DCIT, CENTRAL CIRCLE - 4(4), KOLKATA, KOLKATA vs. SHIVAM DHATU UDYOG PRIVATE LIMITED, KOLKATA

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ITA 1435/KOL/2025Status: HeardITAT Kolkata26 October 2026AY 2018-1910 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal allowed the assessee's appeal on the legal issue. It held that the notice under Section 148 of the Act was issued on 25.05.2022, which was beyond the three-year period from the end of AY 2018-19 (which expired on 31.03.2022). In such cases, where more than three years have elapsed, the approval for issuing the notice under Section 148 must be obtained from the PCCIT as per Section 151(ii) of the Act. However, the approval in this case was obtained from the PCIT. The Tribunal found this to be contrary to the provisions of Section 151 of the Act and relied on the decision of the Telangana High Court in Deloitte Consulting India (P) Limited vs. Assessment Unit, Income Tax Department, NFAC, New Delhi, and the Supreme Court's dismissal of SLPs in similar cases (ACIT v. LinkedIn Singapore Pte. Ltd and ACIT Vs Prakash Pandurang Patil). Consequently, the Tribunal quashed the notice issued under Section 148 and the consequential assessment order dated 20.03.2024 as invalid. The Tribunal noted that other grounds raised on merit were not adjudicated at this stage and were left open. The Revenue's appeal was dismissed as infructuous.

What were the facts?

The Revenue is in appeal against the order of the CIT(A) for Assessment Year 2018-19, which deleted additions made by the Assessing Officer (AO). The assessee, Shivam Dhatu Udyog Private Limited, filed its return declaring NIL income. The AO initiated reassessment proceedings under Section 148A of the Income Tax Act, 1961, after obtaining approval from the Principal Commissioner of Income Tax (PCIT), Central, Kolkata-2. A show-cause notice under Section 148A(b) was issued on 30.03.2022, followed by an order under Section 148A(d) on 25.05.2022, and a notice under Section 148 on 25.05.2022. The assessee, however, raised a preliminary legal issue under Rule 27 of the Income Tax Rules, 1963, challenging the validity of the reassessment proceedings on the grounds that the approval for issuing the notice under Section 148 was obtained from the wrong authority, i.e., PCIT instead of the Principal Chief Commissioner of Income Tax (PCCIT). The assessment year in question is 2018-19, and the notice under Section 148 was issued after the expiry of three years from the end of the relevant assessment year.

What were the issues?

1. Whether, on facts and circumstances of the case, the reassessment proceedings initiated vide notice dated 28.05.2022 issued u/s 148 of the Act and the resultant reassessment order dated 29.03.2023 are illegal and invalid due to the mandatory approval u/s 151 of the Act being wrongly obtained from PCIT (Central), Kolkata-2, instead of the prescribed appropriate authority (PCCIT/Principal Director General/Chief Commissioner/Director General). Assessee's contention: The approval for issuing the notice under Section 148, which was issued after the expiry of three years from the end of the relevant assessment year (AY 2018-19), should have been obtained from the PCCIT as per Section 151(ii) of the Act, not the PCIT as per Section 151(i). The assessee relied on decisions in Hirus Trade Private Limited vs. ITO, Deloitte Consulting India (P) Limited vs. Assessment Unit, Income Tax Department, NFAC, New Delhi, and Principal Commissioner of Income Tax-18 vs. Pravesh Kumar Jaiswal. Revenue's contention: The sanction was obtained from the competent authority as the show-cause notice u/s 148A(b) was issued within three years, making the approval from PCIT permissible under Section 151(i) of the Act. The revenue argued that the contention of the assessee that approval under Section 151(ii) was required was not tenable.

Which sections of the Income-tax Act were involved?

Section 148A,Section 148,Section 147,Section 151,Section 149,Section 69C,Section 115BBE,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” BENCH, KOLKATA

For Appellant: Shri Amit Agarwal, AR
For Respondent: Shri Sanat Kumar Raha, CIT, DR
Hearing: 30.09.2026Pronounced: 26.10.2026

IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI PRADIP KUMAR CHOUBEY, JUDICIAL MEMBER

ITA No.1435/KOL/2025 (ASSESSMENT YEAR: 2018-19)

DCIT, Central Circle-4(4), Vs. Shivam Dhatu Udyog Private Kolkata Limited Aayakar Bhawan Poorva, 5 th Room No.303/302, 3 rd Floor, Floor, Room No.509, 110, Shanti Sikkim Commerce House, Pally, Kolkata-100107 Govind Mahal, Park Street, Kolkata-700016 (Appellant) (Respondent) PAN No. AAICS8785R Assessee by : Shri Amit Agarwal, AR Revenue by : Shri Sanat Kumar Raha, CIT, DR Date of hearing: 30.09.2026 Date of pronouncement: 26.10.2026

O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER:

This is an Appeal preferred by the Revenue challenging the order of the Commissioner of Income Tax (Appeal)[(hereinafter referred to as the “Ld. CIT(A)”] dated 30.03.2025 passed u/s 250 of the Income Tax Act, 1961 [(hereinafter referred to as the “Act”]for the A.Y.2018-19, deleting the additions by raising following Grounds of Appeal:-

“1.Whether, on facts and circumstances of the case, Ld. CIT(A) erred in directing to consider Gross Profit rate on purchase made outside the books of accounts to the extent of Rs.7,55,43,860/-.

“(i) That the Learned CIT (Appeals), Kolkata-27 erred in confirming the validity of the impugned reassessment proceedings initiated vide notice dated 28.05.2022 issued u/s 148 of the Act and also the resultant reassessment order dated 29.03.2023 without appreciating that the impugned reassessment proceedings was itself illegal, invalid, bad-in-law as the mandatory Approval u/s 151 of the Act was wrongly obtained approval from PCIT (Central), Kolkata-2 as against the prescribed appropriate authority i.e. Ld. Principal Chief Commissioner/Principal Director General/ChiefCommissioner/Director General.”

3.

We note that the Assessee has raised the legal issue by way of Rule 27 of the Rules challenging the validity of the notice issued u/s 148 of the Act and the consequent assessment framed vide Order dated

4.

Briefly stated, the facts of the case are that the Assessee filed its return of income on 29.10.2018, declaring income as NIL, which was duly processed u/s 143(1) of the Act. The Assessee is engaged in the business of manufacturing and trading of pig iron, sponge iron, direct reduced iron, etc. The Assessing Officer received information that the income of the Assessee had escaped assessment and, accordingly, a show-cause notice u/s 148A(b) of the Act was issued on 30.03.2022 after obtaining approval from the PCIT, Central, Kolkata-2, as evident from the said notice, which is available at Page No. 1 of the Paper Book. Thereafter, an order u/s 148A(d) of the Act was passed on 25.05.2022, and a notice u/s 148 of the Act was issued on 25.05.2022, which is available at Page Nos. 20 and 21 of the Paper Book. The said notice again mentioned that approval for issuing such notice was obtained from the PCIT, Central, Kolkata-2. It is pertinent to state that the Assessee duly replied to the show-cause notice, which was considered by the Assessing Officer while passing the order u/s 148A(d) of the Act.The assessment year involved is 2018- 19, and the reopening was made on 25.05.2022 by issuing a notice u/s 148 of the Act. Therefore, apparently, the notice was issued after the expiry of three years from the end of the relevant assessment year. The Learned Counsel submitted that, in terms of the provisions of Section 151 of the Act, the approval should have been granted by the PCCIT and not the PCIT and, accordingly, prayed that the notice issued u/s 148 of the Act, as well as the consequent assessment

i. Hirus Trade Private Limited vs. ITO, Ward-9(1), in ITA No.1058/Kol/2026, Order dated 13.07.2026 (ITAT, Kolkata) ii. Deloittee Consulting India (P) Limited vs. Assessment Unit, Income Tax Department, NFAC, New Delhi [2025] 178 taxmann.com 781, Order dated 25.09.2025 (Telangana High Court) iii. Principal Commissioner of Income Tax-18 vs. Pravesh Kumar Jaiswal, ITAT/147/2026, Order dated 22.09.2026 (Calcutta High Court) iv. Principal Commissioner of Income Tax-13 vs. Utkarsh Rai, ITAT/174/2026, Order dated 22.09.2026 (Calcutta High Court) 5. On the other hand, the Ld. DR relied heavily on the orders of the Authorities below, by submitting that the sanction had been obtained from the competent authority in terms of Section 151 of the Act, as the show-cause notice u/s 148A(b) of the Act had been issued well within three years, i.e., on 14.03.2022. Therefore, the contention of the Assessee that approval/permission u/s 151(ii) of the Act was required to be obtained was not tenable, as approval/permission within the period of three years had to be obtained from the PCIT in terms of the provisions of Section 151(i) of the Act. The Ld. DR, therefore, prayed that the ground raised by the Assessee under Rule 27 of the Rules may kindly be dismissed.

6.

We have heard the rival submissions and perused the material available on record. We find that the notice u/s 148 of the Act was issued on 25.05.2022, with the sanction obtained from the PCIT u/s 151(i) of the Act. We note that the case pertains to A.Y. 2018-19,

“9. After hearing the rival contentions and perusing the materials available on record, we find that the assessee has challenged the validity of the notice issued u/s 148 of the Act dated 11.04.2022. In this case, as it pertains to Assessment Year 2018-19, three years period in terms of Section 149(1)(a) would have expired on 31.03.2022 and the six-year period expired on 31.03.2025. Having perused the show cause notice u/s 148A(b) of the Act dated 19.03.2022, it is noted that, the information value of the issue(s) raised in the notice was exceeding Rs.50 lacs. In the present case, that, the order u/s 148A(d) and the notice u/s 148 of the Act came to be issued on 11.04.2022 which is beyond the prescribed period of three years i.e. after the end of 31.03.2022. The approval before passing of the order has been obtained from the PCIT, which is permissible only where less than three years have elapsed from the end of the relevant assessment year. In the present case, the period of three years ended on 31.03.2022. Hence, the order u/s 148A(d) and notice u/s 148 of the Act was required to be issued after obtaining sanction from CCIT or PCCIT.

Order pronounced on 26 .10.2026.

Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 26.10.2026 Deepak Prakash, P.S Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT 5. Guard file.

//TRUE COPY// BY ORDER,

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