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Facts
The Assessing Officer (AO) reopened the assessment for AY 2017-18 based on a notice issued u/s 148, which was beyond three years from the end of the relevant AY. The approval for this notice was taken from the Pr. CIT-2, Mumbai, instead of the specified authority under Section 151(ii) of the Act.
Held
The Tribunal held that the notice u/s 148 and the subsequent assessment order were void ab initio as the approval was not granted by the competent authority as per Section 151 of the Income Tax Act. The provisos to Section 151, relied upon by the Revenue, were inserted w.e.f. 01.04.2023 and were not applicable to the period in question.
Key Issues
Whether the reopening of assessment and subsequent assessment order are valid when the approval for issuing the notice u/s 148 was obtained from an incompetent authority under Section 151 of the Income Tax Act, especially when the notice was issued beyond the prescribed time limit.
Sections Cited
143(3), 147, 148, 148A, 144, 144B, 68, 115BBE, 151, 149, 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “A”, MUMBAI
Before: SHRI NARENDER KUMAR CHOUDHRY & SHRI PRABHASH SHANKAR
O R D E R
Per : Narender Kumar Choudhry, Judicial Member:
This appeal by the Revenue Department and the Cross Objection by the Assessee have been preferred against the order dated 21.05.2024, impugned herein, passed by the National Faceless Appeal Center (NFAC)/ Ld. Commissioner of Income Tax (Appeals) (in short Ld. Commissioner) u/s 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2017-18.
CO. No. 181/MUM/2024 Ms. Asha P Kedia 2. Considering the delay of 4 days in filing of the CO by the Assessee is miniscule, bonafide and unintentional as claimed by the Assessee is condoned.
In this case, the Assessee had declared her total income at Rs.8,24,900/- by filing her return of income on dated 31.07.2017. No regular assessment was done u/s 143(3) of the Act. The case of the Assessee was reopened u/s 147 of the Act by issuing a notice dated 11.06.2021 u/s 148 of the Act, in response to which the Assessee filed her return of income on dated 23.11.2021 declaring total income of Rs.8,24,900/-. Subsequently, there was change in the relevant provisions of the Act and therefore Hon’ble Apex Court in the case of Union of India vs. Ashish Agarwal (order dated 04.05.2022 in civil appeal No.3005/2002) issued certain directions for issuing the show cause notice u/s 148A of the Act and therefore considering the directions of the Hon'ble Apex Court, the Assessing Officer (AO) issued fresh notice dated 27.07.2022 u/s 148 of the Act and ultimately vide assessment order dated 19.04.2023 u/s 147 r.w.s. 144 r.w.s. 144B of the Act, made the addition of Rs.1,71,30,715/- which was found credited in the Assessee’s account as unexplained cash credit u/s 68 r.w.s. 115BBE of the Act and added the same in the total income of the Assessee.
The Assessee, being aggrieved, challenged the aforesaid addition on various grounds, as well as on merit. The Assessee though succeeded on merit but could not get succeeded on the legal ground and thus has preferred the instant cross objection, wherein the Assessee has raised the legal issue and therefore for the sake of brevity we are inclined to decide the same first, before proceeding to the Revenue’s appeal.
The Assessee has contended that in this case, the show cause notice u/s 148A(b) of the Act was issued on dated 25.05.2022 and CO. No. 181/MUM/2024 Ms. Asha P Kedia thereafter an order u/s 148A(d) of the Act was passed and consequently notice u/s 148 of the Act was issued on dated 27.07.2022 which is admittedly, beyond three years from the end of the relevant A.Y. 2017-18 and therefore the specified authority for granting the approval for issuing such notice would be the authority as specified in sub clause (ii) of section 151 of the Act, but not Ld. Pr. Commissioner of Income Tax-2, Mumbai from whom approval has been taken and therefore, the notice issued u/s 148 of the Act and assessment order passed in pursuance to such notice, would be un-sustainable being void ab initio.
6.1 The Ld. D.R. on the contrary has claimed that the time of three years as prescribed in the sub clause (i) of section 151 of the Act, shall be computed after taking into account the period of limitation as excluded by 3rd or 4th or 5th or 6th proviso to sub section (i) of section 149 of the Act and hence the contention of the Assessee is un-tenable.
6.2. The Assessee in response to aforesaid submission of the Ld. DR, has submitted that the above provisos as demonstrated by the Ld. D.R., were inserted vide the Finance Act, 2023 and w.e.f. 01.04.2023 and thus the same at all were not in existence at the time of issuing the impugned notice dated 27.07.2022 u/s 148 of the Act and thus the same would not be applicable to the case of the Assessee.
We have given thoughtful considerations to the peculiar facts and circumstances of the case. Admittedly, the Hon’ble Jurisdictional High Court has dealt with such provisos, as involved in the instant case, in the case of Vodafone India Idea Ltd. vs. DCIT (write petition 2768 of 2022 decided on 06.02.2024), wherein it has been held as under: “3. The impugned order and the impugned notice both dated 7th April 2022 state that the Authority that has accorded the sanction CO. No. 181/MUM/2024 Ms. Asha P Kedia is the PCIT, Mumbai 5. The matter pertains to Assessment Year ("AY") 2018-19 and since the impugned order as well as the notice are issued on 7th April 2022, both have been issued beyond a period of three years. Therefore, the sanctioning authority has to be the PCCIT as provided under Section 151 (ii) of the Act. The proviso to Section 151 has been inserted only with effect from 1st April 2023 and, therefore, shall not be applicable to the matter at hand."
In the instant case, admittedly the notice u/s 148 of the Act was issued for reopening of the case on dated 27.07.2022 i.e. after elapsing of three years from the end of the relevant assessment year and therefore as per sub clause (ii) of section 151 of the Act, the specified authority for granting the approval for issuing the notice u/s 148 of the Act, would have been, either Principal Chief Commissioner or Principal Director or where there is no such post then the Chief Commissioner or Director General, for granting the sanction for issuing of notice u/s 148 of the Act, but not the Ld. PCIT-2, Mumbai who has granted the approval in this case and/or authority specified under sub clause (i) of section 151 of the Act.
Relevant provisions of law, which are very much clear and the Hon’ble Jurisdictional High Court in the case of Vodafone India Idea Ltd. has also clearly held that proviso to section 151 of the Act has been inserted w.e.f. 01.4.2023 and therefore shall not be applicable to the A.Y. 2018-19. In effect, the Hon’ble High Court has clarified that provisos to section 151 of the Act would be effective from 01.04.2023 onwards and would not be applicable to the prior period. Thus, the impugned notice dated 27.07.2022 u/s 148 of the Act, as issued by the AO in the instant case by taking approval from the Ld. Pr. CIT-2, Mumbai but not from the Ld. Pr. CCIT and in pursuance to that the assessment order dated 23.01.2023 u/s 147 r.w.s. 144 & 144B of the Act, is liable to be quashed being void, ab- initio and thus, the same is quashed accordingly. Thus, the CO is allowed.
As we have quashed the reopening and therefore the appeal of the Revenue has become infructuous and thus the same is liable to be dismissed.
In the result, the CO filed by the Assessee is allowed, whereas the appeal filed by the Revenue stands dismissed.
Order pronounced in the open court on 28.03.2025.