Neepa Vipul Parekh Vs ITO (ITAT Mumbai)
₹6 Lakh Political Donation Reassessment Beyond Three Years Time-Barred: Mumbai ITAT Quashes Section 148 Notice
Summary: The Mumbai ITAT allowed the assessee’s appeal for A.Y. 2019-20 and quashed the reassessment proceedings arising from a notice dated 19.04.2023 issued under Section 148 of the Income-tax Act, 1961. The reopening was based more or less on information arising from a search and seizure operation dated 07.09.2022 conducted in the case of the RUPPs Group of Ahmedabad, involving registered un-recognised political parties, intermediary entities and exit providers, and the Assessing Officer ultimately made an addition of Rs.6,00,000/- representing the donation claimed under Section 80GGC. The Tribunal admitted the assessee’s legal grounds, relying upon National Thermal Power Co. Ltd. vs. CIT, (1998) 229 ITR 383 (SC), and held that the alleged escaped income of Rs.6,00,000/- was below the Rs.50,00,000/- threshold under Section 149(1)(b), while the Section 148 notice dated 19.04.2023 had been issued after expiry of three years from the end of A.Y. 2019-20. The Tribunal further held that the benefit of exclusion of the period contemplated by the proviso to Section 149 was unavailable because the information forming the basis of reopening emanated from the search conducted under Section 132 on 07.09.2022, after 01.04.2021, and therefore, in view of the first proviso to Section 148A, the procedure under Section 148A was not applicable. Consequently, the period from issuance of notice under Section 148A(b) until passing of the order under Section 148A(d) could not be excluded for extending the limitation period for issuance of the Section 148 notice. Following Amit Pahuja vs. DCIT, ITA No.868/Mum/2026, order dated 23.06.2026, and Nimish Maheshkumar Bhavsar vs. ACIT, ITA No.32/Ahd/2026, order dated 27.03.2026, the Tribunal held that the notice dated 19.04.2023 was barred by limitation and void ab initio and consequently quashed the assessment order dated 10.02.2025 passed under Section 147 read with Section 144B, without examining the donation claim on merits.
The Mumbai ITAT quashed the reassessment proceedings initiated against the assessee concerning a ₹6 lakh deduction claimed under Section 80GGC towards a political donation, holding that the notice issued under Section 148 was barred by limitation.
The reopening for AY 2019-20 was based on information obtained during a search conducted on 7 September 2022 in the case of the RUPPs Group, Ahmedabad, involving certain registered unrecognised political parties, intermediary entities and alleged exit providers. Based on this information, the AO issued a Section 148 notice on 19 April 2023 and subsequently disallowed the donation of ₹6 lakh. The CIT(A) confirmed the addition.
The Tribunal observed that the alleged escaped income was only ₹6 lakh, which was below the statutory threshold of ₹50 lakh prescribed under Section 149(1)(b). Since the notice was issued after the expiry of three years from the end of AY 2019-20, the reassessment could not be sustained.
The Tribunal further held that the Revenue could not claim exclusion of the period between the issuance of notice under Section 148A(b) and the passing of the order under Section 148A(d). Since the information originated from a search conducted after 1 April 2021, the first proviso to Section 148A made the Section 148A procedure itself inapplicable. Where that procedure was not legally applicable, the time spent undertaking it could not be excluded to extend the limitation period.
Following the decisions in Amit Pahuja v. DCIT and Nimish Maheshkumar Bhavsar v. ACIT, the Tribunal held that the Section 148 notice dated 19 April 2023 was time-barred and void ab initio. Consequently, the reassessment order passed under Sections 147 read with 144B was quashed without examining the donation claim on merits.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
