Mohammed Yousuf Vs ITO (ITAT Bangalore)
In , the ITAT Bangalore quashed the entire reassessment proceedings, holding that the foundation itself was legally defective due to violation of Sec 148A(b) and breach of limitation u/s 149.
The Tribunal noted that the notice issued u/s 148A(b) granted only 5 days for response, whereas the statute mandates a minimum 7 days, making the notice invalid and contrary to law. This procedural lapse was held to be fatal, as it strikes at the root of jurisdiction.
Further, the notice u/s 148 was issued on 04.04.2022 for AY 2015-16, whereas the limitation expired on 31.03.2022. Relying on the Supreme Court ruling in Rajeev Bansal, the Tribunal held that the notice was time-barred, and therefore, the entire reassessment proceedings were void ab initio.
The Tribunal emphasized that when the initiation itself is bad in law, all subsequent proceedings automatically collapse.
Even on merits, it was observed that the property was jointly owned by the assessee and his wife, but the AO incorrectly taxed the entire investment in the hands of the assessee, which was unsustainable.
Accordingly, the Tribunal allowed the appeal, holding that the reassessment fails both on legal grounds and merits, and the additions could not survive.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
This is an appeal filed by the assessee challenging the order of the NFAC, Delhi dated 18/07/2025 in respect of the A.Y. 2015-16 and raised the following grounds:
“Grounds of Appeal No. 01 : The learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre has erred on law and facts by confirming the assessment order passed u/s. 147 r.w.s. 144B of the Income Tax Act, 1961 dated 26/03/2024 without considering that the assessment order is bad in law and illegal on following issues : A. The notice issued u/s. 148 of the Income Tax Act, 1961 on 04/04/2022 by the Income Tax Officer, Ward-6(3)(1), Bengaluru is bad in law for want of requisite jurisdiction, B. The Notice u/s. 148 of the Income Tax Act, 1961 issued on 04/04/2022 is barred by limitation of time and C. The prescribed procedure laid down u/s. 148A of the Income Tax Act, 1961 has not been followed. Thus, it is prayed to set-aside the assessment order being the same as void-ab-initio.
Grounds of Appeal No. 02 : The learned Commissioner of Income Tax (Appeals) has erred on law and facts by confirming the additions of Rs. 46,20,000/- made in the assessment order passed u/s. 147 r.w.s. 144B of the Income Tax Act, 1961 dated 26/03/2024 and the same is liable to deleted.
Grounds of Appeal No. 03 : The learned Commissioner of Income Tax (Appeals) has erred on law and facts by confirming the additions of Rs. 12,33,000/- made u/s. 56(2)(vii) of the Income Tax Act, 1961 in the assessment order passed u/s. 147 r.w.s. 144B of the Income Tax Act, 1961 dated 26/03/2024 and the same is liable to be deleted.
Grounds of Appeal No. 04 : The appellant seeks liberty to modify/alter/amend or withdraw any grounds of appeal or raise any grounds of appeal during appeal proceedings.”
2. The brief facts of the case are that the assessee is an individual and not filed his return of income. Thereafter the case of the assessee was taken up for reopening and to that effect, notice u/s. 148A(b) was issued and subsequently, the order u/s. 148A(d) was issued. The AO had issued a notice u/s. 148. The assessee filed his return of income in response to the notice issued u/s. 148. The AO got information that the assessee had not disclosed the purchases of immovable property as well as the commission received by him. The assessee after filing his return of income, had not responded to any of the notices including the notice sent through the speed post. Since the assessee had not responded to any of the notices, the AO had sent a notice u/s. 133(6) to the Sub-Registrar, Ganga Nagar, Bengaluru and the Sub-Registrar also furnished the sale deed copy from which the AO had confirmed that the assessee had purchased an immovable property for which the source was not explained by the assessee. The AO further observed that in the sale deed, the consideration was shown as Rs. 46,20,000/- whereas the stamp value of the property was about Rs. 58,53,000/-. Therefore the AO had treated the said investment made by the assessee as unexplained investment u/s. 69 of the Act. The AO had also treated the difference value as income from other sources and made an addition to that effect. The assessee challenged the said order before the Ld.CIT(A). Unfortunately, the assessee had not responded to the notices issued by the Ld.CIT(A) and therefore the Ld.CIT(A) had decided the appeal based on the records available with him and finally confirmed the addition made by the AO.
