RAMAN SOUNDARARAJAN,NAMAKKAL vs. ITO, WARD-2,, NAMAKKAL

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ITA 1545/CHNY/2026Status: DisposedITAT Chennai07 July 2026AY 2018-1912 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the notice issued under Section 148 was invalid because the approval was obtained from the PCIT instead of the PCCIT, which is the competent authority for reopening beyond three years. Consequently, the assessment order and the penalty levied were quashed.

What were the facts?

The Assessing Officer (AO) reopened the assessment for AY 2018-19 after the assessee failed to file a return of income. The AO issued a notice under Section 148 after obtaining approval from the Principal Commissioner (PCIT) instead of the Principal Chief Commissioner (PCCIT), as required for reopening beyond three years.

What were the issues?

Whether the reopening notice under Section 148 was valid when the approval was obtained from the PCIT instead of the PCCIT for reopening beyond three years from the end of the relevant assessment year.

Which sections of the Income-tax Act were involved?

Section 148,Section 148A,Section 151,Section 147,Section 271AAC(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI

Before: SHRI ABY T. VARKEY & SHRI S.R. RAGHUNATHA

Hearing: 12.05.2026Pronounced: 07.07.2026

आदेश / O R D E R PER ABY T. VARKEY, JM: These appeals are preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)/NFAC, (hereinafter referred to as “the Ld.CIT(A)”), Delhi, dated 23.12.2025 against quantum appeal; & Ld.CIT(A) order dated 20.01.2026 is against penalty levied u/s

ITA Nos.1545 & 1546/Chny/2026 (AY.2018-19) Raman Soundarajan. :: 2 :: 271AAC(1) of the Income Tax Act 1961 (herein after the Act) for the Assessment Year (hereinafter referred to as "AY”) 2018-19.

2.

At the outset, it is noted that there is delay of ‘20’ days in filing of the quantum appeal before this Tribunal. An application explaining the cause for the delay has been filed by the assessee. Having perused the same, we find sufficient cause for the assessee not preferring an appeal before the Tribunal within the prescribed time. Hence, in the given facts of the case, we condone the delay of ‘11’ days in filing of the appeal before this Tribunal. Therefore, we proceed to hear the appeal on its own merits.

3.

The AO noted that assessee an individual and didn’t file the return of income (RoI) for A.Y 2018-19 The AO received information that the assessee had cash deposit (including bearer cheque) to the tune of ₹ 1,13,99,000/- and cash withdrawals of ₹ 10,57,700/- in his bank account, hence the A.O issued notice u/s. 148A(b) of the Act on 24.03.2022 proposing to reopen the assessment for AY 2018-19; and thereafter, the AO passed an order u/s.148A(d) of the Act on 11.04.2022 and issued notice u/s. 148 of the Act on the same day, conveying his desire to reopen the assessment for AY 2018-19. Pursuant to which, assessee filed RoI on 30.04.2022 declaring ₹ 82,352/-. The AO completed the assessment u/s. 147 of the Act assessing the income of the assessee total

ITA Nos.1545 & 1546/Chny/2026 (AY.2018-19) Raman Soundarajan. :: 3 :: income at Rs.48,04,411/-. Aggrieved, the assessee filed appeal before the Ld CIT(A), who dismissed the appeal. The assessee is in appeal before this Tribunal against the order of the Ld CIT(A).

4.

The assessee is noted to have raised a legal issue i.e. ground No.3, challenging the validity of notice u/s. 148 of the Act. According to assessee, the impugned notice for reopening u/s 148 have been issued after expiry of three years from end of relevant AY, with the approval of Principle Commissioner of Income Tax (PCIT), instead of Principle Chief Commissioner of Income Tax (PCCIT), hence the action of AO is without jurisdiction and hence consequent actions taken are non-est in eyes of law. The Ld. AR further submitted that if the said ground is adjudicated in favour of the assessee, the other grounds on legal as well as on merits would become academic. Accordingly, we will first proceed to consider the said legal contention.

5.

In this regard, the Ld. AR submitted that the notice under section 148 is dated 11.04.2022, which event is undisputedly beyond the period of 3 years from the end of the relevant AY; and therefore as per the provisions of Section 151 of the Act, the AO should have obtained the approval from Principle Chief Commissioner of Income Tax (PCCIT), instead, in the present case the AO has obtained approval from Principle Commissioner of Income Tax (PCIT), Coimbatore, while issuing notice

ITA Nos.1545 & 1546/Chny/2026 (AY.2018-19) Raman Soundarajan. :: 4 :: under section 148 and therefore the notice is invalid. For such a

proposition, he relied on the decision of this Tribunal in the case of

Meganapuram Primary Agricultural cooperative Credit Society vs PCIT

(ITA No.895/Chny/2025 dated 19.09.2025 wherein similar issue cropped

up, and the Tribunal allowed the ibid legal issue in favor of assessee, by

holding as under;-

“40. We find that the Show Cause Notice u/s.148A(b) of the Act came to be issued on 23.03.2022 in proposing to issue notice u/s.148 of the Act and as a consequence proposing to assumption of jurisdiction in terms of Section 147 of the Act. The assessee had filed its response to the said notice on 29.03.2022 and the AO had issued a letter dated 04.04.2022 in seeking further details in support of the submissions of the assessee and ultimately the order u/s.148A(d) of the Act came to be passed on 19.04.2022 by the AO, wherein the AO deemed it fit to issue notice u/s.148 of the Act. Thus, the notice u/s.148 of the Act came to be issued on 19.04.2022 for the A.Y. 2018-19. 41. The provisions of Section 151 defines the sanctioning authority and the relevant provisions as it stood at that point in time reads as under: “151. Specified authority for the purposes of section 148 and section 148A 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.]” From a plain reading of the above provisions, the competent authority to grant / accord sanction in terms of Section 151 of the Act is determined based on the date of issuing of sanction and in the event of issuing the sanction beyond the period of three years from the end of the relevant assessment year, the same would be covered by clause (ii) to Section 151 of the Act. 42. If the notice u/s.148 of the Act / order u/s.148A(d) of the Act is issued / passed within 3 years from the end of the relevant assessment year, the competent authority for the purpose of granting sanction in terms of Section 151 of the Act is either Principal Commissioner or Principal Director or Commissioner or Director, as the case may be. 43. On the other hand, if the same is issued / passed after the expiry of the 3 years from the end of the relevant A.Y., the competent authority in this regard should be Principal Chief Commissioner or Principal Director General or where there is no

ITA Nos.1545 & 1546/Chny/2026 (AY.2018-19) Raman Soundarajan. :: 5 :: Principal Chief Commissioner or Principal Director General, Chief Commissioner or Director General. 44. Now, let us examine the facts of the present case by keeping in mind the above legal position. The Show Cause Notice in terms of Section 148A(b) of the Act came to issue on 23.03.2022 after obtaining prior approval from the office of the PCIT, Madurai – 1 and thereafter the order in terms of Section 148A(d) of the Act came to be passed on 19.04.2022 along with the notice u/s.148 of the Act being issued on the same day, i.e. 19.04.2022. We find that both the order passed u/s.148A(d) of the Act as well as the notice u/s.148 of the Act dated 19.04.2022 was issued after getting approval from the office of the PCIT, Madurai – 1. The assessment year under consideration being A.Y.2018-19, the notice u/s.148 of the Act / order passed u/s.148A(d) of the Act being issued / passed on 19.04.2022, it can be said that same were passed / issued after the expiry of 3 years from the end of the A.Y under consideration. 45. Hence, it can be said that the notice u/s.148 of the Act was issued / order in terms of Section 148A(d) of the Act was passed without obtaining proper sanction from the competent authority as prescribed in terms of Section 151(1)(ii) of the Act. 46. It is pertinent to note that the proviso to Section 151 of the Act contemplates exclusion of time provided to the tax payer to response to Show Cause Notice u/s.148A(b) of the Act to the date of actual passing of the order u/s.148A(d) of the Act / notice u/s.148 of the Act, which proviso reads as follows: “Provided that the period of three years for the purposes of clause (i) shall be computed after taking into account the period of limitation as excluded by the third or fourth or fifth provisos or extended by the sixth proviso to sub-section (1) of section 149.” 47. However, we find that the proviso to Section 151 of the Act was only introduced by way of Finance Act, 2023, with effect from 01.04.2023, i.e. the said amendment was introduced only after the sanction was granted on the present case / not available at the time of recording of sanction in terms of Section 151 of the Act in the case of the appellant herein. 48. The Ld. AR took us through the Finance Bill, 2023, wherein clause 71, proposing the said amendment to Section 151 as well the notes of clauses to Finance Bill, 2023, wherein relevant note to the said amendment reads as follows: Clause 71 of the Bill seeks to amend the section 151 of the Income-tax Act relating to sanction for issue of notice. It is proposed to amend clause (ii) of the said section to provide that the specified authority for the purposes of section 148 and section 148A shall be the 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. It is further proposed to insert a proviso in the said section so as to provide that the period of three years for the purposes of clause (i) shall be computed after taking into account the period of limitation as excluded by the third or fourth or fifth provisos or extended by the sixth proviso to sub- section (1) of section 149. These amendments will take effect from 1st April, 2023.

ITA Nos.1545 & 1546/Chny/2026 (AY.2018-19) Raman Soundarajan. :: 6 :: 49. Thus, it is an irrefutable fact that the amendment brought in by Finance Act, 2023 in introducing the proviso to Section 151 of the Act by giving effect to the exclusion of time limit by operation of 3rd to 5th proviso to Section 149(1) of the Act would take effect only from 01.04.2023. 50. Hence, it can be said that the said amendment would not come to the rescue of the revenue on the facts of the present case in view of the fact that the notice u/s.148 as well the order u/s.148A(d) of the Act being issued / passed well prior to the introduction of the said amendment, i.e. on 19.04.2022. 51. Before us, the Ld.DR argued that the said amendment introduced by Finance Act, 2023 ought to be reckoned as clarificatory and would have retrospective applicability, thereby validating the sanction accorded by the PCIT, Madurai – 1 on the facts of the present case. He further relied on the judgment of the Hon’ble Calcutta High Court in the case of Giriraj Commercial (P.) Ltd. v. Union of India reported in 169 taxmann.com 168 in support of his contentions. 52. This argument of the ld.DR is unable to be countenanced by us for the simple reason that the said amendment was introduced specifically with effect from 01.04.2023 and the plain reading of the notes on clauses as well as the memorandum to Finance Act, 2023 leave no room whatsoever to interpret it otherwise. Moreover, we are not inclined to accept the argument of the Department since the AO could not have foreseen such an amendment while passing the order u/s.148A(d) of the Act / issuing the notice u/s.148 of the Act nor the PCIT, Madurai – 1 could have foreseen such amendment while according sanction in terms of Section 151 of the Act. 53. Hence for the reasons discussed above, we hold that the amendment to Section 151 of the Act, introduced by Finance Act, 2023, with effect from 01.04.2023 cannot be reckoned to have retrospective applicability and on this ground we reject the argument put forth by the ld.DR. 54. It was further argued by the ld.DR, that the approval granted by the competent authority, i.e. PCIT, Madurai – 1 to the AO for issuing the notice u/s.148A(b) of the Act vide approval dated 23.03.2022 as mandated by 1st proviso to Section 148 of the Act would suffice the requirement as per the Section 151 of the Act and as such there was no requirement for the AO to obtain approval / sanction once again by the competent authority for issuing the notice u/s.148 of the Act / passing of the order u/s.148A(d) of the Act. 55. We find that the 1st proviso to Section 148 of the Act as per Finance Act, 2021 reads as follows: “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.” Thus, on the facts of the present case, the Show Cause Notice u/s.148A(b) of the Act was issued upon the assessee herein only upon prior approval of the competent authority, PCIT, Madurai – 1. But whether this sanction would also be available / extended to the issuance of notice u/s.148 of the Act / passing of the order u/s.148A(d) of the Act by the AO by reckoning it was a fit case for issuance of such notice u/s.148 of the Act ? 56. We are unable to further accept this argument of the ld.DR, because if it were to be accepted, it would result in a scenario wherein the competent authority was according sanction / approval in terms of Section 151 of the Act for issuing notice u/s.148 of the Act even prior to reply of the assessee to the Show Cause Notice

ITA Nos.1545 & 1546/Chny/2026 (AY.2018-19) Raman Soundarajan. :: 7 :: u/s.148A(b) of the Act and even prior the decision of the AO in reckoning whether it was a fit case or not for issuing notice u/s.148 of the Act. 57. Furthermore, if the said argument were to be accepted, then the very purpose behind introduction of provisions in Section 148A of the Act by way of Finance Act, 2021 to grant an opportunity to the tax payer to demonstrate his case for dropping the proceedings before issuing notice u/s.148 of the Act would stand defeated. 58. Thus, on the facts of the present case, we find that although the sanction was granted to the AO for issuing the Show Cause Notice u/s.148A(b) of the Act, a separate sanction is to be granted for the purpose of issuance notice u/s.148 of the Act as well as the passing of the order u/s.148A(d) of the Act, in the event of the AO finding it fit to do so. Hence, we reject this argument of the ld.DR also. 59. We further find that the Hon’ble Madras High Court in the case of Core Logistic Company v. Assistant Commissioner of Income-tax, reported in 175 taxmann.com 453, had proceeded to quash the reassessment order passed in terms of Section 147 of the Act on account of grant of sanction by the improper authority. The Hon’ble Madras High Court while quashing the said re-assessment order had held as follows: “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.” 60. Thus, respectfully following the decision of the Madras High Court in the case of Core Logistic Company (supra) we hold that the sanction accorded by the authorities prescribed u/s.151(i) of the Act on the facts of the case, i.e. PCIT, Madurai – 1 for the notice issued u/s.148 of the Act dated 19.04.2022 and the order u/s.148A(d) of the Act after the expiry of 3 years from the end of the relevant assessment year as against the correct sanction to have been granted by the authorities prescribed u/s.151(ii) of the Act would vitiate the entire re- assessment proceedings initiated and completed in terms of Section 147 of the Act. The PCIT by assuming revisionary jurisdiction in terms of Section 263 of the Act could not have set aside a non-est re-assessment order and further could not have directed the AO to pass a fresh assessment order.” 6. The Ld. DR on the other hand pointed out that the AO initiated the

proceedings by issue of notice u/s. 148A(b) within 3 years and therefore

the AO has rightly obtained the approval from PCIT. The Ld DR in this

ITA Nos.1545 & 1546/Chny/2026 (AY.2018-19) Raman Soundarajan. :: 8 :: regard placed reliance on the decision of the Hon'ble Calcutta High Court in the case of Girija Commercial (P) Ltd vs UOI 2024 169 taxmann.com 168 (Calcutta).

7.

We heard the parties and perused the material on record. The legal issue raised by assessee is that AO didn’t had the jurisdiction to issue the re-opening notice u/s 148 of the Act, in absence of sanction by competent authority as prescribed u/s 151 of the Act. In this regard, we note that the impugned notice under section 148 is dated 11.04.2022, which event is undisputedly beyond the period of 3 years from the end of the relevant AY; and therefore as per the provisions of Section 151 of the Act, the AO should have obtained the approval from Principle Chief Commissioner of Income Tax (PCCIT) before issuing the ibid notice. However, in the present case, the AO had obtained approval from Principle Commissioner of Income Tax (PCIT), Coimbatore, while issuing notice under section 148 and therefore the notice is found to be in defiance to prescription given in section 151 of the Act and hence it is invalid in eyes of law. We further notice that that the contentions raised by the Revenue against the ibid legal issue, has been addressed by the Tribunal while passing the order in the case of Meganapuram Primary Agricultural cooperative Credit Society (supra), wherein the Tribunal inter-alia has held that as per scheme of section 148A, separate sanction from competent authority is to be obtained by AO u/s.151 of the Act while issuing notices u/s 148A, which is

ITA Nos.1545 & 1546/Chny/2026 (AY.2018-19) Raman Soundarajan. :: 9 :: sine qua non and separate sanction from competent authority is requirement of law at different stages envisaged u/s 148A of the Act. The Tribunal is noted to have further held that if the argument of the Ld DR is to be accepted it would defeat the very 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. In this regard, we notice that the Hon'ble Bombay High Court in the case of M/s. Vodafone Idea Limited Vs DCIT (WP No. 2768 of 2022 dated 06.02.2024) has considered identical issue wherein it was 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.

8.

Applying the ratio held by the Hon'ble Bombay High Court in the case of M/s. Vodafone Idea Limited (supra), in assessee's case, it is noted that impugned notice u/s. 148 has been issued on 11.04.2022, which is an event undisputedly beyond 3 years from the end of the relevant AY, and find that the approval has been obtained from PCIT, Coimbatore-1. The relevant extract of the notice u/s. 148 is as under:

ITA Nos.1545 & 1546/Chny/2026 (AY.2018-19) Raman Soundarajan. :: 10 ::

9.

From the perusal of this relevant fact, we are of the view that AO ought to have obtained ‘Approval’ from Principle Chief Commissioner of Income Tax (PCCIT) before issuing the ibid notice as per Section 151(ii) of the Act. Accordingly, respectfully following the ratio of judicial

ITA Nos.1545 & 1546/Chny/2026 (AY.2018-19) Raman Soundarajan. :: 11 :: precedence cited supra, we hold that the re-opening notice issued by the AO u/s.148 for AY 2018-19 beyond 3 years on 11.04.2022 with the approval of PCIT instead of PCCIT as per the provisions of section 151(ii) is not valid. Consequently, the assessment completed on 24.11.2023 stemming from the invalid notice dated 11.04.2022 deserves to be quashed, and we order accordingly.

10.

Since we have allowed the appeal considering the legal issue raised by the assessee supra, other grounds have become academic, so not examined.

ITA No.1546/Chny/2026

11.

Having held that the re/assessment order dated 24.11.2023 in the assessee case for AY 2018-19 as void in the eyes of law, the impugned action of the NFAC to initiate & levy penalty u/s.271AAC(1) of the Act by order dated 27.05.2024 is also null in the eyes of law, because the action of the AO to initiate penalty u/s.271AAC(1) of the Act, is pursuant to the finding/satisfaction recorded by the AO in the assessment order dated 24.11.2023. Hence, according to Ld AR, since assessment order dated 24.11.2023 is nullity, subsequent action of levying penalty any way can’t survive. We find considerable force in it and hold that since assessment order is non-est in eyes of law, subsequent action of levying penalty is also non est. For such a proposition, we rely on the legal maxim “sublato

ITA Nos.1545 & 1546/Chny/2026 (AY.2018-19) Raman Soundarajan. :: 12 :: Fundmento Credit opus” meaning in case a foundation is removed, the super-structure falls. In Badarinath v. Tamil Nadu AIR 2000 SC 3243, wherein the Hon’ble Supreme Court held that once the basis of proceedings is gone, all consequential orders & acts would fall on the ground automatically which is applicable to judicial and quasi-judicial proceedings. Therefore, it is held that the impugned order of NFAC passed u/s. 271AAC(1) of the Act dated 27.05.2024 is also null/non-est in the eyes of law. Therefore, we quash the impugned order of penalty u/s. 271AAC(1) of the Act.

12.

In result, appeals of the assessee are allowed.

Order pronounced on the 07th day of July, 2026, in Chennai. Sd/- Sd/- (एस. आर. रघुनाथा) (एबी टी. वक�) (S.R.RAGHUNATHA) (ABY T. VARKEY) लेखा सद�/ACCOUNTANT MEMBER �या�यक सद�य/JUDICIAL MEMBER चे�नई/Chennai, �दनांक/Dated: 07th July, 2026. YS आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकरआयु�/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय�ितिनिध/DR 5. गाड�फाईल/GF

YASHVI Digitally signed by YASHVIR SINGH R SINGH Date: 2026.07.10 12:06:15 +05'30'

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