INCOME TAX OFFICER WARD 24(2)(1),MUMBAI, PIRAMAL CHAMBERS, LALBAUG vs. HOMEWELL REALTY LLP, ANDHERI, MUMBAI

IN THE INCOME-TAX APPELLATE TRIBUNAL “E” BENCH,
MUMBAI
BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER
&
SHRI PRABHASH SHANKAR, ACCOUNTANT MEMBER
Income Tax Officer, Ward
– 24(2)(1), Room No. 608,
6th
Floor,
Piramal
Chambers, Lalbaug, Parel,
Mumbai
-
400012,
Maharashtra v/s.
बनाम
Homewell Realty LLP, 5th
Floor,
Agarwal
Golden
Chambers, Plot No. 13/A, Fun
Republic Road, Off. New L
Andheri(W) Mumbai - 400053,
Maharashtra
स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AAJFH0755L
Appellant/अपीलार्थी
..
Respondent/प्रतिवादी

Appellant by :
Shri Satish Mody, AR
Respondent by :
Shri Hemanshu Joshi (Sr. DR)

Date of Hearing
13.05.2025
Date of Pronouncement
19.05.2025

आदेश / O R D E R

PER PRABHASH SHANKAR [A.M.] :-

The present appeal arising from the appellate order dated
10.01.2025 is filed by the Revenue against the order passed by the Learned Commissioner of Income-tax (Appeals)/National Faceless
Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] pertaining to assessment order passed u/s. 147 r.w.s. 144B of the Income-tax Act, 1961
[hereinafter referred to as “Act”] dated 23.05.2023 for the Assessment
Year [A.Y.] 2017-18. P a g e | 2
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Homewell Realty LLP, Mumbai

Homewell Realty LLP, Mumbai making addition of Rs 3.50 cr. u/s 68 of the Act and also by making further addition of Rs 4,76,712/- on account of disallowance of interest.
4.1 The assessee preferred appeal before the ld.CIT(A) contesting the additions made above. Besides, it challenged the validity of the reopening u/s 147 of the Act and the reassessment order on legal ground. The appellate authority has dealt with the issue at length.
Relevant paras are reproduced for ready reference and better understanding of the main issue involved:
“6.2 In additional Ground No. 1 and 2, the appellant has raised technical ground challenging the validity of reopening of the assessment. Therefore, before adjudicating Grounds on merit, it is prudent to adjudicate additional ground of appeal regarding validity of the assessment as this is the root cause before deciding the appeal on merits.
6.2.1 In additional Ground No.1 of the appeal, the appellant has challenged the validity of notice u/s 148 and contested the validity of reopening of the assessment u/s. 147 of the Act on the ground of lack of requisite prior approval of the appropriate specified authority i.e Pr.CCIT u/s. 151(ii) of the Act .
6.2.2 In the present case, AO initially issued a notice u/s 148 on 29.06.2021. However, pursuant to the judgement of Hon’ble Supreme Court of India in case of UOI Vs. Ashish Agarwal & Ors in Civil Appeal No. 3005/2022, the aforesaid notice was deemed to have been issued u/s 148A of the Act and the same was construed as a show cause notice issued in terms of section 148A(b) vide notice dated 28.05.2022. Thereafter, the AO passed order u/s 148A(d) of the Act on 23/07/2022 after obtaining the prior Sanction from the PCIT-20, Mumbai vide letter No. PCIT20/148
Approval/2022-23/331 dated 19.07.2022. Thereafter, the A.O. issued the notice u/s. 148 of the Act dated 23.07.2022 on the basis of prior approval of the PCIT-20,
Mumbai.
The appellant has contended that since the period of three years from the end of relevant A.Y. 2017-18 had lapsed on 31.03.2021 and notice u/s 148A(d) and 148 of P a g e | 4
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Homewell Realty LLP, Mumbai the Act were issued on 23.07.2022, as per section 151 of the Act, the specified authority to grant prior sanction in his case would be Pr.CCIT/CCIT. However, it is clear that the order u/s 148A(d) and notice u/s 148 of the Act dated 23.07.2022 were passed without the prior sanction of the requisite and appropriate specified authority i.e. PCCIT/CCIT as provided in sec 151 of the Act. The appellant contended that the impugned order u/s 148A(d) and notice u/s 148 have been issued by A.O.
has obtained the prior sanction u/s. 151 of the Act from the PCIT-20, Mumbai who was not the “Specified Authority” as prescribed u/s. 151(ii) of the Act and therefore the impugned order u/s. 148A(d) as well as notice u/s. 148 of the Act dated
23.07.2022 are bad in law and invalid resultantly making the assessment order passed u/s147 r.w.s. 144B of the Act as Void- Ab-initio.
In support of his contention, the appellant has relied on various case laws, which are as under : Hon‘ble Bombay High Court in case of Siemens Financial Services (P.) Ltd.
vs. DCIT – 154 taxmann.com 159 1. Hon‘ble Kolkata High Court in case of Kiran
Agarwal Vs ITO , WPA 28658 of 2022 2. Hon‘ble Chattisgarh High Court in case of Maruti Clean Coal & Power Ltd. Vs ACIT, Circle-1(1)[2018] 89 Taxmann
340(Chattisgarh)
6.2.3 The submissions made by the appellant above have been considered carefully especially in the light of provisions of Income Tax Act and various case laws and legal position. In this connection, in view of the explicit provisions of Section 148 and 148A of the Act, it is incumbent upon the Assessing Officers to obtain the approval of “Specified Authority” referred to in the Section 151 of the Act before passing the order u/s. 148A(d) of the Act and issuing the notice u/s. 148 of the Act. The “Specified Authority” as defined u/s. 151 of the Act is as under:
“151. Specified authority for the purpose 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 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 relevant assessment year:]”
In the present case, since the order u/s 148A(d) and notice u/s 148 were issued by the AO on 23.07.2022 i.e. after three years from the end of relevant assessment year i.e. A.Y. 2017-18 which is 31.03.2021, the specified authority as per the provisions of the Act for granting sanction would be Pr.CCIT/CCIT.

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Homewell Realty LLP, Mumbai

Homewell Realty LLP, Mumbai

(b) no notice could be issued after the expiry of three years; and (ii) If income escaping assessment is more than Rupees fifty lakhs:
(a) a reassessment notice could be issued within three years after obtaining the prior approval of the Principal Commissioner, or Principal Director or Commissioner or Director; and (b) after three years after obtaining the prior approval of the Principal Chief
Commissioner or Principal Director General or Chief Commissioner or Director
General.
76. Grant of sanction by the appropriate authority is a precondition for the assessing officer to assume juri iction under section 148 to issue a reassessment notice.
Section 151 of the new regime does not prescribe a time limit within which a specified authority has to grant sanction. Rather, it links up the time limits with the juri iction of the authority to grant sanction. Section 151(ii) of the new regime prescribes a higher level of authority if more than three years have elapsed from the end of the relevant assessment year. Thus, non-compliance by the assessing officer with the strict time limits prescribed under section 151 affects their juri iction to issue a notice under section 148. 77. Parliament enacted TOLA to ensure that the interests of the Revenue are not defeated because the assessing officer could not comply with the pre conditions due to the difficulties that arose during the COVID-19 pandemic. Section 3(1) of TOLA relaxes the time limit for compliance with actions that fall for completion from 20
March 2020 to 31 March 2021. TOLA will accordingly 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 March 2020 and 31 March 2021, then the specified authority under section 151(i) has an extended time till 30 June 2021 to grant approval.
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 between20 March 2020 and 31 March 2021, then the specified authority under section 151(2) has time till 31 March 2021 to grant approval.
The time limit for Section 151 of the old regime expires on 31 March 2021 because the new regime comes into effect on 1 April 2021. 78. For example, the three-year time limit for assessment year 2017-2018 falls for completion on 31 March 2021. It falls during the time period of 20 March 2020 and P a g e | 7
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31 March 2021, contemplated under section 3(1) of TOLA. Resultantly, the authority specified under section 151(i) of the new regime can grant sanction till 30
June 2021. 79. Under Finance Act 2021, the assessing officer was required to obtain prior approval or sanction of the specified authorities at four stages:
a. Section 148A(a) - to conduct any enquiry, if required, with respect to the information which suggests that the income chargeable to tax has escaped assessment; b. Section 148A(b) - to provide an opportunity of hearing to the assessee by serving upon them a show cause notice as to why a notice under section 148 should not be issued based on the information that suggests that income chargeable to tax has escaped assessment. It must be noted that this requirement has been deleted by the Finance Act 2022;33
c. Section 148A(d) - to pass an order deciding whether or not it is a fit case for issuing a notice under section 148; and. Section 148 - to issue a reassessment notice.
80. In Ashish Agarwal (supra), this Court directed that Section 148 notices which were challenged before various High Courts "shall be deemed to have been issued under section 148-A of the Income-tax Act as substituted by the Finance Act, 2021 and construed or treated to be show-cause notices in terms of Section 148-A(b)." Further, this Court dispensed with the requirement of conducting any enquiry with the prior approval of the specified authority under section 148A(a). Under Section 148A(b), an assessing officer was required to obtain prior approval from the specified authority before issuing a show cause notice. When this Court deemed the Section 148 notices under the old regime as Section 148A(b) notices under the new regime, it impliedly waived the requirement of obtaining prior approval from the specified authorities under section 151 for Section 148A(b). It is well established that this Court while exercising its juri iction under Article 142, is not bound by the procedural requirements of law High Court Bar Association v. State of U P [2024] 160
taxmann.com 32/299 Taxman 21 (SC)/[2024] 6 SCC 267. 81. This Court in Ashish
Agarwal (supra) directed the assessing officers to "pass orders in terms of Section 148-A(d) in respect of each of the assesses concerned." Further, it directed the assessing officers to issue a notice under Section 148 of the new regime "after following the procedure as required under section 148-A." Although this Court waived off the requirement of obtaining prior approval under section 148A(a) and Section 148A(b), it did not waive the requirement for Section 148A(d) and Section 148. Therefore, the assessing officer was required to obtain prior approval of the P a g e | 8
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Homewell Realty LLP, Mumbai specified authority according to Section 151 of the new regime before passing an order under section 148A(d) or issuing a notice under section 148. These notices ought to have been issued following the time limits specified under section 151 of the new regime read with TOLA, where applicable.”
6.2.5 On bare reading of above recent judgement of Hon’ble Supreme Court and provisions of section 151 of the Act, it is clear that the specified authority to grant sanction to issue order u/s 148A(d) and notice u/s 148 of the Act in the present case would be Pr.CCIT/CCIT as the notice u/s 148 has been issued after 3 years from the end of relevant assessment year. However, in the present case, the AO has passed order u/s 148A(d) and issued notice u/s 148 of the Act after taking sanction from PCIT-
20 Mumbai and not from specified Authority i.e. Pr.CCIT/ CCIT and therefore it is clear that the impugned notice has been issued by the AO without obtaining prior approval of the specified authority as statutorily required in section 151 of the Act and since, as the approval was not taken from the specified authority and as held by Hon’ble
Supreme Court in the recent judgement of Union Of India Vs Rajiv Bansal (supra), therefore , AO lacked juri iction to issue a notice u/s 148 of the Act.
6.2.6 To conclude, considering the facts of the case, submissions made, provisions of section 151 of the Act and the Judgement of Hon’ble Supreme Court in case of Union of India & Ors. Vs Rajiv Bansal (Supra), the specified authority to grant sanction for the issuance of notice u/s 148 was PCCIT/CCIT. However, notice u/s 148 & order U/s 148A(d) has been issued by the AO after taking prior approval from PCIT-20, Mumbai who was not specified authority, as discussed above and therefore, the said notice u/s 148 and order u/s 148A(d) of the Act are invalid in the eyes of law as AO lacks juri iction to issue notice u/s 148 without the approval of specified authority.
Accordingly, the notice u/s 148 of the Act is treated as invalid and consequently the assessment proceedings u/s 147 of the Act becomes void-ab-initio and therefore, assessment in this case is hereby annulled as notice u/s 148 and order u/s 148A(d) of the Act are invalid in the eyes of law as AO lacks juri iction to issue notice u/s 148
without the approval of specified authority. Thus, Additional Ground No. 1 of the appeal is allowed.”
5. The ld.DR in the course of hearing made oral as well as written submission contesting the conclusion drawn by the ld.CIT(A).It is not disputed that the order u/s 148A(d) was passed on 23.07.2022
and notice u/s 148 was issued on 23.07.2022. It is pertinent to mention

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Homewell Realty LLP, Mumbai that the approval for passing order u/s 148A(d) and issuing notice u/s in this case was granted by the Pr. CIT-20, Mumbai on 19.07.2022. “.....................The decision of the CIT(A) is not acceptable as in this case, assessment year involved is A.Y.2017-18 and as such the time limit for issuing notice u/s 148
under new regime was 3 years which expired on 31.03.2021 but stood extended till
30.06.2021 in accordance with the provisions of TOLA, 2020.The TOLA shall continue to apply to the I.T. Act after 01.04.2021 if any action or proceedings specified under the substituted provisions of the Income Tax Act falls for completion between 20.03.2020 and 31.03.2021.(Para 114.b of Rajiv Bansal Judgement).In the instant case even though the initial notice dated 29.06.2021 was issued after obtaining approval of JCIT as per the provisions of old regime, the notice was regularised by the decision of the Apex Court in the case of Ashish Aggarwal. As per
Para 114.d of the judgement in the case of Rajiv Bansal: “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 March
2020 and 31 March 2021, then the specified authority under Section 151(i) has extended time till 30 June 2021 to grant approval” In view of the above, the specified authority under section 151(i) has extended time till 30.06.2021 to grant approval.
The CIT(A) did not take into consideration the excluded period as per the said judgement as per the Para
110
of the judgment.............................................................................There is no discussion in the order of the Ld. CIT(A) in respect of the above excluded period and hence, the order of the Ld. CIT(A) is without consideration to the above directions of the Apex Court.
In the present case, the order passed u/s 148A(d) and notice u/s 148 of the Act issued on 23.07.2022 were within Surviving period. The case falls within the prescribed period under section 149(1)(a) i.e. 3 years and therefore, the notices 148 as well as the order passed u/s 148A(d) of the I.T. Act was done with the specified authority u/s 151 (i) of the substituted provisions w.e.f. 01.04.2021.”
6. We have carefully considered all the relevant facts of the case, provisions of the Act, contents of the cited decision and also rival submissions. We find that the ld.CIT(A) has dealt with the issue in great detail and extensively quoted relevant parts of the decision of the hon’ble Apex Court in Rajeev Bansal. He specifically noted that in the P a g e | 10
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Homewell Realty LLP, Mumbai present case, since the order u/s 148A(d) and notice u/s 148 were issued by the AO on 23.07.2022 i.e. after three years from the end of relevant assessment year i.e. A.Y. 2017-18 which is 31.03.2021, the specified authority as per the provisions of the Act for granting sanction would be Pr.CCIT/CCIT. It is evident that while passing the order u/s 148A(d), the AO had obtained the prior approval of the Pr. Commissioner of Income-tax,
Central-3, Mumbai on 19.07.2022. Further, the notice u/s 148 of the Act was also issued with the prior approval of the Pr. Commissioner of Income-tax-20, Mumbai, a fact on record uncontroverted by the ld.DR.
6.1. Grant of sanction by the appropriate authority is a precondition for the AO to assume juri iction under Section 148 to issue a reassessment notice. Section 151 (ii) of the new regime prescribes a higher level of authority if more than three years have elapsed from the end of the relevant assessment year. We find that case of the assessee is covered by section 151(ii) of the Act which provides that where the notices for reassessment are issued beyond the period of three years from the end of the assessment year, the appropriate authority for the purpose of section 148 and section 148A of the Act is the Principal Chief
Commissioner or Principal Director General or Chief Commissioner or P a g e | 11
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Director General. As against this specific requirement of section 151(ii), it is clear from the order u/s. 148A(d) and the notice u/s. 148 that obtained prior approval from Pr. Commissioner of Income-tax-20,
Mumbai. As such, the approval obtained by him is not in accordance with the provisions of section 151(ii). We do not find any merit in the contentions of the ld.DR that the notice u/s 148 of the Act was issued within the ‘surviving period’ and was therefore valid. The moot question involved here is the sanction u/s 151 of the Act by appropriate authority under the Act. It is undisputed fact that the notice u/s 148 of the Act was issued after three years from the end of the relevant assessment year and the sanctioning authority was Pr.CCIT/CCIT.
6.2 Accordingly, we do not find any infirmity in the conclusion drawn by the ld.CIT(A) that the notice under section 148 was invalid and the consequent reassessment orders under section 147 was quashed. Moreover, on legality of the notice u/s 148 vis-a-vis sanctioning authority, the case of the assessee is squarely covered by the above mentioned decision of hon’ble Apex Court(supra) which has been elaborately considered by the coordinate Bench in the case of Assistant Commissioner of Income Tax vs Munish
Financial, Mumbai dated 02.12.2024 in ITA No. 5055/Mum/2024
and on identical facts of the case, quashed the reassessment order.

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Reliance is also placed on several decisions more specifically of the coordinate benches of ITAT, Mumbai in ITA No.1406/Mum/2024 in Surya Ferro Alloys P. Ltd, ITA No.6269 & 6270/Mum/2025 in CLE P.
Ltd, ITA No.3224/Mum/2024 in Ramlal Guthar wherein identical issue of validity of reopening and consequent reassessment have been decided in favour of the assesses on similar facts and legal position.
7. Since we have already quashed the order under section 147 based on the above proposition itself, other grounds of the appeal have become academic and therefore, do not warrant any adjudication.
8. In the result, the appeal of the Revenue is dismissed.
Order pronounced in the open court on 19/05/2025. SANDEEP GOSAIN
PRABHASH SHANKAR
(न्याययक सदस्य /JUDICIAL MEMBER)
(लेखाकार सदस्य/ACCOUNTANT MEMBER)

Place: म ुंबई/Mumbai
ददनाुंक /Date 19.05.2025
Lubhna Shaikh / Steno

आदेश की प्रयियलयि अग्रेयिि/Copy of the Order forwarded to :
1. अपीलार्थी / The Appellant
2. प्रत्यर्थी / The Respondent.

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सत्यावपि प्रवि ////
आदेशानुसार/ BY ORDER,

उि/सहायक िंजीकार (Dy./Asstt.