Sandip Sadanand Narkar Vs ITO (ITAT Mumbai)
The Mumbai ITAT quashed the reassessment proceedings for AY 2015–16, holding that the notice issued u/s 148 after 01.04.2021 was time-barred under the amended Section 149, and hence the entire addition on alleged penny stock transactions was invalid.
The AO had reopened the case based on penny stock information (Kabra Drugs Ltd.) and treated the entire sale proceeds of ₹49.47 lakh as unexplained u/s 68, alleging accommodation entries. The CIT(A) upheld both reopening and addition.
However, the ITAT held:
- As per the Supreme Court ruling in Rajeev Bansal, post 01.04.2021 reassessment must satisfy “surviving limitation” under new Section 149.
- For AY 2015–16:
- Normal limitation (3 years) expired on 31.03.2019,
- Extended limitation applies only if escaped income exceeds ₹50 lakh.
- In this case, addition was ₹49.47 lakh (< ₹50 lakh) – extended limitation not available.
The Tribunal also noted:
- Even Revenue conceded before SC that notices for AY 2015–16 issued after 01.04.2021 must be dropped,
- Hence, notice dated 29.07.2022 was clearly time-barred.
Accordingly:
- Entire reassessment held void ab initio,
- Addition u/s 68 on penny stock became academic and not examined on merits.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal is filed by the assessee against the order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”], under section 250 of the Income Tax Act, 1961 [hereinafter referred to as “the Act”], dated 17.12.2025, arising out of the assessment order passed by the Assessing Officer under section 143(3) read with section 147 of the Act dated 30.05.2023 for the Assessment Year 2015–16.
