AAKASH DILIP DOSHI,MUMBAI vs. AO, WARD 19(1)(1), MUMBAI

The brief facts of the case are that the assessee, Shri Aakash Dilip Doshi, is an individual who filed his return of income for A.Y. 2017-18 on 20.11.2017 declaring total income of ₹3,13,870/-. The case was reopened on the basis of information received from the Investigation Wing in connection with the Sanjay Shah and Jignesh Shah group. As per the information available with the Assessing Officer, the assessee was a beneficiary of an accommodation loan of ₹27,24,000/- from Shri Jignesh S. Shah. The Assessing Officer thereafter passed an order under section 148A(d) on 29.07.2022 and issued notice under section 148 on the same date. In response to the notice, the assessee filed his return on 10.03.2023 declaring the same income of ₹3,13,870/-.

During the reassessment proceedings, the Assessing Officer examined the accommodation loan of ₹27,24,000/- as well as the credits appearing in the assessee's Bank of India and Axis Bank accounts. The assessee stated that he did not enter into any transaction with Shri Jignesh Shah. The Assessing Officer, however, placed reliance on the material received from the Investigation Wing and held that the amount of ₹27,24,000/- was the unexplained cash credit under section 68 of the Act. The Assessing Officer also treated credits of ₹96,30,000/- appearing in the Bank of India account and ₹1,56,79,000/- appearing in the Axis Bank account as the assessee’s unexplained money under section 69A of the Act. The Assessing Officer accordingly passed the reassessment order dated 30.05.2023 under section 147 read with section 144B and computed the total income at ₹2,83,46,870/-.

The assessee carried the matter in appeal before the CIT(Appeals). The CIT(Appeals), by order dated 31.03.2026, rejected the assessee's challenge to the validity of the reopening. The CIT(Appeals) held that the Assessing Officer had acted on specific information received from the Investigation Wing and therefore the reassessment proceedings were within the extended time available under the amended provisions read with the judgment of the Hon'ble Supreme Court in Union of India v. Ashish Agarwal [2022] 138 taxmann.com 64 (SC) / [2022] 286 Taxman 183 (SC) / [2022] 444 ITR 1 (SC).

The assessee is in appeal before us against the order passed by the CIT(Appeals), dismissing the appeal of the assessee.

We have heard the rival submissions and perused the material available on record. The assessee has raised jurisdictional grounds challenging the validity of the reassessment proceedings. Since the objection relating to approval under section 151 goes to the root of the jurisdiction assumed by the Assessing Officer, we are therefore dealing with this issue first.

The assessment year before us is A.Y. 2017-18 and the period of three years from the end of the relevant assessment year expired on 31.03.2021. The earlier notice under the unamended section 148 was issued on 24.06.2021. Thereafter, following the judgment of the Hon'ble Supreme Court in Ashish Agarwal (supra), the Assessing Officer proceeded under the substituted reassessment provisions. The order under section 148A(d) was passed on 29.07.2022 and the consequential notice under section 148 was also issued on the same date.

The assessment record further shows that the Assessing Officer obtained approval from the Pr. CIT-19, Mumbai on 29.07.2022. Thus, the approval for passing the order under section 148A(d) and for issuing the notice under section 148 of the Act was obtained from the Principal Commissioner of Income Tax.

We also find that the income which as per the Assessing Officer had escaped assessment at the stage of passing the order under section 148A(d) was ₹27,24,000/-. Thus, the amount on the basis of which the assessment was reopened was below ₹50 lakh. The additions of ₹96,30,000/- and ₹1,56,79,000/- arose subsequently during the course of the reassessment proceedings and did not form the basis on which jurisdiction was initially assumed under section 148A(d) of the Act.

The issue before us is, therefore, whether the Principal Commissioner was the competent "specified authority" for granting approval under section 151 on 29.07.2022 in the case of A.Y. 2017-18. 12. This issue is directly covered by the judgment of the Hon'ble jurisdictional Bombay High Court in Alag Property Construction (P.) Ltd. v. ACIT [2025] 179 taxmann.com 578 (Bombay) / [2026] 487 ITR 440 (Bombay), dated 08.09.2025. The assessment year involved before the Hon'ble High Court was also A.Y. 2017-18. In that case, the order under section 148A(d) and the notice under section 148 were issued in August 2022 after obtaining approval from the Principal Commissioner. The Hon'ble High Court held that once the period of three years from the end of A.Y. 2017-18 had expired, the approval had to be obtained from the authority specified under section 151(ii), viz. the Principal Chief Commissioner/Principal Director General/Chief Commissioner/Director General, and not from the Principal Commissioner.

The relevant observations of the Hon'ble Bombay High Court are reproduced below for ready reference:

In our view, the above judgment applies squarely to the facts of the present case. The assessment year is the same i.e A.Y. 2017-18. In the present case also, the order under section 148A(d) and the notice under section 148 of the Act were issued on 29.07.2022, i.e. after 30.06.2021. However, the approval was obtained from the Pr. CIT-19, Mumbai. In view of section 151(ii), as interpreted by the Hon'ble jurisdictional High Court in Alag Property Construction (P.) Ltd. (supra), the Principal Commissioner was not the competent specified authority to grant approval at that stage. The approval was required to be obtained from the higher authority specified under section 151(ii) of the Act.

This defect cannot be treated as a mere procedural irregularity. Approval from the competent specified authority is a statutory requirement which has to be satisfied before the Assessing Officer can assume jurisdiction under the reassessment provisions. The Hon'ble Bombay High Court has held that non- compliance with section 148A(d) read with section 151(ii) of the Act vitiates the jurisdiction of the Assessing Officer. We, therefore, hold that the approval obtained from the Principal Commissioner on 29.07.2022 was not a valid approval under section 151(ii) of the Act.

We further note that the income recorded by the Assessing Officer as having escaped assessment at the stage of section 148A(d) was ₹27,24,000/-, which was below ₹50 lakh. The Hon'ble Bombay High Court in Alag Property Construction (P.) Ltd. (supra), while explaining the substituted reassessment provisions, has also observed that where the escaped income is below ₹50 lakh, reassessment notice cannot be issued after expiry of three years. However, since we have already held the reassessment to be invalid for want of approval from the competent specified authority under section 151(ii) of the Act, we do not consider it necessary to separately adjudicate the assessee's challenge on limitation based on the quantum of escaped income or the computation of the surviving period under TOLA and Rajeev Bansal.

Accordingly, we allow Ground No.1 and the connected jurisdictional Ground No.4 raised by the assessee. We hold that the order passed under section 148A(d) dated 29.07.2022 and the consequential notice issued under section 148 dated 29.07.2022 were issued without approval of the competent specified authority and are, therefore, bad in law. Consequently, the reassessment order dated 30.05.2023 passed under section 147 read with section 144B cannot survive and is accordingly quashed.

Since the reassessment proceedings have been quashed on the jurisdictional issue itself, the remaining grounds relating to limitation and the additions on merits have become academic and do not require separate adjudication.

In the result, the appeal of the assessee is allowed.