APTIVA MIDDLE EAST FZE,UNITED ARAB EMIRATES vs. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE 1(1)(2), INTERNATIONAL TAXATION, MUMBAI, MUMBAI

Per Saktijit Dey, Vice President:

Having carefully perused the order proposed by my learned brother
Accountant Member, I fully concur with the decision taken therein for the reasons setout hereunder:
2. At the outset, it must be stated, in addition to the grounds raised in the Memorandum of Appeal, the assessee vide application dated 25.07.2025 made under Rule 11 of the Income Tax (Appellate Tribunal), Rules, 1963 has urged an additional ground, being Ground No.9, challenging the validity of the order passed under section (u/s.) 148A(d) of the Income Tax Act, 1961 (in short the ‘Act’) and the notice issued u/s. 148 of the Act on account of lack of approval u/s. 151 of the Act by the specified authority. The issue raised in the additional ground being a purely legal and juri ictional issue going to the root of the matter and since can be decided based on materials available on record, we admit the additional ground for adjudication.
3. Since my learned brother Accountant Member has already discussed the facts, there is no need to repeat them. Suffice to say, the Assessing Officer (AO), while assuming juri iction u/s. 147 of the Act to reopen the assessment for Assessment
Year 2018-19 has issued show cause notice u/s. 148A(b) of the Act on 20.03.2022. In response to the said show cause notice, the assessee furnished its reply on 30.03.2022. After considering the reply of the assessee, the AO passed an order u/s.
148A(d) of the Act on 06.04.2022. Simultaneously, on the very same day, the AO

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Aptiva Middle East FZE issued the notice u/s. 148 of the Act, after seeking approval of CIT(IT), Mumbai-1. The aforesaid factual position remains uncontroverted. The assessee has pleaded before us that after expiry of three years from the end of the assessment year under dispute, as per Section 151(ii) of the Act, the specified authority, who can grant sanction/approval u/s. 148A and 148 of the Act is the Principal Chief Commissioner of Income Tax (PCCIT) or Principal Director General or Chief Commissioner or Director General. It is the say of the assessee that since approval/sanction in the instant case has been obtained from CIT it is invalid. Hence, all actions taken in pursuance to such approval would also be invalid. In support of such contention, learned counsel has relied upon a number of judicial precedents referred to in the order proposed by my learned brother Accountant Member.
4. In course of hearing, learned counsel for the assessee was fair enough to bring to our notice a decision of the Coordinate bench in case of Albert Joseph Rozario vs.
ITO, Mumbai, ITA No. 1168/Mum/2025 order dated 22.07.2025, wherein, a view has been taken that the limitation prescribed u/s. 149(1) of the Act for issuance of notice u/s. 148 of the Act would also apply to sanction for issue of notice has provided u/s. 151 of the Act. As per the reasoning of the Coordinate Bench in the aforesaid decision, applying the provisions contained in 3rd and 4th proviso to Section 149(1) of the Act as it stood then, the three year period in terms with Section 151(i) of the Act is to be determined after excluding the time allowed to the assessee as per show cause notice issued u/s. 148(b) of the Act and further additional time of seven days thereafter to the AO to issue the notice u/s. 148 of the Act. For the sake of 3
Aptiva Middle East FZE completeness, we deem it appropriate to deal with this decision of the coordinate
Bench.
5. At this stage, it is necessary to examine the provisions contained u/s. 149 of the Act. Prior to its substitution by Finance Act, 2021 effective from 01.04.2021, sub section (1) of Section 149 of the Act provided that no notice u/s. 148 shall be issued for the relevant assessment year after expiry of four years from the end of the relevant assessment year. However, it further provided that in a case where the quantum of escaped income is Rs.1,00,000/- or more, instead of four years, six years limitation would be available. It further provided that if the escaped income relates to any asset located outside India, the limitation would get extended to sixteen years.
The aforesaid provision was substituted by Finance Act 2021 w.e.f. 01.04.2021. As per section 149(1) of the Act under the new regime, no notice u/s. 148 of the Act shall be issued for the relevant assessment year if three years have elapsed for the relevant assessment year. However, in a case where the income escaping assessment is Rs.50,00,000/- or more then the limitation for issuance of notice u/s. 148 of the Act will get extended to ten years. The third proviso to Section 149(1) of the Act provided that for the purpose of computing the period of limitation, the time or extended time allowed to the assessee as per show cause notice issued u/s. 148A(b) of the Act or the period during which proceeding u/s. 148 is stayed by an order of injunction of any court shall be excluded. The fourth proviso to Section 149(1) of the Act provided that immediately after exclusion of period referred in third proviso, if the period of limitation available to the AO for passing an order under Section 4
Aptiva Middle East FZE

148A(d) of the Act is less than seven days, such remaining period shall be extended to seven days and accordingly the period of limitation for issuance of notice u/s. 148
shall be deemed to have been extended.
6. Interestingly, sub section (2) to Section 149 of the Act provides that the limitation prescribed under sub section (1) of Section 149 of the Act for issuance of notice shall be subject to the provisions of Section 151 of the Act. The use of word
‘shall’ in sub section (2) of Section 149 of the Act makes it clear that the limitation prescribed u/s. 149 of the Act for issuance of notice u/s. 148 of the Act is subject to the timeline prescribed u/s. 151 of the Act. In other words, the limitation prescribed u/s. 149(1) of the Act would not override the timeline prescribed for grant of approval by the specified authority u/s. 151 of the Act. Section 151 of the Act as it stood after substitution of earlier Section 151 of the Act by Finance Act, 2021
effective from 01.04.2021 and before its amendment by Finance Act, 2023 w.e.f.
01.04.2023 reads as under:
“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 or less than three years have elapsed from the end of the relevant assessment year;
(ii) Principal Chief Commissioner or Principal Director General or 33[***] Chief Commissioner or Director General, if more than three years have elapsed from the end of the relevant assessment year:”

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Aptiva Middle East FZE the specified authority who can grant sanction/approval is the Principal
Commissioner or Principal Director General or Commissioner or Director of Income
Tax. However, as per clause (ii), if more than three years have elapsed from the end of the relevant assessment year, the specified authority, who can grant sanction is the Principal Chief Commissioner or Principal Director General or where no Principal Chief Commissioner or Principal Director General is available then Chief
Commissioner or Director General of Income Tax. It is noteworthy, akin to third and fourth provisos, which were incorporated in Section 149(1) of the Act under the new regime effective from 01.04.2021, no corresponding amendment was made to Section 151 of the Act. By virtue of Finance Act, 2023 effective from 01.04.2023, the following proviso was added to Section 151 of the Act.
“Provided that the period of three years for the purposes of Clause (i) shall be computed after taking into account, the period of limitation as excluded by the third, fourth and fifth provisos or extended by the sixth proviso to sub section (1) of Section 149 of the Act.”
8. Thus, as per Section 151 of the Act as it stood prior to its amendment by Finance Act, 2023, the limitation prescribed under Clause (i) of Section 151 of the Act was prior to expiry of three years from the end of the relevant assessment year and without benefit of further extension in terms with third, fourth or fifth proviso under sub section (1) of Section 149 of the Act.
9. Therefore, keeping in view the provision contained under sub section (2) of Section 149 of the Act, which makes the limitation provided u/s. 149(1) of the Act

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Aptiva Middle East FZE subject to the timeline provided u/s. 151 of the Act, the limitation provided u/s.
149(1) of the Act including the provisos cannot get imported for the purpose of extending the limitation u/s. 151(i) of the Act prior to the amendment of section 151
of the Act by Finance Act, 2023. That being the case, the timeline for sanction by specified authority fixed u/s. 151 of the Act has to be scrupulously followed.
10. At this stage, it is to be noted that the Hon’ble Juri ictional High Court in the decisions referred to by my learned brother Accountant Member in his order has specifically held that the proviso inserted to Section 151 of the Act by Finance Act,
2023, effective from 01.04.2023 will not apply prior to its effective date. Pertinently, the line of argument taken by the Department in the case of Albert Joseph Rozario vs. ITO (Supra) was not for the first time. Identical argument was advanced by the Department in following two cases dealt by the Coordinate Benches:
(i).
Davos International Fund Vs. ACIT, Mumbai, ITA No. 1190/Mum/2024
dated 13.01.2025. (ii).
ACIT vs. Asha P. Kedia [2025] 174 taxmann.com 99 (Mumbai-Trib.)
11. While dealing with the contentions of learned Departmental Representative in case of Davos International Fund (Supra), the Coordinate Bench has held as under:
“7. We heard the parties and perused the material on record. In assessee's case the 148A notice for AY 2017-18 was issued on 12.03.2022 and the order disposing the objections of the assessee was passed on 04.04.2022
under section 148A(d) of the Act. The AO issued notice under section 148
dated 04.04.2022. On perusal of the order under section 148A(d) of the Act and 148 (page 42 to 46 and 47 of PB) we notice that the impugned notices are issued after obtaining the prior approval of CIT (IT), Mumbai-2. The case of the revenue is that the notice dated 04.04.2022 is issued within three years since as per the 5th proviso to section 149, the AO has got additional

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Aptiva Middle East FZE

9 days for issue of notice under section 148 i.e. upto 09.04.2022. since the extended time of 9 days i.e. from 22.03.2022 to 31.03.2022 was given to the assessee. Therefore, it is argued by the revenue that notice issued on 04.04.2022 is within period of three years and the approval has been correctly obtained by the authority as specified in section 151(i) of the Act.
The assessee is contending that the 5th proviso to section 149 under which the revenue is taking cover is inserted w.e.f. 01.04.2023 and therefore not applicable to assessee's case. In this regard, we notice that the Hon'ble
Bombay High Court iIn the case of Vodafone Idea Ltd (supra) has held that-
“1. Petitioner is impugning a notice dated 19th March 2022
issued under Section 148A(b) of the Income Tax Act, 1961 ("the Act"), the order passed under Section 148A(d) of the Act and the notice both dated 7th April 2022 issued under Section 148 of the Act. One of the grounds raised is that the sanction to pass the order under Section 148A(d) of the Act and issuance of notice under Section 148 of the Act is invalid inasmuch as the sanction has been admittedly issued by the Principal Commissioner of Income Tax ("PCIT") and not by the Principal Chief
Commissioner of Income Tax (PCCIT"). 2. Petitioner's request for a copy of the sanction has also been denied. Even in the affidavit in reply, the Department is refusing to give the sanction which makes us wonder what is the national secret involved in that, that Assessee is being refused what he is rightfully entitled to receive from the Department. In the affidavit in reply, the stand taken by the Revenue is it will be made available during the re- assessment proceeding. 3. The impugned order and the impugned notice both dated 7th April 2022 state that the Authority that has accorded the sanction is the PCIT, Mumbai 5. The matter pertains to Assessment Year ("AY") 2018-19 and since the impugned order as well as the notice are issued on 7th
April 2022, both have been issued beyond a period of three years.
Therefore, the sanctioning authority has to be the PCCIT as provided under Section 151 (ii) of the Act. The proviso to Section 151 has been inserted only with effect from 1" April 2023 and, therefore, shall not be applicable to the matter at hand. 4. In this circumstances, as held by this Court in Siemens Financial
Tax & Ors., the sanction is invalid and consequently, the impugned order and impugned notice both dated 7th April 2022
under section 148A(d) and 148 of the Act are hereby quashed and set aside.”

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Aptiva Middle East FZE

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Aptiva Middle East FZE the 3rd, 4th and 5th or 6th provisos of Section 149(1) of the Act cannot be read into Section 151 of the Act to extend the time limit u/s. 151(i) of the Act.
14. In view of aforesaid, I fully agree with the decision of my learned brother
Accountant Member that, both the order passed u/s. 148A(d) of the Act and notice issued u/s. 148 of the Act are invalid due to lack of sanction by the specified authority as specified u/s. 151(ii) of the Act. As a natural corollary, the assessment order passed in consequence thereof is also invalid. Hence, the ground is allowed.
15. In the result, appeal is allowed.

(Order pronounced in the open court on 15/10/2025) (N.K. Billaiya)
Vice President

Mumbai; Dated : 15/10/2025
Aks/-

Copy of the Order forwarded to :

(Dy./Asstt.