SAGAR PRAMOD DEOGHARE,NASHIK vs. ITO, WD- 1(1), NASHIK

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ITA 2340/PUN/2026Status: DisposedITAT Pune08 September 2026AY 2017-1810 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the reassessment notice was bad in law as it was issued beyond the three-year period and the alleged escaped income was less than Rs. 50 lakhs. The approval for reassessment was also found to be granted by an incorrect authority.

What were the facts?

The assessee appealed against an order for AY 2017-18. The core issue was the validity of reassessment proceedings initiated after a lapse of three years from the end of the assessment year, with alleged escaped income below the prescribed threshold.

What were the issues?

Whether reassessment proceedings initiated after three years from the end of the assessment year are valid when the alleged escaped income is below Rs. 50 lakhs and if the approval for such reassessment was obtained from the competent authority.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 148A,Section 149,Section 151

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE

Before: SHRI Dr. DIPAK P. RIPOTE & SHRI VINAY BHAMORE

For Appellant: Shri Pramod S Shingte
For Respondent: Shri Sanjay Kumar Verma, JCIT

PER Dr. DIPAK P. RIPOTE, A.M : This is an appeal filed by the assessee against the order of the Learned Commissioner of Income Tax (Appeals), NFAC, Delhi [Ld.CIT(A)], passed u/s. 250 of the Income Tax Act, 1961 („the Act‟) for AY 2017-18 on 09.02.2026, emanating from the Assessment Order u/s 147 r.w.s. 144 r.w.s 144B of the Act, dated 18.05.2023.

2.

The assessee has raised the following additional grounds : “1. The appellant has preferred the captioned appeal before this Hon'ble Tribunal against the appellate order passed by the Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre for the assessment year 2017-18, which is presently pending adjudication before this Hon'ble Tribunal. 2. The appellant most respectfully seeks the leave of this Hon'ble Tribunal to raise the additional grounds of appeal set out herein below, these additional grounds was not raised before the lower authorities and is being raised for the first time before this Hon'ble Tribunal.

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3.

The additional ground now sought to be raised is a purely legal ground which goes to the root of the matter, as it touches upon the very validity of the reassessment proceedings and the assumption of jurisdiction under section 147/148 of the Act. A. “On the facts and in the circumstances of the case and in law, Ld Assessing Officer erred in assuming the jurisdiction u/s.147, for the alleged escapement of income to the extent of Rs.13,04,000/-, especially in view of the fact that the relevant Assessment year is 2017-18, which falls beyond the period of three years, and since the alleged amount of escarpment do not exceed Rs. 50.00 lakhs, which is the monetary threshold specified in section 149, therefore action of initiating reassessment proceedings is void ab initio and consequential proceedings are bad in law.” B. “On the facts and in the circumstances of the case the Ld Assessing officer erred in imitating the reassessment proceedings on the basis of mere report on ITBA portal, which is not supported by any documentary evidence of any sort, and therefore belief of alleged escapement of income is purely based on surmises and without any supporting evidence to that effect, therefore the action of initiating reassessment proceedings is bad in law.” 4. In view of the foregoing, and this being a legal ground which goes to the root of the matter, the appellant most respectfully prays that this Hon'ble Tribunal may kindly be pleased to admit the additional ground of appeal enclosed herewith and adjudicate the same on merits, in the interest of justice. The appellant shall remain ever grateful.” Submission of Ld. AR :

3.

The Ld. AR submitted that the notice u/s 148A(b) and order u/s 148A(d) of the Act are bad in law as it has been issued after a lapse of 3 years from the end of the assessment year and admittedly alleged escaped income is only Rs.13,04,000/-. The Ld. AR also submitted that the order has been approved by the Pr. Commissioner of Income Tax, hence, it is bad in law. The approval of Pr. Chief Commissioner of

ITA No.2340/PUN/2026 Income Tax was required as per section 151 of the Act. The Ld. AR submitted that therefore the notice u/s 148 of the Act is bad in law. The Ld. AR relied on the decisions filed in the paper book.

Submission of Ld. DR :

4.

The Ld. DR relied on the order of the Ld. Assessing Officer (AO) and the Ld. CIT(A).

Findings and Analysis :

5.

We have heard both the parties and perused the records. Both the parties have pleaded only the legal grounds.

5.1 The order u/s 148A(d) dated 29.07.2022 for AY 2017-18 is at page Nos. 62 to 64 of the paper book. The relevant paragraphs of the said notice is reproduced here as under :

5.2 Thus, it is observed that as per order u/s 148A(d) dated 29.07.2022 of the Act the alleged escapement of income is

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Rs.13,04,000/- for AY 2017-18. The order has been passed after a lapse of 3 years from the end of the assessment year.

6.

Section 149 of the Act is reproduced here as under : “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— (i) 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 [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.” 6.1 Thus, as per section 149 of the Act notice u/s 148 cannot be issued if alleged escapement of income is less than Rs.50 lakh after a lapse of 3 years from the end of the assessment year. In this case, admittedly, notice u/s 148 has been issued after a lapse of 3 years from the end of the assessment year and alleged escapement of income is only Rs.13,04,000/-. Therefore, as per section 149 of the Act, the said notice is bad in law.

7.

In this case notice u/s 148 has been issued after a lapse of 3 years from the end of the assessment year for alleged escapement of income of Rs.13,04,000/-, which is less than Rs.50 lakh. The identical issue has been decided by the ITAT,

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Mumbai in the case of Manish Jagdish Joshi Vs. CIT, (2024) 165 taxmann.com 836 (Mumbai-Trib.), the relevant paragraph is reproduced here as under : Quote, “18. From the perusal of the order dated 23/05/2022 passed under section 148A(d) of the Act, it is further evident that based on the information in possession of the AO, it was concluded that there is an escapement of income to the tune of Rs.43,32,000 under section 56(2)(vii)(b) of the Act. The aforesaid order further mentions that the conditions of section 149(1) are satisfied in this case for the assessment year 2017-18.However, undisputedly three years from the end of the relevant assessment year elapsed in the present case even at the time of issuance of the first notice under section 148 of the Act. Subsequently, after completion of the process, as per the existing provisions dealing with reassessment, the Jurisdictional AO issued notice under section 148 of the Act on 24/07/2022. As noted in the foregoing paragraph, as per the provisions of section 149, as amended by Finance Act 2021, no notice under section 148 of the Act shall be issued after the expiry of three years but not more than ten years, unless the AO is in the position of documents or evidence which reveal that income amounting to Rs.50 lakh or more chargeable to tax has escaped assessment. As noted above in the present case, the income which is alleged to have escaped assessment is less than Rs.50lakh. We find that the Hon'ble Jurisdictional High Court in Bhavesh Maganlal Dharodv. ITO [2023] 155taxmann.com 335 (Bombay) held as follows: - "3.........Under Section 149(1)(b) of the Act no notice can be issued if the amount is less than Rs. 50lakhs. Further, if Section 149(1)(b) of the Act is applicable, then the approval could be granted only by the Principal Chief Commissioner and not Principal Commissioner as in this case." 19. Thus, in the present case, it is discernible that the notice under section 148 of the Act was issued not only in contravention of the provisions of section 151 as the sanction of the concerned Specified Authority was not obtained, but the same is also time-barred as per the provisions of section 149 of the Act as the same was issued after three years and the amount alleged to have escaped assessment is only Rs.43,32,000, i.e. less thanRs.50 lakh. Accordingly, we are of the considered view that the notice issued under section 148 of the Act is void ab initio and bad in law and therefore is quashed. Consequently, the entire reopening proceedings and impugned final assessment order passed under section 147 r/w section 144C(13) of the Act is also quashed.”Unquote.

8.

Section 151 of the I.T. Act is reproduced here as under :

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“[Sanction for issue of notice. 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 where there is no Principal Chief Commissioner or Principal Director General, Chief Commissioner or Director General, if more than three years have elapsed from the end of the relevant assessment year.]”

8.1 It is observed that order u/s 148A(d) and notice u/s 148 of the Act has been approved by the Pr. Commissioner of Income Tax-1, Nashik. As per section 151 of the Act after a lapse of 3 years from the end of the assessment year approval of Pr. Chief Commissioner of Income Tax or Chief Commissioner of Income Tax was required. However, in this case, notice has been approved by the Pr. Commissioner of Income Tax. Hence, notice has not been approved by the specified authority mentioned in section 151 of the Act.

9.

The Hon‟ble Jurisdictional High Court in the decision of Holiday Developers (P.) Ltd, Vs. ITO [2024] 159 taxmann.com 178 (Bombay) dated 29.01.2024 has held as under : Quote “1. Petitioner is impugning a order under section 148A(d) and the notice, both dated 7th April 2022 passed under section 148 of the Income Tax Act, 1961 ("Act"). Of-course Petitioner has also impugned the notice dated 17th March 2022 issued under section 148A(b) of the Act. Various grounds have been raised but one of the primary grounds for challenging the notice under section 148A(d) and the notice under section 148 of the Act both dated 7th April 2022 is that order as well as the notice both mention the authority that has granted approval, is the Principal Commissioner of Income Tax ("PCIT"), Mumbai 5 and the approval has been granted on 7th April 2022. 2. Mr. Gandhi is correct in saying that the Assessment Year ("AY") is 2018-19 and, therefore, since more than three years have expired from the end of the assessment year, Sanctioning Authority under section 151(ii) of the Act should be the Principal Chief Commissioner of

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Income Tax ("PCCIT") and not the PCIT. Mr. Gandhi says, as held in Siemens Financial Services (P.) Ltd. v. Dy. CIT [2023] 154 taxmann.com 159/457 ITR 647 (Bom.),the sanction is invalid and consequently, the order and the consequent notice under section 148A(d) and section 148, respectively, of the Act should be quashed and set aside. 3. In view of these facts and circumstances, we do not see any reason to just grant Rule and keep the matter pending. 4. As held in Siemens (Supra), the order passed under section 148A(d) and notice issued under section 148 of the Act both are quashed and set aside.” Unquote.

10.

The Hon‟ble Bombay High Court in the case of Alag Property Construction (P.) Ltd. Vs. ACIT, (2025) 179 taxmann.com 578 (Bombay) has held as under : Quote, “10. On perusal of the order dated 18.08.2022, passed under Section 148A(d) of the Act we find that the aforesaid order was passed after taking approval from Principal Commissioner of Income Tax (Respondent No.2). Since the aforesaid order was passed, as well as the notice under section 148 was issued, after the expiry of three years from the end of A.Y. 2017-18, as per the substituted provisions of re-assessment, the authority specified under Section 151(ii) of the Act (i.e. Principal Chief Commissioner or Chief Commissioner) was required to grant approval. Accordingly, we conclude that in the present case, the approval has been obtained from the authority specified under Section 151(i) of the new regime instead of the authority specified under Section 151(ii) of the new regime. 11. The Hon'ble Supreme Court in the above case has drawn an illustration in para 78 of its order in the context of A.Y. 2017-18 (which is also the relevant Assessment year in the present Writ Petition) wherein it is categorically held that the authority specified under section 151(i) can accord sanction only upto 30.06.2021. This illustration makes it absolutely clear that when the period of three years from end of relevant Assessment Year expired between 20.03.2020 and 31.03.2021, the extension by virtue of TOLA was upto 30.06.2021 and not beyond. Thus, it can be said that the period of three years from the end of the relevant Assessment Year (in the present case A.Y. 2017-18) expired on 30.06.2021, whereas Respondent No.1, despite passing order under section 148A(d) on 18.08.2022, and issuing notice under section 148 on 23.08.2022 [in respect of Assessment Year 2017-18], has obtained approval of Respondent No.2 who is not the authority as prescribed under section 151(ii).

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12.

Non-compliance by Respondent No.1 with the provisions contained in Section 148A(d) read with Section 151(ii) vitiates the jurisdiction of Respondent No.1 to issue a notice under Section 148 of the Act. 13. We are clearly of the view that the present matter stands covered by the decision of Hon'ble Supreme Court in the case of Rajeev Bansal (supra) and we are bound by it. Accordingly, we hold that the order dated 18.08.2022 passed under Section 148A(d) of the Act and the consequential notice issued under section 148 dated and 23.08.2022 are bad in law, and hence, are required to be quashed and set aside.”Unquote.

11.

The ITAT Pune in the case of Mahesh Gokuldas Fulwani Vs. ITO in ITA No. 873/PUN/2025 for AY 2017-18 has held as under: Quote, “9. We find since the notice has been issued beyond the period of three years from the end of the relevant assessment year, therefore, in view of the provisions of section 151, the competent authority for granting the approval for issue of notice u/s 148 of the Act is the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General. Since the approval in the instant case has been granted by the PCIT instead of any of the above authorities, therefore, such approval being not in accordance with law, the re-assessment proceedings are invalid.”Unquote. 12. Similar view has been taken by this Tribunal in the case of Chandrakant Viththal Bhopi Vs. ITO in ITA No. 2405/PUN/2024 for AY 2016-17, order dated 07.05.2025. The relevant paragraph is reproduced here as under : Quote, “19. Since the facts of the instant case are identical to the facts in the case of Haresh kumar Dungarmal Jain vs. DCIT (supra), therefore, respectfully following the same, we hold that since in the instant case notice u/s 148A(d) of the Act has been issued on 27.07.2022 which is beyond the period of three years from the relevant assessment year and the approval has been granted by the PCIT for reopening of the case instead of Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General, therefore, such approval being not in accordance with law, we hold that the entire re-assessment proceedings are vitiated. We, therefore, quash the re-assessment proceedings. Since the assessee succeeds on this legal ground, the other grounds challenging the addition on merit are not being adjudicate being academic in nature.” Unquote.

13.

In this case, the Ld. DR has filed submission. The Ld. DR has mainly referred to the decision of Hon‟ble Supreme Court in

ITA No.2340/PUN/2026 the case of Union of India Vs. Rajeev Bansal, (2024) 469 ITR 46 (SC). The Ld. DR also relied on the decision of Hon‟ble Supreme Court in the case of Union of India Vs. Ashish Agarwal, (2022) 444 ITR(SC). In this context it is important to refer to the decision of Hon‟ble Bombay High Court in the case of Alag Property Construction (P.) Ltd. (supra) which we have already reproduced in para 7, it is observed that the Hon‟ble Bombay High Court has considered the decision of Hon‟ble Supreme Court in the case of Rajeev Bansal (supra) and following the decision of Hon‟ble Supreme Court the Hon‟ble Bombay High Court in the case of Alag Property Construction (P.) Ltd. (supra) held that order u/s 148A(d), dated 18.08.2022 for AY 2017-18 was bad in law. Therefore, the contention of the Ld. DR cannot be considered as Hon‟ble Bombay High Court in the case of Alag Property Construction (P.) Ltd. (supra) has already discussed the law laid down by the Hon‟ble Supreme Court in the case of Rajeev Bansal (supra).

14.

The decision of Hon‟ble Bombay High Court is binding on this Tribunal, especially when the Hon‟ble Bombay High Court has duly considered the decision of Hon‟ble Supreme Court in the case of Rajeev Bansal (supra). The Hon‟ble Supreme Court in the case of Union of India And Others Vs. Kamlakshi Finance Corporation, AIR 1992 SC 711, dated 24.09.1991 has already explained the “judicial precedents”. Similarly, the Hon‟ble Bombay High Court in the case of Smt. Godavari Saraf Vs. CIT, 113 ITR 589 has explained the law related to judicial precedents. The law regarding judicial precedents is that when the decision of Hon‟ble Jurisdictional High Court on a particular issue is available then it is mandatory for the Tribunal to follow the decision of Hon‟ble Jurisdictional High Court on a particular issue provided the facts are not distinguishable. In this case, 9

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the facts are identical, therefore, the decision of Hon‟ble Bombay High Court in the case of Alag Property Construction (P.) Ltd. (supra) is binding on us.

15.

In this case notice u/s 148 is dated 29.07.2022 for AY 2017-18, in the case of Alag Property Construction (P.) Ltd. (supra) the notice u/s 148 is dated 23.08.2022 for AY 2017-18. Thus, the facts are identical. Rrespectfully, following the decisions of the Hon‟ble Bombay High Court and ITAT (supra), the notice u/s 148 for AY 2017-18 approved by the Pr. Commissioner of Income Tax after a lapse of 3 years from the end of the assessment year is quashed. Accordingly, consequential reassessment order is bad in law.

16.

Since, we have allowed the legal ground of the assessee, we do not intend to comments on the merits of the addition.

17.

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

Order pronounced in the open Court on 08th September, 2026

Sd/- Sd/- (VINAY BHAMORE) (Dr. DIPAK P. RIPOTE) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे/Pune; दिन ांक/Dated : 08-09-2026 Ravi Kumar Digitally signed by Ravi Kumar Ravi Kumar Date: 2026.09.08 16:34:02 +05'30' आदेशकीप्रतितितिअग्रेतिि/Copy of the Order is forwarded to: 1. अपील र्थी/ The Appellant 2. प्रत्यर्थी/ The Respondent 3. The concerned Pr.CIT, Pune 4. DR, ITAT, „SMC‟ Bench, Pune 5. ग र्डफ ईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Assistant Registrar आयकरअपीलीयअदिकरण, पुणे / ITAT, Pune

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