JAYA RAMESH GUNJAL,AMBERNATH vs. INCOME TAX OFFICER, KALYAN

The assessee has filed an application under Rule 11 of the Income-tax (Appellate Tribunal) Rules, 1963, seeking admission of an additional ground challenging the validity of the reassessment proceedings on the ground that the order under section 148A(d) and the consequential notice under section 148 were issued after more than three years had elapsed from the end of the relevant assessment year, whereas the approval was obtained from the Principal Commissioner of Income-tax instead of the authority specified under section 151(ii), namely, the Principal Chief Commissioner or Chief Commissioner of Income-tax, as the case may be. Since this ground raises a pure question of law going to the root of the jurisdiction assumed by the Assessing Officer and all the necessary facts are already available on record, the same is admitted in terms of the judgment of the Hon’ble Supreme Court in National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383 (SC).

Brief facts relevant to the aforesaid jurisdictional ground are that an initial notice under section 148 of the erstwhile reassessment regime was issued to the assessee on 31.03.2021. Pursuant to the judgment of the Hon’ble Supreme Court in Union of India v. Ashish Agarwal [2022]

Before us, the learned counsel submitted that for AY 2017– 18, the period of three years from the end of the relevant assessment year had expired on 31.03.2021 and, even after considering the extension available under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (“TOLA”), the authority specified under section 151(i) could grant approval only up to 30.06.2021. Therefore, for passing the order under section 148A(d) and issuing the notice under section 148 on 26.07.2022, approval was mandatorily required from the authority specified under section 151(ii). Approval granted by the Principal Commissioner, who was an authority specified under section 151(i), was thus without statutory competence. Reliance was placed upon Union of India v. Rajeev Bansal [2024] 469 ITR 46 (SC), Ramesh Bachulal Mehta v. ITO [2025] 177

We have heard the rival submissions and perused the material placed on record. Section 151, as applicable at the relevant time, prescribed two distinct levels of specified authority. Where three years or less had elapsed from the end of the relevant assessment year, approval could be granted by the authority specified under clause (i), which included the Principal Commissioner. However, where more than three years had elapsed, approval was required from the higher authority specified under clause (ii), namely, the Principal Chief Commissioner or Principal Director General or, where there was no such authority, the Chief Commissioner or Director General. Thus, the competence of the sanctioning authority was statutorily linked to the period elapsed from the end of the relevant assessment year.

The Hon’ble Supreme Court in Union of India v. Rajeev Bansal (supra) has held that although the directions in Ashish Agarwal dispensed with the requirement of approval at the stages of sections 148A(a) and 148A(b), they did not dispense with the requirement of obtaining approval from the competent specified authority before passing an order under

This principle has been followed by the Hon’ble jurisdictional Bombay High Court in Ramesh Bachulal Mehta v. ITO (supra), wherein the order under section 148A(d) and the notice under section 148 issued in July 2022, after obtaining approval from the Principal Commissioner, were quashed because approval was required from the higher authority specified under section 151(ii). More pertinently, the Hon’ble jurisdictional High Court in Alag Property Construction (P.) Ltd. v. ACIT (supra), which also related to AY 2017–18, held that the authority specified under section 151(i) could grant sanction only up to 30.06.2021 and that an order under section 148A(d) and notice under section 148 issued thereafter required approval from the authority specified under section 151(ii). Non-compliance with this statutory requirement was held to vitiate the jurisdiction of the Assessing Officer.

In the present case, the order under section 148A(d) and the notice under section 148 were issued on 26.07.2022,

Accordingly, respectfully following Union of India v. Rajeev Bansal (supra) and the binding judgments of the Hon’ble jurisdictional Bombay High Court in Ramesh Bachulal Mehta v. ITO (supra) and Alag Property Construction (P.) Ltd. v. ACIT (supra), we hold that the approval granted by the Principal Commissioner did not satisfy the mandatory requirement of section 151(ii). Consequently, the order dated 26.07.2022 passed under section 148A(d), the notice dated 26.07.2022 issued under section 148 and the assessment order dated 31.05.2023 passed pursuant thereto are quashed.

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