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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY, HONBLE & SHRI NARENDRA KUMAR BILLAIYA, HONBLE
PER NARENDRA KUMAR BILLAIYA, AM: This appeal by the revenue is preferred against the order dated 31/12/2024 by NFAC, Delhi [hereinafter “the ld. CIT(A)"] pertaining to AY 2016-17. 2. The grievance of the revenue reads as under:- "
Whether on the facts, in the circumstances of the case and in law, the Id. CIT(A) has erred in quashing and set aside the order u/s 148A (d) of the Act and consequent notice issued u/s 148 of the Act on the issue of improper sanctioning authority u/s 151 (i) of the Act without considering provisions of Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) and CBDT's Instruction no. 1/2022 on 11.05.2022. 2. Whether on the facts, in the circumstances of the case and in Law, Ld. CIT(A) has erred in holding that as a period of three years from the and of the relevant
assessment year ended on 31st March 2020 for AY 2016-17, for reopening, the approval of the Principal chief Commissioner of Income Tax should have been obtained in terms of section, 151(ii) of the Act as against the approval taken from the PCIT.
Whether on the facts, in the circumstances of the case and in Law, Ld.CIT(A) has cred in not appreciating that the CBDTs Instruction 1 of 2022 has been issued in accordance with the provisions of law and is in consonance with the Hon'ble Supreme Court's judgment in the case of UOI Vs. Ashish Agarwal.
Whether on the facts, in the circumstances of the case and in Law, Ld CIT(A) has erred in ignoring that the view taken in the assessee's case is contrary to the judgment of the Hon'ble Delhi High Court in the case of Salil Gulati vs. Asst. Commissioner of Income Tax, Circle-49(1), Delhi and Ors. (W.P.(C) 12541/2022 & CM APPLs.37959-37961/2022) which has been subsequently endorsed by the Hon'ble Apex Court(order dated 11,04.2023 in SLP No. 7466/2023 filed in that case)?
It is prayed that this appeal is filed oven if the lax effect is below the monetary limit since the case falls under exception specified in para 3.1(a) of the CBDT Circular 05/2024 dated 15.03.2024 being covered by the circular of the CBDT issued vide F.No. 225/26/2019-ITA(ii) dated 25.021.2019."
The entire quarrel revolves around the sanctioning of the notice issued u/s 148 of the Act. The case of the revenue rests on the provisions of Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) and CBDT's Instruction no. 1/2022. 4. The entire issues raised by the revenue have been taken care of by the Hon'ble Supreme Court in the case of UOI vs. Rajeev Bansal (Civil Appeal No. 8629 of 2024) vide judgment dated 03/10/2024. The relevant observations of the Hon'ble Supreme Court read as under:- “73. Section 151 imposes a check upon the power of the Revenue to reopen assessments. The provision imposes a responsibility on the Revenue to ensure that it obtains the sanction of the specified authority before issuing a notice under section 148. The purpose behind this procedural check is to save the assesses from harassment resulting from the mechanical reopening of assessments Sri krishna (P.) Ltd. v. ITO [1996] 87 Taxman 315/221 ITR 538 (SC)/[1996] 9 SCC 534. A table representing the prescription under the old and new regime is set out below: Regime Time limits Specified authority Section 151(2) of the old regime Before expiry of four years from the end of the relevant assessment year Joint Commissioner Section 151(1) of the old regime After expiry of four years from the end of the relevant assessment year Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner Section 151(i) of the new regime Three years or less than three years from the end of the relevant
assessment year Principal Commissioner or Principal Director or Commissioner or Director Section 151(ii) of the new regime More than three years have elapsed from the end of the relevant assessment year Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General
The above table indicates that the specified authority is directly co-related to the time when the notice is issued. This plays out as follows under the old regime: (i) If income escaping assessment was less than Rupees one lakh: (a) a reassessment notice could be issued under section 148 within four years after obtaining the approval of the Joint Commissioner; and (b) no notice could be issued after the expiry of four years; and (ii) If income escaping was more than Rupees one lakh: (a) a reassessment notice could be issued within four years after obtaining the approval of the Joint Commissioner; and (b) after four years but within six years after obtaining the approval of the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner.
After 1 April 2021, the new regime has specified different authorities for granting sanctions under section 151. The new regime is beneficial to the assessee because it specifies a higher level of authority for the grant of sanctions in comparison to the old regime. Therefore, in terms of Ashish Agarwal (supra), after 1 April 2021, the prior approval must be obtained from the appropriate authorities specified under section 151 of the new regime. The effect of Section 151 of the new regime is thus: (i) If income escaping assessment is less 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) 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.
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 between 20 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 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 d. Section 148 - to issue a reassessment notice.
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 Тахтап 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 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.
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 judgment of Union Of India Vs, Rajiv Bansal(supra), therefore, AO lacked juri iction to issue a notice u/s 148 of the Act.
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.
Since the findings of the ld. CIT(A) is based upon the above discussion, we do not find any reason to interfere with the same.
In the result, appeal of the revenue is dismissed. Order pronounced in the Court on 7th May, 2025 at Mumbai. (SAKTIJIT DEY) VICE-PRESIDENT (NARENDRA KUMAR BILLAIYA) ACCOUNTANT MEMBER Mumbai, Dated 07/05/2025 *SC SPS आदेश की प्रतिलिपि ग्रेषित/