STEELEX,MUMBAI vs. INCOME-TAX OFFICER WARD 20 3 1, MUMBAI

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ITA 4182/MUM/2026Status: DisposedITAT Mumbai31 August 2026AY 2016-175 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 since more than three years had expired from the end of the relevant assessment year, the approval for issuing the notice under Section 148 should have been obtained from the PCCIT or CCIT as per Section 151(ii) of the Act. The approval by the PCIT was invalid, rendering the notice and subsequent proceedings bad in law.

What were the facts?

The assessee, a partnership firm, filed a return declaring a loss. The assessment was reopened under Section 147, and a notice under Section 148 was issued. The approval for this notice was granted by the Principal Commissioner of Income Tax (PCIT) instead of the Principal Chief Commissioner or Chief Commissioner of Income Tax (PCCIT/CCIT).

What were the issues?

Whether the reopening of assessment and the notice issued under Section 148 are invalid due to lack of proper approval from the competent authority as required by Section 151(ii) of the Income Tax Act.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCHES, MUMBAI

Before: SHRI SAKTIJIT DEY & SHRI MAKARAND VASANT MAHADEOKAR

For Respondent: Ms. Meenu Ola, Sr.DR
Pronounced: 31.08.2026

आदेश / ORDER

PER SHRI SAKTIJIT DEY, VICE PRESIDENT:

This is an appeal by the assessee against order dated 31.03.2026, passed by the National Faceless Appeal Centre (‘NFAC’ for short), Delhi, for the assessment year (A.Y. for short) 2016-17.

2.

The assessee has raised multiple grounds, on legal and jurisdictional issues,

challenging the validity of reopening of assessment u/s.147 of the Act, as also on merits.

One of the grounds raised by the assessee is on the validity of notice issued u/s.148 of

the Act due to lack of proper approval. It is the case of the assessee that though more

than three years have expired from the end of the relevant assessment year, however,

the approval u/s. 151 of the Act was granted by Principal Commissioner of Income Tax,

as against Principal Chief Commissioner of Income Tax or Chief Commissioner of

Income Tax, in terms with Section 151(ii) of the Act. In our view, the aforesaid legal

and jurisdictional issue raised by the assessee goes to the root of the matter, hence, has

to be addressed at the very outset.

3.

Undisputedly, the facts on record reveal that the assessee a partnership firm, filed

its return of income for the assessment year under dispute, declaring loss of

Rs.40,51,456/-. The return of income filed by the assessee was processed u/s.143(1) of

the Act. Subsequently, the assessment was reopened u/s.147 of the Act under the new

regime. Notice u/s.148 of the Act was issued to the assessee on 30.07.2022, after order

u/s.148A(d) was passed on 27.07.2022. A perusal of the order passed u/s.148A(d) of the

Act dated 30.07.2022 clearly reveals that it was passed with the approval of Principal

Commissioner of Income Tax, granted on 27.07.2022. Even notice dated 30.07.2022

issued u/s.148 of the Act, a copy of which is placed at page number 49 of the paper

book, clearly reveals that it was issued after obtaining approval of PCIT, as against

PCCIT or CCIT. A reading of section 151 as a whole and clause (ii) in particular, makes

it clear that after expiry of three years from the end of the relevant assessment year,

notice u/s. 148 of the Act can be issued only with the prior approval of PCCIT or CCIT.

Admittedly, the statutory mandate of section 151(ii) has not been complied in the present

case.

4.

Therefore, the issue which arises for consideration is, non-compliance with the

statutory mandate whether invalidates the reopening of assessment. In our view, the

issue is no more res integra because of a number of judicial precedence available before

us, including the decisions of Hon'ble Jurisdictional High Court in case of Anil Gupta

(P.) Ltd. vs. ITO 185 taxmann.com 239 (Bom) which is for the very same assessment

year. The Hon'ble jurisdictional High Court while deciding identical issue has held as

under:

9.

In the present case, the period of three years from the end of the Assessment Year 2016-17 fell for completion on 31 st March 2020. Since the expiry date fell during the time period of 20 th March 2020 and 31st March 2021 contemplated under Section 3(1) of Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (for short "TOLA"), the authority specified under Section 151(i) of the new regime could have granted sanction till 30 th June 2021. On a perusal of the order dated 30.07.2022, passed under Section 148A(d) of the Act, we find that the aforesaid order was passed after taking approval from the Principal Commissioner of Income Tax (Respondent No.4). Since the aforesaid order was passed after the expiry of three years from the end of the Assessment Year 2016-17, 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.

10.

The Hon'ble Supreme Court in the above case has drawn an illustration in paragraph 78 of it's order in the context of Assessment Year 2017-18, 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 (here AY 2016-17) expired on 30.06.2021, whereas Respondent No.1, despite passing the order on 30.07.2022 in repsect of Assessment Year 2016- 17, has obtained approval of Respondent No.4 who is not the authority as prescribed under Section 151(ii).

11.

Non-compliance by Respondent No.1 with the provisions contained in Section 151(ii) vitiates the jurisdiction of Respondent No. 1 to issue a notice under Section 148 of the Act.

12.

We are clearly of the view that the present matter stands covered by the decision of Hon'ble Supreme Court in the case of Union of India vs. Rajeev Bansal (supra). We accordingly hold that the order dated 30.07.2022 passed under Section 148A(d) of the Act and the consequential notice issued under Section 148 also dated 30.07.2022, are bad in law for being violative of the provisions of Section 151(ii) of the Act. Hence they are required to be quashed and set aside. 13. We, accordingly, set aside the impugned order dated 30.07.2022 passed under Section 148A(d), the Notice issued under Section 148 also dated 30.07.2022, and all other proceedings/orders emanating therefrom, and allow the Writ Petition in terms of Prayer Clause (a) of the Petition. 5. Identical view has been expressed by Hon'ble jurisdictional High Court in case

of Skypak Travels (P.) Ltd. vs. ITO [2026] 185 taxmann.com 963 (Bom). There are

plethora of other decisions expressing identical view. Thus, respectfully following the

ratio laid down by Hon'ble jurisdictional High Court in the decisions referred to above,

we declare the notice issued u/s.148 of the Act invalid due to lack of proper approval by

the competent authority. Consequently, all proceedings in pursuance to such invalid

notice cannot survive. Accordingly, we quash the impugned assessment order and the

order of first appellate authority is set aside. In view of our decision in the foregoing

paragraphs, the rest of the grounds having become academic are kept open.

6.

In the result, the appeal is allowed.

Order pronounced in the open court on 31.08.2026.

Sd/- Sd/-

MAKARAND V MAHADEOKAR SAKTIJIT DEY ACCOUNTANT MEMBER VICE PRESIDENT

Mumbai Dated: 31.08.2026

Roshani, Sr. PS Copy to: STEELEX, 23 MAULANA SHAUKAT ALI ROAD 1 CHHOTA SONAPU MUMBAI 400008, MUMBAI-400008, MAHARASHTRA

INCOME-TAX OFFICER WARD 20 3 1, PIRAMAL CHAMBER LALBAUG 2 PAREL MUMBAI 400012, MUMBAI-400012, MAHARASHTRA

3 THE PCIT / CIT, 4 THE D.R., ITAT, MUMBAI BENCH 5 GUARD FILE

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