Mohammed Haneef Mansoor Vs ITO (ITAT Bangalore)
Silence Cannot Cure a Time-Barred Notice: Reassessment u/ss 147 & 148 Quashed Despite Assessee’s Non-Cooperation—Subject to ₹5,000 Cost
Summary: The assessee, an individual, filed his return of income for AY 2016-17 on 19.09.2016. The case was selected for e-assessment since the assessee had not declared capital gains in his return. Several notices were issued u/s 148 and 142(1), but the assessee did not furnish a reply during the e-assessment proceedings. During the reassessment proceedings, however, the assessee submitted that the amount represented business income already declared in the return. The AO was not satisfied and confirmed the addition in respect of capital gain.
CIT(A) Decides Appeal Ex Parte
The assessee challenged the reassessment before the CIT(A), stating that he did not have sufficient knowledge to operate computers or regularly view the income-tax portal and was consequently unable to respond to the notices. The CIT(A) issued four hearing notices, none of which was complied with, and dismissed the appeal both on the ground of non-prosecution and on merits for want of supporting documents.
The assessee thereafter approached the ITAT with a delay of 108 days. He stated that he was out of the country and became aware of the ex parte order only after returning to India in September 2025. The Tribunal accepted the explanation and condoned the delay.
Reopening of AY 2016-17 Through Notice Dated 29.07.2022
Before the Tribunal, the assessee challenged the validity of the reassessment. The notice u/s 148A(b) was issued on 18.05.2022, while the order u/s 148A(d) and notice u/s 148 were both dated 29.07.2022.
The assessee contended that the alleged escaped income was only ₹22,50,000, below the statutory threshold of ₹50 lakh. He therefore argued that, under s.149(1)(a), the reopening was subject to the shorter limitation period.
Reliance was placed upon Parimala Mahadev Tadkase v. ITO, W.P. No. 18407/2023, Karnataka High Court, dated 07.12.2023, and Rahul Meka v. ITO (IT), ITA No. 813/Bang/2024, ITAT Bangalore, dated 06.02.2026. The source order itself identifies these two authorities as part of the paper book relied upon by the assessee.
On merits, the assessee contended that the capital gain had already been included in the business income declared in the return and that a separate addition would therefore result in double taxation.
Department: Non-Cooperative Assessee Cannot Raise Legal Objection
The Department argued that the assessee had failed to respond to the notices issued by the AO and had also not appeared before the CIT(A). It therefore contended that he should not be permitted to raise the legal ground before the Tribunal. The Department also relied upon Union of India v. Ashish Agarwal, reported in 444 ITR 1 (SC).
A Jurisdictional Defect Survives the Assessee’s Default
The ITAT rejected the Department’s objection. It held that an assessee can raise a legal issue even if it was not raised before the lower authorities. The Tribunal further held that no assessment could be made contrary to the provisions of the Act, including statutory limitation.
The Tribunal therefore examined the limitation issue notwithstanding the assessee’s failure to respond to the notice u/s 148A(b) dated 18.05.2022.
Escaped Income Below ₹50 Lakh—Notice Held Time-Barred
According to the AO, the escaped income was ₹22,50,000 for AY 2016-17. The Tribunal recorded that the notice ought to have been issued on or before 31.03.2021 under the unamended provisions and that TOLA extended the period to 30.06.2021.
The Tribunal further noted the Supreme Court directions excluding the period from 15.03.2020 to 28.02.2022 for limitation purposes. It nevertheless held that the grace period had expired in May 2022 and that the notice dated 29.07.2022 was clearly barred by limitation under TOLA as well as the Supreme Court’s judgment.
For the Tribunal’s consideration of TOLA and the surviving limitation framework, see also TaxGuru’s analysis of Union of India v. Rajeev Bansal.
Approval Defect u/s 151(ii) Also Fatal
The Tribunal also considered the coordinate Bench ruling reproduced in paragraph 10 of the order. That ruling relied upon Union of India v. Rajeev Bansal and Ramesh Bachulal Mehta v. ITO and held that an order u/s 148A(d) and consequential notice u/s 148 dated 29.07.2022 were bad in law for violation of s.151(ii).
Following that principle, the Tribunal held that the order u/s 148A(d) dated 29.07.2022 and consequential notice u/s 148 dated 29.07.2022 were bad in law for violation of s.151(ii). The reassessment proceedings were accordingly set aside for want of jurisdiction. The other grounds became infructuous.
Relief Comes With a Price Tag
The Tribunal directed the assessee to pay ₹5,000 by way of cost to the Prime Minister’s National Relief Fund within four weeks from receipt of the order. It specifically directed that otherwise the assessee would not get the benefit of the order.
Legal Principle
An assessee’s non-response to statutory notices does not permit an assessment contrary to the Act. A pure legal issue concerning limitation can be raised before the Tribunal even if it was not raised before the lower authorities. In the present case, the ITAT found the notice u/s 148 dated 29.07.2022 barred by limitation and additionally held the order u/s 148A(d) and consequential notice u/s 148 bad in law for violation of s.151(ii).
List of Cases Discussed / Relied Upon
- Parimala Mahadev Tadkase v. ITO, W.P. No. 18407/2023, Karnataka High Court, dated 07.12.2023.
- Rahul Meka v. ITO (IT), ITA No. 813/Bang/2024, ITAT Bangalore, dated 06.02.2026.
- Union of India v. Ashish Agarwal, (2022) 444 ITR 1 (SC).
- Union of India v. Rajeev Bansal.
- Ramesh Bachulal Mehta v. ITO.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
This is an appeal filed by the assessee challenging the order of the NFAC, Delhi dated 23/07/2025 in respect of the A.Y. 2016-17.
2. The brief facts of the case are that the assessee is an individual and filed his return of income on 19/09/2016. The case of the assessee was selected for e-assessment since the assessee had not declared the capital gains in his return of income. Several notices were issued u/s. 148, 142(1). Assessee has not furnished any reply during the E-assessment proceedings. But in the reply filed during the reassessment proceedings, the assessee submitted that it is the business income declared by him in the return of income. The AO not satisfied with the said reply had confirmed the addition in respect of capital gain earned by the assessee.
3. As against the said order, the assessee filed an appeal before the Ld.CIT(A). The assessee submitted that he has not responded to the notices sent through the email since he does not have the knowledge to operate the computers or does not have knowledge to view the income tax portal regularly and therefore, he was unable to respond to the various notices issued by the AO. The Ld.CIT(A) had issued four hearing notices but the assessee had not responded to any of the notices. Therefore, the Ld.CIT(A) had proceeded to decide the appeal on merits. The Ld.CIT(A) had dismissed the grounds raised by the assessee since the assessee had not furnished any documents in support of his contention and therefore, the Ld.CIT(A) had dismissed the appeal both on the ground of non-prosecution as well as on merits.
4. As against the said order, the assessee is in appeal before this Tribunal with a delay of 108 days. The assessee had filed an application to condone the said delay and the reason stated by the assessee is that he was out of country and therefore, he was not able to follow up the appeal pending before the Ld.CIT(A). The assessee also relied on the entry made in the passport and he also submitted that only after returning to India in the month of September, 2025, he came to know about the ex-parte order of the Ld.CIT(A) and thereafter the appeal was made ready and filed before this Tribunal with a delay.
5. We have considered the said reasoning given by the assessee and we are satisfied that the assessee is having sufficient cause for not filing the appeal in time and therefore, we are condoning the delay in filing the appeal before the Ld.CIT(A) and proceed to decide the appeal on merits.
6. At the time of hearing, the Ld.AR submitted that the notice issued u/s. 148 of the Act on 29/07/2022 is barred by limitation as per section 149 of the Act. The Ld.AR also submitted that even though the assessee had not filed his reply to notice issued u/s. 148A(b) of the Act, it is apparent on the face of the order that the income escaped is below Rs. 50 Lakhs and therefore, the assessment year being the year 2016-17, the reopening should be made within a period of 3 years from the end of the A.Y. i.e. on or before 31.03.2020. The Ld.AR therefore submitted that the notice issued u/s. 148 is barred by limitation and the consequential assessment orders made u/s. 147 of the Act is also bad in law and not sustainable. The Ld.AR on merits, submitted that the capital gain was already included in the business income and declared in the return of income and therefore again treating the same as escaped income would amounts to double taxation and prayed to allow the appeal. The Ld.AR also filed a paper book enclosing the notices issued by the AO and also the judgment of the Hon’ble Karnataka High Court in the case of Parimala Mahadev Tadkase vs. ITO in W.P. No. 18407 of 2023 [T-IT), dated 07/12/2023 and the decision of this Tribunal in the case of Rahul Meka vs. ITO(IT) in ITA No. 813/Bang/2024 dated 06/02/2026.
7. The Ld.DR submitted that the assessee had not responded to the several notices issued by the AO and also not responded to the hearing notices issued by the Ld.CIT(A) and therefore he is not entitled to raise the legal ground and prayed to dismiss the appeal. He also submitted that the AO has rightly followed the ratio laid down by the Hon’ble Supreme Court in the case of Ashish Agarwal reported in 444 ITR 1. The Ld.DR therefore pleaded that the assessee is not entitled to raise the legal issue.
8. We have heard the arguments of both sides and perused the materials available on record.
9. We have perused the records and found that the assessee had not appeared before the AO and also not responded to the hearing notices issued by the Ld.CIT(A). Therefore, the AO has framed the assessment u/s. 147 r.w.s. 144 of the Act and the Ld.CIT(A) had decided the appeal ex-parte. It is trite law that the assessee can raise any legal issue even though if it is not raised before the lower authorities. We have to analyse the facts and if found that the submission is correct, it should be appreciated whether the assessee had cooperated with the Department or not. Further, no assessment could be made against the provisions of the Act including the limitation as prescribed under the Act. Even though the assessee had not responded to the notice issued u/s. 148A(b) of the Act dated 18/05/2022, the fact remains that the AO passed an order u/s. 148A(d) of the Act and thereafter 148 notice was issued on 29/07/2022. As per section 149(1)(a) of the Act, no notice u/s. 148 shall be issued after a period of 3 years from the end of the relevant A.Y. if the escaped assessment does not exceed Rs. 50 Lakhs. In the present case, according to the AO, the escaped income is Rs. 22,50,000/- for the A.Y. 2016-17. The notice ought to have been issued on or before 31/03/2021 under the unamended provisions which was by virtue of TOLA extended to 30/06/2021. However, it was noticed that the AO issued show cause notice u/s. 148A(b) of the Act on 18/05/2022 and passed order u/s. 148A(d) of the Act and notice u/s. 148 both dated 29/07/2022. The Hon’ble Supreme Court in its Suo Moto Writ Petition (Civil) No. 3 of 2020, 6th May of 2020, 10th July of 2020, MA 665 of 2021, Suo Moto Writ Petition 3 of 2020, 27th April 2021, MA No. 2021-22 had directed to exclude the period from 15-03-2020 to 28-02-2022 for the purpose of calculating the limitation and the grace period given by the Hon’ble Supreme Court also expired in the month of May, 2022. Therefore, the 148 notice issued on 29/07/2022 is clearly barred by limitation under TOLA as well as the judgment of the Hon’ble Supreme Court.
10. We have also considered the Coordinate Bench order of this Tribunal referred supra wherein this Tribunal had held as follows:
“6.6 We are clearly of the view that the present matter stands covered by the decision of Hon’ble Supreme Court in the case of Union of India Vs. Rajeev Bansal (supra) and the decision of the Hon’ble Bombay High Court in the case of Ramesh Bachulal Mehta (supra) and accordingly, we hold that the order dated 29.7.2022 passed u/s 148A(d) of the Act and the consequential notice issued u/s 148 of the Act both dated 29.7.2022 are bad in law for being violative of the provisions of section 151 (ii) of the Act. Hence, they are required to be quashed and set aside. Accordingly, the consequential reassessment order dated 8.3.2024 passed u/s 147 r.w.s. 144C(13) of the Act are also set aside and quashed. Since, we have adjudicated one of the legal ground in favour of the assessee, other grounds raised by the assessee becomes academic.”
11. In the instant case, under similar circumstances, it is noticed that the order u/s. 148A(d) dated 29/07/2022 and consequential notice u/s. 148 dated 29/07/2022 are bad in law since it violates the provision of section 151(ii) of the Act and deserves to be quashed and set aside. Moreover, in our opinion, we are of the view that the notice issued u/s. 148 is also barred by limitation. In view of the above said discussion, we have no hesitation to set aside the assessment proceedings initiated without jurisdiction. Since the legal ground raised by the assessee is adjudicated in favour of the assessee by quashing the reassessment order, the other grounds are rendered infructuous.
12. We also direct the assessee to pay a sum of Rs. 5,000/- by way of cost to the Prime Minister’s National Relief Fund within a period of 4 weeks from the date of receipt of this order otherwise, the assessee will not get the benefit of this order.
13. In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on 28th August, 2026.
