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Facts
The assessee's case was reopened under section 147 for AY 2017-18 based on information regarding cash deposits of ₹89,39,000 during the demonetisation period. The notice under section 148 was issued after obtaining approval from the Principal Commissioner of Income Tax, which is stated to be beyond three years from the end of the assessment year.
Held
The Tribunal held that the reassessment proceedings were initiated without valid approval as mandated by Section 151 of the Income Tax Act, as the approval was granted by an authority not competent for notices issued beyond three years. This jurisdictional defect is incurable.
Key Issues
Whether reassessment proceedings are valid when the approval for issuing notice under section 148 beyond three years is obtained from an incompetent authority as per section 151 of the Income Tax Act?
Sections Cited
147, 144, 151, 148, 148A(d)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘D’ BENCH
आदेश / O R D E R PER AMIT SHUKLA (J.M): This appeal preferred by the assessee arises from the order dated 10.07.2025 passed by the National Faceless Appeal Centre, Delhi, confirming the reassessment framed by the Assessing Officer under section 147 read with section 144 of the Income-tax Act, 1961, for the assessment year 2017- 18. 2. At the outset, it may be noted that the assessee has assailed the impugned reassessment proceedings on twin
Deepak Ghanshamdas Takhtani grounds. Firstly, on a pure question of jurisdiction, the assessee has challenged the very validity of initiation of reassessment proceedings on the ground that the mandatory approval contemplated under section 151 of the Act has not been accorded by the competent authority as prescribed under law. Secondly, on merits, the assessee has disputed the addition of ₹89,00,000/- made on account of cash deposits during the demonetisation period.
Before adverting to the merits of the addition, we deem it appropriate, as a matter of judicial propriety and settled legal discipline, to first examine the jurisdictional challenge raised by the assessee, since if the assumption of jurisdiction itself is found to be infirm, the entire superstructure of the reassessment would necessarily collapse.
The brief factual matrix germane to the issue of reopening is that the assessee’s case was reopened under section 147 on the basis of information received to the effect that the assessee had deposited cash aggregating to ₹89,39,000/- in his bank account maintained with Canara Bank during the demonetisation period. Based on this information, notice under section 148 of the Act was issued on 28.07.2022 for the assessment year under consideration.
From a perusal of the notice placed in the paper book, it is evident that the said notice under section 148 was issued after obtaining approval of the Principal Commissioner of Income Tax-20, Mumbai, on 26.07.2022. Thereafter, an order
Deepak Ghanshamdas Takhtani under section 148A(d) was also passed, purportedly with prior approval of the Principal Commissioner of Income Tax-20, Mumbai, vide letter dated 27.02.2022.
It is an undisputed position emerging from the record that the notice under section 148 has been issued beyond a period of three years from the end of the relevant assessment year. In such circumstances, the statute mandates a higher threshold of sanction. Section 151 of the Act, as applicable, clearly provides that where notice under section 148 is sought to be issued beyond three years from the end of the relevant assessment year, the specified authority competent to grant approval is the Principal Chief Commissioner or the Principal Director General or the Chief Commissioner or the Director General, as the case may be.
In the present case, however, the approval has admittedly been granted by the Principal Commissioner of Income Tax. This, in our considered opinion, strikes at the very root of jurisdiction and is not a mere procedural irregularity curable under law.
This precise issue now stands squarely covered by the decision of the Hon’ble Bombay High Court in Chitra Supekar vs. NFAC in Writ Petition No. 15580 of 2022. The relevant observations of the Hon’ble High Court, which have a direct and binding bearing on the issue before us, read as under:
Deepak Ghanshamdas Takhtani “Apropos section 151(ii) of the Act the sanction from the PCCIT ought to have been taken when order was sought to be passed beyond the period of three years ie. beyond 31st March 2022 on 5th April 2022 Consequently, the notice dated 20th March 2022 and order dated 5th April 2022 deserves to be set aside on account of jurisdictional error ie. for want of service and consequently, for non-compliance with the provisions of the Act.”
The ratio laid down by the Hon’ble jurisdictional High Court leaves no room for ambiguity. Once the statute expressly designates a particular authority for grant of approval, any deviation therefrom vitiates the proceedings ab initio. Jurisdiction cannot be conferred by consent, acquiescence, or administrative convenience.
Apart from the aforesaid judgment, there is a consistent line of decisions rendered by various coordinate benches of this Tribunal, wherein it has been categorically held that where more than three years have elapsed from the end of the relevant assessment year, the Assessing Officer is mandatorily required to obtain prior approval from the Principal Chief Commissioner of Income Tax or the equivalent authority specified under section 151 of the Act. Any sanction obtained from an authority lower in rank is no sanction in the eyes of law.
This principle has now received authoritative affirmation from the Hon’ble Supreme Court as well, wherein it has been reiterated that the conditions prescribed for assumption of jurisdiction under reassessment provisions are mandatory
Applying the aforesaid settled legal position to the facts of the present case, we have no hesitation in holding that the notice issued under section 148 of the Act is bad in law, having been issued on the basis of approval granted by an authority not competent under section 151 of the Act. The defect goes to the very jurisdiction of the Assessing Officer and is, therefore, incurable.
Once the initiation of reassessment itself is held to be invalid, the consequential reassessment order framed pursuant thereto cannot survive and is liable to be quashed. In view of this legal conclusion, the other grounds raised by the assessee on merits of the addition become purely academic in nature and are, therefore, not adjudicated upon.
In the result, the appeal filed by the assessee stands allowed, and the impugned reassessment proceedings are hereby quashed.
Order pronounced on 30th December, 2025.