The Income Tax Appellate Tribunal, Bangalore Bench, has quashed a reassessment involving ₹48.73 lakh from cash deposits after finding that the reassessment notice was issued beyond the prescribed limitation period. According to The Times of India, the tribunal pronounced its order on July 10, 2026 in the case of a retired school teacher from Mysore, Karnataka, who had deposited ₹1.33 crore cash in his bank accounts. The taxpayer's assessment was reopened through a notice issued under Section 148A(d) on April 26, 2022, with the tax department treating the cash deposits as unexplained income under Section 147 read with Section 144. The SMC Bench of the ITAT heard the appeal on April 15, 2026, and subsequently allowed the assessee's appeal based on jurisdictional grounds.
The Income Tax Department flagged the senior citizen's cash deposits through the Central Board of Direct Taxes' (CBDT) risk management strategy (RMS) for assessment year 2015-16. As reported by The Times of India, the transactions identified included a cash deposit of ₹13 lakh in a savings bank account, a cash deposit of ₹60 lakh, and multiple cash deposits of ₹50,000 and above. Additionally, the department recorded bank interest of ₹12,701 under "Interest other than Interest on Securities," Section 194A. The department was aware that agriculture and interest from savings bank accounts were the taxpayer's stated primary sources of income, but lacked information about actual income earned from these sources. The first notice was issued under Section 148A(b) on March 26, 2022, but the taxpayer did not respond to it. The next step came on April 26, 2022, when the Assessing Officer passed an order under Section 148A(d), determining the case was fit for reopening the assessment.
The decisive issue proved to be the timing of the reassessment notice, which was issued on April 26, 2022, 26 days after the limitation period had ended. According to The Times of India, for AY 2015-16, March 31, 2022 was the last date for issuing the reassessment notice. The ITAT Bangalore took note of this delay and held that the notice had been issued after the prescribed period had already expired. Chartered Accountant Suresh Surana explained to ET that the ITAT decided the matter on the question of jurisdiction arising from the limitation period. Once the tribunal found that the Section 148 notice had been issued beyond the prescribed period and was therefore invalid, the reassessment proceedings based on that notice could not continue. The tribunal considered decisions of earlier coordinate benches while examining the issue and relied on principles laid down by the Supreme Court in the Rajeev Bansal case and by the Karnataka High Court in Mohammed Yaseen.
The reassessment proceedings ultimately resulted in an order passed by the AO under Section 147 read with Section 144 on February 29, 2024, determining the senior citizen's total assessed income at ₹48.85 lakh. As reported by The Times of India, the taxpayer initially filed an income tax return in response to the notice, but the income tax return was not e-verified and was therefore treated as invalid. The AO subsequently issued notices under Section 142(1) and show-cause notices, with the individual complying only to a limited extent. The taxpayer then challenged the assessment before the CIT (A), but the appeal was dismissed following the hearing. The tribunal consequently held that the reassessment framed under Section 147 read with Section 144 was void ab initio and quashed it, allowing the taxpayer's appeal. Importantly, the tribunal's order was based on the validity of the reassessment proceedings and did not adjudicate whether the ₹48.85 lakh relating to cash deposits was taxable on merits, leaving the taxability of the cash transactions as an open question.
