INNUS INFRASTRUCTURE P LTD,GURGAON vs. ACIT, CIRCLE-10(1), DELHI

PER SUDHIR KUMAR, JM :

This appeal by the assessee is emanating from the order of the Ld. Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, Delhi [hereinafter referred as CIT(A)] dated 22.12.2025 pertaining to assessment year 2016-17. Assessee has raised as many as 6 grounds of appeal, but he argued only the legal issue vide Ground No. 2 to 2.8 as under:- “2. That the CIT(A) has failed to appreciate that the notice issued u/s. 148A(b) of the Act, under section 148 of the Act order u/s. 148A(d) of the Act were also illegal, invalid and without jurisdiction and deserve to be quashed as such. 2.1 That the Ld. CIT(A) has failed to appreciate that the notice issued u/s. 148A(b) of the Act, under section 148 of the Act order u./s. 148A(d) of the Act were also illegal, invalid and without jurisdiction and deserve to be quashed as such.

2.2 That the Ld. CIT(A) has failed to appreciate that the there was no tangible material on record in the form of specified information to suggest that income of the appellant had escaped assessment and in view thereof the proceedings initiated were illegal, untenable and therefore unsustainable. 2.3 That the Ld. CIT(A) has failed to appreciate that non supply of information in accordance with clause (i) of Explanation 1 to section 148 of the Act even otherwise vitiated the notice u/s. 148A(b) of the Act and order u/s. 148A(d) of the Act. 2.4 That the Ld. CIT(A) has failed to appreciate that initiation of proceedings was mechanical and without any application of mind much less independent application of mind, therefore, the notices issued u/s. 148A(b) of the Act; and u/s. 148 of the Act were invalid notice; and also order u/s. 148A(d) of the Act was an invalid notice; and also order u/s. 148A(b) of the Act was an invalid order and thus assumption u/s. 147 of the Act was without jurisdiction. 2.5 That the CIT(A) has failed to appreciate that notice issued u/s. 148 of the Act after three years have elapsed from the end of the relevant assessment year in absence of possession of books of account or other documents or evidence which reveal that the income chargeable to tax represent in the form of asset, which ahs escaped assessment amounting to or is likely to amount to fifty lakh rupees or more for that year in view of the provisions of section 149(1)(b) of the Act. 2.6 That notice u/s. 148A(b) of the Act was issued based on factually incorrect assumptions and presumptions and therefore such a notice being highly cryptic vague could not legally and logically be made a basis for assumption of jurisdiction and therefore deserve to be quashed as such. 2.7 That the Ld. CIT(A) has failed to appreciate that notice u/s. 148A(b) of the Act and, notice dated 29.7.2022 u/s. 148 of the Act issued without validly complying section 151 of the Act were also without jurisdiction. 2.8 That the Ld. CIT(A) has failed to appreciate that notice u/s. 148A(b) of the Act and order u/s. 148A(d) of the Act were contrary to section 151A of the Act; and therefore the assumption of jurisdiction was not in accordance with law.

3 u/s. 147 read with section 144B of the Act which in the respectful submission of the assessee are not in conformity with law and therefore, deserve to be quashed as such. The Ld. AR further submitted that the assumption of jurisdiction was illegal, invalid and void ab initio due to the fact that the notice dated 29.7.2022 u/s. 148 of the Act issued without complying section 151 of the Act is not in accordance with law. 3. Ld. CIT(DR) relied upon the orders of the authorities below. 4. Considered the rival submissions and material placed on record. We observed that notice was issued u/s 148A (b) on 24.5.2022 and order u/s 148A(d) was passed and notice u/s 148 was issued to the assessee on 29.7.2022. The relevant copy of the notices and order, as state above, are placed on record and before us, ld. AR submitted that for issue of notice u/s 148, the Assessing Officer should have obtained approval from Ld. Principal Chief Commissioner or Ld. Principal Director General or Chief Commissioner or Director General, where there is no ld. Principal Chief Commissioner or Ld. Principal Director General. Whereas for initiating the proceedings, the Assessing Officer has obtained the prior approval from Principal Commissioner of Income Tax-1, New Delhi which is not as per the provisions of the Act. In this regard, we draw support from the decision of the Hon’ble High Court of Delhi in the case of Kusum Healthcare (P) Ltd. vs. DCIT reported in 304 Taxman 471 wherein, in the relevant paras it has been held as under:- “4. Undisputedly, we are in this writ petition concerned with Assessment Year 2016-17 and in respect of which the notice under section 148 of the Act ultimately came to be issued on 29 July, 2022. It is thus apparent that the action had come to be initiated after the expiry of three years from the end of the relevant AY. It is in the aforesaid context that the petitioner contends that the sanction accorded by the PCIT would not sustain.

4 5. In cases where assessment is sought to be commenced after the lapse of three years from the end of the relevant AY, undisputedly, it would be the Principal Chief Commissioner who would be liable to be recognized as being the competent authority. Viewed in that light, it is apparent that the reassessment action would not sustain……

Consequently, and for the aforesaid reasons, we find ourselves unable to sustain the reassessment action on this short score alone. 7. Accordingly, the writ petition is allowed. The impugned order referred to Section 148A(d) and notice under section 148, both dated 29.7.2022 are quashed. However, the present order shall be without prejudice to the right of the respondent to draw such other proceedings as may be permissible in law.”

“Considered the rival submissions and the material placed on record. We observed that the Notice dated 29.07.2022 issued u/s 148 of the Act is not a valid notice, as the approval was not granted by the specified authority i.e. Principal Chief Commissioner of Income Tax as mandated u/s 151(ii) We further observe that the impugned notice u/s 148 for AY 2017-18 was issued on 29.07.2022, after obtaining the approval Pr.CIT, Delhi i.e. beyond the period of three years from the end of the relevant assessment year and thus, in terms of sec.151(ii) of the Act, the same was required to be approved by the Principal Chief Commissioner or Principal Director General or where there is no such authority, by Chief Commissioner or Director General. We further observe that in the case of the assessee, the said notice u/s 148 was not issued with the prior approval of the Principal Chief Commissioner or any other authority specified u/s 151(ii) of the Act. In this regard, we find force from the judgment of Hon’ble Delhi

5 High Court in the case of Communist Party of India (Marxist) (supra) wherein Hon’ble Delhi High Court relying on various judgments decided the issue in favour of the assessee as under :-

“18. In view of the above, the order dated 29.07.2022 passed under section 148A(d) of the Act is not sustainable. Consequently, the subsequent proceedings, including the assessment order dated 23.05.2023, cannot be sustained. Accordingly, the impugned order passed under section 148A(d) of the Act, the notice issued under section 148 of the Act as well as the assessment order dated 23.05.2023 and the demand raised pursuant thereto, are hereby set aside.”