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Facts
The Revenue appealed against the order of the CIT(A) which quashed reassessment proceedings. The original assessment order was passed on 24.12.2019. The reassessment notice u/s 148 was issued on 19.07.2022 under the new regime, after obtaining approval from PCIT instead of PCCIT/CCIT.
Held
The Tribunal held that the reassessment proceedings were vitiated due to lack of proper and valid approval from the specified authority under Section 151(ii) of the Income Tax Act. The approval was obtained from PCIT instead of PCCIT/CCIT, which was required for cases where more than three years had elapsed since the end of the relevant assessment year.
Key Issues
Whether the reassessment proceedings are valid when the approval for issuance of notice under Section 148 was obtained from an authority not specified under Section 151(ii) of the Income Tax Act, considering the time elapsed since the end of the assessment year?
Sections Cited
147, 148, 148A, 149, 151
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI ‘A’ BENCH,
Before: SHRI SATBEER SINGH GODARA, & SHRI NAVEEN CHANDRA
This appeal by the Revenue is directed against the order of the ld.
CIT(A)-23, New Delhi dated 05.11.2024 pertaining to A.Y 2017-18.
Page 1 of 10 “1. The Ld. CIT(A) erred in allowing the appeal of the assessee by quashing the reassessment proceedings and subsequent assessment order stating that the approval obtained by the AO from the PCIT-7, Delhi was not in accordance with Section 151 of the Income Tax Act, 1961 despite the fact that A.O. obtained approval from PCIT which was in accordance with clause (i) of Section 151 of the Income Tax Act, 1961 2. The Ld.CIT (A) erred in ignoring that in this case reassessment proceedings are within 3 years after applying the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act 2020 and the exclusions due to court case.
3. The Ld. CIT(A) erred in not appreciating the fact that in this case specified authority for purposes of section 148 and 148A must be Pr. CIT/CIT as per clause (i) of section 151 of the Income Tax Act, 1961 instead of Pr. CCIT/CCIT as the reassessment proceedings were initiated within 3 years of completion of concerned Assessment Year after applying the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act 2020 and the exclusions due to court case.
4. Whether the decision of Ld CIT(A) correct in light of subsequent decision of Apex Court in case of UOI vs Rajiv Bansal dated 03.10.2024 reported 167taxmann.com 70 [2024](SC)? 5. Whether the decision of ld CIT(A) needs to be setaside and matter needs to be referred back to his file to decide on merits in light of subsequent decision of Apex Court in case of B01 vs. Rajiv
Bansal dated 03.10.2024 reported 167 taxmann.com 70 [2024] (SC)?
6. The appellant craves leave to add, amend any/all of the ground of appeal before or during the course of the hearing of the appeal.”
The main argument before us is that the impugned assessment order is beyond jurisdiction since the same has been passed pursuant to an illegal notice dated 19.07.2022 issued u/s 148 of the Income-tax Act, 1961 [the Act, for short] without obtaining prescribed approval from the specified authority in terms of section 151 of the Act.
Brief facts of the case are that the assessee company, M/s Paragon Industries Limited is engaged in the business of manufacturing and trading of aluminium products i.e. GEQ Sheet, Closure Sheet (PP Cap), checkered sheet, Roofing sheet, Aluminium bare Foil, Aluminium Blister Foil and Aluminium Pharma Foil. These business activities were carried out by the assessee in the year under consideration.
Page 3 of 10 consideration on 30.10.2017 declaring a total income of Rs.
11,87,71,000/- along with computation of income. The original assessment order in case of the assessee company was passed on 24.12.2019, wherein the income of the assessee was assessed at the income of Rs. 12,29,71,429/- as against returned income of Rs. 11,87,71,000/- after making an addition amounting to Rs.42,00,429/- on account of cash deposits during demonetization period.
The ld. DR relying on the orders of the authorities below vehemently submitted that there is no jurisdictional error as the reassessment proceedings were initiated within 3 years of completion of concerned Assessment Year after applying the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act 2020.
On the other hand, the ld. counsel for the assessee, at the very outset, submitted that the reassessment proceedings initiated in this case suffer from various jurisdictional flaws which render the entire assessment proceedings illegal, contrary to the new reassessment regime and thus, void ab initio. It is stated that the original notice u/s 148 was issued under the old regime on 25.05.2021. The AO issued notice
Page 4 of 10 148A(d) on 19.07.2022 and subsequently issued notice u/s 148 on 19.07.2022. It is submitted that approval u/s 151 is however, taken from PCIT instead of PCCIT/CCIT and hence the AO committed a jurisdictional error.
The ld AR also placed reliance on the decision of the Hon'ble Delhi High Court in the case of Anindita Sengupta v. Asstt. CIT [2024] 161taxmann.com 39 (Delhi). The ld. counsel for the assessee also relied upon the decisions of the co-ordinate bench in the case of Aftab Ahmad and Neha Goel ITA No. 1782/DEL/2025.
We have heard the rival submissions and have perused the relevant material on record. We find for a fact that the assessment involved in 2017-18 which is sought to be reopened u/s 148. The original notice u/s 148 was issued under the old regime on 25.05.2021. Thereafter, in view of the hon’ble Supreme Court decision in the case of Ashish Agarwal, the AO issued notice u/s 148A(b) under new regime on 21.05.2022. The AO passed order u/s 148A(d) on 19.07.2022 and subsequently issued notice u/s 148 on 19.07.2022. At the time of issuing notice u/s 148 dated 19.07.2022 under the new regime, the time of three years has already
Page 5 of 10 took the mandatory approval from PCIT-7, Delhi u/s 151(i) when under the new regime of reopening cases u/s 148 r.w. section 149 was to be obtained from PCCIT/CCIT u/s 151(ii). In such factual matrix, the notice u/s 148 dated 19.07.2022 can not be held as validly issued. In this regard it would be pertinent to reproduce the relevant portion of the decision of the coordinate Bench in the case of Aftab Ahmad [supra], on identical issue, which reads as under:
“8. At this juncture we find it appropriate to deal with the additional ground taken by the assessee that approval in terms of section 151 of the IT Act has not been obtained by the AO. Order under section 148A(d) was passed on 26/07/2022 and notice under section 148 was issued on 27/07/2022 after obtaining prior approval of the Commissioner of Income Tax-1, (International Taxation). The relevant portions of section 148, 149 and 151 as amended by Finance Act, 2021 which governs the issue of approval at hand, are reproduced hereunder: 1st Proviso to Section 148. "Provided that no notice under this section shall be issued unless there is information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the relevant assessment year and the Assessing Officer has obtained prior approval of the specified authority to issue such notice:" Section 149 reads as under: Page 6 of 10
(1) No notice under section 148 shall be issued for the relevant assessment year,- (a) if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b); (b) if three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income chargeable to tax, represent in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more that year." Section 151 reads as under: 151. Sanction for issue of notice:- Specified authority for the purposes of section 148 and section 148A shall be,- (i) Principal Commissioner of Principal Director or Commissioner or Director, if three years or less than three years have elapsed from the end of the relevant assessment year; (ii) Principal Chief Commissioner or Principal Director General or where there is no Principal Chief Commissioner of Principal Director General, Chief Commissioner or Director General, if more than three years have elapsed from the end of the relevant assessment year.
9. In the instant case, notice under section 148 dated 27.02.2022 was issued for escapement of income of Rs. 2,27,31,635/- which is above Rs 50 lakh. The notice u/s 148 was issued for a period beyond three years from the relevant assessment year. In terms of provisions of Section 151, as amended
Page 7 of 10 by Finance Act, 2021, therefore, the specified authority for grant of approval becomes Principal Chief Commissioner or Principal Director General or where there is no Principal Chief Commissioner of Principal Director General, Chief Commissioner or Director General. We find that in the instant case, the approval u/s 151 has been obtained from the Principal Commissioner of Income Tax- 1 (International Taxation). We are therefore, of the considered view that the impugned re-assessment is vitiated for want of proper, legal and valid approval u/s 151(ii). Accordingly, the reassessment made in the instant case can not be sustained and we hereby quash the said reassessment. The additional ground of appeal is hereby allowed.
10. We are fortified in our view by the decision of the Hon'ble Delhi High Court in the case of Twilight Infrastructure Private Limited Vs Income Tax Officer Ward 25(3), Delhi, which held as under: "12.3 In these cases, there is no dispute that although three (3) years had elapsed from the end of the relevant AY, the approval was sought from authorities specified in clause (1), as against clause (ii) of Section 151. 12.4 Before us, the counsel for the revenue continue to hold this position. The only liberty that they seek is that if, based on the judgement in Ganesh Dass Khanna, the impugned orders and notices are set aside, liberty be given to the revenue to commence reassessment proceedings afresh.
13. Therefore, having regard to the aforesaid, the impugned notices and orders in each of the above-mentioned writ petitions
Page 8 of 10 are quashed on the ground that there is no approval of the specified authority, as indicated in Section 151(ii) of the Act. The direction is issued with the caveat that the revenue will have liberty to take steps, if deemed necessary, albeit as per law." 11. As the case has been decided on the basis of jurisdictional ground, no adjudication is made on the merits of the case.”
In that view of the matter, respectfully following the aforesaid order, we are of the considered view that the impugned re-assessment in the instant case is vitiated for want of proper, legal and valid approval u/s 151(ii). Accordingly, the reassessment made in the instant case can not be sustained and we hereby quash the said reassessment. Finding no merits in the grounds raised by the Revenue, we sustain the findings of the CIT(A). dismissed.
Order pronounced in open court on 20.08.2025.