Mangalam Rice Mill Private Limited Vs ACIT (ITAT Kolkata)
The appeal concerned Mangalam Rice Mill Private Limited for AY 2015-16 against the NFAC/CIT(A) order dated 28.10.2025. The assessee had raised grounds challenging the reassessment and the addition arising from alleged bogus purchases, but the CIT(A) dealt with an earlier assessment order under section 143(3) dated 23.12.2019 and the cash-deposit issue, rather than the reassessment order under section 147 read with sections 144 and 144B dated 24.05.2023. The Tribunal therefore found that the appellate authority had not decided the actual grounds raised in Form No. 35 dated 05.07.2023 and remitted the issue to the CIT(A) for a fresh decision on those grounds.
The record before the Tribunal showed that the reassessment proceedings originated from information concerning alleged bogus purchases from M/s Shri Vaishno Devi Exim. The reassessment order made an addition of Rs.1,05,46,000/- under section 69C. The Tribunal noted that the CIT(A), however, had adjudicated the separate cash-deposit issue arising from the earlier section 143(3) order, including the addition of Rs.2,15,00,000/- relating to cash deposited in a PNB account during the demonetisation period. The Tribunal consequently directed the CIT(A) to pass an appropriate order in accordance with the assessee’s Form No.35 and directed the assessee to substantiate its case.
On the limitation/reopening issue, the assessee relied on the Supreme Court’s decision in Union of India vs Rajeev Bansal and the Revenue’s concession concerning AY 2015-16. The Tribunal’s first order nevertheless expressed the view that the notice dated 16.04.2021 was within the applicable limitation because the escaped income exceeded Rs.50 lakhs and, referring to sections 149(1)(b) and the Supreme Court’s decisions in Ashish Agarwal and Rajeev Bansal, rejected the assessee’s argument on that notice.
The Accountant Member subsequently dissented on the reopening issue. Referring to the Supreme Court decisions in Deepak Steel and Power Ltd. and ITO vs. Sri Sai Kumar Mateti, the dissenting order held that the notice under section 148 dated 27.07.2022 was issued after 1 April 2021 and was bad in law in light of the Supreme Court’s treatment of AY 2015-16 reassessment notices. The dissent therefore quashed the notice and allowed the appeal, while agreeing that the findings on the merits and the remand to the CIT(A) were acceptable.
Because of the dissent, a Third Member/Special Bench reference was made. The principal referred question asks whether the section 148 notice dated 27.07.2022 can be held valid in view of Rajeev Bansal, Deepak Steel and Power Ltd. and ITO vs. Sri Sai Kumar Mateti. The Accountant Member also proposed two additional questions concerning the effect of the Supreme Court’s decisions for AY 2015-16 where the escaped income was more than one crore, and whether the surviving period under section 149(1)(b), read with the third proviso, could validate the notice dated 27.07.2022.
Cases Discussed
- Union of India Vs Ashish Agarwal — Supreme Court decision dated 04.05.2022 concerning reassessment notices and the transition to the amended section 148A procedure.
- Union of India & Ors. Vs Rajeev Bansal — Supreme Court decision concerning TOLA, the substituted reassessment regime and limitation for AY 2015-16.
- Deepak Steel and Power Ltd. vs. CBDT — Supreme Court decision referred to in the dissenting order.
- ITO vs. Sri Sai Kumar Mateti — Supreme Court decision arising from SLP Civil Appeal No. 8682 of 2024, dated 04.05.2026, referred to in the dissent and Third Member reference.
Applicant was Represented By:- Shuvo Chakraborty
FULL TEXT OF THE ORDER OF ITAT KOLKATA
This Appeal is filed by the assessee against the order of the NFAC, Delhi [“the Ld. CIT(A)”, for short], dated 28.10.2025 with DIN & Order No. ITBA/NFAC/S/250/2025-26/1082047335(1) passed u/s 250 of the Income-tax Act, 1961 [“the Act”, for short] for the assessment years 2015-16 on the following grounds of appeals:-
1. For that purported appellate order passed u/s 250 is invalid in law and in nullity since the impugned order is passed on basis of assessment order passed u/s 143(3) on dt. 23.12.2019 pertain to A.Y 2017-18 instead of the relevant assessment order passed u/s 147 r.w.s 144 read with section 144B of the Income-tax Act, dt. 24/05/2023 pertain to the A.Y 2015-16.
2. For that purported assessment order passed u/s 147 is invalid in law and in nullity for the reason of non-services of u/s 148A(d) order, u/s 151 PCIT approval letter for issuance u/s 148 notice as well the u/s 143(2) notice neither in appellant registered e mail nor in the e filing portal of the appellant and the said issues were duly raised in the first appeal by the appellant.
3. For that total non-consideration of appellant revised grounds, appeal submission and vivid documental evidences furnished in appeal hearing as well as factual and legal veracity of the additions by the Ld. Appellate authority is bad in law.
4. For that since the purported appellate and assessment order is void ab initio and not sustainable in law, therefore Hon’ble Bench is most humbly prayed by the appellant to adjudicate this impugned second appeal per the kind judicious discretion of the Hon’ble Bench in accordance with the law of land and the principle of natural justice as appellant compliances in the first appeal were complete and faultless.
5. For that appellant may modify the grounds.
2. The assessee filed appeal before the Ld. CIT(A) on 05.07.2023 against the order dated 24.05.2023. On going through the grounds of appeal taken by the assessee before the Ld. CIT(A) which is as under:-
“1. For that impugned assessment order is grossly defective since the best judgement order was passed under section 143(3) instead of 144.
2. For that purported addition on cash deposits is unjust since the entire deposits cannot be income of appellant
3. For that source of scid deposits are entirely from sales proceeds and appellant uploaded all documents including books of accounts which were overlooked by Assessing Officer.
4. For that no addition on said deposits can be made without rejecting the books of accounts.
5. For that imposition of tax at 60 percent rate is erroneous.
6. whether on facts and circumstances of the case a.o was not appropriate to pass assessment order under section 143(3) by making an addition of Rs.21500000/- specially when the source of said deposit were entirely from sale proceeds and the appellant uploaded all relevant documents including books of accounts in in the course of said assessment me tax depart proceeding.
7. whether on the facts and circumstances of the case the a.o was justified rejecting the books of accounts suo moto and without showing any proper reason thereof.
8. whether on the fact and circumstances of the case Assessing Officer has made gross injustice by making an addition of Rs.21500000/- under section 69A of it act treating same as unaccounted money in possession of the assessee on mere surmises
9. For that appellant may modify the grounds.”
3. The statement of facts as per Ld. CIT(A) are as under:-
“That the brief statement of facts is that the appellant company filed its return of income declaring income of rs 5247810. The case was selected for scrutiny whereby the core issue was the cash deposits of Rs.27000000/- in the bank account. Appellant was asked to explain the nature and source of said deposits. Appellant made detail submission with all evidences including books of accounts. But surprisingly while passing the assessment order a.o has noted total non-compliance appellant of show cause notice inspite of glaring fact that all documents and submission were fully uploaded in e portal of appellant. Thus a gross injustice has been perpetrated on appellant by making such astronomical addition and tax. Hence this appeal.”
On going through the order passed by the Ld. CIT(A), we noted that the Ld. CIT(A) has decided the issue on cash deposits of Rs.2,17,00,000/- in the bank accounts which was treated as unexplained cash credit u/s 68 of the Act. This issue arises by the Assessing Officer against the order u/s 143(3) of the Act dated 23.12.2019, wherein the Assessing Officer has made addition of Rs.2,15,00,000/- observing that the assessee has given declaration under PMKGY of Rs.55,00,000/- and the Ld. CIT(A) has also decided the issue and confirmed the addition of Rs.2,15,00,000/- in the cash deposited in PNB Account No.3194008700001766 during the demonetisation period from 09.11.2016 to 13.12.2016.
Further ongoing observation of the Form No.35 dated 05.07.2023 filed by the assessee, the statement of facts submitted by the assessee is as under:-
“That the brief fact of the case is that appellant company was subjected to a reopening proceeding u/s 147 for alleged bogus purchases shown by it on basis of information gathered by the investigation department by detecting some accommodation entries providers with whom appellant was found linkage. Appellant filed return u/s 148. In assessment proceeding appellant was unable to put forward its point to scuttle said allegation due to some internal problems in the company. As a result best judgement order passed by the Assessing Officer effecting a substantial addition. Hence this appeal.”
4. Further, as per Form No.35 dated 05.07.2023, grounds of appeal at Serial No.13 is as under:-
1. For that passing of best judgement order is bad in law and unjust since there has been reasonable cause for non-compliance of assessment hearing on appellant part.
2. For that appellant has all relevant documents in possession to scuttle the allegation of bogus purchase and accommodation entries.
3. For that very reopening proceeding is not based upon any tangible materials being derived by independent enquiries by the Assessing Officer instead of instant reopening proceeding is based upon investigation wing report without being corroborated with independent findings by the a.o. hence said proceeding is void ab initio being based upon the borrowed satisfaction by the Assessing Officer not permissible in law.
4. For that where sales have been accepted by the a.o and books of accounts have not been found faulted then no addition sustainable on bogus purchase.
5. For that Assessing Officer can not add back the entire bogus purchase amount but only the profit element being embedded therein can be added maximum.
6. For that appellant may modify the grounds.
Further, we noted as per Ground No.2 taken before us, which is issue regarding reassessment completed u/s 147 of the Act dated 24.05.2023. The Assessing Officer passed the order u/s 147 r.w.s 144 r.w.s. 144B on 24.05.2023. The observation of the Assessing Officer is as under:-
In the above reassessment order, the Assessing Officer has made addition of Rs.1,05,46,000/- passed u/s 69C of the Act towards bogus purchase from M/s Shri Vaishno Devi Exim, a proprietorship concerned of Shri Kapil Kumar Jain, Raipur during the F.Y. 2014-15. On observation of the Form No.35 filed by the assessee before the Ld. CIT(A), it is clear that the Ld. CIT(A) has decided the issue raised by the Assessing Officer u/s 143(3) of the Act proceedings vide order dated 23.12.2019 with DIN & Order No. ITBA/AST/S/143(3)/2019-20/1022921097(1). The Ld. CIT(A) has not decided the actual grounds raised by the assessee as per Form No.35 dated 05.07.2023. Therefore, this issue is remitted back to the Ld. CIT(A) for fresh decision. As per Form No.35, Acknowledgment No.365384890050723, dated 05.07.2023.
The ld. Counsel for the assessee without going into the order passed by the ld. CIT(A) submitted that the issue is for the A.Y. 2015-16, which is clearly covered by decision of the various Benches of the Co-ordinate Bench of the ITAT. Since the notice u/s 148 of the Act was issued on 16.04.2021 which is covered by the Judgment of the Hon’ble Apex Court in the case of Union of India vs Rajeev Bansal 2024 (ITR) 167 taxman.com (70) SC. There is Hon’ble ASG conceded that the all notices issued for the AY 2015-16 is to be draft.
5. On the other hand, the ld. DR supported the order of the lower authorities.
6. Considering the Grounds of Appeal, Form No.35, the Ld. CIT(A) order, assessment order dated 24.05.2023, Paper Book filed by the assessee containing page No.1 to 49, written submissions made before the Ld. CIT(A) and assessment order passed u/s 143(3) of the Act dated 23.12.2019, the main contention raised by the assessee is regarding addition made towards the bogus purchase vide order u/s 147 of the Act r.w.s. 144 r.w.s. 144B of the Act dated 24.05.2023 but the Ld. CIT(A) has decided on different issues and as per the Form No.36, as per appeal details at Serial No.3a, 3b and 3c are that:-
i. Section and sub-section under which the order is passed: u/s 250 of the Act,
ii. Date of order: 28.10.2025
iii. Date of service or communication of the order: 14.11.2025.
On going through the above order, the issue decided by the Ld. CIT(A) is against the order passed u/s 143(3) of Act. Accordingly, we direct the Ld. CIT(A) to pass an appropriate order as per Form No.35 dated 05.07.2023 as raised by the assessee. The assessee is also directed to substantiate its case with cogent appeals. However, we have remitted back to the file to ld. CIT(A) for fresh decision in above terms but we think necessary to give our opinion on the arguments advanced by the ld. Counsel for the assessee.
In this case the AO issued notice u/s 148 on 16.04.2021 for the AY 2015-2016. The new amendment in section 147/148 was effective from 04.04.2021 in this case the escaped income is more than Rs. 50 Lakhs. Even as per the old provision the serving period was six years which would expire on 31.03.2022. The notice u/s 148 dated 16.04.2021 is within the time. The ld. Counsel for the assessee relied as per the statement of the ld. ASG in the proceedings of Union of India vs Rajeev Bansal reported in [2024] 167 taxmann.com 70 (SC) where in para No.19-f. it has been observed as under:-
19.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;
Further in the above noted Judgement the Hon’ble Apex court has further held as under:-
51. Given Section 149(1)(b) of the new regime, reassessment notices could be issued after three years only if the income chargeable to tax which escaped assessment is more than Rupees fifty lakhs. The proviso to Section 149(1)(b) limits the retrospectivity of that provision with respect to the time limits specified under section 149(1)(b) of the old regime.
52. In Ashish Agarwal (supra), this Court held that the benefit of the new regime must be provided for the reassessment conducted for the past periods. The increase of the monetary threshold from Rupees one lakh to Rupees fifty lakh is beneficial for the assesses. Mr Venkataraman has also coneeded on behalf of the Revenue that all notices issued under the new regime by invoking the six year time limit prescribed under section 149(1)(b) of the old regime will have to be dropped if the income chargeable to tax which has escaped assessment is less than Rupees fifty lakhs.
53. The position of law whieh can be derived based on the above discussion may be summarized thus: (i) Section 149(1) of the new regime is not prospective. It also applies to past assessment years; (ii) The time limit of four years is now reduced to three years for all situations. The Revenue can issue notices under section 148 of the new regime only if three years or less have elapsed from the end of the relevant assessment year; (iii) the proviso to Section 149(1)(b) of the new regime stipulates that the Revenue can issue reassessment notices for past assessment years only if the time limit survives according to Section 149(1)(b) of the old regime, that is, six years from the end of the relevant assessment year; and (iv) all notices issued invoking the time limit under section 149(1)(b) of the old regime will have to be dropped if the income chargeable to tax which has escaped assessment is less than Rupees fifty lakhs.
ii. TOLA can extend the time limit till 31 June 2021
54. The proviso to Section 149(1)(b) of the new regime uses the expression “beyond the time limit specified under the provisions. of clause (b) of sub section (1) of this section, as they stood immediately before the commencement of the Finance Act, 2021.” Thus, the proviso specifically refers to the time limits specified under section 149(1)(b) of the old regime. The Revenue accepts that without application of TOLA, the time limit for issuance of reassessment notices after 1 April 2021 expires for assessment years 2013-2014, 2014-2015, 2015-2016, 2016-2017, and 2017-2018 in the following manner:
(i) for the assessment years 2013-2014 and 2014-2015, the six years period expires on 31 March 2020 and 31 March 2021 respectively;
(ii) for the assessment years 2016-2017 and 2017-2018, the three years period expires on 31 March 2020 and 31 March 2021 respectively.
a. Finance Act 2021 substituted the old regime It appears that the Learned Counsel for the assessee has not gone into the Para No.51 to 54 of the aforesaid judgement noted supra where it is clear that in the case of the assessee the notice issued u/s 148 dated 16.04.2021 is within the time allowed u/s 149(1)(b) of the Act. In this case the escaped income is more than Rs. 50.00 lakhs and notice was issued on 16.04.2021, therefore, new provision of section 149(1)(b) w.e.f. 01.04.2021, the time limit for 10 years will be applicable. Therefore, relying on the judgement of Hon’ble Apex Court in the case of Ashish Agrawal & Rajeev Bansal the notice u/s 148 dated 16.04.2021 is within the time limit. Accordingly, the arguments advanced by the Learned Counsel is rejected since the judgements of Hon’ble Apex Court noted supra will prevail.
7. In the result, appeal of the assessee is partly allowed for statistical purposes.
Order pronounced on 07.07.2026.
As I refuse to do any act which is in contempt of the decision of the Hon’ble Supreme Court and also that I believe in judicial discipline and as I find that the decision of my learned brother in pages 8 to 10 in para 6 of his order is not in line with the decision of the Hon’ble Supreme Court in the case of Deepak Steel and Power Ltd. vs. CBDT reported in 476 ITR 369 (SC) and also the decision of the Hon’ble Supreme Court in the case of ITO vs. Sri Sai Kumar Mateti in SLP Civil Appeal No.8682 of 2024 dated 04.05.2026, I dissent with the findings of my learned brother and pass a separate order in respect of issue of reopening.
Though a thesis on judicial discipline in respect of obedience to the decision of the Hon’ble Supreme Court can be written, I refrain to do so as no worthwhile purpose would be served in wasting time, efforts and energy in attempting to educate where it has no value.
The impugned assessment year is A.Y 2015-16. The notice u/s 148 is dated 16.04.2021 and also on 27.07.2022. The intimation letter for notice u/s 148 dated 27.07.2022 reads as follows:
A perusal of the decision of the Hon’ble Supreme Court in the case of Deepak Steel and Power Ltd. referred to supra shows that in paras 4 and 5, the Hon’ble Supreme Court has held as follows:
“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 v. Rajeev Bansal 2024 SCC OnLine SC 2693/[2024] 167 taxmann.com 70/301 Taxman 238/469 ITR 46 (SC), 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.”
The Hon’ble Supreme Court in the case of ITO vs. Sri Sai Kumar Mateti referred to supra in paras 4 to 7 has held as follows:
“4, The instant cases were segregated through the above-mentioned order on the premise that they may be pertaining to Assessment Year 2015-16. It is fairly conceded by Mr. N. Venkataraman, learned Additional Solicitor General of India, representing the Revenue, that in the assessment cases pertaining to the year 2015-16, the notices issued/proposed to be issued for reassessment would stand barred by time in light of the view taken by this Court in Union of India & Ors. v. Rajeev Bansal, 2024 SCC OnLine SC 2693.
5. There is no quarrel that if the instant cases are found to pertain to Assessment Year 2015-16, then the impugned notices are liable to be struck down outrightly in terms of the concession on behalf of the Department recorded in paragraph 19(f) of Rajeev Bansal (supra) and reiterated before us by the learned Additional Solicitor General of India.
6. However, if it is found that these cases pertain to an assessment year other than 2015-16, the respondent-assessees shall be entitled to raise all the contentions that have been permitted by this Court vide order dated 10.04.2026. Ordered accordingly.
7. Consequently, keeping in mind the reasons set out in order dated 10.04.2026, the impugned judgment in each appeal is set aside and the instant appeals are disposed of by remitting the matters to the jurisdictional High Courts for redetermination of the issues.”
The Hon’ble Supreme Court having said so much in clear terms, it no more lies in the hands of a quasi-judicial authority like the Tribunal to make any attempt whatsoever, for any reasons whatsoever or on account of any misconceived notion of superior wisdom to interpret or split judicial hairs in respect of such judicial orders of the Hon’ble Supreme Court, however, much one is in disagreement with the decisions of highest judicial forum. Judicial discipline is possible only when one keeps their ego under dock. One who is in a subordinate judiciary cannot take stand that it is my way or the highway.
As it is found that the notice issued u/s 148 is dated 27.07.2022 and the same is categorically issued after 1st April 2021, respectfully following the decision of Hon’ble Supreme Court in the case of Rajeev Bansal referred to supra and also the decision of Hon’ble Supreme Court in the case of Deepak Steel and Power Ltd. referred to supra and also the decision of Hon’ble Supreme Court in the case of Sri Sai Kumar Mateti referred to supra, it is held that the notice u/s 148 is bad in law and consequently, the same stands quashed.
It must also be mentioned here that on merits, my learned brother has set aside the issues to the file of the ld. CIT(A) to pass appropriate orders as per Form 35 dated 05.07.2023 as raised by the assessee. Once the issue has been set aside on merits, it was obviously not required to give any adjudication on the reopening itself in so far as it would be impracticable for the assessee to litigate such legal issues which are held against it and it would be in effect an act of surreptitiously laying down law with no remedy available to the assessee to challenge it.
The findings of my learned brother in regard to the merits are found to be acceptable and the same is also agreed to by me.
In the result, the appeal of the assessee is allowed.
REFERENCE TO CONSTITUTE THIRD MEMBER
As there has been dissent in passing the order, the following question arises for consideration of the Third Member/Special Bench:-
Whether the notice u/s 148 dated 27.07.2022 can be held to be valid in view of the decision of Hon’ble Supreme Court in the case of Rajeev Bansal reported in 469 ITR 46 (SC) and also the decision of Hon’ble Supreme Court in the case of Deepak Steel reported in 476 ITR 369 (SC) and also the decision of the Hon’ble Supreme Court in the case of ITO vs. Sri Sai Kumar Mateti in SLP Civil Appeal No.8682 of 2024 dated 04.05.2026?
REFERENCE TO CONSTITUTE THIRD MEMBER
As I (L.P. Sahu, Accountant Member) wants to add the following additional questions raised to be decided by the Hon’ble Third Member/ Special Bench:-
1. Whether on facts and circumstances of the case the judgements relied on Hon’ble Apex Court in the case of UOI vs Aashish Agrawal reported in [2022] 138 taxmann.com 64 (SC) and UOI Vs. Rajeev Bansal reported in [2024] 167 taxmann.com 70 (SC) where the Hon’ble ASG has conceded as for the AY 2015-16. 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; which is further quoted in para No. 51 to 53 of the Judgement of Rajeev Bansal the Hon’ble ASG has also conceded on behalf of the Revenue that all notices issued under the new regime by invoking the six year time limit prescribed under section 149(1)(b) of the old regime will have to be dropped if the income chargeable to tax which has escaped assessment is less than Rupees fifty lakhs. are applicable in this case or not, since in this case the escaped income is more than one crore. The judgements cited in the case of Deepak Steel reported in 476 ITR 369(SC) and ITO Vs Sri Sai Kumar Mateti in SLP Civil Appeal No. 8682 of 2024 of the Hon’ble SC in which the para No. 51 to 52 has not dealt on this point.
2. Whether on the facts and circumstances of the case the serving period was available for issue of notice within the period as per judgement of UOI Vs. Ashish Agrawal and UOI Vs. Rajeev Bansal or not?, as the period was available to issue of notice as per section 149(1)(b) r.w.s, third proviso of section 149 of the Act is valid notice for initiating proceeding u/s 147 of the Act. The Hon’ble Apex Court has directed to exclude the following period:(1) from 01.07.2021 to date of time allowed to file reply in pursuance of the judgement of UOI vs. Ashish Agrawal. In this case the time was allowed to the assessee for two weeks which was expired on 13.06.2022 but no reply was filed. Therefore, the validity period for issue.of-notice would be from 14.06.2022 plus 75 days (from 16.04.2021 to 30.06.2021) which will be expired on 27.08.2022 and AO issued notice u/s 148 on 27.07.2022 under new regime which is within the surviving time allowed. In such case could the notice issued on 27.07.2022 be treated as invalid notice is time barred?
