Reassessment notice under Section 148 for AY 2015-16 issued after 31.03.2022 barred by first proviso to Section 149(1)(b), as six-year limitation under old regime expired, quashing assessment order.

ORDER

PER MANJUNATHA G., A.M :

This appeal filed by the assessee is directed against the order of the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [in short “NFAC”], Delhi, dated 13.08.2025, pertaining to the assessment year 2015-16.

2. The grounds raised by the assessee read as under :

“1. The CIT(A) erred in upholding the reopening u/s 147. The only income that escaped assessment was the interest income of ₹31,807. Since this is below ₹1,00,000, the notice u/s 148 should have been issued within 4 years (i.e., by 31.03.2020) as per Section 149(1)(a).

Argument:

The addition of ₹12,90,000 u/s 69A is being challenged separately. For the purpose of determining the limitation for issuing the notice, only prima facie escapement of income can be considered. The notice was issued on 06.04.2022, based on info from A.Y. 2015-16, which is clearly beyond the 4-year limit.

Case Law:

CIT vs. Rajesh Jhaveri Stock Brokers P. Ltd. (2007) 291 ITR 500 (SC): The Supreme Court emphasized that the "reason to believe" for reopening must be based on tangible material and must be valid in law, including adherence to the time limits prescribed u/s 149.

2. Addition u/s 69A is Legally Unsustainable as the Assessee is Not Required to Maintain Books of Account.

Objection:

The CIT(A) erred in confirming the addition of ₹12,90,000 u/s 69A.The very precondition of Section 69A is that the money, bullion, etc., is "not recorded in the books of account, if any, maintained by him.

Fact:

The appellant is a retired government employee (Mandal Educational Officer) with no business income. He is not mandated to maintain any books of account under the Income Tax Act, 1961. The CIT(A) confirming that the assessee no need to maintain any Books, as he is retired government employee, erred arriving conclusion, assessee to maintain day to day fund flow, which is contrary to his earlier conclusion.

Argument:

Section 69A cannot be invoked against an individual salaried/retired assessee who is not legally obliged to maintain books. The section is aimed at businesses or professions where books are maintained but certain assets are omitted. Applying it here is a fundamental legal error.

Case Law:

CIT vs. Vishwanath Sharma (2010) 320 ITR 161 (Allahabad HC): The High Court held that Section 69A cannot be invoked if the assessee does not maintain any books of account. The phrase "if any" is crucial. The absence of books itself negates the application of the section.

3. The Addition Ignores the Source of Funds - Accumulated Savings & Retirement Benefits

Objection:

The CIT(A) arbitrarily dismissed the appellant's explanation that the cash deposits were from accumulated savings and withdrawals from retirement benefits (Provident Fund, Gratuity) received in earlier years.

Fact:

The appellant held a cash balance of ₹19,19,650 as of 31.03.2014, substantiated by bank statements. The deposits in FY 2014-15 were from this existing cash in hand.

Argument:

The department did not make any effort to investigate the source of the opening cash balance. Merely because cash was withdrawn and re- deposited does not make it "unexplained." The source was already explained and taxed in the year of receipt (the retirement benefits).

Case Law:

CIT vs. Smt. P.K. Noorjahan (1997) 237 ITR 570 (SC):

ITO vs. Mukesh Kumar Agrawal (ITAT Agra):

4. Ground: Failure to Discharge Burden of Proof - The Onus was Wrongly Placed on the Assessee.

Objection:

The CIT(A) failed to appreciate that the initial burden to prove that the cash deposits were income was on the Revenue. The department merely pointed to the