ZUBAIR AHMED KHAN,MUMBAI vs. NATIONAL FACELESS APPEAL CENTRE, DELHI

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ITA 3261/MUM/2026Status: DisposedITAT Mumbai23 July 2026AY 2017-186 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the notice issued under Section 148 was void ab initio due to non-compliance with the mandatory provisions of Section 151(ii) regarding the approval of the competent authority. Consequently, the notice and the subsequent assessment order were quashed.

What were the facts?

The assessee's case for AY 2017-18 was reopened by issuing a notice under Section 148 after three years from the end of the relevant assessment year. The approval for this notice was obtained from the Principal Commissioner of Income Tax instead of the competent authority mandated by Section 151(ii).

What were the issues?

Whether a notice issued under Section 148 after three years, without obtaining approval from the competent authority as required by Section 151(ii), is valid. The validity of the assessment order passed pursuant to such a notice.

Which sections of the Income-tax Act were involved?

Section 148,Section 151,Section 148A,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCHES, MUMBAI

Before: HON’BLE NARENDER KUMAR CHOUDHRY, JUDICIAL & HON’BLE

For Appellant: Ms. Jayshree Thakur
Pronounced: 23.07.2026

आदेश / ORDER

PER:NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER :

This appeal has been preferred by the Assessee against the order dated 08.09.2025, impugned herein, passed by the Ld. Commissioner of Income Tax (Appeals) [in short, “Ld. Commissioner”] under Section 250 of the Income Tax Act, 1961 (in short, “the Act”), for A.Y. 2017-18.

2.

In this case, the assessment year involved is A.Y. 2017-18 and the case of the Assessee was reopened by issuing a notice dated 20.07.2022 under Section 148 of the Act, admittedly, after the expiry of three years from the end of the relevant assessment year and by getting sanction/approval for issuance of the said notice from the Principal Commissioner of Income Tax-17, Mumbai, and not from the competent authority, namely, the Ld. Principal Chief Commissioner of Income Tax, etc., as mandated under Section 151(ii) of the Act. Thus, the Assessee, has raised an additional ground challenging the validity of the notice issued under Section 148 of the Act on account of non-compliance with the provisions of Section 151(ii) of the Act.

3.

As the additional ground raised by the Assessee is purely legal in nature and goes to the root of the matter, thusthe Assessee was allowed to be raised.

4.

We have heard the parties and considered the rival submissions and perused the material available on record.As observed above, the case of the Assessee was reopened after expiry of three years from the end of the relevant assessment year 2017- 18 by issuing a notice dated 20.07.2022 under Section 148 of the Act by getting sanction/approval for issuance of the said notice from the Principal Commissioner of Income Tax-17, Mumbai, and not from the Competent Authority, as mandated under Section 151(ii) of the Act and thus, the AO had violated the mandatory provisions of Section 151(ii) of the Act. Consequently, the notice dated 20.07.2022 issued under Section 148 of the Act is void ab initio. Therefore, the said notice, along with the assessment order dated 19.05.2023 passed pursuant thereto, is liable to be quashed specifically in view of the judgment of the Hon’ble Jurisdictional High Court in the case of Cipla Pharma and Life Sciences Ltd. vs. Deputy Commissioner of Income Tax, (2024) 300 Taxman 295 (Bombay High Court)/ {Writ Petition No. 149 of 2023, decided 2 on 02.07.2024}, wherein the Hon’ble High Court quashed the identical notice u/s 148 of the Act by observing and holding as under :

“8. On a plain reading of Section 148A it is clear that the Assessing officer before issuing any notice under section 148 is required to follow the procedure as set out in clauses (a) to (d) of Section 148A. One of the pre-conditions as ordained by clause (d) of Section 148A is that an order under such provision can be passed by the Assessing Officer only with the approval of "Specified Authority". Thus, necessarily when clause (d) of Section 148A provides for prior approval of specified authority, it relates to the provisions of Section 151 of the Act providing for 'Specified authority for the purposes of Section 148 and Section 148A of the Act'. In the present case, Section 151 as amended by the Finance Act, 2021 and Section 148A as also introduced by Finance Act, 2021 have become applicable, as although the assessment year in question is 2016-17 in respect of which the assessment is sought to be reopened by issuance of notice under section 148, which is dated 30 July, 2022. Such amended provision would squarely become applicable the date of notice under section 148 itself being 30 July, 2022. 9. The record clearly indicates that the sanction in the present case was issued by the Principal Commissioner which can only be in respect of cases if three years or less than three years have elapsed from the end of the relevant assessment year, as would fall under the provisions of clause (i) of Section 151 of the Act. As in the present case the assessment year in question is 2016-17 and the impugned notice itself has been issued on 30 July, 2022, it is issued after a period more than 3 years having elapsed from the end of the said assessment year, hence, clause (ii) of Section 151 of the Act was applicable. which required the sanction to be issued by either Principal Chief Commissioner or Principal Director General or where there is no Principal Chief Commissioner or Principal Director General, Chief Commissioner or Director General for issuance of notice under Section 148 of the Act.

10.

As rightly pointed out at the bar, such issue fell for consideration of the Division Bench of this Court in Siemens Financial Services Pvt. Ltd. (supra), wherein the Division Bench considered the provisions of Section 151 of the Act read with the provisions of Section 148A(b), the latter provision clearly providing that prior to issuance of any notice 3 under Section 148 of the Act, the assessing officer shall provide an opportunity of being heard to the assessee only after considering the cumulative effect of Section 148A(b) read with Section 151 of the Act and as provided under sub- clause (d), the assessing officer shall decide on the basis of material available on record including reply of the assessee, whether or not it is a fit case to issue a notice under Section 148 by passing an order, with the prior approval of specified authority within one month from the end of the month in which the reply is received. It is held that the sanction of the specified authority has to be obtained in accordance with the law existing when the sanction is obtained and, therefore, the sanction is required to be obtained by applying the amended section 151(ii) of the Act and since the sanction has been obtained in terms of section 151(i) of the Act, the impugned order and impugned notice are bad in law and should be quashed and set aside.

11.

Insofar as the respondent's case based on the notification dated 31 March, 2020 issued under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (for short, 'TOLA') was concerned, the Court held that such notification was a subordinate legislation and it could not override the statute enacted by the Parliament and in that regard, the position in law was discussed by the Division Bench in paragraph 27 of the said decision.

12.

In the present case, it is not in dispute that an appropriate sanction of the specified authority as per the provisions of Section 151(ii) of the Act was not obtained and for such reason, certainly, as held by this Court in Siemens Financial Services Pvt. Ltd. (supra), the impugned notices would be rendered bad and illegal. The petition accordingly needs to succeed on such ground of the Court requiring to delve on such issues of challenge as raised by the petitioner as also prior procedure adopted in that regard.

13.

In the light of the above discussion, the petition needs to succeed. It is accordingly allowed by the following order: - ORDER i. The impugned notice dated 30 July, 2022 issued under Section 148 of the Act is quashed and set aside, as also the impugned order dated 30 July, 2022 passed 4 by the Assessing Officer under Section 148A(d) of the Act is quashed and set aside. 02 July, 2024 931-WP 149-23.DOC ii. Rule is made absolute in the aforesaid terms. iii. Since v have disposed of the petition on the limited ground, we have not considered the other grounds. iv. Disposed of. No costs.”

5.

Thus, considering the relevant provisions of section 151 of the Act as applicable to the instant issue and respectfully following the aforesaid judgment of the Hon’ble Jurisdictional High Court, we do not have any hesitation in holding that the notice dated 20.07.2022 issued under Section 148 of the Act as void ab initio, as the mandatory approval of the competent authority prescribed under Section 151(ii) of the Act had not been obtained.

6.

Consequently, the notice dated 20.07.2022 issued under Section 148 of the Actand the assessment order dated 19.05.2023 passed pursuant thereto, are hereby quashed.

7.

In the result, the Assessee’s appeal is allowed.

Order pronounced in the open court on 23.07.2026. Sd/- Sd/- MAKARAND VASANT NARENDER KUMAR MAHADEOKAR CHOUDHRY ACCOUNTANT MEMBER JUDICIAL MEMBER (Tarun Kushwaha) Sr. Private Secretary

Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The DR Concerned Bench 5 //True Copy// By Order

Dy/Asstt. Registrar, ITAT, Mumbai.

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