Vallabhbhai Bhagvanjibhai Kathiriya Vs ITO (ITAT Rajkot)
Foundation Removed, Structure Falls: Assessment & Penalties Nullified as 148 Notice Held Invalid- Rajkot ITAT Quashes Reopening for AY 2015-16: TOLA Cannot Extend Time for 148 Notice
These ten appeals by Assessee were heard together, involving quantum additions u/s 69A, profit-rate estimations, & penalties u/s 271A, 271(1)(c) & 271F arising from reassessment proceedings of multiple years. Lead case was AY 2015-16 (ITA 515/RJT/2025) in which Assessee, a non-filer trading in brass items on commission basis, had cash credits of Rs.1.58 crore in ICICI Bank. AO treated entire deposits as unexplained money u/s 69A, taxed u/s115BBE, rejecting Assessee’s claim that deposits were business receipts & income should be estimated @2%.
CIT(A) accepted existence of business but could not correlate all deposits, & sustained addition of 10%.
Before Tribunal, Assessee raised a legal ground that the notice u/s148 dated 21.04.2021 for AY 2015-16 was time-barred.
Tribunal reproduced the notice & held that for AY 2015-16, notice u/s148 had to be issued on or before 31.03.2019. After 01.04.2021, TOLA extension was not available. Tribunal relied on Gujarat High Court judgment in Gordhanbhai Devjibhai Kapadia & the Supreme Court rulings in Rajeev Bansal & Deepak Steel & Power Ltd, wherein Revenue conceded that all notices for AY 2015-16 issued on or after 01.04.2021 must be dropped. Applying this binding position, Tribunal held that the notice dated 21.04.2021 was invalid & quashed the reassessment order dated 27.05.2023 as void ab initio. Once the foundation itself failed, all additions on merits became infructuous.
