S D JAVERI HOLDINGS PVT LTD,MUMBAI vs. OFFICER OF THE CIT APPEAL, MUMBAI

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ITA 7380/MUM/2025Status: DisposedITAT Mumbai18 May 2026AY 2009-107 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that issuing a Section 148 notice before obtaining the mandatory approval under Section 151 renders the notice void ab initio. This defect goes to the root of the jurisdiction and cannot be cured.

What were the facts?

The assessee's appeal concerns reassessment proceedings for AY 2009-10. A notice under Section 148 was issued on March 22, 2016, but the required approval under Section 151 was only obtained on March 28, 2016. The assessee argued this made the reassessment proceedings invalid.

What were the issues?

Whether reassessment proceedings are invalid due to the issuance of a Section 148 notice prior to obtaining the mandatory approval under Section 151. Whether a defect in obtaining prior approval for reassessment is a curable procedural irregularity.

Which sections of the Income-tax Act were involved?

Section 148,Section 151,Section 147

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “G” MUMBAI

Before: SHRI OM PRAKASH KANT & SHRI RAHUL CHAUDHARY

For Appellant: Shri Tamil Selvam S. (Sr. AR)
Pronounced: 18/05/2026

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “G” MUMBAI

BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI RAHUL CHAUDHARY (JUDICIAL MEMBER)

ITA No. 7380/MUM/2025 Assessment Year: 2009-10

S D Javeri Holdings Private Deputy Commissioner of Income Limited, PS17, Stock Tax, Circle 2(3)(1), Aayakar Vs. Exchange Towers, Bombay Bhawan, Mumbai – 400023, Samachar Marg, Rotunda Maharashtra. Mumbai – 400023, Maharashtra. PAN NO. AABCS 5827 P Appellant Respondent

: Shri Sukhsagar Syal Assessee by : Shri Tamil Selvam S. (Sr. AR) Revenue by

: 13/05/2026 Date of Hearing Date of pronouncement : 18/05/2026 ORDER PER OM PRAKASH KANT, AM

This appeal by the assessee is directed against order dated 18.09.2025, passed by the learned Additional Commissioner of Income-Tax (Appeals) – Visakhapatnam, [in short ‘the Ld. CIT(A)’] for Assessment Year (in short ‘A.Y’) 2009-10, raising following grounds:

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“1. On the facts and the circumstances of the case, the order passed by the Id. 1. On the facts and the circumstances of the case, the order passed by the Id. 1. On the facts and the circumstances of the case, the order passed by the Id. CIT(A) is bad on facts and in law. CIT(A) is bad on facts and in law. 2. The Id. CIT(A) erred in upholding the initiation of reassessment based on vague 2. The Id. CIT(A) erred in upholding the initiation of reassessment based on vague 2. The Id. CIT(A) erred in upholding the initiation of reassessment based on vague reasons which simply recorded the receipt of data by t reasons which simply recorded the receipt of data by the ADIT(Inv.) Ahmedabad he ADIT(Inv.) Ahmedabad from NSE about Client code modifications (CCMs), which is otherwise a legally from NSE about Client code modifications (CCMs), which is otherwise a legally from NSE about Client code modifications (CCMs), which is otherwise a legally permitted course, without even slightly showing that the Appellant's CCMs, done permitted course, without even slightly showing that the Appellant's CCMs, done permitted course, without even slightly showing that the Appellant's CCMs, done by its broker, were aimed at escapement of income. by its broker, were aimed at escapement of income. 3. The Id. CIT(A) erred 3. The Id. CIT(A) erred in upholding the initiation of reassessment for the AY in upholding the initiation of reassessment for the AY 2009-10 corresponding to the FY 2008 10 corresponding to the FY 2008-09 based on the information pertaining to 09 based on the information pertaining to the next year, being, SEBI probe on 'modifications taking place in derivatives the next year, being, SEBI probe on 'modifications taking place in derivatives the next year, being, SEBI probe on 'modifications taking place in derivatives transactions at the National Stock Exchang transactions at the National Stock Exchange during 2010'. 4. The Id. CIT(A) erred in confirming the addition of Rs.5,98,970 based on the 4. The Id. CIT(A) erred in confirming the addition of Rs.5,98,970 based on the 4. The Id. CIT(A) erred in confirming the addition of Rs.5,98,970 based on the genuine recorded transactions, without there being any incriminating evidence genuine recorded transactions, without there being any incriminating evidence genuine recorded transactions, without there being any incriminating evidence against the Appellant, such as, any statement of the broker or the corresponding against the Appellant, such as, any statement of the broker or the corresponding against the Appellant, such as, any statement of the broker or the corresponding party to the transactions, more so when the broker specifically replied directly to rty to the transactions, more so when the broker specifically replied directly to rty to the transactions, more so when the broker specifically replied directly to the AO that the CCMs were carried out to correct bona fide mistakes occurred at the AO that the CCMs were carried out to correct bona fide mistakes occurred at the AO that the CCMs were carried out to correct bona fide mistakes occurred at the time of punching of data at the time of trade. the time of punching of data at the time of trade. 5. The Id. CIT(A) erred in confirming the 5. The Id. CIT(A) erred in confirming the addition of Rs.5,98,970, being, the addition of Rs.5,98,970, being, the alleged net profit shifted out on the basis of the alleged ascertained profit shifted alleged net profit shifted out on the basis of the alleged ascertained profit shifted alleged net profit shifted out on the basis of the alleged ascertained profit shifted out' amounting to Rs. 11,47,049 and the alleged ascertained 'losses shifted in' out' amounting to Rs. 11,47,049 and the alleged ascertained 'losses shifted in' out' amounting to Rs. 11,47,049 and the alleged ascertained 'losses shifted in' amounting to Rs.5,48,079 without realizing that a pers amounting to Rs.5,48,079 without realizing that a person may intend to have on may intend to have either bogus profit shifted out or bogus loss shifted in and not the both either bogus profit shifted out or bogus loss shifted in and not the both either bogus profit shifted out or bogus loss shifted in and not the both simultaneously in one year. simultaneously in one year. 6. The Id. CIT(A) erred in confirming the addition of Rs.5,98,970 without realizing 6. The Id. CIT(A) erred in confirming the addition of Rs.5,98,970 without realizing 6. The Id. CIT(A) erred in confirming the addition of Rs.5,98,970 without realizing that, despite request, the AO did not furnish to that, despite request, the AO did not furnish to the appellant any item the appellant any item-wise details of the alleged bogus transactions either in the reasons or during the details of the alleged bogus transactions either in the reasons or during the details of the alleged bogus transactions either in the reasons or during the course of assessment proceedings, except a sketchy and dumb table drawn in course of assessment proceedings, except a sketchy and dumb table drawn in course of assessment proceedings, except a sketchy and dumb table drawn in the assessment order without having any dates or the value of the transactions. the assessment order without having any dates or the value of the transact the assessment order without having any dates or the value of the transact 7. On the facts and circumstances of the case and in law, the Id. CIT(A) erred in 7. On the facts and circumstances of the case and in law, the Id. CIT(A) erred in 7. On the facts and circumstances of the case and in law, the Id. CIT(A) erred in not directing the AO to drop the penalty proceedings initiated u/s 271(1)(c) of the not directing the AO to drop the penalty proceedings initiated u/s 271(1)(c) of the not directing the AO to drop the penalty proceedings initiated u/s 271(1)(c) of the Act.”

2.

The learned counsel for the assessee also invited our attention to The learned counsel for the assessee also invited our attention to The learned counsel for the assessee also invited our attention to the additional grounds raised by the assessee. The first additional additional grounds raised by the assessee. The first additional additional grounds raised by the assessee. The first additional ground, filed on 13.03.2026, reads as under: ground, filed on 13.03.2026, reads as under:

S D Javeri Holdings Private Limited, S D Javeri Holdings Private Limited 3 ITA No. 7380/MUM/2025

“On the facts and in the circumstances of the case and in law, the reassessment On the facts and in the circumstances of the case and in law, the reassessment On the facts and in the circumstances of the case and in law, the reassessment proceedings are bad in law as notice under section 148 has been issued without proceedings are bad in law as notice under section 148 has been is proceedings are bad in law as notice under section 148 has been is obtaining a prior approval from the s obtaining a prior approval from the specified authority under section 151 of the ecified authority under section 151 of the Act.”

3.

The assessee further raised another additional ground on The assessee further raised another additional ground on The assessee further raised another additional ground on 07.05.2025, which reads as under: 07.05.2025, which reads as under:

“On the facts and in the circumstances of the case and in law On the facts and in the circumstances of the case and in law On the facts and in the circumstances of the case and in law, the reassessment proceedings are bad in law as the ld. DCIT proceedings are bad in law as the ld. DCIT – 2(3)(2) did did not not have have the the jurisdiction to issue the notice under section 148 of the Act in terms of Instruction jurisdiction to issue the notice under section 148 of the Act in terms of Instruction jurisdiction to issue the notice under section 148 of the Act in terms of Instruction no.1 of 2011 issued by the CBDT no.1 of 2011 issued by the CBDT”

4.

Before us, the learned counsel for the asses Before us, the learned counsel for the assessee submitted that see submitted that the aforesaid additional grounds are purely legal in character, strike the aforesaid additional grounds are purely legal in character, strike the aforesaid additional grounds are purely legal in character, strike at the very root of the reassessment proceedings, and do not require at the very root of the reassessment proceedings, and do not require at the very root of the reassessment proceedings, and do not require investigation into fresh facts. It was, therefore, prayed that the investigation into fresh facts. It was, therefore, prayed that the investigation into fresh facts. It was, therefore, prayed that the same be admitted for adjudicat same be admitted for adjudication.

5.

We have heard the rival submissions on the issue concerning the We have heard the rival submissions on the issue concerning the We have heard the rival submissions on the issue concerning the admissibility of the additional grounds under Rule 11 of the Income admissibility of the additional grounds under Rule 11 of the Income admissibility of the additional grounds under Rule 11 of the Income Tax (Appellate Tribunal) Rules, 1963. Upon consideration of the Tax (Appellate Tribunal) Rules, 1963. Upon consideration of the Tax (Appellate Tribunal) Rules, 1963. Upon consideration of the material available on record, we find that the gro material available on record, we find that the grounds raised by the unds raised by the assessee pertain to the very validity and assumption of jurisdiction assessee pertain to the very validity and assumption of jurisdiction assessee pertain to the very validity and assumption of jurisdiction under section 147/148 of the Act. The issues so raised are purely under section 147/148 of the Act. The issues so raised are purely under section 147/148 of the Act. The issues so raised are purely legal in nature and go to the root of the matter, the adjudication legal in nature and go to the root of the matter, the adjudication legal in nature and go to the root of the matter, the adjudication whereof is indispensable for determ whereof is indispensable for determining the validity of the ining the validity of the impugned reassessment proceedings. Since the additional grounds impugned reassessment proceedings. Since the additional grounds impugned reassessment proceedings. Since the additional grounds

S D Javeri Holdings Private Limited, S D Javeri Holdings Private Limited 4 ITA No. 7380/MUM/2025

involve pure questions of law arising from facts already available on involve pure questions of law arising from facts already available on involve pure questions of law arising from facts already available on record, and no further investigation of facts is required, the same record, and no further investigation of facts is required, the same record, and no further investigation of facts is required, the same are admitted in the light of are admitted in the light of the ratio laid down by the Hon’ble the ratio laid down by the Hon’ble Supreme Court in National Thermal Power Co. Ltd. vs. National Thermal Power Co. Ltd. vs. Supreme Court in Commissioner of Income Tax Commissioner of Income Tax (1998) 229 ITR 383 (SC). (1998) 229 ITR 383 (SC).

6.

The learned counsel for the assessee thereafter drew our The learned counsel for the assessee thereafter drew our The learned counsel for the assessee thereafter drew our attention to the paper book comprising pages 1 to 46 and attention to the paper book comprising pages 1 to 46 and attention to the paper book comprising pages 1 to 46 and specifically referred to page 1 thereof, being the copy of notice specifically referred to page 1 thereof, being the copy of notice specifically referred to page 1 thereof, being the copy of notice issued under section 148 of the Act dated 22.03.2016. For the sake issued under section 148 of the Act dated 22.03.2016. For the sake issued under section 148 of the Act dated 22.03.2016. For the sake of ready reference, the said notice is reproduced hereinbelow: reference, the said notice is reproduced hereinbelow: reference, the said notice is reproduced hereinbelow:

“Notice under Section 148 of the Income Notice under Section 148 of the Income-tax Act, 1961 tax Act, 1961 P.A.N: AABCS5827L P.A.N: AABCS5827L Office of the Office of the Dy. Commissioner of Income-tax,- Dy. Commissioner of Income 2(3)(2), 2(3)(2), Aayakar Bhawan, Room No. 552, Aayakar Bhawan, Room No. 552, M.K. Road, Mumbai 400 020. Mumbai 400 020. Dated: 22.03.2016 To, The Principle Officer, M/s. S.D. JAVERI HOLDINGS LTD., M/s. S.D. JAVERI HOLDINGS LTD., Ps-17 2 Floor-Rotunda Rotunda Stock Exchange-Bombay Bombay Samachar Marg-Mumbai Mumbai-400001

Sir/Madam, Whereas I have reason to believe that your income chargeable to tax for the Whereas I have reason to believe that your income chargeable to tax for the Whereas I have reason to believe that your income chargeable to tax for the assessment year 2009 2009-10 has escaped assessment within the meaning of section has escaped assessment within the meaning of section 147 of the Income Tax Act, 1961. 147 of the Income Tax Act, 1961.

S D Javeri Holdings Private Limited, S D Javeri Holdings Private Limited 5 ITA No. 7380/MUM/2025

2.

I, therefore, propose to assess/re I, therefore, propose to assess/re-assess the income for the said assess the income for the said assessment year and I hereby required you to deliver to me within 30 days from assessment year and I hereby required you to deliver to me within 30 days from assessment year and I hereby required you to deliver to me within 30 days from the service of this notice, a return in the prescribed form of your income for the said tice, a return in the prescribed form of your income for the said tice, a return in the prescribed form of your income for the said assessment year. 3. This notice is being issued after obtaining the necessary satisfaction of the This notice is being issued after obtaining the necessary satisfaction of the This notice is being issued after obtaining the necessary satisfaction of the Commissioner of Income Tax _____________ the Central Board of Direct Taxes. Commissioner of Income Tax _____________ the Central Board of Direct Taxes. Commissioner of Income Tax _____________ the Central Board of Direct Taxes.

(signature of officer) (signature of o Name: _____________ Name: _____________ Designation:_________” Designation:_________

7.

The learned counsel further referred to the approval letter issued The learned counsel further referred to the approval letter issued The learned counsel further referred to the approval letter issued from the office of the Principal Commissioner of Income-tax, from the office of the Principal Commissioner of Income from the office of the Principal Commissioner of Income Mumbai. It was pointed out that, as per the approval proforma Mumbai. It was pointed out that, as per the approval proforma Mumbai. It was pointed out that, as per the approval proforma placed on record, sanction for reopening was accorded on record, sanction for reopening was accorded on record, sanction for reopening was accorded on 28.03.2016 and communicated to the Assessing Officer on 28.03.2016 and communicated to the Assessing Officer on 28.03.2016 and communicated to the Assessing Officer on 29.03.2016. The submission of the assessee was that the notice 29.03.2016. The submission of the assessee was that the notice 29.03.2016. The submission of the assessee was that the notice under section 148 had admittedly been issued on 22.03.2016, under section 148 had admittedly been issued on 22.03.2016, under section 148 had admittedly been issued on 22.03.2016, whereas the statutory approval whereas the statutory approval under section 151 was obtained under section 151 was obtained only subsequently on 28.03.2016. Accordingly, it was contended only subsequently on 28.03.2016. Accordingly, it was contended only subsequently on 28.03.2016. Accordingly, it was contended that the notice itself was issued without prior sanction of the that the notice itself was issued without prior sanction of the that the notice itself was issued without prior sanction of the competent authority and, therefore, the very assumption of competent authority and, therefore, the very assumption of competent authority and, therefore, the very assumption of jurisdiction under section 147 stood v jurisdiction under section 147 stood vitiated in law.

8.

We have considered the rival submissions and perused the We have considered the rival submissions and perused the We have considered the rival submissions and perused the material available on record. The factual position that notice under material available on record. The factual position that notice under material available on record. The factual position that notice under section 148 was issued on 22.03.2016, whereas the approval section 148 was issued on 22.03.2016, whereas the approval section 148 was issued on 22.03.2016, whereas the approval contemplated under section 151 was granted only on 28.03.2016, contemplated under section 151 was granted only on contemplated under section 151 was granted only on

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remains undisputed. Under the statutory scheme prevailing during remains undisputed. Under the statutory scheme prevailing during remains undisputed. Under the statutory scheme prevailing during the relevant assessment year, where reassessment was sought to be the relevant assessment year, where reassessment was sought to be the relevant assessment year, where reassessment was sought to be initiated beyond a period of four years, prior sanction of the initiated beyond a period of four years, prior sanction of the initiated beyond a period of four years, prior sanction of the Principal Commissioner of Income Principal Commissioner of Income-tax constituted a tax constituted a mandatory jurisdictional precondition for assumption of jurisdiction under jurisdictional precondition for assumption of jurisdiction under jurisdictional precondition for assumption of jurisdiction under section 147 of the Act. section 147 of the Act.

9.

In the present case, the Assessing Officer proceeded to issue In the present case, the Assessing Officer proceeded to issue In the present case, the Assessing Officer proceeded to issue notice under section 148 prior to obtaining the mandatory approval notice under section 148 prior to obtaining the mandatory approval notice under section 148 prior to obtaining the mandatory approval from the competent auth from the competent authority. Such a defect goes to the very root of ority. Such a defect goes to the very root of the jurisdiction and is not a mere procedural irregularity capable of the jurisdiction and is not a mere procedural irregularity capable of the jurisdiction and is not a mere procedural irregularity capable of being cured subsequently. Once the statutory condition precedent being cured subsequently. Once the statutory condition precedent being cured subsequently. Once the statutory condition precedent for issuance of notice remains unfulfilled on the date of issuance of for issuance of notice remains unfulfilled on the date of issuance of for issuance of notice remains unfulfilled on the date of issuance of notice itself, the notice issued under section 148 becomes e itself, the notice issued under section 148 becomes void ab e itself, the notice issued under section 148 becomes initio and incapable of conferring lawful jurisdiction upon the and incapable of conferring lawful jurisdiction upon the and incapable of conferring lawful jurisdiction upon the Assessing Officer to reopen the assessment. Assessing Officer to reopen the assessment. Accordingly, we hold Accordingly, we hold that the notice issued under section 148 is invalid in law and, that the notice issued under section 148 is invalid in law and, that the notice issued under section 148 is invalid in law and, consequently, the entire reassessment proceedings undertaken onsequently, the entire reassessment proceedings undertaken onsequently, the entire reassessment proceedings undertaken pursuant thereto are liable to be quashed. We order accordingly. pursuant thereto are liable to be quashed. We order accordingly. pursuant thereto are liable to be quashed. We order accordingly.

10.

Since the reassessment proceedings have already been quashed Since the reassessment proceedings have already been quashed Since the reassessment proceedings have already been quashed on account of the first additional ground raised by the assessee, the on account of the first additional ground raised by the assessee, the on account of the first additional ground raised by the assessee, the adjudication of the second additional ground as well as the other adjudication of the second additional ground as well as the other adjudication of the second additional ground as well as the other

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grounds raised in the appeal becomes merely academic and is, grounds raised in the appeal becomes merely academic and is grounds raised in the appeal becomes merely academic and is therefore, not being undertaken. therefore, not being undertaken.

11.

In the result, appeal of the assessee is allowed. appeal of the assessee is allowed.

Order pronounced in the open Court on ounced in the open Court on 18/05/2026. /05/2026.

Sd/- Sd/- (RAHUL CHAUDHARY RAHUL CHAUDHARY) (OM PRAKASH KANT OM PRAKASH KANT) JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 18/05/2026 M. Ranganath Vittal , Sr. P.S. Ranganath Vittal , Sr. P.S.

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

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