RATUL TEX PRIVATE LIMITED,MUMBAI vs. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 4(2)(1), MUMBAI, MUMBAI

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ITA 5052/MUM/2025Status: DisposedITAT Mumbai30 April 2026AY 2018-20197 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 sanction obtained for issuing the notice under Section 148 was invalid as it was not obtained from the competent authority as required by Section 151(2). Furthermore, the notice was found to be barred by limitation as it was issued beyond three years without satisfying the conditions stipulated in Section 149.

What were the facts?

The assessee challenged the reassessment proceedings initiated by the Assessing Officer. The primary issue was that the sanction for issuing the notice under Section 148 was obtained from the Principal CIT instead of the Principal CCIT, who is the competent authority as per Section 151(2). Additionally, the notice was issued beyond the prescribed period without meeting the conditions for reassessment after three years.

What were the issues?

Whether the reassessment proceedings are vitiated due to improper sanction for issuing the notice under Section 148. Whether the notice under Section 148 is barred by limitation.

Which sections of the Income-tax Act were involved?

Section 148,Section 148A,Section 149,Section 151

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCHES, MUMBAI

Before: SHRI NARENDER KUMAR CHOUDHRY & SHRI PRABHASH SHANKAR

For Respondent: Shri Annavaram Kosuri, Ld. SR DR
Pronounced: 30.04.2026

आदेश / ORDER

PER NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER: This appeal has been preferred by the Assessee against the order dated 31.07.2025 passed by the National Faceless Appeal Centre (NFAC), Delhi/ the learned Commissioner of Income Tax (Appeals) [hereinafter referred to as “Ld. Commissioner”] under Section 250 of the Income Tax Act, 1961 (in short, “the Act”) for Assessment Year 2018–19.

2.

The Assessee has raised a legal ground, challenging the validity of sanction obtained by the Assessing Officer from the Principal Commissioner of Income Tax, Mumbai-4, for issuing notice dated 7th April 2022 under Section 148 of the Act, instead of obtaining approval from the Principal Chief Commissioner of Income Tax (Principal CCIT), who is the competent authority, as specified under Section 151(2) of the Act. Since this legal issue goes to the root of the matter, the same is admitted for adjudication.

3.

It is an admitted position that the order 19th March 2022 under Section 148A(b) of the Act and notice dated 7th April 2022 under Section 148 were passed and issued respectively after obtaining sanction from the Principal CIT but not from the Principal CCIT, who is the competent authority as per the provisions of Section 151(ii) of the Act. Therefore, the initiation of reassessment proceedings stands vitiated.

4.

We find that the Hon’ble Jurisdictional High Court, in the case of Bhavesh Maganlal Darur vs. Income Tax Officer (Writ Petition No. 2774 of 2023, decided on 29th September 2023), has also dealt with an identical issue and quashed the order and notice issued under Sections 148A(d) and 148 of the Act respectively.

5.

Further, the Hon’ble Bombay High Court in Prakash Pandurang Patil Vs. Income Tax Officer & Ors. (Writ Petition No. 10749 of 2024, decided on 12th August 2024), has also considered a similar issue, where sanction was obtained from the Principal CIT instead of the Principal CCIT as required under Section 151(ii) of the Act. The Hon’ble Court held such sanction to be invalid and consequently quashed the proceedings initiated under Sections 148A and 148 of the Act.

6.

Moreover, the Hon’ble Supreme Court, vide order dated 18th August 2025 in Income Tax Officer Vs. Prakash Pandurang Patil (SLP (Civil) No. 39689 of 2025), dismissed the Special Leave Petition filed by the Revenue, thereby affirming the judgment of the Hon’ble Bombay High Court.

7.

We further observe that recently the Hon’ble High Court in the case of Amit Hemraj Gala vs. Assistant Commissioner of Come Tax, Central Circle -2 (4) and ors., Writ Petition (L) -38431 of 2015 decided on 19.01.2026 has also dealt with identical issue and quashed the identical notice u./s 148 of the Act by observing and holding under: "10. In the present case, the period of three years from the end of the A.Y.2016-17 read with TOLA, fell for completion on 30.06.2021. The authority specified under Section 151(i) of the new regime could have granted sanction only till 30th June 2021. However, on perusal Vof the Notice dated 30.07.2022 issued under Section 148 of the Act, we find that the aforesaid Notice was issued after taking approval from the Principal Commissioner of Income-tax2, Mumbai (i.e. Respondent No.2). Since the aforesaid Notice was issued after the expiry of three years from the end of the A.Y.2016-17, as per the substituted provisions of re-assessment, the authority specified under Section 151(ii) of the Act i.e. the Principal Chief Commissioner (PCCIT) or Principal Director General (PDGIT), or where there is no PCCIT or PDGIT, the Chief Commissioner (CCIT) or the Director General (DGIT), was required to grant approval. Accordingly, we conclude that in the present case, the approval has been obtained from the authority specified under Section 151(i) of the new regime instead of the authority specified under Section 151(ii) of the new regime. Non-compliance by Respondent No.1 with the provisions contained in Section 151(ii) vitiates the jurisdiction of Respondent No.1 to issue a notice under Section 148 of the Act.

11.

We are clearly of the view that the present matter stands covered by the decision of Hon'ble Supreme Court in the case of UOI V/S Rajeev Bansal (supra) and decision of this Court in the case of Ramesh Bachulal Mehta (supra). We accordingly hold that the order dated 30.07.2022 passed under Section 148A(d) of the Act and theconsequential notice issued under Section 148 dated 30.07.2022, are bad in law for being violative of the provisions of Section 151(ii) of the Act. Hence, they are required to be quashed and set aside. Accordingly, the consequential reassessment order dated 30.10.2025 passed under Section 147 of the Act and issuance of penalty Notice dated 07.11.2025 under Section 274 read with Section 271(1)(c) of the Act are also quashed and set aside.

12.

In view of the foregoing discussion, we set aside the impugned notices and orders, and all proceedings emanating therefrom and allow the present Writ Petition in terms of prayer clause (a), which is reproduced hereunder:- "(a) that this Hon'ble Court may be pleased to issue a writ of certiorari or a writ in the nature of certiorari or any other appropriate writ, order or direction under Article 226 of the Constitution of India calling for the records of the case relating to the initiation of the passing of the impugned order dated 30th July 2022 u/s. 1484(d) of the Act leading upto to the conclusion of the impugned re-assessment proceedings and after going through the same and examining the question of legality thereof to quash, cancel and set aside the order u/s. 1484(d) of the Act dated 30th July 2022 (Ex. 'K'), the notice issued u/s. 148 of the Act dated 30 July 2022 for A.Y. 2016-17 (Ex. L'), the re-assessment order dated 30th October 2025 passed u/s. 147 of the Act (Ex. 'Z'), the notice of demand dated 30th October 2025 issued u/s. 156 of the Act (Ex. 'AA') and the notice for levy of penalty dated 07th November 2025 issued u/s. 274 r.w.s. 271(1)(c) of the Act (Ex. 'BB')."

8.

Thus, respectfully following the binding precedents of the Hon’ble Supreme Court and the Jurisdictional High Court, and considering the undisputed factual position, we hold that the sanction obtained in the present case is not in accordance with law. Consequently, the reassessment proceedings initiated in the present case are invalid and liable to be quashed.

9.

Accordingly, we quash the notices dated 19.03.2022 and 07.04.2022 issued under Sections 148A(b) and 148 of the Act respectively along with the assessment order dated 11.03. 2024 passed under Section 147 read with Sections 144 and 144B of the Act, being unsustainable in law.

10.

We further observe that in the present case, the allegations against the Assessee were that it had taken or obtained accommodation entries in the form of invoices for purchases amounting to ₹22,19,270/- from Maitri Enterprises. with the intent to avail input tax credit. Based on these allegations of bogus purchases, the case of the Assessee was reopened admittedly after a period of three years from the end of the relevant assessment year.

11.

Accordingly, the notice issued under Section 148 of the Act dated 7th April 2022, being beyond the prescribed period of three years, is prima facie invalid and void ab initio. As per the provisions of Section 149 of the Act, a notice under Section 148 issued beyond three years from the end of the relevant assessment year can only be sustained if the income escaping assessment amounts to or is likely to amount to ₹50 lakh or more. In the present case, this threshold condition is not satisfied. Therefore, the impugned notice dated 7th April 2022 issued under Section 148 is barred by limitation.

12.

We observe that the Hon’ble Jurisdictional High Court in the case of Bhavesh Magarlal Darji Vs. Income Tax Officer (Writ Petition No. 2174 of 2023, decided on 29th September 2023) has also dealt with identical issue and ultimately quashed the notice u/s 148 of the Act.

13.

Thus, respectfully following the ratio laid down by the Hon’ble Jurisdictional High Court in the aforesaid decision, we have no hesitation to hold that the notice dated 7th April 2022 issued under Section 148 of the Act is also liable to be quashed on this aspect, as well.

14.

Consequently, notice dated 7th April 2022 issued under Section 148 of the Act along with the assessment order dated 11th March 2024 passed under Sections 143(3) read with Sections 147, 144, and 144C of the Act, being founded on such invalid notice, is liable to be quashed and is hereby quashed.

15.

Since we have quashed the notice issued under Section 148 of the Act as well as the consequential assessment order, therefore we consider it unnecessary to adjudicate upon the merits of the case or the other grounds raised by the Assessee, as the same would be merely academic in nature.

16.

In the result, the appeal filed by the Assessee is allowed.

Order pronounced in the open Court on dated 30.04.2026.

Sd/- Sd/- PRABHASH SHANKAR NARENDER KUMAR CHOUDHRY ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated: 30.04.2026 {Tarun Kushwaha} Sr. Private Secretary Copy to:

RATUL TEX PRIVATE LIMITED, 130, VITHALWADI, KALBADEVI ROAD, 1 MUMBAI, MAHARASHTRA, MUMBAI-400002, MAHARASHTRA DEPUTY COMMISSIONER OF INCOME TAX, XIRXLE - 4(3)(1), MUMBAI, 2 AAYAKAR BHAWAN, MUMBAI, MUMBAI- 440002, MAHARASHTRA 3 THE PCIT / CIT, 4 THE D.R., ITAT, MUMBAI BENCH 5 GUARD FILE

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