Varun Enterprises Vs ACIT (ITAT Mumbai)
The ITAT Mumbai quashed the reassessment proceedings, holding that notice issued under Section 148 on 29.06.2022 for AY 2015–16 was barred by limitation under Section 149.
The Tribunal noted that:
- The 6-year limitation period expired on 31.03.2022,
- The notice was issued after this date, and hence beyond the permissible time limit.
Relying on binding precedents of the Supreme Court in Union of India vs. Rajeev Bansal and Deepak Steel & Power Ltd., as well as the Bombay High Court ruling in Mitra Biswas, the ITAT held that:
- Reopening of AY 2015–16 after 01.04.2021 is not permissible, and
- Such notices are void and liable to be quashed.
Accordingly, the Tribunal:
- Quashed the notice under Section 148, and
- Set aside the entire reassessment order passed u/s 147 r.w.s. 144B.
Since the matter was decided on this legal ground, all other issues (including additions under Sections 68 and 69C) were treated as academic and not adjudicated.
The ruling reinforces strict compliance with limitation provisions under the new reassessment regime, making it clear that time-barred notices cannot be revived through procedural routes.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The present appeal has been filed by the assessee challenging the impugned order 19.08.2025 passed u/s 250 of the Income Tax Act, 1961 (‘the Act’), by the National Faceless Appeal Centre, Delhi (NFAC) for the assessment year 2015-16. The following grounds are reproduced below:
“1. The Hon CIT(A) erred in upholding the reopening of assessment for A.Y. 2015-16 by way of notice issued u/s 148 of the IT Act, 1961 on 29.06.2022, not appreciating that the reopening was barred by limitation as per section 149 of the 1. T. Act, 1961 and therefore the re-opening of assessment u/s 147 was bad in law and the order of assessment framed u/s 147 r.w.s 144B dt. 27.05.2023, flowing from such an invalid notice was also invalid, bad in law, and both were required to be struck down and quashed.
2. The Hon CIT (A) erred in upholding the reopening of assessment, not appreciating that the notice u/s 148 dt. 29.06.2022 was issued by the jurisdictional assessing officer (JAO), ie. DCIT, 27(3), Mumbai, and not in a faceless manner as provided by law and therefore the said notice u/s 148 as well as the assessment order flowing therefrom, were both invalid and bad in law and were required to be struck down and quashed.
3. The Hon. CIT(A) erred in not appreciating that the re-opening of the assessment u/s 147 of the I. Tax Act 1961, by issue of the notice u/s 148 dt 29.06.2022, was not appropriate by law, as the assessment should have been as provided u/s 153C of the IT Act 1961, as the document seized during search action u/s 132 on Mr. Shripal Vora, contained information relating to the appellant and accordingly the re-opening of assessment u/s 147 as well as the order of assessment passed u/s 147 r.w.s 144B on 27.05.2023 were bad-in-law being void-ab-initio and the same are required to be struck down and quashed on that account.
4. The Hon CIT(A) erred in upholding the reopening of assessment by issue of notice u/s 148 of the IT Act, 1961 on 29.06.2022, not appreciating that such reopening was invalid and bad in law and therefore the order of assessment framed u/s 147 r.w.s 144B dt. 27.05.2023, flowing therefrom was also invalid and bad in law and required to be struck down and quashed.
5. The Hon CIT(A) erred in upholding the assessment framed u/s 147 r.w.s 144B of the I. T. Act 1961, without first making a draft assessment order and providing opportunity to the appellant to respond to such draft assessment order as mandated by section 144B of the 1.T Act, 1961 and therefore the procedure of faceless assessment as well as principles of natural justice stood breached and for this reason also, the assessment framed u/s 147 r.w.s 144B on 27.05.2023 be held to b bad-in-law, void-ab-initio and quashed.
6. The Hon CIT(A) erred in upholding the addition of Rs.52,00,000/- made u/s 68 of the IT Act, 1961, as unexplained cash credit in respect of the genuine unsecured loan borrowed from M/s Money Gems, not appreciating that the appellant had discharged the onus placed by sec 68 of the I.T Act, 1961 and addition in the hands of the appellant was based only on surmises and presumptions without any concrete evidence incriminating the appellant and therefore the addition Rs.52,00,000/- on the above count was not warranted by facts and in law and is required to be deleted.
7. The Hon CIT(A) erred in upholding addition of Rs. 4,00,043/- made by disallowing interest expenditure u/s. 68 of the IT Act, 1961 incurred on the unsecured loan borrowed from M/s Money Gems for the reason that addition on account of such unsecured loan is made u/s 68 of the IT Act, without appreciating that the said interest is being incurred on a genuine loan borrowed for business purposes. The addition of Rs. 4,00,043/- is incorrect by facts and in law may kindly be deleted.
8. Without prejudice to the above, the Hon CIT(A) erred in upholding the addition of Rs.4,00,043/- u/s 68 of the I.T Act, 1961, not appreciating that the provisions of section 68 dealing with unexplained cash credit were not attracted to the facts of the matter and therefore the addition was also legally incorrect and bears deletion on that account.
9. The Hon CIT(A) erred in upholding the addition of Rs. 1,43,000/- u/s 69C of the IT Act, 1961, as alleged unaccounted commission paid for obtaining accommodation entry in the form of an unsecured loan from M/s Money Gems, which addition is not justified and therefore may please be deleted.
10. The Hon CIT(A) erred in upholding the addition on the basis the statement of Mr. Shripal Vrajlal Vora, without granting to the appellant any opportunity to cross examine the said person, inspite of the written and oral request during assessment proceedings/video conferencing made by the appellant, thereby breaching the salient principles of equity, fair play and natural justice and was bad-in-law and void-ab-initio.
11. The appellant craves leave to add, alter, amend, delete and/or vary any of the above grounds of appeal at any time before the decision of the appeal. ”
2. Ground No. 1 raised by the assessee relates to challenging the order of the Ld. CIT(A) in upholding the reopening of assessment for the year under consideration, on the ground that the notice issued under Section 148 of the Act was barred by limitation.
