KORES( INDIA) LIMITED,MUMBAI vs. DCIT-CENTRAL CIRCLE 6(1)(2), MUMBAI, MUMBAI

आदेश / ORDER

PER SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER: All these four appeals are filed by the assessee against different orders of the learned Commissioner of Income Tax (Appeals)- NFAC, Delhi, for the assessment years 2013-14, 2015-16, 2016-17 and 2017- 18.

ADDITIONAL GROUNDS OF APPEAL The following grounds of appeal are without prejudice to one other: -

“7. We have considered the rival submissions. The AO has mentioned in the assessment order that notice u/s 148 of the Act for AY 2013-14 was issued on 31.03.2021. However, from the evidence brought on record in the form of copy of "Notices for e-Proceedings" it is found that the said notice u/s 148 of the Act was issued by the Systems on 01.04.2021 and not on 31.03.2021. This fact has not been disputed by the Revenue. In fact we had also fixed the matter for clarification in order to ascertain whether the procedure u/s 148A(b) and section 148A(d) was followed by the AO in event of notice being issued on 01.04.2021 by the Systems. It was clarified that the notice u/s 148 was issued by the AO on 31.03.2021 under the old provisions of the Act. 8. The provision for issue of notice u/s 148 of the Act was amended with effect from 01.04.2021. Under the old provision there was no requirement to take action as provided u/s 148A of the Act. The AO did not initiate action u/s 148A of the Act, for the reason that he had issued the notice u/s 148 of the Act on 31.03.2021 under the old provision. Hon'ble Gujarat High Court had held in the case of Saumil Abhinash Baheti in Civil Application No. 3804 of 2022 dated 17.06.2025 that where the notice u/s 148 of the Act dated 31.03.2021 was served through e-mail on 01.04.2021, the notice would be an invalid notice. In the present case the notice u/s 148 of the Act sent through email on 1s* April, 2021, was not barred by limitation. Nevertheless, considering the fact that the notice was issued on 01.04.2021, the said notice was required to be treated as notice u/s 148A(b) of the Act as per the direction of Hon'ble Supreme Court in the case of Union of India and others Vs. Shri Ashish Agrawal and others (444 ITR 1)(SC). Thereafter, the AO was required to pass order u/s 148A(d) of the Act and issue a fresh notice u/s 148 of the Act. Further, these actions were required to be completed within the surviving period. In the present case neither the notice u/s 148 issued on 01.04.2021 was treated as notice u/s 148A(b) of the Act under the new provisions nor any order u/s 148A(d) was passed by the AO. Thus the notice u/s 148 of the Act issued by the AO was neither within time limit of the old provision nor in accordance with the procedure laid down under the amended provision with effect from 01.04.2021. Therefore, the notice u/s 148 of the Act issued by the AO on 31.03.2021 which was served on the assessee on 01.04.2021 is quashed and the assessment order made u/s 147 r.w.s 144 of the Act dated 17.05.2022 in pursuance thereof, is set aside.” 11. We further observe that though the Assessing Officer issued notice u/s 148 on 18.03.2020, i.e., prior to 01.04.2021 and the assessee had also furnished a return in response to the said notice, the Assessing Officer chose not to proceed with the reassessment proceedings. On a query from the Bench to the Ld. Counsel for the assessee as to whether any reassessment was culminated based on the notice dated 18.03.2020 issued u/s 148 of the Act, Ld. Counsel for the assessee submitted that this notice was issued by ACIT, Circle-36(1), Mumbai, who was not the jurisdictional Assessing Officer for reopening the assessment in the case of the assessee and the Assessee was regularly assessed to tax by DCIT, Circle – 6(1)(2) Mumbai. It is observed that since the notice issued u/s 148 dated 18.03.2020 was issued by a non-jurisdictional Assessing Officer, perhaps the Assessing Officer chose not to proceed with the reassessment proceedings based on the notice issued under section 148 dated 18.03.2020 in the case of the assessee. However, the subsequent notice issued by the jurisdictional Assessing Officer, i.e., DCIT, Circle 6(1)(2) on 05.04.2021 u/s 148 of the Act was acted upon but the procedure set out in the provisions of section 148A of the Act should have been followed. In the absence of any notice u/s 148A(b) and an order u/s 148A(d) subsequent notice u/s 148, the reassessment framed in the case of the assessee for the assessment year 2013-14 on 29.09.2021 became bad in law and void ab initio. Hence, the same is hereby quashed. The additional ground raised by the assessee is allowed. Since we have quashed the reassessment by allowing the additional ground of appeal, the grounds on merits are not adjudicated and are left open at this stage.

“73. Section 151 imposes a check upon the power of the Revenue to reopen assessments. The provision imposes a responsibility on the Revenue to ensure that it obtains the sanction of the specified authority before issuing a notice under section 148. The purpose behind this procedural check is to save the assesses from harassment resulting from the mechanical reopening of assessments. A table representing the prescription under the old and new regime is set out below: Regime Time limits Specified authority Section 151(2) of Before expiry of four Joint Commissioner the old regime years from the end of the relevant assessment year Section 151(1) of After expiry of four years Principal Chief from the end of the Commissioner or Chief the old regime relevant assessment year Commissioner or Principal Commissioner Section 151(i) of the Three years or less than Principal Commissioner new regime three years from the end or Principal Director or of the relevant assessment Commissioner or year Director Section 151(ii) of More than three years Principal Chief the new regime have elapsed from the end Commissioner or of the relevant assessment Principal Director year General or Chief Commissioner or Director General 74. The above table indicates that the specified authority is directly co-related to the time when the notice is issued. This plays out as follows under the old regime: (i) If income escaping assessment was less than Rupees one lakh: (a) a reassessment notice could be issued under section 148 within four years after obtaining the approval of the Joint Commissioner; and (b) no notice could be issued after the expiry of four years; and (ii) If income escaping was more than Rupees one lakh; (a) a reassessment notice could be issued within four years after obtaining the approval of the Joint Commissioner; and (b) after four years but within six years after obtaining the approval of the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner. 75. After 1 April 2021, the new regime has specified different authorities for granting sanctions under Section 151. The new regime is beneficial to the assessee because it specifies a higher level of authority for the grant of sanctions in comparison to the old regime. Therefore, in terms of Ashish Agarwal (supra), after 1 April 2021, the prior approval must be obtained from the appropriate authorities specified under Section 151 of the new regime. The effect of Section 151 of the new regime is thus: If income escaping assessment is less than Rupees fifty lakhs: (a) a (i) reassessment notice could be issued within three years after obtaining the prior approval of the Principal Commissioner, or Principal Director or Commissioner or Director; and (b) no notice could be issued after the expiry of three years; and (ii) If income escaping assessment is more than Rupees fifty lakhs: (a) a reassessment notice could be issued within three years after obtaining the prior approval of the Principal Commissioner, or Principal Director or Commissioner or Director; and (b) after three years after obtaining the prior approval of the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General. 76. Grant of sanction by the appropriate authority is a precondition for the assessing officer to assume jurisdiction under Section 148 to issue a reassessment notice. Section 151 of the new regime does not prescribe a time limit within which a specified authority has to grant sanction. Rather, it links up the time limits with the jurisdiction of the authority to grant sanction. Section 151 (ii) of the new regime prescribes a higher level of authority if more than three years have elapsed from the end of the "elevant assessment year. Thus, non-compliance by the assessing officer with the strict time limits prescribed under Section 151 affects their jurisdiction to issue a notice under Section 148. 77. Parliament enacted TOLA to ensure that the interests of the Revenue are not defeated because the assessing officer could not comply with the pre-conditions due to the difficulties that arose during the COVID-19 pandemic. Section 3(1) of TOLA relaxes the time limit for compliance with actions that fall for completion from 20 March 2020 to 31 March 2021. TOLA will accordingly extend the time limit for the grant of sanction by the authority specified under Section 151. The test to determine whether TOLA will apply to Section 151 of the new regime is this: if the time limit of three years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under Section 151(i) has an extendedtime till 30 June 2021 to grant approval. In the case of Section 151 of the old regime, the test is: if the time limit of four years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under Section 151(2) has time till 31 March 2021 to grant approval. The time limit for Section 151 of the old regime expires on 31 March 2021 because the new regime comes into effect on 1 April 2021. 78. For example, the three year time limit for assessment year 2017- 2018falls for completion on 31 March 2021. It falls during the time period of 20 March 2020 and 31 March 2021, contemplated under Section 3(1) of TOLA. Resultantly, the authority specified under Section 151(i) of the new regime can grant sanction till 30 June 2021. 79. Under Finance Act 2021, the Assessing Officer was required to obtain prior approval or sanction of the specified authorities at four stages:

a. Section 148A(a) to conduct any enquiry, if required, with respect to the information which suggests that the income chargeable to tax has escaped assessment; b. Section 148A(b) - to provide an opportunity of hearing to the assessee by serving upon them a show cause notice as to why a notice under Section 148 should not be issued based on the information that suggests that income chargeable to tax has escaped assessment. It must be noted that this requirement has been deleted by the Finance Act 2022; c. Section 148A(d) - to pass an order deciding whether or not it is a fit case for issuing a notice under Section 148; and d. Section 148-to issue a reassessment notice. 80. In Ashish Agarwal (supra), this Court directed that Section 148 notices which were challenged before various High Courts "shall be deemed to have been issued under Section 148-A of the Income Tax Act as substituted by the Finance Act, 2021 and construed or treated to be show-cause notices in terms of Section 148-A(b)." Further, this Court dispensed with the requirement of conducting any enquiry with the prior approval of the specified authority under Section 148A(a). Under Section 148A(b), an assessing officer was required to obtain prior approval from the specified authority before issuing a show cause notice. When this Court deemed the Section 148 notices under the old regime as Section 148A(b) notices under the new regime, it impliedly waived the requirement of obtaining prior approval from the specified authorities under Section 151 for Section 148A(b). It is well established that this. Court while exercising its jurisdiction under Article 142, is not bound by the procedural requirements of law. 130 81. This Court in Ashish Agarwal (supra) directed the assessing officers to "pass orders in terms of Section 148-A(d) in respect of each of the assesses concerned." Further, it directed the assessing officers to issue a notice under Section 148 of the new regime "after following the procedure as required under Section 148-A." Although this Court waived off the requirement of obtaining prior approval under Section 148A(a) and Section 148A(b), it did not waive the requirement for Section 148A(d) and Section 148. Therefore, the assessing officer was required to obtain prior approval of the specified authority according to Section 151 of the new regime before passing an order under Section 148A(d) or issuing a notice under Section 148. These notices ought to have been issued following the time limits specified under Section 151 of the new regime read with TOLA, where applicable.” 17. We further find that the Mumbai Bench of the Tribunal in the case of Manish Financials vs. ACIT in CO No.230/Mum/2024 in ITA 13 5050/Mum/2024 dated 02.12.2024 considering the decision of the Hon’ble Supreme Court in the case of Rajiv Bansal (supra) held that notice dated 29.07.2022 issued u/s 148 of the Act with the prior approval of Pr. CIT for reopening an assessment for the AY 2016-17 beyond a period of three years from the end of the relevant assessment year is bad in law. While holding so the Tribunal observed as under: -

“14. We heard the parties and perused the material on record. In assessee's case for AY 2016-17 pursuant to the directions of the Hon'ble Supreme Court in the case of Ashish Agrawal, the AO passed an order under section 148(d) of the Act and issued a notice under section 148 on 30.07.2022. From the above observations of the Hon'ble Supreme Court it is clean that the though the prior approval under section 148A(b) and 148(d) were waived in terms of the decision of Ashish Agarwal (supra), for issue of notice under section 148A(a) and under section 148 on or after 1 April 2021, the prior approval should be obtained from the appropriate authorities specified under Section 151 of the new regime. The provisions of section 151 of the Act under the new regime read as under: Sanction for issue of notice. 151. Specified authority for the purposes of section 148 and section 148A shall be, - (i) Principal Commissioner or Principal Director or Commissioner or Director, if three years or less than three years have elapsed from the end of the relevant assessment year; (ii) Principal Chief Commissioner or Principal Director General or where there is no Principal Chief Commissioner or Principal Director General, Chief Commissioner or Director General, if more than three years have elapsed from the end of the relevant assessment year. 15. In assessee's case from the perusal of para 3 of the notice issued under section 148 for AY 2016-17 we notice that the same is issued with the prior approval of Pr.CIT-19 Mumbai accorded on 29.07.2022 vide reference No. Pr. CIT- 19/148/2022-23 and this fact is not contravened by the Id DR. For AY 2016-17, the period of three years have elapsed as of 31.03.2020 and the notice is issued beyond three years on 30.07.2022. Therefore as per the decision of the Hon'ble Supreme Court, the approval should have been obtained under the amended provisions of section 151 (ii) of the Act i.e. the approval should have been obtained from the Principal Chief Commissioner whereas the approval has been obtained from Pr.CIT as stated in the notice under section 148 itself. Therefore we see merit 14 in the contention of the assessee that the notice under section 148 for AY 2016-17 is issued without obtaining the prior approval from the appropriate authority. Accordingly we hold that the notice under section 148 is invalid and the consequent assessment under section 147 is liable to be quashed.” 18. In the case before us the Assessing Officer while issuing notice u/s 148 dated 28.07.2022 for reopening of assessments for the AY 2016-17 and 2017-18 obtained prior approval from PCIT-6 Mumbai instead of Pr. Chief Commissioner/Chief Commissioner of Income Tax under the provisions of section 151(ii) of the Act and therefore we hold that the notice issued u/s 148 for reopening the assessments for AY 2016-17 and 2017-18 are bad in law and consequently the assessments made u/s 144 r.w.s. 147 of the Act pursuant to such notices are bad in law and void ab initio. Hence, the same are hereby quashed.

Order pronounced in the open court on 29/07/2026

Sd/- Sd/- MAKARAND VASANT MAHADEOKAR CHALLA NAGENDRA PRASAD ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated: 29/07/2026 Prabhat Copy to: KORES( INDIA) LIMITED, 301 302 ASHFORD CHAMBERS, LADY 1 JAMSHEDJI ROAD, MAHIM H.O, MUMBAI-400016, MAHARASHTRA

DCIT-CC-6(1)(2), MUMBAI, 2 AAYAKAR BHAWAN, MUMBAI, MUMBAI-400020, MAHARASHTRA

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