MUKESH MOHANLAL BHATIA,DUBAI UAE vs. INCOME TAX OFFICER , MUMBAI

Per Smt. Beena Pillai, JM:

This appeal is filed by the assessee is directed against the final assessment order passed by the Ld. Assessing Officer u/s 147 r.w.s. 144C(13) of the Income-tax Act, 1961 dated 06/10/2025 for A.Y. 2017–18 on the following grounds of appeal:-

“1. On the facts and in the circumstances of the case and in law, the proceedings initiated u/s 147 by issuance of notice u/s 148 of the act is invalid and bad in law. 2. On the facts and in the circumstances of the case and in law, the order passed u/s. 147r.w.s. 144C(13) of the I TAct is invalid and bad in law. 3. On the facts and in the circumstances of the case and in law, the learned DRP erred in rejecting the objections raised against the proceedings initiated u/s 147 of the act and thereby further erred in upholding the validity of the reopening proceedings as well as approving the proposed addition of Rs.7,10,000/-u/s 69C of the act and directing the learned A.O. accordingly-

2 I.T.A. No. 7452/Mum/2025 4. On the facts and in the circumstances of the case and in law, the learned A.O. erred in charging an amount of Rs. 4,49,279l- as interest u/s 234A of the act. 5. On the facts and in the circumstances of the case and in law, the learned A.O. erred in charging an amount of Rs.5,57,539/- as interest u/s 234B of the act. The appellant craves leave to add, alter, amend and/or delete any or all of the grounds of appeal.” 2. Brief facts of the case are as under:-

The assessee is a non-resident individual and a resident of United Arab Emirates. For the year under consideration, the assessee did not file any return of income, as no income was claimed to be taxable in India. Subsequently, the Ld. AO initiated proceedings u/s 147 by issuing notice u/s 148A(b) dated 02/02/2024, calling upon the assessee to show cause as to why notice u/s 148 should not be issued on the basis of information contained in the annexure thereto. The said notice was complied with by the assessee vide reply dated 14/02/2024. Thereafter, another notice dated 16/03/2024 u/s 148A(b) was issued along with a corrigendum to the earlier notice, which was also duly responded to by the assessee vide reply dated 20/03/2024.

2.1. The Ld. AO thereafter passed an order u/s 148A(d) dated 27/03/2024 and issued notice u/s 148 on the same date for A.Y. 2017–18. In response, the assessee filed return of income on 21/06/2024 declaring total income at Rs. Nil. The case was selected for scrutiny and notices issued u/s 143(2) and 142(1) were duly complied with by the assessee by furnishing the requisite details as called for.

3 I.T.A. No. 7452/Mum/2025 2.1.1. During the course of assessment proceedings, the Ld. AO issued a show cause notice dated 23/12/2024 proposing to treat expenditure of Rs. 13,70,000/- as unexplained expenditure u/s 69C of the Act. The assessee filed its reply vide letter dated 30/12/2024. Thereafter, the Ld.AO passed draft assessment order dated 04/02/2025 u/s 144C(1) proposing addition of Rs.7,10,000/- u/s 69C of the Act.

3.1. The DRP vide directions dated 26/09/2025 issued u/s 144C(5), upheld the proposed addition.

3.2. On receipt of the DRP direction, the Ld.AO passed the final assessment order dated 06/10/2025 u/s 147 r.w.s. 144C(13) determining the total income at Rs.7,10,000/- as against returned income of Rs. Nil and raised a demand of Rs.15,48,143/-.

Aggrieved by the said order, the assessee is in appeal before this Tribunal.

4.1. The sole issue for our consideration, therefore, is whether the notice issued u/s 148 of the Act under the new reassessment regime, pursuant to the order passed u/s 148A(d), is valid in law, particularly

4 I.T.A. No. 7452/Mum/2025 with regard to whether the mandatory approval as required u/s 151 of the Act has been obtained from the competent authority.

4.2. The Ld.AR submitted that, assessee raised legal issue challenging the validity of the notice issued u/s 148 of the Act under the new regime for reopening of the assessment. He submitted that original notice u/s 148 issued under the old regime was dated 02/02/2024, to reopen the assessment. Thereafter, the said notice was treated as a deemed notice as per the decision of the Hon’ble Supreme Court in the case of Union of India vs Ashish Agrawal, reported in (2022) 444 ITR 1. The Revenue after following the procedure as per the new regime u/s 148A issued notice u/s 148 of the Act on 27/03/2024, which was approved by the Principal Commissioner of Income-tax–3, Ahmedabad, wherein the reasons recorded states that income chargeable to tax amounting to ₹7,10,000/- had escaped assessment for the year under consideration.

4.3. The Ld.AR submitted that the notice issued under section 148A(b) and the order passed u/s 148A(d) of the Act are beyond three years and that the income escaping assessment is observed to be ₹7,10,000/-.

4.4. The Ld. AR submitted that in present facts, the appropriate authority who has to approve the issuance of notice u/s 148 of the new regime, as per section 151 of the Act, would be the Principal Chief Commissioner of Income Tax or the Chief Commissioner of Income Tax. The Ld. AR placed reliance on the decision of the Hon’ble Supreme Court in the case of Union of India v. Rajeev Bansal, reported

5 I.T.A. No. 7452/Mum/2025 in [2024] 469 ITR 46, wherein it has been held that the sanctioning authority has to be in accordance with the provisions of section 151 of the Act, based on the new provisions u/s 148A of the Act.

4.5. On the contrary, the Ld. DR relied on the orders passed by the authorities below.

We have perused the submissions advanced by both sides in the light of the records placed before this Tribunal.

5.1 Further on examination whether the notice issued u/s 148 of the Act under the new regime dated 27/03/2024, and the order passed u/s 148A(d) passed on the even date, is not after obtaining approval of the appropriate authority, in accordance with the provisions of section 151 of the Act.

6 I.T.A. No. 7452/Mum/2025 5.2. The Ld.AR relied on the following observations from the decision of the Hon’ble Supreme Court in the case of Union of India v. Rajeev Bansal (supra):

“iii. Sanction of the specified authority

Regime Time limits Specified authority

Before expiry of four years Section 151(2) of from the end of the relevant Joint Commissioner the old regime assessment year

Principal Chief After expiry of four years Commissioner or Chief Section 151(1) of from the end of the relevant Commissioner or Principal the old regime assessment year Commissioner or Commissioner Three years or less than Principal Commissioner or Section 151(i) of three years from the end of Principal Director or the new regime the relevant assessment Commissioner or Director year Principal Chief More than three years have Commissioner or Principal Section 151(ii) of elapsed from the end of the Director General or Chief the new regime relevant assessment year Commissioner or Director General

(i) If income escaping assessment was less than Rupees one lakh:

7 I.T.A. No. 7452/Mum/2025 (a) a reassessment notice could be issued under section 148 within four years after obtaining the approval of the Joint Commissioner; and

(b) no notice could be issued after the expiry of four years; and

(ii) If income escaping was more than Rupees one lakh:

(a) a reassessment notice could be issued within four years after obtaining the approval of the Joint Commissioner; and

(b) after four years but within six years after obtaining the approval of the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner.

(i) If income escaping assessment is less than Rupees fifty lakhs:

(a) a reassessment notice could be issued within three years after obtaining the prior approval of the Principal Commissioner, or Principal Director or Commissioner or Director; and

(b) no notice could be issued after the expiry of three years; and

(ii) If income escaping assessment is more than Rupees fifty lakhs:

(a) a reassessment notice could be issued within three years after obtaining the prior approval of the Principal Commissioner, or Principal Director or Commissioner or Director; and

(b) after three years after obtaining the prior approval of the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General.

8 I.T.A. No. 7452/Mum/2025 authority to grant sanction. Section 151(ii) of the new regime prescribes a higher level of authority if more than three years have elapsed from the end of the relevant assessment year. Thus, non- compliance by the assessing officer with the strict time limits prescribed under section 151 affects their jurisdiction to issue a notice under section 148.

The time limit for Section 151 of the old regime expires on 31st March 2021 because the new regime comes into effect on 1st April 2021.

a. Section 148A(a) - to conduct any enquiry, if required, with respect to the information which suggests that the income chargeable to tax has escaped assessment;

b. Section 148A(b) - to provide an opportunity of hearing to the assessee by serving upon them a show cause notice as to why a notice under section 148 should not be issued based on the information that suggests that income chargeable to tax has escaped

9 I.T.A. No. 7452/Mum/2025 assessment. It must be noted that this requirement has been deleted by the Finance Act 2022;

c. Section 148A(d) - to pass an order deciding whether or not it is a fit case for issuing a notice under section 148; and

d. Section 148 - to issue a reassessment notice.

5.3. On a bare reading of the above extract from the decision, it is noted that under the new provisions of Section 148A introduced by the Finance Act, 2021, the Ld. AO is required to obtain prior approval or sanction of the specified authority at four stages, namely:-

10 I.T.A. No. 7452/Mum/2025 a. Section 148(a)-to conduct any enquiry, if required, with respect to the information which suggests that the income chargeable to tax has escaped assessment;

b. Section 148A(b)-to provide an opportunity of hearing to the assessee by serving upon them a show cause notice as to why a notice under section 148 should not be issued based on the information that suggests that income chargeable to tax has escaped assessment. It must be noted that this requirement has been deleted by the Finance Act 2022;

c. Section 148A(d)-to pass an order deciding whether or not it is a fit case for issuing a notice under section 148; and

d. Section 148-to issue a reassessment notice.

5.4. Thus, the Ld. AO was required to obtain prior approval of the specified authority u/s 151 of the Act under the new regime before passing an order under section 148A(d) and issuing a notice u/s 148 of the Act.

5.5. As per the new regime, if the income escaping assessment is more than ₹50,00,000/-, a reassessment notice can be issued after the expiry of three years from the end of the relevant assessment year only after obtaining prior approval of the Principal Chief Commissioner or the Principal Director General or the Chief Commissioner or the Director General.

It is also noted that if the income escaping assessment is less than ₹50,00,000/-, and the sanction has been obtained from Principle

11 I.T.A. No. 7452/Mum/2025 Chief Ahmedabad for issuance of notice beyond three years, is in violation of section 149(1) as well as section151(1)(b) of the Act.

Accordingly, legal grounds raised stand allowed.

In the result, the appeal filed by the assessee stands allowed.

Order pronounced in the open court on 30/04/2026

Sd/- Sd/-

(BIJAYANANDA PRUSETH) (BEENA PILLAI) Accountant Member Judicial Member Mumbai Dated: 30/04/2026 SC Sr. P.S.

12 I.T.A. No. 7452/Mum/2025 Copy of the order forwarded to:

(1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T.