Madras High Court
Kattuputhur Srinivasaiyyengar … vs Assessment Unit on 8 July, 2026
Author: D.Bharatha Chakravarthy
Bench: D.Bharatha Chakravarthy
2026:MHC:2671
W.P.(MD)Nos.9187 and 9188 of 2026
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
Date of Reserving the Order Date of Pronouncing the Order
08.06.2026 08.07.2026
CORAM :
THE HONOURABLE MR. JUSTICE D.BHARATHA CHAKRAVARTHY
W.P.(MD)Nos.9187 and 9188 of 2026
and
W.M.P.(MD)Nos.7376, 7377, 7379, 7381, 7383, 7384, 7380 & 7382 of
2026
Kattuputhur Srinivasaiyyengar Ramaswamy ... Petitioner in both the W.Ps.
Vs.
1.Assessment Unit,
Income Tax Department,
National Faceless Assessment Centre,
New Delhi.
2.Income Tax Officer,
Ward (2) 1 Trichy,
Main Building, 2nd Floor,
New No.44, Old No.4,
Williams Road, Cantonment,
Tiruchirapalli- 620001,
Tamil Nadu, India.
3.The Branch Manager,
The South Indian Bank Limited,
Thendral Complex Do.No.119,
Bharathiar Salai, Bharathiyar Salai,
Tiruchirappalli, Tamilnadu 620001.
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W.P.(MD)Nos.9187 and 9188 of 2026
4.The Branch Manager,
Punjab National Bank,
Amma Mandapam Road,
Srirangam, Tiruchirappalli,
Tamil Nadu 620006. ... Respondents in both the W.Ps.
Prayer in W.P.(MD)No.9187 of 2026 : Writ Petition filed under Article 226 of
the Constitution of India, praying to issue a Writ of Certiorari, calling for the
records on the file of the respondents and quash the,
(i) Impugned Notice under Section 148 of the Income Tax Act, 1961,
dated 18.04.2022, passed by the second respondent in PAN AGYPR3097E
having DIN-and Notice- ITBA/AST/S/148_1/2022 23/1042758679(1) for the
AY 2015-16;
(ii) Impugned Order under Section 147 r.w.s. 144 read with Section 144B
of the Income Tax Act, 1961 dated 18.03.2024 passed by the first respondent in
PAN AGYPR3097E having ITBA/AST/S/147/2023-24/1062820542(1) for the
AY 2015-16.
Prayer in W.P.(MD)No.9188 of 2026 : Writ Petition filed under Article 226 of
the Constitution of India, praying to issue a Writ of Certiorari, calling for the
records on the file of the respondents and quash the impugned order under
Section 271(1)(c) of the Income Tax Act, 1961 dated 20.09.2024 passed by the
first respondent in PAN AGYPR3097E having DIN-ITBA/PNL/F/271(1)
(c)/2024-25/1068925495(1) for the AY 2015-16.
For Petitioner in both the W.Ps. : Ms.N.V.Lakshmi
For R1 and R2 in both the W.Ps.: Mr.N.Dilip Kumar
Senior Standing Counsel
For R3 and R4 in both the W.Ps.: No Appearance
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W.P.(MD)Nos.9187 and 9188 of 2026
COMMON ORDER
These two writ petitions have been filed by the same petitioner. W.P.(MD)
No.9187 of 2026 challenges the notice dated 18.04.2022 issued under Section
148 of the Income Tax Act, 1961, proposing to reassess the petitioner’s income
for the Assessment Year 2015-2016, as well as the assessment order dated
18.03.2024 passed under Section 147 read with Sections 144 and 144B of the
Income Tax Act, 1961 [hereinafter referred to as ”the Act”]. W.P.(MD)No.9188
of 2026 challenges the consequential penalty order passed under Section 271(1)
(c) of the Act.
B. The Petitioner’s Case:
2. The petitioner is an individual assessee holding PAN: AGYPR3097E.
For the Assessment Year 2015-2016, he did not file a return of income, claiming
that he was under a bona fide belief that no tax liability arose for that assessment
year.
3. The second respondent issued a notice under Section 148A(b) of the Act
on 26.03.2022, alleging that the petitioner had made cash deposits in his bank
accounts aggregating to Rs.1,42,11,020/-, had made time deposits to the extent
of Rs.13,00,000/-, and had received interest income of Rs.3,29,735/-, which was
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W.P.(MD)Nos.9187 and 9188 of 2026
liable to deduction of tax at source under Section 194A of the Act. Thereafter, by
order dated 18.04.2022 passed under Section 148A(d) of the Act, the second
respondent recorded satisfaction that it was a fit case for issuance of notice under
Section 148 of the Act for the Assessment Year 2015-2016. Consequently, a
notice under Section 148 of the Act was issued on 18.04.2022.
4. Subsequently, an intimation dated 27.01.2023 was issued by the
National Faceless Assessment Centre, informing the petitioner that the
assessment proceedings would be completed under the faceless assessment
scheme. Thereafter, notices under Section 142(1) of the Act, dated 06.08.2023
and 08.11.2023, were issued calling upon the petitioner to furnish the documents
and information specified therein. Further notices seeking additional information
were also issued from time to time.
5. A show cause notice under Section 144 of the Act was issued on
29.12.2023, requiring the petitioner to explain why the assessment should not be
completed to the best of judgment. Thereafter, a detailed show cause notice dated
22.02.2024 was issued, proposing additions for (i) cash deposits in the
petitioner’s bank accounts amounting to Rs.1,42,11,020/-, (ii) time deposits
aggregating to Rs.13,00,000/- in the petitioner’s accounts with Bank of India and
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W.P.(MD)Nos.9187 and 9188 of 2026
Vijaya Bank, treated as unexplained investments, and (iii) interest income of Rs.
6,92,109/- received in various bank accounts, treated as income from other
sources.
6. Pursuant thereto, the assessment order dated 18.03.2024 was passed,
determining the petitioner’s tax liability at Rs.53,44,053/-. Thereafter, a penalty
order under Section 271(1)(c) of the Act was also passed, imposing a penalty of
Rs.53,44,053/-. Subsequently, proceedings were initiated for the attachment of
the petitioner’s bank accounts. According to the petitioner, he became aware of
the reassessment proceedings only at that stage. It is his specific case that none
of the notices were effectively served upon him and that the communications
were merely uploaded on the portal without his knowledge. According to him,
the assessment order and the consequential penalty order were passed ex parte,
without affording him an effective opportunity of hearing. Under these
circumstances, the present writ petitions have been filed.
7. The primary contention of the petitioner is that, in respect of the
Assessment Year 2015-2016, the Revenue had made an express concession
before the Hon’ble Supreme Court regarding reassessment proceedings initiated
under the substituted reassessment regime, and that notices issued after
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W.P.(MD)Nos.9187 and 9188 of 2026
01.04.2021 in respect of such assessment years would not survive where the
proceedings were otherwise barred by limitation. According to the petitioner, the
said concession was recorded by the Hon’ble Supreme Court in Union of India
vs. Rajeev Bansal1 and connected matters, and has subsequently been noticed in
several decisions. Therefore, it is contended that the Revenue cannot adopt a
contrary stand in the case of the petitioner.
8. It is further contended that the notice issued under Section 148 of the
Act is barred by limitation in view of the first proviso to Section 149(1) of the
Act, as the proceedings were initiated beyond the period prescribed therein. The
petitioner also challenges the impugned proceedings on the ground of violation
of the principles of natural justice.
C. The Respondent’s Case:
9. The writ petitions are resisted by the Revenue through a detailed
counter-affidavit. According to the Revenue, the petitioner maintained as many
as 113 bank accounts. Despite substantial financial transactions during the
relevant assessment year, he failed to file his return of income. During the
relevant period, the petitioner is stated to have earned interest income of Rs.
3,29,735/-, made cash deposits exceeding Rs.1.42 crores, and invested Rs.
13,00,000/- in time deposits.
1 (2024) SCC OnLine SC 2693
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W.P.(MD)Nos.9187 and 9188 of 2026
10. Based on the information available with the Department, a notice
under Section 148A(b) of the Act was issued on 26.03.2022. As no reply was
received from the petitioner, an order under Section 148A(d) of the Act and a
consequential notice under Section 148 of the Act were issued on 18.04.2022.
Thereafter, notices under Section 142(1) of the Act dated 06.08.2023 and
08.11.2023 were issued. A preliminary show cause notice was issued on
29.12.2023, and a detailed show cause notice on 22.02.2024. Since the petitioner
failed to comply with the notices issued under Section 142(1), the provisions of
Section 144 of the Act were invoked, and the Faceless Assessment Officer
completed the reassessment by best judgment, culminating in the assessment
order dated 18.03.2024.
11. The Revenue further contends that it is the statutory obligation of
every PAN holder and taxpayer to maintain updated address particulars, contact
details, and e-mail credentials with the Department. Although the petitioner
claims to reside in Virugambakkam, he has also furnished an address in
Srirangam, Tiruchirappalli, even in the affidavit filed in support of the present
writ petitions. According to the Revenue, all notices were sent to the address
recorded in the Departmental records.
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W.P.(MD)Nos.9187 and 9188 of 2026
12. It is stated that, since no return of income had been filed, the
petitioner’s case was flagged on the Insight Portal under the category
“NMS” (Non-Filers Monitoring System). Based on the available information on
financial transactions, proceedings under Section 148A of the Act were initiated
after obtaining the requisite approval from the competent authority. The notice
dated 26.03.2022, issued under Section 148A(b), was also dispatched by Speed
Post to the petitioner’s Srirangam address but was returned with the endorsement
“No such person at the address”. As the petitioner failed to explain the
transactions, the Jurisdictional Assessing Officer opined that income chargeable
to tax had escaped assessment and, accordingly, issued the order under Section
148A(d) and the notice under Section 148 of the Act on 18.04.2022 after
obtaining the requisite approvals.
13. The counter affidavit also details the several opportunities afforded to
the petitioner and the various notices issued under Section 142(1) of the Act.
According to the Revenue, all communications were also transmitted to the e-
mail address furnished by the petitioner. Even after completion of the
assessment, repeated demand notices were issued. Thereafter, upon obtaining the
necessary approval, attachment orders in respect of the petitioner’s bank accounts
were issued on 13.01.2026 and 14.01.2026.
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W.P.(MD)Nos.9187 and 9188 of 2026
14. With regard to the allegation of violation of the principles of natural
justice, the Revenue contends that due procedure was strictly followed and that
the petitioner alone is responsible for failing to respond to the notices issued by
the Department. As regards the reliance placed on the concession recorded
before the Hon’ble Supreme Court, it is contended that the concession was made
in the peculiar context of the Taxation and Other Laws (Relaxation and
Amendment of Certain Provisions) Act, 2020 (TOLA) and cannot be
mechanically extended to the facts of the present case.
15. The Revenue further contends that, under the first proviso to Section
149(1) of the Act, the time limit for issuing a notice under Section 148A(b)
expired on 31.03.2022, and that the notice dated 26.03.2022 was therefore issued
within the prescribed period after obtaining the requisite approval. According to
the Revenue, the petitioner’s limitation argument overlooks the effect of the
fourth proviso to Section 149 read with Section 148A(d) of the Act, and
consequently the reassessment proceedings are not barred by limitation.
D. The Questions:
16. I have considered the submissions advanced by the learned counsel
appearing on either side and perused the materials available on record. The
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W.P.(MD)Nos.9187 and 9188 of 2026
following questions arise for consideration:
(a) Are the impugned proceedings barred by limitation as per the
provisions of the Act?
(b) Are the impugned proceedings liable to be quashed on the basis of the
concession made by the revenue before the Hon’ble Supreme Court of India in
Rajeev Bansal’s case (cited supra)?
E. Question (a):
17. To determine this question, the ratio laid down by the Hon’ble
Supreme Court of India in Rajeev Bansal’s case (cited supra) and Union of
India and Ors. Vs. Ashish Agarwal2 have to be kept in mind. The legal position
as obtained is lucidly explained by the Hon’ble Division Bench in Income Tax
Officer Vs. Mahogany Logistics Services (P) Ltd.3
18. Thus, even though in this case, the proceedings that are under
challenge pertain to the Assessment year 2015-16, it is crystal clear that if the
notice for reopening under Section 148 of the Act is issued after 01.04.2021,
then the procedural regime as amended by the Finance Act, 2021, would apply.
Thus, the time limit for the issue of notice under Section 148 would be as per
2 (2023) 1 SCC 617
3 2025 176 taxman.com 478 Madras
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W.P.(MD)Nos.9187 and 9188 of 2026
Section 149(1) of the Act. In the instant case, the notice under Section 148 was
issued on 18.04.2022. The income chargeable to tax that has escaped assessment
exceeds one lakh rupees. Hence, the period prescribed under Section 149 of the
Act would be up to 6 years from the end of the Assessment Year. In this case, the
assessment year ends on 31/03/2016. Six year period ends on 31/03/2022.
However, as per the regime, no notice under Section 148 can be issued unless the
assessee is given an opportunity and orders passed under Section 148A.
19. Within the six-year period, a show cause notice under Section 148A(b)
is issued on 26.03.2022. Under the said notice, 7 days time was allowed for the
assessee to file their response. As per the first proviso to Section149(1), in
computing the six-year period, the time allowed for the assessee to respond to the
notice shall stand excluded. Thus, the period of limitation which was to end on
31.03.2022, stood extended up to 02.04.2022. Thereafter, under normal
circumstances, the revenue had limitation to pass orders under Section 148A(d)
of the act within one month from the month in which the time granted to show
cause expired. The month in which the time to show cause expired is April, 2022
and as such, the revenue has time till May, 2022, that is upto 31.05.2022.
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W.P.(MD)Nos.9187 and 9188 of 2026
20. But considering the overall limitation that is prescribed under Section
149(1) as six years from the last date of the Assessment year, it can be seen that
the Revenue had to immediately pass orders and issue notice under Section 148
of the Act. In such cases, where the time is less than 7 days, the period of
limitation stands extended by another 7 days in view of the fourth proviso to
Section 149(1) of the Act. Thus, the last date before which the Orders ought to
have been passed under Section 148A(d), and notice should have been issued
under Section 148 would only be 09.04.2022. However, the orders were passed
under Section 148A(d) and notice was issued under Section 148 only on
18.04.2022 and as such is beyond the period of limitation.
21. The contention of the revenue is that when Section 148A(d) grants
time upto 31.05.2022, and when the order is passed well within the time limit,
the notice under Section 148 should be deemed to be within the time. But
Section 149(1) prescribes six years limitation not with reference to issue of show
cause notice under Section 148A or passing of orders thereon within limitation,
but specifically caps the upper limit to the notice to be issued under Section 148
of the Act, which is mandatory. The period is six years and by the first and fourth
proviso, the period of 7days available for response to the Show cause notice
under Section 148A(b) and another 7 days for passing the order stands extended.
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W.P.(MD)Nos.9187 and 9188 of 2026
Even if one were to allow the 14 days time in full, even then the order passed
under Section 148A(d) and notice issued under Section 148 of Act are still 4
days beyond the period of limitation. Accordingly the question is answered.
F. Question (b) :
22. A careful perusal of the judgment in Rajeev Bansal’s case (cited
supra), it can be seen that the matter was considered there with reference to the
applicability of Taxation and Other Laws (Relaxation of Certain Provisions) Act,
2020 (TOLA), whereby the time limit for carrying out the various acts under the
taxing statutes were relaxed and extended in view of the Covid-19 pandemic
situation. In that context, the issues before the Hon’ble Supreme Court of India
were, (a) Whether TOLA and notifications issued under it will also apply to
reassessment notices issued after 1 April 2021; and (b) whether the reassessment
notices issued under Section 148 of the new regime between July and September,
2022 are valid. It is in this connection, during the course of the arguments, the
learned Additional Solicitor General of India had made submissions, after
presenting a tabular column with reference to various periods of Limitation
prescribed under TOLA, it is submitted in para 19 (f) as follows :
“The Revenue concedes that for the assessment year 2015-16, all
notices issued after 01/04/2021, will have to be dropped as they
will not fall for completion during the period prescribed under
TOLA”.
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W.P.(MD)Nos.9187 and 9188 of 2026
23. Therefore, the learned Senior Standing counsel is right in contending
that the stand has to be considered if only limitation is sought by applying the
provisions of TOLA and more so, the notice in the instant case, does not pertain
to the period that was in issue before the Hon’ble Supreme Court of India. Thus,
when the revenue in their counter had not relied upon TOLA and since it is not
contended that the period is extended or saved by any of the provisions of TOLA
the concession that no provision of TOLA is applicable and that the notices have
to be dropped cannot be extrapolated to the facts on the instant case as the
revenue sought to justify by the interpretations of the Sections 148, 148A and
149 of the Act. Theoretically, if the orders have been passed immediately on the
same day of the expiry of the time given to the Assessee, that is on 03.04.2022,
still it is possible to contend that the matter is within time and therefore, since the
relief is granted to the petitioner on the ground of limitation, the consideration of
this issue does not have a bearing on the matter. Therefore, the question is
answered that the concession made in Rajeev Bansal’s case (cited supra), is not
germane to the issue in the presence case.
G. The Result :
24. In the result, W.P. No. 9187 and 9188 of 2026 are allowed on the
following terms:
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W.P.(MD)Nos.9187 and 9188 of 2026
(a) The impugned notice dated 18.04.2022 issued to the petitioner under
Section 148 of the Act in PAN AGYPRA3097F for the Assessment Year
2015-16 and the consequent order of assessment dated 18.03.2024 shall stand
quashed;
(b) The consequent order passed under Section 271(1)(c) dated 20.09.2004
as against the petitioner shall also stand quashed;
(c) No costs. Connected miscellaneous petitions are closed.
08.07.2026
Neutral Citation : yes
smn2
To
1.Assessment Unit,
Income Tax Department,
National Faceless Assessment Centre,
New Delhi.
2.Income Tax Officer,
Ward (2) 1 Trichy,
Main Building, 2nd Floor,
New No.44, Old No.4,
Williams Road, Cantonment,
Tiruchirapalli- 620001,
Tamil Nadu, India.
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W.P.(MD)Nos.9187 and 9188 of 2026
D.BHARATHA CHAKRAVARTHY, J.
smn2
Pre-deliery common order in
W.P.(MD)Nos.9187 and 9188 of 2026
08.07.2026
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