Section 149 Limitation Defeats Reassessment Based on Belated Section 148 Notice: ITAT Delhi

Tillsoil Farms Pvt. Ltd Vs DCIT (ITAT Delhi)

The Delhi Bench ‘C’ of the Income Tax Appellate Tribunal allowed Tillsoil Farms Pvt. Ltd.’s appeal for AY 2013-14 and quashed the reassessment initiated by the Section 148 notice dated 27 July 2022. The Tribunal held that the notice fell outside the period prescribed by Section 149 of the Income-tax Act, 1961.

The company had returned income of Rs. 49,31,568. It had purchased agricultural land in Haryana for Rs. 4,63,28,864 and paid stamp duty of Rs. 23,16,500, bringing the total cost to Rs. 4,86,45,364. The Assessing Officer compared this figure with fixed assets of Rs. 3,78,97,364 declared in the return and noted a difference of Rs. 1,07,48,000. Finding the evidence supporting the company’s forfeiture claim inadequate, the officer made an addition of Rs. 1,09,58,000. The best judgment reassessment dated 10 May 2023 determined total income at Rs. 1,58,89,570, and penalty proceedings under Section 271(1)(c) were initiated. The CIT(A)/NFAC dismissed the company’s appeal on 8 January 2026 and confirmed the addition.

Before the Tribunal, the company challenged service of the appellate hearing notices, the Ward ITO’s pecuniary jurisdiction and the issuance of notices by the jurisdictional officer in light of the faceless reassessment scheme. On the merits, it argued that the forfeited property advance was a capital receipt governed by Section 51 for AY 2013-14 and that Section 56(2)(ix) applied only from AY 2015-16. The company pressed the limitation ground at the hearing, relying on its paper-book computation and Union of India v. Rajeev Bansal. The Revenue asked the Tribunal to consider that judgment and restore the matter to the Assessing Officer for a fresh decision.

The Tribunal considered the interplay between the amended reassessment provisions, the earlier six-year limitation and the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA). It referred to the Revenue’s concession before the Supreme Court concerning AY 2015-16 and followed the coordinate Bench ruling in Deepak Agarwal v. DCIT. For Tillsoil Farms’ AY 2013-14, the Tribunal recorded 30 June 2021 as the expiry of the six-year limitation and held that the notice issued on 27 July 2022 pursuant to the Section 148A(d) order was time-barred. It quashed the consequential reassessment and allowed the appeal on that ground. The remaining objections and the tax treatment of the forfeited advance were left undecided.

Cases Discussed

• Deepak Agarwal v. DCIT, Central Circle-25, ITA No. 2307/Del/2025, 23 July 2025 (ITAT Delhi). Followed by the Tribunal as a coordinate Bench decision quashing a time-barred reassessment for AY 2015-16.
• ADIT (International Taxation)-2, Hyderabad & Anr. v. Deepanjan Roy, SLP (C) Diary No. 33956/2025, 16 July 2025 (Supreme Court). Cited by the assessee in its faceless-reassessment ground. The Supreme Court dismissed the Revenue’s SLP against the Telangana High Court order.
• ACIT, Circle 19(1) & Ors. v. Nehal Ashit Shah, SLP (C) Diary No. 57209/2024, 4 April 2025 (Supreme Court). Cited by counsel in the reproduced coordinate Bench order in support of the limitation objection for AY 2015-16.
• Deepak Steel & Power Ltd. v. CBDT & Ors., Civil Appeal No. 5177/2025, 2 April 2025 (Supreme Court). Reproduced in the coordinate Bench order for the quashing of reassessment notices in light of the Revenue’s concession concerning AY 2015-16.
• MakeMyTrip India Pvt. Ltd. v. DCIT, Circle 16(1), Delhi & Anr., W.P.(C) No. 2558/2023, 24 March 2025 (Delhi High Court). Discussed in the reproduced coordinate Bench order for setting aside a belated Section 148 notice for AY 2015-16.
• Union of India & Ors. v. Rajeev Bansal, (2024) 469 ITR 46, 2024 INSC 754, 2024 SCC OnLine SC 2693, 3 October 2024 (Supreme Court). Applied by the Tribunal in deciding how Section 149, the earlier limitation regime and TOLA affected the validity of the notice.
• Shiv Mettalicks Pvt. Ltd., Rourkela v. Principal Commissioner of Income Tax, Sambalpur, W.P.(C) No. 36314/2022, 10 January 2023 (Orissa High Court). Mentioned in the High Court passage reproduced in Deepak Steel & Power Ltd. concerning the stage at which the taxpayer could raise its objections.
• Kailash Kedia v. Income Tax Officer, W.P.(C) No. 9191/2022, 1 December 2022 (Orissa High Court). Identified as the lead matter in the batch referred to in the High Court passage reproduced in Deepak Steel & Power Ltd.
• Union of India & Ors. v. Ashish Agarwal, (2022) 444 ITR 1, 2022 SCC OnLine SC 543, 4 May 2022 (Supreme Court). Cited by the assessee in support of its objection to the timing of the fresh notice after the transitional reassessment procedure.

FULL TEXT OF THE ORDER OF ITAT DELHI

The appeal of the assessee is directed against the order dated 08.01.2026 of ld. CIT(A)/NFAC, Delhi passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) wherein the appeal against the best judgment Assessment Order u/s 147 r.w.s. 144 r.w.s. 144B of the Act dated 10.05.2023 was dismissed.

2. Facts in brief as culled out from the orders of the authorities below are that the assessee company filed its return of income for A.Y. 2013-14 declaring income of Rs.49,31,568/-. During the assessment proceedings, it was noticed that the assessee had purchased agricultural land at Village Ghaber, Tehsil Nuh, District Mewat, Haryana, for a total sale consideration of Rs. 4,63,28,864/-, on which stamp duty of Rs.23,16,500/- was paid. Therefore, the total purchase cost of the agricultural land was Rs. 4,86,45,364/-. On examining, it was found that the assessee had declared the total fixed assets as Rs.3,78,97,364/-. This resulted in a difference of Rs.1,07,48,000/- between the purchase price as per registered deed and the value of fixed assets declared in the ITR. The Assessing Officer, however, was not satisfied with the supporting evidence furnished in respect of the forfeiture claim and made an addition of Rs.1,09,58,000/- to the returned income. The assessment was accordingly completed u/s 147 r.w.s. 144 r.w.s. 144B of the Act at a total income of Rs.1,58,89,570/-. The penalty proceedings initiating u/s 271(1)(c) of the Act.

3. Aggrieved by the assessment order, the assessee filed appeal before the ld. CIT(A) who has dismissed the same and confirmed the addition made in the assessment order.

4. Aggrieved by the impugned order of the ld. CIT(A), the assessee is in appeal before the Tribunal and raising following grounds:

“1.i. That the ex-party order of Ld. CIT (Appeals) – 29, (hereinafter called CIT – A) Dt. 08-01-2026 confirming the Order of Assessment Unit u/s 147/144 Dt. 10-05-2023, is illegal, unjust, opposed to facts and suffers from the vice of arbitrariness.

ii. That all 4 Notices for hearing of appeal were posted on the Portal, but not served on the appellant. E-mail was sent to previous consultant at [email protected] which were not communicated to the appellant, resulting in ex-party order of appeal.

iii. That each ground of appeal is independent, without prejudice to each other. Rs. 81,34,520/-

2. i. That on the facts of the case and in law, the Ld. CIT – A and Ld. AO have both erred in making and confirming the Assessment when the Notices issued u/s 148A(b), 148 & Order u/s 148A(d) are issued by a Non-Jurisdictional Ward AO, who had no pecuniary jurisdiction to assess income declared at Rs. 49,31,570/-.

ii. That the correct jurisdiction of the appellant was with the ACIT and not with the Ward ITO, when the Appellant’s income was above Rs. 30 Lakhs, in terms of CBDT guidelines.

iii. That all the consequent orders in pursuance to illegal notices / orders issued/passed by a non-jurisdictional Ward ITO are void-ab-initio and the same be annulled.

3. i. That without prejudice to Ground No. 1 and 2, on the facts of the case and in law, the Ld. AO, and Ld. CIT – A have both erred in making an assessment on the basis of time barred notice u/s 148A(d) and notice u/s 148 both dated 22.07.2022 issued beyond the surviving period, in terms of fourth proviso to Section 149 of the IT Act.

ii. That in terms of Supreme Court decisions in the case of Union of India Vs. Ashish Aggarwal and Union of India Vs. Rajeev Bansal r.w. TOLA, time limit for issue of notices u/s 148 expired on 17.06.2022 i.e. 7 days from the date of reply filed by the Appellant on 09.06.2022, since the original notice u/s 148 was issued on 29.06.2021 and 7 days’ time is allowed under proviso 4 of Section 149 of the IT Act.

iii. That the assessment made in pursuance of a time barred notice is a nullity and all consequent Orders are also void-ab- initio.

4. i. That without prejudice to the Ground No. 1 to 3, on the facts of the case and in law, the Ld. CIT – A and Ld. AO have both erred in taxing the forfeiture of advance money received against sale of property, as an income, which is a capital receipt u/s 51 of the Act, as applicable to AY 2013-14.

ii. That the advance received against sale of property, under an agreement to sell, if forfeited for nonperformance by the buyer is taxable u/s 56(2)(ix) only from AY 2015-16.

iii. That the addition of Rs. 1,09,58,000/- illegally made and confirmed on wrong interpretation of Section 51 and 56(2)(ix) of the Act be deleted.

5. i. That without prejudice to the Ground No. 1 to 4, on the facts of the case and in law, the Ld. CIT – A and Ld. AO have both erred in confirming and making assessment u/s 148, after six years, when the reasons recorded did not mention any material facts required for assessment, not disclosed in the ITR and enclosed documents.

ii. That the assessment made on the basis of invalid reopening u/s 148 be annulled.

6. i. That without prejudice to Ground No. 1 to 5, on the facts of the case and in law, Ld. CIT – A and Ld. AO have both erred in confirming and making an assessment, based on notices manually issued u/s 148A(b), 148A(d) and 148 by the JAO in place of Faceless Proceedings to be carried on by FAO, as per u/s 151A r.w. notification Dt. 29-03-2022.

ii. That in the case of ADIT (INTLTaxn) Vs. Deepanjan Roy, the Hon’ble Supreme court vide order dated 16-07-2025 dismissed the SLP against the order of Telangana High Court holding that there is no reason to interfere with the High Court’s Order, holding that the issue of manual notices u/s 148A(b), 148A(d), 148 and 147 after Dt. 29-03-2022 – makes the re-assessment notices and orders invalid.

iii. That the assessment so framed without issue of valid faceless notices u/s 148 is void-ab-initio and the same be annulled.

7. That the Net Income of the Appellant be reduced by Rs. 1,09,58,000/-.”

5. We have heard the ld. AR and ld. DR and also examined the record. At the very outset, ld. AR has referred page No. 18A of the paper book filed before us containing the table for calculation of time barred notice u/s 148 of the Act. It was argued that the case is covered by the judgment of Hon’ble Supreme court of India in Union of India & Ors. vs. Rajeev Bansal (2024) 469 ITR 46. (SC). It was therefore argued that since neither AO nor the Ld. CIT(A) has considered the said aspects regarding the notice u/s 148 of the Act was barred by limitation, therefore, the appeal be allowed and the assessment order be quashed.

6. We have also heard the ld. DR who was supplied with the paper book, and after going through Page No. 18A containing the table for the calculation of time-barred notice u/s 148 of the Act, the ld. DR has submitted that the Bench may consider the submissions with respect to the applicability of the judgment of Hon’ble Supreme Court in Rajeev Bansal case (supra) in its own discretion and has prayed for restoring the file to the AO for deciding the matter afresh.

7. We have considered the rival submissions and have perused the material on record. Page no. 18A of the paper book containing the details in respect of notice dated 27.07.2022 u/s 148 of the Act being time barred is extracted as under:

8. Before us, the learned counsel for the assessee pressed legal ground, challenging the jurisdiction of the Assessing Officer to initiate reassessment proceedings as the notice u/s 148 of the Act is barred by limitation. It was submitted that in view of the judgment of the Union of India & Ors. vs. Rajeev Bansal(2024) 469 ITR 46. (SC), the re-assessment proceedings initiated under the old or un-amended provisions of section 148, read with the extensions granted under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (“TOLA”), are without authority of law.

9. It was contended that for Assessment Year 2013-14, the limitation for issuance of notice is under the amended provisions of section 148, therefore, the Assessing Officer could not have resorted to the old provisions by invoking TOLA. Admittedly, in the present case, the notice u/s 148 pursuant to section 148A(d) was issued on 27.07.2022, well beyond the permissible limitation.

10. We have heard rival submissions of the parties including the challenge to the jurisdiction of the Assessing Officer to issue notices u/s 148 of the Act beyond the limitation period. The controversy lies in a narrow compass—whether the notice issued u/s 148 on 27.07.2022 for A.Y. 2013-14 is barred by limitation. The Hon’ble Supreme Court in Union of India vs. Rajeev Bansal (supra) has conclusively interpreted the interplay between the amended provisions of sections 148 and 149, the old regime, and TOLA. Significantly, the Revenue itself conceded before the Hon’ble Supreme Court that for A.Y. 2015- 16, all notices issued on or after 01.04.2021 are liable to be dropped, as they would not fall for completion within the period prescribed under TOLA.

11. The Hon’ble Supreme Court further held that the extended ten-year limitation u/s 149(1)(b), as amended, operates prospectively, and for earlier assessment years, the test is whether the six-year period under the old regime was still alive on the date of issuance of notice. Applying the aforesaid test to the facts of the present case, it is undisputed that the six-year limitation for A.Y. 2013-14 expired on 30.06.2021. The notice u/s 148 having been issued on 27.07.2022, the same is clearly barred by limitation.

12. We also note that identical issues have been examined and decided by Co-ordinate Bench of the Delhi Tribunal in the case of Sh. Deepak Agarwal vs. DCIT order dated 23.07.2025 passed in ITA No. 2307/Del/2025 wherein notices issued on 28.07.2022 for A.Y. 2015-16 was quashed as time-barred, following Rajeev Bansal (supra). For ready reference, findings of the Co-ordinate Bench of the Tribunal is reproduced as under:

“2. The Ld. Counsel for the assessee, at the outset, submits that in the case of the assessee a notice u/s 148 was issued on 30.07.2022 under new law which is barred by limitation since the provisions of taxation and other laws (relaxation and amendment of certain provisions) (TOLA) are not applicable for the AY 2015-16 as held by the Hon’ble Jurisdictional High Court in the case of Make My Trip (India) Pvt. Ltd. in WP(c) 2558/2023 dated 24.03.2025.

3. Ld. Counsel further submits that recently the Hon’ble Supreme Court in the cases of Deepak Steels & Power Ltd. Vs. CBDT and Others in Civil Appeal No.5177/2025 dated 02.04.2025 noted that the Revenue made a concession before the Hon’ble Supreme Court while disposing off the appeal in the case of Union of India & Others Vs. Rajiv Bansal (2024) (SCC) Online SC 2693, that for the AY 2015-16 notices issued on or after 01.04.2021 will have to be dropped as they would not fall for completion during the period prescribed under the TOLA. Ld. Counsel also submitted that similar view has been taken by the Hon’ble Supreme Court in the case of ACIT Vs. Nehal Rashid Shah in SLP (Civil) Diary No. (S) 57209/2024 dated 4.4.2025. Therefore, it is submitted that in the light of these decisions the reassessment framed for the AY 2015-16 based on the notice issued u/s 148 of the Act dated 30.07.2022, is time barred and bad in law.

4. Ld. DR supported the orders of the Assessing Officer.

5. Heard rival contentions, perused the orders of the authorities below. Admittedly in this case notice u/s 148 was issued on 30.07.2022 under new law based on which the reassessment for the AY 2015-16 was framed by the AO on 31.5.2023. The reassessment was challenged before the Ld. CIT(Appeals) and the Ld. CIT(Appeals) dismissed the appeal for non-prosecution by the assessee.

6. In the case of Make My Trip (India) Pvt. Ltd. Vs. DCIT (supra) the Jurisdictional High Court considered whether reassessment completed for the AY 2015-16 based on a notice issued u/s 148 and the viz a viz the applicability of the provisions of TOLA and based on the concession of the Revenue that for the AY 2015-16 all the notices issued on or after 1.4.2021 will have to be dropped as they will not fall for completion during the period prescribed under the TOLA, held that the notice issued under 148 was beyond the period of limitation and consequently the same is liable to be set aside.

7. Further the Hon’ble Supreme Court in the case of Deepak Steel & Power Ltd. Vs. CBDT & Others (supra) quashed the notices issued u/s 148 observing as under: –

“2. These appeals arise from ‘the order passed by the High Court of Orissa at Cuttack in Writ Petition (C) Nos. 2446 of 2823, 2543 of 2023 dated 1.2.2023 and 2544 of 2023 dated 10.02.2023 respectively by which the High Court disposed of the original writ petitions in the following terms:-

“1. The memo of appearance filed by Mr. S. S. Mohapatra, learned Senior Standing Counsel for Revenue Department on behalf of Opposite Parties is taken on record.

2. In view of the order passed by this Court on 1s t December, 2022 in a batch of writ petitions of which W.P. (C) Mo.9191 of 2022 (Kailash Kedia v. Income Tax Officer) was a lead matter and the subsequent order dated 10th January, 2023 passed in W.P.(C) Mo.36314 of 2022 (Shiv Mettalicks Pvt. Ltd., Rourkela v. Principal Commissioner of Income Tax, Sambalpur), the Court declines to entertain the present writ petition, but leaves it open to the Petitioner to raise all grounds available to the Petitioner in accordance with law including the grounds urged in the present petition at the appropriate stage as explained by the Court in those orders.

3. The writ petition is disposed of in the above terms.”

3. We heard Mr. Saswat Kumar Acharya, the learned counsel appearing for the appellants (assessee) and Mr. Chandrashekhar, the learned counsel appearing for the revenue.

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 and Ors. v. Rajeev Bansal, reported in 2024 SCC OnLine SC 2693, 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.

6. In view of the aforesaid, in such circumstances referred to above the original writ petition nos.2446 of 2023, 2543 of 2023 and 2544 of 2023 respectively filed before the High Court of Orissa at Cuttack stands allowed.

7. The impugned notice therein stands quashed and set aside.”

8. Above decisions squarely applies to the fact situation of the assessee and therefore respectfully following the above decisions, we hold that the notices issued u/s 148 on or after 1.4.2021 for reopening the assessment for the AY 2015-16 are barred by limitation and consequently the reassessment made based on such notices are bad in law and void ab initio. Thus, the impugned reassessment order having been made pursuant to notice issued u/s 148 dated 30.07.2022 the re-assessment order is hereby held to be bad in law and the same is quashed. Ground Nos. B, C & D of grounds of appeal of the assessee are allowed.”

13. Considering the above facts and circumstances and also applying the ratio laid down by the Hon’ble Supreme Court in the case of Rajeev Bansal (supra) and respectfully following the co-ordinate Bench decision in Sh. Deepak Agarwal (supra), we are of the opinion that the notice issued u/s 148 of the Act dated 27.07.2022 is barred by limitation as having been issued beyond the period specified u/s 149 of the Act. Consequently, the re-assessment proceedings initiated thereupon is hereby quashed.

14. In the result, the appeal of the assessee is allowed. Order Pronounced in the Open Court on 09/09/2026.