Royal Compservices Pvt. Ltd. Vs DCIT (ITAT Mumbai)
Summary: The Mumbai ITAT allowed the appeal of Royal Compservices Pvt. Ltd. for AY 2014-15 by holding that the notice issued under section 148 on 30.07.2022 was barred by limitation and consequently quashing the reassessment proceedings. The assessee had filed its return of income on 30.09.2014 declaring a loss of Rs.23,44,528/-. The case was selected for scrutiny and an order under section 143(3) was passed on 16.12.2016 accepting the returned loss. Subsequently, the assessment was reopened and an order under section 147 read with sections 144 and 144B was passed on 26.05.2023 determining total income at Rs.4,50,00,000 by making an addition of the same amount under section 68. The CIT(A) dismissed the assessee’s appeal on 26.09.2025.
There was a delay of 72 days in filing the appeal before the Tribunal. The assessee filed an affidavit explaining that Shri Manoj Mishra, who handled its income-tax matters, could not attend office due to his mother’s illness and that she ultimately expired on 12.01.2026. The death certificate was enclosed with the affidavit. The Department did not oppose condonation. Relying upon Collector, Land Acquisition v Mst. Katiji And Others-167 ITR 471 (SC), the Tribunal condoned the delay. The Tribunal also admitted additional legal grounds concerning limitation, jurisdiction, DIN and section 151A after referring to NTPC Ltd. vs. CIT, 229 ITR 383 (SC) and CIT vs. Pruthvi Brokers and Shareholders PVt. Ltd., 349 ITR 336 (Bom.).
On limitation, the assessee’s chronology showed that the first notice under section 148 was issued on 11.06.2021 and the TOLA-extended period ended on 30.06.2021, leaving a surviving period of 19 days. Notice under section 148A(b) was issued on 31.05.2022 and time to reply was available up to 14.06.2022. According to the computation based upon UOI vs. Rajeev Bansal, the surviving 19-day period expired on 03.07.2022. However, the order under section 148A(d) and the fresh notice under section 148 were issued only on 30.07.2022.
The Department did not dispute the relevant dates placed before the Tribunal. Considering the Supreme Court decisions in UOI vs. Ashish Aggarwal and UOI vs. Rajeev Bansal, the Tribunal held that the section 148 notice dated 30.07.2022 was issued beyond the surviving/balance period and was barred by limitation under section 149. The notice was therefore held void ab initio and quashed. Consequently, the assessment order under section 147 read with section 144 for AY 2014-15 was also set aside and quashed. The remaining grounds became academic and were not adjudicated. The appeal was allowed for statistical purpose.
Cases Discussed
- Hitesh Ramniklal Shah v. ACIT [180 taxmann.com 642 (Bom.)] – Relied upon by the assessee in support of its challenge that the notice issued under section 148 was barred by limitation.
- Dhanaji Abasaheb Dhage v. ITO, ITA No. 7663/Mum/2025, dated 05.05.2026 – Relied upon by the assessee in support of the limitation challenge to the reassessment notice.
- Lalit Surajprakash Garg v. DCIT, ITA No. 6122/Mum/2024 and ors., dated 15.04.2025 – Relied upon by the assessee while contending that the notice issued under section 148 was time barred.
- UOI vs. Rajeev Bansal (2024) 469 ITR 56 (SC) – Applied for determining the surviving/balance period available for issuance of the notice under the new reassessment regime.
- UOI vs. Ashish Aggarwal (2022) 444 ITR 1 (SC) – Considered along with Rajeev Bansal while deciding whether the notice under the new reassessment regime was within limitation.
- CIT vs. Pruthvi Brokers and Shareholders PVt. Ltd., 349 ITR 336 (Bom.) – Followed while admitting the additional legal grounds arising from facts already available on record.
- NTPC Ltd. vs. CIT, 229 ITR 383 (SC) – Followed for the proposition that a legal question arising from facts already on record can be raised before the Tribunal.
- Collector, Land Acquisition v Mst. Katiji And Others-167 ITR 471 (SC) – Applied while condoning the 72-day delay in filing the appeal, with the Tribunal preferring substantial justice over technical considerations.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal filed by the assessee emanates from the order passed under section 250 of the Income-tax Act, 1961 (in short, ‘Act’) by the National Faceless Appeal Centre [in short, ‘CIT(A)’], dated 26.09.2025 for the assessment year (AY) 2014-15.
2. The grounds of appeal raised by the assessee are as under:
“1. That the assessment order u/s 147 r.s.w.144 of the Income Tax Act, 1961 (“the Act”) dated 12.05.2023 passed by the Assessing Officer (“AO”) and the additions/disallowances made therein are illegal, bad in law and without jurisdiction.
2. That the AO and the Commissioner of Income Tax (Appeals) (“CIT(A)”) have grossly erred on facts and in law in passing the orders without giving a sufficient and reasonable opportunity to the assessee to be heard. The orders have been passed in violation of principles of natural justice.
3. That, on the facts and circumstances of the case, the CIT(A) has erred in law and on facts in upholding the assessment order u/s 147 r.s.w.144 of the Act and the additions/disallowances made therein.
4. That on the facts and circumstances of the case and law The Learned commissioner of Income tax (Appeals) has erred up holding the Addition made by the Ld. Assessing officer erred in making addition on amounting of Rs.4,50,00,000 on account of undisclosed Income
5. All of the above grounds of appeal are without prejudice and are mutually exclusive to each other.
6. The Appellant craves leave to add, amend, alter and/or delete any of the above grounds of appeal at or before the time of hearing.”
3. The additional grounds of appeal raised by the assessee vide letter dated 15.05.2026 are as under:
“1. The Ld. CIT(A) has erred in law and in facts in not appreciating that the reopening of assessment by issuance of notice u/s 148 of the Act and passing the reassessment order u/s 147 of the Act is invalid and bad in the eyes of law
2. The Ld. CIT(A) has erred in law and in facts in not appreciating that the notice u/s. 148 of the Act has been issued beyond the surviving time limit as per the decision of Hon’ble Supreme Court in the case of Rajeev Bansal v. UOI [167 taxmann.com 70] and hence such notice is time barred and not valid in the eyes of law
3. The Ld. CIT(A) has erred in law and in facts in not appreciating that the Assessing Officer issuing notice u/s. 148 of the Act did not have valid pecuniary jurisdiction to issue such notice and hence the notice u/s 148 of the Act is invalid in the eyes of law.
4 The Ld. CIT(A) has erred in law and in facts in not appreciating that the Assessing Officer has issued the notice u/s. 148 of the Act without quoting valid DIN on the body of the notice which is bad and invalid in the eyes of law.
5. The Ld. CIT(A) has erred in law and in facts in not appreciating that the assessment has been reopened by issue of notice u/s 148 of the Act by the jurisdictional officer instead of National Faceless Assessment Centre which is contrary to the express provisions of s. 151A of the Act.”
4. There is a delay of 72 days in filing the appeal. The appellant has filed an affidavit for condonation of delay in filing appeal before the Tribunal. In the said affidavit, it is stated that Shri Manoj Mishra, who was handling the Income-tax matters, did not attend office due to illness of his mother. His mother ultimately expired on 12.01.2026. The copy of the death certificate is enclosed with the affidavit. It is submitted that the delay was not intentional and was beyond his control. There was genuine reason and sufficient cause for non-filing of appeal within time. Therefore, in the interest of justice, the delay may be condoned and the appeal may be heard on merit. On the other hand, the Ld. Sr. DR has not opposed the prayer of the appellant for condonation of delay. Considering the entire factual position as explained before us and keeping in view the principles laid down by the Hon’ble Supreme Court in case of Collector, Land Acquisition v Mst. Katiji And Others-167 ITR 471 (SC), where it was held that when substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay, we condone the delay.
5. Now, we shall consider the request of the assessee to admit the additional grounds raised by the appellant. The grounds are legal in nature. The Hon’ble Supreme court in case of NTPC Ltd. vs. CIT, 229 ITR 383 (SC) has held that the order of Tribunal u/s 254 is expressed in the widest possible terms. There is no reason to restrict the power of the Tribunal u/s 254 only to decide the grounds which arise from the order of the CIT (Appeals). Both the assessee as well as the Department have a right to file an appeal/cross objection before the Tribunal. There is no reason why the Tribunal should be prevented from considering a question of law arising in the assessment proceedings although not raised earlier. Undoubtedly the Tribunal will have the discretion to allow or not to allow a new ground to be raised. But where the Tribunal is only required to consider the question of law arising from the facts which are on record in the assessment proceedings, there is no reason why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of the assessee. In the instant case, the additional grounds emanate from the facts on record and no additional facts are needed to decide the issue. Hence, following the decision of the Hon’ble Supreme Court in case of NTPC Ltd. vs. CIT, 229 ITR 383 (SC) and the decision of the Hon’ble Jurisdictional High Court in case of CIT vs. Pruthvi Brokers and Shareholders PVt. Ltd., 349 ITR 336 (Bom.), the additional grounds are admitted and will be decided at the relevant place in this order.
6. Facts of the case, in brief, are that the assessee filed its return of income for the AY 2014-15 on 30.09.2014 declaring loss of Rs.23,44,528/-. The case was selected for scrutiny and order u/s 143(3) was passed on 16.12.2016 accepting the returned loss. Subsequently, the case was reopened and notice u/s 148 of the Act was issued on 30.07.2022. After hearing the assessee, order u/s 147 r.w.s. 144 r.w.s. 144B was passed on 26.05.2023 determining total income at Rs.4,50,00,000/-, by making addition of the same amount u/s 68 of the Act.
7. Aggrieved by the order of AO, the assessee filed appeal before the CIT(A), who has dismissed the appeal vide his order u/s 250 of the Act dated 26.09.2025. Further, aggrieved, the assessee filed appeal before the Tribunal.
8. At the outset, the Ld. AR submitted that the issue of notice u/s 148 of the Act was time barred and hence, the further proceedings on such time barred notice cannot survive. The Ld. AR has relied on the decision in cases of (i) UOI vs. Rajeev Bansal (2024) 469 ITR 56 (SC), (ii) UOI vs. Ashish Aggarwal (2022) 444 ITR 1 (SC), (iii) Hitesh Ramniklal Shah v. ACIT [180 taxmann.com 642(Bom)], (iv) Dhanaji Abasaheb Dhage v. ITO [ITA No. 7663/Mum/2025] dated 05.05.2026 and (v) Lalit Surajprakash Garg v. DCIT [ITA No. 6122/Mum/2024 and ors.] dated 15.04.2025. He submitted that the notice u/s 148 of the Act issued on 30.07.2022 is time barred. The facts of the case and submission of the Ld. AR are reproduced below:
“Facts of the case:
Date of Original Notice : 31.03.2021
First notice u/s 148 : 11.06.2021
Last date for issue of notice u/s 148
Considering extension under TOLA :30.06.2021
Surviving Period as per Judgment (supra) : 19 days (11.06.2021-30.06.2021)
Date of notice U/s 148A(b) : 31.05.2022
Time to file reply : 14.06.2022
Reply filed by assessee : No reply
Time limit to issue notice u/s 148 as per Rajeev Bansal case : 03.07.2022 (19 days from 14.06.2022)
Order passed u/s 148A(d) of the Act : 30.07.2022
Notice issued u/s 148 : 30.07.2022 (Time barred).”
8.1 In view of the above facts, the Ld. AR submitted that the last permissible date for issuance of notice u/s 148 would expire on 03.07.2022. The impugned notice issued on 30.07.2022 was much beyond the surviving period available to the revenue. Hence, the notice u/s 148 is barred by limitation and was without jurisdiction. Consequently, the entire reassessment proceeding and reassessment order passed u/s 147 r.w.s. 144 dated 26.05.2023 is liable to be quashed.
9. On the other hand, the Ld. DR relied on the order of lower authorities.
10. We have heard both sides and perused the materials on record. We have also deliberated on the decisions relied on by the Ld. AR. The Ld. DR has not disputed the facts including various dates stated by the Ld. AR, which have been reproduced above. It is clear from the facts that there was surviving period of 19 days to issue the notice u/s 148 of the Act under the new regime in the present case i.e. till 03.07.2022, after the period allowed to the assessee to reply to the show cause notice u/s 148A(b) of the Act. However, undisputedly, the notice u/s 148 of the Act under the new regime was issued on 30.07.2022, i.e., after the surviving/balance time period (i.e. 03.07.2022) as per the decision of the Hon’ble Supreme Court in case of Rajeev Bansal (supra).
10.1 After considering the facts of the case as discussed above in the light of the decisions of the Hon’ble Supreme Court in cases of Ashish Agarwal (supra) and Rajeev Bansal (supra), we are of the considered view that the notice issued u/s 148 of the Act on 30.07.2022 was barred by the limitation u/s 149 of the Act. Accordingly, we are of the considered view that the said notice issued u/s 148 dated 30.07.2022 for the AY 2014-15 is void ab initio and bad in law. Therefore, the notice issued u/s 148 of the Act is quashed. Consequently, the assessment order passed under section 147 read with section 144 of the Act for the AY 2014-15 is also set aside and quashed. As a result, the grounds raised by the appellant are allowed.
10.2 As we have set aside the order passed u/s 147, the other grounds become academic in nature and do not require adjudication.
11. In the result, the appeal of the assessee is allowed for statistical purpose.
Order is pronounced on 13.08.2026.
