NALLUSAMY ARULJOTHI,NAMAKKAL vs. ITO, WARD-2,, NAMAKKAL

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ITA 2776/CHNY/2026Status: DisposedITAT Chennai28 July 2026AY 2019-208 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that since the notice under Section 148 was issued beyond three years, the approval ought to have been obtained from the PCCIT as per Section 151(ii). Approval from the PCIT was insufficient, rendering the notice invalid.

What were the facts?

The assessee challenged the validity of a notice issued under Section 148 of the Income Tax Act, 1961. The notice was issued beyond three years from the end of the relevant assessment year, and the approval for its issuance was obtained from the Principal Commissioner (PCIT) instead of the Principal Chief Commissioner (PCCIT) as required by Section 151(ii).

What were the issues?

Whether the notice issued under Section 148 beyond three years is valid if the approval is obtained from PCIT instead of PCCIT as mandated by Section 151(ii).

Which sections of the Income-tax Act were involved?

Section 148,Section 148A,Section 151

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI

Before: SHRI GEORGE GEORGE K & MS PADMAVATHY S

Hearing: 22.07.2026Pronounced: 28.07.2026

आदेश/ O R D E R PER GEORGE GEORGE K, VICE PRESIDENT: This appeal filed by the assessee is directed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 13.03.2026 passed under

ITA No.2776/CHNY/2026 - 2 - Nallusamy Aruljothi section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2019-20.

2.

At the very outset, the Ld.AR for the assessee challenged the validity of the notice issued u/s.148 of the Act. It was submitted that the notice u/s.148 of the Act having been issued beyond a period of three years from the end of the relevant assessment year, the mandatory prior approval ought to have been obtained from the Pr.CCIT, being the specified authority prescribed u/s.151(ii) of the Act. However, in the instant case, the approval was admittedly obtained only from the PCIT. In support of the said contention, the Ld.AR placed on record copy of the notice issued u/s.148 of the Act dated 12.04.2023 and order passed u/s.148A(d) of the Act. Therefore, it was contended that the notice issued u/s.148 of the Act as well as the consequent reassessment order passed pursuant thereto are bad in law and liable to be quashed.

3.

The Ld. DR, on the other hand, argued that the AO initiated the proceedings by issue of notice u/s. 148A(b) on 28.03.2023 which is within 3 years and therefore the AO has rightly obtained the approval from PCIT. The Ld. DR placed reliance on the decision

ITA No.2776/CHNY/2026 - 3 - Nallusamy Aruljothi of the Hon'ble Calcutta High Court in the case of Girija Commercial (P) Ltd vs UOI 2024 169 taxmann.com 168 (Calcutta).

4.

We have heard rival contentions and perused the material on record. On identical facts, the Chennai Bench of the Tribunal in the case of Chokkalingam Thangavel vs. ITO in ITA No.577/Chny/2025 (order dated 25.07.2025) held that a separate sanction is to be granted for the purpose of issue of notice u/s.148 of the Act from the appropriate authority u/s.151 of the Act. The Coordinate bench has further held that if the argument of the Ld.DR to be accepted it would defeat purpose of introduction of section 148A of the Act whereby the assessee is granted an opportunity to demonstrate his case for dropping the proceedings before issuing notice u/s.148 of the Act. The Chennai Bench of the Tribunal followed the dictum laid down by the Hon’ble Jurisdictional High Court judgment in the case of Core Logistic Company vs. ACIT (WP No.18168 of 2023 dated 05.06.2025). The findings of the Tribunal in the case of Chokkalingam Thangavel (supra) which has considered the judicial pronouncements on the subject, reads as under:- 4. We heard the parties and perused the material on record. The primary contention with regard to notice issued under section 148 is that the notice which is issued beyond the period of three years i.e. on 07.04.2022 should be approved

ITA No.2776/CHNY/2026 - 4 - Nallusamy Aruljothi by the Principle Chief Commissioner of Income Tax and not PCIT. In this regard reliance is placed on the decision of the Hon'ble Madras High Court in the case of M/s Core Logistic Company vs. ACIT (W.P. No. 18168 of 2023 dated 05.06.2025) where it has been held that “6. In the present case, the issue is pertaining to the assessment year 2016- 2017. The relevant law applicable for issuance of notice under Section 148 is as follows: "148. Before making the assessment, reassessment or re-computation under section 147, and subject to the provisions of section 1484. the Assessing Officer shall serve on the assessee a notice, along with a copy of the order passed, if required, under clause (d) of section 1484, requiring him to furnish within such period, as may be specified in such notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139:

Provided that no notice under this section shall be issued unless there is information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the relevant assessment year and the Assessing Officer has obtained prior approval of the specified authority to issue such notice:

[Provided further that no such approval shall be required where the Assessing Officer, with the prior approval of the specified authority, has passed an order under clause (d) of section 148A to the effect that it is a fit case to issue a notice under this section.]

Explanation 1 For the purposes of this section and section 1484, the information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment means,-

(1) any information [***] in the case of the assessee for the relevant assessment year in accordance with the risk management strategy formulated by the Board from time to time; (ii) any audit objection to the effect that the assessment in the case of the assessee for the relevant assessment year has not been made in accordance with the provisions of this Act, or (iii) any information received under an agreement referred to in section 90 or section 90A of the Act; or

ITA No.2776/CHNY/2026 - 5 - Nallusamy Aruljothi (iv) any information made available to the Assessing Officer under the scheme notified under section 135A or (v) any information which requires action in consequence of the order of a Tribunal or a Court

Explanation 2 For the purposes of this section, where,- (1) a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A, on or after the 1st day of April, 2021, in the case of the assessee; or (ii) a survey is conducted under section 133A, other than under subsection (24) 22[***] of that section, on or after the 1st day of April, 2021, in the case of the assessee; or (iii) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner, that any money, bullion, jewellery or other valuable article or thing, seized or requisitioned under section 132 or section 132A in case of any other person on or after the 1st day of April, 2021, belongs to 3 Copy the assessee; or (iv) the Assessing Officer is satisfied, with the prior approval of Principal Commissioner or Commissioner, that any books of account or documents, seized or requisitioned under section 132 or section 132A in case of any other person on or after the 1st day of April, 2021, pertains or pertain to, or any information contained therein, relate to, the assessee, the Assessing Officer shall be deemed to have information which suggests that the income chargeable to tax has escaped assessment in the case of the assessee [where] the search is initiated or books of account, other documents or any assets are requisitioned or survey is conducted in the case of the assessee or money, bullion, jewellery or other valuable article or thing or books of account or documents are seized or requisitioned in case of any other person.

Explanation 3. For the purposes of this section, specified authority means the specified authority referred to in section 151]." 7. A perusal of the above provision would show that, before issuing any notice under Section 148, the Assessing Officer has to obtain prior approval of the specified authority to issue such notice. The specified authority is also defined in explanation of the above provision. As per the above provision, specified authority is the authority who referred to in Section 151.

8.

At this juncture, it would be relevant to extract the provision of Section 151, which is as follows: "Specified authority for the purposes of Section 148 and Section 148A shall be:-

ITA No.2776/CHNY/2026 - 6 - Nallusamy Aruljothi (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 Chief Commissioner or Director General, if more than three years have elapsed from the end of the relevant assessment year.

9.

A perusal of Section 151(i) would show that, the specified authority for the purpose of issuing notice under Section 148 within a period of three years from the end of the relevant assessment year is, the Principal Commissioner or Principal Director or Commissioner or Director. Further, in terms of provision of Section 149, three year time period is fixed for issuance of 148 notice, in the event of the amount is below 50 lakhs. In the present case, the amount involved is Rs.3,65,09,748/-, which is more than 50 lakhs. 148 notice was issued on 25.07.2022, which is beyond the period of three years. So admittedly, the approval has to be obtained from the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General as defined under Section 151(ii). But, in the present case, the approval was obtained from the Principal Commissioner in terms of Section 151(i) and no approval was obtained before issuance of 148 notice in terms of provision of Section 151(ii), which is mandatory. Therefore, the notice under Section 148 was issued in the present case in violation of provision of Section 151(ii) of the Income Tax Act. In view thereof, the initiation of proceedings itself is without any jurisdiction. Hence, the same is liable to be quashed.

10.

Accordingly, the impugned proceedings of the 3rd respondent dated 30.05.2023 is hereby quashed.”

5.

From the perusal of AO's order, we notice that the AO has stated in the order that the notice under section 148 is issued with the prior approval of PCIT, Madurai1. We further notice that the notice under section 148 is issued on 07.04.2022 which is beyond the period of three years from the relevant AY 2018- 19. Therefore, in our considered view the ratio laid down in the above decision of the Hon'ble Madras High Court would be applicable to assessee's case also. Respectfully following the above decision, we hold that the notice issued under section 148 beyond three years without obtaining the approval from the appropriate authority is invalid and the subsequent reassessment based on invalid notice is liable to be quashed.

5.

In this regard, we also notice that the Hon'ble Bombay High Court in the case of M/s. Vodafone Idea Limited Vs DCIT (WP

ITA No.2776/CHNY/2026 - 7 - Nallusamy Aruljothi No. 2768 of 2022 dated 06.02.2024) has considered an identical issue where it is held that even in cases where the notice u/s. 148A(b) was issued before completion of 3 years, if the notice u/s. 148 is issued beyond 3 years the approval needs to be obtained from PCCIT as per Section 151(ii) of the Act.

6.

In assessee's case though the notice under section 148A(b) was issued on 28.03.2023, the notice u/s. 148 is issued on 12.04.2023 and order u/s.148A(d) of the Act was passed on 12.04.2023. On perusal of the order u/s.148A(d) of the Act, we notice that the approval has been obtained from PCIT, Coimbatore-1.

7.

From the perusal of these facts, we are of the considered view that the ratio laid down by the judicial precedence is applicable to the present case. Accordingly, respectfully following the above judicial pronouncements, we hold that the notice issued by the AO u/s.148 of the Act beyond 3 years on 12.04.2023 with the approval of PCIT instead of PCCIT as per the provisions of section 151(ii) is not valid. Consequently, the re-assessment completed based on the invalid notice is quashed.

ITA No.2776/CHNY/2026 - 8 - Nallusamy Aruljothi 8. Since we have quashed the reassessment proceedings on the legal ground challenging the validity of notice issued u/s.148 of the Act, the other grounds raised by the assessee on merits do not require adjudication and are left open.

9.

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

Order pronounced in the open court on 28th July,2026 at Chennai.

Sd/- Sd/- (प�मावती एस) (जॉज� जॉज� के) (PADMAVATHY S) (GEORGE GEORGE K) लेखा सद�य/ACCOUNTANT MEMBER उपा�य� /VICE PRESIDENT चे�नई/Chennai, �दनांक/Dated, the 28th July, 2026 RSR, Sr.PS आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��यथ�/Respondent 3. आयकर आयु�त /CIT, Salem 4. �वभागीय ��त�न�ध/DR 5. गाड� फाईल/GF. By Order Digitally signed by REKHA REKHA SENTHIL RAJ SENTHIL RAJ Date: 2026.07.30 14:30:25 +05'30'

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