69A on account of unexplained money, amounting to Rs.59,18,00,000/- (amount received from 636 investors of AMR customers) and further initiated up penalty U/s 271 (1)(c) for furnishing inaccurate particulars of income.”

5. Thereafter, the assessee has also taken additional grounds of appeal, wherein the assessee has challenged the proceedings initiated by issue of notice u/s 148 passed order u/s 148A(d) of the Act on the ground of limitation. The additional grounds of appeal are as under:

“7. On the facts and circumstances of the case, the order passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [“CIT(A)”] is bad, both in the eyes of law and on facts.

8. On the facts and circumstances of the case, learned CIT(A) has erred both on facts and in law in passing the order despite the fact that the notice issued under section 148A(b), order passed under section 148A(d), notice issued under section 148 of the Act and consequent reassessment order passed under Section 147 r.w.s. 144 of the Act by the AO are illegal, invalid, without jurisdiction and barred by limitation.

9. On the facts and circumstances of the case, the proceedings initiated by the Jurisdictional Assessing Officer (JAO) pursuant to the notice issued under section 148 dated 28.07.2022 for AY 2015-16 is liable to be set aside in view of judgement of Hon’ble Supreme Court in the case of Union of India v. Rajeev Bansal: 469 ITR 46 (2024) dated 03.10.2024 and applied by Hon’ble Delhi High court in the case of Makemytrip India Private Limited versus Deputy Commissioner of Income Tax, Circle 16(1) Delhi & ANR. W.P. (C) 2557/2023 dated 24.03.2025.

10. On the facts and circumstances the learned CITIA) has erred in confirming the action of the AD despite the fact that the show-cause notice issued under Section 14th of Act order passed under Section 148A(d), notice issued under section 148 and consequent reassessment order passed by AO under Section 147 r… 144 of the Act are illegal and void-ab-initio as the same have been issued and passed without following the statutory conditions and procedures prescribed under the Act

11. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the reopening of the reassessment proceedings despite the fact that notice under section 148 has been issued beyond three years without there being any books of accounts, evidence or other documents in the possession of the AO related to any asset or expenditure or entry which shows that income chargeable to tax has escaped assessment.

12.On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the action of AO despite the fact that the order under Section 147 r. w.s. 144 has been passed ignoring the first proviso to section 148 which provides that notice under section 148 shall not be issued unless there is “information” [as defined under Explanation 1 to section 148] with the assessing officer which suggests that income chargeable to tax in the case of assessee for the relevant assessment year has escaped assessment.

13. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the reassessment, despite the fact that the reassessment proceedings initiated and consequent reassessment order passed by A0 are bad in the eye of law as the information on the basis of which notice under Section 148 issued are vague and there is no live nexus between the information and the belief formed by the Assessing Officer.

14.(1) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the action of the AO despite the fact that the order under Section 148A(d) of the Act, notice under section 148 of the Act and the consequent reassessment order under section 147 r. w.s. 144 of the Act, have been issued and passed by the AO without obtaining the valid statutory prior approval from the specified authority as provided under section 151 of the Act.

(ii) That the purported approval is illegal, mechanical in nature and has been given without application of mind.

15. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the action of the AO in reopening of the assessment proceedings, despite the fact that the same has been made by the AO on the basis of borrowed satisfaction without independent application of his mind.

16. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the reopening of the assessment proceedings despite the fact that the notice under section 148A(b) of the Act, order passed under section 148A(d) of the Act and notice under section 148 of the Act are invalid and illegal as the same are contrary to the amended provision of Section 151A read with Section 144B of the Act as well as e-Assessment of Income Escaping Assessment Scheme, 2022.

17. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the reopening of the assessment proceedings despite the fact that notice under section 148 has been issued without there being valid Document Identification Number (DIN) quoted on the body of the notice violating the CBDT Circular No. 19/2019.

18.On the facts and circumstances of the case, the learned CIT(A) has erred both on fact and in law, in confirming the addition despite the fact that the same has been made by the AO indulging in conjectures and surmises without bringing on record any direct evidence against the assessee, only on the basis of presumptions, suspicion and assumptions.”

6. The additional grounds of appeal taken by the assessee are legal in nature wherein the assessee has challenged the reassessment order on the grounds of limitations etc. As these additional grounds of appeal go to the root of the matter and are purely legal in nature requires no fresh investigation thus, the same are admitted for adjudication.

7. First, we take the additional grounds of appeal Nos.7 to 9 taken by the assessee, wherein the assessee has challenged the legality of the reassessment order passed u/s 147 in violation to the directions given by the hon’ble Supreme court in the case of Union of India Vs. Rajeev Bansal reported in (2024) 469 ITR 46 (SC).

8. Heard both the parties at length and perused the material available on record. It is seen that in the instant case, the appeal of the assessee was related to Assessment Year 2015-16 wherein after passing the order u/s 148A(d), a notice u/s 148 was issued on 28.07.2022. In the case of Union of Indian & Ors. vs. Rajiv Bansal (supra), the Hon’ble Supreme Court has held that provisions of Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, would not apply for Assessment Year 2015-16. The Govt. had made statement that no proceedings were taken up for Asst. Year 2015-16 during the course of hearing before the Hon’ble Supreme Court in the case of Rajiv Bansal (supra). From the perusal of the observations of the Hon’ble Supreme Court and the admission of the Revenue, notice issued u/s 148 for Assessment Year 2015-16 is bad in law and liable to be quashed. The Co-ordinate Bench of the Tribunal in the case of Sunita Salhotra vs. ITO in ITA No.4603/Del/2024, under identical facts hold the notice issued u/s 148 as bad in law by making following observations:

“6. We have heard the rival submissions and perused the materials available on record. In the instant case, the appeal of the assessee was dismissed ex-parte by the Ld. CIT(A) for want of prosecution, however, since, the legal ground raised with regard to the legality of notices u/s 148 of the Act could be decided, therefore, we proceed to decide the appeal of assessee on legal issue. The assessee on legal issue. It is an admitted fact that earlier, the notice u/s 148 in the case of assessee was issued on 30/06/2021 which was dropped and proceedings u/s 148 of the Act were initiated in terms of order of Hon’ble Supreme Court in the case of Union of India vs. Ashish Agarwal and finally the notice u/s 148 was issued on 25/07/2022. The Ld. Additional Solicitor General of India in the case of Rajiv Bansal (supra) has made categorical statement at Bar before the Hon’ble Supreme Court that all the notices issued for Asst. Year 2015-16 on or after 1st April 2021 will be dropped, however, in the instant case, no such action has been taken and re-assessment order has been framed in the case of the assessee on the basis of the notice issued u/s 148 of the Act on 25/07/2022. The relevant extract of the assertion made by the Ld. Additional Solicitor General of India before the Hon’ble Supreme Court as reproduced in para 19(f) of the said order is 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 limits specified under the Income Tax Act;

b. Section 149 of the new regime provides three crucial be nefits to the assesses: (i) 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 under Section 3(1) of TOLA apply “notwithstanding anything contained in the specified Act.” Section 3(1), therefore, overrides the time limits for issuing a notice under Section 148 read with Section 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)(b) is read with TOLA, then all the notices issued between 1 April 2021 and 30 June 2021 pertaining to assessment years 2013-2014, 2014-2015, 2015-2016, 2016-2017, and 2017-2018 will be within the period of limitation as explained in the tabulation below:

Assessment yearWithin 3 Years (2)Expiry of LimitationWithin six YearsExpiry of Limitation
(1)read with TOLA for (2) (3)(4)read with TOLA for (4) (5)
2013-201431.03.2017TOLA not applicable31.03.202030.06.2021
2014-201531.03.2018TOLA not applicable31.03.202130.06.2021
2015-201631.03.2019TOLA not applicable31.03.2022TOLA not applicable
2016-201731.03.202030.06.202131.03.2023TOLA not applicable
2017-201831.03.202130.06.202131.03.2024TOLA not applicable

f. The Revenue concedes that for the assessment year 2015-16, all notices issued on or after 1 April 2021 will have to be dropped as they will not fall for completion during the period prescribed under TOLA;

g. Section 2 of TOLA defines “specified Act” to mean and include the Income Tax Act. The new regime, which came into effect on 1 April 2021, is now part of the Income Tax Act. Therefore, TOLA continues to apply to the Income Tax Act even after 1 April 2021; and

h. Ashish Agarwal (supra) treated Section 148 notices issued by the Revenue between 1 April 2021 and 30 June 2021 as show-cause notices in terms of Section 148A(b). Thereafter, the Revenue issued notices under Section 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).

Looking to the facts and considering the assessment year involved is 2015-16, notice issued in the case of originally on 30/06/2021 and later on 25/07/2022 which both the dates have fallen on or after 1st April, 2021, therefore, both the notice deserves to be dropped in view of the admission made by the Revenue before the Hon’ble Supreme Court. Further, for Assessment Year 2015-16, no notice u/s 148 of the Act could be issued after the expiring of six years from the end of the relevant assessment year which limitation expired on 31st March, 2022. As the Hon’ble Supreme Court in the case of Rajiv Bansal (supra) has observed that Tola is not applicable for Asst. Year 2015-16, therefore, even otherwise under the old provisions of section 149 of the Act, the notice issued u/s 148 of the Act for Asst. Year 2015-16 on 25/07/2022 is barred by limitation. In view of these facts, the notice issued u/s 148 of the Act dated 25/07/2022 is hereby quashed. Accordingly, legal ground taken by the assessee is allowed.”

9. Further the Co-ordinate Bench of the ITAT, ‘B’ Bench with same combination in the case of Guru Charan Singh vs. ITO in ITA No.2846/Del/2025 & 2847/Del/2025 has made the following observations:

“2. We notice during the course of hearing that there arises the first and foremost issue of validity of the impugned reopening(s) itself set into motion by the learned Assessing Officer(s) vide section 148 notices issued on 21st & 20th July, 2022, case-wise respectively. This is for the precise reason that the department already appears to have conceded the very issue of limitation aspect in Union of India Vs Rajiv Bansal (2024) 469 ITR 46 (SC) that the provision of Taxation and Other Laws [Relaxation and Amendment of Certain Provisions] Act, 2020 “TOLA” would not apply for assessment year 2015-16 herein. It further emerges that the very issue between the parties is no more res integra in light of the tribunal’s recent learned coordinate bench’s order dated 23.07.2025 passed in ITA No. 2307/Del/2025 (Sh. Deepak Agarwal vs. DCIT) having quashed a similar reopening therein, reading as under:

“2. The Ld. Counsel for the assessee, at the outset, submits that in the case of the assessee a notice u/s 148 was issued on 30.07.2022 under new law which is barred by limitation since the provisions of taxation and other laws (relaxation and amendment of certain provisions) (TOLA) are not applicable for the AY 201516 as held by the Hon’ble Jurisdictional High Court in the case of Make My Trip (India) Put. Ltd. in WP(c) 2558/2023 dated 24.03.2025.

3. Ld. Counsel further submits that recently the Hon’ble Supreme Court in the cases of Deepak Steels & Power Ltd. Vs. CBDT and Others in Civil Appeal No.5177/2025 dated 02.04.2025 noted that the Revenue made a concession before the Hon’ble Supreme Court while disposing off the appeal in the case of Union of India & Others Vs. Rajiv Bansal (2024) (SCC) Online SC 2693, that for the AY 2015-16 notices issued on or after 01.04.2021 will have to be dropped as they would not fail for completion during the period prescribed under the TOLA. Ld. Counsel also submitted that similar view has been taken by the Hon’ble Supreme Court in the case of ACIT Vs. Nehal Rashid Shah in SLP (Civil) Diary No. (S) 57209/2024 dated 4.4.2025. Therefore, it is submitted that in the light of these decisions the reassessment framed for the AY 2015-16 based on the notice issued u/s 148 of the Act dated 30.07.2022, is time barred and bad in law.

4. Ld. DR supported the orders of the Assessing Officer.

5. Heard rival contentions, perused the orders of the authorities below. Admittedly in this case notice u/s 148 was issued on 30.07.2022 under new law based on which the reassessment for the AY 2015-16 was framed by the AO on 31.5.2023. The reassessment was challenged before the Ld. CIT(Appeals) and the Ld. CIT(Appeals) dismissed the appeal for non-prosecution by the assessee.

6. In the case of Make My Trip (India) Pvt. Ltd. Vs. DCIT (supra) the Jurisdictional High Court considered whether reassessment completed for the AY 2015-16 based on a notice issued u/s 148 and the viz. a viz. the applicability of the provisions of TOLA and based on the concession of the Revenue that for the AY 2015-16 all the notices issued on or after 1.4.2021 will have to be dropped as they will not fall for completion during the period prescribed under the TOLA, held that the notice issued under 148 was beyond the period of limitation and consequently the same is liable to be set aside.

7. Further the Hon’ble Supreme Court in the case of Deepak Steel & Power Ltd. Vs. CBDT & Others (supra) quashed the notices issued u/s 148 observing as under: –

“2. These appeals arise from ‘the order passed by the High Court of Orissa at Cuttack in Writ Petition (C) Nos. 2446 of 2823, 2543 of 2023 dated 1.2.2023 and 2544 of 2023 dated 10.02.2023 respectively by which the High Court disposed of the original writ petitions in the following terms:-

“1. The memo of appearance filed by Mr. S. S. Mohapatra, learned Senior Standing Counsel for Revenue Department on behalf of Opposite Parties is taken on record.

2. In view of the order passed by this Court on 1st December, 2022 in a batch of writ petitions of which W.P. (C) Mo.9191 of 2022 (Kailash Kedia v. Income Tax Officer) was a lead matter and the subsequent order dated 10th January, 2023 passed in W.P.(C) Mo.36314 of 2022 (Shiv Mettalicks Pvt. Ltd., Rourkela v. Principal Commissioner of Income Tax, Sambalpur), the Court declines to entertain the present writ petition, but leaves it open to the Petitioner to raise all grounds available to the Petitioner in accordance with law including the grounds urged in the present petition at the appropriate stage as explained by the Court in those orders.

3. The writ petition is disposed of in the above terms.”

3. We heard Mr. Saswat Kumar Acharya, the learned counsel appearing for the appellants (assessee) and Mr. Chandrashekhar, the learned counsel appearing for the revenue.

4. The learned counsel appearing for the revenue with his usual fairness invited the attention of this Court to a three judge bench decision of this Court in Union of India and Ors. v. Rajeev Bansal, reported in 2024 SCC OnLine SC 2693, more particularly, paragraph 19(f) which reads thus:-

“19. (f) The Revenue concedes that for the assessment year 2015-2016, 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.”

5. As the revenue made a concession in the aforesaid decision that is for the assessment year 2015-2016, all notices issued on or after 1st April, 2021 will have to be dropped as they would not fall for completion during the period prescribed under the taxation and other laws (Relaxation and Amendment of certain Provisions Act, 2020). Nothing further is required to be adjudicated in this matter as the notices so far as the present litigation is concerned is dated 25.6.2021.

6. In view of the aforesaid, in such circumstances referred to above the original writ petition nos.2446 of 2023, 2543 of 2023 and 2544 of 2023 respectively filed before the High Court of Orissa at Cuttack stands allowed.

7. The impugned notice therein stands quashed and set aside.”

8. Above decisions squarely applies to the fact situation of the assessee and therefore respectfully following the above decisions, we hold that the notices issued u/s 148 on or after 1.4.2021 for reopening the assessment for the AY 2015-16 are barred by limitation and consequently the reassessment made based on such notices are bad in law and void ab initio. Thus, the impugned reassessment order having been made pursuant to notice issued u/s 148 dated 30.07.2022 the reassessment order is hereby held to be bad in law and the same is quashed. Ground Nos. B, C & D of grounds of appeal of the assessee are allowed.”

3. We adopt the above extracted detailed reasoning mutatis mutandis to quash both these reopening(s) in the instant twin cases in very terms. All the Revenue’s vehement contentions supporting the same are hereby rejected.

All other pleadings between the parties on merits etc. stand rendered academic.

4. These twin assessees’ as many appeals ITA Nos. 2846/Del/2025 & 2847/Del/2025 are allowed in above terms. A copy of this common order be placed in the respective case files.”

10. As the facts are identical, thus, by respectfully following the judgments of the Hon’ble Supreme Court in the case of Rajiv Bansal (supra) and further by the Co-ordinate Bench is as stated above, we hereby quashed the notice u/s 148 dt. 28.7.2022 for Assessment Year 2015-16 in the case of the assessee. Accordingly, the additional grounds of appeal No.7 to 9 taken by the assessee are hereby allowed.

11. The remaining grounds of appeal including other additional grounds of appeal become academic, thus, not adjudicated.

12. In the result appeal of the assessee for AY 2015-16 is allowed.

ITA No.2006/Del/2025 for Assessment Year 2016-17

13. Brief facts of the case are that assessee has filed her return of income on 30-03-2018 declaring total income of Rs. 45,68,190/-. The case of the assessee was reopened u/s 147 of the Act by issue of notice u/s 148 on 08.06.2021, copy of the same is placed in PB-4 of the assessee. In terms of the decisions of Hon’ble Supreme Court in the case of Union of India and Ors. vs. Ashish Agarwal in Civil Appeal No.3005/2022 dated 04.05.2022, the said notice was deemed to have been issued as show cause notice u/s 148A(b) of the Act and consequently, after receiving the submission from the assessee, order u/s 148A(d) was passed on dated 29.7.2022 and notice u/s 148 was issued on 29.07.2022, copy of the same is placed at PB pages 26-27. Thereafter, the re-assessment proceedings were completed, and order was passed u/s 147 r.w.s. 144B of the Act wherein addition of Rs.59,18,00,000/-was made in the hands of the assessee by treating the long terms capital gains as unexplained money u/s 69A on protective basis and further addition of Rs. 1,54,00,000/- is made by holding the same as short terms capital gains from sale of properties not disclosed by the assessee in the return of income filed. Against the said order an appeal was filed before the Ld. CIT(A) who partly allowed the appeal of the assessee and deleted the additions made on protective basis and uphold the addition made on account of short terms capital gains.

14. Aggrieved by the said order, assessee is in appeal before the Tribunal wherein the assessee has taken following grounds of appeal:

1. Unjust Addition of ₹1,54,00,000/- as Undisclosed Short-Term Capital Gain

    • The learned Commissioner of Income Tax (Appeals) [“CIT(A)”] erred in upholding the addition of ₹1,54,00,000/- on account of undisclosed short-term capital gain, despite the appellant providing details regarding the sale of properties.
    • The Assessing Officer (AO) failed to consider the explanations submitted by the appellant and did not provide a proper opportunity to explain the source and cost of acquisition.

2. Incorrect Rejection of Evidence

    • The CIT(A) failed to appreciate that the appellant had provided supporting details regarding the sale consideration, cost of acquisition, and deductions claimed under Section 48 of the Income Tax Act.
    • The appellant was not given adequate opportunity to provide additional documentary evidence to substantiate her claims.

3. Violation of Principles of Natural Justice

    • The assessment order and appellate order were passed without granting a reasonable opportunity for the appellant to explain the capital gain computation.
    • The assessment was conducted in a faceless manner, and the appellant was unaware of the proceedings due to lack of physical delivery of notices.

4. Erroneous Levy of Interest Under Sections 234A, 234B, and 234C

    • The AO erred in charging interest under Sections 234A, 234B, and 234C of the Income Tax Act without considering that the addition was disputed and not part of the original return.

5. Initiation of Penalty Proceedings Under Section 271(1)(c) is Premature

    • The initiation of penalty proceedings for alleged concealment of income is premature and without proper justification.

PRAYER:

The appellant respectfully prays that:

    • The addition of ₹1,54,00,000/- as undisclosed short-term capital gain be deleted.
    • The interest levied under Sections 234A, 234B, and 234C be recalculated or deleted.
    • The penalty proceedings under Section 271(1)(c) be quashed.
    • Any other relief deemed fit by the Hon’ble Tribunal be granted.

15. Thereafter, the assessee has also taken additional grounds of appeal, wherein assessee has challenged the reassessment proceedings initiated by issue of notice u/s 148 passed order u/s 148A(d) of the Act without following due procedure as provided under the Act and without obtaining valid approval form the specified authority as provided in section 151 of the Act. Assessee further challenged the reassessment order on the ground that the notice issued u/s 148 was barred by limitations. The additional grounds of appeal taken by the assessee are as under:

“6. On the facts and circumstances of the case, the order passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [“CIT(A)” is bad, both in the eyes of law and on facts.

7. On the facts and circumstances of the case, learned CIT(A) has erred both on facts and in law in passing the order despite the fact that the notice issued under section 148A(b), order passed under section 148A(d), notice issued under section 148 of the Act and consequent reassessment order passed under Section 147 r.w.s. 144 of the Act by the AO are illegal, invalid, without jurisdiction.

8. On the facts and circumstances of the case, the learned CIT(A) has erred in confirming the action of the AO despite the fact that the show-cause notice issued under Section 148A(b) of the Act, order passed under Section 148A(d), notice issued under section 148 and consequent reassessment order passed by AO under Section 147 r.w.s. 144 of the Act are illegal and void-ab-initio as the same have been issued and passed without following the statutory conditions and procedures prescribed under the Act.

9. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the reopening of the reassessment proceedings despite the fact that notice under section 148 has been issued beyond three years without there being any books of accounts, evidence or other documents in the possession of the AO related to any asset or expenditure or entry which shows that income chargeable to tax has escaped assessment.

10.On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the action of AO despite the fact that the order under Section 147 r.w.s. 144 has been passed ignoring the first proviso to section 148 which provides that notice under section 148 shall not be issued unless there is “information” [as defined under Explanation 1 to section 148] with the assessing officer which suggests that income chargeable to tax in the case of assessee for the relevant assessment year has escaped assessment

11. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the reassessment, despite the fact that the reassessment proceedings initiated and consequent reassessment order passed by AO are bad in the eye of law as the information on the basis of which notice under Section 148 issued are vague and there is no live nexus between the information and the belief formed by the Assessing Officer.

12.(1) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the action of the AO despite the fact that the order under Section 1484(d) of the Act, notice under section 148 of the Act and the consequent reassessment order under section 147 r.w.s. 144 of the Act, have been issued and passed by the AO without obtaining the valid statutory prior approval from the specified authority as provided under section 151 of the Act.

(ii) That the purported approval is illegal, mechanical in nature and has been given without application of mind.

13.On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the action of the AO in reopening of the assessment proceedings, despite the fact that the same has been made by the AO on the basis of borrowed satisfaction without independent application of his mind.

14.On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the reopening of the assessment proceedings despite the fact that the notice under section 1484(b) of the Act, order passed under section 1484(d) of the Act and notice under section 148 of the Act are invalid and illegal as the same are contrary to the amended provision of Section 151A read with Section 144B of the Act as well as e-Assessment of Income Escaping Assessment Scheme, 2022.

15. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the reopening of the assessment proceedings despite the fact that notice under section 148 has been issued without there being valid Document Identification Number (DIN) quoted on the body of the notice violating the CBDT Circular No. 19/2019.

16. On the facts and circumstances of the case, the learned CIT(A) has erred both on fact and in law, in confirming the addition despite the fact that the same has been made by the AO indulging in conjectures and surmises without bringing on record any direct evidence against the assessee, only on the basis of presumptions, suspicion and assumptions.”

16. From the perusal of the additional grounds of appeal taken by the assessee, it is seen that they are legal in nature wherein the assessee has challenged the reassessment order on the grounds of limitations etc. As these additional grounds of appeal go to the root of the matter and are purely legal in nature and require no fresh investigation thus, the same are admitted for adjudication.

17. In additional grounds of appeal No. 6 & 7, assessee has challenged the reassessment order passed u/s 147 of the Act by alleging that the notice issued u/s148 is barred by limitations as per order of hon’ble Supreme court in the case of Rajeev Bansal (supra).

18. Heard both the parties at length and perused the materials available on record. In this case, the issue on validity of the proceedings u/s 148 has been raised in the additional grounds of appeal, wherein the assessee has challenged the validity on account of limitations. The notice u/s 148 was issued on 08.06.2021 leaving 22 days as surviving period with the Assessing Officer till the period of limitation i.e. 30.6.2021. Thereafter, in terms of the order of Hon’ble Supreme Court in the case of Ashish Agarwal (supra), notice issued u/s 148 dated 08.06.2021 was deemed to have been issued u/s 148A(b) of the Act. After considering the submission filed by the assessee on 10.06.2022 in response to the notice u/s 148A(b) of the Act, order u/s 148A(d) was passed on 29.7.2022 followed by the notice u/s 148 issued on the same day.

19. Since the surviving period available with the AO was 22 days therefore, in terms of the order of hon’ble Supreme court in the case of Rajeev Bansal (supra) the time available with the AO to pass the order u/s 148A(d) and to issue notice u/s 148 of the Act was upto 02.07.2022 however, the order u/s 148A(d) was passed on 29.07.2022 and the notice u/s 148 were also issued on 29.07.2022. The hon’ble Supreme court in the case of Rajeev Bansal (supra) has held as under for the cases where the earlier notice issued u/s 148 is treated as notice u/s 148A(b) of the Act. The relevant observations are as under:

105. A direction issued by this Court in the exercise of its jurisdiction under Article 142 is an order of a court. The third proviso to Section 149 of the new regime provides that the period during which the proceedings under Section 148A are stayed by an order or injunction of any court shall be excluded for computation of limitation. During the period from the date of issuance of the deemed notice under Section 148A(b) and the date of the decision of this Court in Ashish Agarwal (supra), the assessing officers were deemed to have been prohibited from passing a reassessment order. Resultantly, the show cause notices were deemed to have been stayed by order of this Court from the date of their issuance (somewhere from 1 April 2021 till 30 June 2021) till the date of decision in Ashish Agarwal (supra), that is, 4 May 2022.

106. In Ashish Agarwal (supra), this Court directed the assessing officers to provide relevant information and materials relied upon by the Revenue to the assesses within thirty days from the date of the judgment. A show cause notice is effectively issued in terms of Section 148A(b) only if it is supplied along with the relevant information and material by the assessing officer. Due to the legal fiction, the assessing officers were deemed to have been inhibited from acting in pursuance of the Section 148A(b) notice till the relevant material was supplied to the assesses. Therefore, the show cause notices were deemed to have been stayed until the assessing officers provided the relevant information or material to the assesses in terms of the direction issued in Ashish Agarwal (supra). To summarize, the combined effect of the legal fiction and the directions issued by this Court in Ashish Agarwal (supra) is that the show cause notices that were deemed to have been issued during the period between 1 April 2021 and 30 June 2021 were stayed till the date of supply of the relevant information and material by the assessing officer to the assessee. After the supply of the relevant material and information to the assessee, time begins to run for the assesses to respond to the show cause notices.

107. The third proviso to Section 149 allows the exclusion of time allowed for the assesses to respond to the show cause notice under Section 149A(b) to compute the period of limitation. The third proviso excludes “the time or extended time allowed to the assessee.” Resultantly, the entire time allowed to the assessee to respond to the show cause notice has to be excluded for computing the period of limitation. In Ashish Agarwal (supra), this Court provided two weeks to the assesses to reply to the show cause notices. This period of two weeks is also liable to be excluded from the computation of limitation given the third proviso to Section 149. Hence, the total time that is excluded for computation of limitation for the deemed notices is: (i) the time during which the show cause notices were effectively stayed, that is, from the date of issuance of the deemed notice between 1 April 2021 and 30 June 2021 till the supply of relevant information or material by the assessing officers to the assesses in terms of the directions in Ashish Agarwal (supra); and (ii) two weeks allowed to the assesses to respond to the show cause notices.

b. Interplay of Ashish Agarwal with TOLA

108. The Income Tax Act read with TOLA extended the time limit for issuing reassessment notices under Section 148, which fell for completion from 20 March 2020 to 31 March 2021, till 30 June 2021. All the reassessment notices under challenge in the present appeals were issued from 1 April 2021 to 30 June 2021 under the old regime. Ashish Agarwal (supra) deemed these reassessment notices under the old regime as show cause notices under the new regime with effect from the date of issuance of the reassessment notices. The effect of creating the legal fiction is that this Court has to imagine as real all the consequences and incidents that will inevitably flow from the fiction. Therefore, the logical effect of the creation of the legal fiction by Ashish Agarwal (supra) is that the time surviving under the Income Tax Act read with TOLA will be available to the Revenue to complete the remaining proceedings in furtherance of the deemed notices, including issuance of reassessment notices under Section 148 of the new regime. The surviving or balance time limit can be calculated by computing the number of days between the date of issuance of the deemed notice and 30 June 2021.

109. If this Court had not created the legal fiction and the original reassessment notices were validly issued according to the provisions of the new regime, the notices under Section 148 of the new regime would have to be issued within the time limits extended by TOLA. As a corollary, the reassessment notices to be issued in pursuance of the deemed notices must also be within the time limit surviving under the Income Tax Act read with TOLA. This construction gives full effect to the legal fiction created in Ashish Agarwal (supra) and enables both the assesses and the Revenue to obtain the benefit of all consequences flowing from the fiction.

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 segments of this judgment, the period from the date of the issuance of the deemed notices till the supply of relevant information and material by the assessing officers to the assesses in terms of the directions 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 assesses to reply to the show cause notices must also 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 assesses to the show causes 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 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 notices 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 2022 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.

113. In Ashish Agarwal (supra), this Court allowed the assesses to avail all the defences, including the defence of expiry of the time limit specified under Section 149(1). In the instant appeals, the reassessment notices pertain to the assessment years 2013-2014, 2014-2015, 2015-2016, 2016-2017, and 2017-2018. To assume jurisdiction to issue notices under Section 148 with respect to the relevant assessment years, an assessing officer has to: (i) issue the notices within the period prescribed under Section 149(1) of the new regime read with TOLA; and (ii) obtain the previous approval of the authority specified under Section 151. A notice issued without complying with the preconditions is invalid as it affects the jurisdiction of the assessing officer. Therefore, the reassessment notices issued under Section 148 of the new regime, which are in pursuance of the deemed notices, ought to be issued within the time limit surviving under the Income Tax Act read with TOLA. A reassessment notice issued beyond the surviving time limit will be time barred.

G. Conclusions

114. In view of the above discussion, we conclude that:

a. After 1 April 2021, the Income Tax Act has to be read along with the substituted provisions;

b. TOLA will continue to apply to the Income Tax Act after 1 April 2021 if any action or proceeding specified under the substituted provisions of the Income Tax Act falls for completion between 20 March 2020 and 31 March 2021;

c. Section 3(1) of TOLA overrides Section 149 of the Income Tax Act only to the extent of relaxing the time limit for issuance of a reassessment notice under Section 148;

d. TOLA will extend the time limit for the grant of sanction by the authority specified under Section 151. The test to determine whether TOLA will apply to Section 151 of the new regime is this: if the time limit of three years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under Section 151(i) has extended time till 30 June 2021 to grant approval;

e. In the case of Section 151 of the old regime, the test is: if the time limit of four years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under Section 151(2) has extended time till 31 March 2021 to grant approval;

f. The directions in Ashish Agarwal (supra) will extend to all the ninety thousand reassessment notices issued under the old regime during the period 1 April 2021 and 30 June 2021;

g. The time during which the show cause notices were deemed to be stayed is from the date of issuance of the deemed notice between 1 April 2021 and 30 June 2021 till the supply of relevant information and material by the assessing officers to the assesses in terms of the directions issued by this Court in Ashish Agarwal (supra), and the period of two weeks allowed to the assesses to respond to the show cause notices; and

h. The assessing officers were required to issue the reassessment notice under Section 148 of the new regime within the time limit surviving under the Income Tax Act read with TOLA. All notices issued beyond the surviving period are time barred and liable to be set aside;

20. In the case of Communist Party of India (Marxist) vs. CIT Exmpt. reported in [2025] 174 taxmann.com925 (Delhi), the Hon’ble Delhi High court held as under:

“8. The AO issued a notice dated 29.07.2022 under Section 148 of the Act accompanied with the order dated 29.07.2022 passed under Section 148A(d) of the Act. It is the petitioner’s case that the said notice is barred by limitation.

9. It is material to note that the original notice under Section 148 of the Act [deemed to be a show cause notice under Section 148A(b) of the Act in terms of the decision in the case of Union of India & Ors. Ashish Agarwal (supra)] was issued on 28.06.2021, that is, two days prior to the expiry of the limitation period as extended by virtue of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 [TOLA]. Thus, the AO had two days to issue the notice under Section 148 of the Act after receiving the reply dated 08.06.2022 filed by the petitioner. Since the said period was less than seven days, the AO had, by virtue of the fourth proviso to Section 149(1) of the Act, seven days to pass an order under Section 148A(d) of the Act (which was necessarily required to accompany a notice under Section 148 of the Act). The said period expired on 16.06.2022. Therefore, the order passed under Section 148A(d) of the Act was beyond the period of limitation.

10. The impugned notice is also liable to be set aside on the ground that it was issued without the approval of the authority specified under Section 151 of the Act. Since the impugned notice was issued beyond the period of three years from the end of the relevant assessment year, thus, in terms of Section 151(ii) of the Act, the same was required to be approved by the Principal Chief Commissioner or Principal Director General or where there is no such authority, by Chief Commissioner or Director General. The determination of the specified authority for grant of approval under Section 151 of the Act depends on whether the notice under Section 148 of the Act has been issued after the expiry of three years from the end of the relevant assessment year or within the said period.”

21. In the instant case notice u/s 148 of the Act has been issued beyond the period of limitation i.e. after the expiry of surviving period as prescribed by the Hon’ble Supreme Court in the case of Rajeev Bansal (supra). As observed above, in the present case, the notice u/s 148 of the Act was issued on 29.07.2022 and reply in response to notice u/s 148A(b) was filed by the assessee on 10.06.2022 thus the surviving period of 22 days expired on 02.07.2022.

22. In view of these facts and by respectfully following the judgement of hon’ble Supreme court in the case of Rajeev Bansal (supra) and of hon’ble Deli high as referred above, we hold that the notice issued u/s 148 on 29.07.2022 is barred by limitations and thus quashed and consequent reassessment order passed u/s 147 r.w.s.144 r.w.s.144B is also quashed. Accordingly, additional grounds of appeal Nos. 6 & 7 taken by the assessee are allowed.

23. The other grounds of appeal are not adjudicated being academic. The appeal of the assessee in ITA No.2006/Del/2025 for A.Y. 2016-17 is allowed.

24. In the final result, both the appeals of the assessee are allowed.

Order pronounced in the open Court on 03.09.2025.

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