JOANA DIAGO DSOUZA ,MUMBAI vs. ITO WARD 24(2)(1), MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL “H(SMC)” BENCH MUMBAI BEFORE MS. KAVITHA RAJAGOPAL, JUDICIAL MEMBER & SHRI MAKARAND VASANT MAHADEOKAR, ACCOUNTANT MEMBER 1. ITA No. 8471/Mum/2025 (Assessment Year: 2017-18) Joana Diago Dsouza ITO 24(2)(1), B-303, Trans Piramal Chamber, Apartments CHS, Vs. Mumbai-400 012 Mahakali Caves Road, Andheri (East), Mumbai – 400 093 PAN/GIR No. AMHPD8814C (Applicant) (Respondent) Assessee by Shri Bhupendra Shah, Ld. AR Revenue by Shri Ajay Chandra & Shri Pravin Salunkhe, Ld. DRs Date of Hearing 28.04.2026 Date of Pronouncement 18.05.2026 आदेश / ORDER PER MAKARAND VASANT MAHADEOKAR, AM: This appeal by the assessee is directed against the order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi[hereinafter referred to as "CIT(A)"], under section 250 of the Income Tax Act, 1961 [hereinafter referred to as "the Act"]dated 17.10.2025 for Assessment Year

2 ITA No. 8471/Mum/2025 Joana Diago Dsouza 2017–18 arising out of the assessment order passed under section 143(3) read with section 147 read with section 144B of the Act dated 13.04.2023. Facts of the Case 2. The assessee an individual had not filed return of income for the A.Y. 2017-18. The assessment for the year under consideration was reopened on the basis of information received from DIT (Investigation & Criminal Intelligence), Mumbai indicating that the assessee had purchased an immovable property at a value lower than the value adopted by the Stamp Valuation Authority. 3. Notice under section 148 was issued on 26.07.2022 after passing order under section 148A(d). The assessee filed return of income in response to notice u/s 148 declaring income of Rs. 3,48,550/-. During the assessment proceedings, it was observed that the assessee had purchased a flat jointly with her granddaughter for a consideration of Rs. 1,29,10,500/- whereas the stamp duty value was Rs. 1,42,90,000/-. The Assessing Officer held that the provisions of section 56(2)(vii)(b) were applicable and brought to tax Rs. 6,89,750/- being 50% share of the difference. The reassessment was completed under section 143(3) read with section 147 read with section 144B vide order dated 13.04.2023 determining total income at Rs. 10,38,300/- as against returned income of Rs. 3,48,550/-.

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5 ITA No. 8471/Mum/2025 Joana Diago Dsouza 7. The learned AR placed reliance on the judgment of the Hon’ble Bombay High Court in the case of Mrs. Chitra Supekar [2023] 149 taxmann.com 26and the judgement of the Hon’ble Supreme Court in the case of Prakash Pandurang Patil[2025] 178 taxmann.com 8. 8. Per contra, the learned Departmental Representative submitted that the order of the CIT(A) is ex-parte in nature and the assessee has not participated in the appellate proceedings despite being afforded multiple opportunities. It was further submitted that the legal ground challenging the validity of reopening has been raised for the first time before the Tribunal and was not agitated before the lower authorities. The learned DR, therefore, contended that in the absence of proper factual foundation and participation by the assessee at earlier stages, the order of the CIT(A) deserves to be upheld. 9. We have heard the rival submissions and perused the material available on record. The primary issue for adjudication is whether the reassessment proceedings initiated under section 147 are valid in law. 10. At the outset, it is noted that the legal ground raised by the assessee goes to the root of jurisdiction and does not require any fresh investigation of facts. It is settled law that such a ground can be raised for the first time before the Tribunal. Accordingly, the same is admitted for adjudication.

6 ITA No. 8471/Mum/2025 Joana Diago Dsouza 11. It is an undisputed fact that the notice under section 148 has been issued on 26.07.2022 for Assessment Year 2017–18, which is beyond three years from the end of the relevant assessment year. Therefore, the provisions of section 151(ii) are applicable and prior approval of the specified authority i.e. PCCIT is mandatory. In the present case, the approval has been granted by PCIT-20, Mumbai. This issue is no longer res integra. 12. The Hon’ble Bombay High Court in the case of Mrs. Chitra Supekar (supra) has held that sanction from PCCIT as contemplated under section 151(ii) ought to have been taken when order was sought to be passed beyond period of three years. Consequently, order was set aside for non-compliance with provisions of Act. Further, the Hon’ble jurisdictional High Court in the case of Prakash Pandurang Patil v. ITO[2025] 177 taxmann.com 552 has categorically held that where the reassessment proceedings are initiated after expiry of three years from the end of the relevant assessment year, the sanction for issuance of notice under section 148 is required to be granted by the authority specified under section 151(ii) and not by an authority of a lower rank under section 151(i). The Hon’ble High Court observed as under: 7.In Siemens Financial Services Pvt. Ltd., this Court held that the sanction as granted by the authority would be rendered invalid in the case it is not issued by the authorities specified in Clause (ii) in the event reassessment proceedings were initiated well after the expiry of three years from the end of the relevant assessment year. The following observations as made in Siemens Financial Services Pvt. Ltd. are required to be noted, which reads thus:

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"24. As per section 151 of the Act, the 'specified authority' who has to grant his sanction for the purposes of section 148 and section 148A is the Principal Chief Commissioner or Principal Director General or where there is no Principal Chief Commissioner or Principal Director General, the Chief Commissioner or Director General if more than three years have elapsed from the end of the relevant assessment year. The present petition relates to the AY 2016-17, and as the impugned order and impugned notice are issued beyond the period of three years which elapsed on 31 st March, 2020 the approval as contemplated in section 151 (ii) of the Act would have to be obtained which has not been done by the Assessing Officer. The impugned notice mentions that the prior approval has been taken of the 'Principal Commissioner of Income-tax - 8' ('PCIT-8') which is bad in law as the approval should have been obtained in terms of section 151 (ii) and not section 151 (i) of the Act and the PCIT-8 cannot be the specified authority as per section 151 of the Act. Further, even in the affidavit-in-reply, the department as accepted that the approval obtained is of the 'Principal Commissioner of Income- tax - 8' and, hence, such an approval would be bad in law. 25. TOLA, enacted on 29th September 2020 and came into force on 31st March 2020. It inter alia, provided for a relaxation of certain provisions of the Income-tax Act, 1961. Where any time limit for completion or compliance of an action such as completion of any proceedings or passing of any order or issuance of any notice fell between the period 20th March 2020 to 31st December 2020, the time limit for completion of such action stood extended to 31st March 2021. Thus, TOLA only seeks to extend the period of limitation and does not affect the scope of section 151. 26. The Assessing Officer cannot rely on the provisions of TOLA and the notifications issued there under as section 151 has been amended by Finance Act, 2021 and the provisions of the amended section would have to be complied with by the Assessing Officer, w.e.f., 1st April 2021. Hence, the Assessing Officer cannot seek to take the shelter of TOLA as a subordinate legislation cannot override any statute enacted by the Parliament. Further, the notification extending the dates from 31st March 2021 till 30th June 2021cannot apply once the Finance Act, 2021

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is in existence. The sanction of the specified authority has to be obtained in accordance with the law existing when the sanction is obtained and, therefore, the sanction is required to be obtained by applying the amended section 151 (ii) of the Act and since the sanction has been obtained in terms of section 151 (i) of the Act, the impugned order and impugned notice are bad in law and should be quashed and set aside." 8. The decision in Siemens Financial Services (P.) Ltd (supra) was subsequently followed in Vodafone Idea Ltd. v. Dy. CIT [Writ Petition No.2768 of 2022, dated 6-2-2024] where the Court made the following observations: "3. The impugned order and the impugned notice both dated 7 th April, 2022 state that the Authority has accorded the sanction is the PCIT, Mumbai-5, The matter pertains to Assessment Year (AY) 2018-19 and since the impugned order as well as the notice are issued on 7th April, 2022, both have been issued beyond a period of three years. Therefore, the sanctioning authority has to be the PCIT as provided under Section 151 (ii) of the Act. The proviso to Section 151 has been inserted only with effect from 1st April,2023 and therefore, shall not be applicable to the matter at hand. 4. In these circumstances, as held by this Court in Siemens Financial Services Private Ltd. v. Deputy Commissioner of Income Tax & Ors., the sanction is invalid and consequently, the impugned order and impugned notice both dated 7th April, 2022 under section 148A(d) and 148 of the Act are hereby quashed and set aside." 9. In the light of the above discussion, and when there is no dispute that the Jurisdictional Assessing Officer(JAO) had no jurisdiction to issue the impugned order and the impugned notices, the writ petition is required to be allowed. 13. The aforesaid decision of the Hon’ble jurisdictional High Court has been carried in appeal by the Revenue before the Hon’ble Supreme Court. The Hon’ble Supreme Court in Income

9 ITA No. 8471/Mum/2025 Joana Diago Dsouza Tax Officer v. Prakash Pandurang Patil [2025] 178 taxmann.com 8has dismissed the SLP. 14. Thus, the ratio laid down by the Hon’ble jurisdictional High Court, to the effect that sanction under section 151(ii) is mandatory in cases beyond three years and approval by PCIT is invalid, stands affirmed by the Hon’ble Supreme Court. 15. Respectfully following the binding judicial precedents, we hold that the approval obtained from PCIT-20, Mumbai in the present case is not in accordance with law. Consequently, the notice issued under section 148 and the reassessment proceedings are liable to be quashed. 16. Since we have quashed the reassessment proceedings on the legal ground, the other grounds raised on merits including addition under section 56(2)(vii)(b) are rendered academic and are not adjudicated. 17. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 18.05.2026.

Sd/- Sd/- (KAVITHA RAJAGOPAL) (MAKARAND VASANT MAHADEOKAR) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated 18/05/2026 Dhananjay, Sr.PS आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : अपीलाथी / The Appellant 1.

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प्रत्यथी / The Respondent. 2. 3. संबंधधत आयकर आयुक्त / The CIT(A) आयकर आयुक्त(अपील) / Concerned CIT 4. धिभागीय प्रधतधनधध, आयकर अपीलीय अधधकरण, मुम्बई / DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. 6. आदेशानुसार/ BY ORDER, सत्याधपत प्रधत //True Copy// 1. उि/सहायक िंजीकार ( Asst. Registrar) आयकर अिीिीय अतिकरण, मुम्बई / ITAT, Mumbai