VENKATA DURGA AGENCIES,KAKINADA vs. INCOME TAX OFFICER, WARD-1, KAKINADA

ITA 692/VIZ/2025Status: DisposedITAT Visakhapatnam16 October 2026AY 2018-198 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the notice issued under Section 148 of the Income Tax Act, 1961, dated April 4, 2022, is invalid, and consequently, the assessment order passed under Section 147 read with Section 144 is liable to be quashed. The Tribunal's reasoning was based on the fact that for Assessment Year 2018-19, the notice under Section 148 was issued on April 4, 2022, which is more than three years after the end of the relevant assessment year. As per Section 151(ii) of the Act, when more than three years have elapsed, the approval must be obtained from the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General. In this case, the approval was obtained from the Principal Commissioner (PCIT), which is not the specified authority for reopening beyond three years. The Tribunal followed the decision of its coordinate bench in Pothina Satyanarayana v. ITO, which in turn relied on the Telangana High Court's decision in Deloitte Consulting India Pvt. Ltd. v. The Assessment Unit, ITD. The Tribunal noted that the proviso to Section 151, introduced by the Finance Act, 2023, with effect from April 1, 2023, cannot be applied retrospectively to exclude the period of reply to the Section 148A(b) notice. Therefore, the assessment framed by the Assessing Officer, being devoid of valid assumption of jurisdiction, was quashed. The appeal filed by the assessee was allowed.

What were the facts?

The assessee, Venkata Durga Agencies, failed to file its Return of Income for Assessment Year 2018-19. The department, having information of cash deposits of Rs. 7,46,24,920/-, issued a notice under Section 148A(b) on March 22, 2022. The assessee did not respond. Consequently, an order under Section 148A(d) was passed on April 4, 2022, followed by a notice under Section 148 dated April 4, 2022, issued with the approval of the Principal Commissioner of Income Tax (PCIT-1), Visakhapatnam. The assessee again failed to file its return. The assessment was completed under Section 147 read with Section 144 of the Income Tax Act, 1961, on February 14, 2024, determining the total income at Rs. 7,46,24,920/- by adding the cash deposits. The Commissioner of Income Tax (Appeals) [CIT(A)] dismissed the assessee's appeal.

What were the issues?

1. Whether the notice issued under Section 148 of the Income Tax Act, 1961, dated April 4, 2022, is invalid, and consequently, the assessment order passed under Section 147 read with Section 144 is liable to be quashed, on the ground that the approval for reopening the assessment beyond three years from the end of the relevant assessment year was obtained from the Principal Commissioner (PCIT) instead of the Principal Chief Commissioner (PCCIT) or Chief Commissioner (CCIT) as required by Section 151(ii) of the Act. Assessee's Contention: The assessee argued that since the assessment was reopened beyond three years from the end of the relevant assessment year (AY 2018-19), the approval for issuing the notice under Section 148 should have been obtained from the PCCIT or CCIT, not the PCIT. Therefore, the notice dated April 4, 2022, issued with PCIT's approval is invalid, rendering the subsequent assessment order void ab initio. The assessee relied on the ITAT Visakhapatnam Bench decision in Pothina Satyanarayana v. ITO. Revenue's Contention: The revenue contended that the assessment proceedings were initiated by issuing a notice under Section 148A(b) on March 22, 2022, which is within three years from the end of the relevant assessment year. The subsequent order under Section 148A(d) and notice under Section 148 dated April 4, 2022, were a continuation of these proceedings. As per Section 151(ii), the PCIT's approval was valid for proceedings initiated within three years. The revenue relied on the fact that the AO obtained approval from the PCIT.

Which sections of the Income-tax Act were involved?

Section 139(1),Section 148A(b),Section 148A(d),Section 148,Section 147,Section 144,Section 151(ii),Section 149

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH

Before: SHRI MANJUNATHA.G, HON’BLE & SHRI RAVISH SOOD, HON’BLE

Hearing: 02.09.2026Pronounced: 16.10.2026

PER MANJUNATHA. G, AM:

This appeal filed by the assessee is directed against the order of the Learned Commissioner of Income Tax (Appeals) [in short, “the Ld.CIT(A)”], National Faceless Appeal Centre (NFAC), Delhi, dated 07.08.2025, for assessment year 2018-19. Venkata Durga Agencies 2. At the outset, we find that appeal filed by assessee is barred by limitation, for which, necessary petition for condonation of delay along with Medical C

The order continues below.

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