MAAN HOUSING DEVELOPMENT,BORIVALI WEST vs. ITO, WARD MUMBAI

At the very outset, we noticed that there is a delay of approximately 6 days in filing the appeal before us. In this regard, the assessee has filed an affidavit on record. Considering the entire factual position as explained in the affidavit and also keeping in view the principles laid down by the Hon’ble Supreme Court in the case of Collector, Land Acquisition, Anantnag & Anr. vs. Mst. Katiji & Ors. [1987 AIR 1353 (SC)], wherein it has been held that where substantial justice is pitted against the technicalities of a non-deliberate delay, substantial justice is to be preferred, we are of the view that the principle of advancing substantial justice is of prime importance. Hence, considering the explanation put forth by the assessee and construing the expression “sufficient cause” liberally, we are inclined to condone the delay in filing the appeal before us. Consequently, the delay is condoned and the appeal is admitted for hearing on merits.

We also noticed that the assessee has filed an application for raising the additional ground. The same is reproduced herein below:

After having heard the learned counsel for both the parties, we find that the additional ground is legal in nature and goes to the root of the case. Therefore, following the principles laid down by the Hon’ble Supreme Court in the cases of The Jute Corporation of India Ltd. Vs. CIT, 187 ITR 688 (SC) and NTPC Vs. CIT, 229 ITR 383 (SC), and considering the facts of the present case, we allow the application for raising the additional ground. Consequently, the said ground is admitted for adjudication on merits.

We first proceed to adjudicate the additional ground raised by the assessee, as the same involves a legal issue which goes to the root of the case.

The additional ground raised by the assessee relates to challenging the validity of the notice issued under Section 148 of the Income-tax Act, 1961, and the order passed under Section 148A(d) of the Act on 23.04.2022, on the ground that the same were issued after the expiry of three years without obtaining the approval of the specified authority prescribed under Section 151(ii) of the Act, and consequently, the reassessment order passed under Section 147 of the Act is bad in law.

We have heard the learned counsel for the parties on the additional ground and perused the material available on record. We notice that the return of income in the present case was filed under Section 139(1) of the Act on 26.10.2018. Thereafter, a show-cause notice under Section 148A(b)

We further notice that the approval under Section 151 of the Act for issuance of notice under Section 148 was accorded by the learned PCIT-17, Mumbai. The contention of the assessee is that, since the notice under Section 148 was issued beyond a period of three years, the sanction was required to be accorded by the Principal Chief Commissioner of Income-tax, as provided under Section 151(ii) of the Act, and not by the Principal Commissioner of Income-tax.

Considering the above facts, we find that the sanction for issuance of notice under Section 148 of the Act was accorded by the Principal Commissioner of Income-tax instead of the Principal Chief Commissioner of Income-tax, as contemplated under Section 151(ii) of the Act. Accordingly, the sanction so accorded is not in accordance with the requirement of Section 151(ii) of the Act and, therefore, the consequential notice issued under Section 148 is bad in law.

In this regard, reliance has also been placed on the decision of the Hon'ble Bombay High Court in the case of Pradeep Himatlal Shah vs. ITO, reported in [2025] 170 taxmann.com 471 (Bombay).

Therefore, respectfully following the aforesaid decision and considering the facts of the present case, we hold that the notice issued under Section 148 of the Act is bad in law and, consequently, the reassessment proceedings initiated pursuant thereto cannot be sustained. Accordingly, the notice issued under Section 148 is quashed and the additional ground raised by the assessee is allowed.

Since the reassessment proceedings themselves are held to be invalid, thus the other grounds raised by the assessee on the merits of the additions do not require adjudication and are rendered academic.

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