AMIT RAMESHCHANDRA BHANSALI,MUMBAI vs. INCOME TAX OFFICER WARD 22(1)(1), MUMBAI, MUMBAI

This appeal by the assessee is directed against the order dated 17.11.2025 passed by the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, Delhi [‘learned CIT(A)’], under section 250 of the Income-tax Act, 1961 (‘the Act’) for the assessment year 2017-18, arising out of the assessment order dated 25.05.2023 passed under section 147 read with section 144B of the Act.

There is a short delay in filing the appeal. Having considered the reasons stated in the application for condonation of delay and finding that the delay was neither deliberate nor attributable to any want of bona fides, we condone the delay and admit the appeal for adjudication on merits.

The assessee has raised the following grounds of appeal:

During the course of hearing, the assessee filed an application under rule 11 of the Income-tax (Appellate Tribunal) Rules, 1963, seeking admission of the following additional ground:

The additional ground raises a pure question of law going to the root of the jurisdiction assumed by the Assessing Officer. The material necessary for deciding the ground, namely, the assessment year, the dates of the order under section 148A(d), the notice under section 148 and the approval, is already on record and no investigation into fresh facts is required. Therefore, respectfully following the principles laid down by the Hon’ble Supreme Court in National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383 (SC) and Jute Corporation of India Ltd. v. CIT [1991] 187 ITR 688 (SC), the additional ground is admitted.

Briefly stated, the assessee is an individual. Information was received that he had purchased an immovable property on 30.09.2016 for a consideration of Rs.45,00,000/-, whereas its stamp duty value was Rs.60,02,090/-. An initial notice under section 148 was issued on 30.06.2021. Pursuant to the decision of the Hon’ble Supreme Court in Union of India v. Ashish Agarwal [2022] 444 ITR 1 (SC), the said notice was treated as a show-cause notice under section 148A(b). Thereafter, the Assessing Officer passed an order under section 148A(d) on 28.07.2022 and issued notice under section 148 on the same date. In the reassessment completed on 25.05.2023, the difference of Rs.15,02,090/- between the stamp duty value and the stated consideration was added under section 56(2)(vii)(b), thereby assessing the total income at Rs.22,95,103/-.

The learned CIT(A) upheld the validity of the reassessment and confirmed the addition of Rs.15,02,090/-. Aggrieved, the assessee is in appeal before the Tribunal.

The learned Authorised Representative submitted that the approval for passing the order under section 148A(d) and issuing notice under section 148 was obtained from the Principal Commissioner of 3 Income-tax-20, Mumbai, vide letter No. PCIT-20/148/2022-23 dated 26.07.2022. He submitted that, since both statutory actions were taken on 28.07.2022, after expiry of three years from the end of the relevant assessment year, the competent specified authority under section 151(ii), as it stood at the relevant time, was the Principal Chief Commissioner of Income-tax or the other authority mentioned therein, and not the Principal Commissioner of Income-tax. Reliance was placed on the judgment of the Hon’ble jurisdictional High Court in Alag Property Construction (P.) Ltd. v. ACIT [2025] 179 taxmann.com 578 (Bom.) and the decision of the coordinate bench in Sheetal Clothing Company Pvt. Ltd. v. DCIT, ITA No.5825/Mum/2025, order dated 29.01.2026. It was accordingly submitted that the notice, the reassessment proceedings and the consequential assessment order be quashed.

The learned Departmental Representative relied upon the order of the learned CIT(A) and supported the reassessment. He submitted that the proceedings originated from the notice dated 30.06.2021 and that no interference was called for.

We have heard the rival submissions and perused the material available on record. The narrow issue arising in the additional ground is whether the approval granted by the Principal Commissioner of Income- tax-20, Mumbai, was an approval by the competent specified authority under section 151 for the order under section 148A(d) and notice under section 148, both dated 28.07.2022.

The relevant assessment year is 2017-18 and, ordinarily, three years from the end of the relevant assessment year expired on 31.03.2021. Even after giving effect to the extension available under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, the authority contemplated under section 151(i) 4 could grant sanction only up to 30.06.2021. The order under section 148A(d) and notice under section 148 were admittedly issued on 28.07.2022. Therefore, on those dates, more than three years had elapsed and the specified authority was the authority prescribed in section 151(ii), namely, the Principal Chief Commissioner or Principal Director General or, where there is no Principal Chief Commissioner or Principal Director General, the Chief Commissioner or Director General.

The Hon’ble jurisdictional High Court, in Alag Property Construction (P.) Ltd. (supra), while dealing with A.Y. 2017-18 and an order under section 148A(d) passed beyond the extended period, held as under:

The ratio of the above judgment squarely applies. The record placed before us shows that approval was granted by the Principal Commissioner of Income-tax-20, Mumbai, vide letter No. PCIT- 20/148/2022-23 dated 26.07.2022. The Principal Commissioner was not the specified authority under section 151(ii) on the relevant date. Approval by an authority not empowered by the statute is not a curable procedural irregularity; it goes to the very assumption of jurisdiction.

Consequently, the reassessment proceedings initiated pursuant to the invalid notice and the assessment order dated 25.05.2023 passed under section 147 read with section 144B are quashed. The additional ground raised by the assessee is allowed.

Since the reassessment itself has been quashed on the jurisdictional ground, the other grounds challenging the addition on merits are rendered academic and are left open.

In the result, the appeal filed by the assessee is allowed.