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Facts
The assessee filed three appeals against reassessment orders for AY 2014-15, 2016-17, and 2017-18. The core issue revolved around the validity of the approval granted under Section 151 of the Income Tax Act for the reopening of assessment, with the assessee contending that the approval was granted by an incorrect authority and lacked due application of mind.
Held
The Tribunal held that the approval for reopening of assessment was not granted by the prescribed authority as per Section 151 of the Act. The approvals were found to be granted by the Principal Commissioner instead of the Principal Chief Commissioner, as required when more than three years have elapsed from the end of the relevant assessment year. Additionally, a common approval for 83 cases was considered to be without application of mind.
Key Issues
Whether the reassessment proceedings initiated by the Assessing Officer are valid when the approval for reopening under Section 151 of the Income Tax Act was granted by an incompetent authority and lacked proper application of mind.
Sections Cited
147, 144, 144B, 151, 148, 148A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘B’BENCH : BANGALORE
Before: SHRI PRASHANT MAHARISHI, VICE – & SHRI SANDEEP SINGH KARHAIL
ORDER PER PRASHANT MAHARISHI, VICE – PRESIDENT 1. These are three appeals filed by Shri Krishna enterprises, Bangalore (Assessee/Appellant) for Assessment Year 2014–15, 2016–17 and 2017–18. is filed for Assessment Year 2014–15 against the Appellate Order passed by the National Faceless Appeal Centre, Delhi (the Ld. CIT(A)) dated 06.01.2025 wherein the Appeal filed by the Assessee against the reassessment order passed u/s. 147 r.w.s. 144 of the Income Tax Act,1961 (the Act) dated 26.05.2023 passed by the National e-Assessment Centre, Delhi (the Ld. Assessing Officer) was dismissed.
-524/Bang/2025 Page 2 of 22 is filed by the Appellant for Assessment Year 2016–17 against the Appellate Order passed by the Ld. CIT(A) on 06.01.2025 against the reassessment order passed u/s. 147 r.w.s. 144B of the Income Tax Act passed by the National e-Assessment Centre, Delhi was confirmed. is also filed by the Assessee against the Appellate Order passed by the National Faceless Appeal Centre, Delhi on 06.01.2025 wherein the Appeal filed by the Assessee against the reassessment order passed u/s. 147 r.w.s. 144B of the Act on 19.04.2023 by the Ld. Assessing Officer was dismissed.
The counsel for the Assessee stated that the Appeal for Assessment Year 2016–17 and 2017–18 may be taken as the lead appeal. In this case he challenges the approval granted by the Additional Commissioner of Income Tax,Range 7(1), Bangalore u/s. 151 of the Act for Assessment Year 2017–18 placed at page No. 29 of the paper book. Similar approval is also for the Assessment Year 2016–17 placed at page No. 34 of the paper book.
The counsel of the Assessee has stated that for Assessment Year 2016–17, three years have elapsed on 2020.However,the date of sanction is 19.07.2022 for Assessment Year 2016–17 and 20.04.2021 for Assessment Year 2017–18. It is the contention of the Ld. Authorized Representative that in this case the approval should have been granted by the Principal Chief Commissioner of Income Tax and not the Principal Commissioner of Income Tax. In this case approval u/s. 151 of the Act is given by the Principal Commissioner of Income Tax which is not valid and therefore if the approval is invalid, the whole of the Assessment also resulting into the addition deserves to be quashed. He relied upon the decision of Hon’ble Telangana High Court in case of DeloitteConsulting India Private Limited versus Page 3 of 22 Assessment Unit, Income Tax Department, National Faceless Assessment Centre, New Delhi (2025) 178 taxmann.com 781 (Telangana) wherein the Hon’ble High Court in paragraph No. 49 and 50 has dealt with the issue of the approval and held that, that if the reopening of the assessment is without the sanction/approval of the specified authority in accordance with section 151 of the Act is not there it is resulting into holding that Reassessment Order is bad in law.
The Ld.Departmental Representative Shri Subramaniam, Senior Departmental Representative, submitted a paper book containing 33 pages and also written submission which covers the additions on the issues involved in all these three years.
For the Assessment Year 2016–17, he submits that in this case the original date of issue of notice u/s. 148 was 31.03.2021. However,CBDT has extended the due date for issue of notice u/s. 148 to 30.04.2021 vide notification dated 31.03.2021. Accordingly, the notice issuedu/s. 148 on 20.04.2021 with the prior approval ofPr CIT Range Head. Thereafter, as per the direction of the Hon’ble Supreme Court on 04.05.2022 in the case of Union of India versus Shri Ashish Agarwal, the notice u/s. 148 of the Income TaxAct issued in the case of the Assessee on 21.04.2021 is deemed to be the show cause notice issued under clause (b) of section 148A of the IncomeTaxAct. The Central Board of Direct Taxes has also issued instruction No. 01/2022 on 11.05.2022 and has given detailed procedure to be followed in compliance with the order of the Hon’ble Supreme Court. In compliance of the above judgment, again a notice u/s. 148A(b) was issued on 20.05.2022 and the order u/s. 148A(d) was passed on 25.07.2022 with the prior approval of the Principal Commissioner of Income Tax–2, Bangalore and consequently the notice u/s. 148 was issued with the prior approval of the Principal Commissioner of Page 4 of 22 Income Tax–2, Bangalore on 25.07.2022. Therefore, he submitted that the notice u/s. 148 is issued within the time and correctly issued.
With respect to Assessment Year 2017–18, he submits that the original date of issue of notice u/s. 148 was 31.03.2021. CBDT has extended the due date for issue of notice to 30.04.2021 vide notification dated 31.03.2021.Accordingly,notice u/s. 148 was issued on 21.04.2021 with the prior approval of the Range Head,Additional Commissioner of Income Tax, Range–7(1), Bangalore. Thereafter, he referred to the decision of the Hon’ble Supreme Court and in compliance of the judgment of the Hon’ble Supreme Court the direction in above case and as per instruction No. 01/2022 dated 11.05.2022, again a notice u/s. 148A(b) was issued on 20.05.2022and 28.07.2022 with the prior approval of the Principal Commissioner of Income Tax, Bangalore and consequently the notice u/s. 148 was issued with the prior approval of the Principal Commissioner of Income Tax–2, Bangalore on 28.07.2022. Therefore, he submitted that the notice is issued within time and correctly issued.
He submits that the copy of the approval u/s. 151 of the Range Head dated 20.04.2021 and copy of the approval dated 19.07.2022 of the Principal Commissioner of Income Tax–2, Bangalore accordingly the approval of passing order u/s. 148A(d) and issue of notice under section 148 is also submitted.
Thus, the ld SR DR says and submits that approval obtained by the ld AO u/s 151 of the act from the PR CIT for both the years is a valid approval despite three years period passed from the end of the assessment year.
For AY 2014-15, The Ld. Authorized Representative submitted that Assessee has obtained the details and it is found that the PCIT has Page 5 of 22 granted approval by way of a common letter in case of 83 parties which is produced here with which shows that a communication dated 06.11.2025 filed before the response of RTI application filed by the Assessee wherein it is supplied that approval was granted in case of the Assessee for Assessment Year 2014–15 vide letter dated 26.07.2022. The Ld. Authorized Representative referred to the letter placed at page No. 57 of the paper book which has been stated to be that approval has been granted by the Principal Chief Commissioner of Income Tax to 78 matters by one letter. He submits that the common sanction is invalid and therefore there is a non-application of mind. He further relied upon the decision of the coordinate bench in case of RoshaAlloys Private Limited versus Deputy Commissioner of Income Tax (2025) 175 taxmann.com 622 (Chandigarh tribunal) dated 28.05.2025 wherein the paragraph No. 27, 30 – 35 and 37 were referred to by the Ld. counsel and submitted that if the approval is granted in such a manner, the reassessment initiated therein deserves to be quashed.
13. The Ld.Departmental Representative also submitted that the Appeal for Assessment Year 2014–15 is also involved wherein the Assessee challenges the reopening of the assessment. He submits that in this case the original date of issue of notice u/s. 148 was 31.03.2021. The Central Board of Direct Taxes extended the due date for issue of notice u/s. 148 of the Act to 30.04.2021 as per notification dated 31.03.2021. Accordingly, the notice u/s. 148 was issued on 21.04.2021 with the prior approval of the Principal Commissioner of Income Tax. Thereafter he referred to the decision of the Hon’ble Supreme Court in case of Union of India versus Shri Ashish Agarwal and submitted that in terms of the above decision and instruction issued by the CBDT on 20.05.2022 notice under section 148A(b) was issued with the prior approval of Principal Chief Commissioner of Income Tax on 27.07.2022. Further information was received from Page 6 of 22 the Assistant Commissioner of Income Tax,Central Circle–1(2), Bengaluru that a statement from Shri K Narayana Raju the partner of the Assessee Company was recorded on 18.09.2017 and during the statement in answer to question No. 23–25 he had admitted and voluntary disclosed income for Assessment Year 2014–15 in the hands of the Assessee. During the statement the Assessee has stated that most of the receipt of Shri Krishna Kalyan Mantapa were in the form of cash and the same are not fully reflected in the books of accounts. He has referred to the CBDT notification of 31.03.2021 and the approval u/s. 151 granted by the Principal Chief Commissioner of Income Tax dated 20.04.2021 as well as the approval dated 26.07.2022 by the Principal Commissioner of Income Tax,Bengaluru accordingly the approval of passing order u/s. 148A(d) and issue of notice u/s. 148 of the Act. He further referred to the statement recorded by Shri K Narayana Raju on 18.09.2017u/s. 131 of the Income Tax Act.
Accordingly for all these three appeals, the approval granted is challenged by the Assessee and defended by the Ld. senior departmental representative.
We have carefully considered the rival contention and perused the order of the ld. Lower Authorities. Only issue challenged in these appeals are whether approval u/s 151 of the Act is proper or not.
We tabulatethe details as under: - A Y Date of Authority Authority who Approval Granting should have approval approved as more than three years have elapsed Page 7 of 22 2016-17 19/4/2021 Pr, CIT 2 Principal Chief Bangalore [ As Commissioner per letter dated 19/7/2022 of ITO HQ PCIT -2 Bangalore approval was granted on 19/7/2022 [ page 29 of paper book] 2017-18 20/4/2021 Pr, CIT 2 Principal Chief Bangalore [ As Commissioner per letter dated 19/7/2022 of ITO HQ PCIT -2 Bangalore approval was granted on 197/2022[ page 29 of paper book]
According to section 151 of the Act the approval is required to be provided as under: - Sanction for issue of notice. 151. Specified authority for the purposes of section 148 and section 148A be,— (i) Principal Commissioner or Principal Director or Commissioner or Director, if three years or less than three years have elapsed Page 8 of 22 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.] 18. Thus, it is apparent that for both the above assessment years, approval was required to be taken from The Principal Chief commissioner of Income tax but as per communication of the ITO HQ of PR CIT -2, Bangalore has granted approval. Thus, the approval is not obtained of the concerned correct authority.
Honourable Bombay High court in Alag Property Construction (P.) Ltd. vs. ACIT [2025] 179 taxmann.com 578 (Bombay) [08-09-2025] has held that [ AY 2017-18] “9. In the present case, the period of three years from the end of the A.Y. 2017-18 fell for completion on 31st March 2021. As the expiry date fell during the time period of 20th March 2020 and 31st March 2021, under Section 3(1) of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (for short "TOLA"), the authority specified under Section 151(i) of the new regime could have granted sanction only till 30th June 2021. 10. On perusal of the order dated 18.08.2022, passed under Section 148A(d) of the Act we find that the aforesaid order was passed after taking approval from Principal Commissioner of Income Tax (Respondent No.2). Since the aforesaid order was passed, as well as the notice under section 148 was issued, after the expiry of three years from the end of A.Y. 2017-18, as per the substituted provisions of re- assessment, the authority specified under Section 151(ii) of the Act (i.e., Principal Chief Commissioner or Chief Commissioner) was required to grant approval. Accordingly, we conclude that in the present case, the approval has been obtained from the authority specified under Section 151(i) of the new regime instead of the authority specified under Section 151(ii) of the new regime.
-524/Bang/2025 Page 9 of 22 11. The Hon'ble Supreme Court in the above case has drawn an illustration in para 78 of its order in the context of A.Y. 2017-18 (which is also the relevant Assessment year in the present Writ Petition) wherein it is categorically held that the authority specified under section 151(i) can accord sanction only upto 30.06.2021. This illustration makes it absolutely clear that when the period of three years from end of relevant Assessment Year expired between 20.03.2020 and 31.03.2021, the extension by virtue of TOLA was upto 30.06.2021 and not beyond. Thus, it can be said that the period of three years from the end of the relevant Assessment Year (in the present case A.Y. 2017-18) expired on 30.06.2021, whereas Respondent No.1, despite passing order under section 148A(d) on 18.08.2022 and issuing notice under section 148 on 23.08.2022 [in respect of Assessment Year 2017-18], has obtained approval of Respondent No.2 who is not the authority as prescribed under section 151(ii).
12. Non-compliance by Respondent No.1 with the provisions contained in Section 148A(d) read with Section 151(ii) vitiates the jurisdiction of Respondent No.1 to issue a notice under Section 148 of the Act.
We are clearly of the view that the present matter stands covered by the decision of Hon'ble Supreme Court in the case of Rajeev Bansal (supra) and we are bound by it. Accordingly, we hold that the order dated 18.08.2022 passed under Section 148A(d) of the Act and the consequential notice issued under section 148 dated and 23.08.2022 are bad in law, and hence, are required to be quashed and set aside.”
Same view is also expressed by Honourable Bombay High court in Ramesh Bachulal Mehta vs. Income-tax Officer [2025] 177 taxmann.com 606 (Bombay) [11-08-2025] [AY 2016-17].
Therefore in absence of any other judicial precedents cited before us by the revenue authority stating that the approval is correctly granted u/s 151 of the Act, we hold that issue is covered in favour of the assessee that approval is granted by PR CIT and Not by PR. Chief Commissioner of Income tax as per 151 (ii) of The Act. Thus, in absence of valid approval assessment order passed for AY 2016-17 and 2017-18 are quashed.
-524/Bang/2025 Page 10 of 22
For Ay 2014-15 the revenue and AR both have placed approval before us which is as under: - Page 11 of Page 12 of Page 13 of Page 14 of Page 15 of Page 16 of Page 17 of Page 18 of Page 19 of Page 20 of 22
Generally, it is the duty of the person who alleges non application of mind of authority, to prove it with reasonable inconsistencies there in, otherwise ' non application of mind" is Page 21 of 22 merely an unsubstantiated allegation. Thus, non-applicationof mind is required to be proved by the person who alleges with evidence. In this case the assessee and Ld DR has produced the whole correspondence which needs to be perused, before approving or negating this allegation.
On careful consideration of the above sanction granted, it is apparent that by one letter 83 approvals went from AO to Addl CIT, to Pr CIT, to PR CCIT and it was approved by the PR CCIt by writing " Approved". The above correspondence reproduced clearly shows that all 83 orders u/s 148A (d) travelled and are approved.
We do not find that this kind ofapproval can be held to be valid. It speaks a lot. It is not contested before us that issues in all these 83 matters is identical and except amount there is no other difference. That is not the case of revenue. The Approvals are of different assesses and of different assessment years. In Rosha Alloys (P.) Ltd. vs. Deputy Commissioner of Income-tax [2025] 175 taxmann.com 622 (Chandigarh - Trib.)/ [2025] 127 ITR(T) 76 (Chandigarh - Trib.) [28-05-2025] approval on the same day travelled documents from the AO to approving authority were held to be without application of mind. We add that that is notthe only issue here, here it is that 83 matters were approved by the Pr CCIT without murmuring anything about the case of the assessee, but in one word has approved all the orders u/s 148A (d) of the act. The documents produced above does not shows thatwhether the orders in 83 cases have been read by the authorities who forwarded the matters and who approved it. Thus, the approvals are quashed and so the assessment order. Accordingly, appeal of the assessee for Ay 2014-15 is also allowed.
-524/Bang/2025 Page 22 of 22 26. In the result all the three appeals filed by the assessee are allowed.
Order pronounced in the open court on 29th December 2025.