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Facts
The Assessee filed appeals against orders of the CIT(A)/NFAC for Assessment Years 2013-14 to 2017-18. The core issue was the validity of reassessment notices issued u/s 148 of the Income Tax Act, 1961.
Held
The Tribunal held that the reassessment notices issued u/s 148 of the Act were barred by limitation. This was based on the Supreme Court's judgments in Rajeev Bansal and Ashish Agarwal, which clarified the application of time limits for issuing such notices, especially in light of amendments and the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act.
Key Issues
Whether the reassessment notices issued u/s 148 of the Income Tax Act were issued within the period of limitation prescribed by Section 149 of the Act, considering the impact of the Finance Act, 2021, and relevant Supreme Court judgments.
Sections Cited
148, 148A, 149, 151, 147, 144B
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Income Tax Appellate Tribunal, DELHI
Before: SHRI M. BALAGANESH & SHRI YOGESH KUMAR U.S.
and 2017-18 and order dated 17/10/2024 for Assessment Year 2014- 15 respectively. Since the captioned Appeals are filed by a single Assessee, the Appeals are heard and decided together.
In so far as the Appeal pertaining to Assessment Year 2013-14 to 2015-16, the Ld. Counsel for the Assessee without going into the merits of the case, submitted that the reassessment notice issued u/s 148of the Act was beyond the limitation period in view of Judgment of Hon'ble Supreme Court in the case of Rajeev Bansal, Civil Appeal No. 8629 o f 2024 dated 03/10/2024. The Ld. Counsel further submitted that, since the notice issued u/s 148 of the Act was barred by limitation, the consequential assessment proceedings will be vitiated, thus sought for allowing the above Appeals of the Assessee.
Per contra, the Ld. Departmental Representative submitted that the contention of the Assessee regarding the notice issued u/s 148 of the Act is barred by limitation does not have merit. Further submitted that, issuing of the notice and the initiation of re- assessment proceedings are well within the limitation, thus relying on the order of the Lower Authorities, sought for dismissal of the Appeal.
We have heard both the parties and perused the material available on record. In order to compute the limitation period to issue the notice u/s 148 of the Act as per the Judgment of Hon'ble Supreme Court in the case of Rajeev Bansal (supra), the details are mentioned as under:-
Sr. Particulars Computation AY 2013-14 A.Y 2014-15 A.Y 2015-16 No. Dates/Days Dates/Days Dates/Days 1 Date of issue of A 18.06.2021 31.05.2021 18.06.2021 Original Notice u/s 148 within TOLA Period 2 Last date of TOLA B 30.06.2021 30.06.2021 30.06.2021 3 Balance (On C=B-A 13 31 13 Inclusive method) 4 Minimum days D 7 7 7 available as per 4th Proviso of Section 149(1) 5 Then SURVIVING E(Higher of C 13 31 13 PERIOD (Para-108 to & D) 113 of Rajeev Bansal) 6 Date of response F 03.06.2022 03.06.2022 03.06.2022 filed by Appellant to 148A(b) notice 7 Date on which Period G 01.06.2022 01.06.2022 02.06.2022 of two weeks allowed to assessee to respond to notice ends (deemed stay as per 3rd proviso to section 149 and Para 114 (g) of Rajeev Bansal) 8 Last date for issuing H=E+F 16.06.2022 20.07.2022 16.06.2022 notice u/s 148 [i.e., 03.06.2022+ 13 days] 9 Actual date of I 27.07.2022 27.07.2022 26.07.2022 issuance of notice u/s 148 10 Then Notice is time J+=I-H 41 25 40 Barred by (Para 114 (h) of Rajeev Bansal)
From the above chart, it is clear that in the notices u/s 148 of the Act have been issued Assessment Year 2013-14 with a delay of 41 days, in the Assessment Year 2014-15 with a delay of 25 days and in the Assessment Year 2015-16 the notice u/s 148 of the Act has been issued with a delay of 40 days. in the case of Nilanjana Arvinder Singh Vs. DCIT reported in 2025 (4) and 6167/MUM/2024 vide order dated 13/03/2025, held as under:-
“13. We have considered the submissions of both sides and perused the material available on record. In order to decide the issue at hand, it is, at the outset, relevant to note that the provisions of section 149 of the Act, as amended by the Finance Act, 2021, which provides the time limit for issuance of notice under section 148 of the Act, and the same reads as follows: -
"Time limit for notice. 149. (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, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more for that year: Provided that no notice under section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before 1st day of April, 2021, if such notice could not have been issued at that time on account of being beyond the time limit specified under the provisions of clause (b) of sub- section (1) of this section, as they stood immediately before the commencement of the Finance Act, 2021: Provided further that the provisions of this sub-section shall not apply in a case, where a notice under section 153A, or section 153C read with section 153A, is required to be issued in relation to a search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A, on or before the 31st day of March, 2021: Provided also that for the purposes of computing the period of limitation as per this section, the time or extended time allowed to the assessee, as per show cause notice issued under clause (b) of 5756, 5761, 5768 & 5756/Del/2024 Balbir Singh Vs. NFAC section 148A or the period during which the proceeding under section 148A is stayed by an order or injunction of any court, shall be excluded: Provided also that where immediately after the exclusion of the period referred to in the immediately preceding proviso, the period of limitation available to ITAs No.6140 & 6167/Mum/2024 (A.Ys. 2013-14 & 2014-15) 8 the Assessing Officer for passing an order under clause (d) of section 148A is less than seven days, such remaining period shall be extended to seven days and the period of limitation under this sub-section shall be deemed to be extended accordingly. Explanation -- For the purposes of clause (b) of this sub-section, "asset" shall include immovable property, being land or building or both, shares and securities, loans and advances, deposits in bank account. (2) The provisions of sub-section (1) as to the issue of notice shall be subject to the provisions of section 151."
Therefore, from the plain reading of the provisions of Section 149 of the Act, it is evident that no notice under section 148 of the Act shall be issued after the expiry of 3 years from the end of the relevant assessment year, unless the case falls under clause (b) to section 149(1) of the Act. Further, clause (b) to section 149(1) of the Act provides the time period of 10 years to issue notice under section 148 of the Act, if the conditions laid down therein are satisfied. We find that the first proviso to section 149(1) of the Act specifically provides that no notice under section 148 of the Act, as per the amended provisions, can be issued at any time for assessment year beginning on or before 01/04/2021, if such notice could not have been issued at that time on account of being beyond the time limit specified under the provisions of section 149(1)(b), as it stood immediately before the commencement of the Finance Act, 2021.
Section 149 of the Act, prior to its amendment by the Finance Act, 2021, reads as follows: -
"Time limit for notice. 149. (1) No notice under section 148 shall be issued for the relevant assessment year, -- ITAs No.6140 & 6167/Mum/2024 (A.Ys. 2013-14 & 2014-15) 9 (a) if four years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b) or clause (c); 5756, 5761, 5768 & 5756/Del/2024 Balbir Singh Vs. NFAC (b) if four years, but not more than six years, have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to one lakh rupees or more for that year; (c) if four years, but not more than sixteen years, have elapsed from the end of the relevant assessment year unless the income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment.
Explanation.-- In determining income chargeable to tax which has escaped assessment for the purposes of this sub-section, the provisions of Explanation 2 of section 147 shall apply as they apply for the purposes of that section. (2) The provisions of sub- section (1) as to the issue of notice shall be subject to the provisions of section 151.
(3) If the person on whom a notice under section 148 is to be served is a person treated as the agent of a non-resident under section 163 and the assessment, reassessment or recomputation to be made in pursuance of the notice is to be made on him as the agent of such non-resident, the notice shall not be issued after the expiry of a period of six years from the end of the relevant assessment year.
Explanation.-- For the removal of doubts, it is hereby clarified that the provisions of sub-sections (1) and (3), as amended by the Finance Act, 2012, shall also be applicable for any assessment year beginning on or before the 1st day of April, 2012."
From the plain reading of section 149 of the Act, prior to its amendment by the Finance Act, 2021, it is evident that the same provides period of 4 years, up to 6 years, and up to 16 years for issuance of notice under section 148 of the Act, provided the conditions laid down therein are satisfied. In the present case, it cannot be disputed that the time limit of 4 years from the end of the relevant assessment year, i.e., assessment year 2013-14, expired on 31/03/2018, and the period of 6 years from the end of the relevant assessment year expired on 31/03/2020. Therefore, in the present case, the time period covered under the provisions of the TOLA, i.e. from 20/03/2020 ITAs No.6140 & 6167/Mum/2024 (A.Ys. 2013-14 & 2014-15) 10 to 31/03/2021, only includes 30/03/2020, i.e., 6 years from the end of the relevant assessment year. It is evident from the record that the original notice under section 148 of the Act, which was deemed to be a notice issued under section 148A(b) of the Act pursuant to the decision of the Hon'ble Supreme Court in Ashish 5756, 5761, 5768 & 5756/Del/2024 Balbir Singh Vs. NFAC Agarwal (supra), was issued on 29/06/2021. We find that the Hon'ble Supreme Court in Rajeev Bansal (supra) in paragraph- 114(b) held that the TOLA will continue to apply to the Act after 01/04/2021 if any action or proceeding specified under the substituted provisions of the Act falls for completion between 20/03/2020 and 31/03/2021. Therefore, applying the aforesaid ratio of the Hon'ble Supreme Court to the facts of the present case, we are of the considered view that as the period of 6 years from the end of the relevant assessment year expires on 31/03/2020, which fell within the period from 20/03/2020 to 31/03/2021, therefore, the notice issued on 29/06/2021, which was deemed to be noticed under section 148A(b) of the Act, is covered under the extended time limit till 30/06/2021 provided under the TOLA.
As regards the submission of the learned DR that the time period from the date of issuance of the deemed show cause notice till the date of filing of response by the assessee shall be excluded under the third proviso to section 149 of the Act, we find that the Hon'ble Supreme Court in paragraph-106 and 107 of its decision in Rajeev Bansal (supra), observed as follows: - "106. In Ashish Agarwal (supra), this Court directed the assessing officers to provide relevant information and materials relied upon by the Revenue to the assesses within thirty days from the date of the judgment. A show cause notice is effectively issued in terms of Section 148A(b) only if it is supplied along with the relevant information and material by the assessing officer. Due to the legal ITAs No.6140 & 6167/Mum/2024 (A.Ys. 2013- 14 & 2014-15) 11 fiction, the assessing officers were deemed to have been inhibited from acting in pursuance of the Section 148A(b) notice till the relevant material was supplied to the assesses. Therefore, the show cause notices were deemed to have been stayed until the assessing officers provided the relevant information or material to the assesses in terms of the direction issued in Ashish Agarwal (supra). To summarize, the combined effect of the legal fiction and the directions issued by this Court in Ashish Agarwal (supra) is that the show cause notices that were deemed to have been issued during the period between 1 April 2021 and 30 June 2021 were stayed till the date of supply of the relevant information and material by the assessing officer to the assessee. After the supply of the relevant material and information to the assessee, time begins to run for the assesses to respond to the show cause notices.
The third proviso to Section 149 allows the exclusion of time allowed for the assesses to respond to the show cause notice under section 149A(b) to compute the period of limitation. The third proviso excludes "the time or extended time allowed to the 5756, 5761, 5768 & 5756/Del/2024 Balbir Singh Vs. NFAC assessee." Resultantly, the entire time allowed to the assessee to respond to the show cause notice has to be excluded for computing the period of limitation. In Ashish Agarwal (supra), this Court provided two weeks to the assesses to reply to the show cause notices. This period of two weeks is also liable to be excluded from the computation of limitation given the third proviso to Section 149. Hence, the total time that is excluded for computation of limitation for the deemed notices is: (i) the time during which the show cause notices were effectively stayed, that is, from the date of issuance of the deemed notice between 1 April 2021 and 30 June 2021 till the supply of relevant information or material by the assessing officers to the assesses in terms of the directions in Ashish Agarwal (supra); and (ii) two weeks allowed to the assesses to respond to the show cause notices."
From the perusal of the aforesaid findings of the Hon'ble Supreme Court in Rajeev Bansal (supra), it is evident that the Hon'ble Supreme Court directed that while computing the time limit for issuance of notice under section 148, the time during which the show cause notice was stayed till the supply of relevant information or material by the AO and further period of two weeks allowed to the assessee to respond to the show cause notice should be excluded. We find that while examining the validity of notices issued from 01/04/2021 to 30/06/2021 under the old regime, the Hon'ble Supreme Court in Rajeev Bansal (supra), analysing the interplay of Ashish Agarwal (supra) with the TOLA, in paragraph-108 of its judgment observed as follows: - "108. The Income Tax Act read with TOLA extended the time limit for issuing reassessment notices under Section 148, which fell for completion from 20 March 2020 to 31 March 2021, till 30 June 2021. All the reassessment notices under challenge in the present appeals were issued from 1 April 2021 to 30 June 2021 under the old regime. Ashish Agarwal (supra) deemed these reassessment notices under the old regime as show cause notices under the new regime with effect from the date of issuance of the reassessment notices. The effect of creating the legal fiction is that this Court has to imagine as real all the consequences and incidents that will inevitably flow from the fiction. 163 Therefore, the logical effect of the creation of the legal fiction by Ashish Agarwal (supra) is that the time surviving under the Income Tax Act read with TOLA will be available to the Revenue to complete the remaining proceedings in furtherance of the deemed notices, including issuance of reassessment notices under Section 148 of the new regime. The surviving or balance time limit can be calculated by computing the number of days between the date of issuance of the deemed notice and 30 June 2021."
5756, 5761, 5768 & 5756/Del/2024 Balbir Singh Vs. NFAC 19. Thus, the Hon'ble Supreme Court held that the surviving time under the Act read with the TOLA will be available to the Revenue to complete the remaining proceedings in furtherance of the deemed notice, including issuance of re-assessment notice under section 148 of the Act under the new regime. While explaining the methodology for computation of the surviving or balance time limit, the Hon'ble Supreme Court in paragraph-112 of Rajeev Bansal (supra) observed as follows: - "112. Let us take the instance of a notice issued on 1 May 2021 under the old regime for a relevant assessment year. Because of the legal fiction, the deemed show cause notices will also come into effect from 1 May 2021. After accounting for all the exclusions, the assessing officer will have sixty-one days [days between 1 May 2021 and 30 June 2021] to issue a notice under Section 148 of the new regime. This time starts ticking for the assessing officer after receiving the response of the assessee. In this instance, if the assessee submits the response on 18 June 2022, the assessing officer will have sixty- one days from 18 June 2022 to issue a reassessment notice under Section 148 of the new regime. Thus, in this illustration, the time limit for issuance of a notice under Section 148 of the new regime will end on 18 August 2022."
Therefore, the surviving/balance time limit can be calculated by computing the number of days between the date of issuance of deemed notice and 30/06/2021. Since, in the present case, we find that the period of 6 years ITAs No.6140 & 6167/Mum/2024 (A.Ys. 2013-14 & 2014-15) 13 from the end of the relevant assessment year expires on 31/03/2020, which falls within the time period from 20/03/2020 to 31/03/2021, in order to compute the surviving/balance time as per the decision of the Hon'ble Supreme Court in paragraph-108, it is relevant to note the following dates: - S. No. Particulars Dates 1 Period of Limitation under the Old Act 31.03.2020 2 First Notice issued u/s 14829.06.2021 3 Extended Limitation as per the TOLA 30.06.2021 4 Surviving Time 2 Days 5 Date of Decision of Ashish Agarwal 04.05.2022 6 Notice u/s 148A(b) 24.05.2022 7 Time Given 30 Days 8 Assessee's Reply 24.06.2022 9 Order u/s 148A(d) 28.07.2022 10 Second Notice u/s 14828.07.2022 5756, 5761, 5768 & 5756/Del/2024 Balbir Singh Vs. NFAC 21. Therefore, computing the surviving/balance time limit, as per the decision of the Hon'ble Supreme Court in Rajeev Bansal (supra), we find that the Revenue had only 2 days (i.e., between 29/06/2021 to 30/06/2021) to issue notice under section 148 of the Act of the new regime in the present case, i.e. till 26/06/2022, after receipt of the response from the assessee on 24/06/2022 to the show cause notice issued under section 148A(b) of the Act. However, undisputedly, in the present case, the notice under section 148 of the Act was issued on 28/07/2022, i.e., 32 days after the surviving/balance time period as per the decision of the Hon'ble Supreme Court in Rajeev Bansal (supra).
We find that even if the benefit of the fourth proviso to section 149 of the Act is granted to the Revenue, since the remaining period in the present case, after the exclusion of time period as provided in the third proviso to section 149, is less than 7 days, even then the notice dated 28/07/2022 under ITAs No.6140 & 6167/Mum/2024 (A.Ys. 2013-14 & 2014-15) 14 section 148 of the Act was issued much beyond the 7 days' extension provided in the fourth proviso to section 149 of the Act.
As regards the other contention of the learned DR that as per the provisions of section 148A(d) of the Act, the AO has time period of one month from the end of the month in which the reply is received from the assessee, and therefore, since in the present case, the assessee filed its reply on 24/06/2022, the order passed under section 148A(d) and notice issued under section 148 of the Act on 28/07/2022 is within the limitation period, we find that similar argument of the Revenue was negated by the Hon'ble Delhi High Court in Ram BalramBuildhome (P.) Ltd. v/s Income-tax Officer, reported in [2025] 171 taxmann.com 99 (Delhi), by observing as follows: - "69. As noted above, by virtue of TOLA, the AO had period of twenty-nine days limitation left on the date of commencement of the reassessment proceedings, which began on 01.06.2021, to issue a notice under Section 148 of the Act. The said notice was required to be accompanied by an order under Section 148A(d) of the Act. Thus, the AO was required to pass an order under Section 148A(d) of the Act within the said twenty-nine days notwithstanding the time stipulated under Section 148A(d) of the Act. This period expired on 12.07.2022.
Since the period of limitation, as provided under Section 149(1) of the Act, had expired prior to issuance of the impugned notice on 30.07.2022. The said is squarely beyond the period of limitation.
5756, 5761, 5768 & 5756/Del/2024 Balbir Singh Vs. NFAC 71. It is contended on behalf of the Revenue that the AO is required to pass an order under Section 148A(d) of the Act by the end of the month following the month on which the reply to the notice under Section 148A(b) of the Act was received. Thus, the order under Section 148A(d) of the Act as well as the notice under Section 148 of the Act (both dated 30.07.2022) are within the prescribed period. This contention is without merit as it does not take into account that proceedings under Section 148A of the Act necessarily required to be completed within the period available for issuing notice under Section 148 of the Act, as prescribed under Section 149 of the Act. Thus, the time available to the AO to pass an order under Section 148A(d) of the Act was necessarily truncated and the same was required to be passed on or before 12.07.2022. The fourth proviso to Section 149 of the Act did not come into play as the time period available for the AO to pass an order under Section 148A(d) of the Act was in excess of the seven days.
In view of the above, we find merit in Mr.Sehgal's contention that the impugned notice dated 30.07.2022 has been issued beyond the period of limitation.
The petition is accordingly allowed and the impugned order dated 30.07.2022 passed under Section 148A(d) of the Act; the impugned notice dated 30.07.2022 issued under Section 148 of the Act; and the assessment order dated 30.05.2023 framed under Section 147 of the Act pursuant to the notice dated 30.07.2022 for AY 2013-14, are set aside. Pending application is also disposed of."
Therefore, in view of the findings of the Hon'ble Delhi High Court in the decision cited supra, we do not find any merits in the aforesaid submission of the learned DR, and the reliance placed by the learned DR upon the decision of the SMC Bench of the Tribunal in PushpadeviShivlalRathi v/s ITO, in ITA No. 1995/Pun./2024, dated 04/12/2024 is also of no relevance.
Therefore, having considered the provisions of the Act, pre as well as post the amendment by the Finance Act, 2021, and the TOLA, in the light of the decision of the Hon'ble Supreme Court in Ashish Agarwal (supra) and Rajeev Bansal (supra), we are of the considered view that the notice issued under section 148 of the Act on 28/07/2022 is barred by limitation period specified under section 149 of the Act. Accordingly, we are of the considered view that notice issued under section 148 of the Act on 28/07/2022 is void ab initio and bad in law. Therefore, the same is quashed. Consequently, the entire re-assessment order passed under section proceedings and assessment 147 r.w. section 144B of the Act are also quashed.”
2015-16 the notices u/s 148 of the Act have been issued beyond the period of limitation prescribed by the Hon'ble Supreme Court in the case of Rajeev Bansal (supra), by applying the ratio laid down by the Hon'ble Supreme Court in the case of Rajeev Bansal (supra), we are of the opinion that the notices issued u/s 148 of the Act dated 27/07/2022 for Assessment Years 2013-14 and 2014-15 and the notice dated 26/07/2022 issued for 2015-16 are barred by the period specified u/s 149 of the Act, consequently, the re-assessment proceedings initiated thereupon for Assessment Year 2013-14 to 2015-16 are hereby quashed.
The Ld. Counsel for the Assessee on the outset, addressing on the Ground No. 1 of the Appeal contended that the assessment proceedings initiated u/s 148 of the Act itself is erroneous as the prior approval of Competent Authority u/s 151 for issues of order u/s 148A(d) of the Act dated 31/07/2022 was obtained from Ld. Pr. CIT- 15, Delhi, whereas the approval should have been obtained from Pr.
CCIT, Delhi as mandated by law. Thus, submitted that the Ld. CIT(Appeals) erred in law and on facts in not quashing the assessment framed by the A.O. The Ld. Counsel has also relied on following judicial precedents:-
5756, 5761, 5768 & 5756/Del/2024 Balbir Singh Vs. NFAC i. Communist Party of India (Marxist) Vs. ITD, W.P.(C) 9031/2023 dated 28.04.2025 (DHC). Referred: JM Financial & Investments Consultancy Services Pvt. Ltd., W.P. No. 1050/2020 dated 04.04.2022 (BHC). ii. Twylight Infrastructure Pvt. Ltd. Vs. ITO, W.P.(C) No. 16524 of 2022 dated 05.01.2024 (DHC). iii. H And H Hennes And Mauritz Retail Private Ltd. Vs. ACIT, W.P.(C) 4848/2023 date 14.05.2025 (DHC). iv. Cadence Real Estates Pvt. Ltd. v. Income Tax Officer and Anr., W.P.(C) 482/2023, decided 24.04.2025 (DHC). v. AnkitaLokeshGoyal Vs. ITO, dated 27.06.2025.
Per contra, the Ld. Assessee's Representative relying on the orders of the Lower Authorities, submitted that the prior approval of Competent Authority u/s 151 for issues of order u/s 148A(d) of the Act has been obtained in accordance with law and the assessment has been framed on its merits. Therefore, the contention of the Assessee cannot be upheld, thus sought for dismissal of the Appeals pertaining to Assessment Years 2016-17 and 2017-18.
We have heard both the parties and perused the material available on record. As could be seen from the record the notice u/s 148 of the Act was issued by the AO on 18/06/2021 and 16.6.2021 for Assessment Year 2016-17 and 2017-18 respectively. The Ld. A.O. in the assessment orders mentioned that, the assessment ‘order has been passed with a priorapproval of Pr. Commissioner of Income Tax- 15, Delhi. Notice u/s 148 of the Income Tax Act, 1961 ('Act' for short) of the Act, if the approval is sought for after the expiry of three years, the approval shall be obtained from the Pr. Chief Commissioner of Income Tax and not from the Pr. Commissioner of Income Tax. If there is no Pr. Chief Commissioner of Income Tax, the permission will suffice if it is obtained from Chief Commissioner. In the above cases the AO obtained prior approval from Principal Commissioner of Income Tax, though the action for initiation of proceedings for beyond three years from the end of the relevant assessment year. The Hon’ble Jurisdictional High Court in the case of Rajesh Gupta (HUF) Vs. ACIT (supra) it was held that when the permission is obtained beyond the period of three years, it had to be obtained only from Pr. Chief Commissioner of Income Tax and not from Pr. Commissioner of Income Tax. The Hon’ble High Court quashed the reassessment proceedings in the absence of proper approval obtained by the AO and the ratio to this judgment squarely applies to the facts of the Assessee’s case which are as under: -
“2. Before us the solitary argument which is addressed today is with respect to the validity of the sanction which was accorded to the reassessment action by the Principal Commissioner of Income Tax. Learned counsel for the writ petitioner, draws our attention to the provisions of Section 151 of the Income Tax Act, 1961 as they stood at the relevant time and which read as follows:-
“151. Specified authority for the purposes of section 148 and section 148A shall be,— (i) Principal Commissioner or Principal Director or Commissioner or Director, if three years 5756, 5761, 5768 & 5756/Del/2024 Balbir Singh Vs. NFAC 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 or Principal Director General, Chief Commissioner or Director General, if more than three years have elapsed from the end of the relevant assessment year.”
4. Undisputedly, we are in this writ petition concerned with Assessment Year 2016-17 and in respect of which the notice under Section 148 of the Act ultimately came to be issued on 29 July 2022. It is thus apparent that the action has come to be initiated after the expiry of three years from the end of the relevant AY. It is in the aforesaid context that the petitioner contends that the sanction accorded by the PCIT would not sustain.
5. In cases where reassessment is sought to be commenced after the lapse of three years from the end of the relevant AY, undisputedly, it would be the Principal Chief Commissioner who would be liable to be recognised as being the competent authority. Viewed in that light, it is apparent that the reassessment action would not sustain.
6. Dealing with an identical question, we had in Abhinav Jindal HUF v. Commissioner of Income Tax and Ors held as under:-
“30. Tested on the principles which were enunciated in SumanJeet Agarwal v. ITO [(2022) 449 ITR 517 (Delhi); 2022 SCC OnLine Del 3141], the petitioners would appear to be correct in their submission of the date liable to be ascribed to the impugned notices and those being viewed as having been issued and dispatched after April 1, 2021. However, and in our considered opinion, the same would be of little relevance or significance when one bears in mind the indubitable fact that all the notices were approved by the Joint Commissioner of Income-tax and which was an authority recognised under the unamended section 151. The answer to the argument based on the provisions of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions] Act would also largely remain unimpacted by our finding on this score as would become evident from the discussion which ensues. Xxxxxxxxxxxx
33.A plain reading of section 3 establishes that where the time limit for the completion or compliance of any action under a specified Act were to fall between March 20, 2020 5756, 5761, 5768 & 5756/Del/2024 Balbir Singh Vs. NFAC to December 31, 2020, the period for completion and compliance would stand extended up to March 31, 2021 or such other date thereafter as may be specified by the Union Government by way of a notification. Undisputedly, the date of March 31, 2021 came to be extended thereafter up to April 30, 2021 and lastly up to June 30, 2021.
Concededly, the Finance Act. 2021 was enacted thereafter and came into effect from April 1. 2021. It is admitted by the respondents that the terminal point for initiation of reassessment for the assessment year 2015- 2016 in ordinary circumstances would have been March 31, 2020 and that date clearly fell within the period spoken of in section 3 of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions') Act. The period for issuance of notice for the assessment year 2015-2016, thus and principally speaking, stood extended up to June 30. 2021.
However, the key to answering the argument which was canvassed on behalf of the respondents is contained in section 3 itself and which purported to extend the period for completion of proceedings, passing of an order, issuance of a notice, intimation, notification, sanction or approval. The provision extended the time limit for such action, notwithstanding anything contained in the specified Act, initially up to March 31. 2021 and which date was extended subsequently to April 30. 2021 and lastly up to June 31. 2021.
Section 3 thus essentially extended the time period statutorily prescribed for initiation and compliance up to the dates notified by the Union Government from time to time. The extension of these timelines was intended to apply to all statutes which were included in the expression “specified Act” as defined in section 2(b) of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act.
The Taxation and Other Laws ('Relaxation and Amendment of Certain Provisions) Act was thus concerned with overcoming the statutory closure and eclipse which would have otherwise descended upon the authority to act and take action under the specified statutes. It was essentially concerned with tiding over the insurmountable hurdles which arose due to the pandemic and the disruption 5756, 5761, 5768 & 5756/Del/2024 Balbir Singh Vs. NFAC that followed in its wake. The Taxation and Other Laws ("Relaxation and Amendment of Certain Provisions) Act, viewed in that light, was neither aimed at nor designed or intended to confer a new jurisdiction or authority upon an officer under a specified enactment. On a fundamental plane, it was a remedial measure aimed at overcoming a position of irretrievable and irreversible consequences which were likely to befall during the nationwide lockdown. It was principally aimed at enabling authorities to take and commence action within the extended timelines that the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act introduced. However, it neither altered nor modified or amended the 9 distribution of functions, the command structure or the distribution of powers under a specified Act. It was in that light that we had spoken of the carving or conferral of a new or altered jurisdiction.
It would therefore be wholly incorrect to read the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act as intending to amend the distribution of power or the categorisation envisaged and prescribed by section 151. The additional time that the said statute provided to an authority cannot possibly be construed as altering or modifying the hierarchy or the structure set up by section 151 of the Act. The issue of approval would still be liable to be answered based on whether the reassessment was commenced after or within a period of four years from the end of the relevant assessment year or as per the amended regime dependent upon whether action was being proposed within three years of the end of the relevant assessment year or thereafter. The bifurcation of those powers would continue unaltered and unaffected by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act.
The fallacy of the submission addressed by the respondents becomes even more evident when we weigh in consideration the fact that even if the reassessment action were initiated, as per the extended Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act timelines, and thus after the period of four years, section 151 incorporated adequate measures to deal with such a contingency and in unambiguous terms identified the authority which was to be moved for the purposes of sanction and approval. Section 151 distributed the powers 5756, 5761, 5768 & 5756/Del/2024 Balbir Singh Vs. NFAC of approval amongst a set of specified authorities based upon the lapse of time between the end of the relevant assessment year and the date when reassessment was proposed. Thus even if the reassessment was proposed to be initiated with the aid of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act after the expiry of four years from the end of the relevant year, the authority statutorily empowered to confer approval would be the Principal Chief Commissioner/Chief Commissioner/Principal Commissioner/Commissioner. It would only be in a case where the reassessment was proposed to be initiated before the expiry of four years from the end of the relevant assessment year that approval could have been accorded by the Joint Commissioner of Income-tax. Similar would be the position which would emerge if the actions were tested on the basis of the amended section 151 and which divides the power of sanction amongst two sets of authorities based on whether reassessment is commenced within three years or thereafter.
What we seek to emphasise is that the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act authorisation merely enables the competent authority to take action within the extended time period and irrespective of the closure which would have ordinarily come about by virtue of the provisions contained in the Act. It does not alter or amend the structure for approval and sanction which stands erected by virtue of section 151. The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions') Act merely extended the period within which action could have been initiated and which would have otherwise and ordinarily been governed and regulated by sections 148 and 149 of the Act. If the contention of the respondents were to be accepted it would amount to us virtually ignoring the date when reassessment is proposed to be initiated and the same being indelibly tied to the end of the relevant assessment year. Once it is conceded that the notice came to be issued four or three years after the end of the relevant assessment year, the approval granted by the Joint Commissioner of Income-tax would not be compliant with the scheme of section 151. We thus find ourselves unable to sustain the grant of approval by the Joint Commissioner of Income-tax.
5756, 5761, 5768 & 5756/Del/2024 Balbir Singh Vs. NFAC 41. It is pertinent to note that the respondents had feebly sought to urge that the use of the expression “sanction” in section 3 of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act also merits due consideration and is liable to be read as supportive of the contentions that were addressed on their behalf. The argument is however clearly meritless when one bears in consideration the indisputable fact that the set of provisions with which we are concerned nowhere prescribe a timeframe within which sanction is liable to be accorded. “Sanction” when used in section 3 of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act caters to those contingencies where a specified Act may have prescribed a particular time limit within which an action may be approved. That is clearly not the position which obtains here. We thus find ourselves unable to sustain the impugned action of reassessment. The impugned notices which rest on a sanction obtained from the Joint Commissioner of Income-tax would thus be liable to be quashed.” Consequently, and for the aforesaid reasons, we find ourselves unable to sustain the reassessment action on this short score alone.
Accordingly, the writ petition is allowed. The impugned order referable to Section 148A(d) and notice under Section 148, both dated 29 July 2022 are quashed. However, the present order shall be without prejudice to the right of the respondent to draw such other proceedings as may be permissible in law.”
The Hon’ble Jurisdictional High Court in the case of Appeal Kids Dream International Pvt. Ltd. vs. ACIT in WP(c) 2814/2023 dated 24.02.2025, held as under:
2. As is evident from the above, the solitary question which was canvassed for our consideration was the issue of sanction as contemplated under Section 151 of the Income Tax Act, 1961 [“Act
3. The reassessment action for Assessment Year [“AY”] 2017-18 came to be commenced admittedly after a lapse of three years from the end of the relevant AY. It is in the aforesaid backdrop that Mr. Kantoor, learned counsel, had 5756, 5761, 5768 & 5756/Del/2024 Balbir Singh Vs. NFAC submitted that the said sanction accorded by the Principal Commissioner of Income Tax [“PCIT”] would not sustain.
4. We note that while dealing with the said question we had in Abhinav Jindal HUF v. Commissioner of Income Tax and Ors [2024 SCC Online Del 6585] duly enunciated the legal position which would obtain. We had ultimately in Abhinav Jindal held that the Taxation & Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 [“TOLA”] provisions would have no bearing on the identification of the competent authority under Section 151 for according sanction.
5. In view of the aforesaid, and since undisputedly in the facts of the present case the sanction was accorded only by the PCIT, the reassessment action would not sustain.
Accordingly and for all the aforesaid reasons, we allow the instant writ petition and quash the impugned order referable to Section 148A(d) dated 30 July 2022 and notice u/s 148 of even date.”
The above ratio of the judgments are squarely applicable to the facts of the Assessee’s case for Assessment Year 2015-16 and 2016-
17. Therefore, by respectfully following the above ratios, we quash the assessment orders. Since we have quashed the assessment proceedings on the legal ground, we are not inclined to decide the rest of the Grounds as they become only academic in nature.
In the result, Appeal of the Assessee in 5756Del/2024, 5761Del/2024, 5768 Del/2024 & 5756/Del/2024 are partly allowed. /// Order pronounced in the open court on 31st July, 2025 Sd/- Sd/- (M. BALAGANESH) (YOGESH KUMAR U.S.) ACCOUNTANT MEMBER JUDICIAL MEMBER Date 31 .07.2025 R.N, Sr.P.S*
ASSISTANT REGISTR ITAT, NEW DELHI