AAKAR INVESTMENT PRIVATE LIMITED,DADAR WEST MUMBAI vs. NATIONAL FACELESS APPEAL CENTRE, MUMBAI

The brief facts of the case are that the assessee, a company, had regularly filed its returns of income. The returns were processed under section 143(1) of the Act. Subsequently, for both the impugned assessment years, the assessments were reopened by issuance of notices under section 148 of the Act. Aggrieved by the reassessment orders, the assessee preferred appeals before the Ld. CIT(A). However, the Ld. CIT(A) dismissed both the appeals. Consequently, the assessee has preferred the present appeals before us. At the outset, the Ld. AR primarily assailed the validity of the assumption of jurisdiction by the Ld. AO for initiating reassessment proceedings under section 147 of the Act for both the assessment years. The Ld. AR also raised Additional Grounds in both the appeals, which are reproduced hereunder: “A.Y. 2015-16: A. Notice issued u/s. 148 of the Act is time barred: 1. The Ld. Assistant Commissioner of Income Tax, Circle – 6(1)(1), Mumbai (hereinafter referred to as “Ld. AO”) has issued the notice dated 27.07.2022 u/s. 148 of the Act beyond the time limit specified u/s. 149 of the Act. Hence, the notice u/s. 148 of the Act is without any jurisdiction as the same is time barred.

The Ld. AR contended that identical issue was duly considered by the Coordinate Bench of ITAT Mumbai in the case of ACIT vs. Nilesh Haresh Parwani ITA 266/Mum/2025 and CO No.46/Mum/2025 date of order 24.04.2025. Relevant observations of the Bench in paragraph 12 to 14 are reproduced as below: “12. We further find that similar findings were rendered by the Hon'ble Delhi High Court in IBIBO Group Pvt. Ltd. vs. ACIT, in W.P.(C) No.17639 of 2022, vide order dated 13.12.2024. We find that in the following decisions of the Co-ordinate Bench of the Tribunal, on similar lines, re-assessment notices issued under section 148 of the Act for the assessment year 2015-16 were quashed: - • ACIT vs. Manish Financials, ITA No.5050 and 5055/Mum/2024 order dated 02.12.2024. • ITO vs. Pushpak Realities Pvt. Ltd., ITA No.4812/mum/2024, order dated 07.09.2024.

We further find that vide a recent order dated 04.04.2025, the Hon'ble Supreme Court in ACIT vs. Nehal Ashit Shah, in SLP (C) Diary No.57209 of 2024, upheld the quashing of the re- assessment proceedings initiated for the assessment year 2015-16 considering the submissions of the Revenue as recorded in paragraph 19(e) and 19(f) of the decision in Rajeev Bansal (supra).

Therefore, it is evident that the Hon'ble Courts, consistently considering the submissions made by the Revenue before the Hon'ble Supreme Court in Rajeev Bansal (supra), have held that the re-assessment notice issued under section 148 of the Act for the assessment year 2015-16 is barred by limitation. Thus, on this limited basis alone, the notice dated 25.07.2022, issued under section 148 of the Act in the present case, is liable to be quashed, being time-barred under the provisions of the Act. We order accordingly. Consequently, the entire re-assessment proceedings and assessment order passed under section 147 r.w. section 144B of the Act are also quashed.”

The Ld. DR argued and stands in favor of the orders of revenue authorities.

We heard the rival submissions and perused the material available on record. The primary contention raised by the assessee is that the notice issued under section 148 of the Act on 27.07.2022 for A.Y. 2015-16 is barred by limitation and, therefore, the entire reassessment proceedings are without jurisdiction and liable to be quashed. The assessee has placed on record the complete sequence of events along with the copies of notices, approvals and orders issued by the revenue authorities. We find that the identical issue relating to the validity of reassessment proceedings for A.Y. 2015-16 has been considered by the Coordinate Bench of ITAT, Mumbai in the case of Nilesh Haresh Parwani (supra), wherein the Coordinate Bench, after considering the judgment of the Hon’ble Supreme Court in the case of Rajeev Bansal [(2024) 167 taxmann.com 70 (SC)], the decision of the Hon’ble Delhi High Court in the case of IBIBO Group Pvt. Ltd. (supra), as well as the decision of the Hon’ble Supreme Court in Nehal Ashit Shah (supra), held that the notice issued under section 148 of the Act for A.Y. 2015-16 was barred by limitation and consequently quashed the reassessment proceedings. In the present case also, the reassessment notice under section 148 of the Act dated 27.07.2022 pertains to A.Y. 2015-16. The Ld. DR could not place any contrary decision or distinguishable facts on record to deviate from the view already taken by the Coordinate Bench. Respectfully following the aforesaid judicial precedents, we hold that the notice issued under section 148 of the Act is barred by limitation and, consequently, the reassessment proceedings initiated under section 147 of the Act and the assessment order passed there under are liable to be quashed. Accordingly, the reassessment order passed under section 147 r.w.s. 144B of the Act is hereby quashed. Since the appeal of the assessee has been allowed on the preliminary on Additional Grounds challenging the validity of reassessment proceedings, the Grounds raised on merits have become academic in nature and, therefore, do not require separate adjudication. So, the appeal of the assessee is allowed.

Respectful reliance was also placed on the decision of the Co-ordinate Bench of the ITAT, Mumbai – I Bench, in the case of Shabbir Taheri v. ITO, ITA No. 1574/Mum/2025, pronounced on 15.10.2025. The Hon’ble Vice President of the Mumbai Bench passed a concurrent order therein, and the relevant observations of the Bench are reproduced below: “6. As could be seen from the provision contained u/s. 151 of the Act reproduced above, as per clause (i), in a case where action u/s. 148 and Section 148A of the Act is initiated before expiry of three years from the end of the relevant assessment year, the specified authority who can grant sanction/approval is the Principal Commissioner or Principal Director General or Commissioner or Director of Income Tax. However, as per clause (ii), if more than three years have elapsed from the end of the relevant assessment year, the specified authority, who can grant sanction is the Principal Chief Commissioner or Principal Director General or where no Principal Chief Commissioner or Principal Director General is available then Chief Commissioner or Director General of Income Tax. It is noteworthy, akin to third and fourth provisos, which were incorporated in Section 149(1) of the Act under the new regime effective from 01.04.2021, no corresponding amendment was made to Section 151 of the Act. By virtue of Finance Act, 2023 effective from 01.04.2023, the following proviso was added to Section 151 of the Act. “Provided that the period of three years for the purposes of Clause (i) shall be computed after taking into account, the period of limitation as excluded by the third, fourth and fifth provisos or extended by the sixth proviso to sub section (1) of Section 149 of the Act.”

Thus, as per Section 151 of the Act as it stood prior to its amendment by Finance Act, 2023, the limitation prescribed under Clause (i) of Section 151 of the Act was prior to expiry of three years from the end of the relevant assessment year and without benefit of further extension in terms with third, fourth or fifth proviso under sub section (1) of Section 149 of the Act. xxxxxxxxxxxxxxxxxxxxxxxxx 11. Similar view was reiterated by the Coordinate Bench in case of ACIT vs. Asha P. Kedia (Supra). It is relevant to observe, though the aforesaid decisions of the Coordinate Benches were rendered at a prior point of time and were available when the appeal of Albert Joseph Rozario (Supra) vs. ITO (Supra) was taken up before another Coordinate Bench, however, either knowingly or unknowingly, these decisions of the Coordinate Benches were not brought to the notice of the learned Bench. It appears so, because, there is no reference of these decisions in case of Albert Joseph Rozario vs. ITO (Supra). Had these decisions of Coordinate Benches been brought to the notice of learned Bench deciding the case of Albert Joseph Rozario (Supra), a different view might have been taken. In any case of the matter, the point of time from which the proviso to Section 151 of the Act would be applicable was considered by the Hon’ble Jurisdictional High Court in at least four judgments. Three of these judgments have already been referred to in the decision of my learned brother Accountant Member. Even in case of AgnelloOswin Dias vs. ACIT [2014] 161 taxmann.com 16 (Bombay), the Hon’ble Jurisdictional High Court, while reiterating the view that after expiry of three years from the end of the relevant assessment year, the specified authority in terms of Section 151(ii) of the Act is PCCIT, has held that the proviso to Section 151 of the Act having been inserted w.e.f. 01.04.2023 shall not be applicable prior to 01.04.2023. Meaning thereby, the proviso will not have retrospective effect. These decisions of the Hon’ble Jurisdictional High Court, being directly on the issue, constitute binding precedents. 12. In any case of the matter, Sections 149 and 151 of the Act have been enacted for different purposes and operate in different situations. While Section 149 of the Act, prescribes limitation for issuance of notice u/s. 148 and 148A of the Act, Section 151 of the Act prescribes the timeline for the specified authority to grant sanction for Section 148 and 148A of the Act. At the cost of repetition, it needs to be observed that prior to insertion of proviso u/s. 151 of the Act by Finance Act, 2023 w.e.f. 01.04.2023, the specified authority who can grant sanction for initiating proceedings u/s. 148A and issuing notice u/s. 148 of the Act after expiry of three years from the end of the assessment year is PCCIT/CCIT in terms with Section 151(ii) of the Act. Hence, in absence of any enabling provision u/s. 151 of the Act, the 3rd, 4th and 5th or 6th provisos of Section 149(1) of the Act cannot be read into Section 151 of the Act to extend the time limit u/s. 151(i) of the Act. 13. In view of aforesaid, I fully agree with the decision of my learned brother Accountant Member that, both the order passed u/s. 148A(d) of the Act and notice issued u/s. 148 of the Act are invalid due to lack of sanction by the specified authority as specified u/s. 151(ii) of the Act. As a natural corollary, the assessment order passed in consequence thereof is also invalid. Hence, the ground is allowed.”

The Ld. DR argued and relied on the order of the revenue authorities. But the Ld. DR was unable to place any contrary judgment against the submission of the Ld. AR.

We have carefully considered the rival submissions and perused the material available on record. The Ld. AR has raised a preliminary legal objection challenging the validity of the sanction granted under section 151 of the Act for issuance of notice under section 148 of the Act. On examination of the notice u/s 148 dated 30.06.2021 and the subsequent order passed under section 148A(d) of the Act, it is evident that the approval for initiation of reassessment proceedings beyond three years from the end of the relevant assessment year was granted by the Ld. Principal Commissioner of Income Tax-6, Mumbai. The legal position with regard to the competent authority for granting sanction under section 151 of the Act, prior to its amendment by the Finance Act, 2023, is now well settled. The Hon’ble Bombay High Court in Alag Property Construction Pvt. Ltd.(supra) has categorically held that where the period of three years from the end of the relevant assessment year has expired, sanction under section 151(i) could not have been accorded by the Principal Commissioner, and such sanction renders the reassessment proceedings void ab initio. The said judgment, being rendered by the Jurisdictional High Court, is binding on us.We further find that the Co-ordinate Bench of the ITAT, Mumbai, in Shabbir Taheri (supra), after an exhaustive analysis of sections 149 and 151 of the Act, has reiterated that prior to 01.04.2023, sanction for issuance of notice under section 148 after expiry of three years could be granted only by the authority specified under section 151(ii) of the Act, namely the Principal Chief Commissioner or Chief Commissioner, and that the proviso inserted by the Finance Act, 2023 has no retrospective application. In the present case, it is undisputed that the sanction for issuance of notice under section 148 and for passing the order under section 148A(d) of the Act was granted by the PCIT-6, Mumbai, who was not the competent authority prescribed under section 151(ii) of the Act. Consequently, the assumption of jurisdiction by the Assessing Officer is bad in law and vitiates the entire reassessment proceedings. In view of the binding judicial precedents and the settled legal position, we hold that the notice issued under section 148 of the Act, the order passed under section 148A(d) of the Act, and all proceedings consequential thereto are invalid and unsustainable in law. Accordingly, the reassessment proceedings are hereby quashed.

As the reassessments itself are held to be invalid on Additional Grounds, the issues are raised on merits & other Grounds do not survive for adjudication.

In the result, the appeal of the revenue bearing ITA No.2818 and 2819/Mum/2026 are allowed. Order pronounced in the open court on 10th day of August 2026.