RATHINAM VISWANATHAN,TRICHY vs. DCIT, TRICHY, TRICHY

आदेश / O R D E R PER ABY T. VARKEY, JM: This is an appeal preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)/NFAC, (hereinafter referred to as ‘Ld.CIT(A)‘), Delhi, dated 01.07.2025 whereby the Ld.CIT(A) confirmed the levy of penalty amounting to ₹22,57,000/- u/s.271E of the Income Tax Act, 1961 [hereinafter referred to as "the Act"].

ITA No.2125/Chny/2025 (AY 2018-19) Rathinam Viswanathan :: 2 :: 2. Brief facts are that the assessee an individual, filed his Return of Income (RoI) for the Assessment Year 2018-19 on 18.01.2019 with total income of ₹2,88,74,900/- including agricultural income of ₹57,96,400/-. The case was selected for scrutiny under CASS on the issue of Agricultural Income and details of Assets & Liabilities and the assessment was completed on 10.03.2021 under section 143(3) of the Act, and the total income was assessed to ₹3,46,71,300/-. Based on information flagged under the “risk management strategy” formulated by the CBDT that the assessee had indulged in “high risk transaction” (huge cash deposits and withdrawals in various bank accounts of the assessee), the AO reopened the assessment of the assessee by issuing notice u/s.148 of the Act on 20.04.2022 and in response, the assessee filed his return of income electronically on 09.11.2022. The AO is noted to have passed the reassessment order u/s.147/144B of the Act on 27.03.2024 by reiterating the original assessed income of ₹3,46,71,300/-. In other words, no addition was made while passing the reassessment order on 27.03.2024. However, the AO noted from perusal of the audit report filed by the assessee that assessee had repaid loan in cash exceeding the limit specified u/s.269T to Shri. R.V. Balamurgan in mode other than by cheque or bank draft or use of electronic clearing system through a bank account. Therefore, according to the AO the assessee has violated the provisions of Section 269T of the Act and hence liable for penalty

ITA No.2125/Chny/2025 (AY 2018-19) Rathinam Viswanathan :: 3 :: u/s.271E for failure to comply with the provisions of Section 269T; and consequently, initiated penalty u/s.271E for non-compliance of provisions of Section 269T and issued notice u/s.274 r.w.s. 271E of the Act on 27.03.2024, calling upon the assessee to explain why penalty u/s.271E of the Act shouldn’t be imposed. Pursuant to the notice, the assessee filed his reply that sum of ₹22,57,000/- was re-paid to his son and therefore, such an action between family members, returning this amount doesn’t fall within the ambit of receipts contemplated u/s.269T of the Act. Thus, it was contended that no penalty is exigible u/s.271E of the Act in respect of the said amount of ₹22,57,000/- and requested dropping of the proposed penalty. However, the Income Tax Authority not convinced, levied penalty of ₹22,57,000/- u/s.271E of the Act.

ITA No.2125/Chny/2025 (AY 2018-19) Rathinam Viswanathan :: 4 :: “ Grounds of Appeal: 1. The order of the Ld.Commissioner of Income Tax (Appeals) is contrary to law, weight of evidence and circumstances of the case. 2. The Ld.Commissioner of Income Tax (Appeals) erred in not appreciating that the transaction between family members will not attract provisions of section 269T. 3. The Ld. Commissioner of Income Tax (Appeals) failed to appreciate the decisions cited before him and instead dismissed them without distinguishing them. 4. The Ld. Commissioner of Income Tax (Appeals) failed to appreciate that disputes within the family cannot be substantiated by any documentary evidence. 5. The Ld. Commissioner of Income Tax (Appeals) failed to appreciate that genuine transaction without any intention to evade tax do not attract penalty under section 271E - Kamal Jeet Kaur Gill vs JCIT (344 CTR 737). 6. The Ld. Commissioner of Income Tax (Appeals) overlooked the fact that no notice under section 274 had been issued by the designated authority. 7. The Ld. Commissioner of Income Tax (Appeals) failed to appreciate that it shall be duty of the department to demonstrate that the act was done by the empowered person and presumption relied upon by the Commissioner of Income Tax (Appeals) is not applicable in this case. 8. The Ld. Commissioner of Income Tax (Appeals) failed to appreciate that the transactions where only between the appellant and hid son and all other transactions without outsiders had been made only through banking channels. 9. The appellant carves leave to amend or alter the grounds raised and raise fresh grounds.”

Without prejudice to the above grounds of appeal, the assessee has raised a legal issue challenging the levy of penalty which reads as under:-

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On the legal issue, supra, the Ld.AR submitted that the impugned 5. penalty is admittedly pursuant to reassessment for AY 2018-19, which was in-turn initiated by issuance of notice on 20.04.2022 u/s. 148 of the Act, by the AO/DCIT, Circle-1, Trichy, which impugned notice, according to him is beyond the period of three (3) years, and therefore, as per the provisions of Section 151 of the Act, the AO ought to have obtained the approval from Principal Chief Commissioner of Income Tax (in short ‘PCCIT’). However, in this case, the AO has obtained approval from Principal Commissioner of Income Tax (in short ‘PCIT’) while issuing notice u/s.148 of the Act. Hence according to him, the reopening notice u/s.148 is invalid and bad in law. Consequently, it was contented that the assessment framed by order dated 27.03.2024 passed u/s.147 of the Act is null in the eyes of law. Therefore, according to the Ld.AR, since there is no assessment order of 27.03.2024 in the eyes of law, and the penalty proceedings is pursuant to assessment order, there can’t be any penal action. Hence, according to him, the impugned penalty order dated 18.09.2024 passed u/s.271E of the Act, levying penalty of ₹22,57,000/-, is invalid and bad in law.

ITA No.2125/Chny/2025 (AY 2018-19) Rathinam Viswanathan :: 6 :: assessment order is a nullity. Therefore, according to him, such an invalid order of the AO couldn’t have been the foundation for the Income Tax Authority to levy the impugned penalty by order dated 18.09.2024. Hence, impugned penalty order also is null in eyes of law. In other words, since the assessment order of the AO dated 27.03.2024 is non-est in the eyes of law, the Income Tax Authority couldn’t have levied penalty u/s.271E of the Act, so the impugned penalty order u/s.271E of the Act is also a nullity or non-est in the eyes of law.

ITA No.2125/Chny/2025 (AY 2018-19) Rathinam Viswanathan :: 7 :: after 01.04.2021 after the new regime came in to force, thereby, invalidating the assessment order passed u/s 147 on 28.03.2023. Hence, according to him, such an illegal action of the AO can be challenged in collateral proceedings u/s.271E of the Act as held by the Pune Tribunal in M/s.Karia Brothers v. ITO in ITA No.2401/Pune/2024 dated 23.07.2025 wherein several decisions of the Hon’ble Supreme Court has been cited. The Ld AR also referred to other decisions of this Tribunal which are also noted as under:

a) Supersonic Technologies (P) Ltd. vs. PCIT in ITA No. 2269/D/2017 dated 10.12.2018 (ITAT, Delhi Bench) ITA. No.3009 to 3012/DEL/2017 “6.1………….It is well settled Law that assessee can challenge the validity of the reassessment proceedings in the collateral proceedings (relating to examination of validity of Order passed) under section 263 of the I.T. Act. We rely upon the Order of ITAT, Mumbai Bench in the case of Westlife Development Ltd., vs. PCIT 49 ITR (Tribu.) 406 in which it was held “allowing the appeal (i) that jurisdiction aspect of the Order passed in the primary proceedings can be examined in collateral proceedings also. Thus, the assessee could be permitted to challenge the validity of the Order passed under section 263 on the ground that the assessment order was non-est.” Since the reassessment order itself is bad in law, therefore, Learned Counsel for the Assessee, rightly contended that the same cannot be revised under section 263 of the I.T. Act. Only valid re-assessment order can be revised under section 263 of the I.T. Act. On this ground itself the proceedings under section 263 of the I.T. Act are bad in law and liable to be quashed. We, accordingly, set aside the Order of Ld. Pr. CIT passed under section 263 of the I.T. Act and quash the same.” b) M/s CharbhujaMarmo (India) (P) Ltd. vs. PCIT in ITA No. 4749/D/2019 dated 31.12.2019 (ITAT, Delhi) “6. We have considered the rival submissions. It is well settled Law that since reassessment proceedings are invalid and bad in law, therefore, such proceedings could not be revised under section 263 of the I.T. Act. It is also well settled Law that validity of the re- assessment proceedings are to be judged on the basis of the reasons recorded for reopening of the assessment.” 9. He further placed reliance upon the following decision: -

ITA No.2125/Chny/2025 (AY 2018-19) Rathinam Viswanathan :: 8 :: c) M/s Westlife Development Ltd. vs. PCIT in ITA No. 688/Mum/2016 dated24.06.2016 (ITAT, Mumbai) d) Krishna Kumar Saraf vs. CIT in ITA No. 4562/Del/2011 dated 24.09.2015 (ITAT, Delhi) e) M/s Classic Flour & Food Processing (P) Ltd. vs. CIT in ITA No. 764 to 766/Kol/2014 dated 05.04.2017 (ITAT, Kolkata)”

ITA No.2125/Chny/2025 (AY 2018-19) Rathinam Viswanathan :: 9 :: was without jurisdiction, the Ld. PCIT cannot invoke the jurisdiction u/s 263 of the Act against such void or non-est order. In the second decision cited, the Mumbai bench of the Tribunal has specifically framed the following questions :-

“ 1. Whether the assessee can challenge the validity of an assessment order during the appellate proceedings pertaining to examination of validity of order passed u/s 263? 2. Whether the impugned assessment order passed u/s 143(3) dated 24-10-2013 was valid in the eyes of law or a nullity as has been claimed by the assessee? 3. If the impugned assessment order passed u/s 143(3) was illegal or nullity in the eyes of law, then, whether the CIT had a valid jurisdiction to pass the impugned order u/s.263 to revise the non-est assessment order?”

ITA No.2125/Chny/2025 (AY 2018-19) Rathinam Viswanathan :: 10 :: Supreme Court in the case of Kiran Singh & Ors. V. Chaman Paswan & Ors. [1955] 1 SCR 117 wherein the Hon’ble Supreme Court observed as follows (relevant portion):-

“ It is a fundamental principle well-established that a decree passed by a Court without jurisdiction is a nullity, and that its invalidity could be set up whenever and wherever it is sought to be enforced or relied upon, even at the stage of execution and even in collateral proceedings. A defect of jurisdiction, whether it is pecuniary or territorial, or whether it is in respect of the subject-matter of the action, strikes at the very authority of the Court to pass any decree and such a defect cannot be cured even by consent of parties."

“ 17. There is no quarrel with the proposition advanced by Id. DR that the proceedings u/s 263 are for the benefit of revenue and not for assessee. 18. However, u/s 263 the Id. Commissioner cannot revise a non est order in the eye of law. Since the assessment order was passed in pursuance to the notice U/S 143(2), which was beyond time, therefore, the assessment order passed in pursuance to the barred notice had no legs to stand as the same was non est in the eyes of law. All proceedings subsequent to the said notice are of no consequence. Further, the decision of Hon’ble Madras High Court in the case of CIT Vs. Gitsons Engineering Co. 370 ITR 87 (Mad) clearly holds that the objection in relation to non service of notice could be raised for the first

ITA No.2125/Chny/2025 (AY 2018-19) Rathinam Viswanathan :: 11 :: time before the Tribunal as the same was legal, which went to the root of the matter. 19. While exercising powers u/s 263 Id. Commissioner cannot revise an assessment order which is non est in the eye of law because it would prejudice the right of assessee which has accrued in favour of assessee on account of its income being determined. If Id. Commissioner revises such an assessment order, then it would imply extending/ granting fresh limitation for passing fresh assessment order. It is settled law that by the action of the authorities the limitation cannot be extended. Because the provisions of limitation are provided in the same 20. In view of above discussion ground no.3 is allowed and revision order passed u/s 263 is quashed.”

“8.6 We have already discussed hereinabove that the decision of Hon’ble Rajasthan High Court in the case of Deep Chand Kothari v. CIT (supra ) is also in favour of the assessee and therefore we are of the view that the validity of assessment proceedings can be looked into during the penalty proceedings even though the assessment itself has not been challenged by the assessee. In that view of the matter, we do not see any merit in this submission of the learned Departmental Representative that validity of assessment order cannot be challenged in appeal against the order of penalty.”

“25. However, in view of the ratio laid down by the jurisdictional High Court in CIT Vs. Lalitkumar Bardia (supra) in turn, relying on the ratio laid down by the Apex Court in Kanwar Singh Saini Vs. High Court of Delhi (supra), wherein it has been held that conferment of jurisdiction was a legislative function and the same neither conferred with the consent of parties nor by superior court and where the Court passes an order / decree having no jurisdiction over the matter, it would amount to nullity as the same goes to the roots of the issue. Applying the said principle, we hold that the assessee can challenge the jurisdiction of Assessing Officer in passing the assessment order while

ITA No.2125/Chny/2025 (AY 2018-19) Rathinam Viswanathan :: 12 :: challenging levy of penalty under section 271(1)(c) of the Act. In case the re- assessment proceedings have been completed without proper jurisdiction entrusted upon the Assessing Officer, then the consequent penalty proceedings are also affected as basic issue of conferment of jurisdiction upon the Assessing Officer is under challenge. Accordingly, we hold so.”

ITA No.2125/Chny/2025 (AY 2018-19) Rathinam Viswanathan :: 13 :: reopening the assessment has concluded the same by passing the reassessment order on 27.03.2024 by accepting the return of income filed by the assessee. Hence, the assessee did not challenge the reassessment order passed on 27.03.2024, which is the foundation for levy of impugned penalty. As noted this issue has been analyzed by the Mumbai Bench of the Tribunal in the case of M/s.Westlife Development Ltd. (supra) wherein the Tribunal has equated the reopening assessment u/s.147 to primary proceedings and the subsequent proceedings by Ld. PCIT u/s.263 passed to be collateral proceedings. In this order the Tribunal has taken note of several ratios of the Hon’ble Supreme Court wherein the Hon’ble Supreme Court held that if the primary proceedings are non-est in law or void on the ground of lack of jurisdiction, then the validity of such proceedings can be challenged even in an appeal arising out of collateral proceedings. Since we have already set out the ratio/operating portions of these decisions we do not wish to repeat the same for the sake of brevity. In the light of the aforesaid discussion, we are of the view that the invalidity of the primary proceedings for lack of jurisdiction can be challenged even in appellate proceedings arising out of a collateral proceeding. In view of the aforesaid legal position, we will now examine the legal issue. For doing that first of all we have to examine whether the AO in the present case could have validly reopened the assessment of the assessee of

ITA No.2125/Chny/2025 (AY 2018-19) Rathinam Viswanathan :: 14 :: issuance of notice dated 20.04.2022 u/s.148 of the Act which resulted in framing of re-assessment order u/s.147/143(3) dated 27.03.2024.

ITA No.2125/Chny/2025 (AY 2018-19) Rathinam Viswanathan

:: 15 :: (c) consider the reply of assessee furnished, if any, in response to the show-cause notice referred to in clause (b); (d) decide, on the basis of material erial available on record including reply of the assessee, whether or not it is a fit case to issue a notice under section 148, by passing an order, with the prior approval of specified authority, within one month from the end of the month in which the reply referred to in clause (c) is received by him, or where no such reply is furnished, within one month from the end of the month in which time or extended time allowed to furnish a reply as per clause (b) expires: [Prior approval for assessment, reassessment or recomputation in certain cases. 148B. No order of assessment or reassessment or recomputation under this Act shall be passed by an Assessing Officer below the rank of Joint Commissioner, in respect of an assessment year to which clause (1) or clause (ii) or clause (iii) or clause (iv) of Explanation 2 to section 148 apply except with the prior approval of the Additional Commissioner or Additional Director or Joint Commissioner or Joint Director. Time limit for notice. 149. (1) No notice under section 148 shall be issued for the relevant assessment year,- (a) if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b); (b) if three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income chargeable to tax, represented in the form of - (1) an asset; (ii) expenditure in respect of a transaction or in relation to an event or occasion; or (iii) an entry or entries in the books of account, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more:] Issue of notice where income has escaped assessment. 148. Before making the assessment, reassessment or recomputation under section 147, and subject to the provisions of section 148A, the Assessing Officer shall serve on the assessee a notice, along with a copy of the order passed, if required, under clause (d) of section 148A, requiring him to furnish within such period, as may be specified in such notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139:

ITA No.2125/Chny/2025 (AY 2018-19) Rathinam Viswanathan :: 16 ::

Provided that no notice under this section shall be issued unless there is information with the Assessing Officer which suggests that the income charge- able to tax has escaped assessment in the case of the assessee for the relevant assessment year and the Assessing Officer has obtained prior approval of the specified authority to issue such notice: [Provided further that no such approval shall be required where the Assessing Officer, with the prior approval of the specified authority, has passed an order under clause (d) of section 148A to the effect that it is a fit case to issue a notice under this section.]

ITA No.2125/Chny/2025 (AY 2018-19) Rathinam Viswanathan :: 17 :: the action of the AO obtaining appeal after 31.03.2022, [i.e. after three (3) years from the end of the relevant assessment year] from the PCIT- Madurai-I, to issue notice on 14.04.2022 & 20.04.2022 u/s.148A(d) and issue of notice u/s.148 on 20.04.2022 is invalid. Undisputedly, the notice u/s.148 of the Act is dated 20.04.2022, which is an event after three (3) years from the end of the relevant AY 2018-19; hence, the AO ought to have taken prior-approval from the PCCIT and not from the PCIT as taken in this case. Various contentions raised by the Ld.DR justifying the issue of notice u/s.148 of the Act with the approval of the PCIT-Madurai, is noted to have been dealt with by the Co-ordinate Bench of this Tribunal in the case of Meganapuram Primary Agricultural cooperative Credit Society v. PCIT (ITA No.895/Chny/2025 dated 19.09.2025), and hence, for the sake of brevity it is not repeated. In, Meganapuram Primary Agricultural cooperative Credit Society supra this Tribunal while adjudicating similar legal issue is noted to have held as under: “40. We find that the Show Cause Notice u/s.148A(b) of the Act came to be issued on 23.03.2022 in proposing to issue notice u/s.148 of the Act and as a consequence proposing to assumption of jurisdiction in terms of Section 147 of the Act. The assessee had filed its response to the said notice on 29.03.2022 and the AO had issued a letter dated 04.04.2022 in seeking further details in support of the submissions of the assessee and ultimately the order u/s.148A(d) of the Act came to be passed on 19.04.2022 by the AO, wherein the AO deemed it fit to issue notice u/s.148 of the Act. Thus, the notice u/s.148 of the Act came to be issued on 19.04.2022 for the A.Y. 2018-19. 41. The provisions of Section 151 defines the sanctioning authority and the relevant provisions as it stood at that point in time reads as under: “151. Specified authority for the purposes of section 148 and section 148A be,—

ITA No.2125/Chny/2025 (AY 2018-19) Rathinam Viswanathan :: 18 :: (i) Principal Commissioner or Principal Director or Commissioner or Director, if three years or less than three years have elapsed from the end of the relevant assessment year; (ii) Principal Chief Commissioner or Principal Director General or where there is no Principal Chief Commissioner or Principal Director General, Chief Commissioner or Director General, if more than three years have elapsed from the end of the relevant assessment year.]” From a plain reading of the above provisions, the competent authority to grant / accord sanction in terms of Section 151 of the Act is determined based on the date of issuing of sanction and in the event of issuing the sanction beyond the period of three years from the end of the relevant assessment year, the same would be covered by clause (ii) to Section 151 of the Act. 42. If the notice u/s.148 of the Act / order u/s.148A(d) of the Act is issued / passed within 3 years from the end of the relevant assessment year, the competent authority for the purpose of granting sanction in terms of Section 151 of the Act is either Principal Commissioner or Principal Director or Commissioner or Director, as the case may be. 43. On the other hand, if the same is issued / passed after the expiry of the 3 years from the end of the relevant A.Y., the competent authority in this regard should be Principal Chief Commissioner or Principal Director General or where there is no Principal Chief Commissioner or Principal Director General, Chief Commissioner or Director General 44. Now, let us examine the facts of the present case by keeping in mind the above legal position. The Show Cause Notice in terms of Section 148A(b) of the Act came to issue on 23.03.2022 after obtaining prior approval from the office of the PCIT, Madurai – 1 and thereafter the order in terms of Section 148A(d) of the Act came to be passed on 19.04.2022 along with the notice u/s.148 of the Act being issued on the same day, i.e. 19.04.2022. We find that both the order passed u/s.148A(d) of the Act as well as the notice u/s.148 of the Act dated 19.04.2022 was issued after getting approval from the office of the PCIT, Madurai – 1. The assessment year under consideration being A.Y.2018-19, the notice u/s.148 of the Act / order passed u/s.148A(d) of the Act being issued / passed on 19.04.2022, it can be said that same were passed / issued after the expiry of 3 years from the end of the A.Y under consideration. 45. Hence, it can be said that the notice u/s.148 of the Act was issued / order in terms of Section 148A(d) of the Act was passed without obtaining proper sanction from the competent authority as prescribed in terms of Section 151(1)(ii) of the Act. 46. It is pertinent to note that the proviso to Section 151 of the Act contemplates exclusion of time provided to the tax payer to response to Show Cause Notice u/s.148A(b) of the Act to the date of actual passing of

ITA No.2125/Chny/2025 (AY 2018-19) Rathinam Viswanathan :: 19 :: the order u/s.148A(d) of the Act / notice u/s.148 of the Act, which proviso reads as follows: “Provided that the period of three years for the purposes of clause (i) shall be computed after taking into account the period of limitation as excluded by the third or fourth or fifth provisos or extended by the sixth proviso to sub-section (1) of section 149.” 47. However, we find that the proviso to Section 151 of the Act was only introduced by way of Finance Act, 2023, with effect from 01.04.2023, i.e. the said amendment was introduced only after the sanction was granted on the present case / not available at the time of recording of sanction in terms of Section 151 of the Act in the case of the appellant herein. 48. The Ld. AR took us through the Finance Bill, 2023, wherein clause 71, proposing the said amendment to Section 151 as well the notes of clauses to Finance Bill, 2023, wherein relevant note to the said amendment reads as follows: Clause 71 of the Bill seeks to amend the section 151 of the Income-tax Act relating to sanction for issue of notice. It is proposed to amend clause (ii) of the said section to provide that the specified authority for the purposes of section 148 and section 148A shall be the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General, if more than three years have elapsed from the end of the relevant assessment year. It is further proposed to insert a proviso in the said section so as to provide that the period of three years for the purposes of clause (i) shall be computed after taking into account the period of limitation as excluded by the third or fourth or fifth provisos or extended by the sixth proviso to sub-section (1) of section 149. These amendments will take effect from 1st April, 2023. 49. Thus, it is an irrefutable fact that the amendment brought in by Finance Act, 2023 in introducing the proviso to Section 151 of the Act by giving effect to the exclusion of time limit by operation of 3rd to 5th proviso to Section 149(1) of the Act would take effect only from 01.04.2023. 50. Hence, it can be said that the said amendment would not come to the rescue of the revenue on the facts of the present case in view of the fact that the notice u/s.148 as well the order u/s.148A(d) of the Act being issued / passed well prior to the introduction of the said amendment, i.e. on 19.04.2022. 51. Before us, the Ld.DR argued that the said amendment introduced by Finance Act, 2023 ought to be reckoned as clarificatory and would have retrospective applicability, thereby validating the sanction accorded by the PCIT, Madurai – 1 on the facts of the present case. He further relied on the judgement of the Hon’ble Calcutta High Court in the case of Giriraj Commercial (P.) Ltd. v. Union of India reported in 169 taxmann.com 168 in support of his contentions.

ITA No.2125/Chny/2025 (AY 2018-19) Rathinam Viswanathan :: 20 ::

ITA No.2125/Chny/2025 (AY 2018-19) Rathinam Viswanathan :: 21 :: demonstrate his case for dropping the proceedings before issuing notice u/s.148 of the Act would stand defeated. 58. Thus, on the facts of the present case, we find that although the sanction was granted to the AO for issuing the Show Cause Notice u/s.148A(b) of the Act, a separate sanction is to be granted for the purpose of issuance notice u/s.148 of the Act as well as the passing of the order u/s.148A(d) of the Act, in the event of the AO finding it fit to do so. Hence, we reject this argument of the ld.DR also. 59. We further find that the Hon’ble Madras High Court in the case of Core Logistic Company v. Assistant Commissioner of Income-tax, reported in 175 taxmann.com 453, had proceeded to quash the reassessment order passed in terms of Section 147 of the Act on account of grant of sanction by the improper authority. The Hon’ble Madras High Court while quashing the said re-assessment order had held as follows: “9. A perusal of Section 151(i) would show that, the specified authority for the purpose of issuing notice under Section 148 within a period of three years from the end of the relevant assessment year is, the Principal Commissioner or Principal Director or Commissioner or Director. Further, in terms of provision of Section 149, three year time period is fixed for issuance of 148 notice, in the event of the amount is below 50 lakhs. In the present case, the amount involved is Rs.3,65,09,748/-, which is more than 50 lakhs. 148 notice was issued on 25.07.2022, which is beyond the period of three years. So admittedly, the approval has to be obtained from the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General as defined under Section 151(ii). But, in the present case, the approval was obtained from the Principal Commissioner in terms of Section 151(i) and no approval was obtained before issuance of 148 notice in terms of provision of Section 151(ii), which is mandatory. Therefore, the notice under Section 148 was issued in the present case in violation of provision of Section 151(ii) of the Income Tax Act. In view thereof, the initiation of proceedings itself is without any jurisdiction. Hence, the same is liable to be quashed.” 60. Thus, respectfully following the decision of the Madras High Court in the case of Core Logistic Company (supra) we hold that the sanction accorded by the authorities prescribed u/s.151(i) of the Act on the facts of the case, i.e. PCIT, Madurai – 1 for the notice issued u/s.148 of the Act dated 19.04.2022 and the order u/s.148A(d) of the Act after the expiry of 3 years from the end of the relevant assessment year as against the correct sanction to have been granted by the authorities prescribed u/s.151(ii) of the Act would vitiate the entire re-assessment proceedings initiated and completed in terms of Section 147 of the Act. The PCIT by assuming revisionary jurisdiction in terms of Section 263 of the Act could not have set aside a non-est re-assessment order and further could not have directed the AO to pass a fresh assessment order.”

ITA No.2125/Chny/2025 (AY 2018-19) Rathinam Viswanathan :: 22 :: 20. In the light of the discussion of this Tribunal (supra), we find that separate sanction prior-approval is sine-qua-non before issue of notice u/s.148 of the Act from the specified authority u/s.151 of the Act. It is clarified that even if the AO sought prior-approval of the specified Authority before issuance of notice u/s.148A(b) of the Act, if the time-limit elapses as given in Section 151 of the Act, then it is incumbent upon the AO to obtain the prior-approval from the specified authority as specified u/s.151 of the Act before issuance of notice u/s.148A(d) or 148 of the Act. In this regard, we rely on the decision of the Hon'ble Bombay High Court in the case of M/s. Vodafone Idea Limited Vs DCIT (WP No. 2768 of 2022 dated 06.02.2024) wherein it was held that even in cases where the notice u/s. 148A(b) was issued before completion of 3 years, if the notice u/s. 148 is issued beyond three (3) years the approval needs to be obtained from PCCIT as per Section 151(ii) of the Act.

ITA No.2125/Chny/2025 (AY 2018-19) Rathinam Viswanathan :: 23 ::

From a perusal of notice issued u/s.148 of the Act, it is clear that the AO obtained prior-approval for PCIT, Madurai, which is not in consonance with the mandate given in Section 151(ii) of the Act. In this case, since the notice has been issued by the AO u/s.148 beyond three (3) years on 20.04.2022 with the approval of the PCIT instead of the PCCIT as per the provisions of section 151(ii) it is held to be illegal/invalid. Consequently,

ITA No.2125/Chny/2025 (AY 2018-19) Rathinam Viswanathan :: 24 :: the assessment completed on 27.03.2024 based on the invalid notice is held to be non-est in the eyes of law, so it is a nullity.

ITA No.2125/Chny/2025 (AY 2018-19) Rathinam Viswanathan :: 25 :: u/s.271E dated 18.09.2024 is also null/non-est in the eyes of law. Therefore, we quash the impugned order of penalty u/s.271E of the Act.

Order pronounced on the 05th day of June, 2026, in Chennai.

Sd/- Sd/- (प�ावती .एस) (एबी टी. वक�) (PADMAVATHY. S) (ABY T. VARKEY) लेखा सद�य/ACCOUNTANT MEMBER �या�यक सद�य/JUDICIAL MEMBER चे�नई/Chennai, �दनांक/Dated: 05th June, 2026. YS आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकरआयु�/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय�ितिनिध/DR 5. गाड�फाईल/GF

Digitally signed YASHVI by YASHVIR SINGH R SINGH Date: 2026.06.20 16:57:09 +05'30'