Income Tax Appellate Tribunal - Mumbai
Sunil Kumar Alagh,Mumbai vs Ddit(Inv) Unit 2(2), Mumbai on 25 March, 2026
IN THE INCOME TAX APPELLATE TRIBUNAL, 'E' BENCH MUMBAI BEFORE: SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI ARUN KHODPIA, ACCOUNTANT MEMBER BMA No.27/Mum/2025 (Assessment Year :2021-22) Mr. Sunil Kumar Alagh Vs. DDIT (Inv) Unit 2(1), 12 C, IL Plazzo Mumbai Little Gibbs Road, Malabar Hill, Mumbai-400 006 PAN/GIR No.ACTPA7811L (Appellant) .. (Respondent) BMA No.29/Mum/2025 (Assessment Year :2021-22) Dy. CIT CC 4(4) Vs. Mr. Sunil Kumar Alagh Mumbai 12 C, IL Plazzo Little Gibbs Road, Malabar Hill, Mumbai-400 006 PAN/GIR No.ACTPA7811L (Appellant) .. (Respondent) Assessee by Shri Vijay Mehta Revenue by Shri Ritesh Misra, CIT DR Date of Hearing 19/02/2026 Date of Pronouncement 25/03/2026 2 BMA No. 27 & 29/Mum/2025 Sunil Kumar Alagh आदेश / O R D E R PER AMIT SHUKLA (J.M):
The aforesaid cross appeals have been preferred by the assessee as well as by the Revenue against the appellate order passed by the learned Commissioner of Income Tax (Appeals)- 51, Mumbai under section 15 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, arising out of the assessment order dated 30.09.2023 passed by the Assessing Officer under section 10 of the said Act for the assessment year 2021-22.
2. The Revenue is mainly aggrieved by the action of the learned CIT(A) in restricting the addition on account of alleged undisclosed foreign investment from Rs.48,32,06,643/- to Rs.19,88,88,315/-, thereby deleting an amount of Rs.28,43,18,328/-. The assessee, on the other hand, is aggrieved by the sustenance of the balance addition of Rs.19,88,88,315/-. However, before adverting to the rival contentions on the merits of the addition, it is apposite to first take up the jurisdictional ground raised by the assessee, namely, that the assessment order dated 30.09.2023 passed under section 10 of the Black Money Act is bad in law and barred by limitation. Since this ground goes to the very root of the validity of the assessment itself and, if accepted, would 3 BMA No. 27 & 29/Mum/2025 Sunil Kumar Alagh render the entire assessment non est, the same is required to be adjudicated at the threshold.
3. The gravamen of the assessee's challenge is that in terms of section 11 of the Black Money Act, the assessment order ought to have been passed on or before 29.09.2023 and, therefore, the order having been passed on 30.09.2023 is barred by limitation by one day. In order to appreciate this contention, it is necessary to notice the relevant facts, chronology of events and the statutory framework governing the issue.
4. Here in this case a notice under section 10(1) of the Black Money Act dated 24.11.2020 was issued by the Assessing Officer and served upon the assessee on 25.11.2020 through e-mail on the personal e-mail address of the assessee. Thereafter, the assessment proceedings under section 10 stood initiated.
5. Section 10 of the Act is the machinery provision under which the Assessing Officer assumes jurisdiction to make an assessment or reassessment in respect of undisclosed foreign income and assets. The Section 10(1) of the Black Money Act is reproduced hereunder:-
"For the purposes of making an assessment or reassessment under this Act, the Assessing Officer may, on receipt of an information from an income-tax authority under the Income-tax Act or any other authority under any law for the time being in force or on coming of any information to his notice, serve on any person, a notice requiring him on a date to be specified to produce or cause to be produced such accounts or documents 4 BMA No. 27 & 29/Mum/2025 Sunil Kumar Alagh or evidence as the Assessing Officer may require for the purposes of this Act and may, from time to time, serve further notices requiring the production of such other accounts or documents or evidence as he may require."
5.1. The language of section 10(1) is significant, for it contemplates service of notice upon the concerned person requiring him to produce accounts, documents or evidence for the purposes of the Act. Thus, the statutory trigger for commencement of assessment proceedings is the issuance and service of notice upon the assessee. Till such notice is served, there may be information in possession of the Department, there may be enquiry, there may be inter- jurisdictional correspondence, but in the eye of law there are no pending assessment proceedings under section 10 against the assessee.
6. The limitation for completion of such assessment is governed by section 11 of the Black Money Act. Since the interpretation of this provision lies at the heart of the controversy, it would be apposite to reproduce the relevant part of section 11:
"11. Time limit for completion of assessment and reassessment.
(1) No order of assessment or reassessment shall be made under section 10 after the expiry of two years from the end of the financial year in which the notice under sub-section (1) of section 10 was issued by the Assessing Officer.
********************************************************** 5 BMA No. 27 & 29/Mum/2025 Sunil Kumar Alagh Explanation 1. In computing the period of limitation for the purpose of this section --
(i) the time taken in reopening the whole or any part of the proceeding; or
(ii) the period during which the assessment proceeding is stayed by an order or injunction of any court; or
(iii) the period commencing from the date on which a reference or first of the references for exchange of information is made by an authority competent under an agreement referred to in section 90 or section 90A of the Income-tax Act or under section 73 of this Act and ending with the date on which the Principal Commissioner or the Commissioner last receives the information so requested or a period of one year, whichever is less, shall be excluded.
Provided that where immediately after the exclusion of the aforesaid time or period, the period of limitation referred to in sub-sections (1), (2) and (3) available to the Assessing Officer for making an order of assessment or reassessment, as the case may be, is less than sixty days, such remaining period shall be extended to sixty days and the aforesaid period of limitation shall be deemed to be extended accordingly."
6.1. Ergo, a plain reading of section 11(1) makes it manifest that the normal limitation for completion of assessment is 2 years from the end of the financial year in which the notice under section 10(1) was issued. Since the notice in the present case was dated 24.11.2020, but issued and served on 25.11.2020 which falls in financial year 2020-21, the normal limitation for completion of assessment would expire on 31.03.2023.
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7. The assessment order, however, records that references had been made to foreign jurisdictions for gathering information relating to the assessee, and therefore the Assessing Officer invoked Explanation 1(iii) to section 11 for exclusion of the relevant period. The details of such references, as noted in the assessment order, are as under:
Sr. No. Jurisdiction Date of Date of reply reference 1 Jersey 14.12.2020 15.04.2021 2 France 11.11.2020 20.05.2021 3 UAE 31.03.2021 25.05.2021 7.1. From the aforesaid chronology, the following facts emerge with clarity:
(i) Notice under section 10(1) was dated 24.11.2020 and the said notice was served on the assessee on 25.11.2020.
(ii) The normal limitation under section 11(1), without taking into account any exclusion, expired on 31.03.2023.
(iii) References were made to France, Jersey and UAE on the dates noted hereinabove, and replies were received on different dates, the last of them being received from UAE on 25.05.2021.7
BMA No. 27 & 29/Mum/2025 Sunil Kumar Alagh
(iv) The Assessing Officer considered the first reference to be that made to France on 11.11.2020 and the last reply to be that received from UAE on 25.05.2021, and accordingly treated the entire period from 11.11.2020 to 25.05.2021, being 195 days, as excludable.
(v) By adding 195 days to 31.03.2023, the Assessing Officer worked out the time barring date as 12.10.2023 and, on that basis, held the assessment order dated 30.09.2023 to be within limitation.
(vi) The assessee, however, contended that the period from 11.11.2020 to 24.11.2020 falls prior to service of notice under section 10(1), and hence prior to commencement of assessment proceedings, and therefore cannot be excluded. According to the assessee, the correct exclusion period would only be from 25.11.2020 to 25.05.2021, that is 182 days, (even after including starting and ending dates) which would shift the time barring date only up to 29.09.2023.
(vii) Since the assessment order has been passed on 30.09.2023, the assessee submits that the same is beyond limitation by one day.
8. The assessee had specifically raised this contention before the learned CIT(A). The appellate authority, however, did not accept the same and upheld the computation made by the 8 BMA No. 27 & 29/Mum/2025 Sunil Kumar Alagh Assessing Officer. The relevant observations of the learned CIT(A), as noticed from the appellate order, are to the following effect:
"10.5.1 The issue of computation of time barring date has been discussed by the AO in para 13 of the assessment order. It is noted that the references had been made to various foreign tax jurisdictions by the competent authority of India for information and these had been received on various dates. The period required to be excluded has been computed by the AO by specifying the dates on which references were made and the dates on which replies had been received. The BMA mandates computation of exclusion period from the date on which the first reference is made and concluding on the day on which the last of the replies are received. It is noted that no error has been committed by the AO in computing this time.
10.5.2 AO has also reproduced section 11(3) of the BMA which deals with extension of time barring date in certain circumstances. It is noted that the time period between making the reference and receipt of replies, subject to a maximum period of one year, can be excluded while computing the limitation period. It is noted that in this case such period has been computed at 195 days which has been rightly excluded by the AO while deciding the time barring date.
10.5.3 Since the time barring date has been computed correctly, the ground raised by the appellant is not found tenable. Such date has been correctly worked out as 12.10.2023. Since the order has been passed on 30.09.2023, the same is within time."
9. Assailing the aforesaid approach, the learned counsel for the assessee, drawing our pointed attention to the language of sections 10 and 11, submitted that the Revenue's entire 9 BMA No. 27 & 29/Mum/2025 Sunil Kumar Alagh computation rests on a basic legal fallacy, namely, the assumption that the period anterior to service of notice can also be brought within the sweep of Explanation 1 to section
11. He submitted that section 10(1) itself is explicit that the assessment proceedings under the Black Money Act begin only when a notice is served upon the assessee requiring him to produce evidence or documents. Therefore, before such service, there are no pending assessment proceedings in the eye of law. If there are no proceedings, there can be no question of any time being lost during those proceedings for which the statute needs to compensate the Assessing Officer by exclusion. The exclusion mechanism, according to him, can operate only upon a period which is part of the total pool of time legally available to the Assessing Officer for completing the assessment.
10. The learned counsel further submitted that the provision in Explanation 1 is not meant to reward administrative action taken prior to commencement of proceedings, but only to ensure that where, during the subsistence of assessment proceedings, the Assessing Officer is constrained to await foreign information, the limitation clock does not unfairly run against him. He submitted that in the present case the first reference to France was made on 11.11.2020, whereas the notice although dated 24.11.2020, issued and served only on 25.11.2020. Thus, the segment from 11.11.2020 to 10 BMA No. 27 & 29/Mum/2025 Sunil Kumar Alagh 24.11.2020 lies wholly outside the zone of assessment proceedings and cannot be telescoped into the excludable period. He emphasized that what is not part of the assessment period cannot be excluded from the assessment period.
11. The learned counsel also invited our attention to the order of the learned CIT(A), wherein the appellate authority upheld the computation of the Assessing Officer on the premise that the Black Money Act mandates exclusion from the date of first reference till the date of receipt of last reply. According to him, the learned CIT(A) addressed the issue only in a mechanical manner, without examining the anterior and more vital question as to whether the period so excluded formed part of the assessment proceedings at all. He submitted that the CIT(A) thus treated the dates of reference and reply as self-executing triggers for exclusion, while overlooking the embedded statutory assumption that such exclusion has relevance only within the currency of pending proceedings.
12. On a without prejudice basis, the learned counsel also urged an alternate submission, namely, that even if one were to compute the limitation from the first day after the end of the financial year in which the notice under section 10(1) was issued, the exclusion could in no event commence prior to 11 BMA No. 27 & 29/Mum/2025 Sunil Kumar Alagh 01.04.2021, and thus only the period from 01.04.2021 to 25.05.2021, that is 55 days, could be said to impact the limitation computation. On that alternative basis too, according to him, the order dated 30.09.2023 would be hopelessly barred by time. However, his principle plank remained that the period prior to 25.11.2020 is legally incapable of exclusion and that, on the correct reckoning, the last permissible date was 29.09.2023.
13. Per contra, the learned Departmental Representative supported the orders of the lower authorities. He submitted that clause (iii) of Explanation 1 to section 11 uses clear phraseology and provides that the period commencing from the date on which the first of the references is made and ending with the date on which the information is last received shall be excluded. According to him, the statute does not carve out any distinction between a reference made before or after service of notice, and once it is found that the first reference was made on 11.11.2020 and the last reply was received on 25.05.2021, the entire period has necessarily to be excluded. He accordingly submitted that the Assessing Officer was justified in computing 195 days as excludable and in working out the time barring date as 12.10.2023. Since the order was passed on 30.09.2023, it was, according to him, well within the permissible period.
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14. The learned DR further submitted that the object of the exclusion clause is to account for the time consumed in obtaining information from foreign jurisdictions, and therefore a literal construction of clause (iii) ought to prevail. He relied upon the reasoning adopted by the Assessing Officer and affirmed by the CIT(A), namely, that the Black Money Act contemplates exclusion from the date of first reference till the date of last reply, subject only to the upper cap of one year. According to him, no error therefore inheres in the computation made by the Revenue authorities.
15. We have considered the rival submissions and also have examined the aforesaid statutory language. The controversy, here raises a question of construction of the limitation provisions under the Black Money Act. The core legal question that falls for our adjudication is, whether a period which precedes the commencement of assessment proceedings under section 10(1) can at all be regarded as part of the excludable period under Explanation 1 to section 11.
16. In our considered opinion, the answer to this question has to be returned in favour of the assessee. The starting point of the analysis must be the nature of proceedings under section 10. The power to make an assessment under the Black Money Act is not an amorphous administrative continuum. It is a jurisdictional process set in motion in the 13 BMA No. 27 & 29/Mum/2025 Sunil Kumar Alagh manner prescribed by the statute. Section 10(1) makes the service of notice the operative event by which the assessee is called upon to respond and the assessment proceedings are thereby initiated. Till such service, there may be information in possession of the Department, and there may even be inter-governmental or inter-jurisdictional correspondence, but there are, in the strict legal sense, no assessment proceedings pending against the assessee under the Act.
17. Once that position is accepted, the implications for section 11 become inevitable. Section 11(1) prescribes the outer temporal boundary within which the assessment order must be made. Explanation 1 then permits certain exclusions in computing that limitation. Such exclusion is conceptually intelligible only where it operates upon time which otherwise counts towards limitation. If a stretch of time does not belong to the assessment period at all, it is difficult, if not impossible, to comprehend how it can be excluded from that period. Exclusion necessarily presupposes inclusion within the original field of computation. That which never entered the pool of available time cannot be extracted from it.
18. Clause (iii) of Explanation 1, in our view, cannot be read in splendid isolation divorced from the structure of section 11 as a whole and from the jurisdictional trigger embedded in section 10. The phrase "period commencing from the date on 14 BMA No. 27 & 29/Mum/2025 Sunil Kumar Alagh which a reference or first of the references is made" cannot be interpreted as though the legislature intended to permit exclusion even of time preceding the initiation of assessment proceedings. Such a reading would sever the exclusion clause from the very logic of limitation law. The legislative purpose of the clause is to compensate the Assessing Officer for time lost in awaiting foreign information during the assessment. It is not to confer upon the Revenue an enlarged charter of limitation by permitting addition of periods which were never part of the running clock of assessment.
19. The fallacy in the Revenue's stand becomes particularly evident when tested on principle. Suppose the reply to the reference made on 11.11.2020 had been received on 24.11.2020 itself, that is, before service of notice under section 10(1). Could that period from 11.11.2020 to 24.11.2020 have been excluded while computing limitation? The answer, plainly, would be no, because during that period the assessment proceedings had not even commenced. If that be so, then the mere happenstance that the reply was received after the service of notice cannot transmute the anterior period into an excludable period. A construction which yields such an inconsistent and arbitrary result cannot be countenanced.
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20. The statutory logic is far more coherent than the Revenue's computation allows. Once notice under section 10(1) was issued and served on 25.11.2020, the assessment proceedings commenced on that date. The normal limitation, by virtue of section 11(1), ran up to 31.03.2023. If during that span there was a period consumed in awaiting foreign information, such period could legitimately be excluded to the extent it overlapped with the assessment proceedings. But the segment from 11.11.2020 to 24.11.2020, being anterior to 25.11.2020, did not overlap with any assessment proceedings at all. It therefore could not have depleted the time available to the Assessing Officer for completion of assessment, and consequently could not be restored to him by way of statutory exclusion.
21. The language of section 10(1) fortifies this construction. The provision says that the Assessing Officer may serve on any person a notice requiring him to produce such accounts or documents or evidence as may be required for the purposes of the Act. This is not a mere procedural nicety; it is the point at which the assessee is brought within the fold of proceedings under the Black Money Act. It is only thereafter that the Assessing Officer can be said to have entered the arena of assessment qua that assessee. Prior thereto, the Department may undertake preparatory or investigative steps, 16 BMA No. 27 & 29/Mum/2025 Sunil Kumar Alagh but such steps cannot enlarge the statutory period of limitation fixed for the formal adjudicatory process.
22. We also find considerable force in the assessee's submission that the proviso to Explanation 1 reinforces this interpretation. The proviso says that where, immediately after exclusion of the relevant period, the period of limitation available to the Assessing Officer is less than sixty days, such remaining period shall stand extended to sixty days. This indicates that the statute contemplates exclusion only from out of the limitation period otherwise available to the Assessing Officer. The legislative focus is on what remains available to the Assessing Officer after excluding the period lost. The very vocabulary of the proviso thus proceeds on the premise that the excluded period is part of the running limitation itself. It would be wholly incongruous to apply this formulation to a period which lies outside the limitation framework ab initio.
23. Adverting now to the concrete computation in the present case, the first reference was made to France on 11.11.2020. The last reply was received from UAE on 25.05.2021. However, notice under section 10(1) was issued and served only on 25.11.2020. Therefore, the period from 11.11.2020 to 24.11.2020 falls outside the assessment period and cannot be included in the excludable period. Once this anterior segment is removed, the correct period liable to exclusion would be 17 BMA No. 27 & 29/Mum/2025 Sunil Kumar Alagh from 25.11.2020 to 25.05.2021, which works out to 182 days. If 182 days are added to the normal limitation date of 31.03.2023, the resulting last date for passing the assessment order would be 29.09.2023.
24. This conclusion is not a matter of interpretative elasticity but one of statutory inevitability. The order under challenge has admittedly been passed on 30.09.2023. Therefore, once the correct limitation date is held to be 29.09.2023, the impugned assessment order stands passed one day beyond the permissible period. In matters of limitation, particularly where the statute confers jurisdiction to make an assessment only within a prescribed timeframe, even a delay of one day is fatal. Limitation in such cases is not a procedural ornament but a substantive fetter on the exercise of power. When the statutory period expires, the authority to frame the order perishes with it.
25. We are, with respect, unable to concur with the view taken by the learned CIT(A). The appellate authority appears to have proceeded on the footing that the Black Money Act mandates exclusion from the date of first reference till the date of the last reply and, since the Assessing Officer had followed that formula, no error had been committed. In our considered view, this approach begs the very question which required adjudication. The issue was not merely from which 18 BMA No. 27 & 29/Mum/2025 Sunil Kumar Alagh date the reference began and on which date the last reply was received. The real issue was whether the period so computed could in law be excluded when part thereof lay outside the commencement of assessment proceedings. That anterior jurisdictional question has not been examined by the learned CIT(A), and hence his conclusion cannot be sustained.
26. We may also note that the assessee had pressed an alternate submission that the limitation period for the purpose of exclusion ought, in the alternative, to be reckoned only from 01.04.2021 and therefore only 55 days would be excludable. Since we have already accepted the principal submission of the assessee and held that the correct time barring date is 29.09.2023, which itself renders the assessment order barred by limitation, we do not consider it necessary to examine the alternate contention any further. Suffice it to state that the assessee succeeds even on the principal legal plank.
27. Thus, on a conspectus of the statutory provisions, the chronology of events, and the legal position emerging from the structure of sections 10 and 11 of the Black Money Act, we hold that the Revenue authorities erred in computing the exclusion period at 195 days by including the period from 11.11.2020 to 24.11.2020, which was prior to the commencement of assessment proceedings. The Assessing Officer could have excluded only 182 days, and consequently 19 BMA No. 27 & 29/Mum/2025 Sunil Kumar Alagh the assessment order ought to have been passed on or before 29.09.2023. Since the impugned order has been passed on 30.09.2023, the same is clearly barred by limitation.
28. Accordingly, we hold that the assessment order dated 30.09.2023 passed under section 10 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 is time barred, without jurisdiction, and non est in law. The same is therefore quashed. Since we have quashed the assessment itself on this preliminary legal ground, the other grounds raised on merits do not survive for adjudication and are left open.
29. Since the entire assessment order itself has been quashed and the jurisdictional ground raised by the assessee is allowed, the departmental appeal is rendered academic and dismissed as infructuous.
30. In the result, appeal of the assessee is allowed and department's appeal is dismissed.
Order pronounced on 25th March, 2026.
Sd/- Sd/-
(ARUN KHODPIA) (AMIT SHUKLA)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Mumbai; Dated 25/03/2026
KARUNA, sr.ps
20
BMA No. 27 & 29/Mum/2025
Sunil Kumar Alagh
Copy of the Order forwarded to :
1. The Appellant
2. The Respondent.
3. CIT
4. DR, ITAT, Mumbai
5. Guard file.
//True Copy// BY ORDER,
(Asstt. Registrar)
ITAT, Mumbai