ANNIE BRAZIL SULDANHA,MUMBAI vs. INCOME TAX OFFICER 42(2)(1), MUMBAI, MUMBAI

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ITA 7595/MUM/2026Status: DisposedITAT Mumbai10 September 2026AY 2016-179 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the reopening of assessment was bad in law due to non-compliance with Section 149(1)(b) regarding the escaped income threshold and Section 151 regarding the competent authority for approval. Therefore, the reassessment proceedings were quashed.

What were the facts?

The assessee's assessment for AY 2016-17 was reopened under Section 147. The reopening notice was issued beyond three years, and the alleged escaped income was below the Rs. 50 lakh threshold. Additionally, the approval for reopening was obtained from an authority not specified for cases beyond three years.

What were the issues?

Whether the reopening of assessment beyond three years was valid when the escaped income was below the prescribed threshold and if the approval for reopening was obtained from the correct authority as per Section 151.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 148A,Section 149(1)(b),Section 151

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “J” MUMBAI

Before: SHRI SANDEEP GOSAIN & SHRI ARUN KHODPIA

For Appellant: Shri Brijesh Vyas, CA, Ms. Kanupriya Damor –Sr. DR
Hearing: 10/09/2026

PER ARUN KHODPIA, AM

The captioned appeal is preferred by the assessee against the order of Commissioner of Income-tax (Appeals), NFAC-New Delhi, dated 21.04.2026, for assessment year 2016-17, arises out of assessment order u/s 147/144 dated 11.04.2023 passed by assessment unit Income-tax Department.

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2.

The grounds of appeal raised by the assessee are as under:

1.

On the facts and circumstances of the case and law, the Ld. CIT(A) erred in confirming reopening of assessment u/s 147 of Income Tax Act, 1961 which is bad-in-law and required to be quash. 2. On the facts and circumstances of the case and law, the Ld. CIT(A) erred in confirming reopening of assessment without considering the fact that reopening for AY 2016-17 is time barred as per section 149(1) of the Income Tax Act, 1961 3. On the facts and circumstances of the case and law, the Ld. CIT(A) erred in confirming the approval obtained of PCIT-3, Mumbai u/s 151 of Income Tax Act, 1961 for reopening of assessment 4. On the facts and circumstances of the case and law, the Ld. CIT(A) erred in set aside the issue of disallowance of HRA amounting to Rs. 70,551, despite of the fact that appellant has not claimed any deduction on account of HRA and hence when nothing is claimed then the same cannot be disallowed. 5. On the facts and circumstances of the case and law, the Ld CIT(A) erred in not allowing the deduction of Rs. 19,200 on the assumption that appellant has claimed deduction of Rs. 37,301/-as against the actual deduction of Rs. 18,101/- 6. On the facts and circumstances of the case and law, the Ld. CIT(A) erred in not allowing deduction of Rs. 6,162/- u/s 80C of Income Tax Act, 1961 on account of payment of life insurance premium directly paid by employer and deducted from salary. 7. Without Prejudice to Ground No 6, on the facts and circumstances of the case and law, the Ld CIT(A) erred in not considering the appellant investment in Employee Provident Fund of Rs. 27,320/- and House Loan Repayment of Rs. 1,24,280/- are more than the statutory limit of Rs. 1,50,000/- and thus the deduction under section 80C cannot be disallowed for want of LIC Premium receipts. 7. On the facts and circumstances of the case and in law, the Ld CIT(A) erred in not deleting the excess amount of Rs. 1,79,502 from computation sheet as the Ld AO wrongly taken income from other sources at Rs. 2,01,322 as against the actual income from other sources earned by the appellant of Rs. 21,820/- and duly accepted in assessment.

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8.

On the facts and circumstances of the case and law, the Ld. CIT(A) erred in charging interest u/s 234B & 234D of Income Tax Act, 1961 9. On the facts and circumstances of the case and law, the Ld. CIT(A) erred in levying penalty u/s 271(1)(c) of Income Tax Act, 1961 10. Appellant craves leave to add further grounds OR to amend OR alter the existing grounds of appeal on OR before the date of hearing. 3. In the present case, the re-opening assessment was completed on 11.04.2023, wherein the return income of assessee for Rs.4,98,910/-. The assessee revised her income while filing the return in response to notice u/s 148 on VIA for Rs.6,162/-. Against aforesaid order assessee preferred an appeal before the ld. CIT(A) which was partly allowed.

4.

Before us, the learned counsel of the assessee submitted that the reopening in the present case, itself was bad in law as the same was time barred as per provisions of section 49(1) of the Income-tax Act, 1961. Further, the approval u/s 151 was obtained from Ld. PCIT, who was not the specified authority for granting of such approval in the facts of the present case.

5.

In order to substantiate the aforesaid contentions, ld. A.R. drew our attention to the order u/s 148A(d) and notice u/s 148 both dated 21.07.2022. Wherein the approval u/s 151 was granted by PCIT-3, copy of such orders has been placed on record at page no. 1 to 17 and 19 to 20 of the assessee’s paper book. The ld. A.R. on this aspect placed his reliance on the decision by Hon’ble Bombay High Court in the case of Alag Property Construction P

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Ltd v. ACIT 2025 179 taxmann.com 578 Bom, wherein it is held that if the order u/s 148A(d) was passed beyond three years from the end of relevant assessment year and approval was obtained from Principal Commissioner instead of specified authority required under amended u/s 151(ii), none compliance with such statutory mandate and time limit vitiates the validity of jurisdiction assumed by the Assessing Officer, rendering order u/s 148A(d) and notice u/s 148 to be liable to quashed.

6.

Ld. A.R. also relied on a decision on this aspect namely in the case of Naresh Balchandrarao Shinde vs. ITO [2023] 146 taxmann.com 66 (Bom HC), wherein the Hon’ble Bombay High Court has held that if the escaped income was less than jurisdictional requirement of Rs. 50 lakhs as contemplated u/s 149(1)(b) of the Act the impugned reopening notice issued beyond permissible period of three years was liable to be quashed. 7. Ld. A.R. also relied on the case of Siemens Financial Services Pvt Ltd v. Dy.CIT (2023) 457 ITR 647/154 taxmann.com 159 (Bom)(HC), wherein the Hon’ble Court has categorically held that TOLA benefit would not affect scope of Section 151 and Section 151 and sanction of specified authority was to be obtained in accordance with law existing when sanction was obtained. Assessing Officer issued reopening notice beyond period of three years, approval was required to be taken as per provisions of amended section 151 from Principal Chief

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Commissioner or Principal Director General or Chief Director or Director General.

8.

Ld. A.R. also submitted before us, the relevant dates in comparison with the dates in the case of Alag Property Construction P Ltd (supra), reproduced as under:

This issue is already decided by Hon’ble Bombay High Court in case of Alag Property Construction (P.) Ltd. Vs. ACIT [2025] 179 taxmann.com 578 (Bombay). The facts of that case and appellant are tabulated below: - SN Particulars Alag Property Appellant (PARA 4-5) 1 Notice u/s 148 (Unamended) 20.04.2021 20.04.2021 2 Notice u/s 148A(b) (After Ashish Agarwal) 21.05.2022 26.05.2022 3 Objection u/s 148A(c) 06.06.2022 08.06.2022 4 Order u/s 148A(d) after approval of PCIT 18.08.2022 26.07.2022 5 Approval u/s 151(i) by PCIT-6 PCIT-3 6 Notice u/s 148 after approval of PCIT 23.08.2022 26.07.2022

9.

Based on the aforesaid submissions, it was the prayer that the approval granted by the PCIT-3, Mumbai was not in accordance with law and, therefore, the entire reassessment proceedings conducted on the foundation of such invalid approval were liable to be quashed.

10.

Per contra, the learned DR supported the orders of the Revenue authorities.

11.

We have considered the rival submissions of the parties, perused the material available on record and carefully considered the case laws relied upon by the assessee. Admittedly, the present

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case pertains to Assessment Year 2016-17. The initial notice under section 148 of the Act, under the erstwhile reassessment regime, was issued on 20.04.2021. The said proceedings were thereafter taken up in terms of the directions issued by the Hon’ble Supreme Court in the case of Union of India v. Ashish Agarwal [(2022) 138 taxmann.com 64 (SC)]. Consequently, notice under section 148A(b) of the Act was issued on 26.05.2022. The assessee filed its objections thereto on 08.06.2022. Thereafter, the order under section 148A(d) of the Act was passed on 26.07.2022, pursuant to the approval granted by the Ld. PCIT-3 on 21.07.2022, and notice under section 148 of the Act was also issued on 26.07.2022. 12. On a perusal of the aforesaid chronology, it is evident that, insofar as the notice under section 148 issued on 26.07.2022 is concerned, the same was issued beyond a period of three years from the end of the relevant assessment year. Therefore, the conditions prescribed under section 149(1)(b) of the Act become relevant. The said provision, in cases where three years, but not more than ten years, have elapsed from the end of the relevant assessment year, permits issuance of notice under section 148 only where the Assessing Officer is in possession of books of account or other documents or evidence which reveal that the income chargeable to tax, represented in the form of an asset, expenditure in respect of a transaction or in relation to an event or occasion, or an entry or entries in the books of account, which has escaped

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assessment, amounts to or is likely to amount to Rs.50 lakh or more. 13. On examination of the material available on record, we find that the income alleged to have escaped assessment in the present case amounts to Rs.34,00,013/-, which is admittedly below the statutory threshold of Rs.50 lakh prescribed under section 149(1)(b) of the Act. Thus, the condition precedent prescribed under the said provision for assumption of jurisdiction beyond the period of three years is not satisfied. 14. We further find that the approval for the purposes of issuance of notice under section 148 was granted by the Ld. PCIT on 21.07.2022. Since the proposed reassessment proceedings were beyond the period of three years from the end of the relevant assessment year, the question as to the competence of the authority granting approval is also required to be examined with reference to section 151 of the Act. In this regard, the Hon’ble Bombay High Court, in Siemens Financial Services (supra), has laid down the guiding principles concerning the authority competent to grant approval in reassessment proceedings falling beyond the period of three years. 15. Having regard to the aforesaid statutory framework and the ratio of the judgment relied upon by the assessee, we find that the approval in the present case was granted by the Ld. Principal

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Commissioner of Income Tax, whereas, for a case falling beyond the prescribed period of three years, the approval was required to be obtained from the authority specified under the applicable provision of section 151 of the Act. Consequently, the assumption of jurisdiction by the Assessing Officer suffers from an additional infirmity on this count. 16. Thus, considered cumulatively, we find that the impugned reassessment proceedings suffer from infirmities on two independent jurisdictional counts. First, the notice under section 148 was issued beyond three years from the end of the relevant assessment year, whereas the income alleged to have escaped assessment was only Rs.34,00,013/-, i.e., below the threshold of Rs.50 lakh prescribed under section 149(1)(b) of the Act. Secondly, the approval preceding the issuance of notice was granted by the Ld. Principal Commissioner of Income Tax, notwithstanding the fact that the proceedings were beyond the period of three years, thereby giving rise to an issue regarding compliance with the requirement of section 151 of the Act, as explained by the Hon’ble Bombay High Court in Siemens Financial Services (supra). 17. In view of the aforesaid discussion, and respectfully following the ratio laid down by the Hon’ble Courts in the decisions referred to hereinabove, we find that the jurisdiction assumed by the Assessing Officer for reopening the assessment was not in accordance with the statutory requirements. The reassessment

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proceedings, therefore, cannot be sustained in law. Accordingly, the order passed by the Ld. CIT(A) is set aside and the impugned assessment framed under section 147 of the Act is quashed.

18.

Since the assessee succeeds on the legal grounds challenging the validity of the reassessment proceedings and the impugned assessment under section 147 of the Act dated 11.04.2023 has been quashed, the other grounds and contentions raised by the assessee, being rendered academic, do not call for separate adjudication.

19.

In the result, the appeal of the assessee stands allowed in above terms.

Order pronounced in the open Court on 10/09/2026.

Sd/- Sd/- (SANDEEP GOSAIN) (ARUN KHODPIA) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 10/09/2026 Kunal Kr. P.S. Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, (Assistant Registrar) ITAT, Mumbai

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