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Facts
The revenue challenged an order passed by the CIT(A) regarding the validity of a notice issued under Section 148 for AY 2016-17. The assessee contended that the notice was invalid as it was issued after the permissible time limit and without proper approval from the competent authority.
Held
The Tribunal held that the notice issued under Section 148 was invalid because it was issued beyond the three-year period from the end of the assessment year and without the required approval from the Principal Chief Commissioner, as mandated by the amended Section 151 of the Act. Consequently, the assessment order was quashed.
Key Issues
Whether the notice issued under Section 148 for AY 2016-17 was validly issued within the prescribed time limits and with proper approval from the competent authority.
Sections Cited
147, 148, 148A, 151, 68, 250, 151A
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Income Tax Appellate Tribunal, “B” BENCH MUMBAI
Before: HON’BLE SHRI SANDEEP GOSAIN & HON’BLE SMT. RENU JAUHRI
Date of Hearing 20.03.2025 Date of Pronouncement 04.04.2025 आदेश / ORDER PER SANDEEP GOSAIN, JM:
The present appeal has been filed by the revenue challenging the impugned order 19.06.2024 passed u/s 250 of the Income Tax Act, 1961 (‘the Act’), by the Commissioner of Income Tax (Exemptions), Mumbai, for the A.Y: 2016-17. The assessee has raised the following grounds of appeal:
1. On the facts and circumstances of the case and in law, the notice issued under Section 148 dated 31.05.2021 itself was invalid and bad in law in as much as it was issued after 2 Nikesh Govndrao Rathod, Mumbai obtaining the approval of the JCIT which was not the correct authority to grant approval under Section 151 (as it stood prior to its amendment with effect from 1-4-2021) when four years had already elapsed from the end of the assessment year consideration. Under Consequentially, the Assessing Officer has erred in treating such an invalid notice as a notice deemed to have been issued under Section 148A(b) by wrongly applying the SC's decision in the case of UOI vs. Ashish Agarwal [2022] 138 taxmann.com 64.
2. On the facts and circumstances of the case and in law, the Assessing Officer has erred in passing the order under Section 148A(d) and issuing the notice under Section 148 after obtaining the approval of the Pr. CIT, Mumbai-1 which was not the correct 'specified authority' as per Section 151 (amended with effect from 1-4-2021) who should have approved it when three years have already elapsed from the end of the relevant assessment year.
3. On the facts and circumstances of the case and in law, the ITO, Ward 1(3)(4) , Mumbai has erred in passing the order u/s. 148A(d) and also issuing the notice u/s. 148 without appreciating that he was not having the jurisdiction for the same in view of Section 151A and the notification issued thereunder notifying e-Assessment of Income Escaping Assessment Scheme, 2022 and, thereby, rendering the said order and the notice as well as the entire assessment proceeding as null and void.
4. On the facts and circumstances of the case and in law, the Assessing Officer has erred in applying the directions of the Supreme Court as issued in the case of Ashish Agarwal to the appellant's case without appreciating the fact that the notice issued under Section 148 on 31.05.2021 for AY 2016-17 was not covered by the provisions of TOLA and, therefore, the direction of the Supreme Court to treat it as deemed show cause notice under Section 148A(b) was not applicable at all.
3 Nikesh Govndrao Rathod, Mumbai
5. On the facts and circumstances of the case and in law, the Assessing Officer ought to have appreciated that the appellant was not a party to the writ petition filed before any High Court challenging the notice issued under Section 148 on 31.05.2021 without complying with the requirements of the amended provisions and, therefore, the directions issued by the Supreme Court in the case of UOI vs. Ashish Agarwal [2022] 138 taxmann.com 64 (SC) under Article 142 of the Constitution of India cannot be applied to the appellant's case.
6. The Learned CIT has erred in making the additions of sale proceeds from sale of script Goenka Financial Business and Ltd. through Registered Stock exchange amounting to Rs.89,04,471/- treating the same as Penny script with respect to section 68 of the Income Tax Act, 1961 in the Order u/s 250 of the I.T. Act.
7. The Appellant craves leave to add, amend, alter, substitute and or modify, withdraw in any manner what so ever all or any of foregoing grounds of appeal at or before the hearing of appeal.
Ground No. 1 is not being pressed by the assessee therefore this ground stands dismissed as not pressed.
This ground raised
by the assessee relates to challenging the noticed issued by the AO u/s 148 of the Act as the same was issued in violation of provisions of Sec. 151 of the Act. In this regard Ld. AR submitted that AO erred in passing the order u/s 148A(d) of the Act and issuing the notice u/s 148 of the Act after obtaining the approval of PCIT, Mumbai-1. It was submitted that PCIT 4 Nikesh Govndrao Rathod, Mumbai was not the correct “specific authority” as per Sec. 151 of the Act as amended with effect from 01.04.2021, who should have been approved it when three years had already elapsed from the end of the relevant assessment year. In this regard reliance is being placed upon the decision of Coordinate Bench of ITAT in the case of Monish Financial in & 5050/Mum/2024 & CO Nos. 231 & 230/Mum/2024.
3. On the other hand, LD. DR relied upon the orders passed by the revenue authorities.
We have heard the counsels for both the parties and perused the material placed on record, judgements cited before us and orders passed by the revenue authorities. From the records we noticed that it is an undisputed fact that the year under consideration is A.Y 2016-17 and the notice u/s 148 of the Act was issued on 29.07.2022 which is at Paper Book page No. 2 and the said notice was issued after seeking approval from PCIT as is depicted in the last para of notice which is at Paper Book page No. 13. Since the period of three years from the end of the financial year has elapsed on 31.03.2020 therefore no notice could have been issue after the said date after seeking approval from PCIT and in this regard we rely upon the decision of the 5 Nikesh Govndrao Rathod, Mumbai Coordinate Bench in the case of Monish Financial (supra) and the operative portion is reproduced herein below:
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, the AO passed an 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.
Specified authority for the purposes of section 148 and section 148A shall be,-
(1) 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.
In assessee's case from the perusal of para 3 of the notice issued under section 148 for AY 2016-17 we notice that the same is issued with the prior approval of Pr.CIT-19 Mumbai accorded on 29.07.2022 vide reference No.Pr.Cit- 19/148/2022-23 and this fact is not contravened by the Id DR. For AY 2016-17, the period of three years have elapsed as 6 Nikesh Govndrao Rathod, Mumbai of 31.03.2020 and the notice is issued beyond three years on 30.07.2022. Therefore as per the decision of the Hon'ble Supreme Court, the approval should have been obtained under the amended 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 Pr.CIT as stated in the notice under section 148 itself. Therefore we see merit in the contention of the assessee that the notice under section 148 for AY 2016-17 is issued without obtaining the prior approval from the appropriate authority. Accordingly we hold that the notice under section 148 is invalid and the consequent assessment under section 147 is liable to be quashed.
Since we have already quashed the order u/s 147 based on the legal contention of notice being issued without obtaining proper approval, the other legal contention have become academic not warranting any adjudication.
After appreciating the facts of the present case and keeping in view of the decision of the Coordinate Bench, we are of the view that since the period of three years have already been elapsed as on 31.01.2020 and the notice in the present case was issued beyond the period three years i.e 29.02.2022 therefore as per the decision of Hon’ble Supreme Court in this case approval should have been obtained under the amendment provision of Sec. 151(2)(ii) i.e the approval should have been obtained from the PCCIT, whereas approval in this case has been obtained from PCIT as stated in the notice u/s 148 itself. Therefore we see merits in the contention of the assessee that the noticed u/s 148 of the Act for the A.Y 2016-17 has been issued 7 Nikesh Govndrao Rathod, Mumbai without obtaining the prior approval from “Appropriate Authority”, accordingly we hold that the notice in question is invalid and the order issued u/s 147 is liable to be quashed, we order accordingly.
Since we have already quashed order u/s 147 of the Act based on the legal contention of notice being issued without obtaining the prior approval from the appropriate authority therefore other grounds have become academic and needs no adjudication.
In the result the appeal filed by the assessee is partly allowed with no orders as to cost.