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Facts
The revenue preferred an appeal against the CIT(A)'s order which had quashed the assessment order due to an invalid notice issued under Section 148 of the Income Tax Act. The assessee also filed cross-objections.
Held
The Tribunal held that the approval for issuing the notice under Section 148 was not in accordance with the provisions of Section 151 of the Act, as concluded by the Supreme Court in the Union of India vs. Rajeev Bansal case. Therefore, the notice was set aside.
Key Issues
Whether the notice issued under Section 148 of the Income Tax Act, 1961, was valid considering the approval obtained from the Principal Commissioner, in light of the Supreme Court's decision in Union of India vs. Rajeev Bansal.
Sections Cited
148, 147, 151, 133A, 132, 132A
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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
Before: SHRI NARENDRA KUMAR BILLAIYA, HON’BLE & SHRI ANIKESH BANERJEE, HON’BLE
Assessee by : Shri Subodh Ratnaparkhi, A/R Revenue by : Shri Leyaqat Ali Aafaqui, Sr. D/R सुनवाई की तारीख/Date of Hearing : 23/07/2025 घोषणा की तारीख /Date of Pronouncement: 25/07/2025 आदेश/O R D E R
PER NARENDRA KUMAR BILLAIYA, AM:
This appeal by the revenue is preferred against the order dated 19/02/2025 by NFAC, Delhi [hereinafter ‘the CIT(A)’] pertaining to AY 2017-18. The assessee has also preferred cross- objections against the very same order of the ld. CIT(A) in C.O. No. 13/Mum/2025. C.O. No. 131/Mum/2025 2
The grievance of the revenue reads as under:- “A. Whether the Hon’ble CIT(A) erred in reversing the findings of the Assessing Officer for the A.Y. 2017-18?”
B. Whether the Hon’ble CIT(A) erred in quashing the Assessment order on account of notice issued u/s 148 of the Income tax Act is invalid without appreciating that notice u/s 148 of the Income tax Act is invalid without appreciating that notice u/s 148 was issued as per instruction no. 1 of 2022 issued by CBDT?
C. Whether the Hon’ble CIT(A) erred in deleting the addition of Rs. 2,31,39,000/- made in the Assessment order without merit.
D. The appellant craves leave to amend or alter any ground or add new ground which may necessary.”
Representatives of both the sides were heard at length. Case records carefully perused and the relevant documentary evidence brought on record duly considered in the light of Rule 18(6) of the ITAT Rules, 1963.
The entire quarrel revolves around the notice dated 28/07/2022 issued u/s 148 of the Act which is as under:-
***This space has been left blank intentionally, P.T.O.***
The bone of contention is the approval of the notice by the PCIT(1), Mumbai accorded on 26/07/2022.
The issue whether approval has been accorded by the appropriate authority has been elaborately explained by the Hon’ble Supreme Court in the case of Union of India vs. Rajeev Bansal [2024] 469 ITR 46 (SC), wherein the Hon’ble Supreme Court concluded as under:-
“(a) After 1-4-2021, the Income-tax Act has to be read along with the substituted provisions;
(b) TOLA will continue to apply to the Income-tax Act after 1-4-2021 if any action or proceeding specified under the substituted provisions of the Income-tax Act falls for completion between 20-3-2020 and 31-3-2021;
(c) Section 3(1) of TOLA overrides section 149 only to the extent of relaxing the time-limit for issuance of a reassessment notice under section 148;
(d) TOLA will extend the time-limit for the grant of sanction by the authority specified under section 151. The test to determine whether TOLA will apply to section 151 of the new regime is this: if the time-limit of three years from the end of an assessment year falls between 20-3-2020 and 31-3-2021, then the specified authority under section 151(i) has extended time till 30-6-2021 to grant approval;
(e) In the case of section 151 of the old regime, the test is: if the time-limit of four years from the end of an assessment year falls between 20-3-2020 and 31-3-2021, then the specified authority under section 151(2) has extended time till 31-3-2021 to grant approval;
(f) The directions in Ashish Agarwal (supra) will extend to all the ninety thousand reassessment notices issued under the old regime during the period 1-4- 2021 and 30-6-2021;
(g) The time during which the show cause notices were deemed to be stayed is from the date of issuance of the deemed notice between 1-4-2021 and 30-6-2021 till the supply of relevant information and material by the Assessing Officers to the assessees in terms of the directions issued by this Court in Ashish Agarwal (supra), and the period of two weeks allowed to the assessees to respond to the show cause notices; and (h) The Assessing Officers were required to issue the reassessment notice under section 148 of the new regime within the time-limit surviving under the Income-tax Act read with TOLA. All notices issued beyond the surviving period are time barred and liable to be set aside. [Para 114]”
In light of the above findings of the Hon’ble Supreme Court, the since the approval was given by the PCIT, the approval is not as per the provisions of Section 151 of the Act and hence, the notice issued u/s 148 of the Act deserves to be set aside.