AY 2015-16 Reassessment Time-Barred; ₹3.27 Crore Additions Fall as ITAT Quashes Proceedings

Ganga Sahkari Awas Samiti Ltd Vs DCIT (ITAT Agra)

₹3.27 Crore Additions Fall as Reopening Fails the Limitation Test

A Jurisdictional Defect Ends the Assessment

The Agra Bench of the Income Tax Appellate Tribunal quashed reassessment proceedings against a cooperative housing society involving aggregate additions of ₹3,27,35,685, holding that the reassessment notice was barred by limitation. Following the Supreme Court’s decision in Union of India v. Rajeev Bansal, the Tribunal concluded that the original notice issued under the old reassessment regime and the subsequent notice issued under the new regime could not sustain the assessment.

The decision illustrates the importance of examining the validity of reopening before entering into the merits of additions. Although the society had raised several objections concerning mutuality, bank credits, alleged undisclosed profits and denial of an effective hearing, the appeal succeeded on the preliminary legal ground itself.

Bank Credits and Alleged Profits Trigger Reopening

The assessee, Shri Ganga Sahkari Awas Samiti Ltd., had not filed its return for Assessment Year 2015-16. Information available on the Department’s Insight Portal indicated aggregate credits of ₹50,70,425 in its bank account. The Department also identified alleged unaccounted and undisclosed profits of ₹2,76,65,260. Together, these amounts were treated as income escaping assessment.

The Assessing Officer initially issued a notice under Section 148 on 29 June 2021. Subsequently, following the Supreme Court’s directions in Union of India v. Ashish Agarwal, proceedings were taken under the substituted reassessment framework. An order under Section 148A(d) and a fresh notice under Section 148 were issued on 30 July 2022.

According to the assessment record, the society did not file a return in response to the notice and remained non-compliant with the opportunities provided. The Assessing Officer consequently completed an ex parte assessment under Section 147 read with Sections 144 and 144B on 4 May 2023.

The assessment included ₹50,70,425 under Section 69A as unexplained bank credits and ₹2,76,65,260 under Section 68 as alleged unaccounted and undisclosed profits. The CIT(A), NFAC, dismissed the society’s appeal ex parte.

A Short Delay Was Condoned

Before examining the substantive issue, the Tribunal considered a delay of approximately nine days in filing the appeal. The society explained that its previous counsel had been attending to her seriously ill father, who was hospitalised. The newly engaged counsel subsequently suffered an eye-related ailment and was advised bed rest.

The Tribunal accepted these circumstances as sufficient cause, condoned the delay in the interest of justice and admitted the appeal for hearing.

The Decisive Objection: Notice Beyond Time

Although the society raised numerous grounds, its representative pressed the objection concerning limitation for Assessment Year 2015-16.

The society relied on the Revenue’s concession recorded in paragraph 19(f) of Rajeev Bansal, concerning notices for that assessment year and the applicability of the Taxation and Other Laws (Relaxation of Certain Provisions) Act, 2020 — TOLA.

The relevant distinction was that, for Assessment Year 2015-16, the six-year limitation date shown in the Supreme Court’s reproduced table was 31 March 2022, against which TOLA was stated to be inapplicable. The society argued that the original notice dated 29 June 2021 and the fresh notice dated 30 July 2022 could not survive the limitation objection in the transitional reassessment proceedings.

Tribunal Quashes the Consequential Proceedings

The Tribunal noted that the Finance Act, 2021 substituted the reassessment provisions with effect from 1 April 2021. It then examined the Supreme Court’s decision in Rajeev Bansal, particularly the Revenue’s submissions and concession reproduced in paragraphs 19(e) and 19(f).

Applying that decision, the Tribunal held that the original notice dated 29 June 2021, issued under the old regime, did not fall within the period covered by TOLA. The subsequent notice dated 30 July 2022 was consequently held to be beyond limitation, time-barred and bad in law.

The Tribunal therefore quashed all consequential assessment proceedings and allowed the society’s appeal. The aggregate additions of ₹3.27 crore thus fell with the assessment.

Mutuality and Other Contentions Remain Undecided

The society had also argued that it purchased land using members’ contributions and allotted plots exclusively to members. It claimed protection under the doctrine of mutuality and relied on the acceptance of its mutual character in Assessment Year 2013-14.

Other grounds challenged the taxation of gross bank credits, alleged borrowed satisfaction, rejection of an adjournment request and the treatment of members’ contributions as taxable income.

However, the Tribunal did not adjudicate these contentions. Having quashed the reassessment on limitation, it treated the remaining grounds as academic and expressly left them open.

Author’s Comments

The practical significance of this order lies in its jurisdictional outcome, rather than any finding on the taxability of housing society receipts. It should therefore not be presented as a decision accepting mutuality or deleting unexplained credits on their merits.

For comparable matters, the assessment year, original notice date, fresh notice date and precise application of TOLA require careful examination. The Tribunal’s conclusion arose in the context of notices issued under the old regime and subsequently processed under the new framework. A substantial addition cannot sustain an assessment founded on a notice held to be time-barred.

Cases Discussed

• Union of India v. Rajeev Bansal, (2024) 167 taxmann.com 70 / 301 Taxman 238 / 469 ITR 46 (Supreme Court) — Relied upon for the limitation governing reassessment notices under the substituted regime and TOLA; the Tribunal applied the Revenue’s concession concerning AY 2015-16 and held the notices time-barred.
• Union of India Vs Ashish Agarwal, (2023) 1 SCC 617 (Supreme Court) — Referred to for the Supreme Court directions pursuant to which the Assessing Officer subsequently issued a fresh Section 148 notice under the new reassessment regime.

FULL TEXT OF THE ORDER OF ITAT AGRA

This appeal is directed against the impugned order dated 17.06.2026 passed in appeal No NFAC/2014-15/10254267 by the ld. Commissioner of Income Tax, NFAC(Delhi) [(hereinafter referred to as the “CIT(A)] u/s. 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) for the A.Y. 2015-16, wherein ld CIT(A) has dismissed assessee’s appeal.

2. At the outset, we notice that, according to registry’s report, the assessee filed this second appeal on 24.08.2026 against the impugned order dated 17.06.2026 by a delay of about 9 days. The reasons mentioned in assessee’s application for condonation of delay are that, the appellant assessee’s previous counsel was busy, looking after her father, who was seriously ill during the relevant period and admitted to the hospital, requiring counsel’s extreme care, so the appeal could not be attended to effectively by the counsel. This apart, the assessee had engaged another counsel for looking into his matter but unfortunately the newly engaged counsel suffered an eye-related ailment and was advised bed rest for a considerable time, thus the appeal could not be filed within time. Prayed to condone the delay. In the interest of justice and fair play, we treat the aforesaid cause as sufficient and condone the said delay caused in filing this appeal. The appeal is admitted for hearing.

3. The brief facts state that the appellant assessee is a non filer, the case was reopened on the basis of information received from the insight portal that the credits aggregating to Rs. 50,70,425/- were found in the bank account of the assessee during the A.Y. 2015-16. Further unaccounted and undisclosed profits amounting to Rs. 2,76,65,260/- were also identified and the total amount of Rs. 3,27,35,685/- was considered as income chargeable to tax escaped assessment. The order u/s 148A(d) was passed. Notice u/s 148 of the Act was issued to the appellant who did not file any return in response thereof. Statutory notice u/s 142(1) of the Act was issued. The appellant assessee remained non compliant to the various opportunities provided by the assessing officer, hence the assessing officer proceeded ex parte and completed best judgment assessment making additions of Rs. 50,70,425/- as unexplained bank credit u/s 69A and Rs. 2,76,65,260/- as unaccounted and undisclosed profits u/s 68 of the Act, vide ex parte assessment order dated 04.05.2023 made u/s 147/144 r.w.s 144B of the Act.

4. Aggrieved assessee, preferred an appeal before ld CIT(A), who dismissed assessee’s appeal ex parte.

5. Appellant assessee has raised following grounds under this second appeal:

“1. Because the impugned order dated 17.06.2026 passed by the learned Commissioner of Income Tax (Appeals) is bad in law, contrary to the facts borne out by the record and in violation of the principles of natural justice, and the learned CIT(A) has erred in law and on facts in dismissing the appeal of the appellant and in confirming the order of assessment dated 04.05.2023 in its entirety.

2. Because the learned CIT(A) has erred in law and on facts in upholding the reassessment proceedings for Assessment Year 2015-16, which are wholly unsustainable in view of the categorical concession made on behalf of the Revenue before the Hon’ble Supreme Court and recorded at paragraph 19(f) of Union of India v. Rajeev Bansal [2024] 167 taxmann.com 70/301 Taxman 238/469 ITR 46 (SC), namely that for Assessment Year 2015-16 all notices issued on or after 01.04.2021 will have to be dropped as they will not fall for completion during the period prescribed under TOLA; and the notice under section 148 dated 29.06.2021 and the notice under section 148 dated 30.07.2022 both falling on or after that date, the learned CIT(A) ought to have held that the order under section 148A(d) dated 30.07.2022 and the assessment order dated 04.05.2023 cannot survive, and ought to have quashed the same.

3. Because the learned CIT(A) has erred in law and on facts in confirming the initiation of the proceedings, which rested upon borrowed satisfaction and upon a total non-application of mind, the Assessing Officer having acted solely upon the report of the Investigation Wing and upon the flagging of the case on the Insight Portal, without any independent enquiry of his own and without any enquiry of the bank under section 133(6) or of the members of the society whose particulars were on record; and the learned CIT(A) has erred in failing to appreciate that deposits into and withdrawals from the bank account of a housing society do not “suggest” escapement of income, receipts not being synonymous with income, and that the non-filing of a return, upon which the reopening was originally founded, is no longer a deeming ground of escapement under the regime introduced by the Finance Act, 2021.

4. Because the learned CIT(A) has erred in law and on facts in sustaining the order passed under clause (d) of section 148A, which is a non-speaking order, in that it neither addresses nor rebuts the doctrine of mutuality urged by the appellant, nowhere deals with the assessment order for assessment year 2013-14 in which the identical claim was accepted, and discards the source-wise break-up of the credits and the bank statement filed by the appellant upon a bare suspicion of fabrication without the appellant having been confronted with that suspicion; and the learned CIT(A) has erred in not holding that in embarking upon an adjudication of the genuineness and evidentiary worth of the appellant’s audited books at that preliminary stage the Assessing Officer travelled beyond the limited scope of the enquiry contemplated by section 148A.

5. Because the learned CIT(A) has erred in law and on facts in upholding the order of assessment dated 04.05.2023, which was passed in undue haste and in violation of the principles of natural justice and of the scheme of faceless assessment under section 144B of the Act, the adjournment sought on account of the death of the mother-in-law of the President of the society, who resided with him and who looks after its affairs, having been declined although nearly eleven months of the period of limitation prescribed by section 153 then remained, that period expiring only on 31.03.2024; and the learned CIT(A) has erred in failing to redress that breach in the exercise of his coterminous powers under sections 250(4) and 251 of the Act.

6. Because the learned CIT(A) has erred in law and on facts in confirming the addition of Rs. 50,70,425/- under section 69A of the Act, notwithstanding the factual misconception underlying it, the Assessing Officer having described the sum added as cash deposited by the appellant when the information relied upon speaks only of aggregate credits in the bank account, without any bifurcation as between cash deposits, clearing entries, inter-account transfers, reversals and refunds; and the learned CIT(A) has erred in failing to hold that, in any event, the gross aggregate of credits could not be assessed as income, at the highest only the income element embedded therein being assessable, and that the addition of the whole of the credits without adjusting the corresponding debits, refunds and rotational entries and without applying the theory of peak credit is arbitrary and excessive.

7. Because the learned CIT(A) has erred in law and on facts in confirming the addition of Rs. 2,76,65,260/- under section 68 of the Act, which is against the facts and circumstances of the case and has been made on the basis of material collected at the back of the appellant without giving any proper opportunity to rebut the same.

8. Because the learned CIT(A) has erred in law and on facts in rejecting the plea of mutuality as a bald assertion, without examining the bye-laws, the audited accounts and the membership records of the society,, and in failing to appreciate that the appellant is a mutual concern, being a co-operative housing society which purchased land out of the contributions of its members and allotted plots exclusively to its members, the contributors to and the participators in the common fund being identical, so that its receipts are not liable to tax upon the doctrine of mutuality,

9. Because the learned CIT(A) has erred in law and on facts in ignoring the rule of consistency, the identical issue, arising upon the identical material and in relation to the very same bank account, having stood concluded in favour of the appellant for assessment year 2013-14, where reassessment proceedings initiated upon the same advice of the Investigation Wing culminated in an order accepting the appellant’s mutual character and making no addition in respect of the deposits; and there having been no change whatever in the facts or in the law, the learned CIT(A) ought to have held that a contrary view could not be taken for the year under consideration.

10. Because the learned CIT(A) has erred in law and on facts in failing to appreciate that, without prejudice to the above, the amounts received from members towards the allotment of plots are capital receipts, or in any event advances carrying a corresponding obligation and liability in the hands of the appellant, and are not income chargeable to tax under any provision of the Act.

11. Because the learned CIT(A) has erred in law and on facts in disposing of the appeal without affording to the appellant a proper, adequate and effective opportunity of being heard and in deciding the appeal in a summary manner without adjudicating the several grounds raised before him, the impugned order being to that extent non-speaking and unsustainable.

12. Because the learned CIT(A) has erred in confirming the interest charged under sections 234A, 234B and 234C of the Act, the levy whereof is denied and is in any event consequential; and has further erred in upholding the initiation of penalty proceedings under sections 271(1)(c) and 271(1)(b) of the Act, which is bad in law, no satisfaction as contemplated by law having been recorded.

….…………”

6. Perused the records. Heard ld AR for the appellant assessee and ld CIT DR for the respondent revenue.

7. Appellant assessee has though raised as many as 13 grounds. However, ld AR has pressed on the legal ground no. 2, stating that the present case pertains to A.Y. 2015-16, hence the notice u/s 148 dated 29.06.2021 and the notice u/s 148 dated 30.07.2022 both do not fall for completion during the period prescribed for TOLA, thus barred by limitation in view of Apex Court’s judgment passed in Union of India v. Rajeev Bansal (2024) 167 taxmann.com 70 (SC).

8. Undisputedly, the instant case relates to A.Y. 2015-16. Assessing Officer initially issued notice dated 29.06.2021 u/s. 148 of the Act. The Finance Act, 2021 substituted section 147 to 151 of the Act w.e.f. 01.04.2021 and sections 147 to 151 of the old law ceased to operate from 01.04.2021. The Apex Court in Rajeev Bansal (supra) specifically observed that after 01.04.2021, any reference to the Income Tax Act means the Income Tax Act as amended by Finance Act, 2021 and held that the time limit prescribed for issuing reassessment notice u/s. 149 operate retrospectively for three years for all situation and six years in case the escaped assessment amounts to or is likely to amount to more than Rs. 50 lacs. In the instant case, it is not disputed that consequent upon the directions issued by Hon’ble Supreme Court in Union of India vs. Ashish Agarwal (2023) 1 SCC 617, the Assessing Officer finally issued fresh notice u/s. 148 of the Act on 30.07.2022 under the new regime, which is beyond the period of limitation for the present A.Y. 2015-16.

9. It is relevant to refer paragraph 19(e) and 19(f) from the decision of Hon’ble Supreme Court in Rajeev Bansal (supra), which sets out the concession as made on behalf of the Revenue.

“19. a. …………………..

b. …………………..

c. ……………………

d. …………………..

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:

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;

……………….”

10. It is now crystal clear from the aforesaid decision of apex court in Rajeev Bansal (supra) that all notices relevant to the assessment year 2015-16 issued on or after 01.04.2021 will have to be dropped, as they will not fall for completion during the period prescribed under the taxation and other laws (Relaxation of Certain Provisions) Act, 2020 (TOLA). In the instant case, the initial notice u/s. 148 of the Act was issued under old regime on 29.06.2021 which will not fall for completion during the period prescribed under TOLA. The subsequent notice u/s 148 dated 30.07.2022 shall accordingly fall beyond the period of limitation, hence, time barred and bad in law. All consequential assessment proceedings are accordingly quashed. Aforesaid issue is thus determined in favour of the assessee. The other factual and legal grounds are mere academic in nature, hence need not be adjudicated upon and are left open.

11. In the result, assessee’s appeal is allowed.

Order pronounced in the Open Court on – 28.09.2026