INCOME-TAX OFFICER, WARD-4(1)(1), AHMEDABAD, AHMEDABAD vs. SUN GOLD CAPITAL LIMITED, AHMEDABAD
What did the Tribunal hold?
The Tribunal held that the notice issued under section 148 was invalid due to lack of proper sanction under section 151 and also because it was issued beyond the permissible period of limitation. Consequently, the reassessment proceedings were quashed.
What were the facts?
The Revenue appealed against the deletion of additions made on account of unexplained cash credits and advances. The assessee filed a cross-objection challenging the validity of the notice issued under section 148 of the Income Tax Act, 1961.
What were the issues?
Whether the notice issued under section 148 for reassessment was validly sanctioned and within the prescribed limitation period.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD
Before: DR. B.R.R. KUMAR, VICE-SHRI T.R. SENTHIL KUMAR
Heard together (2 matters)
Read from the judgment's own cause title. This page is filed under one of them.
PER DR. B.R.R. KUMAR, VICE-PRESIDENT:
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Delay Condoned.
This appeal has been filed by the Revenue and the corresponding Cross Objection has been filed by the assessee against the order dated 28.06.2024, passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter referred to as “Ld. CIT(A)”] under section 250 of the Income-tax Act, 1961 [“the Act”] for the Assessment Year (AY) 2016–17. 2. The Revenue has raised the following grounds of appeal: “The Ld. CIT(A) has erred in holding that the proceedings u/s 148 of the IT Act are void ab initio. The Ld. CIT(A) has further erred in quashing the notice issued u/s 148 of the Income tax Act, 1961. 2. The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs 1,32,50,000/- made on account of unexplained cash credits u/s 68 of the Income tax Act, 1961. ITA No. 1938/Ahd/2024 & CO No.14/Ahd/26 - 2–
The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs 25,65,000/- made on account of advance treated as unexplained cash credit u/s 68 of the Income tax Act, 1961.”
The assessee, in its Cross Objection, has raised following grounds:- “1.1 That on the facts and circumstances of the case, the notice u/s 148 dated 17.08.2022 having been issued without valid sanction u/s 151 of the Act, the same is invalid and void-ab-initio.
2 That the notice u/s 148 having been issued after expiry of three years from the end of the relevant assessment year, the sanction obtained from PCIT instead of PCCIT is in contravention of Section 151(ii) of the Act and thus unsustainable.”
The brief facts of the case are that the assessee is a public limited company registered as an NBFC with RBI and engaged in the business of finance, investment and allied activities. During the year under consideration, the assessee filed its return of income on 15.10.2016 declaring income of Rs. 14,06,670/-. The assessment was completed u/s 143(3) on 24.12.2018 determining total income at Rs. 17,84,970/-. Subsequently, based on information received from the Investigation Wing alleging that the assessee was a beneficiary of accommodation entries amounting to Rs. 1,33,55,000/-, notice u/s 148 dated 19.04.2021 was issued. Thereafter, an order u/s 148A(d) was passed and notice under section 148 dated 17.08.2022 was issued. The reassessment was completed u/s 147 r.w.s. 144B on 19.05.2023 making following additions:
i. Rs. 1,32,50,000/- on account of sale proceeds of shares treated as unexplained cash credit u/s 68 of the Act; ii. Rs. 25,65,000/- on account of bank credits treated as unexplained u/s 68 of the Act.
Aggrieved by the assessment order, the assessee preferred appeal before the Ld. CIT(A), who quashed the reassessment proceedings and deleted the additions.
- 3–
Aggrieved by the order of the Ld. CIT(A), the Revenue is in appeal before the Tribunal challenging the deletion of additions, while the assessee by way of its Cross-Objection has challenged the validity of notice issued u/s 148 of the Act.
We have heard the rival submissions and perused the material available on record. Since the issue raised in the Cross-Objection goes to the root of juri iction, the same is taken up for adjudication first.
1 It is an undisputed fact that the impugned assessment year is AY 2016–17 and the notice u/s 148 dated 17.08.2022 has been issued beyond a period of three years from the end of the relevant assessment year. As per the provisions of Section 151 of the Act, as applicable to reassessment proceedings initiated after 01.04.2021, in cases where notice is issued beyond three years, prior approval of the specified authority, i.e. the Principal Chief Commissioner of Income Tax (PCCIT), is mandatorily required. However, in the present case, the sanction has been obtained from the Principal Commissioner of Income Tax (PCIT), which is not in accordance with the statutory mandate. For the sake of ready reference, the notice issued u/s 148 of the Act, dated 17.08.2022 is reproduced hereunder:-
PAN: AAJCS0998M Assessment Year: 2016-17 Dated: 17/08/2022
DIN & Order No. ITBA/COM/F/17/2022-23/1044727054(1)
Sir/Madam/ M/s.
Subject: Proceedings u/s 148A(d) in consequence to Hon'ble SC Order dated 04.05.2022 - Order Order u/s 148A(d) of the Income Tax Act, 1961
The assessee, SUN GOLD CAPITAL LIMITED, had filed its return of income for assessment year 2016-17on 15.10.2016declaring a total income of Rs. 14,06,670/-.The return was processed under section 143(1) of the Income Tax Act 1961. Thereafter, a regular assessment u/s 143(3) of the - 4– Act was completed on 24.12.2018 assessed income determined at Rs. 17,84,970/-.
In the instant case, information(s) in the case of assessee was flagged on the Insight Portals uploaded by the Directorate of Income-tax (Systems) after risk profiling based on enquiry reports and findings of Directorate of Income-tax (Investigation) and Directorate of Intelligence & Criminal Investigation. In case of the assessee, information has been received that assessee SYNDICATE OVERSEAS PRIVATE LIMITED is beneficiary for an amount of Rs. 1,33,55,000/-.
Accordingly, reasons for reopening in the case of assessee were recorded and Notice under section 148 of the Act was issued to the assessee on 19.04.2021 having DIN and Notice No ITBA/AST/S/148/2021- 22/1032500156(1). The reasons so recorded in the case of the assessee are reproduced herein below:- The case of the assessee has been identified as a Potential Case flagged by the Directorate of income-tax (Systems) after risk profiling based on enquiry reports and findings of Directorate of Income-tax (Investigation) and Directorate of intelligence & Criminal Investigation. The information has been disseminated to this office through INSIGHT Portal wherein enquiry reports and findings have been uploaded by the field officers of respective directorates in case of the assessee, information has been received that the assessee is a beneficiary for an amount of Rs 13355.000 21 In this case, another information has been received from DOIT(Inv) Unit-1(3), Ahmedabad vide letter No.DDIT (Inv)-1(3) Ahd/S&S/JSSS/ Dissemination/19-20 dtd 30.09.2019 that a search u/s 132 was conducted on 11/09/2018 in the case of Shin Jignesh Shah, an accommodation entry provider. The search resulted into seizure of unaccounted cash of Rs 19.3 Cr from the residence premises of Shri Jignesh Shah alongwith Incriminating digital as well as documentary evidence During the course of investigation, it was found that Shri Jignesh Shah has been managing and controlling multiple companies and concerns which are not carrying out any genuine business activities. These concems are involved into activity of accommodation entres of various kinds such as unsecured loan share premium, bogus gain, contrived losses etc. The concerns were found to be non existent at their address. The director of the company and other persons in whose name concems are registered admitted by way of filing affidavit that they are not carrying out any genuine business activity and engaged into providing accommodation entry through Shri Jignesh Shah. When various evidences were confronted to Shri Jignesh Shah, he admitted the - 5– evidences and also admitted of running multiple concern for providing accommodation entries in his reply dated 13.11.2018. Shri Jignesh Shah has also provided an explanation in connection with the entities through which he has given accommodation entries to various persons during 01.04.2011 to 10.09.2018 in the statement Shri Jignesh Shah has explained the modus operandi in respect of providing accommodation entry in respect of unsecured loan, one time entries, shroff business, cheque against cash, accommodation entry of profit on NMCE platform and accommodation entry of bogus LTCG
The beneficiaries have been identified through the bank statement of the bogus concerns run and managed by Shri Jignesh Shah and further enquiries made with the concerned banks. The details of the persons/proprietary concerns through whom accommodation entries have been availed by the assessee M/s SUN GOLD CAPITAL LIMITED during FY 2015-16 relevant to A.Y. 2016-17 found in MS Excel Sheet. it is evident that the assessee M/s SUN GOLD CAPITAL LIMITED had availed accommodation entries through Shri Jignesh Shah, amounting to Rs. 1,33,55,000/ Therefore, the same is to be taken as income of the assessee company for the year under consideration being the accommodation entries availed by the assessee as provided by the above said concern.
On the basis of reason to believe as mentioned above and after analysis of the same with due diligence and application of mind in the light of facts available with this office, I have reasons to believe that income chargeable to tax to the extent of Rs 1,33,55,000 has escaped assessment
4 in this case, a return of income was filed for the year under consideration and regular assessment u/s 143(3) of the Act was made on 24.12.2018 The above discussed information was not available with the then AO while finalization of assessment uls 143(3) on 24.12.2018. Since, four years from the end of the relevant year has not expired in this case, the only requirement to initiate proceedings u/s 147 of the Act is reason to believe which has been recorded above
It is pertinent to mention here that in this case an assessment was made as stipulated u/s 2(40) of the Act. However, as discussed in reason to believe in this case, income chargeable to tax has been under assessed by an amount of Rs. 1,33,55,000 - 6– 6. in view of the above facts, the provisions of clause (c) of explanation 2 to section 147 are applicable to facts of this case and the assessment year under consideration is deemed to be a case where income chargeable to tax has escaped assessment. The then Assessing Officer was not in possession of the above-discussed information while finalization of assessment under section 143(3) of the Act on 24 12.2018
It is evident from the above discussion that in this case, the issues under consideration were never examined by the Assessing Officer during the course of assessment. This fact is corroborated from the contents of notices issued by the AO uls 143(2)/ 142(1) and order sheet entries recorded during the course of assessment proceedings. It is important to highlight here that material facts relevant for the assessment on the issue(s) under consideration were not filed during the course of assessment proceedings and the same may be embedded in Financial statements and other documents, in such a manner that it would require due diligence by the AD to extract this information. Further, on perusal of these documents, it is also noted that the issue identified above have not been examined during the course of assessment proceedings, as assessee had not filed corroborative evidences along with supporting details and hence no inference was drawn on the same by the Assessing Officer. For the aforesaid reasons, it is not a case of change of opinion on this issue identified above.”
In compliance to the judgement of Honorable Supreme Court dated 04.05.2022 in the Civil Appeal No. 3005/2022 in case of Union of India and others vs Shri Ashish Agarwal and others and CBDT Instruction No. 01/2022 dated 11.05.2022 issued vide F. No. 279/Misc./M-51/2022-ITJ, the information and material relied upon by the Revenue, which suggest that Income has escaped assessment in case of the assessee within the meaning of the provisions of Section 147 of the Income-tax Act, 1961, were provided to the assessee vide letter dated 30/05/2022 having DIN and letter No. ITBA/COM/F/17/2022-23/1043246945 (1) Assessee was requested to submit reply by 20/06/2022. 05. As per the directions of the honourable Supreme Court in the Civil Appeal No. 3005/2022 in case of Union of India and others vs Shri Ashish Agarwal and others. above-mentioned notice issued under Section 148 of the Act dated 19.04.2021 would be treated as notice under Section 148A(b) of the Act.
In response to the letter issued dated 30/05/2022, the assessee made following submission on 10/06/2022:- - 7–
"With regard to reassessment proceedings for AY 2016-17 certain
Sir Rs. 16,70,000 was credited in our account by mistake by this party on 15/03/2016 which was repaid on 22/03/2016 Further we advanced the follow amount to this party as under.
Date Rs. 23/03/15 25,10,000 (out of that Rs.2.35,000/- was received on 15/03/16)28/03/16 24,80,000
Copy of account of this party from our books of account along with necessary entries in the bank account is enclosed herewith. Kindly see Annexure A page 1 & 2. Mainak Comtrade Sir Rs.8,95,000/- was credited in our account by mistake by this, party on 15/03/2016 which was repaid on 22/03/2016. Further we advanced the following amount to this party as under.
Date 29/03/16 Rs 25,00,000
Copy of account of this party from our books of account along with necessary entries in the bank account is enclose herewith. Kindly see Annexure B page 1& 2. 2.2 Parin Infrastructure
Rs.5,00,000/- and Ks 20,00,000/- was received from this party against sale of shares on 21/01/2016 and Il/0v3/2016 respectively, Shares of Crystal Ceramics Industries Ltd where received as bonus share on 02/12/2014 which was sold and This amount was received. Copy of account of this party with bank account, copy of allotment of shares and share-transfer form is enclosed herewith. Kindly see Annexure C page 1 to 4. 2.3 Vidisha Tradelink Pvt Ltd.
Rs.60,00,000/- = Rs 53,00,000/- +Rs 19,50,000/- totalling Rs. 1,32,50,000/- was received from this party against sale of shares.
- 8– Shares of Amitara Industries Ltd were received as allotment on 25/11/2014. This was our investment which was sold and the above amount was received. Copy of account of this party with bank account, copy of allotment of shares and share transfer form is enclosed herewith. Kindly see Annexure D page 1 to 5. Thus this amount was against the encashment of investment which cannot be termed as entry.
Mainak Comtrade
Rs 7,00,000/- was received on 09/03/2016 against sale of shares of Crystal Ceramics Industries Pvt Lt were received as bonus share on 02/12/2014 which was sold and this amount was received. Copy of account of this party with bank account, copy of allotment of shares and share transfer form is enclosed herewith. Kindly sec Annexure E page 1 to 4. From the above submission it could be seen that cither the payment was against encashment of investment or return of advance or amount of loan which was received and repaid or wrongly credited which was also repaid,
In case of penny stock, in case of entry provider the amount is received by RTGS from shroff and on the same day it is transferred in the account of the entry receiver. Thus there is direct nexus of the transaction. In our case the facts are totally different and it cannot be termed as bogus transaction,
Though all the necessary details are provided to prove that the transaction was genuine still if there is any further query or document required in this regard may be inform to its for prompt action.
As tills is preliminary submission we are not seeking any cross examination or video conferencing as the facts are totally different from penny stock transactions.
Hope that you will consider this submission judiciously and considering settled position of law in relation to entry providers.
If convinced with the submission, documents, accounts etc, the proceedings may be dropped in the interest of justice - 9– If further details are still required, the same may be informed with minimum 15 15 days for compliance.
From Sungold Capital Ltd 41, Green Villa Complex, Near HB Kapadia School, Gurukul Road, Ahmedabad-52
Date: 10/06/2022
To The Income Tax Officer Ward 4(1)(1) Ahmedabad
Dear Sir, Sub: Reassessment proceedings u/s.148 for AY 2016-17 PAN: AAJCS0898M
In continuation of our previous correspondence dated 06/12/21 which was uploaded on 07/12/21 further we have request your goodself that you have relied on statement of third party but the copy of the statement is not provided to us. The same may be given immediately without delay for further correspondence.
If the inquiry relates to more than one party, complete details of such parties, date, name of bank etc. may be provided
Hope that you will consider this request."
1 Further, a notice has been issued to the assessee vide letter dated 11/07/2022 as per the assessee request -adjournment is extended as final opportunity having DIN and letter No. ITBA/COM/F/17/2022- 23/1043789828(1) Assessee was requested to submit reply by 18.07.2022. The assessee filed its reply on 27.07.2022. the assessee nearly submitted the copy of reply dated 10.06.2022 the details are as under "In continuation of my reassessment proceedings, previous submission dated 10/06/22 was uploaded. Further an adjournment was asked as per submission dated 09/07/22
Again I reiterate that i. Either it was wrong credit which was reversed - 10– ii. It was on account of sale of shares
In relation to this all necessary documents were uploaded and also furnished in your office.
Still if there is any query which could not be satisfy your goodself from the submission, kindly give personal hearing so that the correct accounting can be explained
The time for personal hearing should be given in the month of August as my Tax Consultant is busy in filing Income Tax Return."
AO's findings and comments on assessee's submission:-
The submission filed by the assessee has been duly considered and the same is not found acceptable for the reasons discussed as under :-
A notice under Section 148 of the Act dated 30.06.2021was issued in this case. Incompliance to the judgement of Hon'ble Supreme Court dated 04.05.2022 in the Civil Appeal No. 3005/2022 in case of Union of India and others vs Shri Ashish Agarwal and others and CBDT Instruction No. 01/2022 dated 11.05.2022 issued vide F.No. 279/Misc./M-51/2022-ITJ, the information and material relied upon by the Revenue, which suggest that Income has escaped assessment in case of the assessee, within the meaning of the provisions of Section 147 of the Income-tax Act, 1961, has been provided to the assessee on 27.05.2022. Further, as per the directions of the Hon'ble Supreme Court in the above-mentioned case, above-mentioned notice issued under Section 148 of the Act dated 30.06.2021 would be treated as notice under Section 148A(b) of the Act.
In reference of CBDT Instruction No. 01/2022 dated 11.05.2022 issued vide F.No. 279/Misc./M-51/2022-ITJ wherein, as per section 149(1)(b) of the Act the limit of 50 lakhs and more has been discussed. In this case the total escapement of income is Rs.1,33,55,000/- for the year under consideration. The AO rightly issued the notice u/s 148 of the Act, keeping in view the Hon'ble Supreme Court and instruction of CBDT for the year under consideration.
The case of the assessee has been identified as a Potential Case flagged by the Directorate of Income-tax (Systems) after risk profiling based on enquiry reports and findings of Directorate of Income-tax (Investigation) and Directorate of Intelligence & Criminal Investigation. The information has been disseminated to this office through INSIGHT Portal wherein enquiry reports and findings have been uploaded by the field officers of respective directorates In case of the assessee, information has been - 11– received that the assessee is a beneficiary for an amount of Rs. 1,33,55.000/-. In this case, another information has been received from DDIT (Inv) Unit-1(3), Ahmedabad vide letter No.DDIT(Inv)-1(3)/ Ahd/S&S/ JSSS/ Dissemination/19-20 dtd.30.09.2019 that, a search u/s. 132 was conducted on 11/09/2018 in the case of Shri Jignesh Shah, an accommodation. entry provider. The search resulted into seizure of unaccounted cash of Rs.19.3 Cr from the residence premises of Shri Jignesh Shah alongwith incriminating digital as well as documentary evidence. During the course of investigation, it was found that Shri Jignesh Shah has been managing and controlling multiple companies and concerns which are not carrying out any genuine business activities. These concerns are involved into activity of accommodation entries of various kinds such as unsecured loan, share premium, bogus gain, contrived losses etc. The concerns were found to be non-existent at their address. The director of the company and other persons in whose name concerns are registered admitted by way of filing affidavit that they are not carrying out any genuine business activity and engaged into providing accommodation entry through Shri Jignesh Shah. When various evidences were confronted to Shri Jignesh Shah, he admitted the evidences and also admitted of running multiple concern for providing accommodation entries in his reply dated 13.11.2018. Shri Jignesh Shah has also provided an explanation in connection with the entities through which he has given accommodation entries to various persons during 01.04.2011 to 10.09.2018. In the statement Shri Jignesh Shah has explained the modus operandi in respect of providing accommodation entry in respect of unsecured loan/one time entries shroff business/cheque against/cash, accommodation entry of profit on NMCE/platformy and accommodation entry of bogus LTCG. The beneficiaries have been identified through the bank statement of the bogus concerns run and managed by Shri Jignesh Shah and further enquiries made with the concerned banks. The details of the persons / proprietary concerns through whom accommodation entries have been availed by the assessee M/s. SUN GOLD CAPITAL LIMITED during F.Y.2015-16 relevant to A.Y. 2016-17 found in MS Excel Sheet. It is evident that the assessee M/s. SUN GOLD CAPITAL LIMITED had availed accommodation entries through Shri Jignesh Shah, amounting to Rs. 1,33,55,000/-.
The submission filed by the assessee has been duly considered and the same is not found acceptable for the reasons discussed as under:
(a) The assessee company has confirmed that it had entered into transaction with M/s Aneel A and Co., M/s Mainak Comtrade Pvt. Ltd. and M/s Parin Infrastructure Pvt. Ltd for the amounts mentioned in the table above. It is pertinent to mention here that all the above entities/concern are controlled and managed by Shri Jighesh Shah.
- 12– (b) On verification of the written submission of the assessee, it is noticed that the genuineness of transactions of the assessee company with M/s Aneel A and Co.. M/s Mainak Comtrade Pvt. Ltd. and M/s Parin Infrastructure Pvt. Ltd. is not established. Besides, the capacity and creditworthiness of M/s Aneel A and Co.. M/s Mainak Comtrade Pvt. Ltd. and M/s Parin Infrastructure Pvt. Ltd. is also not established considering the facts and circumstances discussed in the detailed Investigation Report in respect of search conducted in the case of Shri Jignesh Shah on 11/02/2018 wherein the entire modus operandi has been explained with evidences. During the course of investigation, it was found that Shri Jignesh Shah has been managing and controlling multiple companies and concern which are not carrying out any genuine business activities. M/s Aneel A and Co., M/s Mainak Comtrade Pvt. Ltd. and M/s Parin Infrastructure Pvt. Ltd. are one of those concerns of Shri Jignesh Shah from whom the company assessee has made such transactions.
(c) The details of concerns through which the company assessee has made such transactions amounting to Rs. 1,33,55,000/- which was provided to the assessee company vide letter dated 25.05.2022 is as under:
- 13– On verification of the above table, it can be seen that the assessee company (d) has entered into transactions with M/s Aneel A and Co., M/s Mainak Contrade Pvt. Ltd. and M/s Parin Infrastructure Pvt. Ltd. which are operated, controlled and managed by Shri Jignesh Shah. It is pertinent to mention that the above information has also been provided to the assessee company vide this office letter dated 30.05.2022. However, the assessee company has not submitted satisfactory reply with supporting documentary evidences in this regard. Hence, it can be said that the transactions entered into by the assessee company with M/s Aneel A and Co., M/s Mainak Comtrade Pvt. Ltd. and M/s Parin Infrastructure Pvt. Ltd. are not genuine. From the following factual position and findings provided by the Investigation Wing, it is clearly established that Shri Jignesh Shah is an accommodation entry provider.
(e) The assessee failed to submit, the demat account, bills/invoices from the broker, name and address of the broker, along with the statement of purchase and sale of shares during the year under consideration EPARTM
(f) The above mentioned two concerns are involved into activity of accommodation entries of various kinds such as unsecured loan, share premium, bogus gain, contrived losses etc. The concerns were found to be non-existent at their address as provided. The director of the company and other persons in whose name concerns are registered admitted by way of filling affidavit that they are not carrying out any genuine business activity and engaged into providing accommodation entry through Jignesh Shah.
(g) Shri Jignesh shah admitted running of multiple concerns for providing accommodative entries in his reply dated 13.11.2018. Shri Jignesh Shah has also provided an explanation in connections with the entities through which her has given accommodative entries to various persons during the period 01.04.2011 to 10.09.2018
(i) In the statement, Shri Jignesh Shah has explained the modus operandi in respect of providing accommodation entry in respect of unsecured loan, one-time entries, shroff business, cheque against cash, and accommodation entry of profit of NMCE platform and in the form of bogus LTCG/LTCL.
(v) The submission of the assessee is perused, the assessee company had entered transaction of accommodation entry is confirmed by the tangible material available with the department. Hence, the contention of the assessee not tenable and not acceptable at this stage.
(vi) In view of the above discussion and facts, it is amply clear that the income chargeable to tax to the extent of Rs. 1,33,55,000/- due to above- - 14– mentioned transactions has escaped assessment within the meaning of section 147 of the I.T. Act.
The submission filed by the assessee has been duly considered and the same is not found acceptable. Having considered the submission of the assessee, it is found that the documentary evidences submitted by the assessee do not explain the fact that income arising from the impugned transaction/transaction itself has been duly disclosed and relevant income arising therefrom has been offered for taxation for the relevant assessment year.
Therefore, in the light of the above reasons, information and material available on record, I am of the considered view that the assessee has failed to explain the above-mentioned transactions and income earned/ derived therefrom, during the year under consideration. Hence, on the basis of material available on record which establish that the income chargeable to tax in respect of above-mentioned transactions of Rs. 1,33,55,000/- which is being represented in the form of assets i.e., 'accommodation loan deposited in bank account has escaped assessment for FY 2015-16 and therefore, this is a fit case for issuance of notice u/s 148 of the Act for Assessment Year 2016-17
This order is being passed u/s 148A(d) of the Act, with prior approval of the specified authority i.e. Pr. Commissioner of Income Tax-3, Ahmedabad vide letter No.Pr.CIT-3/ITO(Tech.)/148A/B-183/2022- 23/3261 dated 11.08.2022.”
2 For the sake of ready reference, the Section 151 of the Act is reproduced hereunder:-
“Sanction for issue of notice
(1) No notice shall be issued under section 148 by an Assessing Officer, after the expiry of a period of four years from the end of the relevant assessment year, unless the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner is satisfied, on the reasons recorded by the Assessing Officer, that it is a fit case for the issue of such notice.
(2) In a case other than a case falling under sub-section (1), no notice shall be issued under section 148 by an Assessing Officer, who is below the rank of Joint Commissioner, unless the Joint Commissioner is - 15– satisfied, on the reasons recorded by such Assessing Officer, that it is a fit case for the issue of such notice.
(3) For the purposes of sub-section (1) and sub-section (2), the Principal Chief Commissioner or the Chief Commissioner or the Principal Commissioner or the Commissioner or the Joint Commissioner, as the case may be, being satisfied on the reasons recorded by the Assessing Officer about fitness of a case for the issue of notice under section 148, need not issue such notice himself.”
3 The requirement of approval/sanction u/s 151 is not a mere procedural formality but a juri ictional condition precedent. Approval by an authority not prescribed under the Act renders the entire reassessment proceedings invalid. Accordingly, on this ground alone, the notice issued u/s 148 dated 17.08.2022 is liable to be held as invalid.
4 Apart from the above juri ictional defect, we also find merit in the contention of the assessee that the impugned notice is barred by limitation in view of the law laid down by the juri ictional High Court in the case of Dhanraj Govindram Kella Vs. ITO, 177 taxmann.com 194, wherein it was held as under:-
“65. The alternative contention of the petitioner as to whether notices would be valid notice or invalid notice considering 'surviving time' between the date of the issuance of notices under TOLA and 30th June, 2021 or not is required to be considered and for that each matter has to be considered separately on the basis of the facts of case considering the date of issuance of notices under section 148 under TOLA by the Revenue and thereafter date of supplying information to the assessee and date of passing of order under section 148A(d) and date of issuance of notice under section 148 of the Act so as to consider whether issuance of notice under section 148 of the Act is within 'surviving time' as per the direction of Hon'ble Apex Court in case of Rajeev Bansal (supra) or not.
So far as Assessment Years 2013-2014 and 2014-2015 are concerned, the period of three years from the end of the assessment year would be over prior to 20.03.2020 and the period of six years would be over between 20.03.2020 and 30.06.2021. Therefore, the notices issued under section 148 of the Act under old regime between 01.04.2021 and 30.06.2021 as per TOLA, will be a valid notice if the notice under section 148 of the Act under new regime is issued within the period of 'surviving time' as per the - 16–
directions issued by Hon'ble Apex Court in case of Rajeev Bansal (supra). For the Assessment Years 2016-2017 and 2017-2018 are concerned, the notice issued under section 148 of the Act under old regime between 01.04.2021 and 30.06.2021 under TOLA would be considered to be issued within three years from the end of the relevant assessment year as three years would complete within the period of 20.03.2020 and 30.06.2021. 67. Therefore, in facts of these petitions, following data is required to be considered to find out 'surviving time' to decide as to whether the impugned notices under section 148 of the Act issued under the new regime as per the decision of Hon'ble Apex Court in case of Ashish Agarwal (supra) would be valid notice or not in view of the decision of the Hon'ble Apex Court in case of Rajeev Bansal (supra):
SCA NO AY Date of notice No of days of Date of under section surviving time providing 148 under TOLA available till information 30.06.2021 under section 148A(b)
6387/2023 2013-2014 17.06.2021 13 26.05.2022 5688/2023 2014-2015 09.06.2021 21 23.05.2022 22260/2022 2016-2017 30.06.2021 1 23.05.2022 996/2023 2017-2018 30.06.2021 1 24.05.2022
SCA NO Due date Date of Date of Last date for of filing reply:- order under issuance of notice reply section under section 148 148A(d) as per surviving and notice time:- under section 148:-
6387/2023 09.06.2022 04.06.2022 29.07.2022 22.06.2022 5688/2023 06.06.2022 - 27.07.2022 27.06.2022 22260/2022 07.06.2022 06.07.2022 30.07.2022 14.06.2022 996/2023 11.06.2022 10.06.2022 19.07.2022 18.06.2022
It is apparent from the above details that impugned notice under section 148 of the Act is issued beyond the period of 'surviving time' as per the direction of Hon'ble Apex Court in case of Rajeev Bansal (supra)and therefore, such notices would be invalid notices.
- 17–
The impugned notices issued under section 148 of the Act are accordingly quashed and set aside being invalid having been issued beyond the 'surviving time'. Accordingly, impugned orders passed under section 148A(d) of the Act would also not survive and are accordingly, quashed and set aside. Subsequent proceedings, if any, undertaken by the respondent would not survive and are also quashed and set aside.”
5 In the present case, the original notice u/s 148 was issued on 19.04.2021, i.e. within the extended period under TOLA. However, after following the procedure u/s 148A, the fresh notice u/s 148 has been issued on 17.08.2022. Therefore, applying the ratio laid down by the Hon’ble High Court (supra), the notice u/s 148 ought to have been issued within the “surviving time” available as on 30.06.2021. Thus, the issuance of notice on 17.08.2022 is clearly beyond such permissible time. Therefore, the impugned notice u/s 148 is also liable to be quashed on the ground of being issued beyond the permissible period of limitation.
6 In view of the above, we hold that the notice issued u/s 148 of the Act dated 17.08.2022 is invalid for want of proper sanction u/s 151 of the Act as also for the reason that the same is barred by limitation. Accordingly, the reassessment proceedings initiated u/s 147 of the Act are quashed. As a consequence, the impugned assessment order for the AY 2016-17 does not survive and the same is also quashed and set aside.
In the result, the Cross Objection filed by the assessee is allowed and the appeal filed by the Revenue is dismissed.
Order pronounced in the open Court on 05.05.2026 (T.R. SENTHIL KUMAR) VICE-PRESIDENT Ahmedabad; Dated 05.05.2026 **btk - 18–
आदेशकी"ितिलिपअ"ेिषत/Copy of the Order forwarded to : अपीलाथ"/ The Appellant
""थ"/ The Respondent. 2. संबंिधतआयकरआयु"/ Concerned CIT 3. 4. आयकरआयु"(अपील) /The CIT(A)- 5. िवभागीय"ितिनिध, आयकरअपीलीयअिधकरण, अहमदाबाद/ DR, ITAT, Ahmedabad 6. गाड"फाईल /Guard file. आदेशानुसार/ BY ORDER,सहायकपंजीकार (Dy./Asstt.
More judgments on Section 148
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- Sar Business Tradelink Private Limited… vs Income Tax Officer, Ward - 1(2), RaipurITA 599/RPR/2026[2014-15]Status: Heard21 Oct 2026AY 2014-15
- Neo Incorporation, Rajkot vs DCIT Circle- 1(2), RajkotITA 471/RJT/2026[2012-2013]Status: Disposed21 Oct 2026AY 2012-2013
- Adj Agri International LLP, Rajkot vs The Income Tax Officer, Ward-1(1)(1), RajkotITA 1198/RJT/2026[2018-19]Status: Disposed21 Oct 2026AY 2018-19
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