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Income Tax Appellate Tribunal, DELHI BENCH: “SMC” NEW DELHI
Before: SHRI SATBEER SINGH GODARA
Date of hearing 30.06.2025 Date of pronouncement 30.06.2025 ORDER This assessee’s appeal for assessment year 2016-17, arises against the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre [in short, the “CIT(A)/NFAC”], Delhi’s DIN and order no. ITBA/NFAC/S/250/2024-25/1072584888(1), dated 27.01.2025 involving proceedings under section 147 of the Income- tax Act, 1961 (hereinafter referred to as ‘the Act’). Heard both the parties. Case file perused.
This assessee’s appeal raises the following substantive grounds:
That on the facts and in the circumstances of the case, the disallowance, imposition of tax and interest with reference thereto, the quantification of taxable income and the tax liability, has been grossly unjustified, erroneous and unsustainable and necessary direction be given to the Ld. AO to give appropriate relief in accordance with law.
2. That on the facts and in the circumstances of the case, the Ld. 2 AO erred in reopening the assessment u/s 148 of the Act since the time limit for issuance of notice u/s 149(1) had elapsed. 3 . That on the facts and the circumstances of the case and without prejudice to the ground taken herein above, the Ld. AO has grossly erred in reopening the assessment u/s 148 of the Act since the alleged transaction is outside the purview of section 149 as same is not covered under the definition of assets. 4. That on the facts and the circumstances of the case and without prejudice to the ground taken herein above, the Ld. AO erred in disallowing thirty percent of External Development Charges paid to HUDA in terms of Section 40(a)(ia) of the Act. 5. That on the facts and in the circumstances of the case, the appellant was under no obligation to deduct tax on aforesaid EDC payment. 6. That on the facts and in the circumstances of the case, the Ld. AO has grossly erred in levying interest u/s 234B and 234D, being consequential in nature. 7. That the appellant craves to add, amend, modify, rescind, supplement, or alter any of the grounds stated here-in-above, either before or at the time of hearing of this appeal.
Next comes the legal issue between the parties. Learned senior counsel first of all refers to the Assessing Officer’s section 148 notice dated 28.07.2022 issued after obtaining the necessary satisfaction of Pr. CIT, Delhi. He then quotes section 151(ii) of the Act that once the above stated notice has been issued after a period of more than 3 years having elapsed from the end of relevant
2 | P a g e assessment year; the necessary sanction ought to have been obtained not from the Principal Commissioner but from the “Principal Chief Commissioner or Principal Director……………., as the case may be”.
We notice in this factual backdrop that the instant clinching issue i.e. the learned “prescribed authority” as to whether it should be the jurisdictional commissioner or Principal Commissioner under section 151(i) or the Principal Chief Commissioner under clause (ii) of the Act, as the case may be, is no more res-integra as per hon’ble apex court’s recent landmark decision in Union of India Vs. Rajeev Bansal [2024] 167 taxmann.com 70, deciding the same against the department as under: “73. Section 151 imposes a check upon the power of the Revenue to reopen assessments. The provision imposes a responsibility on the Revenue to ensure that it obtains the sanction of the specified authority before issuing a notice under Section 148. The purpose behind this procedural check is to save the assesses from harassment resulting from the mechanical reopening of assessments. 128 A table representing the prescription under the old and new regime is set out below: Regime Time limits Specified authority Section 151(2) of Before expiry of four Joint the old regime years from the end of the Commissioner relevant assessment year Section 151(1) of After expiry of four years Principal Chief the old regime from the end of the Commissioner or relevant assessment Chief years Commissioner or Principal
3 | P a g e Commissioner or Commissioner Section 151(i) of the Three years or less than Principal new regime three years from the end Commissioner or of the relevant Principal Director assessment year or Commissioner or Director Section 151(ii) of More than three years Principal Chief the new regime have elapsed from the Commissioner or end of the relevant Principal Director assessment year General or Chief Commissioner or Director General
The above table indicates that the specified authority is directly co-related to the time when the notice is issued. This plays out as follows under the old regime: (i) If income escaping assessment was less than Rupees one lakh: (a) a reassessment notice could be issued under Section 148 within four years after obtaining the approval of the Joint Commissioner; and (b) no notice could be issued after the expiry of four years; and (ii) If income escaping was more than Rupees one lakh: (a) a reassessment notice could be issued within four years after obtaining the approval of the Joint Commissioner; and (b) after four years but within six years after obtaining the approval of the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner.
After 1 April 2021, the new regime has specified different authorities for granting sanctions under Section 151. The new regime is beneficial to the assessee because it specifies a higher level of authority for the grant of sanctions in comparison to the old regime. Therefore, in terms of Ashish Agarwal (supra), after 1 April 2021, the prior approval must be obtained from the appropriate authorities specified under Section 151 of the new regime. The effect of Section 151 of the new regime is thus: (i) If income escaping assessment is less than Rupees fifty lakhs: (a) a reassessment notice could be issued within three years after obtaining PART E the prior approval of the Principal Commissioner, or Principal Director or Commissioner or Director; and (b) no notice could be issued after the expiry of three years; and (ii) If income escaping assessment is more than Rupees fifty lakhs: (a) a reassessment notice could be issued within three years after obtaining the prior approval of the Principal Commissioner, or Principal Director or Commissioner or Director; and (b) after three years after obtaining the prior approval of the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General. 4 | P a g e
Grant of sanction by the appropriate authority is a precondition for the assessing officer to assume jurisdiction under Section 148 to issue a reassessment notice. Section 151 of the new regime does not prescribe a time limit within which a specified authority has to grant sanction. Rather, it links up the time limits with the jurisdiction of the authority to grant sanction. Section 151(ii) of the new regime prescribes a higher level of authority if more than three years have elapsed from the end of the relevant assessment year. Thus, non- compliance by the assessing officer with the strict time limits prescribed under Section 151 affects their jurisdiction to issue a notice under Section 148.
Parliament enacted TOLA to ensure that the interests of the Revenue are not defeated because the assessing officer could not comply with the pre- conditions due to the difficulties that arose during the COVID-19 pandemic. Section 3(1) of TOLA relaxes the time limit for compliance with actions that fall for completion from 20 March 2020 to 31 March 2021. TOLA will PART E accordingly extend the time limit for the grant of sanction by the authority specified under Section 151. The test to determine whether TOLA will apply to Section 151 of the new regime is this: if the time limit of three years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under Section 151(i) has an extended time till 30 June 2021 to grant approval. In the case of Section 151 of the old regime, the test is: if the time limit of four years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under Section 151(2) has time till 31 March 2021 to grant approval. The time limit for Section 151 of the old regime expires on 31 March 2021 because the new regime comes into effect on 1 April 2021.” 5. Suffice to say, it has come on record in light of their lordship’s detailed discussion hereinabove that section 151(ii) approval in the instant case involving escaped income of Rs.50 lakhs or more, had to be obtained under the “new regime” only. I accordingly adopt the foregoing detailed discussion mutatis mutandis to conclude that the impugned section 148 proceedings herein are not sustainable in law for want of valid section 151(ii) approval in very terms. The impugned reopening/reassessment stands quashed therefore. 5 | P a g e
All other pleading on merits stands rendered academic.