POOJA PRABHAKAR,CHENNAI V. INCOME TAX OFFICER, NON CORPORATE WARD 15(1), CHENNAI, CHENNAI

ITA 3045/CHNY/2025

AI Insights

The case involves an appeal by Pooja Prabhakar against the order of the Learned Commissioner of Income Tax (Appeals), which had dismissed her appeal in limine due to delay. The original reassessment was conducted by the National Faceless Assessment Centre under sections 147 and 144 of the Income-tax Act, 1961, based on alleged unexplained bank credits and investments. The Tribunal examined the validity of the notice issued under section 148, which was found to be time-barred as per the provisions applicable for the Assessment Year 2014-15. The Tribunal also considered the procedural compliance under section 151 of the Act for reopening the assessment beyond three years, which was not met.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 822330 (ITAT-CHENNAI)
• Duration Of Justice: 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-12-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2014-2015
• Appeal Filed On: 31-10-2025
• Other Referred Cases: Collector, Land Acquisition v. Mst. Katiji & Ors., Ram Nath Sao @ Ram Nath Sahu & Others v. Gobardhan Sao & Others, Vidya Shankar Jaiswal v. Income Tax Officer, Ward-2, Ambikapur, Union of India vs. Rajiv Bansal, Godrej Industries Ltd. v. ACIT, Tyagi Pipe Craft Pvt. Ltd. v. ITO, DCIT v. Vizag Re-Bars Private Limited, Ram Balram Buildhome Vs. ITO & Anr, Ashish Agarwal v. Union of India, National Thermal Power Co. Ltd. v. CIT, Jute Corporation of India Ltd. v. CIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARV SREENIVASAN
• Assessee Lawyers: R. VENKATA RAMAN; VISHWA PADMANABHAN
• Keywords: Condonation of delay; Set aside; Invalid notice; Reassessment proceedings; Question of law; Unexplained investment; Period of limitation; Reopening of assessment; Source of fund
• Section: 147; 148; 144

Judgement Text

" आयकर अपीलीय अधिकरण, ‘डी’ न्यायपीठ, चेन्नई IN THE INCOME TAX APPELLATE TRIBUNAL ‘D’ BENCH, CHENNAI श्री मनु क ुमार गिरर, न्याययक सदस्य एवं श्री एस. आर. रघुनाथा, लेखा सदस्य क े समक्ष BEFORE SHRI MANU KUMAR GIRI, JUDICIAL MEMBER AND SHRI S. R. RAGHUNATHA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.:3045/Chny/2025 ननिाारण वर्ा / Assessment Year: 2014-15 Pooja Prabhakar, 17 Kingston Apartments, M G Ramachandran Road Kalakshetra Colony, Chennai – 600 090. vs. ITO, Non-Corp Ward -15(1), Chennai. [PAN: BCGPP-8061-H] (अपीलाथी/Appellant) (प्रत्यथी/Respondent) अपीलाथी की ओर से/Appellant by : Mr. R. Venkataraman, CA & Mr. Vishwa Padmanabhan, CA. प्रत्यथी की ओर से/Respondent by : Shri. ARV Sreenivasan, CIT. सुनवाई की तारीख/Date of Hearing : 16.12.2025 घोर्णा की तारीख/Date of Pronouncement : 26.12.2025 आदेश /O R D E R PER S. R. RAGHUNATHA, AM : This appeal preferred by the assessee is directed against the order dated 25.08.2025 passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”). The said order emanates from the assessment framed by the National Faceless Assessment Centre (hereinafter referred to as the “AO”) u/s.147 r.w.s 144 of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), vide assessment order dated 23.05.2023, for the Assessment Year 2014-15. Printed from counselvise.com :-2-: ITA. No:3045/Chny/2025 2. The grounds of appeal raised by the assessee are as under: - 1. That the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [“Ld. CIT(A)”] has erred, both in law and on facts, in refusing to condone the delay in filing of the appeal by the appellant, and thereby failed to adjudicate the appeal on its merits. The Ld. CIT(A) ought to have appreciated that the delay, was neither deliberate nor intentional but occurred due to bona fide reasons, and thus deserved to be condoned in the interest of substantial justice. 2. Without prejudice to the above, that the Ld.CIT(A) erred in not appreciating that the assessment order dated 23.05.2023 passed by the National Faceless Assessment Centre [“Assessing Officer”] u/s.147 r.w.s 144 of the Act for the Assessment Year 2014-15 is invalid, void ab initio, and liable to be quashed as being bad in law. 3. That the Ld.CIT(A) erred in not appreciating that the reopening of the assessment is bad in law. 4. That the Ld.CIT(A) ought to have appreciated the fact that the notice u/s.148 of the Act, dated 31.07.2022 issued by the Income Tax Officer, Non Corporate Ward 15(1), Chennai [“JAO”] is in violation of the provisions of Section 151A of the Act and the faceless assessment scheme notified by the Central Government, hence the same is bad in law and consequently the impugned assessment order dated 23.05.2023 framed u/s.147 of the Act is invalid and void ab initio. 5. That the Ld.CIT(A) erred in not appreciating that the notice dated 31.07.2022 issued u/s.148 of the Act is barred by limitation. Without prejudice to the above, on merits the following grounds of appeal are raised. 6. That the Ld.CIT(A) ought to have set aside the assessment to the file of the Assessing Officer for fresh assessment in view of the assessment order framed u/s.144 of the Act. 7. That the Ld.CIT(A) failed to appreciate that the Assessing Officer erred in making an addition of Rs.1,99,00,000/- on account of unexplained money u/s.69A of the Act. 8. That the Ld.CIT(A) failed to appreciate that the Assessing Officer erred in making an addition of Rs.3,81,32,765/- on account of unexplained investment u/s.69 of the Act. 9. That the appellant craves the leave of the Hon’ble Income Tax Appellate Tribunal, Chennai Bench to add/delete/revise/adduce additional grounds in support of its contentions before or during the course of hearing of the appeal. 3. The brief facts of the case, as culled out from the records, are that the assessment in the case of the assessee for the impugned assessment year was Printed from counselvise.com :-3-: ITA. No:3045/Chny/2025 reopened on the basis of specific information received by the Department with regard to (i) credits aggregating to Rs.1,99,00,000/- appearing in the bank account of the assessee, and (ii) investment towards purchase of a residential property situated at Koramangala, Bangalore, valued at Rs.3,81,32,765/-. 4. Pursuant thereto, proceedings were initiated u/s.148A of the Act and an order u/s.148A(d) of the Act was passed by the Income-tax Officer, Non- Corporate Ward-15(1), Chennai (hereinafter referred to as the “JAO”) on 31.07.2022, followed by issuance of notice u/s.148 of the Act on the very same date. The said notice had been issued after obtaining the prior approval of the Principal Commissioner of Income-tax-3, Chennai, vide Reference No. C.No.3039/148A/Pr.CIT/2022-23 dated 30.07.2022. 5. Subsequently, notice u/s.142(1) of the Act was issued calling upon the assessee to furnish an explanation regarding the aforesaid bank credits as well as the source of funds utilized for acquisition of the said residential property. The AO observed that no details or explanations were forthcoming from the assessee in response to the statutory notices issued. In the absence of any satisfactory explanation, the AO treated the sum of Rs.1,99,00,000/- credited in the bank account during the relevant previous year as unexplained money within the meaning of section 69A of the Act. Likewise, the investment in the residential property amounting to Rs.3,81,32,765/- was treated as unexplained investment and brought to tax u/s.69 of the Act. 6. Consequently, the assessment was completed u/s.147 r.w.s 144 of the Act on 23.05.2023, determining the total income of the assessee at Rs.5,88,72,435/-, which included additions of Rs.1,99,00,000/- u/s.69A of the Act and Rs.3,81,32,765/- u/s.69 of the Act. 7. The assessee, being aggrieved by the assessment order passed by the AO, preferred an appeal before the Ld.CIT(A). The Ld.CIT(A), however, vide the impugned order dated 25.08.2025, dismissed the appeal in limine on the Printed from counselvise.com :-4-: ITA. No:3045/Chny/2025 ground that the same was filed beyond the period of limitation prescribed under the law. Being further aggrieved, the assessee has carried the matter in appeal before this Tribunal. 8. The Ld.AR, Shri R. Venkata Raman, Chartered Accountant, appearing on behalf of the assessee, drew our attention to the reasons seeking condonation of delay in preferring the appeal before the Ld.CIT(A). The Ld.AR submitted that the delay had occurred due to circumstances beyond the control of the assessee and was attributable to bona fide reasons. The Ld.AR emphasized that there was neither deliberate negligence nor any mala fide intention on the part of the assessee, and that denial of condonation would result in grave hardship and denial of justice. The Ld.AR therefore prayed that, considering the settled legal position that substantive justice should prevail over technicalities, the delay may kindly be condoned. 9. The Ld.AR further submitted that, consequent upon condonation of delay, various legal grounds raised in the memorandum of appeal which go to the root of the matter deserve to be admitted for consideration and adjudication by this Tribunal. The Ld.AR contended that such grounds are purely legal in nature, do not require fresh investigation of facts, and therefore can validly be considered at this stage in the interest of justice. 10. Per contra, the Ld.DR vehemently opposed the request for condonation of delay. 11. At the threshold, it is noticed that the appeal preferred before the Ld.CIT(A) stood delayed by 178 days beyond the time period prescribed under the Act. The Ld.CIT(A), taking note of such delay, dismissed the appeal in limine, solely on the ground of limitation, without entering into the merits of the case. 12. We have carefully examined the reasons for condonation of delay as well as the explanation tendered by the assessee in support thereof. Upon a Printed from counselvise.com :-5-: ITA. No:3045/Chny/2025 comprehensive appraisal of the facts, we find that the delay cannot be attributed either to deliberate inaction or to any lack of bona fides on the part of the assessee. The circumstances explained demonstrate that the default occurred due to reasons beyond the assessee’s control and not on account of any design, negligence, or want of diligence. In our considered view, therefore, the assessee has satisfactorily established the existence of “sufficient cause” for the delay in preferring the appeal before the first appellate authority. 13. The Hon’ble Supreme Court has, in a catena of decisions, unequivocally laid down that when an explanation regarding delay does not smack of mala fides and is otherwise reasonable, acceptance ought to be the rule and refusal an exception. A hyper-technical or pedantic approach, resulting in the dismissal of matters at the threshold, is discouraged as it may cause irreparable prejudice by foreclosing adjudication on merits. The expression “sufficient cause” occurring in limitation statutes has consistently been interpreted to receive a liberal and justice-oriented construction, so as to advance rather than defeat the cause of substantial justice. 14. In this regard, we may gainfully refer to the judgment of the Hon’ble Supreme Court in Collector, Land Acquisition v. Mst. Katiji & Ors. (167 ITR 471), wherein it was held that the Courts should adopt a liberal approach while considering applications seeking condonation of delay. The Hon’ble Court cautioned that refusal to condone delay may result in meritorious matters being thrown out at the inception itself, whereas condonation merely facilitates adjudication on merits. It was further observed that there is ordinarily no presumption of deliberate delay and that the judiciary commands respect because of its role in removing injustice rather than perpetuating it on technical grounds. The relevant portion of the said judgement is as under: - “Any appeal or any application, other than an application under any of the provisions of Order XXI of the Code of Civil Procedure, 1908, may be admitted after the prescribed period if the appellant or the applicant satisfies the court that he had sufficient cause for not preferring the appeal or making the application within such period. Printed from counselvise.com :-6-: ITA. No:3045/Chny/2025 1. Ordinarily a litigant does not stand to benefit by lodging an appeal late. 2. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this when delay is condoned the highest that can happen is that a cause would be decided on merits after hearing the parties. 3. “Every day’s delay must be explained” does not mean that a pedantic approach should be made. Why not every hour’s delay, every second’s delay? The doctrine must be applied in a rational common sense pragmatic manner. 4. When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay. 5. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact he runs a serious risk. 6. It must be grasped that judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so.” 15. Similarly, in Ram Nath Sao @ Ram Nath Sahu & Others v. Gobardhan Sao & Others (2002 AIR 1201), the Hon’ble Supreme Court reiterated that the expression “sufficient cause” occurring under Section 5 of the Limitation Act and analogous provisions must be construed liberally so as to advance substantial justice. The Court emphasized that rejection of condonation applications on trivial or fault-finding grounds should be avoided, particularly where negligence, lack of bona fides, or intentional delay cannot reasonably be attributed to the litigant. 16. Further, we note that the Hon’ble Supreme Court in Vidya Shankar Jaiswal v. Income Tax Officer, Ward-2, Ambikapur (SLP (Civil) Nos. 26310– 26311 of 2024, order dated 31 January 2025), has reiterated that while dealing with applications seeking condonation of delay in filing appeals, the authorities must adopt a liberal and justice-oriented approach, ensuring that technicalities do not overshadow substantive rights. Printed from counselvise.com :-7-: ITA. No:3045/Chny/2025 17. Having regard to the factual matrix of the present case and guided by the above binding precedents of the Hon’ble Supreme Court, we are of the considered opinion that the assessee has successfully demonstrated sufficient cause warranting condonation of the delay of 178 days. Accordingly, the said delay is hereby condoned. 18. Having condoned the delay, we further note that the grounds urged before us are predominantly legal in nature and go to the very root of the assessment proceedings. It is a settled proposition of law that where a ground involves a pure question of law arising from the facts already on record, the same may be raised at any stage of the proceedings, including for the first time before the appellate forum. Such admission does not require any fresh investigation of facts nor does it prejudice the interests of the Revenue. 19. In this context, reference may be made to the landmark decision of the Hon’ble Supreme Court in National Thermal Power Co. Ltd. v. CIT (229 ITR 383), wherein it has been held that the Tribunal is empowered to examine a question of law arising from the facts already available on record, even if such question had not been raised earlier. The Hon’ble Supreme Court clarified that the Tribunal’s jurisdiction is not confined merely to the issues dealt with by the lower authorities but extends to all questions of law bearing on the correctness of the assessment. 20. Similarly, the Hon’ble Supreme Court in Jute Corporation of India Ltd. v. CIT (187 ITR 688) recognized the right of an assessee to raise additional legal grounds at the appellate stage, observing that the appellate authorities are vested with wide powers to do substantial justice by determining the correct tax liability in accordance with law. 21. In the present case, the grounds pressed before us relate to fundamental legal issues which strike at the validity and sustainability of the impugned assessment. They arise from the material already available in the assessment Printed from counselvise.com :-8-: ITA. No:3045/Chny/2025 records and do not necessitate any further enquiry or verification of extraneous facts. The adjudication of such legal grounds is therefore imperative, as failure to do so may result in perpetuation of an illegality. 22. In view of the foregoing legal position, and in the interest of substantial justice, we hold that the legal grounds raised by the assessee deserve to be admitted and adjudicated on merits. We accordingly proceed to consider the same in the subsequent part of this order. 23. In support of Grounds Nos. 2 to 5, the Ld.AR drew our attention to the copy of notice issued u/s.148 of the Act by the JAO on 31.07.2022 and submitted that the said notice is clearly barred by limitation in view of the first proviso to section 149 of the Act. It was contended that, for the impugned assessment year, viz., A.Y. 2014-15, the limitation prescribed for issuance of notice u/s.148 of the Act under the unamended provisions expired on 31.03.2021. Consequently, the notice issued on 31.07.2022 is ex-facie time- barred. In support of this proposition, reliance was placed on the judgment of the Hon’ble Bombay High Court in the case of Godrej Industries Ltd. v. ACIT [2024] 160 taxmann.com 13 (Bom), wherein, on identical facts, it was held that a notice issued on 31.07.2022 for A.Y. 2014-15 was barred by limitation. The Ld. AR, therefore, urged that the reassessment proceedings initiated on the basis of such invalid notice deserve to be quashed. 24. The Ld.AR further submitted that, in any event, the reopening of assessment for A.Y. 2014-15 having been initiated beyond the period of three years, sanction in terms of section 151 of the Act, as applicable on the relevant date, was required to be obtained from the Principal Chief Commissioner / Principal Director General / Chief Commissioner / Director General, as the case may be. However, a perusal of the notice issued u/s.148 of the Act reveals that approval was obtained only from the Principal Commissioner of Income-tax (PCIT). According to the Ld. AR, therefore, the very sanction is defective, rendering the notice invalid. Reliance was placed on the decision of the Printed from counselvise.com :-9-: ITA. No:3045/Chny/2025 Coordinate Bench, Visakhapatnam, in DCIT v. Vizag Re-Bars Private Limited (ITA No. 428/Viz/2024, dated 08.10.2025). 25. In light of the above submissions, it was argued that the impugned assessment framed u/s.147 r.w.s 144 of the Act on 23.05.2023 is bereft of a valid assumption of jurisdiction and is consequently liable to be annulled. 26. Per contra, the Ld.DR strongly opposed the submissions of the Ld. AR and supported the action of the AO. The Ld.DR contended that the notice issued u/s.148 of the Act on 31.07.2022 is valid in law and prayed that the reassessment proceedings be upheld. 27. We have heard the rival contentions, perused the orders of the authorities below and the paper book and case laws paper book filed by the assessee. Admittedly in this case notice u/s.148 of the Act was issued on 31.07.2022 under new law based on which the reassessment for the A.Y.2014-15 was framed by the AO on 23.05.2023. Further, sanction u/s.151 of the Act was accorded by the Principal Commissioner of Income Tax – 3, Chennai on 30.07.2022. The copy of notice issued by the JAO is as under: - Printed from counselvise.com :-10-: ITA. No:3045/Chny/2025 28. We find that identical issue came up before the Coordinate Delhi bench of this Tribunal in Tyagi Pipe Craft Pvt. Ltd. v. ITO [ITA No.147/Del/2025 dated 23.07.2025] wherein the Tribunal following the decision of the Hon’ble Supreme Court in the case of Union of India vs. Rajiv Bansal held that the notice issued u/s.148 of the Act is barred by limitation observing as under: - Printed from counselvise.com :-11-: ITA. No:3045/Chny/2025 “3. We have heard the rival submissions and perused the material available on record. The return of income for AY 2014-15 was filed by the assessee u/s 139(1) of the Act 29.11.2014. Notice u/s 148 of the Act stood issued to the assessee on 28.03.2021. The ld AR pleaded that the said notice issued was as per old provisions of Section 148 of the Act prior to the substitution by Finance Act, 2021. It was submitted that Section 148 of the Act has been substituted by Finance Act, 2021 w.e.f 01.04.2021 wherein notice u/s 148 of the Act as per the old provisions of Section 148 of the Act applicable upto 31.03.2021 could not have been issued after 31.03.2021. This issue per se was subject matter of various writ petitions filed in various High Courts and ultimately got settled by the Hon'ble Supreme Court in the case of Union of India Vs. Ashish Agarwal reported in 444 ITR 1 (SC) dated 04.05.2022. Thereafter, the ld AO issued letter u/s 148A(b) of the Act on 26.05.2022 and subsequently, on 17.06.2022. The assessee filed its reply on 24.06.2022. The ld AO passed an order u/s 148A(d) of the Act on 23.07.2022 rejecting the objections of the assessee and proceeded to issue notice u/s 148 of the Act on 23.07.2022. All these facts are not in dispute before us with regard to dates. Now the short question that arises for our consideration is as to whether the subsequent notice issued u/s 148 of the Act on 23.07.2022 is to be treated as time barred or not in the light of decision of Hon'ble Supreme Court in the case of Union of India Vs. Rajeev Bansal reported in 469 ITR 46 (SC). In this regard, it would be appropriate to reproduce the relevant portion of the decision of the Hon'ble Supreme Court in the case of Rajeev Bansal referred (supra) as under:- “110. The effect of the creation of the legal fiction in Ashish Agarwal (supra) was that it stopped the clock of limitation with effect from the date of issuance of Section 148 notices under the old regime [which is also the date of issuance of the deemed notices]. As discussed in the preceding segments of this judgment, the period from the date of the issuance of the deemed notices till the supply of relevant information and material by the assessing officers to the assesses in terms of the directions issued by this Court in Ashish Agarwal (supra) has to be excluded from the computation of the period of limitation. Moreover, the period of two weeks granted to the assesses to reply to the show cause notices must also be excluded in terms of the third proviso to Section 149. 111. The clock started ticking for the Revenue only after it received the response of the assesses to the show causes notices. After the receipt of the reply, the assessing officer had to perform the following responsibilities: (i) consider the reply of the assessee under Section 149A(c); (ii) take a decision under Section 149A(d) based on the available material and the reply of the assessee; and (iii) issue a notice under Section 148 if it was a fit case for reassessment. Once the clock started ticking, the assessing officer was See State of A P v. A P Pensioners Association, (2005) 13 SCC 161 [28]. [This Court observed that the “legal fiction undoubtedly is to be construed in such a manner so as to enable a person, for whose benefit such legal fiction has been created, to obtain all consequences flowing therefrom.”] PART F required to complete these procedures within the surviving time limit. The surviving time limit, as prescribed under the Income Tax Printed from counselvise.com :-12-: ITA. No:3045/Chny/2025 Act read with TOLA, was available to the assessing officers to issue the reassessment notices under Section 148 of the new regime. 112. Let us take the instance of a notice issued on 1 May 2021 under the old regime for a relevant assessment year. Because of the legal fiction, the deemed show cause notices will also come into effect from 1 May 2021. After accounting for all the exclusions, the assessing officer will have sixty-one days [days between 1 May 2021 and 30 June 2021] to issue a notice under Section 148 of the new regime. This time starts ticking for the assessing officer after receiving the response of the assessee. In this instance, if the assessee submits the response on 18 June 2022, the assessing officer will have sixty-one days from 18 June 2022 to issue a reassessment notice under Section 148 of the new regime. Thus, in this illustration, the time limit for issuance of a notice under Section 148 of the new regime will end on 18 August 2022. 4. Now let us see whether the notice issued u/s 148 of the Act on 23.07.2022 is within the time in the light of the aforesaid observation of the Hon'ble Supreme Court. For this purpose, the following table would be relevant which is reproduced as under:- S. No. Particulars Date A Date of original notice issued u/s 148 28.06.2021 B Time remaining till 30.06.2021 2 Day C Date of notice issued u/s 148A(b) 26.05.2022 & 17.06.2022 D Due date for filing of reply to notice issued u/s 148A(b) 09.06.2022 & 24.06.2022 E Reply/ objection filed on 24.06.2022 F Extended date by which notice should have been issued u/s 148 (E + B) 26.06.2022 G Actual date of notice issued u/s 148 23.07.2022 5. 23.07.2022 Hence, in view of the observation of the Hon'ble Supreme Court in the case of Rajeev Bansal (supra), the extended due date for issuance of notice u/s 148 of the Act expired on 26.06.2022 and since, the notice u/s 148 of the Act is issued on 23.07.2022, the said notice is to be treated as barred by limitation and consequentially reassessment proceedings would be liable to be quashed as void ab initio. This issue was also subject matter of consideration by the Hon‟ble Jurisdictional High Court in the case of Ram Balram Buildhome Vs. ITO & Anr reported in 445 ITR 1 (Del) dated 30.01.2025. Relevant operative portion of the said order is reproduced herein below:- “65. Thus, in the facts of the present case, the last date for issuance of notice under Section 148 of the Act for AY 2013-14 under the statutory framework, as was existing prior to 01.04.2021 was 31.03.2020, that is, six years from the end of the relevant assessment year. 66. By virtue of Section 3 (1) of TOLA time for completion of specified acts, which fell during the period 20.03.2020 to 31 12.2020 were extended till 30.06.2021 [Notification No.38/21 dated 27.04.2021]. Printed from counselvise.com :-13-: ITA. No:3045/Chny/2025 Thus, the notice dated 01.06.2021 was issued twenty-nine days prior to the expiry of period of limitation for issuing a notice under Section 148 of the Act as was extended by TOLA. As noted above, the period from 01.06.2021, the date of issuance of notice, and 04.05.2022, being the date of decision of the Supreme Court in Union of India & Ors. v. Ashish Agarwal is required to be excluded by virtue of the third proviso to Section 149 (1) of the Act. 67 Additionally, the period from the date of decision in Union of India & Ors. v. Ashish Agarwal2 till the date of providing material, as required to the accompanied with a notice under Section 148A (b) of the Act. is required to be excluded. Thus, the period between 04.05.2022 to 30.05.2022, the date on which the AO had issued the notice under Section 148A (b) of the Act in furtherance of his earlier notice dated 01.06.2021, is also required to be excluded by virtue of the third proviso to Section 149 (1) of the Act as held by the Supreme Court in Union of India & Ors. v. Rajeev Bansal4. 68. In addition to the above, the time granted to the petitioner to respond to the notice dated 30.05.2022-the period of two weeks-is also required to be excluded by virtue of the third proviso to Section 149 (1) of the Act. The petitioner had furnished its response to the notice under Section 148A (b) of the Act on 13.06.2022. Thus, the period of limitation began running from that date. 69. As noted above, by virtue of TOLA, the AO had period of twenty nine days limitation left on the date of commencement of the reassessment proceedings, which began on 01.06.2021, to issue a notice under Section 148 of the Act. The said notice was required to be accompanied by an order under Section 148A (d) of the Act. Thus, the AO was required to pass an order under Section 148A (d) of the Act within the said twenty-nine days notwithstanding the time stipulated under Section 148A (d) of the Act. This period expired on 12.07.2022. 70. Since the period of limitation, as provided under Section 149 (1) of the Act, had expired prior to issuance of the impugned notice on 30.07.2022. The said is squarely beyond the period of limitation 71. It is contended on behalf of the Revenue that the AO is required to pass an order under Section 148A (d) of the Act by the end of the month following the month on which the reply to the notice under Section 148A (b) of the Act was received. Thus, the order under Section 148A (d) of the Act as well as the notice under Section 148 of the Act (both dated 30.07.2022) are within the prescribed period. This contention is without merit as it does not take into account that proceedings under Section 148A of the Act necessarily required to be completed within the period available for issuing notice under Section 148 of the Act, as prescribed under Section 149 of the Act. Thus, the time available to the AO to pass an order under Section 148A (d) of the Act was necessarily truncated and the same was required to be passed on or before 12.07.2022. The fourth proviso to Section 149 of the Act did not come into play as the time period available for the AO to pass an order under Section 148A (d) of the Act was in excess of the seven days. Printed from counselvise.com :-14-: ITA. No:3045/Chny/2025 72. In view of the above, we find merit in Mr. Sehgal's contention that the impugned notice dated 30.07.2022 has been issued beyond the period of limitation. 73. The petition is accordingly allowed and the impugned order dated 30.07.2022 passed under Section 148A (d) of the Act; the impugned notice dated 30.07.2022 issued under Section 148 of the Act; and the assessment order dated 30.05.2023 framed under Section 147 of the Act pursuant to the notice dated 30.07.2022 for AY 2013-14, are set aside. Pending application is also disposed of.” 6. Respectfully following the said decision, we hold that the notice issued u/s 148 of the Act on 23.07.2022 is barred by limitation. Accordingly, ground No. 1 raised by the assessee is allowed.” 29. Further, we make gainful reference to the judgment of the Hon’ble Bombay High Court in Godrej Industries Ltd v. ACIT [2024] 160 taxmann.com 13 (Bom), wherein the Hon’ble Court on similar facts held that the notice u/s.148 of the Act issued on 31.07.2022 for the A.Y.2014-15 is barred by limitation. We find that in the instant case of the assessee also, notice u/s.148 of the Act was issued on 31.07.2022 for the A.Y.2014-15. Thus, the ratio laid down by the Hon’ble Bombay High Court is squarely applicable to the facts of the case of the assessee. The relevant observation of the Hon’ble Court is as under: - “15. The validity of a notice must be judged on the basis of the law existing as on the date on which the notice is issued under section 148 of the Act, which in the present case is 31st July 2022, by which time the Finance Act, 2021 is already on the statute and in terms thereof, no notice under section 148 of the Act for AY 2014 15 could be issued on or after 1st April 2021 based on the first proviso to Section 149 of the Act. Therefore, the fifth proviso cannot apply in a case where the first proviso applies because, if a notice under section 148 of the Act could not be issued beyond the time period provided in the first proviso, then the fifth proviso could not save such notices. The fifth proviso can only apply where one has to determine whether the time limit of three years and ten years in Section 149(1) of the Act are breached. 16. The sixth proviso to Section 149 of the Act has no impact as it only provides a situation where after exclusion of the time period referred to in the fifth proviso, the time available with the Assessing Officer for passing an order under section 148A(d) of the Act is less than 7 days, then the remaining time frame shall be extended to 7 days and limitation also stands extended by 7 days. 17. The notice under section 148 of the Act issued on 31st July 2022, therefore, is barred by limitation. As per the fifth proviso to Section 149 of the Act only the period from 24th May 2022 to 8th June 2022 can be Printed from counselvise.com :-15-: ITA. No:3045/Chny/2025 excluded since the notice under section 148A(b) of the Act has been issued for the first time on 24th May 2022 providing time to petitioner till 8th June 2022 to furnish a reply. The Revenue is seeking to exclude a period from 21st May 2021 to 4th May 2022 relying on Ashish Agarwal (supra) which, as explained earlier, cannot apply. Hence, the impugned notice dated 31st July 2022 is bad in law.” 30. Above decisions squarely applies to the fact situation of the assessee and therefore respectfully following the above decisions, we hold that the notice issued u/s.148 of the Act on 31.07.2022 for the A.Y.2014-15 in the present case of the assessee is barred by limitation and consequently the impugned reassessment order made based on such notice is bad in law and void ab initio. We therefore quash the impugned order of assessment dated 23.05.2023 framed by the AO u/s.147 r.w.s 144 of the Act in DIN: ITBA/AST/S/147/2023- 24/1053112544(1). Thus, Ground Nos.2, 3 and 5 of grounds of appeal of the assessee are allowed. As we have quashed the reassessment on one of the legal issues raised in the grounds of appeal all other grounds are not adjudicated as they become only academic at this stage and left open. 31. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 26th December, 2025 at Chennai. Sd/- Sd/- (मनु क ुमार गिरर) (MANU KUMAR GIRI) न्याययक सदस्य/Judicial Member (एस. आर. रघुनाथा) (S. R. RAGHUNATHA) लेखा सदस्य/Accountant Member चेन्नई/Chennai, ददनांक/Dated, the 26th December, 2025 jk Printed from counselvise.com :-16-: ITA. No:3045/Chny/2025 आदेश की प्रनतललपप अग्रेपर्त/Copy to: 1. अपीलाथी/Appellant 2. प्रत्यथी/Respondent 3.आयकर आयुक्त/CIT– Chennai/Coimbatore/Madurai/Salem 4. पवभागीय प्रनतननधि/DR 5. गाडा फाईल/GF Printed from counselvise.com "