PALLAVI NILESH KHIMANI,MUMBAI vs. INCOME TAX OFFICER - WARD 42(1)(4), MUMBAI

This appeal by the assessee is directed against the order dated 09.10.2025 passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [“the learned CIT(A)”], under section 250 of the Income-tax Act, 1961 [“the Act”], arising from the assessment order dated 23.04.2023 passed under section 147 read with section 144B of the Act for the assessment year 2017-18.

The appeal is delayed by 141 days. The assessee has filed an application for condonation supported by a duly sworn affidavit. It is stated that during December 2025 to March 2026 she suffered from acute spondylosis and severe vertigo, was advised complete rest and could resume normal activity only in the first week of April 2026. On receipt of a penalty notice dated 15.04.2026, she consulted her Chartered Accountant and promptly took steps to institute the present appeal. Having considered the affidavit and the circumstances explained therein, we find that the delay was occasioned by sufficient cause and not by any deliberate inaction. The delay is, therefore, condoned and the appeal is admitted for adjudication.

The assessee has raised grounds challenging the validity of the reassessment as well as the additions sustained by the learned CIT(A). During the course of hearing, the learned Authorised Representative raised the following additional jurisdictional grounds: (i) that the notice dated 28.07.2022 issued under section 148 was beyond the surviving period and was therefore barred by limitation in view of the judgment of the Hon’ble Supreme Court in Union of India v. Rajeev Bansal (2024) 469 ITR 46 (SC); and (ii) that the approval had been obtained from the Principal Commissioner of Income Tax instead of the Principal Chief Commissioner/Chief Commissioner prescribed under section 151(ii) of the Act. These grounds are purely legal, arise from facts already available on record and go to the root of the jurisdiction. Following the principle laid down by the Hon’ble Supreme Court in National Thermal Power Co. Ltd. v. CIT (1998) 229 ITR 383 (SC), the additional grounds are admitted.

Briefly stated, the assessee, an individual, filed her return of income on 04.12.2017 declaring total income of Rs.5,40,500/-. An original notice under section 148 of the erstwhile provisions was issued on 29.06.2021. Pursuant to the judgment of the Hon’ble Supreme Court in Union of India v. Ashish Agarwal (2022) 444 ITR 1 (SC), information and material were supplied through a notice/communication dated 27.05.2022 under section 148A(b). The assessee filed her reply on 06.06.2022. The Assessing Officer thereafter passed an order under section 148A(d) and issued a fresh notice under section 148, both dated 28.07.2022.

The reassessment was completed on 23.04.2023 determining total income at Rs.46,03,000/-, inter alia, by adding Rs.36,87,500/- under section 69A on account of alleged cash investment in immovable property, adding rental income of Rs.2,25,000/- and disallowing deduction of Rs.1,50,000/- under section 80C. The learned CIT(A) confirmed the additions of Rs.36,87,500/- and Rs.2,25,000/-, but allowed the claim under section 80C. The assessee is in further appeal before us.

The learned Authorised Representative submitted that the original notice having been issued on 29.06.2021, only one day remained out of the extended limitation ending on 30.06.2021. The assessee furnished her reply to the notice under section 148A(b) on 06.06.2022. Applying the surviving-period principle laid down in Rajeev Bansal (supra) and the minimum period of seven days contemplated by the proviso to section 149(1), the fresh notice under section 148 could have been issued at the latest by 13.06.2022. The impugned notice dated 28.07.2022 was thus hopelessly time barred. The learned Authorised Representative further submitted that more than three years had elapsed from the end of assessment year 2017-18 when the order under section 148A(d) was passed and the fresh notice under section 148 was issued. Therefore, approval under section 151(ii) ought to have been obtained from the Principal Chief Commissioner or Chief Commissioner, whereas approval was admittedly obtained from the Principal Commissioner. Reliance was placed on Union of India v. Rajeev Bansal (supra) and Ramesh Bachulal Mehta [2025] 177 taxmann.com 606(Bombay).

Per contra, the learned Departmental Representative relied upon the orders of the authorities below and submitted that the proceedings were taken pursuant to the directions in Ashish Agarwal (supra); that the order under section 148A(d) and the notice under section 148 were issued after following the procedure prescribed under the substituted provisions. She accordingly prayed that the legal grounds be rejected.

We have heard the rival submissions and perused the material available on record. The dates material for adjudicating the jurisdictional objection are not in dispute: the original notice under section 148 was issued on 29.06.2021; the communication under section 148A(b) was issued on 27.05.2022; the assessee replied on 06.06.2022; and the order under section 148A(d) and fresh notice under section 148 were issued on 28.07.2022.

In Rajeev Bansal (supra), the Hon’ble Supreme Court explained that the period from the date of the deemed notice until supply of the relevant material, together with the response period allowed to the assessee, stood excluded; after such exclusion, the Assessing Officer was required to act within the period which survived under the Act read with the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. Paragraph 114(h) records the controlling conclusion that “All notices issued beyond the surviving period are time barred and liable to be set aside.” The Hon’ble Supreme Court further explained in paragraph 112 that the surviving period begins to run upon receipt of the assessee’s response.

In the present case, the original notice was issued on 29.06.2021 when the TOLA-extended limitation ended on 30.06.2021. Thus, only one day survived. Since the surviving period was less than seven days, the relevant proviso to section 149(1) ensured a minimum period of seven days. The assessee’s response was filed on 06.06.2022; consequently, even after granting the statutory minimum of seven days, the order under section 148A(d) and the notice under section 148 were required to be issued on or before 13.06.2022. They were in fact issued on 28.07.2022. The impugned notice was therefore issued beyond the surviving period and is barred by limitation. The consequence, as declared in paragraph 113 of Rajeev Bansal (supra), is jurisdictional: a reassessment notice issued beyond the surviving time limit is time barred.

There is yet another jurisdictional infirmity. For assessment year 2017-18, more than three years from the end of the relevant assessment year had elapsed when the order under section 148A(d) and notice under section 148 were issued on 28.07.2022. The prior approval was therefore required from the authority specified in section 151(ii), namely, the Principal Chief Commissioner/Principal Director General or, where there is no such authority, the Chief Commissioner/Director General. Approval of the Principal Commissioner under section 151(i) did not meet that statutory condition.

The issue is directly covered by the judgment of the Hon’ble jurisdictional High Court in Ramesh Bachulal Mehta [2025] 177 taxmann.com 606. The Hon’ble High Court held that approval of the Principal Commissioner was approval from the authority specified under 5 section 151(i), whereas approval was required from the authority specified under section 151(ii), and consequently quashed the order under section 148A(d) and the notice under section 148. The contention that approval of another or superior authority constitutes substantial compliance cannot cure the absence of approval from the authority specifically designated by the statute.

Respectfully following the binding judgment of the Hon’ble Supreme Court in Rajeev Bansal (supra) and the judgment of the Hon’ble Bombay High Court in Ramesh Bachulal Mehta (supra), we hold that the notice dated 28.07.2022 issued under section 148 is barred by limitation and is also vitiated for want of approval from the specified authority under section 151(ii). The notice under section 148, the consequential assessment order dated 23.04.2023 and the order of the learned CIT(A), to the extent it sustains the reassessment, are accordingly quashed. The additional jurisdictional grounds are allowed.

Since the reassessment itself has been quashed, the remaining grounds challenging the additions on merits have become academic and do not require adjudication.

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