ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 6(4), MUMBAI, MUMBAI vs. SHANTILAL CHIMANLAL SHETH, MUMBAI

Thus, it can be seen that Revenue conceded before the Hon'ble\nSupreme Court in para 19(f) for dropping all the notices issued on or\nafter 01/04/2021 for A.Y. 2015-16 as they will not fall for completion\nduring the period prescribed under TOLA.\n6. Again the Hon'ble Supreme Court in the case of Deepak Steel and\nPower Limited vs. CBDT in Civil Appeal Nos.5177 of 2025, 5178 of 2025 &\n5179 of 2025, had the occasion to consider an identical grievance and\nheld as under:-\n“The learned counsel appearing for the revenue with his usual fairness invited the\nattention of this Court to a three judge bench decision of this Court in Union of India\nand Ors. v. Rajeev Bansal, reported in 2024 SCC OnLine SC 2693, more\nparticularly, paragraph 19(f) which reads thus: -\n\"19. (f) The Revenue concedes that for the assessment year 2015- 2016, all\nnotices issued on or after April 1, 2021 will have to be dropped as they will\nnot fall for completion during the period prescribed under the Taxation and\nother Laws (Relaxation and Amendment of Certain Provisions) Act, 2020.\"\n5. As the revenue made a concession in the aforesaid decision that is for the\n assessment year 2015-2016, all notices issued on or after 1st April, 2021 will have\nto be dropped as they would not fall for completion during the period prescribed\nunder the taxation and other laws (Relaxation and Amendment of certain Provisions\nAct, 2020). Nothing further is required to be adjudicated in this matter as the notices\nso far as the present litigation is concerned is dated 25.6.2021.\nआयकर अपीलीय अधिकरण\nINCOME TAX APPELLATE TRIBUNAL\nI.T.A. No. 6867 & 6866/Mum/2024\nC.O. No. 21 & 22/Mum/2025\n5\n6. In view of the aforesaid, in such circumstances referred to above the original writ\npetition nos.2446 of 2023, 2543 of 2023 and 2544 of 2023 respectively filed before\nthe High Court of Orissa at cuttack stands allowed.\"\n7. Once again, the Hon'ble Supreme Court had the occasion to\ndecide a similar issue in the case of ACIT vs. Nehal Ashit Shah in IA No.\n66386/2025 & IA No. 66387/2025 by order dated 04/04/2025. The relevant\nfindings read as under :-\n“It has been submitted at the bar that this Special Leave Petition could be disposed\nof by following the order dated 17.01.2025 passed in the case of the Income Tax officer\nWard 1(2) Jaipur vs. R.K.Build Creations Private Limited (Special Leave Petition\n(Civil) Diary No(s) .59625 of 2024). For ease of reference the aforesaid order reads\nas under:\n\"Delay condoned.\nHaving regard to the concession made by the petitioner-Department in the\ncase of Union of India vs. Rajeev Bansal, Civil Appeal No. 8629 of 2024 on\n03.10.2024 (2024 SCC ONLINE 754), this Special Leave Petition would\nnot survive for further consideration.\nHence, the Special Leave Petition is dismissed.\nPending applications), if any, shall stand disposed of.\"\n4. Consequently, following the aforesaid order, this Special Leave Petition is\ndismissed as it does not survive for further consideration.\n5. In this regard, reference could also be made to paragraph 19(e) and (f) in the case\nof Union of India vs. Rajeev Bansal, Civil Appeal No.8629 of 2024 on 03.10.2024\nunder which the learned Additional Solicitor General for India has made a concession\ninsofar as the assessment year 2015-16 is concerned.\nPending application(s), if any, shall stand disposed of.”\n8. In light of the aforementioned decisions of the Hon'ble Supreme\nCourt, the impugned notice mentioned hereinabove is set-aside and the\nresultant order is quashed. Since we have quashed the assessment order\non this preliminary issue, other issues raised by the revenue in its appeal\nand by the assessee in its cross-objection are left open. Accordingly, C.O.\nNo. 21/Mum/2025 for AY 2015-16 is allowed.\nआयकर अपीलीय अधिकरण\nINCOME TAX APPELLATE TRIBUNAL\nI.T.A. No. 6867 & 6866/Mum/2024\nC.O. No. 21 & 22/Mum/2025\n6\n9. In C.O. No. 22/Mum/2025, the assessee has raised as much as\n11.7 grounds. However, the specific ground argued before us reads as\nunder:-\n“11.

The Ld. CIT(A) erred in not considering that notice u/s 148A(b) of the Act,\norder u/s 148A(d) of the Act and notice u/s 148 of the Act were passed without prior\napproval of appropriate authority specified u/s 151(ii) of the Act, which is bad in\nlaw.\"\n10. The notice u/s 148 of the Act dated 29/07/2022 which is in\ndispute, is as under:-\nGOVERNMENT OF INDIA\nकार्यालय आयकर उपायुक्त कें. मं. - 6(4)\nOFFICE OF THE DEPUTY COMMISSIONER OF INCOME TAX (CC) -6(4)\nकक्षसं. 1925, उन्नीस मंज़िल, एयर इंडिया विल्डिंग, नरीमन पॉइंट, मुंबई\nROOM No.1925, AIR INDIA BUILDING, NARIMAN POINT, Mumbal -21\ne-mail: mumbai.dcjt.cen6.4@incometax.gov.in,\nSHANTILAL CHIMANLAL SHETH OFFICE NO.9, 3RD\nFLOOR CHEMOX HOUSE, BARRACK ROAD BOMBAY\nHOSPITAL LANE MUMBAI 400001, Maharashtra\nPAN: AAOPS0258E\nΑ.Υ. 2016-17\nDated: 29.07.2022\nNotice under section 148 of the Income-tax Act, 1961\n1. (A) I have the following information in your case or in the case of the person in respect of which you\nare assessable under the Income Tax Act, 1961 (hereinafter referred to as \"the Act\") for Assessment\nYear 2016-17.\na. information flagged by the risk management strategy formulated in this regard:\nb. final objection has been raised by the Comptroller and Auditor-General of India to the Effect that\nthe assessment has not been made in accordance with the provisions of Act;\nc. a survey was conducted under section 133A of the Act, other than under section 133A(2A) of\nsection 133A(5) of the Act.\nd. information which requires action in consequence of the judgement of the Hon'ble Supreme\nCourt in the case Union of India Vs. Ashish Agarwal, Civil Appeal 3005/2022, dated 4th May, 2022,\nsuggesting that income chargeable to tax has escaped assessment within the meaning of section 147 of\nthe Act. Order under sub-section (d) of section 148A of the Act has been passed in such case vide DIN:\nITBA/COM/F/17/2022-23/1044290649(1) dated 29.07.2022 and annexed herewith for reference,\n(B) I have information that a search was initiated under-section 132 of the Act in your case or in the case\nof the person in respect of which you are assessable under the Act on the date-\n(C) I have information that books of accounts, other documents or any assets have been requisition\nunder section 132A of the Act in your case or in the case of the person-in-respect of which you are\nassessable under the Act.\n(D) I am satisfied, with the approval of Principal Commissioner or Commissioner, that money, bullion,\njewellery or other valuable article or thing, seized or requisitioned-under section 132-or section 132A-of\nthe Act in case of\nrelate to you or the person in respect of which you are assessable under\nthe Act.\n(E) I am satisfied, with the approval of Principal Commissioner or Commissioner, that books of accounts\nor documents, seized or requisitioned under under-section-132 section 132 er section 132A of the Act in the case of\npertains or pertain to or any information contained therein, relate to you or the person in respect of\nwhich you are assessable under the Act.\n2. I therefore, propose to assess or reassess such income or recompute the loss or the depreciation\nallowance or any other allowance or deduction for the A.Y 2016-17 and I, hereby, require you to furnish,\nwithin 30 days from the service of this notice, a return in the prescribed form for the A.Y. 2016-17.\n3. This notice is being issued after obtaining the prior approval of the Principal Commissioner of Income\nTax (Central)-3 accorded on date 28.07.2022 vide Reference No: No. Pr.CIT(C)-3/Order U/s\n148A(d)/2022-23/173.\nShivendra Kumar Mishra)\nDy. Commissioner of Income Tax\nCentral Circle - 6(4), Mumbai.\nआयकर अपीलीय अधिकरण\nINCOME TAX APPELLATE TRIBUNAL\nI.T.A. No. 6867 & 6866/Mum/2024\nC.O. No. 21 & 22/Mum/2025\n7\n11. It can be seen from paragraph 3 of the aforementioned notice that,\nthe approval was given by the PCIT, Central – 3 on 28/07/2022. The\nchallenge of the assessee is the invalid approval of the notice u/s 148 of\nthe Act. We find that a similar quarrel was decided by the Hon'ble\nSupreme Court in the case of Union of India v. Rajeev Bansal [2024] 167\ntaxmann.com 70 (SC)/469 ITR 46 (SC), as the Hon'ble Supreme Court has\nconsidered the issue of getting approval from the appropriate authority\nu/s 151 of the Act before issuing notice u/s 148 of the Act to cases where\nthe revenue has invoked the provisions of the Section 148A of the Act\nas per the directions of the Hon'ble Supreme Court in the case of Union\nof India vs Ashish Agarwal (2022 SCC Online SC 543). The relevant\nobservations of the Hon'ble Supreme Court are as under:-\n\"73. Section 151 imposes a check upon the power of the Revenue to reopen\nassessments. The provision imposes a responsibility on the Revenue to ensure that it\nobtains the sanction of the specified authority before issuing a notice under section\n148. The purpose behind this procedural check is to save the assesses from harassment\nresulting from the mechanical reopening of assessments Sri krishna (P.) Ltd. v. ITO\n[1996] 87 Taxman 315/221 ITR 538 (SC)/[1996] 9 SCC 534. A table representing\nthe prescription under the old and new regime is set out below:-\nRegime\nTime limits\nSpecified authority\nSection 151(2) of\nthe old regime\nBefore expiry of four years from\nthe end of the relevant\n assessment year\nJoint Commissioner\nSection 151(1) of\nthe old regime\nAfter expiry of four years from\nthe end of the relevant\n assessment year\nPrincipal Chief\nCommissioner or Chief\nCommissioner or\nPrincipal Commissioner\nor Commissioner\nSection 151(i) of\nthe new regime\nThree years or less than three\nyears from the end of the\nrelevant assessment year\nPrincipal Commissioner\nor Principal Director or\nCommissioner or Director\nआयकर अपीलीय अधिकरण\nINCOME TAX APPELLATE TRIBUNAL\nI.T.A. No. 6867 & 6866/Mum/2024\nC.O. No. 21 & 22/Mum/2025\n8\nSection 151(ii) of\nthe new regime\nMore than three years have\nelapsed from the end of the\nrelevant assessment year\nPrincipal Chief\nCommissioner or\nPrincipal Director\nGeneral or Chief\nCommissioner or Director\nGeneral\n74. The above table indicates that the specified authority is directly co-related to the\ntime when the notice is issued. This plays out as follows under the old regime:-\n(i) If income escaping assessment was less than Rupees one lakh: (a)\na reassessment notice could be issued under section 148 within\nfour years after obtaining the approval of the Joint\nCommissioner; and (b) no notice could be issued after the expiry\nof four years; and\n(ii) If income escaping was more than Rupees one lakh: (a)\na reassessment notice could be issued within four years after\nobtaining the approval of the Joint Commissioner; and (b) after\nfour years but within six years after obtaining the approval of the\nPrincipal Chief Commissioner or Chief Commissioner or\nPrincipal Commissioner or Commissioner.\n75. After 1 April 2021, the new regime has specified different authorities for granting\nsanctions under section 151. The new regime is beneficial to the assessee because it\nspecifies a higher level of authority for the grant of sanctions in comparison to the\nold regime. Therefore, in terms of Ashish Agarwal (supra), after 1 April 2021, the\nprior approval must be obtained from the appropriate authorities specified under\nsection 151 of the new regime. The effect of Section 151 of the new regime is thus:-\n(i) If income escaping assessment is less than Rupees fifty lakhs:-\n(a) a reassessment notice could be issued within three years\nafter obtaining the prior approval of the Principal\nCommissioner, or Principal Director or Commissioner or\nDirector; and (b) no notice could be issued after the expiry of\nthree years; and\n(ii) If income escaping assessment is more than Rupees fifty lakhs:-\n(a) a reassessment notice could be issued within three years\nafter obtaining the prior approval of the Principal\nCommissioner, or Principal Director or Commissioner or\nDirector; and (b) after three years after obtaining the prior\napproval of the Principal Chief Commissioner or Principal\nDirector General or Chief Commissioner or Director General.\nआयकर अपीलीय अधिकरण\nINCOME TAX APPELLATE TRIBUNAL\nI.T.A. No. 6867 & 6866/Mum/2024\nC.O. No. 21 & 22/Mum/2025\n9\n76. Grant of sanction by the appropriate authority is a precondition for the assessing\nofficer to assume jurisdiction under section 148 to issue a reassessment notice.\nSection 151 of the new regime does not prescribe a time limit within which a specified\nauthority has to grant sanction. Rather, it links up the time limits with the\njurisdiction of the authority to grant sanction. Section 151(ii) of the new regime\nprescribes a higher level of authority if more than three years have elapsed from the\nend of the relevant assessment year. Thus, non-compliance by the assessing officer\nwith the strict time limits prescribed under section 151 affects their jurisdiction to\nissue a notice under section 148.\n77. Parliament enacted TOLA to ensure that the interests of the Revenue are not\ndefeated because the assessing officer could not comply with the pre conditions due\nto the difficulties that arose during the COVID-19 pandemic. Section 3(1) of TOLA\nrelaxes the time limit for compliance with actions that fall for completion from 20\nMarch 2020 to 31 March 2021. TOLA will accordingly extend the time limit for the\ngrant of sanction by the authority specified under section 151. The test to determine\nwhether TOLA will apply to Section 151 of the new regime is this: if the time limit\nof three years from the end of an assessment year falls between 20 March 2020 and\n31 March 2021, then the specified authority under section 151(i) has an extended\ntime till 30 June 2021 to grant approval. In the case of Section 151 of the old regime,\nthe test is: if the time limit of four years from the end of an assessment year falls\nbetween 20 March 2020 and 31 March 2021, then the specified authority under\nsection 151(2) has time till 31 March 2021 to grant approval. The time limit for\nSection 151 of the old regime expires on 31 March 2021 because the new regime\ncomes into effect on 1 April 2021.\n78. For example, the three year time limit for assessment year 2017-2018 falls for\ncompletion on 31 March 2021. It falls during the time period of 20 March 2020 and\n31 March 2021, contemplated under section 3(1) of TOLA. Resultantly, the\nauthority specified under section 151(i) of the new regime can grant sanction till 30\nJune 2021.\n79. Under Finance Act 2021, the assessing officer was required to obtain prior\napproval or sanction of the specified authorities at four stages:-\na. Section 148A(a) - to conduct any enquiry, if required, with\nrespect to the information which suggests that the income\nchargeable to tax has escaped assessment;\nb. Section 148A(b) - to provide an opportunity of hearing to the\nassessee by serving upon them a show cause notice as to why a\nnotice under section 148 should not be issued based on the\ninformation that suggests that income chargeable to tax has\nescaped assessment. It must be noted that this requirement has\nbeen deleted by the Finance Act 2022;33\nc. Section 148A(d) - to pass an order deciding whether or not it is\na fit case for issuing a notice under section 148; and\nआयकर अपीलीय अधिकरण\nINCOME TAX APPELLATE TRIBUNAL\nI.T.A. No. 6867 & 6866/Mum/2024\nC.O. No. 21 & 22/Mum/2025\n10\nd. Section 148 - to issue a reassessment notice.\n80. In Ashish Agarwal (supra), this Court directed that Section 148 notices which\nwere challenged before various High Courts \"shall be deemed to have been issued\nunder section 148-A of the Income-tax Act as substituted by the Finance Act, 2021\nand construed or treated to be show-cause notices in terms of Section 148-A(b).\"\nFurther, this Court dispensed with the requirement of conducting any enquiry with\nthe prior approval of the specified authority under section 148A(a). Under Section\n148A(b), an assessing officer was required to obtain prior approval from the specified\nauthority before issuing a show cause notice. When this Court deemed the Section\n148 notices under the old regime as Section 148A(b) notices under the new regime,\nit impliedly waived the requirement of obtaining prior approval from the specified\nauthorities under section 151 for Section 148A(b). It is well established that this\nCourt while exercising its jurisdiction under Article 142, is not bound by the\nprocedural requirements of law High Court Bar Association v. State of U P [2024]\n160 taxmann.com 32/299 Taxman 21 (SC)/[2024] 6 SCC 267.\n81. This Court in Ashish Agarwal (supra) directed the assessing officers to \"pass\norders in terms of Section 148-A(d) in respect of each of the assesses concerned.\"\nFurther, it directed the assessing officers to issue a notice under Section 148 of the\nnew regime \"after following the procedure as required under section 148-A.\"\nAlthough this Court waived off the requirement of obtaining prior approval under\nsection 148A(a) and Section 148A(b), it did not waive the requirement for Section\n148A(d) and Section 148. Therefore, the assessing officer was required to obtain prior\napproval of the specified authority according to Section 151 of the new regime before\npassing an order under section 148A(d) or issuing a notice under section 148. These\nnotices ought to have been issued following the time limits specified under section\n151 of the new regime read with TOLA, where applicable.\"\n12. In light of the aforementioned observations of the Hon'ble\nSupreme Court, we find that the AO passed an order u/s 148A(d) of the\nAct on 29/07/2022 and issued notice u/s 148 of the Act on 29/07/2022.\nAs per the provisions of section 151 of the Act for the issue of notice,\nunder the relevant Section of the Act on or after 01/04/2021, the prior\napproval should be obtained from the appropriate authorities specified\nu/s 151 of the Act in the new regime. The provisions of Section 151 of\nthe Act under the new regime reads as under:-\n\"Sanction for issue of notice.\n151. Specified authority for the purposes of section 148 and section 148A shall be, -\nआयकर अपीलीय अधिकरण\nINCOME TAX APPELLATE TRIBUNAL\nI.T.A. No. 6867 & 6866/Mum/2024\nC.O. No. 21 & 22/Mum/2025\n11\n(i) Principal Commissioner or Principal Director or Commissioner or Director, if\nthree years or less than three years have elapsed from the end of the relevant\n assessment year;\n(ii)Principal Chief Commissioner or Principal Director General or where there is no\nPrincipal Chief Commissioner or Principal Director General, Chief Commissioner or\nDirector General, if more than three years have elapsed from the end of the relevant\n assessment year.\"\n13. In assessee's case, from the perusal of paragraph 3 of the notice,\nexhibited elsewhere, we notice that the same is issued with the approval\nof the PCIT, Central – 3 on 28/07/2022 and this fact is not contravened\nby the ld. D/R.\n14. In the considered opinion of the Bench, as per the decision of the\nHon'ble Supreme Court (supra), the approval should have been\nobtained as per the amended provisions of Section 151 of the Act\nmentioned hereinabove i.e., the approval should have been obtained\nfrom PCCIT whereas the approval has been obtained from PCIT.\nTherefore, we hold that the notice u/s 148 of the Act is invalid and the\nconsequent assessment order is liable to be quashed. Since we have\nquashed the assessment order, the other issues raised in the appeal by\nthe revenue and in the cross-objection by the assessee are left open.\n15. In the result, the appeals by the revenue are dismissed and the\ncross-objections by the assessee are partly allowed.\nOrder pronounced in the Court on 30th July, 2025 at Mumbai.\nSd/-\n(SAKTIJIT DEY)\nVICE PRESIDENT\nMumbai, Dated 30/07/2025\nSd/-\n(NARENDRA KUMAR BILLAIYA)\nACCOUNTANT MEMBER\n*SC SPPS\nआदेश की प्रतिलिपि अग्रेषित/