PREM ANTONY SEQUEIRA,MUMBAI vs. INCOME TAX OFFICER, PIRAMAL CHAMBER

In the instant case, it is an admitted position that the assessment was reopened after the lapse of three years from the end of the relevant assessment year by issuing a notice dated 27.07.2022 u/s 148 of the Act after obtaining sanction/approval from the Principal Commissioner of Income Tax-20, Mumbai, and not from the Principal Chief Commissioner of Income Tax or any other designated authority as prescribed under the provisions of section 151(ii) of the Act and therefore, the Assessee has challenged the notice u/s. 148 of the Act, sans sanction from the Designated Authority.

The Ld. DR specifically relied upon the amendment brought into the statute vide the Finance Bill, 2023 (Memorandum), with effect from 01.04.2023, and contended that the amendment is required to be interpreted retrospectively, whereby provisions have been introduced for computation of the period of three years by taking into account the period of limitation excluded by the third, fourth or fifth provisos, or extended by the sixth proviso to sub-section (1) of section 149 of the Act.

On the contrary, Shri K. Gopal, the Ld. Counsel for the Assessee, drew our attention to the judgment passed by the Hon’ble Jurisdictional High Court in the case of Mystique Media Private Limited vs. Income Tax Officer-10(2)(4), Mumbai & Others, Writ Petition No. 12562 of 2024, decided on 15.04.2024, wherein the Hon’ble High Court dealt with an identical issue concerning the sanction granted for issuance of notice u/s 148 of the Act and the interpretation of the proviso to Section 151 of the Act as inserted with effect from 01.04.2023.

We observe that the Hon’ble High Court, in the above case ultimately, not only quashed the impugned order and notice dated 05.04.2022 passed and issued u/s 148A(d) and 148 of the Act, but also held that the proviso to Section 151 of the Act was inserted only w.e.f 01.04.2023 and, therefore, would not be applicable to the facts of the case at hand. For the sake of brevity and ready reference, the 2 observations and conclusions drawn by the Hon’ble High Court are reproduced hereinbelow:- “3. Petitioner is impugning a notice issued under Section 148 of the Income Tax Act, 1961 ("the Act") and the order passed under Section 148A(d) of the Act, both dated 5th April 2022 and the notice dated 17th March 2022 issued under Section 148A(b) of the Act. One of the grounds raised is that the sanction to pass the order under Section 148A(d) of the Act and issuance of notice under Section 148 of the Act is invalid inasmuch as the sanction has been admittedly issued by the Principal Commissioner of Income Tax ("PCIT") and not by the Principal Chief Commissioner of Income Tax (PCCIT"). 3. Counsels for Petitioner state this petition is covered by the order dated 6th February 2024 passed by this Court in the case of Vodafone Idea Limited v. Deputy Commissioner of Income Tax, Circle-5(2)(1), Mumbai & Ors.'. Counsel for Respondents agrees. 4. The impugned order and the impugned notice both dated 5th April 2022 state that the Authority that has accorded the sanction is the PCIT, Mumbai. The matter pertains to Assessment Year ("AY") 2018-2019 and since the impugned order as well as the notice are issued on 5th April 2022, both have been issued beyond a period of three years. Therefore, the sanctioning authority has to be the PCCIT as provided under Section 151 (ii) of the Act. The proviso to Section 151 of the Act has been inserted only with effect from 1" April 2023 and, therefore, shall not be applicable to the matter at hand. 5. In the circumstances, as held by this Court in Siemens Financial Services Private Limited Vs. Deputy Commissioner of Income Tax & Ors.2, the sanction is invalid and consequently, the impugned order and impugned notice both dated 5th April 2022 under Sections 148A(d) and 148 of the Act are hereby quashed and set aside.”

We further observe that the Hon’ble High Court in the case of Vodafone Idea Limited vs. Deputy Commissioner of Income Tax & Others [(2024) 468 ITR 346 (Bom.)], Writ Petition No. 2768 of 2022, decided on 06.02.2024, has also dealt with notice issued u/s 148 of the Act dated 07.04.2022 for A.Y. 2018-19, being beyond three years from the end of the relevant assessment year, and ultimately held that the sanction granted by the PCIT, as invalid by holding that the proviso to Section 151 has been inserted only with effect from 01.04.2023 and, therefore, would not be applicable to the facts of the case, before it.

Though the Revenue has also relied upon the judgment passed by the Co-ordinate Bench of the Tribunal in the case of Albert Joseph Rozario vs. ITO, ITA No. 1168/Mum/2025, decided on 22.07.2025, reported in 176 taxmann.com 995 (Mumbai - Trib.), wherein the Hon’ble Bench held that, for the purpose of computing the period of limitation u/s 149 of the Act, the period allowed to the Assessee to respond to the show-cause notice issued u/s 148A(b) of the Act has necessarily to be excluded. Whereas, it is a fact that the Hon’ble Co-ordinate Bench of the Tribunal in the case of Shabbir vs. Income Tax Officer, Int. Tax Ward-4(1)(1), Mumbai, ITA No. 1574/Mum/2025, decided on 15.10.2025, also considered the aforesaid judgment in the case of Albert Joseph Rozario (supra), and ultimately held that the timeline prescribed for obtaining sanction from the specified authority under section 151 of the Act has to be strictly followed. Further, prior to insertion of proviso under Section 151 of the Act as amended by the Finance Act, 2023 with effect from 01.04.2023, the specified authority competent to grant sanction for initiating proceedings u/s 148A and issuance of notice u/s 148 of the Act after the expiry of three years from the end of the relevant assessment year, is the PCCIT or CCIT in terms of Section 151(ii) of the Act. Hence, in the absence of any enabling provision under Section 151 of the Act, the third, fourth and fifth provisos, or the sixth proviso to Section 149 of the Act, cannot be read into Section 151 of the Act, so as to extend the time limit prescribed under section 151(i) of the Act.

We further observe that in the amendment brought by the Finance Bill, 2023 (the ‘Memorandum’), itself prescribes that the amendment shall be applicable with effect from 01.04.2023.

Thus, on the aforesaid analyzations, we do not have any hesitation to quash the notice under consideration issued u/s 148 of the Act, along with the assessment order (supra) passed in pursuance to such notice. Thus, the same are quashed.

Since we have quashed the notice issued u/s 148 of the Act along with the assessment order passed in pursuance to such notice, hence, we deem it appropriate not to delve into other aspects of the case, as adjudication of the same would be a futile exercise.

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