DCIT CENTRAL CIRCLE- 7(1), MUMBAI, MUMBAI vs. BHAVIK PRAFULCHANDRA VORA, GUJRAT

This appeal filed by the Revenue and the Cross Objection filed by the assessee are directed against the order dated 30.09.2025 passed by the Ld. Commissioner of Income Tax (Appeals)-49, Mumbai [hereinafter referred to as “Ld. CIT(A)”] for A.Y. 2018-19. Since common issues are involved, both were heard together and are disposed of by this consolidated order.

The Revenue has challenged the action of the Ld. CIT(A) in deleting additions made by the Assessing Officer u/s 68 and 69C of the Act. The assessee in the Cross Objection has challenged the validity of reassessment proceedings on legal grounds. Since the legal grounds raised by the assessee go to the very root of jurisdiction assumed by the Assessing Officer u/s 147 of the Act, the Cross Objection is taken up first for adjudication.

The assessee in Ground No.2 of the Cross Objection has challenged the validity of notice issued u/s 148 of the Act on the ground that sanction was obtained from the Principal Commissioner of Income Tax-3, Ahmedabad though notice u/s 148 was issued beyond three years from the end of the relevant assessment year and therefore approval ought to have been obtained from the Principal Chief Commissioner of Income Tax/Chief Commissioner of Income Tax in terms of section 151(ii) of the Act.

Brief facts of the case are that the assessee had originally filed return of income declaring total income of Rs.76,11,920/-. Subsequently, information was received through INSIGHT Portal alleging that the assessee had availed accommodation entries and unsecured loan entries from alleged entry providing concerns. Based on 2

The Ld. AR submitted that the reassessment proceedings are void ab initio as sanction for issuance of notice u/s 148 was obtained from the Principal Commissioner of Income Tax-3, Ahmedabad though the notice was admittedly issued beyond three years from the end of relevant assessment year. It was submitted that under amended provisions of section 151 applicable w.e.f. 01.04.2021, sanction in such cases could have been accorded only by the Principal Chief Commissioner of Income Tax or Chief Commissioner of Income Tax.

The assessee furnished before us the following chronology of events:

The assessee also furnished chart showing that approval for both order passed u/s 148A(d) dated 06.04.2022 and notice issued u/s 148 dated 07.04.2022 was obtained from the Principal Commissioner of Income Tax-3, Ahmedabad though approval was required from Principal Chief Commissioner of Income Tax.

The Ld. AR submitted that identical issue has already been adjudicated in favour of the assessee by the Coordinate Bench in assessee’s own case for A.Y. 2017-18 in ITA No.8891/Mum/2025 & CO No.88/Mum/2026 order dated 18.03.2026. The Ld. AR further relied upon the judgment of Hon’ble Supreme Court in the case of Union of India v. Rajeev Bansal reported in [2024] 469 ITR 46 (SC) and

Per contra, the Ld. DR relied upon the orders of lower authorities.

We have heard rival submissions and perused the material available on record. The short issue for adjudication before us is whether sanction granted by the Principal Commissioner of Income Tax- 3, Ahmedabad for issuance of notice u/s 148 dated 07.04.2022 is valid in law where admittedly more than three years had elapsed from the end of the relevant assessment year.

It is an undisputed fact that the relevant assessment year ended on 31.03.2019 and the period of three years expired on 31.03.2022. In the present case, order u/s 148A(d) was passed on 06.04.2022 and notice u/s 148 was issued on 07.04.2022 i.e. after expiry of three years from the end of relevant assessment year. It is also not in dispute that sanction for issuance of notice was obtained from the Principal Commissioner of Income Tax-3, Ahmedabad.

For ready reference, section 151 as substituted by Finance Act, 2021 w.e.f. 01.04.2021 reads as under:

A plain reading of section 151(ii) makes it abundantly clear that where more than three years have elapsed from the end of the relevant assessment year, sanction has necessarily to be obtained from the Principal Chief Commissioner of Income Tax/Principal Director General of Income Tax/Chief Commissioner of Income Tax/Director General of Income Tax. In the present case, admittedly sanction has been obtained from the Principal Commissioner of Income Tax-3, Ahmedabad and not from the Principal Chief Commissioner of Income Tax.

We find that Hon’ble Supreme Court in the case of Union of India v. Rajeev Bansal , after analysing amended provisions of sections 147 to 151 held that grant of sanction by appropriate authority is a jurisdictional pre-condition for assumption of jurisdiction u/s 148 and non-compliance with section 151 affects jurisdiction itself.

We further find that the Hon’ble jurisdictional Bombay High Court in the case of Vodafone India Ltd held as under:

Likewise, in the case of Mystique Media Pvt Ltd, the Hon’ble Bombay High Court reiterated that where notice u/s 148 was issued on 05.04.2022 after expiry of three years from the end of relevant assessment year, sanction was required from Principal Chief Commissioner of Income Tax and approval by Principal Commissioner of Income Tax was without jurisdiction.

We further note that the Coordinate Bench in the case of Shabbir Taheri order dated 15.10.2025 has elaborately considered the argument of the Revenue that amendment brought in section 151 by Finance Act, 2023 should be read into notices issued in April 2022. The Coordinate Bench after analysing sections 149 and 151 held that prior to insertion of proviso to section 151 by Finance Act, 2023 w.e.f. 01.04.2023, the benefit of exclusion/extension provided in provisos to section 149 could not be imported into section 151. The Coordinate Bench specifically held that amendment brought by Finance Act, 2023 cannot be applied retrospectively to notices issued on 06.04.2022/07.04.2022 and therefore approval in such cases had necessarily to be obtained from Principal Chief Commissioner of Income Tax.

The Coordinate Bench in the case of Davos International Fund in ITA No.1190/Mum/2024 also held that where notice u/s 148 was issued on 04.04.2022 beyond three years from end of assessment year,

Similar view has been taken by the Coordinate Bench in the case of Asha P. Kedia wherein reassessment proceedings were quashed for want of sanction from Principal Chief Commissioner of Income Tax.

We also note that identical issue has already been adjudicated in favour of the assessee by the Coordinate Bench in assessee’s own case for A.Y. 2017-18 in ITA No.8891/Mum/2025 & CO No.88/Mum/2026 order dated 18.03.2026. The Coordinate Bench after considering the judgment of Hon’ble Supreme Court in Rajeev Bansal (supra), judgments of Hon’ble Bombay High Court and Coordinate Bench decisions held that sanction obtained from Principal Commissioner of Income Tax instead of Principal Chief Commissioner of Income Tax after expiry of three years rendered the reassessment proceedings void ab initio.

Consequently, the notice issued u/s 148, order passed u/s 148A(d) and reassessment order passed pursuant thereto are quashed. Accordingly, Ground No.2 raised by the assessee in the Cross Objection is allowed.

Since we have quashed the reassessment proceedings on legal ground, other grounds raised in the Cross Objection as well as grounds raised by the Revenue on merits have become academic and therefore are not adjudicated.

In the result, the Cross Objection filed by the assessee is allowed.

As we have already quashed the reassessment proceedings while adjudicating the Cross Objection, the appeal filed by the Revenue

In the result, Cross Objection filed by the assessee is allowed and Revenue appeal is dismissed.