SRINIVAS JAKKAM,HYDERABAD vs. ITO, WARD 8(1), HYDERABAD

PDF · subscribers
ITA 2028/HYD/2025Status: DisposedITAT Hyderabad14 October 2026AY 2016-1718 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 notice under Section 148 of the Act, dated 31.03.2021, was issued on 16.04.2021. As this date falls after the effective date of the amendments brought about by the Finance Act, 2021 (w.e.f. 01.04.2021), the procedure prescribed under Section 148A of the Act, including conducting an inquiry and providing an opportunity of being heard, was mandatory before issuing the notice under Section 148. The Tribunal noted that the AO had failed to comply with these statutory requirements. Relying on the Supreme Court's decision in Union of India & Ors. Vs. Ashish Agrawal, the Tribunal concluded that the AO had wrongly assumed jurisdiction and framed the assessment without following the mandatory procedure. Therefore, the assessment framed by the AO was quashed for want of valid assumption of jurisdiction. Consequently, the Tribunal refrained from adjudicating the other grounds of appeal, which were left open. The appeal was allowed in terms of these observations.

What were the facts?

The assessee, Srinivas Jakkam, filed his return of income for Assessment Year 2016-17 on 14.12.2016, declaring an income of Rs. 3,50,000. The Assessing Officer (AO) initiated reassessment proceedings under Section 147 of the Income Tax Act, 1961, based on information regarding cash deposits of Rs. 1,61,04,474 in the assessee's bank account, which were not disclosed in the return. A notice under Section 148 was issued on 31.03.2021 and served on the assessee on 16.04.2021. The assessee failed to respond to this notice or a subsequent notice under Section 142(1). Consequently, the AO proceeded to frame an assessment under Section 144 r.w.s. 144B, treating the entire cash deposits as unexplained income under Section 69A and making an addition of Rs. 1,64,54,474. The assessee's appeal to the CIT(A) was unsuccessful, leading to the present appeal before the ITAT.

What were the issues?

1. Whether the notice issued under Section 148 of the Act is bad in law due to the AO's failure to comply with the procedure prescribed under Section 148A of the Act, specifically regarding conducting inquiry and providing an opportunity of hearing before issuing the notice, considering the notice was dated 31.03.2021 but issued on 16.04.2021, after the amendment to Section 147/148/149 by the Finance Act, 2021, effective from 01.04.2021? The assessee argued that the AO erred by dispensing with the statutory requirement of conducting an inquiry and providing an opportunity of being heard under Section 148A(a) to (d) before issuing the notice under Section 148, rendering the assumption of jurisdiction invalid. The revenue contended that since the notice was dated 31.03.2021, the amended provisions of Section 148A were not applicable, and the assessee's non-participation in earlier proceedings disentitled him from challenging the AO's jurisdiction. 2. Whether the CIT(A) failed to provide an adequate opportunity of hearing to the assessee? The assessee argued that the CIT(A) ought to have provided another opportunity of hearing and set aside the order. The revenue did not record any specific arguments on this ground.

Which sections of the Income-tax Act were involved?

Section 147,Section 144,Section 144B,Section 69A,Section 148,Section 142(1),Section 148A,Section 149

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, HYDERABAD BENCHES, HYDERABAD

Before: SHRI RAVISH SOOD, HON’BLE & SHRI MADHUSUDAN SAWDIA, HON’BLE

PER RAVISH SOOD, JM: The present appeal filed by the assessee is directed against the order passed by the CIT(A), NFAC, Delhi, dated 12.09.2025, which in turn arises from the order passed by the AO under Section 147 r.w.s. 144 r.w.s. 144B of the Income Tax Act, 1961 (for short, “the Act”), dated 25/03/2022 for the assessment year 2016-17. The assessee has assailed the impugned order on the following grounds of appeal before us: “1. Your Appellant submits that the CIT(A) has not given opportunity of hearing, ought to have given another opportunity of hearing. The order may be set-aside. 2. Your Appellant submits that the CIT(A) ought to have appreciated the fact that the reason to believe that income has escaped assessment is not based on any cogent material, therefore the issue of notice under section 148 is bad in law. 3. Your Appellant submits that the CITA) as well as the Assessing Officer erred in law and facts of the case in considering the entire credits in the bank account as unexplained under section 69A, the addition may be deleted. 4. Your Appellant submits that the CIT(A) ought to have appreciated the fact that he was not aware of the proceeding under section 147 r.w.s 148 and not aware of the notices issued could not submit the information called for, been given an opportunity would submit the information before the assessing officer as well as the Cit(A). 5. Without prejudice to the above grounds your appellant submits that entire amount of cash deposited cannot be considered as unexplained, in view of the fact that he is engaged in the business of trading in mobile phones and mobile recharges, at best income would have been estimated at a reasonable percentage 6. Alternatively, Your Appellant submits that a profit and loss account and computation of income is enclosed for your consideration of CIT(A) ought to have been considered and the income returned as per the same may accepted and addition may be deleted 7. For these and such other grounds that may be urged at the time of hearing, the addition may be deleted and income may be estimated.”

2.

Succinctly stated, the assessee had e-filed his return of income for AY 2016-17 on 14/12/2016 declaring an income of Rs.3,50,000/-. Thereafter, the AO, based on information that the assessee had made cash deposits of Rs.1,61,04,474/- in his bank account No.100030390011488, held with Navanirman Cooperative Urban Bank Limited, Madhapur Branch, which was not disclosed by him in his return of income for the year under consideration, initiated proceedings under section 147 of the Act. Notice under section 148 of the Act, dated 31/03/2021, was issued and served upon the assessee. However, the assessee failed to respond to the said notice and did not file his return of income in response thereto.

3.

Thereafter, the AO issued notice under section 142(1) of the Act, but the assessee failed to effect necessary compliance. Accordingly, the AO, in the backdrop of the aforesaid facts, was constrained to proceed with and frame the assessment to the best of his judgment under section 144 of the Act.

4.

The AO, observing that the assessee had failed to come forth with any explanation regarding the cash deposits of Rs.1,61,04,474/- made in his aforesaid bank account, held the entire amount as having been sourced out of the assessee’s unexplained money under section 69A of the Act. The AO framed the assessment vide his order passed under section 147 r.w.s 144 r.w.s 144B of the Act, dated 25/03/2022 at Rs. 1,64,54,474/-.

5.

Aggrieved, the assessee carried the matter in appeal before the CIT(A) but without success.

6.

The assessee, aggrieved with the order of the CIT(A), has carried the matter in appeal before us.

7.

We have heard the Learned Authorized Representatives of both parties, perused the orders of the authorities below and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the Ld. AR to drive home his contentions.

8.

Shri M V Anil Kumar, Advocate, Learned Authorized Representative (for short, “Ld. AR”) for the assessee, at the threshold of hearing of the appeal submitted that the AO had grossly erred in law and facts of the case in assuming jurisdiction and framing the assessment vide his order passed under section 147 r.w.s 144 r.w.s 144B of the Act, dated 25/03/2025. Elaborating on his contention, the Ld. AR submitted that the notice under section 148 of the Act, dated 31/03/2021, in the present case was issued on 16/04/2021. The Ld. AR, to buttress his aforesaid contention, has taken us through a screenshot of the assessee's e-filing portal account and the copy of the notice under section 148 of the Act, dated 31/03/2021, which revealed that the aforesaid notice was issued on 16/04/2021, Pages 1-5 of APB. The Ld. AR submitted that now when the notice under section 148 of the Act, dated 31/03/2021 was admittedly issued by the AO on 16/04/2021, therefore, the AO before making the assessment under section 147 of the Act remained under a statutory obligation to conduct enquiry, provide opportunity before issuance of the notice as contemplated under section 148A(a) to (d) of the Act as has been made available in the statute vide the Finance Act, 2021, w.e.f 01/04/2021. Elaborating further on his contention, the Ld. AR submitted that the AO in the present case had dispensed with the aforesaid statutory obligation and issued notice under section 148 of the Act, dated 31/03/2021, on 16/04/2021 by dispensing with the statutory requirement of conducting an inquiry, providing opportunity before issuance of notice under section 148 of the Act as was mandatorily required under section 148A of the Act. The Ld. AR to fortify his contention that the AO had not issued any show cause notice (SCN) under section 148A(b) of the Act and not passed any order under section 148A(d) of the Act, which was statutorily required to proceed with the issuance of the impugned notice under section 148 of the Act. dated 31/03/2021, which was admittedly issued on 16/04/2021, took us through the screenshots of the e-filing portal, Page 3-5 of APB, which duly supported his aforesaid claim. Carrying his contention further, the Ld. AR submitted that as the AO had framed the assessment vide his order passed under section 147 r.w.s 144 r.w.s 144B of the Act, dated 25/03/2022 without complying with the statutory requirements as provided in section 148A of the Act, therefore, the assessment so framed by him was liable to be quashed for want of valid assumption of jurisdiction.

9.

Per contra, Shri K Prasad, Learned Senior Departmental Representative (for short, “Ld. Sr-DR”) rebutted the aforesaid contention of the assessee’s counsel. It was submitted that as the notice under section 148 of the Act was issued on 31/03/2021 as per the date mentioned in the notice, Page-1 of APB, therefore, there was no obligation cast upon the AO to comply with the conditions contemplated under section 148A(a) to (d) of the Act, as the same had been made available on the statute only vide Finance Act, 2021, w.e.f. 01/04/2021. Apart from that, the Ld. Sr. DR submitted that as the assessee had not participated either in the assessment proceedings or those before the CIT(A), there was no justification for him to assail the validity of the jurisdiction assumed by the AO for framing the assessment vide his order passed under section 147 r.w.s 144 r.w.s 144B of the Act, dated 25/03/2022 in the course of the present proceedings.

10.

We have given thoughtful consideration to the contentions advanced by the Learned Authorized Representatives of both parties in the backdrop of the orders of the authorities below.

11.

Admittedly, it is a matter of fact borne from record that the AO had issued notice under section 148 of the Act, dated 31/03/2021, on 16/04/2021, Page 1 and 5 of APB. At this stage, we may observe that neither is anything discernible from the record nor anything brought to our notice that would dislodge the aforesaid factual position regarding the date of issuance of the notice under section 148 of the Act, dated 16/04/2021.

12.

We shall, in the backdrop of the aforesaid fact that the AO had issued the notice under section 148 of the Act, dated 31/03/201 on 16/04/2021, deal with the Ld. AR’s contention that the AO, having failed to conduct an inquiry and provide an opportunity before issuing the impugned notice under section 148 of the Act as contemplated under section 148A(a) to (d) of the Act, as had been made available in the statute vide the Finance Act, 2021, w.e.f. 01/04/2021, wrongly assumed jurisdiction and framed the impugned assessment, which is thus liable to be quashed for want of valid assumption of jurisdiction.

13.

Before proceeding further, we deem it apposite to cull out the substituted sections 147 to 149 and 151 of the Act, applicable w.e.f. 01/04/2021, as under:

“Income escaping assessment- 147. If any income chargeable to tax, in the case of an assessee, has escaped assessment for any assessment year, the Assessing Officer may, subject to the provisions of sections 148 to 153, assess or reassess such income or recompute the loss or the depreciation allowance or any other allowance or deduction for such assessment year (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year). Explanation.—For the purposes of assessment or reassessment or recomputation under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, irrespective of the fact that the provisions of section 148A have not been complied with.”. Issue of notice where income has escaped assessment 148. Before making the assessment, reassessment or recomputation under section 147, and subject to the provisions of section 148A, the Assessing Officer shall serve on the assessee a notice, along with a copy of the order passed, if required, under clause (d) of section 148A, requiring him to furnish within such period, as may be specified in such notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139: 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. Explanation 1.—For the purposes of this section and section 148A, the information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment means,— (i) any information flagged in the case of the assessee for the relevant assessment year in accordance with the risk management strategy formulated by the Board from time to time; (ii) any final objection raised by the Comptroller and Auditor General of India to the effect that the assessment in the case of the assessee for the relevant assessment year has not been made in accordance with the provisions of this Act. Explanation 2.—For the purposes of this section, where,— (i) a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A, on or after the 1st day of April, 2021, in the case of the assessee; or (ii) a survey is conducted under section 133A, other than under subsection (2A) or subsection (5) of that section, on or after the 1st day of April, 2021, in the case of the assessee; or (iii) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner, that any money, bullion, jewellery or other valuable article or thing, seized or requisitioned under section 132 or under section 132A in case of any other person on or after the 1st day of April, 2021, belongs to the assessee; or (iv) the Assessing Officer is satisfied, with the prior approval of Principal Commissioner or Commissioner, that any books of account or documents, seized or requisitioned under section 132 or section 132A in case of any other person on or after the 1st day of April, 2021, pertains or pertain to, or any information contained therein, relate to, the assessee, the Assessing Officer shall be deemed to have information which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the three assessment years immediately preceding the assessment year relevant to the previous year in which the search is initiated or books of account, other documents or any assets are requisitioned or survey is conducted in the case of the assessee or money, bullion, jewellery or other valuable article or thing or books of account or documents are seized or requisitioned in case of any other person. Explanation 3.—For the purposes of this section, specified authority means the specified authority referred to in section 151.” Conducting inquiry, providing opportunity before issue of notice under section 148- “148A. The Assessing Officer shall, before issuing any notice under section 148,— (a) conduct any enquiry, if required, with the prior approval of specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment; (b) provide an opportunity of being heard to the assessee, with the prior approval of specified authority, by serving upon him a notice to show cause within such time, as may be specified in the notice, being not less than seven days and but not exceeding thirty days from the date on which such notice is issued, or such time, as may be extended by him on the basis of an application in this behalf, as to why a notice under section 148 should not be issued on the basis of information which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year and results of enquiry conducted, if any, as per clause (a); (c) consider the reply of assessee furnished, if any, in response to the showcause notice referred to in clause (b); (d) decide, on the basis of material available on record including reply of the assessee, whether or not it is a fit case to issue a notice under section 148, by passing an order, with the prior approval of specified authority, within one month from the end of the month in which the reply referred to in clause (c) is received by him, or where no such reply is furnished, within one month from the end of the month in which time or extended time allowed to furnish a reply as per clause (b) expires: Provided that the provisions of this section shall not apply in a case where,— (a) a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A in the case of the assessee on or after the 1st day of April, 2021; or (b) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any money, bullion, jewellery or other valuable article or thing, seized in a search under section 132 or requisitioned under section 132A, in the case of any other person on or after the 1st day of April, 2021, belongs to the assessee; or (c) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any books of account or documents, seized in a search under section 132 or requisitioned under section 132A, in case of any other person on or after the 1st day of April, 2021, pertains or pertain to, or any information contained therein, relate to, the assessee. Explanation.—For the purposes of this section, specified authority means the specified authority referred to in section 151.” Time limit for notice- “149. (1) No notice under section 148 shall be issued for the relevant assessment year,— (a) if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b); (b) if three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income chargeable to tax, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more for that year: Provided that no notice under section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before 1st day of April, 2021, if such notice could not have been issued at that time on account of being beyond the time limit specified under the provisions of clause (b) of subsection (1) of this section, as they stood immediately before the commencement of the Finance Act, 2021: Provided further that the provisions of this subsection shall not apply in a case, where a notice under section 153A, or section 153C read with section 153A, is required to be issued in relation to a search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A, on or before the 31st day of March, 2021: Provided also that for the purposes of computing the period of limitation as per this section, the time or extended time allowed to the assessee, as per show cause notice issued under clause (b) of section 148A or the period during which the proceeding under section 148A is stayed by an order or injunction of any court, shall be excluded:

Provided also that where immediately after the exclusion of the period referred to in the immediately preceding proviso, the period of limitation available to the Assessing Officer for passing an order under clause (d) of section 148A is less than seven days, such remaining period shall be extended to seven days and the period of limitation under this subsection shall be deemed to be extended accordingly. Explanation.—For the purposes of clause (b) of this subsection, “asset” shall include immovable property, being land or building or both, shares and securities, loans and advances, deposits in bank account. (2) The provisions of subsection (1) as to the issue of notice shall be subject to the provisions of section 151.’ Sanction for issue of notice- “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.”

14.

Also, we find that the Hon’ble Apex Court in the case of Union of India & Ors. Vs. Ashish Agrawal, Civil Appeal No.3005/2022, dated 04.05.2022, after deliberating at length on the aforesaid amended provisions has, inter alia, observed as under:

“5. We have heard Shri N. Venkataraman, learned ASG appearing on behalf of the Revenue and Shri C.A. Sundaram and Shri S. Ganesh, learned Senior Advocates and other learned counsel appearing on behalf of the respective assessee. 6. It cannot be disputed that by substitution of sections 147 to 151 of the Income Tax Act (IT Act) by the Finance Act, 2021, radical and reformative changes are made governing the procedure for reassessment proceedings. Amended sections 147  to 149 and section 151 of the IT Act prescribe the procedure governing initiation of reassessment proceedings. However, for several reasons, the same gave rise to numerous litigations and the reopening were challenged inter alia, on the grounds such as (1) no valid “reason to believe” (2) no tangible/reliable material /information in possession of the assessing officer leading to formation of belief that income has escaped assessment, (3) no enquiry being conducted by the assessing officer prior to the issuance of notice;

and reopening is based on change of opinion of the assessing officer and (4) lastly the mandatory procedure laid down by this Court in the case of GKN Driveshafts (India) Ltd. Vs. Income Tax Officer and ors; (2003) 1 SCC 72, has not been followed. 6.1 Further pre Finance Act, 2021, the reopening was permissible for a maximum period up to six years and in some cases beyond even six years leading to uncertainty for a considerable time. Therefore, Parliament thought it fit to amend the Income Tax Act to simplify the tax administration, ease compliances and reduce litigation. Therefore, with a view to achieve the said object, by the Finance Act, 2021, sections 147 to 149 and section 151 have been substituted. 6.2 Under the substituted provisions of the IT Act vide Finance Act, 2021, no notice under section 148 of the IT Act can be issued without following the procedure prescribed under section 148A of the IT Act. Along with the notice under section 148 of the IT Act, the assessing officer (AO) is required to serve the order passed under section 148A of the IT Act. section 148A of the IT Act is a new provision which is in the nature of a condition precedent. Introduction of section 148A of the IT Act can thus be said to be a game changer with an aim to achieve the ultimate object of simplifying the tax administration, ease compliance and reduce litigation. 6.3 But prior to pre-Finance Act, 2021, while reopening an assessment, the procedure of giving the reasons for reopening and an opportunity to the assessee and the decision of the objectives were required to be followed as per the judgment of this Court in the case of GKN Driveshafts (India) Ltd. (supra). 6.4 However, by way of section 148A, the procedure has now been streamlined and simplified. It provides that before issuing any notice under section 148, the assessing officer shall (i) conduct any enquiry, if required, with the approval of specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment; (ii) provide an opportunity of being heard to the assessee, with the prior approval of specified authority; (iii) consider the reply of the assessee furnished, if any, in response to the showcause notice referred to in clause (b); and (iv) decide, on the basis of material available on record including reply of the assessee, as to whether or not it is a fit case to issue a notice under section 148 of the IT Act and (v) the AO is required to pass a specific order within the time stipulated. 6.5 Therefore, all safeguards are provided before notice under section 148 of the IT Act is issued. At every stage, the prior approval of the specified authority is required, even for conducting the enquiry as per section 148A(a). Only in a case where, the assessing officer is of the opinion that before any notice is issued under section 148A(b) and an opportunity is to be given to the assessee, there is a requirement of conducting any enquiry, the assessing officer may do so and conduct any enquiry. Thus if the assessing officer is of the opinion that any enquiry is required, the assessing officer can do so, however, with the prior approval of the specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment. 6.6 Substituted section 149 is the provision governing the time limit for issuance of notice under section 148 of the IT Act. The substituted section 149 of the IT Act has reduced the permissible time limit for issuance of such a notice to three years and only in exceptional cases ten years. It also provides further additional safeguards which were absent under the earlier regime preFinance Act, 2021. 7. Thus, the new provisions substituted by the Finance Act, 2021 being remedial and benevolent in nature and substituted with a specific aim and object to protect the rights and interest of the assessee as well as and the same being in public interest, the respective High Courts have rightly held that the benefit of new provisions shall be made available even in respect of the proceedings relating to past assessment years, provided section 148 notice has been issued on or after 1st April, 2021. We are in complete agreement with the view taken by the various High Courts in holding so. 8. However, at the same time, the judgments of the several High Courts would result in no reassessment proceedings at all, even if the same are permissible under the Finance Act, 2021 and as per substituted sections 147 to 151 of the IT Act. The Revenue cannot be made remediless and the object and purpose of reassessment proceedings cannot be frustrated. It is true that due to a bonafide mistake and in view of subsequent extension of time vide various notifications, the Revenue issued the impugned notices under section 148 after the amendment was enforced w.e.f. 01.04.2021, under the unamended section 148. In our view the same ought not to have been issued under the unamended Act and ought to have been issued under the substituted provisions of sections 147 to 151 of the IT Act as per the Finance Act, 2021. There appears to be genuine nonapplication of the amendments as the officers of the Revenue may have been under a bonafide belief that the amendments may not yet have been enforced. Therefore, we are of the opinion that some leeway must be shown in that regard which the High Courts could have done so. Therefore, instead of quashing and setting aside the reassessment notices issued under the unamended provision of IT Act, the High Courts ought to have passed an order construing the notices issued under unamended Act/unamended provision of the IT Act as those deemed to have been issued under section 148A of the IT Act as per the new provision section 148A and the Revenue ought to have been permitted to proceed further with the reassessment proceedings as per the substituted provisions of sections 147 to 151 of the IT Act as per the Finance Act, 2021, subject to compliance of all the procedural requirements and the defences, which may be available to the assessee under the substituted provisions of sections 147 to 151 of the IT Act and which may be available under the Finance Act, 2021 and in law. Therefore, we propose to modify the judgments and orders passed by the respective High Courts as under:

(i) The respective impugned section 148 notices issued to the respective assessees shall be deemed to have been issued under section 148A of the IT Act as substituted by the Finance Act, 2021 and treated to be show cause notices in terms of section 148A(b). The respective assessing officers shall within thirty days from today provide to the assessees the information and material relied upon by the Revenue so that the assessees can reply to the notices within two weeks thereafter; (ii) The requirement of conducting any enquiry with the prior approval of the specified authority under section 148A(a) be dispensed with as a onetime measure vis-à-vis those notices which have been issued under Section 148 of the unamended Act from 01.04.2021 till date, including those which have been quashed by the High Courts; (iii) The assessing officers shall thereafter pass an order in terms of section 148A(d) after following the due  procedure as required under section 148A(b) in respect of each of the concerned assessees; (iv) All the defenses which may be available to the assessee under section 149 and/or which may be available under the Finance Act, 2021 and in law and whatever rights are available to the Assessing Officer under the Finance Act, 2021 are kept open and/or shall continue to be available and; (v) The present order shall substitute/modify respective judgments and orders passed by the respective High Courts quashing the similar notices issued under unamended section 148 of the IT Act irrespective of whether they have been assailed before this Court or not. 9. There is a broad consensus on the aforesaid aspects amongst the learned ASG appearing on behalf of the Revenue and the learned Senior Advocates/learned counsel appearing on behalf of the respective assessees. We are also of the opinion that if the aforesaid order is passed, it will strike a balance between the rights of the Revenue as well as the respective assesses as because of a bonafide belief of the officers of the Revenue in issuing approximately 90000 such notices, the Revenue may not suffer as ultimately it is the public exchequer which would suffer. Therefore, we have proposed to pass the present order with a view avoiding filing of further appeals before this Court and burden this Court with approximately 9000 appeals against the similar judgments and orders passed by the various High Courts, the particulars of some of which are referred to hereinabove. We have also proposed to pass the aforesaid order in exercise of our powers under Article 142 of the Constitution of India by holding that the present order shall govern, not only the impugned judgments and orders passed by the High Court of Judicature at Allahabad, but shall also be made applicable in respect of the similar judgments and orders passed by various High Courts across the country and therefore the present order shall be applicable to PAN INDIA.

10.

In view of the above and for the reasons stated above, the present Appeals are ALLOWED IN PART. The impugned common judgments and orders passed by the High Court of Judicature at Allahabad in W.T. No. 524/2021 and other allied tax appeals/petitions, is/are hereby modified and substituted as under: (i) The impugned section 148 notices issued to the respective assessees which were issued under unamended section 148 of the IT Act, which were the subject matter of writ petitions before the various respective High Courts shall be deemed to have been issued under section 148A of the IT Act as substituted by the Finance Act, 2021 and construed or treated to be show cause notices in terms of section 148A(b). The assessing officer shall, within thirty days from today provide to the respective assessees information and material relied upon by  the Revenue, so that the assesees can reply to the show cause notices within two weeks thereafter; (ii) The requirement of conducting any enquiry, if required, with the prior approval of specified authority under section 148A(a) is hereby dispensed with as a onetime measure vis-à-vis those notices which have been issued under section 148 of the unamended Act from 01.04.2021 till date, including those which have been quashed by the High Courts. Even otherwise as observed hereinabove holding any enquiry with the prior approval of specified authority is not mandatory but it is for the concerned Assessing Officers to hold any enquiry, if required; (iii) The assessing officers shall thereafter pass orders in terms of section 148A(d) in respect of each of the concerned assessees; Thereafter after following the procedure as required under section 148A may issue notice under section 148 (as substituted); (iv) All defenses which may be available to the assesses including those available under section 149 of the IT Act and all rights and contentions which may be available to the concerned assessees and Revenue under the Finance Act, 2021 and in law shall continue to be available. 11. The present order shall be applicable PAN INDIA and all judgments and orders passed by different High Courts on the issue and under which similar notices which were issued after 01.04.2021 issued under section 148 of the Act are set aside and shall be governed by the present order and shall stand modified to the aforesaid extent. The present order is passed in exercise of powers under Article 142 of the Constitution of India so as to avoid any further appeals by the Revenue on the very issue by challenging similar judgments and orders, with a view not to burden this Court with approximately 9000 appeals. We also observe that present order shall also govern the pending writ petitions, pending before various High Courts in which similar notices under Section 148 of the Act issued after 01.04.2021 are under challenge. 12. The impugned common judgments and orders passed by the High Court of Allahabad and the similar judgments and orders passed by various High Courts, more particularly, the respective judgments and orders passed by the various High Courts particulars of which are mentioned hereinabove, shall stand modified/substituted to the aforesaid extent only. All these appeals are accordingly partly allowed to the aforesaid extent. In the facts of the case, there shall be no order as to costs.” (emphasis supplied by us)

15.

We find that as per the amended provisions of section 147 of the Act as had been made available in the statute vide Finance Act, 2021 w.e.f 01/04/2021 read along with the aforesaid judgment of the Hon’ble Supreme Court in the case of Union of India & Ors. Vs. In Ashish Agrawal (supra), no notice under section 148 of the Act can be issued without following the procedure prescribed under section 148 of the Act. Also, before issuing the notice under section 148 of the Act, the AO must serve the assessee with the order passed under section 148A(d) of the Act, which is a condition precedent for valid assumption of jurisdiction.

16.

We find that the Hon’ble Supreme Court in the case of Union of India & Ors. Vs. Ashish Agrawal (supra) at Para 6.4 observed that the introduction of section 148A of the Act has streamlined and simplified the procedure. It provides that before issuing any notice under section 148, the assessing officer shall (i) conduct any enquiry, if required, with the approval of specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment; (ii) provide an opportunity of being heard to the assessee, with the prior approval of specified authority; (iii) consider the reply of the assessee furnished, if any, in response to the show cause notice referred to in clause (b); and (iv) decide, on the basis of material available on record including reply of the assessee, as to whether or not it is a fit case to issue a notice under section 148 of the IT Act; and (v) the AO is required to pass a specific order within the time stipulated. The Hon’ble Apex Court had further observed that all the safeguards are provided before a notice under section 148 of the Act is issued.

17.

We are of the firm conviction that as the AO in the present case had issued the notice under section 148 of the Act, dated 31/03/2021, on 16/04/2021 without complying with and following the statutory procedure contemplated under section 148 of the Act for conducting inquiry, providing opportunity before issuing the notice, therefore, as stated by the Ld. AR and rightly so, he had wrongly assumed jurisdiction and framed the impugned assessment vide his order passed under section 147 r.w.s. 144 r.w.s. 144B of the Act, dated 25/03/2022.

18.

We thus, based on our aforesaid observations, quash the assessment framed by the AO based on an invalid assumption of jurisdiction.

19.

As we have quashed the assessment for valid assumption of jurisdiction on the part of the AO, therefore, we refrain from adverting to and adjudicating the other grounds of appeal based on which the impugned order of assessment has been assailed before us, which, thus, are left open.

20.

In the result, the appeal filed by the assessee is allowed in terms of our aforesaid observations. Order pronounced in the open court on 14th October, 2026.

Sd/- Sd/- MADHUSUDAN SAWDIA RAVISH SOOD ACCOUNTANT MEMBER JUDICIAL MEMBER Hyderabad Dated: 14th October, 2025. **OKK/SPS Copy to: SRINIVAS JAKKAM, PLOT NO 134, AYYAPPA SOCIETY, 1 MADHAPUR, HYDERABAD-500081, TELANGANA ITO, WARD 8(1), SIGNATURE TOWERS, GACHIBOWLI - 2 MIYAPUR RD, KONDAPUR, HYDERABAD-500084, TELANGANA 3 THE PCIT, HYDERABAD. 4 THE D.R., ITAT, HYDERABAD BENCH 5 GUARD FILE TRUE COPY KAMALA KUMAR Digitally signed by KAMALA KUMAR ORUGANTI ORUGANTI Date: 2026.10.14 15:09:04 +05'30' ASSISTANT REGISTRAR / SR. PRIVATE SECRETARY I.T.A.T., HYDERABAD

More judgments on Section 147

All 49,210 judgments and leading authorities on Section 147 →

Recent GST High Court judgments

Search GST case law →