PHOENIX INFRACON,PUNE vs. INCOME TAX OFFICER WARD 1(1), PUNE

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ITA 2630/PUN/2025Status: DisposedITAT Pune23 July 2026AY 2017-1817 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the approval for issuing the notice under Section 148A(d) was not in accordance with Section 151 of the Act, as it was obtained from the PCIT when the case fell beyond three years from the end of the assessment year. Following the jurisdictional High Court's decision, the Tribunal quashed the reassessment proceedings.

What were the facts?

The assessee's appeal was against an assessment order for AY 2017-18. The primary contention was that the approval for issuing the notice under Section 148A(d) was obtained from the Principal Commissioner of Income Tax (PCIT), whereas, since more than three years had elapsed from the end of the assessment year, the approval should have been from the Chief Commissioner or Principal Chief Commissioner of Income Tax.

What were the issues?

Whether the approval obtained from the PCIT for issuing a notice under Section 148A(d) is valid when the reassessment proceedings are initiated beyond three years from the end of the assessment year, as per Section 151 of the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 148A,Section 151

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE

Before: SHRI PAVAN KUMAR GADALE & SHRI Dr. DIPAK P. RIPOTE

For Appellant: Shri Shubham N Rathi
For Respondent: Shri Amit Bobde, CIT

आदेश /ORDER

PER Dr. DIPAK P. RIPOTE, A.M : This is an appeal filed by the assessee against the order of the Learned Commissioner of Income Tax (Appeals), NFAC, Delhi [Ld.CIT(A)], passed u/s. 250 of the Income Tax Act, 1961 („the Act‟) for AY 2017-18 on 06.10.2025, emanating from the Assessment Order u/s 147 r.w.s. 144 r.w.s. 144B of the Act, dated 01.05.2023.

Findings and analysis:

2.

We have heard both the parties and perused the record. In this case, the Ld. AR submitted that the order u/s 148A(d) of the Act for AY 2017-28 dated 26.07.2022 was approved by the Pr. Commissioner of Income Tax – 1, Nashik. Since, 3 years have lapsed from the end of the assessment year the approval should have been by the Chief Commissioner of Income Tax or

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the Pr. Chief Commissioner of Income Tax. Therefore, the Ld. AR pleaded that notice u/s 148 of the Act and the order u/s 148A(d) of the Act is bad in law. The Ld. AR also submitted that the said issue was raised by the assessee before the Ld. CIT(A) but the Ld. CIT(A) has not adjudicated the issue. The Ld. AR relied on the decisions of Hon‟ble Bombay High Court in the case of Ramesh Bachulal Mehta Vs. ITO, (2025) 177 taxmann.com 606 (Bombay), ITAT Pune in the case of Chandrakant Viththal Bhopi Vs. ITO in ITA No. 2405/PUN/2024, order dated 07.05.2025. Ld. AR filed the copy of the decisions relied in the form of paper book.

3.

The Ld. AR had filed copy of order u/s 148A(d) of the Act. The relevant paragraph of the said order is reproduced here as under : “6. In view of the above facts, the information in my possession as mentioned above suggests that the income chargeable to tax of Rs.2,44,68,000/- for the A.Y. 2017-18 has escaped the assessment. Therefore this is a fit case for issue of notice u/s. 148 of Income Tax Act, 1961 for the A.Y. 2017-18. 7. This order is passed with prior approval of Pr. CIT-1, Nashik vide letter no. Nsk/Pr.CIT-1/Appr. u/s 148/Range-1, Abd./2022-23/1476 dated 20.07.2022. VIVEK KUMAR WARD 1(1), AURANGABAD”

4.

Thus, it is clear that order u/s 148A(d) of the Act was approved by the Pr. Commissioner of Income Tax-Nashik.

Submissions of Ld. DR

5.

The Ld. DR filed a note on the issue opposing submission of Ld. AR. The said submission is reproduced as under : Quote, “A written submission on the issue of validity of approval u/s 151 of the Income Tax Act, 1961 and notice u/s 148 for AY 2017-18 is submitted and the same may kindly be considered. A Paper Book-1 has already

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submitted on 23.02.2026 may kindly be considered a part of this submission.

Facts of the case The assessee is Non-filer. The AO received information on the basis of which original notice u/s 148 was issued on 07.05.2021. This notice u/s 148 was converted into notice u/s 148A(b) in pursuance of the Supreme Court decision in Union of India v. Ashish Agarwal [2022]444ITR1(SC) and subsequent CBDT Instruction No.01/2022. The information and material was provided to the assessee vide letter dated 26.05.2022. Thereafter, considering the reply of the assessee, order u/s 148A(d) was passed on 26.07.2022 and notice u/s 148 was issued on 26.07.2022. The order u/s 148A(d) and notice u/s 148 was issued with prior approval of PCIT-1, Nashik as per the para 6.2 of the CBDT Instruction No.01/2022. The order u/s 147 rws 144B was passed on 01.05.2023 making an addition of rs.2.53crore. The CIT(A) dismissed the appeal of the assessee for non- prosecution.

Ground regarding validity of sanction u/s 151

2.

One of the grounds preferred by the assessee is that sanction obtained from PCIT in this case is wrong as the case falls within 149(1)(b) i.e. beyond three years and hence, the approval of the PCCIT was mandated by section 151 of the new regime.

Contention of the Revenue

3.

At the outset, it is pertinent to mention here that the Ld.AR has completely misinterpreted the decision of Hon. Supreme Court in Rajeev Bansal case (supra). Ld.AR had completely failed to understand the factual and legal matrix of Supreme Court decisions in Union of India v. Ashish Agarwal [2022]444 ITR 1 (SC) and Union of India vs Rajeev Bansal [2024] 469 ITR 46. On the conjoint reading of the above decisions of Hon. Supreme Court, it is evident that all notices issued u/s 148 between July, 2022 and September, 2022 are nothing but substitution of the notices which were issued under TOLA between 1st April,2021 and 30th June, 2021. Therefore, these notices deemed to have been issued before 30th June, 2021, within the extended and excluded time. Hence the sanctioning authority as prescribed u/s 151 of the Act is determined as if the approval is being sought before 30th June. This is apparent from the discussion in paras 73 to para 81 of the Rajeev Bansal case. Particularly, the example given in para 78 makes it clear that as far as notices u/s 148 for (AY 2016-17 &) AY 2017-18 issued in pursuance of the Ashish Agarwal case (supra) are considered, since their completion falls for completion during the period 20th March, 2020 to 30th June, 2021, the authority specified u/s 151 is the Commissioner of Income Tax. This view that for notices u/s 148 issued for AY 2016-17 & AY2017-18 in pursuance of Ashish Agarwal case, the specified authority is the authority as per section 151 (i) ie PCIT/CIT/DIT has been upheld by the Gujarat High Court in Dhanraj Govindram

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Kella vs ITO [2025] 177 taxmann.com 194 (Gujarat). Relying on Ashish Agarwal and Rajeev Bansal (supra), the Court held that all notices issued u/s 148 between July, 2022 and September, 2022 is nothing but substitution of the notices which were issued under TOLA between 1st April,2021 and 30th June, 2021. High Court further supported its view by relying on the directions in the case of Rajeev Bansal to exclude the period from 30th June, 2021 till 4th May, 2022 i.e. the date of the decision in case of Ashish Agarwal and further exclusions of the time to provide relevant information and time taken to file responses. Based on this observations, Hon'ble High Court held that notices are nothing but substitution of original notices and therefore, deemed to have been issued before 30th June, 2021, within the extended and excluded time. Hence the sanctioning authority as prescribed u/s 151(i) of the Act is the correct authority to accord sanction for AY 2016-17 and AY 2017-18. Detailed analysis of the Rajeev Bansal case with reference to the issue of sanctioning authority U/s 151

4.

For understanding the decision of Rajeev Bansal case, it is imperative to understand the interplay of TOLA, changes brought in the reassessment provisions by Finance Act, 2021 and the decision of Hon. Supreme Court in Union of India v. Ashish Agarwal [2022]444ITR1(SC)

Back ground of the Rajeev Bansal case

COVID and TOLA 4.1 In order to tide over the crisis created by COVID-19 Pandemic, the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (TOLA), was promulgated by the President of India on 31 March 2020. The ordinance was introduced to extend time limits for various statutory and regulatory compliances under specified Acts, such as the Income Tax Act, which were due between 20 March 2020 and 29 June 2020. Initially, the time limit was extended until 30 June 2020. On 24 June 2020, the Central Government issued a notification under Section 3(1) of the TOLA Ordinance, further extending the deadline for compliance under the specified Acts to 31 March 2021. Later, on 29 September 2020, Parliament enacted TOLA, giving it retrospective effect from 31 March 2020. Section 3(1) of TOLA empowered the Central Government to extend these deadlines further, allowing compliance or completion of actions beyond 31 March 2021 by issuing subsequent notifications. 4.2 In pursuance of this, several notifications were issued to extend the deadlines. For instance, Notification No. 93 of 2020 extended the deadline to 30 March 2021, while Notification No. 20 of 2021 further extended it to 30 April 2021. Lastly, Notification No. 38 of 2021 extended the deadline until 30 June 2021. These extensions provided relief to taxpayers and authorities by extending the time limit for completing statutory actions such as passing orders, issuing

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notices, and obtaining sanctions under the Income Tax Act, covering the period from 20 March 2020 to 30 June 2021. Simply put the time limit for actions which were getting time barred during the period 20-03-2020 to 30-06-21 was extended to 30-06-21 by TOLA. New Reassessment Regime

4.3 During the same period, the Finance Act 2021 introduced significant changes to the reassessment procedure under Sections 147 to 151 of the Income Tax Act, effective from 1 April, 2021 (The changes brought are hereinafter referred to "New Regime" and unamdended provisions are referred to as "Old Regime"). These changes revamped the entire scheme of reassessment, aiming to make the process more structured and transparent. The key highlights of the new regime were

Opportunity before issue of notice u/s 148 :

a. Introduction of new Section 148A mandating that the assessing officer conduct an inquiry (if needed) and provide the assessee with an opportunity to be heard before issuing a reassessment notice.

Change in time Limit for Reassessments (Section 149):

b. The time limit for reopening assessments has been reduced from four years to three years. However, in cases where income that escaped assessment amounts to Rs.50 lakhs or more, assessments can be reopened within ten years. The new regime prohibits reopening of assessments that were time-barred under the old regime.

Change in specified authority

c. For cases within three years, approval is required from the Principal Commissioner or Commissioner, while for cases beyond three years, higher authorities such as the Principal Chief Commissioner or Director General must provide approval

Notice u/s 148 issued between 01.04.2021 and June 30,2021 under old regime

4.4 The notification issued by the Central Government under section 3(1) of TOLA contained an explanation that provisions of section 147 to 151 of the Act prior to April 1, 2021 (herein after referred to as "old regime") shall be applied to reassessment proceedings initiated under them between April 1,2021 and June 30,2021. Accordingly, Notification No.20 of 2021 dated March 31, 2021 [(2021) 432 ITR (St.) 141] and Notification No.38 of 2021 dated April 27,2021 [(2021) 434 ITR (St.)11] directed and permitted the Assessing Officers to apply the provisions of the old regime for reassessment notices to be issued after coming into force of the Finance Act, 2021 with amendment with

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effect from April 1, 2021. Hence, the reassessment notices were issued between April 1, 2021, and 30th June 2021 under the provisions of section 148 of the old regime for A.Y.2013-14 to A.Υ. 2017-18.

4.5 The assessee challenged such notices issued after 1st April, 2021 for reassessment on the ground that such notices could not have been issued under the old regime in view of coming into force of amendment brought by the Finance Act, 2021. Various High Courts allowed the writ petitions field by the assessee and quashed all the reassessment notices issued between April 1, 2021 and June 30, 2021 under section 148 of the Act under the old regime on the ground that no such notices could have been issued under the provisions of section 147 to 151 of the Act which are not in existence after April 1, 2021 and there was no saving clause which could have been resorted to by the Revenue and the reassessment proceedings could have been initiated as per the amended provisions of sections 147 to 151 of the Act after April 1, 2021 (herein after referred to as "new regime") since they were remedial, beneficial and meant to protect the rights and interests of the assesses. Being aggrieved by the decisions of various High Courts, the Income tax Department challenged the same before the Apex Court.

Decision in case of Ashish Agarwal

5.1 The Hon'ble Apex Court in case of Ashish Agarwal (supra) vide order dated 04.05.2022 held that it was in complete agreement with the view taken by various High Courts. However, the Hon'ble Apex Court considering the stand of the Revenue that the reassessment notices were issued under bona fide belief that amendment may not yet have been enforced in view of TOLA, exercised the discretionary jurisdiction under Article 142 to strike a balance between the interest of Revenue and the assessee and directed that such notices issued between April 1, 2021 and June 30, 2021 under the old regime be deemed to be notices under the new regime as provided under section 148A(b) of the Act.

Notice u/s 148 issued between July & Sept.,2022 in pursuance of Ashish Agarwal

5.2 In compliance of the aforesaid directions issued by the Apex Court, the Central Board of Direct Taxes issued an Instruction on May 11, 2022, [(2022) 444 I.T.R. (St.) 43] which reads as under:

"6.1 With respect of operation of new section 149 of the Act, the following may be seen: Hon'ble Supreme Court has held that the new law shall operate and all the defences available to assessees under section 149 of the new law and whatever rights are available to the Assessing Officer under the new law shall continue to be available. Sub-section (1) of new section

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149 of the Act as amended by the Finance Act, 2021 (before its amendment by the Finance Act, 2022) reads as under:-

149.

(1) No notice under section 148 shall be issued for the relevant assessment year, (a) if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b): (b) if three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income chargeable to tax, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more for that year:

Provided that no notice under section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before 1st day of April, if such notice could not have been issued at that time on account of being beyond the time limit specified under the provisions of clause (b) of sub-section (1) of this section, as they stood immediately before the commencement of the Finance Act, 2021:

6.2 Hon'ble Supreme Court has upheld the views of High Courts that the benefit of new law shall be made available even in respect of proceedings relating to past assessment years. Decision of Hon'ble Supreme Court read with the time extension provided by TOLA will allow extended reassessment notices to travel back in time to their original date when such notices were to be issued and then new section 149 of the Act is to be applied at that point.

Based on above, the extended reassessment notices are to be dealt with as under:

(i) AY 2013-14, AY 2014-15 and AY 2015-16: Fresh notice under section 148 of the Act can be issued in these cases, with the approval of the specified authority, only if the case falls under clause (b) of sub-section (1) of section 149 as amended by the Finance Act, 2021 and reproduced in paragraph 6.1 above. Specified authority under section 151 of the new law in this case shall be the authority prescribed under clause (ii) of that section. (ii) AY 16-17, AY 17-18: Fresh notice under section 148 can be issued in these cases. with the approval of the specified authority, under clause (a) of sub-section (1) of new section 149 of the Act, since they are within the period of three years from the end of the relevant assessment year. Specified authority under section 151 of the new law in this case shall be the authority prescribed under clause (i) of that section."

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5.3 The assessing officers accordingly considered the replies furnished by the assessees and passed orders under section 148A(d). Subsequently, notices under section 148 of the new regime were issued to the assessees by the assessing officers between July and September 2022 for the assessment years 2013-2014, 2014- 2015, 2015-2016, 2016-2017, and 2017-2018.

Challenge to the notices issued in pursuance of Ashish Agarwal (supra)

6.1 These notices, issued in pursuance of Ashish Agarwal between July to September, 2022, (hereinafter referred to as Ashish Agarwal notice/s u/s 148 in this submission) were challenged before several High Courts. The High Courts declared the notices to be invalid on the ground that they were: (i) time-barred; and (ii) issued without the appropriate sanction of the specified authority. Since, the main issue in the case of the assessee in this case for AY 2016-17 is of appropriate sanctioning authority we will focus on controversy surrounding the issue of appropriate sanctioning authority will the example of decision of Bombay High Court in the case of Siemens Financial Services (P) Ltd. Vs. DCIT [2023] 154 taxmann.com 159 (Bombay). In this case, the Bombay high court declared an Ashish Agarwal notice u/s 148 for AY 2016- 17 issued with the prior approval of PCIT.

Analysis of Siemens Financial Services (P) Ltd. Vs. DCIT (supra) Facts of Siemens Financial case

6.2 In this case, original notice u/s 148 for AY 2016-17 was issued of 25.06.2021. Therafter, in pursuance of Ashish Agarwal decision (supra), vide notice/letter dated 31- 05-2022, the notice u/s 148 dated 25-06-2021 was converted to notice u/s 148A(b) and material and information relied upon by the AO for issue of deemed notice u/s148A(b) was supplied to the assessee. Subsequently, order u/s 148A(d) was passed and notice u/s 148 was issued on 31-07-2022 after seeking approval from PCIT u/s 151(i).

6.3 The notice u/s 148 was challenged in writ before the Hon.Bombay High Court, inter alia, on ground that the approval was granted by wrong specified authority u/s 151. The contention of the assessee which is reproduced in para 11 (c), 11(d), 11(e) and 11(f) of the order. The contention can be summarized as under

(i) As per section 151 of the Act, the specified authority who has to grant his sanction for the purposes of section 148 and section 148A is the Principal Chief Commissioner or Principal Director General/Principal Chief Commissioner/Principal Director General/ the Chief Commissioner/Director General if more than three years have elapsed from the end of the relevant assessment year.

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(ii) For A.Y.-2016-2017, three years elapsed on 31st March 2020 and hence for passing order u/s 148A(d) and issue of notice u/s 148, the provisions of section 151(ii) of the Act would have to be fulfilled, which have not been complied with. (iii) In this case, for passing order u/s 148A(d) and issue of notice u/s 148 prior approval of PCIT has been taken from PCIT under section 151 (i) of the Act. Such sanction would be bad in law as the AO should have complied with section 151(ii) and not section 151(i) of the Act. Hence, PCIT cannot be a specified authority as per section 151 of the Act. (iv) The AO cannot rely on the provisions of the Taxation and other laws (Relaxation and Amendment of certain provisions) Act, 2020 (TOLA) and the notification issued thereunder as section 151 of the Act has been amended by Finance Act 2021 and the provisions of amended section would have to be complied with by respondent no. 1, w.e.f. 1st April 2021. Hence, as the sanction of the specified authority has not been obtained, the impugned order and impugned notice both dated 31st July 2022 are bad-in-law and should be quashed and set aside.

6.4 The revenue relied on the CBDT Instruction dated 01/2022 wherein it has stated in para 6.1 that decision of Hon'ble Supreme Court in Ashish Agarwal case (supra) read with the time extension provided by TOLA will allow extended reassessment notices to travel back in time to their original date when such notices were to be issued and then new section 149 of the Act is to be applied at that point. The CBDT instruction, further in para 6.2, states that for AY 16-17 and AY 17-18 fresh notices under section 148, with the approval of the specified authority, under clause (a) of sub-section (1) of new section 149 of the Act, since they are within the period of three years from the end of the relevant assessment year. Specified authority under section 151 of the new law in this case shall be the authority prescribed under clause (i) of that section."

6.4.1 The thrust of the argument of the revenue was that the notices u/s 148 issued in pursuance of Ashish Agarwal case (supra), though issued in the period from July to September, 2022, due to legal fiction created by the Hon. Supreme Court have to be considered as nothing but substitution of the notices which were issued under TOLA by the Income tax department between 01.04.2021 to 30.06.2021. Hence, it would not be correct to consider that the notice as if it is issued in July, 2022 and then calculate the period for determining sanctioning authority. In case of the assessee, the period that has elapsed is three years or less than three years because the assessment year is AY-2016- 2017, as provided under section 3 of TOLA and extended by Notification dated 31st March 2020 and subsequently until 31st March 2021, the three years would have expired on 31st March 2020 and has got extended till 30th June 2021. The provisions of TOLA read with judgment of the Apex Court in Ashish Agarwal case (supra),

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the sanction has been rightly granted by the Principal Commissioner and there is no violation of Section 151 of the Act as alleged or at all.

6.5 Hon. High Court rejected the contention of the revenue. It rejected the interpretation of CBDT circular No.01/2022 that extended reassessment notices will travel back in time. Hon High Court held that interpretation placed by the CBDT in paragraph 6.1 of Instruction No. 1/2022 dated 11th May 2022 cannot be countenanced as it is not open to them to clarify that the law laid down by the Apex Court means that the extended reassessment notices will travel back in time to their original date when such notices were to be issued...(para 28). It further held that the CBDT in Instruction no. 1/2022 at paragraph 6.2(ii) has wrongly stated that the notices issued under section 148 of the Act for AY 2016-17 are to be considered as having been issued within a period of three years from the end of the relevant assessment year and, on that basis, has wrongly mentioned that the approval of the specified authority under section 151(i) should be taken. This conclusion is premised on the basis that these notices travel back to 31 March 2020 which premise is completely erroneous as explained herein before. The notice under section 148 of the Act is issued on 31 July 2022 and, hence, is issued beyond period of three years from the end of the relevant assessment year and, accordingly, the approval of the specified authority under section 151(ii) of the Act should be taken. (para 29). In view of the above, the High Court quashed the notices.

Analysis of the decision in Rajeev Bansal case with regard to the issue of sanctioning authority

7.

In many case, notices for AY 2016-17 and AY 2017-18 were quashed following the ratio of the Siemens (supra) on the issue of wrong sanctioning authority u/s 151. The Revenue moved the Apex Court aggrieved by the decisions of High Courts on various issuing related to these Ashish Agarwal notices, including on the issue of wrong sanctioning authority. The Hon. Supreme Court bunched all these cases and decided them in Union of India vs Rajeev Bansal [2024] 469 ITR 46. The decision of Bombay High Court in Siemens (supra) was one of the cases which were reviewed by the Supreme Court in Rajeev Bansal. The Hon'ble Apex Court crystalised following two issues in the present appeal. (para 18 of the SC order) a) Whether TOLA and notifications issued under it will also apply to reassessment notices issued after 1 April 2021; and

b) Whether the reassessment notices issued under section 148 of the new regime between July and September 2022 are valid.

7.1. The Supreme Court decided the issue of sanctioning authority in paras 73 to para 81 in the favour of revenue. The Hon. Supreme Court reviewed the decision of Hon.Bombay High Court in Siemens (supra) and set it aside (see para 115 of the Supreme Court order). The Hon. Supreme Court held that Parliament enacted TOLA to ensure

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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 theCOVID-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. Hon. Supreme Court, further, held that the test to determine whether TOLA will apply to Section 151 of the new regime is that: 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 extended time till 30 June 2021 to grant approval. (para 77). 7.2 To further clarify the position, Hon. Supreme Court in para 78 has given an example, the relevant portion is reproduced here "78. For example, the three year time limit for assessment year 2017-2018 falls for completion on 31 March2021. 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 30June 2021."

7.3 Hon. Supreme Court also upheld the legal fiction created by Ashish Agarwal (supra) and the concept of travelling back in time espoused by the CBDT Instruction 01/2022 (This concept was repudiated by the Hon.Bombay High Court in Siemens Financial Services (P) Ltd. Vs. DCIT (supra)). The relevant paras are reproduced here

110.

The effect of the creation of the legal fiction in Ashish Agarwal (supra) was that it stopped the clock of limitation with effect from the date of issuance of Section 148 notices under the old regime [which is also the date of issuance of the deemed notices]. As discussed in the preceding segments of this judgment, the period from the date of the issuance of the deemed notices till the supply of relevant information and material by the assessing officers to the assesses in terms of the directions issued by this Court in Ashish Agarwal (supra) has to be excluded from the computation of the period of limitation. Moreover, the period of two weeks granted to the assesses to reply to the show cause notices must also be excluded in terms of the third proviso to Section149. 111. The clock started ticking for the Revenue only after it received the response of the assesses to thes show causes notices. After the receipt of the reply, the assessing officer had to perform the following responsibilities: (i) consider the reply of the assessee under section 149A(c); (ii) take a decision under section149A(d) based on the available material and the reply of the assessee; and (iii) issue a notice under section148 if it

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was a fit case for reassessment. Once the clock started ticking, the assessing officer was required to complete these procedures within the surviving time limit. The surviving time limit, as prescribed under the Income-tax Act read with TOLA, was available to the assessing officers to issue the reassessment notices under section 148 of the new regime.

112.

Let us take the instance of a notice issued on 1 May 2021 under the old regime for a relevant assessment year. Because of the legal fiction, the deemed show cause notices will also come into effect from 1 May 2021.After accounting for all the exclusions, the assessing officer will have sixty-one days [days between 1 May2021 and 30 June 2021] to issue a notice under section 148 of the new regime. This time starts ticking for the assessing officer after receiving the response of the assessee. In this instance, if the assessee submits the response on 18 June 2022, the assessing officer will have sixty-one days from 18 June 2022 to issue a reassessment notice under section 148 of the new regime. Thus, in this illustration, the time limit for issuance of a notice under section 148 of the new regime will end on 18 August 2022."

7.4 The example given in para 112 of the order clearly upholds the stand of the revenue that Ashish Agarwal notices issued between July to September , 2022 have to be considered as issued between 01.04.2021 to 30.06.2021. Thus, the sanctioning authority is also to be determined as if notices were issued under the TOLA period. Thus, sanctioning authority for AY 2016-17 & AY 17-18 would be PCIT as per section 151 (i). Decision of Gujarat High Court in Dhanraj Govindram Kella vs ITO [2025] 177 taxmann.com 194 (Gujarat)

7.5 Even after the decision of Supreme Court in Rajeev Bansal (supra), the issue of wrong sanctioning authority based on logic of Siemens (supra) was raised in some cases. One such as heard by Gujarat High Court in Dhanraj Govindram Kella vs ITO [2025] 177 taxmann.com 194 (Gujarat). Here the Hon.High Court undertook a detailed survey of the legislative background, including TOLA, the Finance Act 2021, and CBDT notifications. It observed that while TOLA extended timelines, it could not authorise use of the old sanction regime after 1 April 2021. Relying on Ashish Agarwal and Rajeev Bansal (supra), the Court held that all notices issued u/s 148 between July, 2022 and September, 2022 is nothing but substitution of the notices which were issued under TOLA between 1st April,2021 and 30th June, 2021. High Court further supported its view by relying on the directions in the case of Rajeev Bansal to exclude the period from 30th June, 2021 till 4th May, 2022 i.e. the date of the decision in case of Ashish Agarwal and further exclusions of the time to provide relevant information and time taken to file responses. Based on this observations, Hon'ble High Court held that notices are nothing but substitution of original notices and therefore, deemed to

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have been issued before 30th June, 2021, within the extended and excluded time. Hence the sanctioning authority as prescribed u/s 151(i) of the Act is the correct authority to accord sanction.(paras 59 to 64 of the order). Conclusion: 8. In view of the above discussion, the appropriate specified authority for sanctioning notice u/s 148 for Ay 2017-18, in special Ashish Agarwal notices u/s 148, as per section 151(i) is PCIT. This view is fortified by the decision of Supreme Court in Rajeev Bansal (supra) and Dhanraj Govindram Kella (supra). Hence, it is prayed that the additional ground raised by the assessee may kindly be dismissed and reassessment proceedings may kindly be upheld. Submitted for kind consideration. Sd/- (AMIT BOBDE) Commissioner of Income Tax (DR) ITAT-II, Pune” Findings & Analysis :

6.

We have heard both the parties and perused the records. In this case, it is observed that order u/s 148A(d) dated 26.07.2022 for AY 2017-18 has been approved by the Pr. Commissioner of Income Tax, Nashik and notice u/s 148 for AY 2017-18 dated 26.07.2022 has been approved by the Pr. Commissioner of Income Tax, Nashik. Thus, after a lapse of 3 years from the end of the assessment year notice u/s 148 has been approved by Pr. Commissioner of Income Tax, Nashik.

7.

The Hon‟ble Bombay High Court in the case of Alag Property Construction (P.) Ltd. Vs. ACIT, (2025) 179 taxmann.com 578 (Bombay) has held as under : Quote, “10. On perusal of the order dated 18.08.2022, passed under Section 148A(d) of the Act we find that the aforesaid order was passed after taking approval from Principal Commissioner of Income Tax (Respondent No.2). Since the aforesaid order was passed, as well as the notice under section 148 was issued, after the expiry of three years from the end of A.Y. 2017- 18, as per the substituted provisions of re-assessment, the authority specified under Section 151(ii) of the Act (i.e. Principal Chief Commissioner or Chief Commissioner) was required to grant approval. Accordingly, we conclude that in the present case, the approval has been obtained from the

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authority specified under Section 151(i) of the new regime instead of the authority specified under Section 151(ii) of the new regime. 11. The Hon'ble Supreme Court in the above case has drawn an illustration in para 78 of its order in the context of A.Y. 2017-18 (which is also the relevant Assessment year in the present Writ Petition) wherein it is categorically held that the authority specified under section 151(i) can accord sanction only upto 30.06.2021. This illustration makes it absolutely clear that when the period of three years from end of relevant Assessment Year expired between 20.03.2020 and 31.03.2021, the extension by virtue of TOLA was upto 30.06.2021 and not beyond. Thus, it can be said that the period of three years from the end of the relevant Assessment Year (in the present case A.Y. 2017-18) expired on 30.06.2021, whereas Respondent No.1, despite passing order under section 148A(d) on 18.08.2022, and issuing notice under section 148 on 23.08.2022 [in respect of Assessment Year 2017-18], has obtained approval of Respondent No.2 who is not the authority as prescribed under section 151(ii). 12. Non-compliance by Respondent No.1 with the provisions contained in Section 148A(d) read with Section 151(ii) vitiates the jurisdiction of Respondent No.1 to issue a notice under Section 148 of the Act. 13. We are clearly of the view that the present matter stands covered by the decision of Hon'ble Supreme Court in the case of Rajeev Bansal (supra) and we are bound by it. Accordingly, we hold that the order dated 18.08.2022 passed under Section 148A(d) of the Act and the consequential notice issued under section 148 dated and 23.08.2022 are bad in law, and hence, are required to be quashed and set aside.”Unquotee.

8.

The ITAT Pune in the case of Mahesh Gokuldas Fulwani Vs. ITO in ITA No. 873/PUN/2025 for AY 2017-18 has held as under: Quote, “9. We find since the notice has been issued beyond the period of three years from the end of the relevant assessment year, therefore, in view of the provisions of section 151, the competent authority for granting the approval for issue of notice u/s 148 of the Act is the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General. Since the approval in the instant case has been granted by the PCIT instead of any of the above authorities, therefore, such approval being not in accordance with law, the re-assessment proceedings are invalid.” Unquote. 9. Similar view has been taken by this Tribunal in the case of Chandrakant Viththal Bhopi Vs. ITO in ITA No. 2405/PUN/2024 for AY 2016-17, order dated 07.05.2025. The relevant paragraph is reproduced here as under : Quote, “19. Since the facts of the instant case are identical to the facts in the case of Hareshkumar Dungarmal Jain vs. DCIT (supra), therefore,

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respectfully following the same, we hold that since in the instant case notice u/s 148A(d) of the Act has been issued on 27.07.2022 which is beyond the period of three years from the relevant assessment year and the approval has been granted by the PCIT for reopening of the case instead of Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General, therefore, such approval being not in accordance with law, we hold that the entire re-assessment proceedings are vitiated. We, therefore, quash the re-assessment proceedings. Since the assessee succeeds on this legal ground, the other grounds challenging the addition on merit are not being adjudicate being academic in nature.” Unquote.

10.

In this case, the Ld. DR has filed an elaborate submission which we have already reproduced in earlier paragraphs. The Ld. DR has mainly referred to the decision of Hon‟ble Supreme Court in the case of Union of India Vs. Rajeev Bansal, (2024) 469 ITR 46 (SC). The Ld. DR also relied on the decision of Hon‟ble Supreme Court in the case of Union of India Vs. Ashish Agarwal, (2022) 444 ITR (SC). In this context it is important to refer to the decision of Hon‟ble Bombay High Court in the case of Alag Property Construction (P.) Ltd. (supra) which we have already reproduced in para 7, it is observed that the Hon‟ble Bombay High Court has considered the decision of Hon‟ble Supreme Court in the case of Rajeev Bansal (supra) and following the decision of Hon‟ble Supreme Court the Hon‟ble Bombay High Court in the case of Alag Property Construction (P.) Ltd. (supra) held that order u/s 148A(d), dated 18.08.2022 for AY 2017-18 was bad in law. Therefore, the contention of the Ld. DR cannot be considered as Hon‟ble Bombay High Court in the case of Alag Property Construction (P.) Ltd. (supra) has already discussed the law laid down by the Hon‟ble Supreme Court in the case of Rajeev Bansal (supra).

11.

The decision of Hon‟ble Bombay High Court is binding on this Tribunal, especially when the Hon‟ble Bombay High Court has duly considered the decision of Hon‟ble Supreme Court in the case of Rajeev Bansal (supra). The Hon‟ble Supreme Court

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in the case of Union of India And Others Vs. Kamlakshi Finance Corporation, AIR 1992 SC 711, dated 24.09.1991 has already explained the “judicial precedents”. Similarly, the Hon‟ble Bombay High Court in the case of Smt. Godavari Saraf Vs. CIT, 113 ITR 589 has explained the law related to judicial precedents. The law regarding judicial precedents is that when the decision of Hon‟ble Jurisdictional High Court on a particular issue is available then it is mandatory for the Tribunal to follow the decision of Hon‟ble Jurisdictional High Court on a particular issue provided the facts are not distinguishable. In this case, the facts are identical, therefore, the decision of Hon‟ble Bombay High Court in the case of Alag Property Construction (P.) Ltd. (supra) is binding on us.

12.

Rrespectfully, following the decisions of the Hon‟ble Bombay High Court and ITAT (supra), the notice u/s 148 for AY 2017-18 approved by the Pr. Commissioner of Income Tax after a lapse of 3 years from the end of the assessment year is quashed. Accordingly, consequential reassessment order is bad in law.

13.

Since, we have allowed the legal ground of the assessee, we do not intend to comments on the merits of the addition.

14.

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

Order pronounced in the open Court on 23rd July, 2026

Sd/- Sd/- (PAVAN KUMAR GADALE) (Dr. DIPAK P. RIPOTE) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे/Pune; दिन ांक/Dated : 23-07-2026 Ravi Kumar

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आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपील र्थी / The Appellant 2. प्रत्यर्थी / The Respondent 3. The concerned Pr. CIT, Pune 4. DR, ITAT, „B‟ Bench, Pune 5. ग र्ड फ ईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Assistant Registrar आयकर अपीलीय अदिकरण,पुणे / ITAT, Pune

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