RANJIT TARACHAND SANGHVI,MUMBAI vs. ITO, WARD 20(3)(1), MUMBAI, MUMBAI

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ITA 4736/MUM/2025Status: DisposedITAT Mumbai14 May 2026AY 2016-1713 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 since the notice under Section 148 was issued beyond three years from the end of the relevant assessment year, the approval ought to have been obtained from the Principal Chief Commissioner or Chief Commissioner. As the approval was granted by a lower authority, the reassessment proceedings were quashed for want of jurisdiction.

What were the facts?

The assessee challenged reassessment proceedings initiated under Section 147. The core issue was whether the approval for issuing the notice under Section 148 was obtained from the competent authority as per the substituted provisions of Section 151 of the Income Tax Act.

What were the issues?

Whether the reassessment proceedings are vitiated due to the lack of mandatory approval from the competent authority under Section 151 of the Income Tax Act, when the notice was issued beyond three years from the end of the relevant assessment year.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 148A,Section 151

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘D’ BENCH

Before: SHRI AMIT SHUKLA & SHRI MAKARAND VASANT MAHADEOKAR

For Appellant: Shri Narayan Atal
For Respondent: Shri Annavaram Kosuri
Hearing: 08/04/2026Pronounced: 14/05/2026

आदेश / O R D E R PER AMIT SHUKLA (J.M): The aforesaid appeal has been filed by the assessee against the impugned order passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, arising out of assessment framed under section 147 read with section 144B of the Income Tax Act, 1961 for the impugned assessment year.

2 ITA No.4736/Mum/2025 & 4739/Mum/2025 Ranjit Tarachand Sanghvi 2. At the very outset, the learned counsel for the assessee submitted that though several grounds have been raised assailing the validity of reassessment proceedings as well as the additions made on merits, however, the core jurisdictional issue which goes to the very root of assumption of jurisdiction under section 147 is that the mandatory approval contemplated under section 151 of the Act has not been obtained from the competent authority prescribed under the statute. It was submitted that since the impugned notice under section 148 had been issued beyond a period of three years from the end of the relevant assessment year, therefore, under the substituted provisions of section 151 as introduced by the Finance Act, 2021, the sanctioning authority ought to have been the Principal Chief Commissioner or the Chief Commissioner and not the Principal Commissioner or Commissioner of Income Tax. Thus, according to the learned counsel, the very initiation of reassessment proceedings stood vitiated for want of proper jurisdictional sanction and consequently the notice issued under section 148, the order passed under section 148A(d), and the consequential assessment framed under section 147 deserved to be quashed as void ab initio.

3.

Since the controversy involved in the present appeal lies in a very narrow compass and revolves primarily around the chronology of events vis-à-vis the applicability of section 151

3 ITA No.4736/Mum/2025 & 4739/Mum/2025 Ranjit Tarachand Sanghvi under the new reassessment regime, we do not deem it necessary to burden this order with elaborate factual narration on merits relating to the alleged penny stock transaction or additions sustained by the learned CIT(A), inasmuch as the jurisdictional issue itself is capable of adjudicating the lis in entirety. Suffice it to state that the reassessment proceedings came to be initiated pursuant to notice issued under section 148 and the assessee had challenged the validity of such initiation on the ground that the approval under section 151 had not been granted by the authority prescribed under law.

4.

The learned counsel drew our attention to the chronology of dates and events, which according to him clearly demonstrate that the impugned notice had been issued after expiry of three years from the end of the relevant assessment year and, therefore, the sanction contemplated under section 151(ii) ought to have emanated from the Principal Chief Commissioner or Chief Commissioner. For ready reference and proper appreciation of controversy, the chronology of dates and events, as furnished by the assessee, is reproduced hereunder:-

Date of Response of Response Type of Date of compliance the assessee type notice/communicatio response if Remarks if any. Date of notice/ given received/not (Full/part/adjo r received communication received urnment) 27.07.2022 Notice served to the Notice u/s 148 of assessee on the" IT Act 27.07.2022 at

4 ITA No.4736/Mum/2025 & 4739/Mum/2025 Ranjit Tarachand Sanghvi srathod16@gmail.c om

Notice served to the assessee on Notice u/s 143(2) of 29.12.2022 05.01.2023 Received 17.02.2023 Part 29.12.2022 at the IT Act srathod16@gmail.c om Notice served to the assessee on Notice u/s 142(1) of 09.01.2023 16.01.2023 Received 31.01.2023 Part 09.01.2023 at the IT Act srathod16@gmail.c orr Notice served to the assessee on 12.05.2023 Not Show Cause Notice 18.05.2023 38.05.2023 at Received srathod16@gmail.c on

5.

We have carefully considered the rival submissions and perused the material placed on record. The controversy involved before us lies in a very narrow legal compass, namely, whether the approval obtained by the Assessing Officer under section 151 of the Act was from the competent authority prescribed under the substituted reassessment regime brought into force by the Finance Act, 2021. The issue, though seemingly procedural, in fact strikes at the very root of jurisdiction, because sanction under section 151 is not an empty formality or ritualistic approval, but a statutory safeguard consciously engrafted by the legislature to prevent arbitrary reopening of concluded assessments.

6.

Under the substituted scheme of reassessment introduced by the Finance Act, 2021 with effect from 01.04.2021, a complete paradigm shift has been brought in the architecture

5 ITA No.4736/Mum/2025 & 4739/Mum/2025 Ranjit Tarachand Sanghvi governing reassessment proceedings. Section 151 now draws a clear demarcation between cases where notice under section 148 is issued within three years from the end of the relevant assessment year and cases where such notice is issued beyond three years. In cases falling within three years, the specified authority is the Principal Commissioner or Commissioner; however, where more than three years have elapsed from the end of the relevant assessment year, the statute consciously mandates a higher threshold of approval, namely, sanction from the Principal Chief Commissioner or Chief Commissioner or equivalent authority. Thus, the prescription of sanctioning authority is intrinsically linked with the period of limitation and is not a matter of administrative convenience.

7.

In the present case, it is an admitted and undisputed position emerging from the chronology of events that the impugned notice under section 148 came to be issued after expiry of three years from the end of the relevant assessment year. However, the approval admittedly had not been granted by the Principal Chief Commissioner or Chief Commissioner as mandated under section 151(ii), but by the Commissioner/Principal Commissioner. Thus, the very condition precedent for assumption of jurisdiction under section 148 remained unfulfilled. Once the statute specifically prescribes the authority competent to grant sanction, any

6 ITA No.4736/Mum/2025 & 4739/Mum/2025 Ranjit Tarachand Sanghvi approval obtained from an authority lower or different than the one contemplated under law cannot be treated as substantial compliance. Jurisdictional conditions, particularly those affecting assumption of reassessment jurisdiction, have to be strictly complied with and cannot be diluted on equitable considerations.

8.

The entire controversy now stands conclusively settled by the judgment of the Hon’ble Supreme Court in the case of Union of India v. Rajeev Bansal, wherein the Hon’ble Apex Court has elaborately explained the interplay between TOLA, the substituted reassessment regime under the Finance Act, 2021, and the sanction contemplated under section 151 of the Act. The Hon’ble Supreme Court has categorically held that after coming into force of the new reassessment regime, the sanction required under section 151 has to be obtained strictly from the authority specified under the substituted provisions and the same is directly co-related to the elapsed time from the end of the relevant assessment year. The relevant observations of the Hon’ble Supreme Court in the case of Rajeev Bansal are reproduced hereunder:-

73.

Section 151 imposes a check upon the power of the Revenue to reopen assessments. The provision imposes a responsibility on the Revenue to ensure that it obtains the sanction of the specified authority before issuing a notice under section 148. The purpose behind this procedural check is to save the assesses from harassment resulting from the mechanical reopening of

7 ITA No.4736/Mum/2025 & 4739/Mum/2025 Ranjit Tarachand Sanghvi assessments Sri krishna (P.) Ltd. v. ITO [1996] 87 Taxman 315/221 ITR 538 (SC)/[1996] 9 SCC 534. A table representing the prescription under the old and new regime is set out below: Regime Time limits Specified authority Section Before expiry of four Joint Commissioner 151(2) of years from the end of the old the relevant assessment regime year Section After expiry of four Principal Chief Commissioner 151(1) of years from the end of or Chief Commissioner or the old the relevant assessment Principal Commissioner or regime year Commissioner Section Three years or less than Principal Commissioner or 151(i) of the three years from the end Principal Director or new regime of the relevant Commissioner or Director assessment year Section More than three years Principal Chief Commissioner 151(ii) of have elapsed from the or Principal Director General the new end of the relevant or Chief Commissioner or regime assessment year Director General

74.

The above table indicates that the specified authority is directly co-related to the time when the notice is issued. This plays out as follows under the old regime: (i) If income escaping assessment was less than Rupees one lakh: (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.

8 ITA No.4736/Mum/2025 & 4739/Mum/2025 Ranjit Tarachand Sanghvi 75. After 1 April 2021, the new regime has specified different authorities for granting sanctions under section 151. The new regime is beneficial to the assessee because it specifies a higher level of authority for the grant of sanctions in comparison to the old regime. Therefore, in terms of Ashish Agarwal (supra), after 1 April 2021, the prior approval must be obtained from the appropriate authorities specified under section 151 of the new regime. The effect of Section 151 of the new regime is thus: (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. 76. Grant of sanction by the appropriate authority is a precondition for the assessing officer to assume jurisdiction under section 148 to issue a reassessment notice. Section 151 of the new regime does not prescribe a time limit within which a specified authority has to grant sanction. Rather, it links up the time limits with the jurisdiction of the 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. 77. Parliament enacted TOLA to ensure that the interests of the Revenue are not defeated because the assessing officer could not comply with the pre conditions due to the difficulties that arose during the COVID-19 pandemic. Section 3(1) of TOLA relaxes the time limit for compliance with actions that fall for completion from 20 March 2020 to 31 March 2021. TOLA will accordingly extend the time limit for the grant of sanction by the authority specified under

9 ITA No.4736/Mum/2025 & 4739/Mum/2025 Ranjit Tarachand Sanghvi section 151. The test to determine whether TOLA will apply to Section 151 of the new regime is this: if the time limit of three years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under section 151(i) has an extended time till 30 June 2021 to grant approval. In the case of Section 151 of the old regime, the test is: if the time limit of four years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under section 151(2) has time till 31 March 2021 to grant approval. The time limit for Section 151 of the old regime expires on 31 March 2021 because the new regime comes into effect on 1 April 2021. 78. For example, the three year time limit for assessment year 2017-2018 falls for completion on 31 March 2021. It falls during the time period of 20 March 2020 and 31 March 2021, contemplated under section 3(1) of TOLA. Resultantly, the authority specified under section 151(i) of the new regime can grant sanction till 30 June 2021. 79. Under Finance Act 2021, the assessing officer was required to obtain prior approval or sanction of the specified authorities at four stages: 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 assessment. It must be noted that this requirement has been deleted by the Finance Act 2022;33 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. 80. In Ashish Agarwal (supra), this Court directed that Section 148 notices which were challenged before various High Courts "shall be deemed to have been issued under section 148-A of the Income-tax Act as substituted by the Finance Act, 2021 and construed or treated to be show-cause notices in terms of Section 148-A(b)."

10 ITA No.4736/Mum/2025 & 4739/Mum/2025 Ranjit Tarachand Sanghvi Further, this Court dispensed with the requirement of conducting any enquiry with the prior approval of the specified authority under section 148A(a). Under Section 148A(b), an assessing officer was required to obtain prior approval from the specified authority before issuing a show cause notice. When this Court deemed the Section 148 notices under the old regime as Section 148A(b) notices under the new regime, it impliedly waived the requirement of obtaining prior approval from the specified authorities under section 151 for Section 148A(b). It is well established that this Court while exercising its jurisdiction under Article 142, is not bound by the procedural requirements of law High Court Bar Association v. State of U P [2024] 160 taxmann.com 32/299 Taxman 21 (SC)/[2024] 6 SCC 267. 81. This Court in Ashish Agarwal (supra) directed the assessing officers to "pass orders in terms of Section 148-A(d) in respect of each of the assesses concerned." Further, it directed the assessing officers to issue a notice under Section 148 of the new regime "after following the procedure as required under section 148-A." Although this Court waived off the requirement of obtaining prior approval under section 148A(a) and Section 148A(b), it did not waive the requirement for Section 148A(d) and Section 148. Therefore, the assessing officer was required to obtain prior approval of the specified authority according to Section 151 of the new regime before passing an order under section 148A(d) or issuing a notice under section 148. These notices ought to have been issued following the time limits specified under section 151 of the new regime read with TOLA, where applicable.

9.

From the ratio laid down by the Hon’ble Supreme Court, it is manifestly clear that grant of sanction by the authority prescribed under section 151 is a foundational jurisdictional requirement and not a mere procedural formality. The Hon’ble Apex Court has unequivocally held that where more than three years have elapsed from the end of the relevant assessment year, the approval necessarily has to be granted

11 ITA No.4736/Mum/2025 & 4739/Mum/2025 Ranjit Tarachand Sanghvi by the higher authority contemplated under section 151(ii), namely, the Principal Chief Commissioner or Chief Commissioner, and that non-compliance with such statutory mandate directly affects the very jurisdiction of the Assessing Officer to issue notice under section 148. In the present case also, it is an undisputed position borne out from the chronology of events that at the time of issuance of notice under section 148, more than three years had elapsed from the end of the relevant assessment year and therefore sanction could only have been accorded by the Principal Chief Commissioner or Chief Commissioner as contemplated under section 151(ii). However, admittedly, the approval in the present case had not emanated from the said competent authority. Thus, the mandatory jurisdictional condition precedent for assumption of reassessment jurisdiction remained unfulfilled. Once the statute itself prescribes a specific authority whose satisfaction forms the very foundation for reopening of completed assessments, then any approval obtained from an authority not recognized under the statutory framework cannot be treated as a curable irregularity or substantial compliance. Such defect goes to the very root of assumption of jurisdiction and renders the entire proceedings void ab initio. The sanctity attached by the legislature to section 151 is not an empty procedural ritual, but a substantive safeguard intended to insulate taxpayers from arbitrary or mechanical exercise of reassessment

12 ITA No.4736/Mum/2025 & 4739/Mum/2025 Ranjit Tarachand Sanghvi powers, especially in cases where the power is sought to be exercised after expiry of substantial period of limitation.

10.

The aforesaid principle also stands fortified by the judgment of the Hon’ble Jurisdictional High Court in the case of Holiday Developers (P.) Ltd. v. ITO wherein, while dealing with an identical controversy arising under the substituted reassessment regime, the Hon’ble Court held that where more than three years had elapsed from the end of the relevant assessment year, sanction under section 151(ii) necessarily had to be obtained from the Principal Chief Commissioner and not from the Principal Commissioner, and consequently the notice issued under section 148 as well as the order passed under section 148A(d) on the basis of approval granted by an incompetent authority were liable to be quashed. The facts of the present case stand on identical footing. Respectfully following the ratio laid down by the Hon’ble Supreme Court in Union of India v. Rajeev Bansal as well as the judgment of the Hon’ble Jurisdictional High Court, we hold that the impugned notice issued under section 148 suffers from an incurable jurisdictional defect on account of absence of sanction from the competent authority prescribed under section 151(ii) of the Act. Consequently, the notice issued under section 148, the order passed under section 148A(d), and the consequential assessment framed under section 147 read with section 144B are hereby quashed as

13 ITA No.4736/Mum/2025 & 4739/Mum/2025 Ranjit Tarachand Sanghvi being wholly without jurisdiction and void ab initio. Since the reassessment proceedings themselves have been quashed on the aforesaid legal ground, the grounds raised on merits have become merely academic and therefore do not call for separate adjudication.

11.

In the result, appeal of the assessee stands allowed.

Order pronounced on 14th May, 2026.

Sd/- Sd/- (MAKARAND VASANT (AMIT SHUKLA) MAHADEOKAR) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated 14/05/2026 KARUNA, sr.ps

Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, //True Copy//

(Asstt. Registrar) ITAT, Mumbai

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