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Facts
The assessee filed their return of income declaring a certain amount. The Assessing Officer (AO) initiated reassessment proceedings based on information that the assessee had availed bogus long-term capital gains from penny stocks. The AO completed the assessment treating the gains as unexplained cash credit.
Held
The Tribunal held that the reassessment proceedings were invalid because the notice u/s 148 was issued beyond the period of three years from the end of the relevant assessment year, and the required sanction from the appropriate authority under Section 151 was not obtained. Consequently, the reassessment proceedings and the assessment order were quashed.
Key Issues
Whether the reassessment proceedings initiated by the Assessing Officer were valid, specifically concerning the issuance of notice u/s 148 beyond the prescribed time limit and the lack of proper sanction from the specified authority.
Sections Cited
68, 69C, 115BBE, 148A, 148, 143(1), 147, 151, 142(1), 149, 144C(13)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “A” MUMBAI
Before: SHRI OM PRAKASH KANT & MS. KAVITHA RAJAGOPAL
These cross appeals by the assessee and Revenue are directed These cross appeals by the assessee and Revenue are directed These cross appeals by the assessee and Revenue are directed against order dated 09.02.2024 passed by the Ld. Commissioner of against order dated 09.02.2024 passed by the Ld. Commissioner of against order dated 09.02.2024 passed by the Ld. Commissioner of Income-tax (Appeals) tax (Appeals) – National Faceless Appeal Centre, Delhi [in National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2016 short ‘the Ld. CIT(A)’] for assessment year 2016-17.
2. The grounds raised by the assessee are reproduced as under: unds raised by the assessee are reproduced as under: unds raised by the assessee are reproduced as under:
I. Addition of Rs. 1,01,85,745/ I. Addition of Rs. 1,01,85,745/-:
1.
1. The learned CIT(A) erred in upholding the assessment order by 1. The learned CIT(A) erred in upholding the assessment order by 1. The learned CIT(A) erred in upholding the assessment order by restricting restricting restricting the the the disallowance disallowance disallowance of of of LTCG LTCG LTCG of of of Rs. Rs. Rs. 1,01,85,745/- 1,01,85,745/ 1,01,85,745/ (Rs.1,11,85,745/-, minus Rs 10,00,000/ , minus Rs 10,00,000/-) and treating the same as non treating the same as non genuine and taxing the sale consideration of Rs. 1,01,85,745/- u/s. 68 of genuine and taxing the sale consideration of Rs. 1,01,85,745/ genuine and taxing the sale consideration of Rs. 1,01,85,745/ the Act, without appreciating that the shares were dealt on stock the Act, without appreciating that the shares were dealt on stock the Act, without appreciating that the shares were dealt on stock exchange platform and consideration for purchase and sales were exchange platform and consideration for purchase and sales were exchange platform and consideration for purchase and sales were through banking channel, al through banking channel, all the primary evidence like contract notes, l the primary evidence like contract notes, bank statement of relevant period, ledger of broker, Sale contract note bank statement of relevant period, ledger of broker, Sale contract note bank statement of relevant period, ledger of broker, Sale contract note from HDFC Securities Ltd along with Ledger, from HDFC Securities Ltd along with Ledger, D-mat statement, etc were mat statement, etc were provided further there is no adverse provided further there is no adverse report or action taken by SEBI report or action taken by SEBI against the assessee or his broker ainst the assessee or his broker HDFC Securities Ltd in regards to the HDFC Securities Ltd in regards to the said transaction.
2. The learned CIT(A) erred in upholding the Assessment order treating 2. The learned CIT(A) erred in upholding the Assessment order 2. The learned CIT(A) erred in upholding the Assessment order the LTCG as non genuine on basis of general information the LTCG as non genuine on basis of general information without bringing without bringing on record any material/ on record any material/ evidence showing assessee involvement in the assessee involvement in the alleged transaction of alleged transaction of accommodation entry, more so when the Assessee entry, more so when the Assessee is regular investor which is revealed from his portfolio. is regular investor which is revealed from his portfolio.
3. The learned CIT(A) has relied on judgments totally inapplicable to the 3. The learned CIT(A) has relied on judgments totally inapplicable to 3. The learned CIT(A) has relied on judgments totally inapplicable to facts of assessee and has also based his addition on mere assessee and has also based his addition on mere suspicion and suspicion and surmises which are contrary to material available on record and as such, surmises which are contrary to material available on record and as such, surmises which are contrary to material available on record and as such, the addition so made needs to be deleted. the addition so made needs to be deleted.
4. The learned CIT(A) has erred in law and on facts in restricting the 4. The learned CIT(A) has erred in law and on facts in restricting the 4. The learned CIT(A) has erred in law and on facts in restricting the addition to Rs. 1,01,85,745/ on to Rs. 1,01,85,745/- in the hands of assessee without giving in the hands of assessee without giving any fair and proper opportunity of cross examining the parties on whose any fair and proper opportunity of cross examining the parties on whose any fair and proper opportunity of cross examining the parties on whose & 2026/MUM/2024 statement/investigation reports the assessing statement/investigation reports the assessing officer had relied, thereby, officer had relied, thereby, violating the principles of natural justice. violating the principles of natural justice.
5. The Ld CIT(A) erred in up holding the addition of Rs. 3,35,572/ The Ld CIT(A) erred in up holding the addition of Rs. 3,35,572/ The Ld CIT(A) erred in up holding the addition of Rs. 3,35,572/-u/s. 69C of the Act being alleged expenditure incurred in nature of commission 69C of the Act being alleged expenditure incurred in nature of 69C of the Act being alleged expenditure incurred in nature of charges @3% of Rs. 1,11,85,745/ charges @3% of Rs. 1,11,85,745/-. II. Reopening of Assessment II. Reopening of Assessment 6. The learned CIT (A) failed to appreciate that The learned CIT (A) failed to appreciate that the JAO have no the JAO have no jurisdiction to issue show cause notice u/s 148A(b) dated 28/05/2022, jurisdiction to issue show cause notice u/s 148A(b) dated 28/05/2022, jurisdiction to issue show cause notice u/s 148A(b) dated 28/05/2022, notice u/s 148 dated 31/07/2022 and pass order u/s 148A(d) dated notice u/s 148 dated 31/07/2022 and pass order u/s 148A(d) dated notice u/s 148 dated 31/07/2022 and pass order u/s 148A(d) dated 30/07/2022 as after 29/03/2022 same can be done in a faceless 30/07/2022 as after 29/03/2022 same can be done in a faceless 30/07/2022 as after 29/03/2022 same can be done in a faceless manner, therefore the reassessment proceed manner, therefore the reassessment proceedings is bad in law. ings is bad in law.
7. The learned CIT (A) failed to appreciate that the AO issued reopening 7. The learned CIT (A) failed to appreciate that the AO issued reopening 7. The learned CIT (A) failed to appreciate that the AO issued reopening notice beyond period of three years, approval was required to be taken as notice beyond period of three years, approval was required to be taken as notice beyond period of three years, approval was required to be taken as per provisions of amended section 15lof the Act from Principal Chief per provisions of amended section 15lof the Act from Principal Chief per provisions of amended section 15lof the Act from Principal Chief Commissioner or Prin Commissioner or Principal Director General or Chief Commissioner or cipal Director General or Chief Commissioner or Director General however approval is from PCIT Director General however approval is from PCIT-
1. 1.
8. The CIT(A) erred in upholding the levy of tax rates provided u/s. 8. The CIT(A) erred in upholding the levy of tax rates provided u/s. 8. The CIT(A) erred in upholding the levy of tax rates provided u/s. 115BBE of the Act. Act. 2.1 The grounds raised by the Revenue are reproduced as under: The grounds raised by the Revenue are reproduced as under: The grounds raised by the Revenue are reproduced as under:
1. Whether on the facts and in the circumstances of the case and in law, her on the facts and in the circumstances of the case and in law, her on the facts and in the circumstances of the case and in law, the Ld. CIT(A)has erred in deleting the addition of Rs. 10,00,000/-, made the Ld. CIT(A)has erred in deleting the addition of Rs. 10,00,000/ the Ld. CIT(A)has erred in deleting the addition of Rs. 10,00,000/ by the AO on account of claim of Bogus LTCG in penny stock without by the AO on account of claim of Bogus LTCG in penny stock without by the AO on account of claim of Bogus LTCG in penny stock without giving any cogent findings for deleting the addit giving any cogent findings for deleting the addition? 2. "Whether on the facts and in the circumstances of the case and in law, 2. "Whether on the facts and in the circumstances of the case and in law, 2. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A)was justified in allowing partial relief of Rs. 10,00,000/- to the Ld. CIT(A)was justified in allowing partial relief of Rs. 10,00,000/ the Ld. CIT(A)was justified in allowing partial relief of Rs. 10,00,000/ the assessee, ignoring the fact that the CIT(A) has himself confirmed the the assessee, ignoring the fact that the CIT(A) has himself confirmed the the assessee, ignoring the fact that the CIT(A) has himself confirmed the order of AO by holding tha order of AO by holding that the assessee could not conclusively justify t the assessee could not conclusively justify such a steep rise of the price of the penny stock company and that the such a steep rise of the price of the penny stock company and that the such a steep rise of the price of the penny stock company and that the transaction was pre- -arranged one and make believe transaction? arranged one and make believe transaction? 3. " Whether on the facts and in the circumstances of the case and in law, 3. " Whether on the facts and in the circumstances of the case and in law, 3. " Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A)was justified in allowing partial relief of Rs. 10,00,000/- to the Ld. CIT(A)was justified in allowing partial relief of Rs. 10,00,000/ the Ld. CIT(A)was justified in allowing partial relief of Rs. 10,00,000/ the assessee when the entire addition, except of Rs.10,00,000/- has the assessee when the entire addition, except of Rs.10,00,000/ the assessee when the entire addition, except of Rs.10,00,000/ been confirmed by CIT(A)?"
& 2026/MUM/2024 ITA No. 1582
Before us, the Ld. counsel for the assessee has also filed Before us, the Ld. counsel for the assessee has also filed Before us, the Ld. counsel for the assessee has also filed additional grounds dul duly signed and verified by the assessee. The the assessee. The relevant additional grounds are reproduced as under: relevant additional grounds are reproduced as under: relevant additional grounds are reproduced as under:
I. Reopening is bad in law: Reopening is bad in law:
1.
The learned CIT (A) failed to appreciate that the JAO have no 1. The learned CIT (A) failed to appreciate that the JAO have no 1. The learned CIT (A) failed to appreciate that the JAO have no jurisdiction to issue show cause notice u/s 148A(b) dated 28/05/2022, jurisdiction to issue show cause notice u/s 148A(b) dated 28/05/20 jurisdiction to issue show cause notice u/s 148A(b) dated 28/05/20 notice u/s 148 dated 31/07/2022 and pass order u/s 148A(d) dated notice u/s 148 dated 31/07/2022 and pass order u/s 148A(d) dated notice u/s 148 dated 31/07/2022 and pass order u/s 148A(d) dated 30/07/2022 as after 29/03/2022 same can be done in a faceless 30/07/2022 as after 29/03/2022 same can be done in a faceless 30/07/2022 as after 29/03/2022 same can be done in a faceless manner, therefore the reassessment proceedings is bad in law. manner, therefore the reassessment proceedings is bad in law. manner, therefore the reassessment proceedings is bad in law.
2. The learned CIT (A) failed to appreciate that the AO issued The learned CIT (A) failed to appreciate that the AO issued The learned CIT (A) failed to appreciate that the AO issued reopening notice beyond period of three years, approval was required to be taken as notice beyond period of three years, approval was required to be taken as notice beyond period of three years, approval was required to be taken as per provisions of amended section 151of the Act from Principal Chief per provisions of amended section 151of the Act from Principal Chief per provisions of amended section 151of the Act from Principal Chief Commissioner or Principal Director General or Chief Commissioner or Commissioner or Principal Director General or Chief Commissioner or Commissioner or Principal Director General or Chief Commissioner or Director General however approval Director General however approval is from PCIT-1. 3.1 The additional ground The additional grounds raised being purely legal raised being purely legal in nature and not requiring investigation of fresh facts, after hearing the parties not requiring investigation of fresh facts, after hearing the parties not requiring investigation of fresh facts, after hearing the parties on the issue in dispute, we admitted e issue in dispute, we admitted the additional ground the additional grounds for adjudication in view of the decision of adjudication in view of the decision of the Hon’ble Supreme Court in the Hon’ble Supreme Court in the case of NTPC Ltd. 229 ITR 283 (SC) NTPC Ltd. 229 ITR 283 (SC).
Briefly stated, facts of the case are that the assessee file Briefly stated, facts of the case are that the assessee file Briefly stated, facts of the case are that the assessee filed return of income for the year under consideration on 27.06.2016 by return of income for the year under consideration on 27.06.2016 by return of income for the year under consideration on 27.06.2016 by declaring total income declaring total income at Rs.3,93,480/-. The return of income filed . The return of income filed by the assessee was processed u/s 143(1) of the Income-tax Act, by the assessee was processed u/s 143(1) of the Income by the assessee was processed u/s 143(1) of the Income 1961 (in short ‘the Act’). Subsequently, in view of information 1961 (in short ‘the Act’). Subsequently, in view of information 1961 (in short ‘the Act’). Subsequently, in view of information received that assessee received that assessee availed ‘bogus long term capital gain bogus long term capital gain’ by way of purchase and sale of penny stock sale of penny stocks of scrip namely scrip namely ‘Ojas Asset Re-construction Company Ltd construction Company Ltd’., the Assessing Officer recorded he Assessing Officer recorded & 2026/MUM/2024 reasons reasons reasons to to to believe believe believe that that that income income income escaped escaped escaped assessment assessment assessment and and and accordingly, issued notice u/s 148 of the Act on 19.05.2021. The issued notice u/s 148 of the Act on 19.05.2021. The issued notice u/s 148 of the Act on 19.05.2021. The assessee assessee objected objected to to above above reassessment reassessment proceedings. proceedings Subsequently, due to Hon’ble Supreme Court judgment in the case Subsequently, due to Hon’ble Supreme Court judgment in the case Subsequently, due to Hon’ble Supreme Court judgment in the case of Union of India & Ors v. Ashish Agarwal Union of India & Ors v. Ashish Agarwal reported in (2022) 138 reported in (2022) 138 taxmann.com 64(SC) taxmann.com 64(SC), a fresh notice was issued/ material relied / material relied upon was supplied on on 28.05.2022. The assessee filed objection t assessee filed objection to the above notice on 10.06.2022 the above notice on 10.06.2022. The Assessing Officer addressed all . The Assessing Officer addressed all the objections of the assessee and passed order u/s 148A(d) of the the objections of the assessee and passed order u/s 148A(d) of the the objections of the assessee and passed order u/s 148A(d) of the Act on 30.07.2022 and a fresh notice Act on 30.07.2022 and a fresh notice u/s 148 of the Act 148 of the Act was issued on 30.07.2020. Thereafter, on 30.07.2020. Thereafter, statutory notices u/s 142(1) of the Act statutory notices u/s 142(1) of the Act were issued and after considering subm were issued and after considering submission/response of the ission/response of the assessee, the Assessing Officer completed the assessment on Assessing Officer completed the assessment on Assessing Officer completed the assessment on 23.05.2023 thereby treating the alleged long term capital gain of 23.05.2023 thereby treating the alleged long term capital gain of 23.05.2023 thereby treating the alleged long term capital gain of Rs.1,11,85,745/- as unexplai as unexplained cash credit in terms of section 68 ned cash credit in terms of section 68 of the Act which was taxed of the Act which was taxed at special rate u/s 115JBE of the Act. special rate u/s 115JBE of the Act. On further appeal, the Ld. CIT(A) allowed part relief and therefore, On further appeal, the Ld. CIT(A) allowed part relief and therefore, On further appeal, the Ld. CIT(A) allowed part relief and therefore, aggrieved both the assessee and the Revenue are in appeal before aggrieved both the assessee and the Revenue are in appeal before aggrieved both the assessee and the Revenue are in appeal before the Tribunal by way of raising grounds as reproduced above. ay of raising grounds as reproduced above. ay of raising grounds as reproduced above.
Before us, the assessee filed a Paper Book containing pages 1 Before us, the assessee filed a Paper Book containing pages 1 Before us, the assessee filed a Paper Book containing pages 1 to 1 to 311.
Addressing the additional ground No. 2, the Ld. counsel for Addressing the additional ground No. 2, the Ld. counsel for Addressing the additional ground No. 2, the Ld. counsel for the assessee submitted that in the case, the Assessing Officer the assessee submitted that in the case, the Assessing Officer the assessee submitted that in the case, the Assessing Officer issued reopening notice beyond period of the three years and issued reopening notice beyond period of the three years and issued reopening notice beyond period of the three years and & 2026/MUM/2024 therefore, approval/sanction for issue of notice was /sanction for issue of notice was required to be /sanction for issue of notice was taken from the Principal incipal Chief Commissioner of Income Chief Commissioner of Income (PCCIT)or Principal Director General or Chief Commissioner or Director Director General or Chief Commissioner or Director Director General or Chief Commissioner or Director General of Income-tax under the amended provisions of section 151 tax under the amended provisions of section 151 tax under the amended provisions of section 151 of the Act, whereas the approval has been obtained from the whereas the approval has been obtained from the whereas the approval has been obtained from the Principal Commissioner of Income Commissioner of Income-tax (PCIT). The Ld. counsel for . The Ld. counsel for the assessee referred to page 41 of the Paper Book which is a copy the assessee referred to page 41 of the Paper Book which is a copy the assessee referred to page 41 of the Paper Book which is a copy of the notice u/s 148 of the Act of the notice u/s 148 of the Act and submitted that on para No. 3 of on para No. 3 of the said notice it is mentioned that notice has been issued after the said notice it is mentioned that notice has been issued afte the said notice it is mentioned that notice has been issued afte obtaining prior approval of the P ining prior approval of the PCIT, Mumbai dated 28.07.2022. CIT, Mumbai dated 28.07.2022. Further, the Ld. counsel also referred to the order u/s 148A(d) of Further, the Ld. counsel also referred to the order u/s 148A(d) of Further, the Ld. counsel also referred to the order u/s 148A(d) of the Act, which is available on paper book page 31 , which is available on paper book page 31- -39, which has been also been issued issued with prior approval of the PCIT, Mumb CIT, Mumbai vide his letter dated 28.07.2022. The Ld. counsel referred to section 151 his letter dated 28.07.2022. The Ld. counsel referred to section 151 his letter dated 28.07.2022. The Ld. counsel referred to section 151 of the Act and submitted that even after excluding the time period of the Act and submitted that even after excluding the time period of the Act and submitted that even after excluding the time period provided under proviso to section 151 of the Act, t viso to section 151 of the Act, the time period he time period in issuing notice u/s 148 issuing notice u/s 148 in the case of the assessee exceeded three in the case of the assessee exceeded three years from the end of the relevant assessment year and therefore, years from the end of the relevant assessment year and therefore, years from the end of the relevant assessment year and therefore, the approval for the issue of the notice u/s 148 of the Act was to be the approval for the issue of the notice u/s 148 of the Act was to be the approval for the issue of the notice u/s 148 of the Act was to be obtained from PCCIT or CCIT PCCIT or CCIT only. The assessee has filed a chart only. The assessee has filed a chart for computing the period of the three years g the period of the three years based on the survival based on the survival period referred to in to in decision of Hon’ble Supreme Court in the case decision of Hon’ble Supreme Court in the case of Rajeev Bansal ( 2024) 167 taxmann.com 70 (SC) ( 2024) 167 taxmann.com 70 (SC) ( 2024) 167 taxmann.com 70 (SC), which is reproduced as under: reproduced as under:
& 2026/MUM/2024 Sr. No. As per SC Decision in case of Rajiv As per SC Decision in case of Rajiv As per Assessee Case As per Assessee Case Bansal Par Bansal Para 112 1. The deemed show cause notice issued on The deemed show cause notice issued on The The deemed deemed show show cause cause 01/05/2021 under the old regime. 01/05/2021 under the old regime. The notice issued on 19/05/2021 notice issued on 19/05/2021 Assessing Officer will have sixty Assessing Officer will have sixty-one days under the old regime. [pg 6] under the old regime. [pg 6] [days between 1 May 2021 and 30 [days between 1 May 2021 and 30 June The The Assessing Assessing Officer will 2021] to issued notice u/s 2021] to issued notice u/s 148 of the new have Forty Forty-two days [days regime. between 19 May 2021 and 30 between 19 June 2021] to issued notice June 2021] to issued notice u/s 148 of the new regime. u/s 148 of the new regime.
The time starts ticking for the Assessing The time starts ticking for the Assessing Pursuant to Ashish Agarwal Pursuant to Ashish Agarwal Officer after after receiving the response of the decision ecision the the AO AO issued issued Assessee. In this instance, if the assessee In this instance, if the assessee 148A(b) notice on 28/5/2022. 148A(b) notice on 28/5/2022. submits the response on 18 June 2022. submits the response on 18 June 2022. The The The Assessee Assessee submits submits its its Assessing officer will have Sixty Assessing officer will have Sixty-one day response on 10 June 2022. response on from 18 June June 2022 to issue a reassessment [pg 22] The Assessing officer notice u/s 148 of the new regime notice u/s 148 of the new regime will have Forty-two day from will have 10 June 2022 to issue a 10 June 2022 to issue a reassessment notice u/s 148 reassessment notice u/s of the new regime of the new regime 3. Thus, in this Thus, in this illustration, the time limit for The time limit for issuance of The time limit for issuance of issuance of a notice u/s 148 of the new issuance of a notice u/s 148 of the new a notice u/s 148 of the new a notice u/s 148 of the new regime will end on 18 August 2022. regime will end on 18 August 2022. regime will end on 22 July regime will end on 22 July 2022.
4. JAO has to issue notice under surviving JAO has to issue notice under surviving The Assessing Officer issued The Assessing Officer issued time limit. pa time limit. para 114 clause (h) notice u/s 148 of the Act on notice u/s 148 of the Act on 30 July 2022 which is beyond July 2022 which is beyond the the period period of of 3 3 years. years. Therefore Therefore Sanction Sanction was was required required from from PCCIT PCCIT and not from PCIT. 6.1 In the case notice u/s 148 of the Act was issued on notice u/s 148 of the Act was issued on notice u/s 148 of the Act was issued on 19/05/2021 invoking old 147 provisions on the premise that 1 invoking old 147 provisions on the premise that 1 invoking old 147 provisions on the premise that time limit under old provisions got extended due to old provisions got extended due to TOLA, TOLA, but, various Hon’ble High Court in writs held that in view of provisions of 147 Hon’ble High Court in writs held that in view of provisions of 147 Hon’ble High Court in writs held that in view of provisions of 147 amended w.e.f. 1/04/2021, the benefit of extension of time limit amended w.e.f. 1/04/2021, the benefit of extension of time limit amended w.e.f. 1/04/2021, the benefit of extension of time limit under Taxation and Other Laws ( Relaxation and Amendment of Taxation and Other Laws ( Relaxation and Amendment of Taxation and Other Laws ( Relaxation and Amendment of Certain Provisions ) Act,m2020 ( in short ‘ Certain Provisions ) Act,m2020 ( in short ‘TOLA’) ’) would not be available to old provisions and in the case of Ashish Agrwal to old provisions and in the case of Ashish Agrwal (supra), to old provisions and in the case of Ashish Agrwal the Hon’ble Supreme Court held that TOLA will apply Hon’ble Supreme Court held that TOLA will apply Hon’ble Supreme Court held that TOLA will apply on amended & 2026/MUM/2024 provisions of section 147 provisions of section 147. The Hon’ble Supreme Court in the case of The Hon’ble Supreme Court in the case of Ashish Agrawal (supra) gave life to such Ashish Agrawal (supra) gave life to such notices issued u/s 148 of notices issued u/s 148 of the Act under old provisions during the under old provisions during the period form 1/04/21 to form 1/04/21 to 30/06/2021 and held to treat the same as notice and held to treat the same as notice and held to treat the same as notices issued under new procedure u/s 148A u/s 148A(b) of the Act amended from 1/04/2021 the Act amended from 1/04/2021 and commence the further proceedings of 147 u and commence the further proceedings of 147 under new provisions nder new provisions subject to amended provisions. The Hon’ble Supreme Court subject to amended provisions. The Hon’ble Supreme Court subject to amended provisions. The Hon’ble Supreme Court provided two weeks time to the assessee for responding after supply provided two weeks time to the assessee for responding after supply provided two weeks time to the assessee for responding after supply of relevant material or enquiry report in pursuance to 148A of relevant material or enquiry report in pursuance to 148A of relevant material or enquiry report in pursuance to 148A proceedings. The Hon’ble Supreme Court The Hon’ble Supreme Court in the ca in the case of Rajeev bansal (supara) treated the period from date of issue of notice to bansal (supara) treated the period from date of issue of notice to bansal (supara) treated the period from date of issue of notice to under old provisions to the date of under old provisions to the date of responding to the AO under new to the AO under new provisions in compliance compliance to the Direction of Hon’ble Supreme Court of Hon’ble Supreme Court in Ashish Agrawal (supra) (supra) as deemed stay period and thus time period and thus time period which would be available to the AO would be the period , period which would be available to the AO would be the period , period which would be available to the AO would be the period , which would have been available from issue of notice under old which would have been available from issue of notice under old which would have been available from issue of notice under old provisos upto 30/06/2021 provisos upto 30/06/2021 i.e. the time period under new provisions i.e. the time period under new provisions extended under TOLA. under TOLA.
6.2 In the case notice u/s 148 under old provisions was issued on In the case notice u/s 148 under old provisions was issued on In the case notice u/s 148 under old provisions was issued on 19/05/2021 , so the survival period of 42 days was available to the 19/05/2021 , so the survival period of 42 days was 19/05/2021 , so the survival period of 42 days was AO upto 30/06/2021 and same period would be available after AO upto 30/06/2021 and same period would be available after AO upto 30/06/2021 and same period would be available after excluding the period of stay upto the date of filing response by the excluding the period of stay upto the date of filing response by t excluding the period of stay upto the date of filing response by t assessee. which has been filed on 10/06/22. which has been filed on 10/06/22. Pursuant to the Pursuant to the supply of material/ issue of notice u/s 148A(b) of the Act on supply of material/ issue of notice u/s 148A(b) of the Act on supply of material/ issue of notice u/s 148A(b) of the Act on & 2026/MUM/2024 28.05.2022, the assessee filed its response on 10.06.2022 therefore, , the assessee filed its response on 10.06.2022 therefore, , the assessee filed its response on 10.06.2022 therefore, the Assessing Officer got 42 days from 10.06.2022 for issue of the Assessing Officer got 42 days from 10.06.2022 for issue of the Assessing Officer got 42 days from 10.06.2022 for issue of reassessment notice u/s 148 of the Act of under the amended reassessment notice u/s 148 of the Act of under the amended reassessment notice u/s 148 of the Act of under the amended regime of reassessment. regime of reassessment. Thus, survival period of 42 days 42 days ended on 22.07.2022, whereas the Assessing Officer in the instant case has whereas the Assessing Officer in the instant case has whereas the Assessing Officer in the instant case has issued notice u/s 148 of the Act on 30.07.2022, tice u/s 148 of the Act on 30.07.2022, which is which is otherwise beyond the period of three years beyond the period of three years from the end of relevant from the end of relevant assessment year.
6.3 Therefore, sanction of the Pr. Chief Commissioner herefore, sanction of the Pr. Chief Commissioner herefore, sanction of the Pr. Chief Commissioner of income- tax (PCCIT/CCIT) was required as required under the amended provisions w.e.f under the amended provisions w.e.f 1/04/2021 , whereas whereas sanction has been obtained sanction has been obtained from Principla Commissioner of Income Commissioner of Income-tax, Mumbai (PCIT) as evident form notice as evident form notice u/s 148 issued on 30/07/2022 30/07/2022 , a copy of which is available on PB copy of which is available on PB 40-41. Since sanction has not been obtained from the appropriate sanction has not been obtained from the appropriate sanction has not been obtained from the appropriate authority prescribed prescribed under under the the law law, , therefore, therefor the entire reassessment proceedings are invalid and accordingly liable to be reassessment proceedings are invalid and accordingly reassessment proceedings are invalid and accordingly quashed.
6.4 In support of the Ld. counsel for the assessee relied on the In support of the Ld. counsel for the assessee relied on the In support of the Ld. counsel for the assessee relied on the decision of the Co-ordinate Bench of the Tribunal in the case of ordinate Bench of the Tribunal in the case of ordinate Bench of the Tribunal in the case of Manish Jagdish Joshi in Manish Jagdish Joshi in ITA No. 1617/Mum/2024. The relevant /Mum/2024. The relevant para of the same is reproduced as under: para of the same is reproduced as under:
“19. Thus, in the present case, it is discernible that the notice Thus, in the present case, it is discernible that the notice Thus, in the present case, it is discernible that the notice under section 148 of the Act was issued not only in contravention under section 148 of the Act was issued not only in contravention under section 148 of the Act was issued not only in contravention of the provisions of section 151 as the sanction of the of the provisions of section 151 as the sanction of the of the provisions of section 151 as the sanction of the concerned Specified Authority was not obtained, but the same is also time Specified Authority was not obtained, but the same is also time Specified Authority was not obtained, but the same is also time- & 2026/MUM/2024 barred as per the provisions of section 149 of the Act as the same barred as per the provisions of section 149 of the Act as the same barred as per the provisions of section 149 of the Act as the same was issued after three years and the amount alleged to have was issued after three years and the amount alleged to have was issued after three years and the amount alleged to have escaped assessment is only Rs.43,32,000, i.e. less than escaped assessment is only Rs.43,32,000, i.e. less than escaped assessment is only Rs.43,32,000, i.e. less than Rs.50 lakh. Accordingly, we are of the considered view that the notice lakh. Accordingly, we are of the considered view that the notice lakh. Accordingly, we are of the considered view that the notice issued under section 148 of the Act is void ab initio and bad in issued under section 148 of the Act is void ab initio and bad in issued under section 148 of the Act is void ab initio and bad in law and therefore is quashed. Consequently, the entire reopening law and therefore is quashed. Consequently, the entire reopening law and therefore is quashed. Consequently, the entire reopening proceedings and impugned final assessment order passed proceedings and impugned final assessment order passed proceedings and impugned final assessment order passed under section 147 r/w section 144C(13) of the Act is also quashed.” section 147 r/w section 144C(13) of the Act is also quashed. section 147 r/w section 144C(13) of the Act is also quashed. 6.5 The Ld. counsel also relied on the decision of the Co The Ld. counsel also relied on the decision of the Co The Ld. counsel also relied on the decision of the Co-ordinate Bench of in the case of Surya Ferrous Alloys Pvt. Ltd. in of in the case of Surya Ferrous Alloys Pvt. Ltd. in ITA No. Bench of in the case of Surya Ferrous Alloys Pvt. Ltd. in ITA No. 1406/Mum/2024 for assessment year 2017 1406/Mum/2024 for assessment year 2017-18 wherein also 18 wherein also the Tribunal quashed the reassessment in absence of sanction from the Tribunal quashed the reassessment in absence of sanction from the Tribunal quashed the reassessment in absence of sanction from the specified authority. The relevant finding of the Tribunal is specified authority. The relevant finding of the Tribunal is specified authority. The relevant finding of the Tribunal is reproduced as under: reproduced as under:
“8.1. From the above, we note that in para 73, in the table last 8.1. From the above, we note that in para 73, in the table last 8.1. From the above, we note that in para 73, in the table last two rows relate to provisions of Secti two rows relate to provisions of Section 151(i)(ii) of the new on 151(i)(ii) of the new regime prescribing the time limit as well as the specified regime prescribing the time limit as well as the specified regime prescribing the time limit as well as the specified authority. In para 75, it is very categorically mentioned by the authority. In para 75, it is very categorically mentioned by the authority. In para 75, it is very categorically mentioned by the Hon'ble Court that after 01.04.2021, in terms of Ashish Agrawal Hon'ble Court that after 01.04.2021, in terms of Ashish Agrawal Hon'ble Court that after 01.04.2021, in terms of Ashish Agrawal (supra) the prior approval must be obtained (supra) the prior approval must be obtained from the appropriate from the appropriate authorities specified u/s.151 of the new regime. This abundantly authorities specified u/s.151 of the new regime. This abundantly authorities specified u/s.151 of the new regime. This abundantly brings clarity on the aspect of obtaining approval for issue of brings clarity on the aspect of obtaining approval for issue of brings clarity on the aspect of obtaining approval for issue of notice u/s.148 which are fall out of the decision in Ashish notice u/s.148 which are fall out of the decision in Ashish notice u/s.148 which are fall out of the decision in Ashish Agrawal (supra). In para 77, objective of sec Agrawal (supra). In para 77, objective of section 3(1) of TOLA is tion 3(1) of TOLA is mentioned which is to relax the time limit for compliance with mentioned which is to relax the time limit for compliance with mentioned which is to relax the time limit for compliance with actions that fall for completion from 20.03.2020 to 31.03.2021. actions that fall for completion from 20.03.2020 to 31.03.2021. actions that fall for completion from 20.03.2020 to 31.03.2021. Thus, the objective is specific for providing temporal flexibility. In Thus, the objective is specific for providing temporal flexibility. In Thus, the objective is specific for providing temporal flexibility. In para 78, the same has been explained para 78, the same has been explained by an example taking by an example taking Assessment Year 2017 Assessment Year 2017-18 which also in specific terms mentions 18 which also in specific terms mentions that the authority specified u/s.151(i) of the new regime can that the authority specified u/s.151(i) of the new regime can that the authority specified u/s.151(i) of the new regime can grant sanction till 30.06.2021. Thus, while concluding in para 81 grant sanction till 30.06.2021. Thus, while concluding in para 81 grant sanction till 30.06.2021. Thus, while concluding in para 81 on the issue obtaining approval, Hon'ble Cour on the issue obtaining approval, Hon'ble Court has specifically t has specifically stated that the Assessing Officer is required to obtain prior stated that the Assessing Officer is required to obtain prior stated that the Assessing Officer is required to obtain prior approval of the specified authority according to section 151 of the approval of the specified authority according to section 151 of the approval of the specified authority according to section 151 of the new regime before passing an order u/s.148A(d) or issuing a new regime before passing an order u/s.148A(d) or issuing a new regime before passing an order u/s.148A(d) or issuing a notice u/s.148. According to the Hon'ble Court, notice u/s.148. According to the Hon'ble Court, though it had though it had waived off the requirement obtaining prior approval u/s.148A(a) waived off the requirement obtaining prior approval u/s.148A(a) waived off the requirement obtaining prior approval u/s.148A(a) and Section 148Ab, it did not waive the requirement for section and Section 148Ab, it did not waive the requirement for section and Section 148Ab, it did not waive the requirement for section 148A(d) and Section 148. 148A(d) and Section 148.
& 2026/MUM/2024 ITA No. 1582
8.2. Taking into consideration the submissions made by the ld. 8.2. Taking into consideration the submissions made by the ld. 8.2. Taking into consideration the submissions made by the ld. Sr. DR and keeping the sa Sr. DR and keeping the same in juxtaposition with the above me in juxtaposition with the above observations and findings of the Hon'ble Court, we note that the observations and findings of the Hon'ble Court, we note that the observations and findings of the Hon'ble Court, we note that the issue we are presently addressing raised before us is not on the issue we are presently addressing raised before us is not on the issue we are presently addressing raised before us is not on the aspect of "when" for the procedural compliance for issuance of aspect of "when" for the procedural compliance for issuance of aspect of "when" for the procedural compliance for issuance of notice u/s.148 but on the as notice u/s.148 but on the aspect of "by whom" it ought to have pect of "by whom" it ought to have been issued. Ld. Sr. DR has contended that there is hierarchical been issued. Ld. Sr. DR has contended that there is hierarchical been issued. Ld. Sr. DR has contended that there is hierarchical escalation vis escalation vis-a-vis obtaining approval for issuing notice u/s.148. vis obtaining approval for issuing notice u/s.148. In this respect, Hon'ble Court has very categorically held in para In this respect, Hon'ble Court has very categorically held in para In this respect, Hon'ble Court has very categorically held in para 75 that the prior app 75 that the prior approval must be obtained from the appropriate roval must be obtained from the appropriate authorities specified u/s.151 of the new regime for the notices authorities specified u/s.151 of the new regime for the notices authorities specified u/s.151 of the new regime for the notices issued in terms of Ashish Agrawal (supra) after 01.04.2021. issued in terms of Ashish Agrawal (supra) after 01.04.2021. issued in terms of Ashish Agrawal (supra) after 01.04.2021. Reference by ld. Sr. DR to Section 149(1)(a) deals with time limit Reference by ld. Sr. DR to Section 149(1)(a) deals with time limit Reference by ld. Sr. DR to Section 149(1)(a) deals with time limit for issuing notice u/ for issuing notice u/s.148. Contention of the ld. Sr. DR that there s.148. Contention of the ld. Sr. DR that there is no hierarchical escalation for obtaining prior approval for is no hierarchical escalation for obtaining prior approval for is no hierarchical escalation for obtaining prior approval for issuing notice u/s.148 is not in coherence with the guidelines issuing notice u/s.148 is not in coherence with the guidelines issuing notice u/s.148 is not in coherence with the guidelines mandated by the Hon'ble Apex Court as enunciated above. mandated by the Hon'ble Apex Court as enunciated above. mandated by the Hon'ble Apex Court as enunciated above. Repeatedly, Hon'ble Court h Repeatedly, Hon'ble Court has stated including by way of as stated including by way of illustration that TOLA extends time line from the old regime which illustration that TOLA extends time line from the old regime which illustration that TOLA extends time line from the old regime which survives making the notice validly issued subject to the approval survives making the notice validly issued subject to the approval survives making the notice validly issued subject to the approval requirements of Section 151 under the new regime. Accordingly, requirements of Section 151 under the new regime. Accordingly, requirements of Section 151 under the new regime. Accordingly, the prior approval requirement the prior approval requirement is mandated under the section is mandated under the section 151 of new regime. 151 of new regime. 8.3. In the present case, the relevant Assessment Year is 2017 8.3. In the present case, the relevant Assessment Year is 2017 8.3. In the present case, the relevant Assessment Year is 2017- 18 and the time limit of three years lapsed on 31.03.2021 which 18 and the time limit of three years lapsed on 31.03.2021 which 18 and the time limit of three years lapsed on 31.03.2021 which falls between 20.03.2020 and 31.03.2021 during which falls between 20.03.2020 and 31.03.2021 during which falls between 20.03.2020 and 31.03.2021 during which provisions of Taxation and provisions of Taxation and Other Laws (Relaxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) would apply. Amendment of Certain Provisions) Act, 2020 (TOLA) would apply. Amendment of Certain Provisions) Act, 2020 (TOLA) would apply. Accordingly, the amended provisions under the Act read with Accordingly, the amended provisions under the Act read with Accordingly, the amended provisions under the Act read with TOLA extended the time limit for granting of approval till TOLA extended the time limit for granting of approval till TOLA extended the time limit for granting of approval till 30.06.2021 by the specified authority. Thus, o 30.06.2021 by the specified authority. Thus, on the above stated n the above stated facts and law, in the present case, three years had lapsed from facts and law, in the present case, three years had lapsed from facts and law, in the present case, three years had lapsed from the end of the Assessment Year when the order u/s.148A(d) and the end of the Assessment Year when the order u/s.148A(d) and the end of the Assessment Year when the order u/s.148A(d) and notice u/s.148 was issued on 30.07.2022. In the present case, notice u/s.148 was issued on 30.07.2022. In the present case, notice u/s.148 was issued on 30.07.2022. In the present case, since the notice u/s. 148 and order u/s. 148A(b) since the notice u/s. 148 and order u/s. 148A(b) since the notice u/s. 148 and order u/s. 148A(b) have been issued beyond the period of three years from the end of the issued beyond the period of three years from the end of the issued beyond the period of three years from the end of the relevant Assessment Year, case of the assessee falls within the relevant Assessment Year, case of the assessee falls within the relevant Assessment Year, case of the assessee falls within the provisions of section 151(ii) of the amended law whereby the provisions of section 151(ii) of the amended law whereby the provisions of section 151(ii) of the amended law whereby the specified authority for grant of approval is specified as Pri specified authority for grant of approval is specified as Pri specified authority for grant of approval is specified as Principal Chief Commissioner or Principal Director General or Chief Chief Commissioner or Principal Director General or Chief Chief Commissioner or Principal Director General or Chief Commissioner or Director General. Contrary to this requirement, Commissioner or Director General. Contrary to this requirement, Commissioner or Director General. Contrary to this requirement, the approval obtained is by Principal Commissioner of Income the approval obtained is by Principal Commissioner of Income the approval obtained is by Principal Commissioner of Income Tax-17, Mumbai. Accordingly, since a proper sanction by the 17, Mumbai. Accordingly, since a proper sanction by the 17, Mumbai. Accordingly, since a proper sanction by the specified authority had not been obtained for issue of notice ied authority had not been obtained for issue of notice ied authority had not been obtained for issue of notice u/s.148 under the applicable provisions of law, said notice is u/s.148 under the applicable provisions of law, said notice is u/s.148 under the applicable provisions of law, said notice is invalid and bad in law. invalid and bad in law.
& 2026/MUM/2024 ITA No. 1582
8.4. 8.4. 8.4. Keeping Keeping Keeping in in in juxtaposition juxtaposition juxtaposition the the the undisputed undisputed undisputed and and and the the the uncontroverted facts as stated above and the judicial preced uncontroverted facts as stated above and the judicial preced uncontroverted facts as stated above and the judicial precedent of the Hon'ble Supreme Court in the case of Ashish Agarwal and of the Hon'ble Supreme Court in the case of Ashish Agarwal and of the Hon'ble Supreme Court in the case of Ashish Agarwal and Rajiv Bansal (supra), we hold that sanction by specified authority Rajiv Bansal (supra), we hold that sanction by specified authority Rajiv Bansal (supra), we hold that sanction by specified authority has not been obtained by the ld. Assessing Officer in accordance has not been obtained by the ld. Assessing Officer in accordance has not been obtained by the ld. Assessing Officer in accordance with the provisions contained in section 151 of the Act u with the provisions contained in section 151 of the Act u with the provisions contained in section 151 of the Act under the new regime, since notice u/s.148 has been issued beyond three new regime, since notice u/s.148 has been issued beyond three new regime, since notice u/s.148 has been issued beyond three years from the end of the relevant Assessment Year. Accordingly, years from the end of the relevant Assessment Year. Accordingly, years from the end of the relevant Assessment Year. Accordingly, the said notice issued is invalid and thus quashed. Resultantly, the said notice issued is invalid and thus quashed. Resultantly, the said notice issued is invalid and thus quashed. Resultantly, the impugned re the impugned re-opening proceedings so initiated and th opening proceedings so initiated and the impugned re impugned re-assessment order passed thereafter are also assessment order passed thereafter are also quashed.” 6.6 In view of the above discussion, the reassessment proceedings In view of the above discussion, the reassessment proceedings In view of the above discussion, the reassessment proceedings in the case of the assessee are quashed. As the reassessment in the case of the assessee are quashed. As the reassessment in the case of the assessee are quashed. As the reassessment these appeals by the assessee and proceedings have been quashed been quashed, these appeals by the assessee the Revenue are rendered infructuous. Accordingly, same are the Revenue are rendered infructuous. Accordingly, same are the Revenue are rendered infructuous. Accordingly, same are dismissed.
In the result, both the appeals of the assessee and Revenue In the result, both the appeals of the assessee and Revenue In the result, both the appeals of the assessee and Revenue are dismissed.
Order pronounced in the open Court on nounced in the open Court on 27/03/2025. /03/2025.