VANITA ANIL MEHTA,MUMBAI vs. ITO 33(1)(1), MUMBAI

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ITA 7836/MUM/2026Status: HeardITAT Mumbai05 October 2026AY 2018-20199 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the issue regarding the validity of the Section 148 notice, issued beyond three years with approval from the PCIT instead of the PCCIT/CCIT, was no longer res integra and stood settled by the Supreme Court's judgment in Union of India vs. Rajeev Bansal. The Tribunal noted that the Supreme Court clarified that for reassessment notices issued after 30.06.2021, the specified authority under Section 151(ii) of the Act (new regime) should be the PCCIT/CCIT, not the PCIT. In the present case, the order under Section 148A(d) and the notice under Section 148 were issued on 20-04-2022, which was after 30.06.2021, with the approval of the PCIT, Mumbai-8. The Tribunal found this to be contrary to the Supreme Court's ruling. Consequently, the Tribunal quashed and set aside the order passed under Section 148A(d) and the consequential notice issued under Section 148, both dated 20-04-2022, as being bad in law. As a result, the assessment order dated 14-02-2024 was also quashed. The Tribunal allowed the legal ground of appeal and did not adjudicate on other legal grounds or the merits of the case, as they had become academic.

What were the facts?

The assessee, Vanita Anil Mehta, filed an appeal against the order of the CIT(A)/NFAC for Assessment Year (AY) 2018-19. The appeal arose from an assessment order under Section 147 read with Section 144B of the Income Tax Act, 1961, dated 14/02/2024. The assessee had claimed an exemption of Rs. 29,44,000/- under Section 10(38) on account of long-term capital gains from the sale of shares of M/s Aditya Consumer Marketing Ltd. The Assessing Officer (AO) reopened the assessment under Section 147, rejecting the exemption claim and making an addition under Section 68. The CIT(A) upheld the AO's decision. The assessee's primary contention before the Tribunal concerned the validity of the notice issued under Section 148.

What were the issues?

1. Whether the notice issued under Section 148 of the Income Tax Act, 1961, for AY 2018-19, beyond three years from the relevant assessment year, with approval from the Principal Commissioner of Income Tax (PCIT) instead of the Principal Chief Commissioner of Income Tax (PCCIT)/Chief Commissioner of Income Tax (CCIT), is valid, thereby affecting the jurisdiction of the Assessing Officer, as per Section 151(ii) of the Act? Assessee's Contention: The assessee argued that the notice under Section 148 was issued beyond the three-year period, and the approval for its issuance was granted by the PCIT, Mumbai-8. However, as per Section 151(ii) of the Act, for notices issued beyond three years, the sanction authority should have been the PCCIT/CCIT. Therefore, the reassessment proceedings and the consequent assessment order suffered from a lack of valid jurisdiction. The assessee relied on the Bombay High Court judgment in Alag Property Construction Private Limited v. ACIT and the Supreme Court judgment in Union of India vs. Rajeev Bansal. Revenue's Contention: The Revenue's representative (Sr. DR) could not distinguish the High Court judgment and relied upon the orders of the CIT(A) and AO.

Which sections of the Income-tax Act were involved?

Section 10(38),Section 68,Section 115BBE,Section 147,Section 148,Section 148A,Section 149,Section 151,Section 250,Section 271AAC(1),Section 234B,Section 234C,Section 234D

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “F”, MUMBAI

Before: SHRI PAWAN SINGH & SHRI RAKESH KUMAR LODHA

For Appellant: Shri Gaurav Sarda, CA
For Respondent: Shri Vikas Chandra, Sr
Hearing: 29.09.2026Pronounced: 05.10.2026

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “F”, MUMBAI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER And SHRI RAKESH KUMAR LODHA, ACCOUNTANT MEMBER ITA No. 7836/M/2026 Assessment Year: 2018-2019 VANITA ANIL MEHTA ITO 33(1)(1) 42, Shreeji Kutir, Kautilya Bhavan, Kandivali West, Mumbai – Vs. Bandra East, Mumbai – 400 067 400 050 Maharasthra Maharasthra PAN-AFNPM8256Q (Appellant) (Respondent) Present for: Assessee by : Shri Gaurav Sarda, CA Revenue by : Shri Vikas Chandra, Sr. DR

Date of Hearing : 29.09.2026 Date of Pronouncement : 05.10.2026 O R D E R

Per : Rakesh Kumar Lodha, Accountant Member:

The present appeal has been preferred by the Assessee against the order dated 20/05/2026, passed by the Learned Commissioner of Income Tax Appeals [Ld.CIT(A)]/National Faceless Appeal Center (NFAC), Delhi, under Section 250 for the Assessment Year 2018-19, arising out of the assessment order under Section 147 r.w.s. 144B of the Income Tax Act (the Act), 1961, dated 14/02/2024.

2.

The Assessee has raised the following grounds of appeal:

1.

On facts and in the circumstances of case and in law the learned CIT (A) NFAC has erred in confirming additions of Rs.29,44,000/- on account of non genuine Long Term Capital gain/loss claimed under section 10(38) on account of sale of shares of M/S Aditya Consumer Marketing Ltd (ACML) without appreciating the submission/evidence placed during the course of appeal proceeding as well as in assessment proceeding. 2. CIT (A) erred in confirming the exemption claimed U/S 10(38) of the I.T. ACT without considering documentary evidences, CIT (A) finding is on assumptions, presumption, surmises. 3. CIT (A) erred in confirming the addition of Rs.29,44,000/- unexplained cash credit U/S 68 of the Income Tax Act taxable rate applied U/S 115 BBE, where as sale of shares of ACML is genuine sale of shares. 4. CIT (A) failed to discussed the validity of provision of section 68 of the Income Tax Act, as Appellant is individual and not maintaining books of accounts. 5. CIT (A) erred in drawing conclusion that appellant had introduced his own unaccounted money by way of sale proceeds of shares into Bank account without any evidences on record that own money was passed to Shri Naresh Jain and his associates and failed bring any cash trail on record. 6. A.O. erred in initiating penalty proceeding U/S 27AAC(1).

7.

A.O. erred in charging Interest u/s 234B/C/D of the I.T. Act. 8. CIT (A) erred in confirming that notice issued u/s 148 is valid. a) Sanction of notice u/s 151 of the Income Tax Act - Approval for issue of notice u/s 149A(d) and u/s 148 was obtained from PCIT instead of CCIT, as notice beyond 3 years. b) There is violation of provision of section 149(b) as the income escaped assessment is below Rs.50 Lakh (Rs.29,44,000/-). Hence notice issued u/s 148 is not valid.

3.

The brief relevant facts of the case are that the Assessee is an individual, filed her return of income declaring the total income of ₹34,23,040/-, including the exempted income of ₹29,44,000/- under Section 10(38) of the Act for the long-term capital gain earned on the sale of penny stocks being shares of Aditya Consumer Marketing Limited. Subsequently, the Assessing Officer, based on the information, noticed her involvement in taking bogus long-term capital gains from the searched person Mr. Naresh Jain, therefore, her case was reopened u/s 147 of the Act and claim of exemption u/s 10(38) has been rejected. Accordingly, the exemption under Section 10(38) of the Act of ₹ 29,44,000/- disallowed and corresponding addition u/s 68 made iin the assessment order.

4.

The Ld.CIT(A) also upheld the rejection of exemption under Section 10(38) of ₹29,44,000/- and treated that income as the income u/s 68 of the Act on the basis of search information and statements of Naresh Jain Group persons.

5.

Now, the Assessee is in appeal before the Tribunal against the dismissal of Appeal by the Ld.CIT (A), the Ld.AR of the Assessee stated that before proceeding on the merit of the case, invited our attention to the copy of notice under Section 148 provided at paper book page 1, containing the date of issue of 20th notice dated April 2024 for the assessment year 2018-2019, with an approval of the Ld. PCIT, Mumbai-8. The Ld.AR submitted that impugned statutory notice under section 148 of the Act was issued beyond the period of 3 years and approval under section 151 of the Act was accorded by the learned PCIT, Mumbai-8, whereas, in terms of the applicable provision of section 151(ii) of the Act, the sanction authority for grant of an approval for issue of notice u/s 148, beyond 3 years should have been Pr. CCIT/CCIT. Therefore, the basis for reassessment proceedings, and subsequent assessment order suffered from assumption of valid jurisdiction in terms of the provisions of section 151(ii) of the Act, thus, in the present facts, the impugned notice under section 148, without the sanction of appropriate authority specified under section 151(ii) of the Act, i.e. PCCIT/ CCIT. The Assessee placed reliance upon the judgment of the Judicial High Court of Mumbai in case of AlagProperty Construction Private Limited v. ACIT (2025) 179 Taxmann.com 578(Bombay), dated September 8, 2025, wherein the issue has been discussed in detail and held that para:

8.

On bare reading of the above extract of the judgment of the Hon'ble Supreme Court in the case of Rajeev Bansal (supra), we find that the Hon'ble Supreme Court had clarified as under:- (a) 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 - at the first stage under Section 148A(a), at the second stage under Section 148A(b), at the third stage under Section 148A(d), and at the 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 issuing a notice under section 148. (b) Under the 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 previous year only after obtaining the prior approval of the Principal Chief Commissioner or the Principal Director General or the Chief Commissioner or the Director General. (c) Section 151(ii) of the new regime prescribes an approval of a higher authority, if more than 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 vitiates their jurisdiction to issue a notice under section 148. (d) Grant of sanction by the specified authority is a precondition for the assessing officer to assume jurisdiction to issue a notice under section 148. 9.In the present case, the period of three years from the end of the A.Y. 2017-18 fell for completion on 31st March 2021. As the expiry date fell during the time period of 20th March 2020 and 31st March 2021, under Section 3(1) of the 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 regime could have granted sanction only till 30th June 2021.

10.On perusal of the order dated 18.08.2022, 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, as well as the notice under section 148 was issued, after the expiry of three years from the end of A.Y. 2017-18 as per the substituted provisions of re-assessment, the authority specified under Section 151(i) (i.e. Principal 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(ii) of the new regime instead of the authority specified under Section 151(i) of the new regime. 11.The Hon'ble Supreme Court in the above case has drawn an illustration in para 78 of its order in the context of A.Y. 2017-18 (which is also the relevant Assessment year in the present Writ Petition) wherein it is categorically held 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 (in the present case A.Y. 2017-18) expired on 30.06.2021, whereas despite passing order under Section 148A(d) on 18.08.2022, and issuing notice under section 148 on 23.08.2022 [in respect of Assessment Year 2017-18], has obtained approval of Respondent No.2 who is not the authority as prescribed under section 151(ii) of the new regime. 13.We are clearly of the view that the present matter stands covered by the decision of Hon'ble Supreme Court in the case of Rajeev Bansal (supra) and we are bound by it. Accordingly, we hold that the order dated 18.08.2022 passed under Section 148A(d) of the Act and the consequential notice issued under section 148 dated and 23.08.2022 are bad in law, and hence, are required to be quashed and set aside. 14.We accordingly set aside the impugned order dated 18.08.2022 passed under Section 148A(d) of the Act and the consequential notice issued under section 148 dated 23.08.2022, and all other proceedings/orders emanating therefrom. 15.Rule is made absolute in the aforesaid terms and the Writ Petition is also disposed of in terms thereof. No order as to costs. 6. The facts of the present case are identical and herein also notice u/s 148 of the Act has been issued beyond 3 years from the relevant assessment year, and approval was obtained from the Principal Commissioner of Income Tax, Mumbai-8, instead, specified authority under section 151(ii), thus, prays for quash of notice u/s 148 of the Act.

7.

Per contra, the Ld.DR could not distinguish the judgment of Hon’ble High court through any judgment, however, he relied upon the orders of the Ld.CIT(A) and AO.

8.

We have perused the notice u/s 148 of the Act and judgment of the Hon’ble jurisdictional High Court as relied upon by the Ld. AR. We found that the issue that arises for consideration in the present appeal is that in case where order u/s 148A(d) of the Act (new regime) has been passed and notice u/s 148 of the Act (new regime) has been issued for the AY 2018-19, with the approval of Pr. CIT u/s 151(i) of the Act was lawful or that should have been obtained from Pr. CCIT u/s 151(ii) of the Act is required. In our view, the above issue is no longer res-integra and stands settled by the judgment of the Hon’ble Supreme Court in the case Union of India vs. Rajeev Bansal (2024) 167 Taxmann.com 70, wherein, while dealing with the issue of approval from “specified authority” in terms of section 151 of the Act, made it clear that the specified authority u/s 151(i) of the Act (new regime) could grant sanction till 30.06.2021 and not thereafter. In the present case, it is an undisputed fact that order u/s 148A(d) and notice u/s 148 of the Act (new regime) were issued on 20-04-2022, i.e. after 30.06.2021, with approval of the PCIT, Mumbai-8. However, as per the judgement of the Hon’ble Supreme Court in case of Rajeev Bansal (supra), the authority specified u/s 151(ii) was the Pr. CCIT and not Pr.CIT. 9. The jurisdictional High Court, Mumbai in case of Alag Property Construction (P) Ltd (supra), held that in absence of the approval from the “specified authority” u/s 151(ii) of the Act, the AO lacked jurisdiction to pass order u/s 148A(d) and issue notice u/s 148 of the Act (new regime). 10. Therefore, the impugned order u/s 148A(d) and notice u/s 148 of the Act, both dated 20-04-2022, are quashed and set aside as being bad in law. Resultantly, the order passed u/s 147 r.w.s. 144B dated 14-02-2024 is quashed. Since, we have already quashed notice u/s 148 of the Act, allowed the legal ground of appeal, we do not find any reason to adjudicate other legal grounds as also on merits of the case have become academic and are left open. 11. In the result, the appeal of the Assessee is allowed.

Order pronounced in the open court on 05.10.2026

Sd/- Sd/- (PAWAN SINGH) (RAKESH KUMAR LODHA) JUDICIAL MEMBER ACCOUNTANT MEMBER

Mumbai, Dated 05.10.2026 Sharath Kumar,PS.

Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The DR Concerned Bench //True Copy// By Order Dy./Asstt. Registrar, ITAT, Mumbai.

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