ABHISHEK SUNILKUMAR GOYAL ,MUMBAI vs. INCOME TAX OFFICER WARD 22(1)(1), MUMBAI

ORDER \nPER SANDEEP GOSAIN, JM:\nThe present appeal has been filed by the assessee\nchallenging the impugned order dt. 17.04.2025 passed\nunder section 250 of the Income Tax Act, 1961 (‘the Act'),\nby the National Faceless Appeal Centre (NFAC) / CIT(A) for\nthe assessment year 2016-17.\n2. At the very outset, Ld. AR appeared on behalf of the\nassessee pressed ground No. 2, which is legal in question\nand relates to challenging the order of Ld. CIT(A) in\nupholding the approval sought by the AO while initiating\nproceedings of reopening. Therefore we have decided to\nadjudicate this ground firstly as it goes to the roots of the\ncase.\n3. We have heard the counsels for both the parties,\nperused the material placed on record, judgments cited\nbefore us and the orders passed by the revenue\nauthorities. From the records, we noticed that the year\nunder consideration is A.Y 2016-17 and the proceedings\nu/s 148A(d) of the Act in consequence to Hon'ble Supreme\nCourt's order 04.05.2022 were initiated and consequently\nthe order under Clause D of 148A of the Act was passed\non 30.07.2022 and in the order it has been categorically\nmentioned that the same is being passed with prior\napproval of Ld. PCIT, Mumbai 20. The copy of the said\norder is at paper book page No. 49-52. Apart from this\nnotice u/s 148 of the Act was also issued on 30.07.2022\nwhich is at paper book page No. 53, wherein at para 3 it\nhas been categorically mentioned that this notice is being\nissued after obtaining the approval of Ld. PCIT, Mumbai\n20.\n4. Admittedly in this case the proceedings for reopening\nhas been initiated after the expiry of 3 years, thus as per\nthe provisions of Sec. 151 of the Act for issue of notice\nbeyond 3 years from the end of relevant assessment year,\napproval of Ld. Principle Chief Commissioner of Income Tax\n(PCCIT) or Ld. Chief Commissioner of Income Tax (CCIT)\nwas required. In this case undisputedly the notice u/s 148\nof the Act had been issued beyond the period of 3 years\nfrom the end of the relevant assessment. Therefore in our\nview, the approval of Ld. PCCIT was required. In this\nregard reliance is being placed upon the decision in the\ncase of M/s Nickson Morries Rodricks Vs. ITO, in ITA No.\n180/Mum/2025 and Ajay Multi Projects Pvt Ltd Vs.\nDCIT, in wherein the ‘identical\nissue' was decided in favour of assessee and the operative\nportion of the decision is reproduced herein below:\n7. We have heard the counsels for both the parties, perused\nthe material placed on record and judgments cited before us\nand the orders passed by the revenue authorities. It is\nundisputed fact that the impugned notice u/s 148 of the Act\nwas issued by the department on 29.07.2022 for the year\nunder consideration as in sub para (3) of the impugned notice it\nclearly mentioned that the said notice is being issued after\nobtaining the prior approval of PCIT instead of PCCIT as is\nrequired u/s 151 of the Act. In this regard, we placed reliance\nupon the decision of the Coordinate Bench of ITAT in ITA No.\n3551/Mum/2024 (supra), wherein the ‘identical issue’was\ndecided in favour of assessee and the operative portion of the\ndecision is reproduced herein below:\n4. We have heard both the sides and have perused the\nmaterial on record in relation to this issue. We have also taken\ninto consideration the judicial precedents cited during the course\nof hearing.\n5 In the facts and circumstances of the present case the issue\nthat arises for consideration is whether the Principal\nCommissioner of Income Tax or the Principal Chief\nCommissioner of Income Tax was the Specified Authority for\nseeking approval for passing order under Section 148A(d) of the\nAct and issuance of notice under Section 148 of the Act (new\nregime) for the Assessment Year 2017-18.\n6 In this regard we deem it appropriate to refer to judgment of\nthe Hon'ble Supreme Court in the case Union of India vs.\nRajeev Bansal [2024] 469 ITR 46 (SC)[03/10/2024]. The\nHon'ble Supreme Court had, while dealing with the issue of\napproval from specified authority in terms of Section 151 of the\nAct, made the following observations:\n\"74. The above table indicates that the specified authority\nis directly co-related to the time when the notice is\nissued. This plays out as follows under the old\nregime: (i) If income escaping assessment was less\nthan Rupees one lakh: (a) a reassessment notice\ncould be issued under section 148 within four years\nafter obtaining the approval of the Joint\nCommissioner; and (b) no notice could be issued\nafter the expiry of four years; and (ii) If income\nescaping was more than Rupees one lakh: (a) a\nreassessment notice could be issued within four years\nafter obtaining the approval of the Joint\nCommissioner; and (b) after four years but within six\nyears after obtaining the approval of the Principal\nChief Commissioner or Chief Commissioner or\nPrincipal Commissioner or Commissioner.\n75. After 1 April 2021, the new regime has specified\ndifferent authorities for granting sanctions under\nsection 151. The new regime is beneficial to the\nassessee because it specifies a higher level of\nauthority for the grant of sanctions in comparison to\nthe old regime. Therefore, in terms of Ashish Agarwal\n(supra), after 1 April 2021, the prior approval must\nbe obtained from the appropriate authorities specified\nunder section 151 of the new regime. The effect of\nSection 151 of the new regime is thus: (i) If income\nescaping assessment is less than Rupees fifty lakhs:\n(a) a reassessment notice could be issued within\nthree years after obtaining the prior approval of the\nPrincipal Commissioner, or Principal Director or\nCommissioner or Director; and (b) no notice could be\nissued after the expiry of three years; and (ii) If\nincome escaping assessment is more than Rupees\nfifty lakhs: (a) a reassessment notice could be issued\nwithin three years after obtaining the prior approval\nof the Principal Commissioner, or Principal Director or\nCommissioner or Director; and (b) after three years\nafter obtaining the prior approval of the Principal\nChief Commissioner or Principal Director General or\nChief Commissioner or Director General.\n76. Grant of sanction by the appropriate authority is a\nprecondition for the assessing officer to assume\njurisdiction under section 148 to issue a\nreassessment notice. Section 151 of the new regime\ndoes not prescribe a time limit within which a\nspecified authority has to grant sanction. Rather, it\nlinks up the time limits with the jurisdiction of the\nauthority to grant sanction. Section 151(ii) of the\nnew regime prescribes a higher level of\nauthority if more than three years have\nelapsed\nfrom the end of the relevant assessment year.\nThus, non-compliance by the assessing officer\nwith the strict time limits prescribed under\nsection 151 affects their jurisdiction to issue a\nnotice under section 148.\n77. Parliament enacted TOLA to ensure that the interests\nof the Revenue are not defeated because the\nassessing officer could not comply with the pre-\nconditions due to the difficulties that arose during the\nCOVID-19 pandemic. Section 3(1) of TOLA relaxes\nthe time limit for compliance with actions that\nfall for completion from 20 March 2020 to 31\nMarch 2021. TOLA will accordingly extend the\ntime limit for the grant of sanction by the\nauthority specified under section 151. The test\nto determine whether TOLA will apply to Section\n151 of the new regime is this: if the time limit\nof three years from the end of an assessment\nyear falls between 20 March 2020 and 31 March\n2021, then the specified authority under section\n151(i) has an extended time till 30 June 2021 to\ngrant approval. In the case of Section 151 of the\nold regime, the test is: if the time limit of four years\nfrom the end of an assessment year falls between 20\nMarch 2020 and 31 March 2021, then the specified\nauthority under section 151(2) has time till 31 March\n2021 to grant approval. The time limit for Section\n151 of the old regime expires on 31 March 2021\nbecause the new regime comes into effect on 1 April\n2021.\n78. For example, the three year time limit for assessment\nyear 2017-2018 falls for completion on 31 March\n2021. It falls during the time period of 20 March 2020\nand 31 March 2021, contemplated under section 3(1)\nof TOLA. Resultantly, the authority specified under\nsection 151(i) of the new regime can grant sanction\ntill 30 June 2021.\n79. Under Finance Act 2021, the assessing officer was\nrequired to obtain prior approval or sanction of the\nspecified authorities at four stages:\na. Section 148A(a) - to conduct any enquiry, if\nrequired, with respect to the information\nwhich suggests that the income chargeable to\ntax has escaped assessment;\nb. Section 148A(b) - to provide an opportunity of\nhearing to the assessee by serving upon them\na show cause notice as to why a notice under\nsection 148 should not be issued based on the\ninformation that suggests that income\nchargeable to tax has escaped assessment. It\nmust be noted that this requirement has been\ndeleted by the Finance Act 2022;\nc. Section 148A(d) - to pass an order deciding\nwhether or not it is a fit case for issuing a\nnotice under section 148; and\nd. Section 148 - to issue a reassessment notice;\n80. In Ashish Agarwal (supra), this Court directed that\nSection 148 notices which were challenged before\nvarious High Courts \"shall be deemed to have been\nissued under section 148-A of the Income-tax Act as\nsubstituted by the Finance Act, 2021 and construed\nor treated to be show-cause notices in terms of\nSection 148-A(b)." Further, this Court dispensed with\nthe requirement of conducting any enquiry with the\nprior approval of the specified authority under section\n148A(a). Under Section 148A(b), an assessing officer\nwas required to obtain prior approval from the\nspecified authority before issuing a show cause\nnotice. When this Court deemed the Section 148\nnotices under the old regime as Section 148A(b)\nnotices under the new regime, it impliedly waived the\nrequirement of obtaining prior approval from the\nspecified authorities under section 151 for Section\n148A(b). It is well established that this Court while\nexercising its jurisdiction under Article 142, is not\nbound by the procedural requirements of law High\nCourt Bar Association v. State of U P [2024] 160\ntaxmann.com 32/299 Taxman 21 (SC)/[2024] 6 SCC\n267.