ARUNAVA BHATTACHARJEE,KOLKATA vs. THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 7(1), KOLKATA, KOLKATA

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ITA 569/KOL/2026Status: DisposedITAT Kolkata13 October 2026AY 2017-1810 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessment order was bad in law and liable to be quashed on two primary grounds. Firstly, regarding the validity of the notice under section 148, the Tribunal found that the approval for reopening was obtained from the PCIT-1, Kolkata. However, since the reopening was initiated after a period of three years from the end of the relevant assessment year (AY 2017-18), the approval ought to have been obtained from the Principal Chief Commissioner of Income Tax (PCCIT) or a higher specified authority, as mandated by Section 151(ii) of the Act. The approval from the PCIT was thus invalid, rendering the notice under section 148 and the consequent assessment void, aligning with the Supreme Court's decision in Union of India vs. Rajeev Bansal. Secondly, the Tribunal noted that the assessee had complied with the notice under section 148 by intimating that the return filed under section 139(1) should be treated as the return in response to the section 148 notice. In such a scenario, it was mandatory for the AO to issue a notice under section 143(2), which was not done. This omission rendered the assessment order invalid, following the Delhi High Court's decision in PCIT v. S.G. Portfolio (P.) Ltd. Regarding the additions under section 56(2)(vii)(b), the Tribunal held that the transaction of purchase was completed in the financial year 2012-13 (AY 2013-14) when the entire consideration was paid and possession was taken. Since the provisions of section 56(2)(vii)(b) became effective from AY 2014-15, they were not applicable to the instant assessment year. The Tribunal relied on a coordinate bench decision in Bajrang Lal Naredi v. ITO to delete the addition. Consequently, all grounds challenging the assessment order were allowed.

What were the facts?

The assessee, Arunava Bhattacharjee, filed an appeal against the order of the National Faceless Appeal Centre, Delhi, for Assessment Year (AY) 2017-18. The appeal challenged the assessment order passed by the Assessing Officer (AO) under sections 147/144/144B of the Income-tax Act, 1961, dated 30.05.2023. The primary contention was that the notice under section 148, which initiated the reassessment, was based on invalid approval, rendering the assessment void. The notice u/s 148 was initially issued on 31.04.2021, but subsequently, a show cause notice u/s 148A(b) was issued, followed by an order u/s 148A(d) on 26.07.2022, after obtaining approval. A fresh notice u/s 148 was then issued on 26.07.2022. The AO assessed the income at ₹9,22,33,123/-. The assessee also challenged additions made under section 56(2)(vii)(b) and section 50C.

What were the issues?

1. Whether the assessment order passed under section 147/144/144B is bad in law and a nullity, as the notice issued under section 148 was based on invalid approval not in accordance with Section 151(ii) of the Income-tax Act, 1961? Assessee's contention: The approval for issuing the notice u/s 148 was obtained from the PCIT-1, Kolkata. However, as the reopening was made after a period of three years from the end of the relevant assessment year (AY 2017-18), the approval should have been obtained from the Principal Chief Commissioner of Income Tax (PCCIT), Kolkata, as per Section 151(ii). The approval from the PCIT was incorrect, making the notice and subsequent assessment void. Reliance was placed on Union of India vs. Rajeev Bansal. Revenue's contention: The revenue relied on the orders of the authorities below. 2. Whether the assessment order passed by the AO is invalid and liable to be quashed for not issuing a notice under section 143(2) of the Act, despite the assessee complying with the notice issued under section 148? Assessee's contention: The assessee complied with the notice u/s 148 by treating the return filed u/s 139(1) as the return in response to the notice. The AO failed to issue a mandatory notice u/s 143(2) thereafter. Revenue's contention: Not recorded. 3. Whether the addition of ₹1,53,05,847/- under section 56(2)(vii)(b) and section 50C of the Act is justified, considering the property was acquired in AY 2013-14, prior to the applicability of the amended provisions of section 56(2)(vii)(b)? Assessee's contention: The agreement to purchase the property was dated 10.08.2012, and the entire consideration was paid in FY 2012-13. The registration occurred later, but the transaction was complete in FY 2012-13. The provisions of section 56(2)(vii)(b) are effective from AY 2014-15 and thus not applicable. Reliance was placed on Bajrang Lal Naredi v. ITO. Revenue's contention: Not recorded.

Which sections of the Income-tax Act were involved?

Section 147,Section 144,Section 144B,Section 148,Section 148A,Section 151,Section 151(ii),Section 142(1),Section 139(1),Section 143(2),Section 56(2)(vii)(b),Section 50C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, KOLKATA

For Appellant: Shri Abhishek Bansal, AR
For Respondent: Shri Pramod Lakra, DR
Hearing: 12.08.2026Pronounced: 13.10.2026

Per Rajesh Kumar, AM:

This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 23.01.2026 for the AY 2017-18.

2.

In the ground no. 2(i) , the assessee has challenged the assessment order passed by the ld. AO u/s 147/ 144 of the Income-tax Act, 1961 (the Act) read with section 144B of the Act dated 30.05.2023, on the ground that the same is passed consequent to a notice issued u/s 148, which is based on the invalid approval not in accordance with the Provisions of

ITA No. 569/KOL/2026 Arunava Bhattacharjee; A.Y. 2017-18 Section 151(ii) of the Income-tax Act, 1961 (the Act) and therefore, the assessment framed is bad in law and nullity.

3.

The facts in brief are that the notice u/s 148 of the Act was issued originally on 31.04.2021. Thereafter, in view of the Supreme Court order in the case of Union of India vs. Ashish Agarwal [2022] 138 taxmann.com 64 (SC)/[2022] 286 Taxman 183 (SC)/[2022] 444 ITR 1 (SC)[04-05-2022], a show cause notice u/s 148A(b) of the Act was issued and thereafter the order u/s 148A(d) of the Act was passed on 26.07.2022, after taking the approval from the competent authority. Finally, the notice u/s 148 of the Act was issued on 26.07.2022, which was not complied with by the assessee. During the assessment proceedings, the ld. assessee complied with the directions of the AO in notice u/s 142(1) and questionnaire and also various show cause notices issued by the AO. Finally, the income was assessed at ₹9,22,33,123/- vide order dated 30.05.2023, passed u/s 147/ 144/144B of the Act, which was confirmed by the ld. Commissioner of Income-tax (Appeals).

4.

At the outset, the ld. Counsel for the assessee submitted that the assessment was framing in consequence to notice issued u/s 148 of the Act which is invalid and nullity in the eyes of law as the same has been issued with the prior approval of ld. PCIT-1, Kolkata. The ld. AR submitted that the said approval is not in accordance with the Provisions of Section 151(ii) of the Act as the approval should have been granted by the ld. PCCIT, Kolkata as the reopening was made after a period of three years from the end of the relevant assessment year for Page | 2

ITA No. 569/KOL/2026 Arunava Bhattacharjee; A.Y. 2017-18 which approval is required to be obtained from the competent authority as mentioned in Section 151(ii) of the Act and not from the authority as mentioned u/s 151(i) of the Act. The ld. AR submitted that the approval is obtained from ld. PCIT-1, Kolkata which is wrong and therefore, all the subsequent proceedings including the notice u/s 148 of the Act as well as the assessment framed by the ld. AO are bad in law. The ld. AR relied on the decision of Hon'ble Apex Court in case of Union of India vs. Rajeev Bansal [2024] 167 taxmann.com 70 (SC)/[2024] 301 Taxman 238 (SC)/[2024] 469 ITR 46 (SC)[03-10-2024].

5.

The ld. DR on the other hand heavily relied on the order of the authorities below.

6.

After hearing the rival contentions and perusing the materials available on record, we find that the assessment year involved is A.Y. 2017-18. We further note that the notice u/s 148 of the Act was issued by the ld. AO after obtaining approval from the ld. PCIT-1, Kolkata, whereas the reopening has been made after a period of three years from the end of the relevant assessment year. In our opinion in terms of Section 151(ii) of the Act, prior approval/sanction must be taken from the Principal Chief Commissioner of Income Tax (PCCIT), Chief Commissioner (CCIT), or higher specified authority when a reassessment notice under Section 148 is issued beyond three years from the relevant assessment year. Therefore , the approval has to be obtained from ld. Principal Chief Commissioner of Income Tax-1, Kolkata (PCCIT) in terms of Section1 151(ii) of the Act and not from PCIT-1, Page | 3

ITA No. 569/KOL/2026 Arunava Bhattacharjee; A.Y. 2017-18 Kolkata. Consequently, the notice issued by the ld. AO u/s 148 of the Act is invalid as the same is based upon the invalid approval obtained by the ld. AO. Similarly, the consequent assessment framed by the ld. AO is also bad in law and cannot be sustained. The case of the assessee is squarely covered by the decision of Hon'ble Supreme Court in case of Union of India Vs. Rajeev Bansal (supra) wherein it has been held that the approval granted by wrong authority in terms of provisions of section 151 of the Act would render the proceedings as well as the assessment as null and void. Therefore considering the facts of the case and also the ratio laid down in the above decision , we are inclined to quash the approval granted u/s 151 of the Act and also the consequent notice issued u/s 148 of the Act as well as the assessment framed u/s 147/144 of the Act. The ground no. 2(i) is accordingly allowed.

7.

The issue raised in ground no. 2(vii) is against the order of ld. CIT(A) upholding the order of AO which is invalid and nullity in the eyes of law as it was passed by the AO sans notice u/s 143(2) of the Act despite the assessee duly complying the notice issued u/s 148 of the Act.

8.

We have heard the rival contentions and perused the material on records. As stated above notice u/s 148 of the Act was issued on 26.7.2022 which was complied by the assessee vide letter dated 24.08.2022 intimating the AO that the return of income filed u/s 139(1) on 30.4.2021 may be treated as the return filed in response to the notice u/s 148 of the Act. In our opinion this amounted to filing of return in Page | 4

ITA No. 569/KOL/2026 Arunava Bhattacharjee; A.Y. 2017-18 compliance to notice u/s 148 of the Act. Once that communication is on record, it is mandatory on the part of the AO to issue a notice u/s 143(2) of the Act for the AO, however ,the same has not been issued and therefore the assessment order passed by the AO is invalid and has to be quashed. The issue raised by the appellant is fully covered by the decision of the Hon’ble Delhi High Court in the case of PCIT v. S.G. Portfolio (P.) Ltd.[2023] 151 taxmann.com 307 (Delhi) wherein it held that where notice under section 148 was issued to appellant and there was material on record, indicative of fact that appellant had communicated to Assessing Officer that its original return be treated as a return in response to notice issued under section 148 of the Act , since record showed that appellant's return was in place, Assessing Officer was required to issue a notice under section 143(2) and upheld the decision of the CIT(A) and the tribunal quashing the assessment order. Therefore respectfully following the above decision, the assessment order passed by the AO is held to be invalid and is hereby quashed. Consequently the ground no. 2(vii) is allowed.

9.

The issue raised in ground no. 4, 5 and 6 is against the order of ld. CIT(A) confirming the addition of ₹ 1,53,05,847/- as made by the AO by taking the cost of acquisition of ₹ 1,12,03,913/- instead of 2,08,39,101/- and also by invoking the provisions of section 56(2)(vii)(b) of the Act which are not applicable to A.Y. 2013-14.

10.

The facts in brief are that the assessee entered into an agreement to purchase dated 10.8.2012 with M/S Creative Page | 5

ITA No. 569/KOL/2026 Arunava Bhattacharjee; A.Y. 2017-18 Residency Pvt Ltd. for a consideration of 2,08,39,101/- qua Flat No. 2601, 25th Floor, Tower 8, "Uniworld City Heights". With the signing of the agreement a sum of ₹ 60,00,000/-was paid to the seller and balance of ₹ 1,43,00,000/- was payable to the seller and also ₹ 5,39,101/- to M/S Bengal Unitech Universal Infrastructure Pvt Ltd. The assessee paid the entire outstanding consideration between 13.8.2012 to 12.9.2012. According the seller M/S Creative Residency Pvt Ltd filed a nomination letter and indemnity bond on18.9.2012 to M/S Bengal Unitech Universal Infrastructure Pvt Ltd. thereby transferring the all the rights and interest in the said property in favour of the assessee. The registration of the said property was done during the impugned financial year 2016-17 though the property was acquired in financial year 2012-13. The said flat was originally booked by Bajrang Lal Churiwala and Sarla Churiwalawith from M/s Bengal Unitech Universal Infrastructure Pvt. Ltd. ("BUUIPL") who was the original allottee and thereafter nominated M/s Creative Residency Pvt. Ltd. ("CRPL") on 20.07.2006 which is evidenced by promoters communications appearing at PB pages 14-15 of the paper book. The assessee agreed to acquire the flat from CRPL for Rs.2,08,39,101/-, paying Rs.2,03,00,000/- to CRPL through banking channels between 13.08.2012 and 12.09.2012 as evidenced by the Agreement to Sell dated 10.08.2012 attached at PB Page No. 16-19 of the paper book and bank statement appearing at PB Pages 20-21. The assessee paid a further sum of Rs.6,06,695/- directly to BUUIPL the details whereof are appearing at PB Page 498 of the paper. Thus the assessee paid Rs.2,09,06,695/- in all, during the financial Page | 6

ITA No. 569/KOL/2026 Arunava Bhattacharjee; A.Y. 2017-18 year 2012-13. A Nomination Letter and Indemnity Bond dt. 18.09.2012 executed by CRPL are appearing at PB Pages 23- 24 of the paper book. It was submitted before the AO that the appellant took physical possession on 13.03.2013 as is evident from the evidence filed at Page 68 of the paper book. It was also submitted that the assessee has borne the maintenance charges from that month, March 2013 which are available at pages 499-511 of the paper book. It was submitted that the Deed of Conveyance was registered by BUUIPL directly in the appellant’s favour on 05.05.2016, with a stamp duty value of Rs.2,65,09,760/-. Pertinent to mention that during the year no consideration was paid by the assessee as the entire consideration was paid in the financial year 2012-13. The AO held the transaction between the assessee and M/S Creative Residency Pvt Ltd. to be colourable transactions as the latter was not having a valid title and the title still vested in M/S Bengal Unitech Universal Infrastructure Pvt. Ltd. ("BUUIPL)". The AO ,however, was not convinced with the plea of the assessee and added ₹ 1,53,05,847/- to the income of the assessee by taking the cost of acquisition at ₹ 1,12,03,913/- instead of ₹ 2,08,39,101/- and the stamp duly valuation at ₹ 2,65,09,760/- in the impugned financial year by ignoring the fact that there the transaction was completed in the financial year 2012-13 itself when the entire consideration was paid and possession was also taken thereby making an addition u/s 56(2)(vii) of the Act to the income of the assessee besides adding making addition of capital gain of ₹ 2,70,72,246/- u/s 50C of the Act.

ITA No. 569/KOL/2026 Arunava Bhattacharjee; A.Y. 2017-18 11. The ld. CIT(A) affirmed the order of the AO by ignoring the submissions and contentions raised by the assessee in the appellate proceedings.

12.

We have heard the rival contentions and perused the materials on records. We note that a flat was purchased by the assessee vide agreement to purchase dated 10.08.2012 which was apparently before the introduction of section 56(2)(vii)(b) on the statue book which provides for charging difference between consideration received from sale of immovable property and stamp duty value which was inserted by the Finance Act, 2013 w.e.f. 01.04.2014, i.e. from AY 2014-15. We have examined the facts before us in the form of agreement to purchase entered into with M/S Creative Residency Pvt Ltd. the seller, the banks statement evidencing all the payments in financial years 2012-13 and also the nomination letter and indemnity bond dated 18.9.2012 executed by the seller which are all available in the paper book. Therefore in our considered opinion the the transaction of purchase was complete in the assessment year 2013-14 when the assessee made the entire payment and also took the possession of the fat. We also note that the assessee has been incurring the monthly maintenance charges since March 2013. Considering the facts of the case , we are of the considered view that order of the ld. CIT(A) upholding the order of AO is wrong and can not be sustained for the reasons that the provisions of section 56(2)(vii)(b) were effective from assessment year 2014-15 and not from the instant assessment year at hand. The issue is squarely Page | 8

ITA No. 569/KOL/2026 Arunava Bhattacharjee; A.Y. 2017-18 covered by the decision of the Coordinate Bench in the case of Bajrang Lal Naredi v. ITO, Jamshedpur, ITA No.327/Ran/2018 dt. 20.01.2020 (Ranchi Trib.) wherein similar addition was deleted coordinate bench. The operative part of the decision is extracted as under:

“6. We have carefully considered the rival submissions on the issue. In the instant appeal, the applicability of Section 56(2)(vii)(b) of the Act as amended by Finance Act, 2013 and applicable to AY 2014-15 in question. On a perusal of pre-amended provisions of Section 56(2)(vii)(b) of the Act, we gather that where an individual or HUF receives from any person any immovable property without consideration, the provisions of pre-amended Section 56(2)(vii)(b) of the Act would apply. The aforesaid provisions was however substituted by Finance Act, 2013 and made applicable to AY 2014-15 onwards. As per the amended provisions, the scope of substituted provision was expanded to cover purchase of immovable property for inadequate consideration as well. It is alleged on behalf of the Revenue that the amended provision will apply in view of the fact that registration has been carried out during the FY 2013-14 concerning AY 2014-15 where the amended law came into force. The assessee, on the other hand, seeks to claim that his case would be covered by pre-amended provision in view of the fact that agreement for purchase of the property was entered into with the prospective seller in FY 2011-12 relevant to AY 2012-13 at which time the new law did not come into play. It was claimed that the purchase consideration was duly paid at the time of agreement in FY 2011-12 and the purchase was de facto completed except for the formality of registration. It was thus submitted that the transactions entered prior to the FY 2013-14 would be governed by the pre-amended provision which triggers the applicability of such provision only where there is a total lack of consideration and does not cover a case of inadequacy in purchase consideration. 7. We find merit in such plea advanced on behalf of the assessee. It is not in dispute that purchase transactions of immovable property were carried out in FY 2011-12 for which full consideration was also parted with the seller. Mere registration at later date would not cover a transaction already executed in the earlier years and substantial obligations have already been discharged and a substantive right has accrued to the assessee therefrom. The pre- amended provisions will thus apply and therefore the Revenue is debarred to cover the transactions where inadequacy in purchase consideration is alleged. We thus find merit in the issue raised on behalf of the assessee. The order of the CIT(A) is accordingly set aside and the AO is directed to delete the additions made under s. 56(2)(vii)(b) of the Act and restore the position claimed by the assessee. ”

ITA No. 569/KOL/2026 Arunava Bhattacharjee; A.Y. 2017-18 13. Considering the facts and circumstances of the case and respectfully following the decision of the co-ordinate Bench, we set aside the order of CIT (A) on this issue and direct the ld. AO to delete the addition by holding that the purchase of flat has taken place in a financial year 2012-13 relevant to A.Y. 2013-14 and the provisions of Section 56(2)(vii)(b) of the Act are not applicable as the same are effective from A.Y. 2014-15. Ground nos. 4,5 and 6 are allowed.

14.

The other grounds are left open to be decided in later stage if need arises for the same.

15.

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

Order pronounced on 13.10.2026.

Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 13.10.2026 Sudip Sarkar, Sr.PS Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT DR, ITAT, 4. 5. Guard file. BY ORDER, True Copy//

Dy. Registrar Income Tax Appellate Tribunal, Kolkata Page | 10

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