MANISHA NITIN BRAHMBHATT ,MUMBAI vs. ITO WARD 24(2)(1), MUMBAI

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ITA 1651/MUM/2025Status: DisposedITAT Mumbai19 May 2025AY 2017-185 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 found merit in the assessee's contention that the notice under Section 148 of the Income Tax Act, 1961, for AY 2017-18 was issued without obtaining prior approval from the appropriate authority. The Tribunal noted that the period of three years from the end of AY 2017-18 had elapsed on March 31, 2021. According to Section 151(ii) of the Act, for cases where more than three years have elapsed, the approval must be obtained from the Principal Chief Commissioner or Chief Commissioner. However, the approval for the notice was obtained from the Principal Commissioner, which is not the mandated authority under the new regime for cases beyond three years. The Tribunal relied on the Supreme Court's decision in the case of Ashish Agarwal (supra) which clarified that for issuing notices under Section 148A and 148 on or after April 1, 2021, prior approval from the authorities specified under Section 151 is required. Consequently, the Tribunal quashed the notice issued under Section 148. As the notice was quashed, the Tribunal deemed it unnecessary to delve into the merits of the case regarding the addition made under Section 68.

What were the facts?

The assessee, Manaisha Nitin Brahmbhatt, an individual, filed a return of income for Assessment Year (AY) 2017-18 on November 7, 2017, declaring a total income of Rs. 14,97,250/-. The case was reopened based on information received from ACIT Central Circle 2(1), Mumbai. A notice under Section 148 of the Income Tax Act, 1961, was issued on July 27, 2022. The assessee challenged this notice as bad in law, and also the addition of Rs. 3,77,29,617/- made under Section 68. The assessee further contended that the notice under Section 148 was not approved by the appropriate authority as required by Section 151 of the Act. The notice stated that prior approval was obtained from Pr. CIT-20, Mumbai, on July 24, 2022.

What were the issues?

1. Whether the notice issued under Section 148 of the Income Tax Act, 1961, for AY 2017-18 is bad in law due to non-compliance with the approval requirements under Section 151 of the Act? Assessee's Contention: The assessee argued that the notice issued under Section 148 is not approved by the appropriate authority as provided in Section 151 of the Act. Specifically, the assessee contended that since more than three years had elapsed from the end of AY 2017-18 (which ended on March 31, 2018), the approval for issuing the notice should have been obtained from the Principal Chief Commissioner or Chief Commissioner, as mandated by Section 151(ii) of the Act. However, the approval was obtained from the Principal Commissioner, which is not the appropriate authority for cases beyond three years. Revenue's Contention: The judgment does not record any specific arguments made by the Revenue on this issue. However, the notice itself indicates that approval was obtained from Pr. CIT-20, Mumbai.

Which sections of the Income-tax Act were involved?

Section 148,Section 68,Section 151,Section 148A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” BENCH, MUMBAI

Before: SHRI SAKTIJIT DEY, HONBLE & SHRI NARENDRA KUMAR BILLAIYA, HONBLE

For Appellant: Shri K. Gopal Akhilesh, A/Rs

PER NARENDRA KUMAR BILLAIYA, AM: This appeal by the assessee is preferred against the order dated 31/01/2025 by NFAC, Delhi [hereinafter “the ld. CIT(A)"] pertaining to AY 2017-18. 2. The challenge of the assessee is two-fold. Firstly, the assessee has challenged the reopening of the assessment claiming that the notice issued u/s 148 of the Act is bad in law and subsequently on merits of the case, the assessee has challenged the addition of Rs.3,77,29,617/- made u/s 68 of the Act.

3.

Before us, the ld. Counsel for the assessee took a new plea that the notice issued u/s 148 of the Act is not approved by appropriate authority as provided in provisions of Section 151 of the Act. आयकर अपीलीय अधिकरण

4.

Briefly stated, the facts of the case are that the assessee is an individual assessee who filed his return of income on 07/11/2017 declaring total income of Rs.14,97,250/-.

5.

On the basis of information received from ACIT Central Circle 2(1), Mumbai, the case of the assessee was reopened and accordingly notice u/s 148 of the Act was issued dated 27/07/2022 which reads as under:- To Manisha Nitin Brahmbhatt Andheri (W), Mumbai-400058. Mumbai-ai (17 PAN:AABPB7462J Α.Υ. 2017-18 Dated 27.07.2022 DIN&Notice No. Notice under section 148 of the Income-tax Act, 1961 Sir/Madam/M/s.

1.

(A) 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 (herein after referred to as "the Act") for Assessment Year Α.Υ. 2017-18. Information flagged by the risk management strategy formulated in this regard; has not been Final objection has been raised by the Comptroller and Auditor General of India to the effect that the assessment made in accordance with the provisions of Act; made A survey was conducted under section 133A of the Act, other than under section 133A(2A) or section 133A(5) of the Act, Information which requires action in consequence of the judgement of the Hon'ble Supreme Court in the case Union of India Vs. Ashish Agarwal, Civil Appeal 3005/2022, dated 4th May, 2022 suggesting that income chargeable to tax has escaped assessment with in 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/COMF/17/2022-23/1044153581(1) dated 27/07/2022 and annexed herewith for reference. अधिकारी-24 (2) (1), Income Tax Officer-2 आयक Mumba मुंबई * आयकर अपीलीय अधिकरण B. C. D. I have information that a search was initiated under section 132 of the Act in your case or in the case of the person in respect of which you are assessable under the Acton the date I have information that books of accounts, other documents or any assets have been requisitioned under section 132A of the Action your case or in the case of the person in respect of which you are assessable under the Act. or I am satisfied, with the approval of Principal Commissioner or Commissioner, that money, bullion, jewelry or other valuable article or thing, seized or requisitioned under section 132 or section 132A of the Action case of _relate to you or the person in respect of which you are assessable under the Act. E. I am satisfied, with the approval of Principal Commissioner or Commissioner, that books of accounts or documents, seized or requisitioned under section132or section 132A of the Action case of _Pertains or pertain to, or any information contained therein, relate to you or the person in respect of which you are assessable under the Act. F. 1, 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 2017-18 and I, hereby, require you to furnish, within 30 days from the service of this notice, a return in the prescribed form for the Assessment Year 2017-18. G. This notice is being issued after obtaining the prior approval of the Pr. CIT-20 Mumbai, accorded on date 24.07.2022 vide Reference No. PCIT20/148/Approval/2022-23/452. (S.S.PRASAD) ITO-24(2)(1), Mumbai. आ B leas Mumbal मुंबई

6.

As can be seen from point G that the notice is being issued after obtaining the prior approval of the Pr. CIT-20, Mumbai dated 24/07/2022. The quarrel revolves around the validity of this notice.

7.

We heard the parties and perused the material on record. In assessee's case for AY 2016-17 pursuant to the directions of the Hon'ble Supreme Court in the case of Ashish Agrawal (supra), the AO passed an आयकर अपीलीय अधिकरण order under section 148(d) of the Act and issued a notice under section 148 on 30/07/2022. From the above observations of the Hon'ble Supreme Court it is clear that the though the prior approval under section 148A(b) and 148(d) were waived in terms of the decision of Ashish Agarwal (supra), for issue of notice under section 148A(a) and under section 148 on or after 1 April 2021, the prior approval should be obtained from the appropriate authorities specified under Section 151 of the new regime. The provisions of section 151 of the Act under the new regime read as under: 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.

8.

As mentioned elsewhere, in the case of the assessee, the impugned notice is issued with the prior approval of the Pr. CIT-20, Mumbai accorded on 24/07/2022 and this fact has not been controverted by the ld. D/R. The period of three years has elapsed on 31/03/2021. Thus, the notice is issued beyond three years, therefore, as per the decision of the Hon'ble Supreme Court (supra), the approval should have been obtained under the mandated provisions of Section 151(ii) of the Act i.e., the approval should have been obtained from the Principal Chief Commissioner whereas, the approval has been obtained from Principal Commissioner as stated in the notice u/s 148 of the Act exhibited elsewhere. आयकर अपीलीय अधिकरण

9.

Thus, we find force in the contention of the ld. Counsel for assessee that the notice u/s 148 of the Act for AY 2017-18 is issued without obtaining prior approval from the appropriate authority and, therefore, deserves to be quashed. Since we have quashed the notice, we do not find it necessary to delve into the merits of the case.

10.

In the result, appeal of the assessee is allowed. Order pronounced in the Court on 14th May, 2025 at Mumbai. (SAKTIJIT DEY) VICE-PRESIDENT Mumbai, Dated 14/05/2025 SC SPS आदेश की प्रतिलिपि ग्रेषित/

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