INCOME TAX OFFICER (INTERNATIONAL TAXATION) 3(2)(1), KAUTILYA BHAWAN MUMBAI vs. SHAPOORJI PALLONJI MISTRY, MUMBAI

O R D E R PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: These appeals filed by the Revenue and Cross Objections filed by the assessee are against the orders of CIT (A) 57, Mumbai- and ors. Shapoorji Pallonji Mistry AYs 2015-16 and 2016-17 i) vide order No. ITBA/APL/S/250/2024-25/1074571063(1), dated 17.03.2025 passed against the assessment order of Income Tax Officer (International Taxation)-3(2)(1), Mumbai u/s. 147 r.w.s.144C(3) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), dated 28.07.2023 for AY 2015-16. ii) vide order No. ITBA/APL/S/250/2024-25/1074573456(1), dated 17.03.2025 passed against the assessment order of Income Tax Officer (International Taxation)-3(2)(1), Mumbai u/s. 147 r.w.s.144C(3) of the Act, dated 28.07.2023 for AY 2016-17.

2. Grounds taken by the Revenue are reproduced as under:

1. Whether on the facts and in the circumstances of the case and in law, the ld.CIT(A) was justified in quashing the notice u/s. 148 of the Act without appreciating the fact that the impugned notice which was deemed to have been issued under Section 148A, would be governed by TOLA, 2020 and the limitation period from 01.04.2021 would get extended up to 30.06.2021 since because the time limit for issuing notice under un-amended Section 149 which was falling from 20th March 2020 till 31st March 2021 was extended by Section 3 of TOLA read with Notification No. 20/2021 dated 31st March, 2021, and Notification No. 38/2021 dated 27th April, 2021, until 30th June, 2021.

2. Whether a plain and literal construction of Section 3(1) of the TOLA permits that in all cases where "such action' could not be completed/complied with within the limitation period provided the Specified Act, Such action" could be completed/complied with during the extended period granted under Section 3(1) of TOLA in accordance with the law as it stood prior to 31.03.2021.

3. Whether a plain and literal construction of Section 3(1) of the TOLA it would follow that in all cases in which notices u/s. 148 of the Income Tax Act, 1961 was issued between 01.01.2021 and 30.06.2021 as a result of the extension/relaxation granted under the TOLA, it would be Sections 147, 148, 149 and 151 as they stood prior to their amendment by way of Finance Act, 2021 that would govern such notices.

5. Whether section 3(1) of TOLA creates a legal fiction by virtue of which the revenue is entitled to invoke section 148 of the Income Tax Act, 1961 as it existed prior to 31.03.2021 during the extended period between 01.04.2021 and 30.06.2021.

6. Whether on the facts and circumstances of the case and in law, the Id. CIT(A) has erred in disregarding the mandate of the Hon'ble Supreme Court in the case of Ashish Agrawal that all the notices issued by Revenue between 01.04.2021 to 30.06.2021 are deemed notices issued u/s. 148A(b) of the Act meaning thereby that these are valid notices and not barred by limitation.

7. Whether on the facts, in the circumstances of the case and in Law, the Id.CIT(A) has erred in disregarding the fact that the case of Ashish Agrawal-the lead case is also of A Y 2015-16 and Hon'ble Supreme Court after considering the provisions of TOLA as well as new provisions of Law has given a one-time relief to the Revenue to proceed with the proceedings under Article 142 of the Constitution and did not hold A Y 2015-16 as barred by limitation.

8. Whether the ld.CIT(A) has erred in not considering The Taxation And Other Laws 1 Relaxation of Certain Provisions) Ordinance, 2020 dated 31st March, 2020 and further The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 dated 29th September, 2020 which extended the time limit for issue of notice for AY 2013-11 till 31st December. 2020 which is further extended till 31st March, 2021 by Notification No.93/2020 dated 31st December, 2020 and further extended the time limit by Notification No.20 dated 31st March 2021 till 30th June 2021 and by only considering notification dated 31s, March, 2021 whether Id.CIT(A) has erred in holding that AY 2013-14 is barred by limitation on 31st March, 2021 and the limitation has not been extended after 31st March, 2020 till 31st March, 2021. 9. Whether on the facts, in the circumstances of the case and in Law, the ld. CIT(A) has erred in not appreciating that the CBDT's instruction 1 of 2022 has been issued in accordance with the provisions of law and is in consonance with the Hon'ble Supreme Court's judgment in the case of UOI Vs. Ashish Agrawal.

1. Whether on the facts and in the circumstances of the case and in law, the CIT(A) was justified in quashing the notice u/s. 148 of the Act without appreciating the fact that the impugned notice which was deemed to have been issued under Section 148A, would be governed by TOLA, 2020 and the limitation period from 01.04.2021 would get extended up to 30.06.2021 since because the time limit for issuing notice under un-amended Section 149 which was falling from 20th March 2020 till 31st March 2021 was extended by Section 3 of TOLA read with Notification No. 20/2021 dated 31st March, 2021, and Notification No. 38/2021 dated 27th April, 2021, until 30th June, 2021.

3. Whether a plain and literal construction of Section 3(1) of the TOLA it would follow that in all cases in which notices u/s. 148 of the Income Tax Act, 1961 was issued between 01.01.2021 and 30.06.2021 as a result of the extension/relaxation granted under the TOLA, it would be Sections 147, 148, 149 and 151 as they stood prior to their amendment by way of Finance Act, 2021 that would govern such notices.

4. Whether on the facts and circumstances of the case and in law, the ld. CIT(A) has erred in not considering that the sanction u/s. 151 of the case has been obtained as per the CBDT Instruction No.1/2022 dated 11.05.024 wherein it has been specified that fresh notice under section 148 is to be issued for AY 2016-17 with the approval of the specified authority under clause (i) of section 151 of the Act, i.e., the Pr.CIT/Pr.DIT or the CIT/DIT.

5. Whether on the facts and in the circumstances of the case and in law, the Hon’ble Bombay High Court has erred in not appreciating that the CBDT’s Instruction 1 of 2022 has been issued in accordance with the provisions of law and is in consequence with the Hon’ble Supreme Court’s judgement in the case of UOI vs. Ashish Agarwal.

6. Whether on the facts and in the circumstances of the case and in law, the Hon’ble Bombay High Court has erred in not appreciating that the Hon’ble Delhi High Court vide order dated 31.08.2022 in the case of Salil Gulati vs. ACIT, Circle 49(1), Delhi and Ors. (cited supra) has upheld the validity of Instruction No.1/2022 of CBDT and that this judgement has been subsequently endorsed by the Hon’ble Apex Court. 2.1 Grounds taken by the assessee in the cross objections are reproduced as under:

CO. No. 152/MUM/2025

1. erred in issuing notices for reassessment proceedings under Section 148A, conducting the reassessment under Sections 148A and 148, and/or in passing the impugned orders dated 30 July 2022 and/or 28th July 2023 under the said provisions. The actions are contrary to law, beyond the jurisdiction of the Assessing Officer, and the impugned orders are liable to be quashed. 2. erred in passing order under section 147 of the Act by reopening of original assessment order without appreciating that issue of notice u/s 148 of the Act is time barred as TOLA, 2020 is not applicable for AY 2015-16 and thus extended period granted under section 3(1) of TOLA is not applicable to the assessee. 3. ought to have appreciated that since the time limit for issue of notice u/s 148 of the Act as per the amended provisions of Finance Act, 2021 for AY 2015-16 is upto 31 March 2022 which does not fall within the period of expiry of notice specified under section 3(1) of the TOLA i.e. between 20th March 2020 to 31st and ors. Shapoorji Pallonji Mistry AYs 2015-16 and 2016-17 March 2021 and thus TOLA is not applicable to the assessee and thus notice u/s 148 is barred by limitation as per proviso to section 149(1) of the Income Tax Act, 1961 as amended by Finance Act, 2021. 4 erred in not considering the judgment of the Hon'ble Supreme Court in the case of Union of India & Ors. Vs. Rajeev Bansal (Civil Appeal No 8629 of 2024) and of the jurisdictional Mumbai Tribunal in the case of ACIT v. Manish Financial (ITA No.5050/Mum/2024) wherein it is held that TOLA is not applicable for AY 2015- 16. 5. erred in placing reliance on the judgment of Hon'ble Supreme Court in the case of Salil Gulati vs. ACIT (150 taxmann.com 49) and of Hon'ble Delhi High Court in the case of Salil Gulati vs. ACIT (150 taxmann.com 49) without appreciating that said judgment was pertaining to AY 2013-14 and thus not applicable to the facts of the assessee.

6. Without prejudice to the above grounds, learned AO erred in making addition in respect of loss of Rs.28,47,45,915/- towards transaction in derivatives at Bombay Stock Exchange (BSE') along with notional commission of Rs.2,84,746/- u/s 68 of the Act in the order under section 147 of the Act without appreciating the facts of the case. CO. No. 153/MUM/2025

2. The learned Assessing Officer erred in issuing notices for reassessment proceedings under Section 148A, conducting the reassessment under Sections 148A and 148, and/or in passing the impugned orders dated 30th July 2022 and/or 28th July 2023 under the said provisions. The actions are contrary to law, beyond the jurisdiction of the Assessing Officer, and the impugned orders are liable to be quashed 3. erred in passing order under section 147 of the Act by reopening of assessment order without obtaining requisite approval as per amended Section 151 of the Income-tax Act, 1961, resulting into issue of notice u/s 148 of the Act being bad in law. 4. ought to have appreciated that either approval of Principal Chief Commissioner of Income Tax or Chief Commissioner of Income Tax to be obtained as per section 151(ii) of the Act as amended by Finance Act, 2021 for issue of notice u/s 148 of the Act and order passed u/s 148A(d) of the Act dated 30th July 2022. 5. erred in not considering the judgment of the jurisdictional Mumbai Tribunal in the case of ACIT v. Manish Financial (ITA No.5050/Mum/2024) wherein it is held that approval of authority specified under amended section 151 of the Act needs to be obtained for reopening of the assessment for AY 2016-17. and ors. Shapoorji Pallonji Mistry AYs 2015-16 and 2016-17 6. erred in placing reliance on the judgment of Hon'ble Supreme Court in the case of Salil Gulati vs. ACIT (150 taxmann.com 49) and of Hon'ble Delhi High Court in the case of Salil Gulati vs. ACIT (150 taxmann.com 49) without appreciating that said judgment was in relation to time barring of assessment and thus not applicable to the facts of the assessee as issue under consideration pertains to obtaining approval u/s 151 of the Act.

7. Without prejudice to the above grounds of appeal

, reopening of assessment is bad in law since approval of Commissioner of Income-Tax (International Tax) -3, Mumbai obtained is incorrect, as the same is not signed by Commissioner of Income-Tax (International Tax) -3, Mumbai.

8. Without prejudice to the above grounds of appeal, erred in reopening the assessment u/s 148 of the Act as the procedure laid down for reopening the assessment is not followed.

9. Without prejudice to the above grounds of appeal, erred in reopening the assessment basis the borrowed satisfaction of investigation done by SEBI, only relying on the statement of brokers, which are not related to the transaction by the appellant and without any independent enquiry or application of mind.

10. Without prejudice to the above grounds of appeal, the learned AO erred in making addition in respect of loss of Rs.2,57,97,824/- towards transaction in derivatives at Bombay Stock Exchange (BSE) along with notional commission of Rs.2,57,978/- u/s 68 of the Act in the order under section 147 of the Act without appreciating the facts that there is profit of Rs.2,57,97,824/- from transaction in derivatives at BSE and the same is already offered to tax by the Assessee.

4. We first take up appeal in filed by the Revenue and its corresponding CO. No. 152/Mum/2025 filed by the assessee. In this appeal by the Revenue, essentially the issue to be decided is on legal ground, challenging the validity of notice issued u/s.148 on account of being barred by limitation and consequent reassessment order passed u/s. 147 r.w.s. 144C(3) being bad in law. Assessee has filed his Cross Objection for defending the order passed by ld. CIT(A) who granted relief on the legal issue in respect of notice issued u/s. 148 as barred by limitation.

5.1. Chronology of events which took place in the present case for which the relevant material is on record is tabulated below for ready reference:

Sr. Date Notices/replies Page No No. 1. 21st June 2021 Notice u/s 148 of the Act 11-12 2. 21st July 2021 Reply filed along with return of income asking 13-15 for reasons 3. 19th January Notice u/s 142(1) of the Act 16-18 2022 4. 10th February Notice u/s143(2) r.w.s 147 providing 19-28 2022 reasons for reopening 5. 16th February Notice u/s 142(1) of the Act 29-30 2022 6. 1st March 2022 Objection filed with respect to 31-43 reopening for reassessment

7. 25th May 2022 Notice u/s 148A(b) along with statements 44-79 and 20th June of Sanjay Periwal and Harshavardhan Kalyan 2022 and BSE Equity Expiry trade Part 1 -4 8. 24th June 2022 Reply to show cause notice u/s 148A(b) of the 80-92 Act 9. 30th July 2022 Notices u/s 148 of the Act and order passed 93-97 u/s 148A(d)of the Act 10. 26th August 2022 Appellant filed return of income in response to 98-130 notice u/s 148 of the Act 11 11th May 2023 Notice u/s 142(1) of the Act, wherein the 131-136 and 17th details was May 2023 asked with respect to the transaction in stock options. 12. 19th May 2023 Appellant filed reply along with details of 137-144 transactions in options in response to the above notice u/s 142(1) 13. 23rd May 2023 Received Show cause notice asking as to why BSE derivative losses claimed to the tune of 145-146 Rs.24.73,90.413/-by way of trading in illiquid stock options should not be considered as manipulated and non-genuine and added to the total income for the year under consideration. 14. 24th May 2023 Appellant filed submission for not making any 147-149 addition with respect to trading in options as there was no escapement of income 15. 25th May 2023 Notice u/s 143(2) of the Act issued by learned 150-153 AO 16. 28th May 2023 Reply filed in response to notice u/s 143(2) of 154-155 the Act 17. 27th May 2023 Notice u/s 142(1) issued wherein Approval of 156-157 Principal Chief Commissioner of Income Tax. International Taxation. New Delhi dated 27th July 2022 for order u/s 148A(d) and issued of notice u/s 148 was provided 18. 30th May 2023 Draft assessment order u/s 144C(1) r.w.s 147 158-169 was passed proposing addition of Rs.28,50,30,661/- while computing income under the normal provisions under the head "Income from other source”. 19. 28th June 2023 Appellant filed submission dated 28th 170-174 June 2023 requesting for no addition of Rs.

6.1. It is noted that the notice u/s.148 is issued on 30.07.2022, which according to the assessee is barred by limitation, since it has been issued after expiry of 6 years from the end of the relevant assessment year i.e., AY 2015-16. According to the assessee, it is contrary to the mandate of the first proviso below section 149(1)(b) and therefore is invalid, bad in law and leading the impugned assessment proceedings as well as the impugned assessment order bad in law, liable to be quashed ab initio.

6.2. Identical issue had come up before the Coordinate Bench of ITAT, Mumbai in the case of dated 30.09.2025, with the undersigned Accountant Member as the author. Detailed discussion is made in respect of applicable provisions on the issue in the present appeal as well as all the relevant judicial precedents have been discussed whereby the notice issued u/s.148 under the new regime was held to be barred by limitation and was thus, quashed resulting in the reassessment proceedings as well as the reassessment order as bad in law. Relevant extracts from the said order are reproduced for the sake of ready reference: and ors. Shapoorji Pallonji Mistry AYs 2015-16 and 2016-17 “7. To delve on the issue in hand before us, let us take note of the provisions contained in section 149 under the new regime introduced by the Finance Act, 2021, prescribing limitation on issue of notice u/s. 148 of the Act. Section 149 of the Act reads as under: 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- (1) an asset; ii) expenditure in respect of a transaction or in relation to an event or occasion; or (iii) an entry or entries in the books of account, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more:] 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 28[a notice under section 148 or section 153A or section 153C 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 or section 153A or section 1530, as the case may be], 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 cases referred to in clauses (i), (iii) and (iv) of Explanation 2 to section 148, where, - (a) a search is initiated under section 132; or b) a search under section 132 for which the last of authorisations is executed; or (c) requisition is made under section 132A, after the 15th day of March of any financial year and the period for issue of notice under section 148 expires on the 31st day of March of such financial and ors. Shapoorji Pallonji Mistry AYs 2015-16 and 2016-17 year, a period of fifteen days shall be excluded for the purpose of computing the period of limitation as per this section and the notice issued under section 148 in such case shall be deemed to have been issued on the 31st day of March of such financial year: Provided also that where the information as referred to in Explanation 1 to section 148 emanates from a statement recorded or documents impounded under section 131 or section 133A, as the case may be, on or before the 31st day of March of a financial year, in consequence of,- (a) a search under section 132 which is initiated; or (b) a search under section 132 for which the last of authorisations is executed; or (c) a requisition made under section 132A, after the 15th day of March of such financial year, a period of fifteen days shall be excluded for the purpose of computing the period of limitation as per this section and the notice issued under clause (b) of section 148A in such case shall be deemed to have been issued on the 31st day of March of such financial year:] 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 section 14SA 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 the Assessing Officer for passing an order under clause (d) of section 148A 30[does not exceed 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. ((1A) Notwithstanding anything contained in sub-section (1). where the income chargeable to tax represented in the form of an asset or expenditure in relation to an event or occasion of the value referred to in clause (b) of sub-section (1), has escaped the assessment and the investment in such asset or expenditure in relation to such event or occasion has been made or incurred, in more than one previous years relevant to the assessment years within the period referred to in clause (b) of sub-section (1), a notice under section 148 shall be issued for every such assessment year for assessment, reassessment or recomputation, as the case may be.] (2) The provisions of sub-section (1) as to the issue of notice shall be subject to the provisions of section 151.)

7.1. Finance Act, 2021 amended re-assessment related provisions w.e.f. 01.04.2021. These amended provisions made a significant change in the way re- assessment proceedings are initiated and the limitation period in relation thereto. One of the key amendments is introduction of section 148A. Pursuant to section 148A, it is mandatory for the Assessing Officer to provide an opportunity of being heard to the assessee by serving a notice of show cause as to why the notice u/s. 148 should not be issued. Further, Assessing Officer is required to consider reply, if any, filed by the assessee in response to the said show cause notice. The procedural requirement contained in section 148A, for the Assessing Officer to comply with, mentions that – i.Assessing Officer shall conduct any enquiry, if required, with the approval of the specified authority, with respect to information which suggests that income chargeable to tax has escaped assessment. ii.He shall provide an opportunity of being heard to the assessee with the prior approval of the specified authority. iii.He shall consider the reply of the assessee furnished, if any in response to the show cause notice. iv.He shall decide on the basis of material available on record and after considering the reply of the assessee as to fitness of the case to issue a notice u/s.148 for which a specific order shall be passed within the stipulated time. v.Thus, section 148A under the new regime of re-assessment is a provision brought on the statute which is in the nature of condition precedent to issuing of notice u/s.148. 7.2. Also, first proviso to section 149 under the new regime introduced by the Finance Act, 2021 prescribed limitation on issuance of notice by taking into consideration the time limit available under the old regime for the relevant assessment year. First proviso to section 149 states, “Provided that no notice u/s.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 a notice under section 148 or section 153A or section 153C 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 or section 153A or section 153C, as the case may be, as they stood immediately before the commencement of the Finance Act, 2021” 7.3. This proviso to section 149 provided a defense and limitation on issuance of notices under the new regime of re-assessment relating to the Assessment Years covered by the old regime. Thus, first proviso to section 149 under the new regime limits the retrospective operation to protect the interest of assessees. Section 149(1)(b) of the old regime provided a time limit of six years from the end of the relevant assessment year for issuing notice under Section 148 of the Act. For the relevant assessment year, being Assessment Year 2015-2016, 6th year expired on 31.03.2022. The notice under Section 148 of the Act, in the present case, is issued on 27.04.2022, i.e., clearly beyond the period of limitation prescribed in Section 149 read with the first proviso to the said section as per the old regime. 7.4. In the present context, we need to deliberate on the purpose of first proviso to section 149 under the new regime so as to decide on the issue raised by the assessee in the present appeal. The first proviso to Section 149 of the Act and ors. Shapoorji Pallonji Mistry AYs 2015-16 and 2016-17 provides that no notice under Section 148 shall be issued at any point of time in a case for a relevant assessment year beginning on or before the 1st day of April 2021, if a notice under Section 148 could not have been issued at that time on account of being beyond the time limit specified under the provision of clause (b) of sub-section (1) of this Section, as it stood immediately before the commencement of the Finance Act, 2021. The purpose of the first proviso to Section 149 of the Act is consistent with the stated object of the government to make prospective amendments in the Act. Accordingly, the proviso provides that up to Assessment Year 2021-22 (period before the amendment), the period of limitation as prescribed in the erstwhile provisions of Section 149(1)(b) of the Act would be applicable and only from Assessment Year 2022-23, the period of ten years as provided in Section 149(1)(b) of the Act, would be applicable.

8. It is pertinent to take note of the observations and findings of the Hon'ble Supreme Court in the case of Union of India and others vs. Rajeev Bansal [2024] 167 taxmann.com 70 (SC), wherein the first proviso to section 149(1)(b) has been deliberated in detail. Relevant paragraphs are extracted below for ready reference: “46. The ingredients of the proviso could be broken down for analysis as follows: (1) no notice under Section 148 of the new regime can be issued at any time for an assessment year beginning on or before 1 April 2021; (ii) if it is barred at the time when the notice is sought to be issued because of the "time limits specified under the provisions of 149(1)(b) of the old regime. Thus, a notice could be issued under Section 148 of the new regime for assessment year 2021-2022 and before only if the time limit for issuance of such notice continued to exist under Section 149(1)(b) of the old regime. …………….

9. Similar issue had come up before the Hon'ble Jurisdictional High Court of Bombay in the case of Hexaware Technologies Ltd. vs. ACIT in Writ Petition No.1778 of 2023, dated 03.05.2024, wherein Hon'ble Court while dealing with the provisos to section 149(1)(b) under the new regime for the Assessment Years covered by the erstwhile provisions of section 149(1) observed that the section has to be interpreted so as to give meaning to all the words and phrases used in the said section. It could not be interpreted in such a way so as to render any part or phrase in the said section otiose. According to the Hon'ble Court, terms “at that time” in the first proviso refers to the date on which notice u/s.148 is to be issued by the Assessing Officer. The term “at that time” has to refer to the term “at any time” used earlier in the said proviso. According to the Hon'ble Court the reference to “at any time” is to the date of the notice to be issued by the Assessment officer and therefore, the term “at that time” would also refer to the said date. Thus, on the said date, if a notice could not have been issued under the provision of section 149(1)(b) of the old regime for any Assessment Year beginning on or before 01.04.2021, the notice cannot be issued even under the new regime. 9.1. Hon'ble Court took into consideration the stand of the Revenue to interpret the first proviso to section 149 of the Act to be applicable only for Assessment Years 2013-14 and 2014-15, i.e., for the Assessment Years where the period of limitation has already expired on 01.04.2021 which was held to be not correct because that would render the first proviso to section 149 under a new regime redundant and otiose. According to the Hon'ble Court, if such a stand of the Revenue is accepted then, it would amount to re-writing the proviso to section 149(1)(b). Hence such an interpretation as canvassed by the Revenue is clearly not permissible in law. Hon'ble Court thus, concluded that the first proviso to section 149(1)(b) is an exception to the period of limitation and provides for a restriction on the notices issued u/s.148 which are issued for Assessment Years up to 2021-22 beyond a certain date. It also took into account the extension of time as contained in fifth and sixth proviso to section 149(1)(b) while concluding on the period of limitation available for issuing the notice u/s.148. Hon'ble Court, thus concluded that if a notice is not issued within the time prescribed under the first proviso to section 149(1)(b) then, such period cannot be extended by fifth proviso and sixth proviso. 9.2. Relevant paragraph is extracted below: “30. With respect to applicability of the fifth proviso and the sixth proviso to Section 149(1)(b) of the Act for extension of limitation for issuing the notice under Section 148 of the Act, fifth and sixth provisos are only applicable with respect to the period of limitation prescribed in Section 149(1) of the Act, i.e., three years or ten years, as the case may be. Fifth proviso or sixth proviso extend limitation for issuing notice under Section 149 of the Act, however, the first proviso is an exception to the period of limitation and provides for a restriction on the notices under Section 148 being issued for Assessment Years upto 2021-22 beyond a certain date. Therefore, the way the Section would operate, is first to decide whether a notice issued under Section 148 of the Act and ors. Shapoorji Pallonji Mistry AYs 2015-16 and 2016-17 is within the period of limitation in terms of Section 149(1)(a) or (b) of the Act. To decide whether the notice is within the period of limitation under Section 149(1)(a) or (b) of the Act, the extension of time as per the fifth and/or sixth proviso would be considered. Once, the notice is otherwise within the period of limitation, thereafter one has to see whether the said time limit is within the restriction provided in the first proviso or not. If the notice is beyond the restriction period, the notice is invalid. The fifth and/or the sixth proviso cannot apply at this stage to extend the period of restriction as per the first proviso. Hence, if a notice is not within the time prescribed under the first proviso to Section 149(1) of the Act, then such period cannot be extended by fifth proviso and sixth proviso.

c. The relaxations provided under Section 3(1) of TOLA apply "notwithstanding anything contained in the specified Act." Section 3(1), therefore, overrides the time limits for issuing a notice under Section 148 read with Section 149 of the Income Tax Act; d. TOLA does not extend the life of the old regime. It merely provides a relaxation for the completion or compliance of actions following the procedure laid down under the new regime; e. The Finance Act 2021 substituted the old regime for re-assessment with a new regime. The first proviso to Section 149 does not expressly bar the application of TOLA. Section 3 of TOLA applies to the entire Income Tax Act including Sections 149 and 151 of the new regime. Once the first proviso to Section 149(1)(b) is read with TOLA, then all the notices issued between 1 April 2021 and 30 June 2021 pertaining to assessment years 2013-2014, 2014- 2015, 2015-2016, 2016-2017 and 2017-2018 will be within the period of limitation as explained in the tabulation below; Assessme Within 3 Expiry of Within six Years Expiry of nt Year Years Limitation (4) Limitation read (1) (2) read with with TOLA for TOLA for (2) (3) (4) (5) 2013-2014 31.03.20 TOLA not 31.03.2020 30.06.2021 17 applicable 2014-2015 31.03.20 TOLA not 31.03.2021 30.06.2021 18 applicable 2015- 3103.20 TOLA not 31.03.2022 TOLA not 2016 19 applicable applicable 2016-2017 31.03.20 30.06.2021 31.03.2023 TOLA not 20 applicable 2017-2018 31.03.20 30.06.2021 31.03.2024 TOLA not 21 applicable f. The Revenue concedes that for the assessment year 2015-16, all notices issued on or after 1 April 2021 will have to be dropped as they will not fall for completion during the period prescribed under TOLA; g. Section 2 of TOLA defines "specified Act" to mean and include the Income Tax Act. The new regime, which came into effect on 1 April 2021, is now part of the Income Tax Act. Therefore, TOLA continues to apply to the Income Tax Act even after 1 April 2021; and h. Ashish Agarwal (supra) treated Section 148 notices issued by the Revenue between 1 April 2021 and 30 June 2021 as show-cause notices in terms of Section 148A(b). Thereafter, the Revenue issued notices under Section 148 of the new regime between July and August 2022. Invalidation of the Section 148 notices issued under the new regime on the ground that they were issued beyond the time limit specified under the Income Tax Act read with TOLA will and ors. Shapoorji Pallonji Mistry AYs 2015-16 and 2016-17 completely frustrate the judicial exercise undertaken by this Court in Ashish Agarwal (supra). 11.1. Thus, it can be seen that Revenue conceded before the Hon’ble Supreme Court in para 19(f) for dropping all the notices issued on or after 01.04.2021 for A.Y. 2015-16 as they will not fall for completion during the period prescribed under TOLA.

12. This issue had come up before the Hon'ble Delhi High Court in the case of IBIBO Group Pvt. Ltd. vs. ACIT, WP(C) 17639 of 2022, dated 13.12.2024 wherein re-assessment action for Assessment Year 2015-16 was held to be not sustainable. Hon'ble Court quashed the notice issued u/s.148 as well as order passed u/s. 148A(d), dated 23.07.2022 for Assessment Year 2015-16 by following the decision in the case of Rajeev Bansal (supra). 12.1. In the case of present assessee, since the notice issued u/s.148 is dated 27.04.2022, period of six years expired on 31.03.2022 and is thus barred by limitation. Accordingly, notice so issued and re-assessment completed thereafter u/s. 147 is liable to be quashed, in view of the decision of Hon'ble Supreme Court in the case of Rajeev Bansal (supra) which was followed by Hon'ble Delhi High Court in the case of IBIBO (supra). 12.2. Hon'ble Supreme Court while dismissing the SLP filed by Revenue in the case of ACIT vs. Nehal Ashit Shah in SLP (Civil) Diary No(s). 57209/2024, dated 04.04.2025 held that it does not survive for further consideration. While holding so, Hon'ble Court noted in para 5 as under: “5. In this regard, reference could also be made to paragraph 19(e) and (f) in the case of Union of India vs. Rajeev Bansal, Civil Appeal No.8629 of 2024 on 03.10.2024 (2024 SCC ONLINE 754) under which the learned Additional Solicitor General for India has made a concession insofar as the assessment year 2015-16 is concerned.” 12.3. In view of above stated deliberation, both on facts and law including the applicable jurisprudence, we hold that notice for A.Y. 2015-16 issued on 27.04.2022 u/s 148 of the new regime is barred by limitation and hence bad in law, liable to be quashed, resulting in impugned reassessment proceedings as well as the impugned reassessment order bad in law. Accordingly, additional ground raised by the assessee is allowed.

11. Brief facts relevant to the issue are that assessee filed his return of income on 14.10.2016 reporting total income at Rs.3,30,53,460/-. Case of the assessee was taken up for reopening under the provisions of section 148 r.w.s. 147, on similar reasons to believe as recorded by the ld. Assessing Officer for AY 2015-16 noted in above paragraphs. Reassessment was completed by making an addition of Rs.2,57,97,827/- by treating the transactions executed by assessee in illiquid options derivative at Bombay Stock Exchange as non-genuine, fictitious and in the nature of accommodation entries. Ld. Assessing Officer also made an addition of Rs. 2,57,978/- towards commission by and ors. Shapoorji Pallonji Mistry AYs 2015-16 and 2016-17 applying a rate of 0.1% on the aforesaid quantum addition. Thus, assessment was completed at total income of Rs.4,85,29,270/-.

11.1. From the perusal of the impugned reassessment order, it is worth noting that assessee had raised his objections regarding issue of notice u/s.148 by stating that reopening is invalid as sanction of the jurisdictional Principal Chief Commissioner of Income Tax was not obtained, required in terms of section 151 of the Act. Reasons to believe were recorded by the ld. Assessing Officer for initiating reopening of the proceedings for which he issued impugned notice dated 12.04.2021. Since this notice was issued under the erstwhile regime of re- assessment as provided u/s.148 r.w.s. 147 which has undergone total revamp by the Finance Act, 2021, the amendments brought in by the Finance Act 2021 led to several jurisdictional issues in respect of reassessment proceeding for which the matter travelled up to the Hon'ble Supreme Court with the lead case of Union of India vs. Ashish Agarwal [2022] 130 taxmann.com 64 (SC) followed by the decision in the case of Union of India vs. Rajeev Bansal [2024] 167 taxmann.com 70 (SC). As a fall out of the directions given in the case of Ashish Agarwal (supra), ld. Assessing Officer in the present case complied with the same, after which an order u/s.148A(d) was passed dated 30.07.2022 recommending the reopening of the case u/s.148. Subsequent to this, notice u/s.148 was issued, dated 30.07.2022, wherein in para-8, prior approval of CIT(IT)-3, Mumbai was obtained. Facts in this respect are noted by ld. CIT(A) in his order at page-60, while giving relief to the assessee on the legal issue. The same is extracted below to take note of the correct factual position: “Thus, it is clear that in the instant case, the approval of the Principal CCIT was required to be taken before issuing the impugned notice u/s 148 of the Act dated 30th July, 2022 for AY.2016-17, since the said date of 30/07/2022 was clearly beyond the prescribed period of three years from the end of the relevant Act, i.e. and ors. Shapoorji Pallonji Mistry AYs 2015-16 and 2016-17 31/03/2020. The appellant has submitted documentary evidence to establish that in its case, approval for issue of notice u/s 148 of the Act and for order u/s 148A(d) of the Act was taken from the Commissioner of Income Tax and not PCCIT. The approval letter dated 148A(d) dated 28/07/2022 was issued by clearly issued by Ld. CIT (IT)-3, Mumbai (WZ), whereas the same should have been approved by the Hon’ble PCCIT, International Tax, New Delhi/CCIT(IT), WZ, Mumbai. It is noted that this letter was supplied to the appellant as sanction letter u/s.151 of the Act by the AO vide notice u/s.142(1) of the Act dated 27/05/2023 for AY.2016-17 -DIN and Notice number - ITBA/AST/F/142(1)/2023- 24/1053237286(1) addressed to the appellant. The said order u/s.148 A(d) of the Act dated 30/07/2022 has been reproduced in para 6.1.4 above. It can be seen that in para 7 of this order, the AO has clearly mentioned that it is a fit case to isssue notice u/s.148 of the Act with the approval of the CIT(IT)-3, Mumbai. Further, in para 8, it is mentioned that the order u/s.148 A(d) of the Act is passed with prior approval of the CIT(IT)-3, Mumbai. As per the amended provisions of section 151 of the Income Tax Act, the specified authority for giving sanction for section 148 and 148 A of the Act in the case of the appellant for the instant assessment year will be PCCIT/CCIT, since more than three years have elapsed from the end of relevant AY.2016-17 when the approval letter dated 28/07/2022 was issued by CIT(IT)-3, Mumbai (WZ). Hon’ble Supreme Court has clearly stated in the above discussed judgment of Rajeev Bansal (supra) wherein it was clarified that:-……”

13.1. We find that in the decision by the Hon'ble Supreme Court in the case of Union of India v. Rajeev Bansal (supra), Hon'ble Court after the fall out of its own decision in the case of Ashish Agarwal (supra) had dealt with the issue in respect of sanction of the specified authority and concluded that TOLA will extend the time limit for the grant of sanction by the authority specified u/s.151. According to the Hon'ble Court, the test to determine whether TOLA will apply to section 151 of the new regime is that if the time limit of three years from the end of the Assessment Year falls between 20.03.2020 and 31.03.2021 then, the specified authority u/s.151(i) has extended time till 30.06.2021 to grant the approval. According to the Hon'ble Court, Assessing Officers were required to issue the re-assessment notice u/s.148 of the new regime within the time limit surviving under the Act read with TOLA. All notices issued beyond the surviving period are time barred and liable to be set and ors. Shapoorji Pallonji Mistry AYs 2015-16 and 2016-17 aside. Hon'ble Court had elaborately dealt with this issue in Part E of its decision in para 73 to 78 which are extracted below: 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:

13.2. From the above, we note that in para 73, in the table last two rows relate to provisions of Section 151(i) and (ii) of the new regime prescribing the time limit as well as the specified authority. In para 75, it is very categorically mentioned by the Hon’ble Court that after 01.04.2021, in terms of Ashish Agrawal (supra) the prior approval must be obtained from the appropriate authorities specified u/s.151 of the new regime. This abundantly brings clarity on the aspect of obtaining approval for issue of notice u/s.148 which are fall out of the decision in Ashish Agrawal (supra). In para 77, objective of section 3(1) of TOLA is mentioned which is to relax the time limit for compliance with actions that fall for completion from 20.03.2020 to 31.03.2021. Thus, the objective is specific for providing temporal flexibility. In para 78, the and ors. Shapoorji Pallonji Mistry AYs 2015-16 and 2016-17 same has been explained by an example taking Assessment Year 2017- 18 which also in specific terms mentions that the authority specified u/s.151(i) of the new regime can grant sanction till 30.06.2021. Thus, while concluding in para 81 on the issue obtaining approval, Hon’ble Court has specifically stated that the Assessing Officer is required to obtain prior approval of the specified authority according to section 151 of the new regime before passing an order u/s.148A(d) or issuing a notice u/s.148. According to the Hon’ble Court, though it had waived off the requirement obtaining prior approval u/s.148A(a) and Section 148Ab, it did not waive the requirement for section 148A(d) and Section 148.

13.3. Taking into consideration the submissions made by both the sides and findings of the Hon’ble Court, we note that the issue we are presently addressing raised before us is not on the aspect of “when” for the procedural compliance for issuance of notice u/s.148 but on the aspect of “by whom” it ought to have been issued. Ld. DR has contended that there is hierarchical escalation vis-à-vis obtaining approval for issuing notice u/s.148. In this respect, Hon’ble Court has very categorically held in para 75 that the prior approval must be obtained from the appropriate authorities specified u/s.151 of the new regime for the notices issued in terms of Ashish Agrawal (supra) after 01.04.2021. Reference by ld. DR to Section 149(1)(a) deals with time limit for issuing notice u/s.148. Contention of the ld. Sr. DR that there is no hierarchical escalation for obtaining prior approval for issuing notice u/s.148 is not in coherence with the guidelines mandated by the Hon’ble Apex Court as enunciated above. Repeatedly, Hon’ble Court has stated including by way of illustration that TOLA extends time line from the old regime which survives making the notice validly issued subject to the approval and ors. Shapoorji Pallonji Mistry AYs 2015-16 and 2016-17 requirements of Section 151 under the new regime. Accordingly, the prior approval requirement is mandated under the section 151 of new regime.

13.4. Thus, on the above stated facts and law, in the present case, three years had lapsed from the end of the Assessment Year when the order u/s.148A(d) and notice u/s.148 were issued on 30.07.2022. In the present case, since the notice u/s. 148 and order u/s. 148A(d) have been issued beyond the period of three years from the end of the relevant Assessment Year, case of the assessee falls within the provisions of section 151(ii) of the amended law whereby the specified authority for grant of approval is specified as Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General. Contrary to this requirement, the approval obtained is by Commissioner of Income Tax (IT)-3, Mumbai. Accordingly, since a proper sanction by the specified authority had not been obtained for issue of notice u/s.148 under the applicable provisions of law, said notice is invalid and bad in law.

13.5. Keeping in juxtaposition the undisputed and the uncontroverted facts as stated above and the judicial precedent of the Hon'ble Supreme Court in the case of Ashish Agarwal and Rajiv Bansal (supra), we hold that sanction by specified authority has not been obtained by the ld. Assessing Officer in accordance with the provisions contained in section 151 of the Act under the new regime, since notice u/s.148 has been issued beyond three years from the end of the relevant Assessment Year. Accordingly, the said notice issued is invalid and thus quashed. Resultantly, the impugned re-opening proceedings so initiated and the impugned re-assessment order passed thereafter are also quashed.