ELANGO,SALEM vs. ITO, WARD-1(6), SALEM

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ITA 956/CHNY/2026Status: DisposedITAT Chennai04 November 2026AY 2018-1911 pages
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What did the Tribunal hold?

The Tribunal held that the notice issued under Section 148 of the Act on May 6, 2022, which was beyond three years from the end of Assessment Year 2018-19, required prior approval from the PCCIT as per Section 151(ii). Since the approval was obtained only from the PCIT, the notice was invalid. The Tribunal rejected the revenue's contention regarding Section 292BC of the Act, stating that it cannot cure a jurisdictional defect arising from the grant of approval by an incompetent authority. The Tribunal followed the ratio laid down in the case of Chokkalingam Thangavel, which was affirmed by the Hon'ble Jurisdictional High Court, and also referred to the Bombay High Court's decision in M/s. Vodafone Idea Limited. Consequently, the reassessment proceedings completed based on the invalid notice were quashed. The other grounds raised by the assessee on merits were left undecided.

What were the facts?

The assessee, Shri Elango, filed an appeal against the order of the Commissioner of Income Tax (Appeals), NFAC, Delhi, for Assessment Year 2018-19. The core issue revolved around the validity of the notice issued under Section 148 of the Income Tax Act, 1961. The assessee contended that since the notice was issued beyond three years from the end of the relevant assessment year, mandatory prior approval from the Principal Chief Commissioner of Income Tax (PCCIT) was required under Section 151(ii) of the Act. However, the approval was obtained only from the Principal Commissioner of Income Tax (PCIT). The notice under Section 148A(b) was issued on March 18, 2022, and the notice under Section 148 was issued on May 6, 2022. The approval from the PCIT was dated May 4, 2022.

What were the issues?

1. Whether the notice issued under Section 148 of the Income Tax Act, 1961, beyond a period of three years from the end of the relevant assessment year, is invalid for want of prior approval from the Principal Chief Commissioner of Income Tax (PCCIT) as prescribed under Section 151(ii) of the Act, when approval was obtained only from the Principal Commissioner of Income Tax (PCIT)? (Question of law) Assessee's Contention: The assessee argued that since the Section 148 notice was issued beyond three years, approval from the PCCIT was mandatory under Section 151(ii). Approval from the PCIT was insufficient. Reliance was placed on the jurisdictional High Court in Core Logistic Company vs. ACIT and Ramachandran Shivan vs. ITO, and Chennai Bench ITAT orders in Chokkalingam Thangavel vs. ITO and Rajendran Senthil Kumar vs. ITO. Revenue's Contention: The revenue argued that the Section 148A(b) notice was issued within three years, and therefore, approval from the PCIT was rightly obtained. Reliance was placed on the Calcutta High Court decision in Girija Commercial (P) Ltd vs. UOI. The revenue also contended that Section 292BC of the Act, inserted by the Finance Act, 2026, would cure any such defect in approval.

Which sections of the Income-tax Act were involved?

Section 148,Section 151,Section 148A,Section 250,Section 292BC

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI

Before: SHRI GEORGE GEORGE K & SHRI GAGAN GOYAL

Hearing: 04.11.2026Pronounced: 04.11.2026

आदेश/ O R D E R PER GEORGE GEORGE K, VICE PRESIDENT: This appeal filed by the assessee is directed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 15.12.2025 passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2018-19.

ITA No.956/CHNY/2026 - 2 - Elango 2. At the very outset, the Ld.AR for the assessee vide Ground No.4, challenged the validity of the notice issued u/s.148 of the Act. It was submitted that the notice u/s.148 of the Act having been issued beyond a period of three years from the end of the relevant assessment year, the mandatory prior approval ought to have been obtained from the Principal Chief Commissioner of Income Tax (PCCIT), being the specified authority prescribed u/s.151(ii) of the Act. However, in the instant case, the approval was admittedly obtained only from the PCIT, Coimbatore-1. In support of the said contention, the Ld.AR placed on record copy of the notice issued u/s.148 of the Act dated 06.05.2022. Therefore, it was contended that the notice issued u/s.148 of the Act as well as the consequent reassessment order passed pursuant thereto are bad in law and liable to be quashed. In support of the aforesaid contention, the Ld.AR placed reliance on the order of the Jurisdictional High Court in the case of Jurisdictional High Court in the case of Core Logistic Company vs. ACIT in WP No.18168 of 2023 (judgment dated 05.06.2025) & Ramachandran Shivan vs. ITO in WP No.8570/2023 (judgment dated 04.3.2024) and orders of the Chennai Bench of the Tribunal in the case of Chokkalingam Thangavel vs. ITO in ITA No.577/Chny/2025 (order dated 25.07.2025) and Rajendran Senthil Kumar vs. ITO in ITA No.1467/CHNY/2026 (order dated 02.07.2026)

ITA No.956/CHNY/2026 - 3 - Elango 3. The Ld. DR, on the other hand, argued that the AO initiated the proceedings by issue of notice u/s. 148A(b) on 18.03.2022 which is within 3 years and therefore the AO has rightly obtained the approval from PCIT. The Ld DR placed reliance on the decision of the Hon'ble Calcutta High Court in the case of Girija Commercial (P) Ltd vs UOI 2024 169 taxmann.com 168 (Calcutta). The Ld. DR further submitted that the amendment brought in by Finance Act, 2026 inserting section 292BC of the Act w.e.f 01.04.2021 is to address the notice being held invalid for the reasons as contended by the assessee in the present case. Accordingly, the Ld. DR argued that the notice issued the approval of PCIT cannot be held to be invalid in the light of the Section 292BC of the Act.

4.

We heard the parties and perused the material on record. From the perusal of the decision of the coordinate bench in the case of Chokkalingam Thangavel, supra, we notice that the ratio laid down is that a separate sanction is to be granted for the purpose of issue of notice u/s.148 of the Act from the appropriate authority u/s.151 of the Act. The coordinate bench has further held that and that if the argument of the Ld.DR to be accepted it would defeat purpose of introduction of section 148A of the Act whereby the assessee is granted an opportunity to demonstrate his case for dropping the

ITA No.956/CHNY/2026 - 4 - Elango proceedings before issuing notice u/s.148 of the Act. The findings of the Tribunal in the case of Chokkalingam Thangavel (supra) which has considered the judicial pronouncements on the subject, reads as under:- 4. We heard the parties and perused the material on record. The primary contention with regard to notice issued under section 148 is that the notice which is issued beyond the period of three years i.e. on 07.04.2022 should be approved by the Principle Chief Commissioner of Income Tax and not PCIT. In this regard reliance is placed on the decision of the Hon'ble Madras High Court in the case of M/s Core Logistic Company vs. ACIT (W.P. No. 18168 of 2023 dated 05.06.2025) where it has been held that “6. In the present case, the issue is pertaining to the assessment year 2016- 2017. The relevant law applicable for issuance of notice under Section 148 is as follows: "148. Before making the assessment, reassessment or re-computation under section 147, and subject to the provisions of section 1484. 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 1484, 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:

[Provided further that no such approval shall be required where the Assessing Officer, with the prior approval of the specified authority, has passed an order under clause (d) of section 148A to the effect that it is a fit case to issue a notice under this section.]

ITA No.956/CHNY/2026 - 5 - Elango Explanation 1 For the purposes of this section and section 1484, the information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment means,-

(1) any information [***] 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 audit objection 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, or (iii) any information received under an agreement referred to in section 90 or section 90A of the Act; or (iv) any information made available to the Assessing Officer under the scheme notified under section 135A or (v) any information which requires action in consequence of the order of a Tribunal or a Court

Explanation 2 For the purposes of this section, where,- (1) 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 (24) 22[***] 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 section 132A in case of any other person on or after the 1st day of April, 2021, belongs to 3 Copy 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 [where] 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]."

ITA No.956/CHNY/2026 - 6 - Elango

7.

A perusal of the above provision would show that, before issuing any notice under Section 148, the Assessing Officer has to obtain prior approval of the specified authority to issue such notice. The specified authority is also defined in explanation of the above provision. As per the above provision, specified authority is the authority who referred to in Section 151.

8.

At this juncture, it would be relevant to extract the provision of Section 151, which is as follows: "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 Chief Commissioner or Director General, if more than three years have elapsed from the end of the relevant assessment year.

9.

A perusal of Section 151(i) would show that, the specified authority for the purpose of issuing notice under Section 148 within a period of three years from the end of the relevant assessment year is, the Principal Commissioner or Principal Director or Commissioner or Director. Further, in terms of provision of Section 149, three year time period is fixed for issuance of 148 notice, in the event of the amount is below 50 lakhs. In the present case, the amount involved is Rs.3,65,09,748/-, which is more than 50 lakhs. 148 notice was issued on 25.07.2022, which is beyond the period of three years. So admittedly, the approval has to be obtained from the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General as defined under Section 151(ii). But, in the present case, the approval was obtained from the Principal Commissioner in terms of Section 151(i) and no approval was obtained before issuance of 148 notice in terms of provision of Section 151(ii), which is mandatory. Therefore, the notice under Section 148 was issued in the present case in violation of provision of Section 151(ii) of the Income Tax Act. In view thereof, the initiation of proceedings itself is without any jurisdiction. Hence, the same is liable to be quashed.

10.

Accordingly, the impugned proceedings of the 3rd respondent dated 30.05.2023 is hereby quashed.”

5.

From the perusal of AO's order, we notice that the AO has stated in the order that the notice under section 148 is issued with the prior approval of PCIT, Madurai1. We further notice that the notice under section 148 is issued on 07.04.2022 which is beyond the period of three years from the relevant AY 2018- 19. Therefore, in our considered view the ratio laid down in the above decision of

ITA No.956/CHNY/2026 - 7 - Elango the Hon'ble Madras High Court would be applicable to assessee's case also. Respectfully following the above decision, we hold that the notice issued under section 148 beyond three years without obtaining the approval from the appropriate authority is invalid and the subsequent reassessment based on invalid notice is liable to be quashed.

5.

We further note that the Revenue challenged the decision of the Tribunal before the Hon’ble Jurisdictional High Court (TCA No.38 of 2026). Before the Hon’ble High Court, the Learned Senior Standing Counsel appearing for the Revenue contended that, under the amended provisions of Section 148A of the Act, the Assessing Officer was required to allow a period of 7 to 30 days for the assessee to respond to the notice issued under Section 148A(b) and that the order under Section 148A(d) was required to be passed within one month, in addition to the period allowed for furnishing the response. It was further contended that, since the notice was issued on 21.03.2022 and duly received by the assessee, but remained unanswered, the limitation for passing the order extended up to 30.04.2022. Accordingly, the order passed on 06.04.2022 was within the prescribed period and that the Tribunal had failed to consider this aspect. However, the Hon’ble Jurisdictional High Court vide judgment dated 12.06.2026, rejected the Revenue’s contention and dismissed the appeal, following its decision in the case of Core Logistic Company (supra), thereby affirming the order of the Tribunal. Thus, the view taken by the Coordinate Bench in

ITA No.956/CHNY/2026 - 8 - Elango Chokkalingam Thangavel (supra) stands affirmed by the Hon’ble Jurisdictional High Court.

6.

We further notice that the Hon'ble Bombay High Court in the case of M/s. Vodafone Idea Limited Vs DCIT (WP No. 2768 of 2022 dated 06.02.2024) has considered an identical issue where it is held that even in cases where the notice u/s. 148A(b) was issued before completion of 3 years, if the notice u/s. 148 is issued beyond 3 years the approval needs to be obtained from PCCIT as per Section 151(ii) of the Act.

7.

In assessee's case though the notice under section 148A(b) was issued on 18.03.2022, the notice u/s. 148 is issued on 06.05.2022. On perusal of the notice u/s. 148 we notice that the approval has been obtained from PCIT, Coimbatore-1. The relevant extract of the notice u/s. 148 is as under – “I have the following information in your case or in the case of the person in respect of which you are assessable under the Income tax Act, 1961(here in after referred to as "the Act") for Assessment Year 2018-19  information flagged by the risk management strategy formulated in this regard suggesting that income chargeable to tax has escaped assessment within the meaning of section 147 of the Act. Order under sub-section (d) of section 148A of the Act has been passed in such case vide DIN ITBA/AST/F/148A/2022-23/1042955303(1) dated 05/05/2022 and annexed herewith for reference,

ITA No.956/CHNY/2026 - 9 - Elango 2. I, therefore, propose to assess or reassess such income or recompute the loss or the depreciation allowance or any other, allowance or deduction for the Assessment Year 2018-19 and I, hereby, require you to furnish, within 30 days from service of this notice, a return in the prescribed form of the Assessment Year 2018-19.

3.

This notice is being issued after obtaining the prior approval of the PCIT, Coimbatore-1 accorded on date 04/05/2022 vide Reference No. 100000029222063”

8.

With regard to the contention of the Ld. DR regarding the applicability of Section 292BC of the Act, the Ld. AR drew our attention to the recent decision of the Hyderabad Bench of the Tribunal in the case of Castle Constructions vs. ITO [ITA No.277/Hyd/2026, dated 24.07.2026], wherein the Tribunal has held as under: “16. Before parting, we may herein observed that though the Finance Act, 2026 has made available on the statute under section 292BC of the Act, which is deemed to have inserted w.e.f 01/04/2021, wherein it is contemplated that notwithstanding anything contained in this Act or in any judgment, order or decree of any Court, for the removal of doubts, it is hereby clarified that any approval given by an income-tax authority in relation to any assessment, reassessment or re-computation proceedings under this Act shall be deemed to be administrative and supervisory in nature and shall not be invalid or shall not be deemed to be invalid by reason of any insufficiency of the reasons recorded or by reason of any defect in the form or manner of its authentication or communication including whether digital signature have been appended to such approval or not, where such approval is granted electronically; granting of an approval by an authority other than that specified under the Act does not fall within the scope and gamut of the said statutory provision. On the contrary, we find that in case once the approval for initiation of reassessment proceedings was granted by the Commissioner of Income Tax after expiry of three years from the end of the relevant assessment

ITA No.956/CHNY/2026 - 10 - Elango year, which ought to have been granted by the Principal Chief Commissioner of Income Tax. The Hon'ble Supreme Court in the case of ACIT, International Taxation v. LinkedIn Singapore Pte. Ltd. (2025) 180 Taxmann 158 (SC) had upheld the order of the Hon'ble High Court, which had quashed the impugned order passed by the AO under section 148A(d) as well as the notice issued under section 148 of the Act for want of valid assumption of jurisdiction.”

9.

In view of the above judicial pronouncement, we find merit in the contention of the Ld. AR that the provisions of Section 292BC of the Act cannot be invoked to cure a jurisdictional defect arising from the grant of approval by an authority not competent to do so under Section 151 of the Act. The said provision does not dispense with the requirement of obtaining approval from the competent authority as prescribed under the Act. Therefore, the contention of the Ld. DR in this regard is not acceptable.

10.

From the perusal of these facts, we are of the considered view that the ratio laid down by the judicial precedence is applicable to the present case. Accordingly, respectfully following the above judicial precedence, we hold that the notice issued by the AO u/s.148 beyond 3 years on 06.05.2022 with the approval of PCIT instead of PCCIT as per the provisions of section 151(ii) is not valid. Consequently, the re-assessment completed based on the invalid notice is quashed.

ITA No.956/CHNY/2026 - 11 - Elango

11.

Since we have quashed the reassessment proceedings on the legal ground challenging the validity of notice issued u/s.148 of the Act, the other grounds raised by the assessee on merits do not require adjudication and are left open.

12.

In the result, the appeal filed by the assessee is partly-allowed.

Order pronounced in the open court on 4th November,2026 at Chennai.

Sd/- Sd/- (जॉज� जॉज� के) (गगन गोयल) (GEORGE GEORGE K) (GAGAN GOYAL) लेखा सद�य/ACCOUNTANT MEMBER उपा�य� /VICE PRESIDENT चे�नई/Chennai, �दनांक/Dated, the 4th November, 2026 RSR, Sr.PS आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��यथ�/Respondent 3. आयकर आयु�त /CIT, Salem 4. �वभागीय ��त�न�ध/DR 5. गाड� फाईल/GF. By Order Digitally signed by REKHA REKHA SENTHIL RAJ SENTHIL RAJ Date: 2026.11.06 12:49:50 +05'30'

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