MRS NAYANA ASHOK SHAH,MUMBAI V. INCOME TAX OFFICER-20(2)(1), MUMBAI

ITA 6247/MUM/2024

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The case involves Mrs. Nayna Ashok Shah, who appealed against the order of the National Faceless Appeal Centre (NFAC), which confirmed the addition of Rs. 93,19,238 under section 69 of the Income Tax Act, 1961, for the assessment year 2017-18. The primary contention was regarding the validity of the notice issued under section 148 of the new regime, which was claimed to be beyond the period of limitation as prescribed under the Income Tax Act read with the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA). The Tribunal admitted additional grounds raised by the assessee, challenging the notice's validity based on the Supreme Court's decision in Union of India vs. Rajeev Bansal. The Tribunal found that the notice was indeed issued beyond the permissible time limit, leading to the quashing of the reassessment order.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 360840 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2017-2018
• Other Referred Cases: Union Bank of India vs. Rajiv Bansal, National Thermal Power Company Ltd. Vs. CIT, Jute corporation of India Ltd vs.CIT, UOI V/s Ashish Agarwal
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LEYAQAT ALI AAFAQUI
• Assessee Lawyers: VARSHANANWANI
• Keywords: Period of limitation
• Section: 147; 148

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, MUMBAI BEFORE SMT. BEENA PILLAI (JUDICIAL MEMBER) AND SHRI OMKARESHWAR CHIDARA (ACCOUNTANT MEMBER) I.T.A. No. 6247/Mum/2024 Assessment Year: 2017-18 Mrs. Nayna Ashok Shah 15/2, Agarwal Nagar, Dr. Ambedkar Road, Matunga Central, Mumbai-400019 PAN:ASWPS4651B Vs. Income Tax Officer- 20(2)(1) Piramal Chambers, Lal Baug, Mumbai-400012 (Appellant) (Respondent) Appellant by Ms. Varsha Nanwani Respondent by Shri Leyaqat Ali Aafaqui, SR. A.R. Date of Hearing 05.05.2025 Date of Pronouncement 21.05.2025 ORDER Per: Smt. Beena Pillai, J.M.: The present appeal filed by the assessee arises out of order dated 30/09/2024 passed by National Faceless Appeal Centre (NFAC), Delhi for assessment year 2017-18 on following grounds of appeal : 2 ITA No.6247/Mum/2024; A.Y. 2017-18 Mrs. Nayna Ashok Shah “1. The National Faceless Appeal Centre has erred in law, facts and circumstances of the case by confirming the addition of 93,19,238/- u/s 69 of the Income Tax Act, 1961. 2. The National Faceless Appeal Centre has erred in law, facts and circumstances of the case by confirming the addition of Rs. 93,19,238/- on the ground that the loan given to Jeaneration Clothing Private Limited is Rs. 93,19,238/-inspite of the fact that the loan given to Jeaneration Clothing Private Limited during the year under consideration is Rs. 63,00,000/- only. 3. The National Faceless Appeal Centre has erred in law, facts and circumstances of the case by confirming the addition of Rs. 93,19,238/- u/s 69 of the Act inspite of the fact that the Appellant has borrowed the money through the bank and name of the bank - DCB is clearly mentioned. 4. The National Faceless Appeal Centre has erred in law, facts and circumstances of the case by confirming the addition of Rs. 93,19,238/- u/s 69 of the Act inspite of the fact that the details of loan taken from the parties were submitted during the course of Assessment Proceedings to explain the source of the loan given to Jeaneration Clothing Private Limited. 5. Your Appellant craves leave to add to, alter, amend, delete and/or modify the above grounds of appeal on or before the final date of hearing.” 2. The Ld.AR at the outset submitted that, the assessee has raised additional grounds challenging the validity of notice issued u/s. 148 of the new regime being beyond the period of limitation as prescribed under the Income Tax Act read with TOLA based on the decision of Hon’ble Supreme Court in case of Union Bank of India vs. Rajiv Bansal reported in (2024) 167 taxmann. com 70. The additional grounds raised by assessee are as under : “9. The National Faceless Appeal Centre has erred in law, facts and circumstances of the case by confirming the addition of Rs. 93,19,238/- u/s 69A of the Income Tax Act on the ground that the notice issued u/s 148 of the new regime was not within the surviving time limit as prescribed under the Income Tax Act read with TOLA as explained in 3 ITA No.6247/Mum/2024; A.Y. 2017-18 Mrs. Nayna Ashok Shah Para 111 of the judgement of the Hon'ble Supreme Court in the case of Union of India v. Rajeev Bansal [2024] 167 taxmann.com 70 (SC). 10. The National Faceless Appeal Centre has erred in law, facts and circumstances of the case by confirming the addition of Rs. 93,19,238/- u/s 69A of the Income Tax Act on the ground that the notice issued u/s 148 of the new regime was not issued after obtaining the approval from the appropriate authorities specified u/s 151 of the Income Tax Act, 1961 and as prescribed in Para 75 of the judgement of the Hon'ble Supreme Court in the case of Union of India v. Rajeev Bansal [2024] 167 taxmann.com 70 (SC).” 2.1 The Ld.AR submitted that, the adjudicating these issues do not require consideration of any new facts. 2.2 On the contrary, the Ld.DR though could not object the submissions of the assessee did not support the admission of the additional ground. We have perused the submissions advance by both sides in the light of record placed before us. 3. We note that, the legal issues raised by the assessee in the additional ground is challenging validity of notice issued u/s. 148 of the Act of the new regime is issued beyond the period of limitation and deserves to be quashed. It is noted that, this issue alleged by the assessee and do not require any investigation of new facts. Respectfully following the decision of Hon’ble Supreme Court in case of National Thermal Power Company Ltd. Vs. CIT reported in (1998) 229 ITR 383 and Jute corporation of India Ltd vs.CIT reported in 167 ITR 688, we admit the additional grounds raised by the assessee. Accordingly application seeking admission of additional ground raised by the assessee stands allowed. 4 ITA No.6247/Mum/2024; A.Y. 2017-18 Mrs. Nayna Ashok Shah As legal issue goes to the root cause of the case it is necessary to consider the additional grounds first. Brief facts of the case leading to the legal issues are as under: 4. In the instant case, the Ld.AO received information from the office of the ITO-6 (3)(3), Mumbai vide letter No.ITO- 6(3)(3)/Jeaneration /info/2019-20 dated 20.09.2019, gathered during the course of scrutiny proceeding for AY 2017-18, in the case of Jeaneration Clothing P. Ltd. It was noted by the Ld.AO, that the assessee, during the FY. 2016-17, provided Rs.93,19,238/- as Unsecured Loan to M/s. Jeaneration Clothing P. Ltd. As the assessee filed the return of income on 30.3.2018 declaring income of Rs.6,54,800/-, the above information needed verification in order to find the sources of unsecured loan of Rs.93,19,238/- given to M/s. Jeaneration Clothing P. Ltd. These based on the information received by the ITO-6(3)(3), Mumbai, notice under un-amended section 148 of the Act was issued on 10/6/2021 for AY 2017-18 calling upon the assessee to file its return of income. 4.1 It is submitted that, pursuant to the decision of Hon’ble Supreme Court in case of UOI V/s Ashish Agarwal reported in (2022) 138 taxmann.com 64, notice dated 10/06/2021 u/s.148 of the old regime; was deemed to the notice issued u/s.148 under the new regime. The Ld.AR submitted that, subsequently notice u/s. 148A(b) was issued on 24/05/2022 granting 14 days time to the assessee to file its response. Subsequently, order u/s. 148A(d) was passed on 20/07/2022, and after taking approval from the Pr.Commissioner of Income Tax - 20 Mumbai notice u/s.148 was issued on 20/07/2022. 5 ITA No.6247/Mum/2024; A.Y. 2017-18 Mrs. Nayna Ashok Shah 4.2 The Ld.AR submitted that, the notice issued u/s.148 dated 20/07/22 of the new regime is beyond the period of limitation for the year under consideration. She placed reliance on following observation of the decision of Hon’ble Supreme Court in case of UOI vs. Rajeev Bansal reported in (2024) 167 taxmann.com 70, in support of the contention: “19. Mr. N Venkataraman, learned Additional Solicitor General of India, made the following submissions on behalf of the Revenue: a. Parliament enacted TOLA as a free-standing legislation to provide relief and relaxation to both the assesses and the Revenue during the time of COVID- 19. TOLA seeks to relax actions and proceedings that could not be completed or complied with within the original time limits specified under the Income-tax Act; b. Section 149 of the new regime provides three crucial benefits to the assesses: (i) the four-year time limit for all situations has been reduced to three years; (ii) the first proviso to Section 149 ensures that re-assessment for previous assessment years cannot be undertaken beyond six years; and (iii) the monetary threshold of Rupees fifty lakhs will apply to the re assessment for previous assessment years; c. The relaxations provided under section 3(1) of TOLA apply \"notwithstanding anything contained in the specified Act.\" Section 3(1), therefore, overrides the time limits for issuing a notice under section 148 read with Section 149 of the Income-tax Act; d. TOLA does not extend the life of the old regime. It merely provides a relaxation for the completion or compliance of actions following the procedure laid down under the new regime; e. The Finance Act 2021 substituted the old regime for re- assessment with a new regime. The first proviso to Section 149 does not expressly bar the application of TOLA. Section 3 of TOLA applies to the entire Income-tax Act, including Sections 149 and 151 of the new regime. Once the first proviso to Section 149(1)(b) is read with TOLA, then all the notices issued between 1 April 2021 and 30 June 2021 pertaining to assessment years 2013-2014, 2014-2015, 2015- 2016, 2016-2017, and 2017-2018 will be within the period of limitation as explained in the tabulation below: Assessment Year Within 3 years Expiry of Limitation read with TOLA for (2) Within six Years Expiry of Limitation read with TOLA for (4) (1) (2) (3) (4) (5) 2013-2014 31-3-2017 TOLA not applicable 31-3-2020 30-6-2021 2014-2015 31-3-2018 TOLA not 31-3-2021 30-6-2021 6 ITA No.6247/Mum/2024; A.Y. 2017-18 Mrs. Nayna Ashok Shah applicable 2015-2016 31-3-2019 TOLA not applicable 31-3-2022 TOLA not applicable 2016-2017 31-3-2020 30-6-2021 31-3-2023 TOLA not applicable 2017-2018 31-3-2021 30-6-2021 31-3-2024 TOLA not applicable f. The Revenue concedes that for the assessment year 2015-16, all notices issued on or after 1 April 2021 will have to be dropped as they will not fall for completion during the period prescribed under TOLA; g. Section 2 of TOLA defines \"specified Act\" to mean and include the Income-tax Act. The new regime, which came into effect on 1 April 2021, is now part of the Income-tax Act. Therefore, TOLA continues to apply to the Income T a x Act even after 1 April 2021; and h. Ashish Agarwal (supra) treated Section 148 notices issued by the Revenue between 1 April 2021 and 30 June 2021 as show-cause notices in terms of Section 148A(b). Thereafter, the Revenue issued notices under section 148 of the new regime between July and August 2022. Invalidation of the Section 148 notices issued under the new regime on the ground that they were issued beyond the time limit specified under the Income-tax Act read with TOLA will completely frustrate the judicial exercise undertaken by this Court in Ashish Agarwal (supra).” 4.3 Ld.AR submitted that, for A.Y. 2017-18, TOLA being not applicable the notice u/s. 148 under new provisions should have been issued on or before 30/06/2021 being the surviving period granted by Hon’ble Supreme Court by virtue of decision laid down in the case of UOI vs. Ashish Agarwal (supra). She also referred to following paragraphs of the said decision : “68. After 1 April 2021, the Income-tax Act has to be read along with the substituted provisions. The substituted provisions apply retrospectively for past assessment years as well. On 1 April 2021, TOLA was still in existence, and the Revenue could not have ignored the application of TOLA and its notifications. Therefore, for issuing a reassessment notice under section 148 after 1 April 2021, the Revenue would still have to look at: (i) the time limit specified under section. 149 of the new regime; and (ii) the time limit for issuance of notice as extended by TOLA and. its notifications. The Revenue cannot extend the operation of the old law under TOLA, but it can certainly benefit from the extended time limit for completion of actions falling for. completion between 20 March 2020 and 31 March 2021. 7 ITA No.6247/Mum/2024; A.Y. 2017-18 Mrs. Nayna Ashok Shah 69. For instance, Section 149(1)(a) of the new regime specified the time limit of three years from the end of the relevant assessment year for reopening of the assessment. For assessment year 2017-2018, the three year period expired on 31 March 2021. The expiry of time fell within the time period contemplated by Section 3 of TOLA read with its notifications. Resultantly, the Revenue had time until 30 June 2021 to issue a reassessment notice for assessment year 2017-2018 under section 149(1)(a). This harmonious reading gives effect to the legislative intention of both the Income-tax Act and TOLA. Moreover, Sections 147 to 151 are machinery provisions. Therefore, they must be given an interpretation that is consistent with the object and purpose of the Income-tax Act.” 4.4 On the contrary the Ld.DR relied on the orders passed by authorities below. We have perused the submissions advance by both sides in the light of record placed before us. 5. Admittedly, notice under old provision of the Section 148 was issued to the assessee on 20/06/2022. As per the table in the decision Hon’ble Supreme Court in case of UOI vs. Ashish Agarwal (supra) reproduced here in above, 3 years expired on 31/03/2021. By virtue of ratio laid down by Hon’ble Supreme Court in case of UOI vs. Ashish Agarwal, notices issued between 01/04/2021 and 30/06/2021 was deemed to be issued as on 31/03/2021 and thus extended period to complete the procedure as per the new provisions of Section 148A was available only till 30/06/2021 for A.Y.2017-18. Thus in the present facts of the case, the revenue only had 20 days to complete the entire procedure u/s.149(1) of the new regime and to issue notice u/s.148 in the new regime. 5.1 However the procedure was completed u/s.148A and the notice u/s. 148 of the new regime was issued on 20/07/2022. The notice thus issued is beyond the period of limitation and 8 ITA No.6247/Mum/2024; A.Y. 2017-18 Mrs. Nayna Ashok Shah deserves to be quashed. As notice u/s. 148 is quashed the reassessment order passed dose not survive and will be treated as void ab initio accordingly the assessee succeeds on the legal issue raised. Accordingly additional Ground No.9 raised by the assessee stands allowed. 6. As we have quashed the entire reassessment proceeding to be bad in law, the legal issue raised by the assessee in Additional Ground No.10 is not adjudicated. In the result the appeal filed by the assessee stands allowed. Order pronounced in the open court on 21/05/2025 SD/- SD/- (OMKARESHWAR CHIDARA) (BEENA PILLAI) Accountant Member Judicial Member Mumbai: Dated: 21/05/2025 Poonam Mirashi, Stenographer Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By order (Asstt. Registrar) ITAT, Mumbai "