NARAYAN GOUDA,BANGALORE vs. ITO, WARD 4(3)(3), BANGALORE, BMTC BUILDING, KORAMANGALA

PER KESHAV DUBEY, JUDICIAL MEMBER:

This appeal at the instance of the assessee is directed against the order of the ld. CIT(A)/NFAC, Delhi dated 22.01.2026 vide DIN & Order No. ITBA/NFAC/S/250/2025-26/1085047561(1) passed u/s 250 of the Income Tax Act, 1961 (in short “the Act”) for the assessment year 2017-18.

ITA No.534/Bang/2026 Narayan Gouda, Bengaluru Page 2 of 23

ITA No.534/Bang/2026 Narayan Gouda, Bengaluru Page 3 of 23 (present appellant) gave a self-declaration that he had deposited Rs.64,23,272/- in cash in the bank current account no.6024207777 of M/s. Sri Nidhi Mobiles, Proprietary concern of Moorthy Anand Babu during the period 09.11.2016 to 31.12.2016 (Demonetization Period). Further on verification, it was found that the assessee Sri Narayan Gouda had not filed his return of income for AY 2017-18. As the amount deposited in cash of Rs.64,23,272/- during the demonetization period was more than the maximum amount which is not chargeable to income tax, accordingly the AO did the preliminary investigation into the case and formed satisfaction about the escapement of income after recording the reasons to believe that an income chargeable to tax for the AY 2017-18 had escaped assessment. Thereafter, the case of the assessee was initially reopened by issuing notice u/s 148 of the Act on 30/06/2021 (Old regime).

3.1 Thereafter, as per the direction of the Hon’ble Supreme Court in the case of Ashish Agarwal, the information on the basis of which this case was reopened had been provided to the assessee vide show cause notice u/s 148A(b) of the Act dated 25/05/2022. The assessee was required to furnish his response/reply by 08/06/2022. The assessee did not file his response/reply in response to the show cause notice issued u/s 148A(b) of the Act. Thereafter, as per the directions of the Hon’ble Supreme Court and on the basis of material information available on record, the AO passed an order u/s. 148A(d) of the Act on 28/07/2022 holding that it is a fit case for the issuance of notice u/s. 148 of the Act for the AY 2017-18. As observed by the AO, the order u/s 148A(d) of the Act was passed with prior approval of the Principal Commissioner of Income Tax, Bengaluru-2, Bengaluru vide letter in F. No. 148A(d)/PCIT-2/2022-23 dated 27/07/2022. The AO thereafter issued notice u/s. 148 of the Act on the same day i.e. on

ITA No.534/Bang/2026 Narayan Gouda, Bengaluru Page 4 of 23 28/07/2022 directing the assessee to file a return in the prescribed form within 30 days from the service of notice. Further, the notice u/s 148 of the Act dated 28/07/2022 was also issued after obtaining the prior approval of the Principal Commissioner of Income Tax, Bengaluru-2, Bengaluru accorded on 27/07/2022 vide letter in F. No. 148A(d)/PCIT-2/2022-23. The assessee in response to the notice u/s 148 of the Act, filed the return of income by declaring the commission income earned during the period amounting to Rs.1,38,980/-. The AO thereafter, issued notices u/s. 143(2), 142(1), Notice u/s 144 of the Act on various dates along with the final show cause notice. The AO after considering the submissions of the assessee held that as the nature and source of the cash deposits aggregating Rs.64,23,272/- had remained unexplained & therefore the conditions for invoking the provisions of section 69A of the Act are satisfied. Thus, the AO completed the assessment proceedings on a total assessed income of Rs.65,27,182/-/- u/s 143(2) r.w.s. 147 of the Act.

ITA No.534/Bang/2026 Narayan Gouda, Bengaluru Page 5 of 23 Rs.64,23,272/- made by the AO u/s 69A r.w.s. 115BBE of the Act was confirmed.

ITA No.534/Bang/2026 Narayan Gouda, Bengaluru Page 6 of 23 the Act. Later on, as per the Directions of the Hon’ble Supreme Court in the case of Ashish Agarwal, the information on the basis of which this case was reopened had been provided to the assessee vide show cause notice u/s 148A(b) of the Act dated 25/05/2022 and accordingly the order u/s 148A(d) as well as notice u/s 148 of the Act both dated 28/07/2022 were issued after obtaining the prior approval of the Principal Commissioner of Income Tax, Bengaluru- 2, Bengaluru accorded on 27/07/2022. Thus, this is just a continuation of the proceedings initiated on 30/06/2021 as per the directions of the Hon’ble Supreme Court & therefore the approval of the ld. Pr. CIT, Bengaluru-2, Bengaluru is the proper approval. Further, the ld. DR submitted that even otherwise, merely because the ld. PCIT had accorded the approval instead of ld. PCCIT, the entire reassessment proceedings should not be quashed as no prejudice is caused to the assessee and it is a curable defect.

ITA No.534/Bang/2026 Narayan Gouda, Bengaluru Page 7 of 23 18 within 30 days from the date of service of the notice. Further, the AO had categorically mentioned both in Order passed u/s 148A(d) of the Act as well as notice u/s 148 of the Act are being issued after obtaining the prior approval of the principal Commissioner of Income Tax, Bengaluru-1, Bengaluru both accorded on 27.7.2022, vide letter in F.No. 148A(d)/PCIT-2/2022-23. Now the ld. A.R. of the assessee before us is contending that as per the provisions contained in section 151(ii) of the Act as amended by Finance Act, 2021, the specified authority for the purpose of section 148 of the Act and section 148A of the Act are Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General, if more than 3 years have elapsed from the end of the relevant assessment year. In the present case, the assessment year involved is AY 2017- 18. The 3 years from the end of the relevant assessment year elapsed on 31.3.2021. Undisputedly, the order u/s 148A(d) of the Act as well as notice issued u/s 148 of the Act are dated 28.7.2022. Therefore, as on the date of passing the order u/s 148A(d) of the Act & issue of notice u/s 148 of the Act, 3 years had already elapsed in the present case.

9.1 Before proceeding further, it is apposite here to mention the relevant section 151 of the Act, which is reproduced below for ease of reference: “Sanction for issue of notice. Section 151: Specified authority for the purposes of section 148 and section 148A shall be,—

(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.]”

ITA No.534/Bang/2026 Narayan Gouda, Bengaluru Page 8 of 23 9.2 On the plain reading of above, the specified authority for the purpose of section 148 & 148A of the Act are Principal Chief Commissioner or Chief Commissioner, if more than 3 years have elapsed from the end of the relevant assessment year. Thus, the specified authority changes depending on the time limit prescribed in section 151 of the Act. Therefore, we find force in the argument of the ld. A.R. of the assessee that the order u/s 148A(d) of the Act dated 28/07/2022 and also the notice issued u/s 148 of the Act dated 28/07/2022 were issued after obtaining the prior approval of the Pr. CIT, Bengaluru-2, Bengaluru accorded on 27/07/2022 whereas in the present case as more than 3 years have already elapsed from the end of the relevant assessment year, the Principal Chief Commissioner of Income Tax/Chief Commissioner should have accorded the Approval as per the provisions contained in section 151(ii) of the Act. We are of the considered opinion that the Hon’ble Supreme Court in the case of UOI Vs. Ashish Agarwal reported in (2022) 444 ITR 1 has passed an order by invoking Article 142 of the constitution & directed that section 148 notices which were challenged before the various High Courts “shall be deemed to have been issued under section 148A of the Act as substituted by the Finance Act,2021 and construed or treated to be show-cause notices in terms of section 148A(b) of the Act.” Further, the Apex Court dispensed with the requirement of conducting any enquiry with the prior approval of the specified authority under section 148A(a) of the Act. Under Section 148A(b) of the Act, an assessing officer was required to obtain prior approval from the specified authority before issuing a show cause notice. When the Apex 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) of the Act & not for passing the order u/s 148A(d) of the Act & issuing subsequent notice u/s 148 of the Act as

ITA No.534/Bang/2026 Narayan Gouda, Bengaluru Page 9 of 23 per the amended provisions & therefore we do not agree with the contentions of the ld. DR that the order u/s 148A(d) as well as notice issued u/s 148 of the Act both dated 28.7.2022 were only continuation of earlier proceedings initiated by issue of notice u/s 148 of the Act on 30/06/2021. The Apex Court has categorically stated that there cannot be any waiver of a statutory requirement or provision that goes to the root of the jurisdiction. An Order passed without jurisdiction is a nullity. Any consequential order passed or action taken will also be invalid and without jurisdiction.

9.3 We are of the considered opinion that a satisfaction/approval, to be a valid satisfaction under section 151 of the Act has to be accorded by the Prescribed Authority under the Act on application of mind and not mechanically, as also held by the Hon’ble Supreme Court in the case of Chhugamal Rajpal (supra). Unless the Prescribed Authority under section 151 of the Act accords his satisfaction on application of mind, there cannot be a valid satisfaction empowering the AO to assume jurisdiction to issue notice under section 148 of the Act. Further, we are of the considered opinion that the approval is mandatory is plainly evident on perusal of the first proviso appended to section 148 of the Act. The said proviso, at the risk of repetition, reads as follows:

Provided that no notice under this section shall be issued unless there is information with the assessing officer which suggests that the income chargeable 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.

ITA No.534/Bang/2026 Narayan Gouda, Bengaluru Page 10 of 23 We also take a guidance and support from the decision of Hon’ble High Court of Delhi in the case of Communist Party of India (Marxist) v. ITD reported in (2026) 485 ITR 775 held as under-

“10. The impugned notice is also liable to be set aside on the ground that it was issued without the approval of the authority specified under section 151 of the Act. Since the impugned notice was issued beyond the period of three years from the end of the relevant assessment year, thus, in terms of section 151(ii) of the Act, the same was required to be approved by the Principal Chief Commissioner or Principal Director General or where there is no such authority, by Chief Commissioner or Director General. The determination of the specified authority for grant of approval under section 151 of the Act depends on whether the notice under section 148 of the Act has been issued after the expiry of three years from the end of the relevant assessment year or within the said period. 11. Section 151 of the Act (as amended by the Finance Act, 2021) as in force on the date of issuance of notice read as under: 151. Sanction for issue of notice Specified authority for the purposes of section 148 and section 148A shall be, (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. 12. The question whether the sanction in respect of notices that were issued during the period of limitation as extended by TOLA required the prior sanction in terms of section 151 of the Act, as in force after 31-3-2021 or as in force prior to the said date, has fell for consideration of this court in several cases including Twylight Infrastructure Pvt. Ltd. v. Income Tax Officer Ward 25 Delhi & Ors.: Neutral Citation No.2024:DHC:259-DB : 2024 TaxPub(DT) 354 (Del-HC) and Abhinav Jindal HUF v. Income Tax Officer Ward 54(1) Delhi & Ors.: Neutral Citation No.: 2024:DHC:7238-DB : 2024 TaxPub(DT) 5188 (Del-HC). This court had he learned that TOLA would have no relevance for determining the specified authority whose approval was mandatory under section 151 of the Act for issuance of a notice under section 148 of the Act. We consider it apposite to refer to the following extract from the decision of this court in Abhinav Jindal HUF v. Income Tax Officer Ward 54 (1) Delhi & Ors. (supra). The same is set out below:

ITA No.534/Bang/2026 Narayan Gouda, Bengaluru Page 11 of 23 the sanction and approval accorded by the JCIT would be in accordance with law. *** *** *** 38. It would therefore be wholly incorrect to read TOLA as intending to amend the distribution of power or the categorisation envisaged and prescribed by section 151. The additional time that the said statute provided to an authority cannot possibly be construed as altering or modifying the hierarchy or the structure set up by section 151 of the Act. The issue of approval would still be liable to be answered based on whether the reassessment was commenced after or within a period of four years from the end of the relevant assessment year or as per the amended regime dependent upon whether action was being proposed within three years of the end of the relevant assessment year or thereafter. The bifurcation of those powers would continue unaltered and unaffected by TOLA. 39. The fallacy of the submission addressed by the respondents becomes even more evident when we weigh in consideration the fact that even if the reassessment action were initiated, as per the extended TOLA timelines, and thus after the period of four years, section 151 incorporated adequate measures to deal with such a contingency and in unambiguous terms identified the authority which was to be moved for the purposes of sanction and approval. Section 151 distributed the powers of approval amongst a set of specified authorities based upon the lapse of time between the end of the relevant assessment year and the date when reassessment was proposed. Thus even if the reassessment was proposed to be initiated with the aid of TOLA after the expiry of four years from the end of the relevant assessment year, the authority statutorily empowered to confer approval would be the Principal Chief Commissioner /Chief Commissioner /Principal Commissioner /Commissioner. It would only be in a case where the reassessment was proposed to be initiated before the expiry of four years from the end of the relevant assessment year that approval could have been accorded by the JCIT. Similar would be the position which would emerge if the actions were tested on the basis of the amended section 151 and which divides the power of sanction amongst two sets of authorities based on whether reassessment is commenced within three years or thereafter. 13. In Twylight Infrastructure Pvt. Ltd. v. Income Tax Officer Ward 25 3 Delhi & Ors. (supra), a Coordinate Bench of this court examined the validity of initiation of reassessment proceedings, in cases where the income alleged to have escaped assessment was Rs. 50,00,000 or less. In the aforesaid context, this court also considered the question as to the specified authority, whose prior approval was required and held as under: 10. As indicated above, the specified authority changes depending on the time limit prescribed in section 151 of the Act. It is on this account that there is a linkage between ruling rendered in Ganesh Dass Khanna [Ganesh Dass Khanna v. ITO, (2024) 460 ITR 546 (Delhi) : 2023 SCC Online Del 7286 : 2023 : DHC : 8187-DB. : 2023 TaxPub(DT) 7124 (Del-HC)] and the instant matters. 11. It may also be noted that in Ganesh Dass Khanna [Ganesh Dass Khanna v. ITO, (2024) 460 ITR 546 (Delhi) : 2023 SCC Online Del 7286 : 2023 :

ITA No.534/Bang/2026 Narayan Gouda, Bengaluru Page 12 of 23 DHC : 8187-DB. : 2023 TaxPub(DT) 7124 (Del-HC)], we had recorded the stand of the Revenue that the issue concerning limitation and the specified authority are intertwined. For convenience, the relevant part of the judgment is extracted hereafter (page 567 of 460 ITR):

ITA No.534/Bang/2026 Narayan Gouda, Bengaluru Page 13 of 23 7124 (Del-HC)], the impugned orders and notices are set aside, liberty be given to the Revenue to commence the reassessment proceedings afresh. 13. Therefore, having regard to the aforesaid, the impugned notices and orders in each of the above-captioned writ petitions are quashed on the ground that there is no approval of the specified authority, as indicated in section 151 (ii) of the Act. The direction is issued with the caveat that the Revenue will have liberty to take steps, if deemed necessary, albeit as per law. 14. In J M Financial & Investments Consultancy Services Private Limited v. ACIT, Circle 3 (2) (1) & Ors., W.P. No. 1050/2020, dt. 4-4-2022 : 2023 TaxPub(DT) 1105 (Bom-HC), the Bombay High Court had made observations to the effect that even if the time to issue notice may have been extended by TOLA, the same would not amend the provisions of section 151 of the Act. The relevant extract of the said decision is set out below: 5. Respondents have relied upon a Letter, dt. 18-3-2021 issued by one Income Tax Officer, who has given an opinion to the Additional Commissioner of Income Tax that in view of the Taxation and other Laws (Relaxation of Certain Provisions) Act, 2020 (Relaxation Act), limitation, inter alia, under provisions of section 151 (1) and section 151 (2), which were originally expiring on 31-3-2020 stand extended to 31-3-2021. According to the Income Tax Officer, in view of the above, assessment year 2015-2016 which falls under the category within four years as on 31-3-2020, the statutory approval for issuance of notice under section 148 of the Act for the assessment year 2015-2016 may be given by the Range Head as per the said provisions. Mr. Sharma clarifies that the Income Tax Officer is only conveying the view of the Principal Commissioner of Income Tax because this letter has been issued on the letterhead of Principal Commissioner of Income Tax. 6. Even for a moment we agree with the view expressed by the Principal Commissioner of Income Tax, still it applies to only cases where the limitation was expiring on 31-3-2020. In the case at hand, the assessment year is 2015-2016 and, therefore, the six years limitation will expire only on 31-3-2022. Certainly, therefore, the Relaxation Act provisions may not be applicable. In any event, the time to issue notice may have been extended but that would not amount to amending the provisions of section 151 of the Act. 7. In our view, since four years had expired from the end of the relevant assessment year, as provided under section 151 (1) of the Act, it is only the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner who could have accorded the approval and not the Additional Commissioner of Income Tax. On this ground alone, we will have to set aside the Notice, dt. 31-3-2021 issued under section 148 of the Act, which is impugned in this petition. In view thereof, the consequent orders and notices will also have to go. [emphasis added] 15. In a latter decision in Siemens Financial Services Pvt. Ltd. v. Deputy Commissioner of Income-Tax & Ors.:2023 SCC Online Bom 2822 : 2023

ITA No.534/Bang/2026 Narayan Gouda, Bengaluru Page 14 of 23 TaxPub(DT) 5557 (Bom-HC), the Bombay High Court reiterated the said view in the following words: 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 assessment year 2016-17, and as the impugned order and impugned notice are issued beyond the period of three years which elapsed on 31-3- 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 Principal Commissioner of Income-Tax-8 cannot be the specified authority as per section 151 of the Act. Further, even in the affidavit-in-reply, the Department has 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. The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, enacted on 29-9-2020 and came into force on 31-3-2020 ((2020) 428 ITR (St.) 29 ). 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 20-3-2020 to 31-12-2020, the time limit for completion of such action stood extended to 31-3-2021. Thus, the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act 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 the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act and the notifications issued thereunder as section 151 has been amended by the Finance Act, 2021 and the provisions of the amended section would have to be complied with by the assessing officer, with effect from 1-4-2021. Hence, the assessing officer cannot seek to take the shelter of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act as a subordinate legislation cannot override any statute enacted by Parliament. Further, the notification extending the dates from 31-3-2021 till 30-6-2021 cannot apply once the Finance Act, 2021 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.

ITA No.534/Bang/2026 Narayan Gouda, Bengaluru Page 15 of 23 16. In Ramachandran Shivan v. Income Tax Officer, W.P. No. 8570/2023, dt. 4-3- 2024 : 2024 TaxPub(DT) 1338 (Mad-HC) and other connected matters, decided on 4-3-2024, the Madras High Court also referred to the decisions of the Bombay High Court as well as the decision of this court in Twylight Infrastructure Pvt. Ltd. v. Income Tax Officer Ward 25 3 Delhi & Ors. (supra) and expressed the similar view. The relevant extract of the said decision is set out below: 13. The orders and notices are challenged herein not on the ground that the time limit under pre-amended section 149 does not apply, but on the ground that sanction was not granted by the specified authority. Therefore, it remains to be considered as to whether the application of the proviso to section 149 has the effect of incorporating by reference to pre-amended section 151. In order to substantiate the contention that pre-amended section 151 gets incorporated by reference, learned standing counsel relied on sub- section (2) to the pre-amended section 149. It should be noticed that the proviso to sub-section (1) of the amended section 149 does not even incorporate the whole of pre-amended section 149. It merely makes the time limit prescribed therein applicable to the issuance of notices for reassessment in respect of any assessment year beginning before 1-4-2021. A fortiori the proviso certainly does not incorporate pre-amended section 151 by reference and make it applicable. 14. The next question to be examined is the impact of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. Undoubtedly, the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 extended the time limits under specified enactments, including the Income Tax Act. As per clause (a)(ii) of sub- section(1) of section 3 thereof, time limits for grant of sanction or approval were also extended. Since the petitioner does not challenge the sanction with respect to the time limit, clause (a) of sub-section (1) of section 3 is immaterial. Indeed, the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, which extends the time limits for completion of specified tasks up to 31-3-2021, itself becomes irrelevant because of the nature of the challenge in these writ petitions. 15. In Siemens Financial Services [Siemens Financial Services Pvt. Ltd. v. Dy. CIT, (2023) 457 ITR 647 (Bom-HC) : 2023 SCC Online Bom 2822 : (2023) 154 taxmann.com 159 (Bom) : 2023 TaxPub(DT) 5557 (Bom-HC)], the Division Bench of the Bombay High Court concluded, in substantially similar facts and circumstances, that the amended section 151 and not the pre-amended section 151 would apply. For reasons set out above, I concur with the conclusion in Siemens Financial Services [Siemens Financial Services Pvt. Ltd. v. Dy. CIT, (2023) 457 ITR 647 (Bom-HC) : 2023 SCC Online Bom 2822 : (2023) 154 taxmann.com 159 (Bom) : 2023 TaxPub(DT) 5557 (Bom-HC)] and Ganesh Das Khanna v. ITO [(2024) 460 ITR 546 (Delhi) : (2023) 6 HCC (Del) 516 : (2023) 156 taxmann.com 417 (Delhi) : 2023 TaxPub(DT) 7124 (Del-HC).] as subsequently followed in Twylight Infrastructure [Twylight Infrastructure Pvt. Ltd. v. ITO, (2024) 463 ITR 702 (Del-HC) : 2024 SCC Online Del 330 : 2024 TaxPub(DT) 354 (Del-HC)]. Consequently, the validity of sanction for issuing the orders under section 148A (d) and the notices under section 148 should be tested with reference to amended section 151. If so tested, it is evident that sanction was not

ITA No.534/Bang/2026 Narayan Gouda, Bengaluru Page 16 of 23 granted by an authority specified under clause (ii) of section 151. Hence, the orders under section 148A (d) and the notices under section 148 are quashed. As a corollary, the draft assessment orders under section 144B/144C cannot survive and are also quashed. 16. These writ petitions are allowed on the above terms. There will be no order as to costs. Consequently, the connected miscellaneous petitions are also closed. 17. We may also note the view of the Orissa High Court in Ambika Iron and Steel Pvt. Ltd. v. Principal Commissioner of Income Tax: 2022 SCC Online Ori 4162 : 2023 TaxPub(DT) 2428 (Ori-HC) which is also similar to the view as expressed by this court. The relevant extract of the said decision is reproduced below: 2. In each of these cases, the challenges to a notice issued by the Income Tax Department (hereinafter Department) under section 148 of the Income Tax Act, 1961, (IT Act) as it stood prior to the amendment by the Finance Act of 2021 with effect from 1-4-2021. In other words, in each of these cases, the notice under section 148 of the Income Tax Act has been issued prior to 1-4- 2021. In many of them, in fact, the date of the notice is 31-3-2021. 3. In each of these cases, the relevant assessment year (AY) in relation to which such notice has been issued is more than four years prior to the date of the reopening, i.e., it is beyond four years from the expiry of the assessment year in question and is clearly therefore, time barred in terms of the first proviso to section 147 of the Income Tax Act. 4. The stand of the Revenue that in view of the notifications issued by the Central Government in terms of the provisions of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, the said time limits stood extended is clearly untenable as those notifications were issued to deal with the situation arising from the amendment to the Income- tax Act by the Finance Act, 2021 with effect from 1-4-2021 whereas in these cases the notices were issued prior to 1-4-2021. 5. This court had an occasion in similar circumstances to quash an identical notice under section 148 of the Income Tax Act by its Order, dt. 20-11-2019 in Writ Petition (C) No. 7618 of 2009 and which order stood confirmed by this court by the dismissal of the Department's review petition, i. e., RVWPET No. 188 of 2020 by the Order, dt. 3-12-2021 which reads as under : 1. Although the point made by the Revenue in this review petition is that this court in its Order, dt. 20-11-2019 erred in drawing a distinction between an Additional Commissioner and Commissioner in terms of their authority, the point involved was that for the purpose of section 151 (1) of the Income Tax Act, 1961 since the reopening of the assessment was beyond four years, it had to have the prior approval of the Commissioner of Income-tax, and there was no such approval in the present case. 2. Consequently, no ground is made out for reviewing the Order, dt. 20-11-2019 in Writ Petition (C) No. 7618 of 2009. 3. The review petition is dismissed. 6. Indeed in the notice issued under section 148 of the Income Tax Act on 31- 3-2021 which has been challenged in Writ Petition (C) No. 41826 of 2021 it

ITA No.534/Bang/2026 Narayan Gouda, Bengaluru Page 17 of 23 has been stated that the notices had been issued after obtaining necessary satisfaction of the Joint Commissioner of Income-tax Range-I, Cuttack whereas the Officer authorized to record the necessary satisfaction had to be the Chief Commissioner of Income Tax/Commissioner of Income Tax. 7. For all the aforesaid reasons, in each of the above cases, the impugned notice under section 148 of the Income-tax Act is hereby quashed. The writ petitions are allowed, but in the circumstances, with no order as to costs.

9.4 Further, Hon’ble High Court of Bombay in the case of Ramesh Bachulal Mehta vs. Income Tax Officer, reported in [2025] 177 taxmann.com 606 (Bombay) has also held as under:

“3. Among several jurisdictional grounds challenging the re-opening of assessment for the relevant Assessment Year in the present Writ Petition, the Petitioner has inter-alia contended [in Ground B of this petition] that the order passed under section 148A(d) is bad in law because Respondent No.1 has not obtained appropriate prior approval/sanction mandated under section 151 and has sought relief in terms of prayer clause (a) of the Writ Petition which reads as under: "(a) that this Hon'ble Court may be pleased to issue a Writ of Certiorari or a Writ in the nature of Certiorari or any other appropriate Writ, Order or direction, calling for the records of the Petitioners case and after going into the legality and propriety thereof, to quash and set aside the notice dated 19.05.2021 issued u/s 148 [now treated as a notice u/s 148A(b) by the Respondents] (Exhibit B). issue letter dated 23.05.2022 (Exhibit C), order dated 13.07.2022 passed under section 148A(d) (Exhibit E-1) and the notice dated 15.07.2022 issued under section 148 of the Act (Exhibit F)" 4. Initially, Respondent No.1 had issued notice under section 148 (under the erstwhile law of re-assessment) on 19.05.2021 [placed at Exhibit B of the Petition] for Assessment Year 2016-17. Subsequently, in consequence of the judgment of the Hon'ble Supreme Court in the case of Union of India v. Ashish Agarwal [2022] 138 taxmann.com 64/286 Taxman 183/444 ITR 1 (SC), the communication dated 23.05.2022 [placed at Exhibit C of the Petition], was sent to the Petitioner intimating that the aforesaid notice issued under Section 148 of the Act (under old regime) would be treated as a show-cause notice issued in terms of Section 148A (b) of the Act (under new regime introduced by the Finance Act, 2021 w.e.f. 01.04.2021). It is

ITA No.534/Bang/2026 Narayan Gouda, Bengaluru Page 18 of 23 claimed by the Petitioner that when the said notice was issued, he was travelling and was unaware about the issuance thereof. Thereafter, Respondent No.1 passed an order under section 148A(d) on 13.07.2022 [placed at Exhibit E1 of the Petition] along with the notice dated 15.07.2022 issued under section 148 of the Act (Exhibit F of the Petition]. Undisputedly, the above referred order under section 148A(d) and notice under section 148 were passed/issued in pursuance of the provisions of the substituted law of re-assessment as amended by the Finance Act, 2021 and which came into force from 01.04.2021. 5. The Petitioner has contended that in the present case, the order under section 148A(d) dated 13.07.2022 was passed beyond three years from the end of the relevant Assessment Year 2016-17. Consequently, according to the provisions of section 151(ii), when more than three years have elapsed from the end of the relevant assessment year, the specified authority for obtaining the approval was either the Principal Chief Commissioner (PCCIT) or Principal Director General (PDGIT), or where there is no PCCIT or PDGIT, the Chief Commissioner (CCIT) or the Director General (DGIT). However, in paragraph 7 of the order dated 13.07.2022 passed under section 148A(d), Respondent No.1 has stated that before passing the said order, prior approval of Respondent No.2 i.e. the Principal Commissioner of Income Tax-27, Mumbai, was obtained and the said order was passed thereafter. This aspect remains uncontroverted by the Respondents. 6. In these facts, the limited point to be examined is whether the order dated 13.07.2022 passed under section 148A(d) for the Assessment Year 2016-17 after obtaining approval of Respondent No.2 [i.e. the PCIT-27, Mumbai], was in accordance with the provisions of section 151. 7. The Petitioner has drawn our attention to the decision of the Hon'ble Supreme Court in the case of Union of India v. Rajeev Bansal [2024] 167 taxmann.com 70 (SC)/[2024] 301 Taxman 238 (SC)/[2024] 469 ITR 46 (SC) and we deem it appropriate to refer to the said judgment where the Hon'ble Supreme Court has, while dealing with the issue of approval from the specified authority in terms of Section 151 of the Act, made the following observations: "iii. Sanction of the specified authority 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 assessments Sri krishna (P) Ltd. v ITO [1996] 87 Taxman 315/221ITR 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 151 Before expiry of four years Joint Commissioner (2) of the old from the end of the relevant regime assessment year

ITA No.534/Bang/2026 Narayan Gouda, Bengaluru Page 19 of 23 Section (1) of After expiry of four years from Principal Chief Commissioner or Chief the old regime the end of the relevant Commissioner or Principal assessment year Commissioner or Commissioner Section 151 (i) Three years or less than three Principal Commissioner or Principal of the new years from the end of the Director or Commissioner or Director regime relevant assessment year Section 151 More than three years have Principal Chief Commissioner or (ii) of the new elapsed from the end of the Principal Director General or Chief regime relevant assessment year Commissioner or Director General

ITA No.534/Bang/2026 Narayan Gouda, Bengaluru Page 20 of 23 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 20th March 2020 to 31st March 2021. TOLA will accordingly extend the time limit for the grant of sanction by the authority specified under 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 20th March 2020 and 31st March 2021, then the specified authority under section 151(i) has an extended time till 30th 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 20th March 2020 and 31st March 2021, then the specified authority under section 151(2) has time till 31st March 2021 to grant approval. The time limit for Section 151 of the old regime expires on 31st March 2021 because the new regime comes into effect on 1st April 2021. 78. For example, the three year time limit for assessment year 2017-2018 falls for completion on 31st March 2021. It falls during the time period of 20th March 2020 and 31st 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 30th 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; 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 showcause notices in terms of Section 148-A(b)." 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

ITA No.534/Bang/2026 Narayan Gouda, Bengaluru Page 21 of 23 exercising its jurisdiction under Article 142, is not bound by the procedural requirements of law High Court Bar Association v State of UP [2024] 160 taxmann.com 32/299 Taxman 21 (SC)/[2024] 6SCC267, 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." 8. On bare reading of the above extract of the judgment of Hon'ble Supreme Court in the case of Rajeev Bansal (supra), we find that the Hon'ble Supreme Court had clarified as under: 8.1 Under the substituted provisions of re-assessment as introduced by the Finance Act, 2021, the Assessing Officer is required to obtain prior approval or sanction of the 'Specified Authority' at four stages: (i) at first stage under Section 148A(a); (ii) at second stage under Section 148A(b); (iii) at third stage under Section 148A(d); and (iv) at fourth stage under Section 148. In the case of Ashish Agarwal (supra) the Hon'ble Supreme Court waived off the requirement of obtaining prior approval under section 148A(a) and Section 148A(b) of the Act only. 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 for issuing a notice under Section 148. 8.2 Under new regime, if income escaping assessment is more than Rupees 50 lakhs, a reassessment notice could be issued after the expiry of three years from the end of the relevant assessment year only after obtaining the prior approval of the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General. 8.3 Section 151(ii) of the substituted provisions prescribes a higher level of authority if more than three years have elapsed from the end of the relevant assessment year. Thus, non-compliance with the provisions of section 151 vitiates the jurisdiction of the Assessing Officer to issue a notice under section 148. 8.4 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. 9. In the present case the period of three years from the end of the Assessment Year 2016-17 fell for completion on 31st March 2020. Since the expiry date fell during the time period of 20th March 2020 and 31st March 2021 contemplated under Section 3(1) of Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (for short "TOLA"), the authority specified under Section 151(i) of the new

ITA No.534/Bang/2026 Narayan Gouda, Bengaluru Page 22 of 23 regime could have granted sanction till 30th June 2021. On perusal of the order, dated 13.07.2022, passed under Section 148A(d) of the Act, we find that the aforesaid order was passed after taking approval from Principal Commissioner of Income Tax (Respondent No.2). Since the aforesaid order was passed after the expiry of three years from the end of the Assessment Year 2016-17, as per the substituted provisions of re-assessment, the authority specified under Section 151(ii) of the Act (i.e. Principal Chief Commissioner or Chief Commissioner) was required to grant approval. Accordingly, we conclude that in the present case the approval has been obtained from the authority specified under Section 151(i) of the new regime instead of the authority specified under Section 151(ii) of the new regime. 10. The Hon'ble Supreme Court in the above case has drawn an illustration in paragraph 78 of it's order in the context of Assessment Year 2017-18, wherein it is categorically held that the authority specified under section 151(i) can accord sanction only upto 30.06.2021. This illustration makes it absolutely clear that when the period of three years from end of relevant Assessment Year expired between 20.03.2020 and 31.03.2021, the extension by virtue of TOLA was upto 30.06.2021 and not beyond. Thus, it can be said that the period of three years from the end of the relevant Assessment Year (here AY 2016-17) expired on 30.06.2021, whereas the Respondent No.1, despite passing the order on 13.07.2022 in repsect of Assessment Year 2016-17, has obtained approval of Respondent No.2 who is not the authority as prescribed under section 151(ii). 11. Non-compliance by Respondent No.1 with the provisions contained in Section 148A(d) read with Section 151(ii) vitiates the jurisdiction of the Respondent No. 1 to issue a notice under Section 148 of the Act. 12. We are clearly of the view that the present matter stands covered by the decision of Hon'ble Supreme Court in the case of UPI v. Rajeev Bansal (supra). We accordingly hold that the order dated 13.07.2022 passed under Section 148A(d) of the Act and the consequential notice issued under section 148 dated 15.07.2022 are bad in law for being violative of the provisions of Section 151(ii) of the Act. Hence they are required to be quashed and set aside. 13. We, accordingly, set aside the impugned order dated 13.07.2022 passed under section 148A(d), the Notice issued under Section 148 and all other proceedings/orders emanating therefrom and allow the writ Petition in terms of Prayer Clause (a) of the petition.”

9.5 Respectfully following the above decisions, we are of the considered opinion that as in the present case more than 3 years have already elapsed from the end of the relevant assessment year, the specified authority for the purpose of section 148 & 148A(d) of the Act shall be Principal Chief Commissioner of Income Tax/Chief Commissioner of Income Tax. We accordingly held that the order

ITA No.534/Bang/2026 Narayan Gouda, Bengaluru Page 23 of 23 dated 28/07/2022 passed under Section 148A(d) of the Act and the consequential notice issued under section 148 of the Act dated 28/07/2022 are illegal & bad in law for being violative of the provisions of Section 151(ii) of the Act. Hence they are required to be quashed and set aside. We, accordingly, set aside the impugned order dated 28/07/2022 passed under section 148A(d), the Notice issued under Section 148 and all other proceedings/orders emanating therefrom and allow the appeal of the assessee.

Order pronounced in the open court on 6th Oct, 2026

Sd/- Sd/- (Balakrishnan S.) (Keshav Dubey) Accountant Member Judicial Member

Bangalore, Dated 6th Oct, 2026. VG/SPS

Copy to:

Asst. Registrar, ITAT, Bangalore.

Digitally signed P G by P G RAJANI Date: RAJANI 2026.10.14 16:43:30 +05'30'