Case Law Details
Pradeep Shyamlal Sayani Vs ITO (ITAT Mumbai)
The ITAT Mumbai allowed the assessee’s appeal and quashed reassessment proceedings after holding that a notice under Section 148 cannot be treated as issued within limitation merely because it bore an earlier date when it was actually signed and served later.
The assessee had filed a return declaring total income of ₹5,82,400 for AY 2017-18. The case was reopened based on information that deposits of ₹1.46 crore had been made in eight bank accounts maintained with ICICI Bank and Syndicate Bank. The Assessing Officer (AO) issued a notice under Section 148 and later completed reassessment under Sections 147 read with 144B, making an addition of ₹52.66 lakh towards unexplained bank deposits.
Before the CIT(A), the assessee challenged both the jurisdiction of the AO and the merits of the addition. The assessee specifically contended that the notice under Section 148, though dated 31.03.2021, was actually signed and served only on 07.04.2021 and was therefore barred by limitation. The CIT(A) rejected the contention and upheld the reassessment.
Before the Tribunal, the assessee relied on e-proceeding records showing service of notice on 07.04.2021. Reliance was also placed on judgments of the Telangana High Court in Kalyan Chillara and Anantha Reddy Pannala, as well as the Gujarat High Court decision in Saumil Avinash Baheti, where notices served after expiry of limitation were held invalid.
The Revenue argued that the notice had been generated on 31.03.2021 within time and delay in online processing resulted in later service.
The Tribunal observed that the notice under Section 148 was admittedly signed and served on 07.04.2021, beyond 31.03.2021. It further noted that amended reassessment provisions, including Section 148A, came into effect from 01.04.2021. Therefore, reassessment proceedings initiated after that date ought to have followed the amended procedure.
Relying on the cited High Court decisions and verification of e-proceeding records, the Tribunal held that the notice issued under Section 148 was barred by limitation and without jurisdiction. Consequently, the reassessment framed under Sections 147 read with 144B was declared void ab initio. The Tribunal set aside the appellate order and quashed the assessment order, while leaving the merits of the addition open.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The instant appeal of the assessee filed against the order of the NFAC, Delhi [for brevity the “Ld. CIT(A)”], order passed under section 250 of the Income Tax Act 1961 (for brevity ‘the Act’) for Assessment Year 2017-18, date of order 26.09.2025. The impugned order emanated from the order of the National Faceless Assessment Centre, Delhi (for brevity the ‘Ld. AO’) order passed under section 147 r.w.s. 144B of the Act date of order 25.03.2022.
2. The brief facts of the case are that the assessee is an individual capacity filed the return by declaring total income Rs.5,82,400/-. The assessee’s case was reopened on basis of the information available with department that assessee has deposited an amount of Rs.1,46,82,305/- in his eight bank accounts maintained with ICICI Bank and Syndicate Bank during the impugned assessment year. On verification of the return of income it was found that the banks are not reflected correctly in the ROI of FY 2016-17. Accordingly, the Ld. AO proceeded for reassessment and issued the notice u/sec. 148 of the Act. Finally, the assessment was framed and the addition was confirmed amount to Rs.52,66,355/- related to unexplained deposit in the bank account. Being aggrieved assessee filed an appeal before the Ld. CIT(A) by challenging the jurisdiction of the Ld. AO related to the notice issued u/sec. 148 is time barred and also challenged the merit of the case. But the Ld. CIT(A) rejected the appeal of the assessee in both legal ground & on merit. Being aggrieved assessee filed an appeal before us.
3. The Ld. AR argued and filed a paper book containing pages 1 to 37 which has been placed on record. The Ld. AR contended that the notice issued u/sec. 148 by the Ld. AO dated 31.03.2021 was signed and served on 07.04.2021 to the assessee. The Ld. AR annexed the notice in APB page 1 which is reproduced as below:
4. The Ld. AR further contended that on view of notice of E-proceeding whichis filed in APB page 2 to 3 clearly depicted the service of notice u/sec. 148 on 07.04.2021. As per the Ld. AR the service of the notice is time barred. The Ld. AR stated that the objection was filed by the assessee before the Ld. AO related to delay in service of the notice but the Ld. AO has rejected the same by a order dated 28/01/2022. The assessee has raised this legal ground before the Ld. CIT(A) but the Ld. CIT(A) had rejected the same on the ground that the notice dated 31.03.2021 is itself a valid whether the service is beyond the time limitation.
5. The Ld. AR respectfully relied on the order of Hon’ble High Court of Telangana in the case of Kalyan Chillara vs DCIT reported in (2024) 167 com 500 (Telangana). In the case of Anantha Reddy Pannala vs DCIT reported in [2024] 167 taxmann.com 500 (Telangana) & the SLP was duly dismissed by the Hon’ble Supreme Court reported in (2025) 175 taxmann.com 688 (SC) the relevant observations is held as below:
“LP dismissed against order of High Court that where last date for service of notice and initiating proceedings under section 148 under un-amended provisions was coming to an end on 31-32021 but notices had been issued from office of Department either on 1-4-2021 or on subsequent dates, impugned notices were barred by limitation under sections 148 and 149.”
6. The Ld. AR respectfully relied on the order of the Hon’ble High Court of Gujarat at Ahmedabad in the case of Saumil Avinash Baheti vs ITO in R/Special Civil Application No.3804 of 2022 date of order 17.06.2025. the relevant para 4 to 7 is reproduced as below:
“4. The short question which arises in this petition is as to whether the notice dated 31.03.2021 issued under Sec.148 of the Income-Tax Act, 1961 (for short “the Act”), for the Assessment Year 2017-18 to reassess the income was actually issued on 31.03.2021 or not.
5. It is the case of the petitioner that the impugned notice was served through E-mail on 01.04.2021, and therefore, the notice dated 31.03.2021 would be an invalid notice.
5.1 The contention of the petitioner is not controverted the by respondent in the affidavit-in-reply but on the contrary, it is confirmed as stated in para 7 as under:
“7 With reference to paragraph 3, the assessee has submitted that the impugned notice dated 31.03.2021 for A.Y 2017-18 for re-opening the assessment under section 148 of the Act is illegal, without jurisdiction quashed. and is required to be In this case, notice under section 148 of the Act for A.Y.2017-18 was issued to the assessee on 31/03/2021 having DIN and Notice No. ITBATBA/AST/S/148/2020-21/1032037041 (1) and served through e-mail on 01.04.2021. Thereafter, in compliance to the judgement of Hon’ble Supreme Court dated 04.05.2022 in the Civil Appeal No.3005/2002 in case of Union of India and others vs. Shri Ashish Agarwal and others and CBDT Instruction No. 01/2022 dated 11.05.2022 issued vide F.No.279/Misc./M-51/2022-ITJ, the above mentioned notice issued under Section 148 of the Act dated 31/03/2021 would be treated as notice under Section 148A(b) of the Act and re-assessment proceedings initiated issuing fresh notice u/s 148 of the Act after following due procedure Α.Υ.2017-18.”
6. On a specific query raised by the Court, learned Senior Standing Counsel Ms.Mehta appearing for the respondent submitted that no notice under Sec. 148A(b) of the Act was issued as per the directions of the Hon’ble Apex Court in the case of Union of India and others vs. Shri Ashish Agarwal and others., reported in 444 ITR pg 1 SC.
7. In view of the above fact, admittedly, the notice dated 31.03.2021 is a time barred notice and hence the same would be invalid and without jurisdiction and only on this ground, the impugned notice is hereby quashed and set aside. Rule is made absolute to the aforesaid extent with no orders as to costs.”
7. The Ld. DR argued contended that the notice dated 31.03.2021 is clearly
shows that the Ld. AO had generated the notice within time. But due to the delay in processing online the notice was served on 07.04.2021. The Ld. DR stands in favor of the orders of revenue authorities. The Ld. DR has drawn our attention in impugned appellate order para no.6.2.1 which is reproduced as below:
“6.2.1. The AO is not required to carry out any investigation before reopening as held by Hon’ble Supreme Court in the case of Raymond Woollen Mills Ltd v ITO 236 ITR 34(SC). Hon’ble Apex Court held that in determining whether commencement of reassessment proceedings was valid, it has only to be seen whether there was prima facie some material on the basis of which the department could reopen the case. The sufficiency or correctness of the material is not a thing to be considered at the stage of reopening. In view of this, the action of the AO to re-open the case by issuing of notice u/s.148 is held to be valid. The first ground of appeal is dismissed.”
8. We heard the rival submissions and considered the documents available on record. The assessee is a regular filer of income tax returns. The reassessment proceedings were initiated in relation to credits/deposits appearing in various bank accounts of the assessee. The notice issued u/sec. 148 of the Act was dated 31.03.2021; however, the same was admittedly signed and served upon the assessee only on 07.04.2021. Thus, there is an admitted factual position that both the signing and service of the notice were beyond 31.03.2021. The assessee raised specific objections before the Ld. AO challenging the validity of the reassessment proceedings. However, the Ld. AO rejected the objections by passing a speaking order dated 28.01.2022, which is placed at APB pages 4 and 5. The issue was further agitated before the Ld. CIT(A), but the Ld. CIT(A) also rejected the contention of the assessee. It is pertinent to mention that with effect from 01.04.2021, the amended provisions governing reassessment proceedings, including section 148A of the Act, were introduced by the Finance Act, 2021. Since the impugned notice was admittedly signed and issued only on 07.04.2021, the reassessment proceedings ought to have been initiated in accordance with the amended provisions of section 148A of the Act and not under the erstwhile regime. We respectfully rely upon the judgments of the Hon’ble Telangana High Court in the cases of Kalyan Chillara (supra) and Anantha Reddy Pannala, (supra) as well as the judgment of the Hon’ble Gujarat High Court in the case of Saumil Avinash Baheti (supra). Upon verification of the e-proceeding records, it is clearly evident that the notice u/sec. 148 was served upon the assessee only on 07.04.2021. Accordingly, we hold that the notice issued by the Ld. AO is without jurisdiction and barred by limitation. Consequently, the reassessment framed u/sec. 147 r.w.s. 144B of the Act is void ab initio. We, therefore, set aside the impugned appellate order and quash the assessment order. Since we have adjudicated the legal issue relating to the jurisdiction of the Ld. AO in favour of the assessee, the grounds raised on merits and other issues are rendered academic and are kept open.
9. In the result, the appeal of the assessee bearing ITA No.9317/Mum/2025 is allowed.
Order pronounced in the open court on 13th day of May 2026.
Author Bio
