INCOME TAX OFFICER, WARD-1, WARANGAL vs. SHIVA KUMAR THOTA, WARANGAL
आयकर अपीलीय अिधकरण, हैदराबाद पीठ
IN THE INCOME TAX APPELLATE TRIBUNAL
Hyderabad ‘A’ Bench, Hyderabad
Before Shri Manjunatha G., Accountant Member and Shri Ravish Sood, Judicial Member
आ.अपी.सं /ITA No.996/Hyd/2024
(िनधाŊरण वषŊ/Assessment Year: 2017-18)
Income Tax Officer,
Ward-1,
PAN: AAOPT4519M
(Appellant)
(Respondent)
िनधाŊįरती Ȫारा/Assessee by:
Shri K.A. Sai Prasad, CA
राज̾ व Ȫारा/Revenue by:
Mrs. U. Mini Chandran,
CIT-DR
सुनवाई की तारीख/Date of Hearing:
18/11/2025
घोषणा की तारीख/Date of Pronouncement:
10/12/2025
आदेश / ORDER
PER. RAVISH SOOD, J.M:
The present appeal filed by the revenue is directed against the order passed by the Commissioner of Income Tax (Appeals), National
Faceless Appeal Centre, Delhi, dated 06/08/2024 which in turn arises from the order passed by the Assessing Officer under section 147 r.w.s
144B of the Income-Tax Act, 1961 (for short, “the Act”), dated
26/05/2023 for the Assessment Year 2017-18. The revenue has assailed the impugned order on the following grounds of appeal before us:
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1. “The Id CIT(A) erred both on law and on facts in giving relief to the assessee.
2. The Id CIT(A) ought to have given an opportunity to the AO on the additional evidences and submissions made before the Appellate authority under Rule 46A of the Income Tax rules prior to allowing the appeal
3. The Id CIT(A) ought to have called for a remand report from the AO on the said submissions and evidences filed as per Rule 46A of the Income Tax Rules.
4. Any other grounds that may arise during the hearing will be submitted before Hon’ble ITAT with kind permission.”
2. Also, the revenue has raised an additional grounds of appeal, as under:
“Notice u/s 148 issued on 29/07/2022, in respect of initial notice under section 148, dated 28/06/2021, and reply on 01/06/2022, is barred by limitation as per the ratio laid down by the Hon’ble Supreme Court in the case of Union of India vs. Rajeev Bansal (2024) 167 taxmann.com
70 (SC)”.
Also, we find that the assessee/respondent has filed a letter, dated 02/06/2025, wherein he has sought for admission of a fresh grounds (additional) No.2 to support the order of the CIT(A), which reads asunder: "In the facts and circumstances of the case, in the light of the fact that more than 3 vears lapsed from the end of the relevant A.Y. 2017-18 the approval for isuance of notice under section 148 granted on 29.07.2022 by Ld. Principal Commissioner of Income (PCIT-1), Hyderabad is bad in law, since the competent authority for granting such approval is Ld. Principal Chief Commissioner of Income Tax (PCCIT)".
Succinctly stated, the AO based on information received from the Directorate of Systems, CBDT, New Delhi through Insight Portal under the category of “High Risk Transactions” that the assessee had 3 ITO vs. Shiva Kumar Thota deposited an amount of Rs.1.93 crores during the year under consideration, i.e., post demonetization, which was not commensurate with his return of income, initiated proceedings under section 147 of the Act. Order under section 148A(d) of the Act, dated 29/07/2022 was passed by the AO. Thereafter, the AO issued notice under section 148 of the Act, dated 29/07/2022. 5. The AO thereafter vide his order passed under section 147 r.w.s 144B of the Act, dated 26/05/2023 assessed the income of the assessee at Rs.8,15,30,754/- after making certain additions, viz., (i) cash deposited during demonetization period: Rs.2,35,06,868/-; (ii) cash deposited during post demonetization period: Rs.4,89,51,132/-; (iii) addition of unproved sundry creditors under section 68 of the Act: Rs. 43,43,207/-; (iv) addition of unsecured loans under section 68 of the Act: Rs.16,19,208/-; (v) disallowance under section 43B of the Act: Rs.6,08,594/-; (vi) addition of undisclosed interest income: Rs.2,46,769/- ; and (vii) addition of undisclosed sales: Rs.3,34,246/-.
Aggrieved, the assessee carried the matter in appeal before the CIT(A) who partly allowed the same. Ostensibly, the CIT(A) though vacated certain additions, viz., (i) cash deposits aggregating to Rs.7,24,58,000/- (Rs.2,35,06,868/-, made during the demonetization
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ITO vs. Shiva Kumar Thota period plus Rs.4,89,51,132/-, made during the post demonetization period); (ii) addition of unproved sundry creditors under section 68 of the Act: Rs. 43,43,207/-; (iii) addition of unsecured loan made under section 68 of the Act: Rs.16,19,208/-; (iv) disallowance towards TDS and VAT payable under section 43B of the Act: Rs. 6,08,694/-; and (v) addition of Rs.3,34,246/- on account of estimated profit on undisclosed sales:
Rs.3,34,246/-, but at the same time declined the assessee’s claim regarding the validity of juri iction that was assumed by the AO, while initiating proceedings under section 148 of the Act. Accordingly, the CIT(A) partly allowed the assessee’s appeal. The revenue being aggrieved with the order of the CIT(A), has carried the matter in appeal before us.
We have heard the Learned Authorized Representatives of both parties, perused the orders of the lower authorities and the material available on record as well as considered the judicial pronouncements that have been pressed into service by the Ld. AR to drive home his contentions.
Ms. Mini Chandran, Ld. CIT - Departmental Representative (for short “CIT-DR”) at the threshold of hearing of the appeal submitted that the objection raised by the assessee regarding the validity of the 5 ITO vs. Shiva Kumar Thota juri iction assumed by the AO for framing the assessment was not as per the mandate of law. The Ld. CIT-DR submitted that the assessee respondent has challenged the validity of the juri iction assumed by the AO for framing the assessment vide his order passed under Section based on a fresh ground. The Ld. CIT-DR submitted that, as per Rule 11 of the Appellate Tribunal Rules, 1963, the right to raise an additional ground of appeal is only vested with an appellant and cannot be pressed into service by the respondent. The Ld. CIT-DR to buttress her contention had drawn our attention to Rule 11 of the Appellate Tribunal Rules, 1963. The Ld. CIT-DR submitted that as the assessee has misconstrued the scope of Rule 11 of the Appellate Tribunal Rules, 1963, and raised his objection regarding the validity of the juri iction assumed by the AO for framing the assessment, therefore, the same on the said count itself is liable to be rejected. The Ld. CIT-DR on being confronted with the fact that the objection of the assessee-respondent regarding the validity of the juri iction assumed by the AO for framing the assessment in the absence of a valid approval from the competent authority as contemplated in Section 151(ii) of the Act, is a preliminary objection U/rule 27 of the Appellate Tribunal Rules, 1963, wherein he is seeking adjudication of a purely legal issue that would not require looking any further beyond the facts available on record, objected to the same.
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The Ld. CIT-DR submitted that the application dated 02/06/2025 filed by the assessee-respondent reveals beyond doubt that he has raised a “fresh ground (additional) No.2” and there is nothing discernible from the record from where it could be gathered that he had objected to the assumption of juri iction by raising a preliminary objection U/rule 27 of the Appellate Tribunal Rules, 1963. To sum up, it was the Ld. CIT-DR’s contention that as the “fresh ground” raised by the assessee- respondent did not fall within the meaning of Rule 11 (supra) that exclusively catered to an appellant, therefore, the application filed by the assessee was liable to be dismissed at the threshold.
Per Contra, Shri. Sai Prasad, Chartered Accountant - the Ld. Authorized Representative (for short, “AR”) for the assessee rebutted the contentions of the Ld. CIT-DR. The Ld. AR submitted that the assessee has challenged the validity of the juri iction assumed by the AO for framing the assessment by way of a preliminary objection under Rule 27 of the Appellate Tribunal Rules, 1963. Elaborating further on his contention, the Ld. AR submitted that irrespective of the nomenclature used in the application based on which the aforesaid objection was raised by the assessee, the same being purely a legal issue, the adjudication of which would not require looking any further beyond the facts available on record, thus, the same being a preliminary objection
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U/rule 27 could have even otherwise been raised orally. The Ld. AR to support his contention had relied on the judgment of the Hon’ble High
10. The Ld. AR on being queried that as the subject issue, i.e., the challenge to the juri iction assumed by the AO for framing the assessment in the absence of approval from the competent authority as contemplated under Section 151(ii) of the Act did not emanate from the impugned order of the CIT(A), therefore, how the same could be brought within the meaning of Rule 27 (supra), submitted that a legal issue can be raised by the respondent for the first time under Rule 27 of the Appellate Tribunal Rules, 1963. The Ld. AR to fortify his contention had relied on the judgment of the Hon’ble High Court of Bombay in the case of Peter Vaz Vs. CIT, Central Circle, Bangalore (2021) 128
taxmann.com 180 (Bom). The Ld. AR submitted that as the assessee has challenged the validity of juri iction that the A.O had assumed for framing the assessment without obtaining the approval of the competent authority as statutorily required under Section 151 (ii) of the Act, which is a purely legal issue that goes to the roots of the case and the sustainability of the impugned order passed u/s 147 r.w.s 144B of the Act. Dated 26/06/2023; therefore, the same can be safely raised by way
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Tribunal Rules, 1963. The Ld. AR further relied on the judgment of the Hon’ble High Court of Delhi in the case of Sanjay Sawhney Vs. Pr.
CIT (2020) 316 CTR 392 (Del), and submitted that for availing the remedy under Rule 27 of the Income Tax Appellate Tribunal Rules,
1963, even an application in writing is not necessary, and the same can also be orally raised before the Tribunal. Further, the Ld. AR submitted that though an issue might not have been raised before the CIT(Appeals), the same can be raised for the first time before the Tribunal under Rule 27 of the Income Tax Appellate Tribunal Rules,
1963, and in support thereof relied on the judgment of the Hon’ble High
Bangalore (supra). It was, thus, the Ld. AR’s claim that, as per Rule 27
(supra), as had been interpreted in the aforesaid judicial pronouncements, the assessee remained well within his right to assail the validity of the juri iction that was assumed by the AO for framing the impugned assessment.
We have thoughtfully considered the contentions advanced by the Ld. Authorized Representatives of both parties regarding the maintainability of the objection raised by the assessee respondent under Rule 27 of the Income Tax Appellate Tribunal Rules, 1963, based on 9 12. Admittedly, it is a fact borne from the record that the assessee respondent has neither preferred before us a cross-appeal nor a cross- objection. The objection regarding the validity of the juri iction assumed by the A.O. had been raised by the assessee based on his application, which is titled as “fresh ground (additional) No.2”. Although we concur with the Ld. CIT-DR that, Rule 11 of the Appellate Tribunal Rules, 1963, permits raising of an additional ground of appeal only by an appellant, therefore, the assessee - respondent before us could not have raised an “additional ground”, as has been raised by him as per his application dated 02/06/2025, but cannot on such a hyper technical ground reject the said application. As observed hereinabove, the assessee- respondent has assailed before us the validity of the juri iction assumed by the AO for framing the assessment, on the ground that he had failed to obtain the approval of the prescribed authority as provided in Section 151(ii) of the Act, which purely being a legal issue, thus, falls within the meaning of a preliminary objection U/rule 27 of the Appellate Tribunal Rules, 1963, which as held by the Hon’ble High Courts could even otherwise be orally raised before the Tribunal. As the substance over the form is to be preferred, therefore, we are of the view that 10 ITO vs. Shiva Kumar Thota irrespective of the nomenclature used by the assessee in his application, as long as he is challenging the validity of the juri iction assumed by the AO for framing the assessment in absence of a valid approval required under Section 151 of the Act, which being a legal issue not requiring us to look beyond the facts available on record, the same would clearly fall within the meaning of a preliminary objection U/rule 27 of the Appellate Tribunal Rules, 1963. In fact, we find that the Hon’ble High 1963 does not specify any definite structure for making any application in a particular manner, therefore, the view that was taken by the Tribunal, which had declined the objection filed by the assessee respondent for the reason that it was not raised by filing an application made in writing was fallacious. For the sake of clarity, the observations of the Hon’ble High Court are culled out as under (relevant extract): “11. The Tribunal has taken a pedantic view on the interpretation of Rule 27 by holding that for availing the remedy under the said provision, an application in writing is necessary. In our opinion, this surmise is fallacious and we cannot countenance the same. We agree with Mr. Krishnan that Rule 27, as it stands today, does not mandate for the application to be made in writing. Revenue has not brought to our notice any particular Form notified for filing such an application. Revenue also does not controvert the contention of the Appellant that the draft Appellate Tribunal Rules 2017 proposing to insert a proviso to Rule 27, providing for an application to be made in writing, have not been notified, as yet. Therefore, the reasoning of the Tribunal for rejecting Appellant's contentions is palpably wrong. If the provision does not specify any defined structure for making an application in a particular manner, the Tribunal ought not to have deprived the 11 Appellant of an opportunity to raise a fundamental question of juri iction, taking a hyper technical viewpoint. The Tribunal has plainly refused to consider the additional grounds on an erroneous premise which is contrary to the statutory scheme of the Act, that permits the Respondent to urge all grounds in support of the order appealed, as provided under Rule 27. The appeal deserves to be allowed on this short ground and we would have no hesitation in doing so with a consequential direction to ITAT to reconsider the matter afresh on the additional grounds urged by the Appellant…….”
Coming to the issue as to whether the assessee respondent, in the absence of any cross-appeal or a cross-objection could assail the validity of the juri iction that was assumed by the A.O for framing the assessment in absence of an approval of the competent authority as contemplated under Section 151(ii) of the Act, despite the fact that, neither any such issue was raised before the CIT(Appeals) nor was adverted to by the latter while disposing off the appeal, we find that the said issue had been looked into at length by the Hon’ble High Court of Bombay in the case of Peter Vaz Vs. CIT, Central Circle, Bangalore (supra). Before adverting to the view taken by the Hon’ble High Court on the aforesaid issue, we deem it apposite to briefly cull out the facts that were involved in the appeal before the Hon’ble High Court in the context of which the latter had looked into the scope of Rule 27. (i). The assessee before the Hon’ble High Court had, in the proceedings before the Tribunal, filed cross-objections, which involved a delay of 248 days. The cross-objections filed by the assessee were dismissed by the Tribunal, which declined to condone the delay therein involved. On further appeal, it was the claim of the assessee that as it had assailed the validity of the juri iction that was assumed by 12 ITO vs. Shiva Kumar Thota the AO under Section 153C of the Act, which was purely an issue of law, therefore, there was no justification on the part of the Tribunal in refusing to consider such a significant issue. It was the claim of the assessee that, as he was under Rule 27 of the Income Tax Appellate Tribunal Rules, 1963, only supporting the order passed by the CIT(Appeals) before the Tribunal, which was already in his favor, thus, there was no necessity for filing a cross-objection.
(ii).
After deliberating on the contentions advanced by the assessee, the Hon’ble High Court found favor with the same. Adverting to the issue as to whether or not the assessee could have assailed the validity of the juri iction u/s.153C of the Act before the Tribunal without filing any cross-objection, the Hon’ble High Court observed that as the assessee wished to raise an issue that was at least, prima facie, going to the roots of the juri iction to initiate proceedings under Section 153C of the Act, therefore, having regard to the provisions of Rule 27, the Tribunal should have permitted the assessee-respondent to have supported the order of CIT (Appeals) on this ground, even without the necessity of filing any cross-objections. Relying on the judgment of the Hon’ble High Court of Gujarat in the case of Dahod Sahakari Kharid Vechan Sangh Ltd.
Vs. CIT (2006) 200 CTR 265 (Guj), the Hon’ble High Court had observed that the right that accrued to the assessee respondent under Rule 27 of the Income Tax Appellate
Tribunal Rules, 1963 could not have been taken away by the Tribunal by referring to the provisions of Section 253(4) of the Act. The Hon’ble High Court had further observed that though the issue regarding the validity of the juri iction assumed by the AO u/s. 153C of the Act was not raised before the CIT(Appeals), but having regard to the provisions of Rule 27 of the Income Tax Appellate Tribunal Rules,
1963, as also the provisions of Section 260A(7) read with provisions of Order XLI Rule 22 of the CPC as interpreted by the Hon’ble Supreme Court in the case of S. Nazeer
Ahmed Vs. State Bank of Mysore (2007) 11 SCL 75, the ITAT should not have precluded the assessee from assailing the issue regarding the validity of the juri iction assumed by the AO u/s.153C of the Act in the course of hearing of the appeal instituted by the revenue, even
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ITO vs. Shiva Kumar Thota without the necessity of filing any cross-objection. Based on its aforesaid observations, the Hon’ble High Court observed that in terms of Rule 27 of the Income Tax Appellate
Tribunal Rules, 1963, the assessee was entitled to support the order of the CIT(Appeals) before the Tribunal even without the necessity of filing any cross-objection. For the sake of clarity, the observations of the Hon’ble High Court are culled out as under (relevant extract) :
“38. In the present case, it is not as if the issue of non-fulfillment of juri ictional parameters of Section 153C was raised but rejected by the CIT (Appeals). Such an issue was not raised before the CIT
(Appeals). Having regard to the provisions of Rule 27 of the Appellate Tribunal Rules, 1963 as also the provisions of Section 260A(7) read with Order XLI Rule 22 of CPC as interpreted by the Hon'ble Supreme Court in S. Nazeer Ahmed (supra) we think that the ITAT should not have precluded the assessees from raising the issue in the appeals instituted by the Revenue, even without the necessity of filing any cross-objections. Accordingly, the additional substantial question of law is required to be answered in favor of the Appellants/assessees and against the Revenue.”
(emphasis supplied by us)
Also, the vesting of similar rights with the assessee respondent can be traced in the judgment of the Hon’ble High Court of Punjab & Haryana in the case of CIT Vs. Dehati Co-operative Marketing cum Processing Society (1981) 130 ITR 504 (P&H). The Hon’ble High Court, referring to Rule 11 of the Income Tax Appellate Tribunal Rules, 1963, had observed that now, when the appellant can be allowed a concession, therefore, there is no justification for denying the respondent in an appeal a similar concession. It was, thus, observed by the Hon’ble Tribunal Rules, 1963, as had been looked into by the Hon’ble High Courts, are of the considered view that the objection raised by the assessee respondent under Rule 27 of the Income Tax Appellate Tribunal Rules, 1963 regarding the validity of the juri iction assumed by the A.O for framing the assessment vide his order passed under Section 147 r.w.s 144B of the Act, dated 26/05/2023 merits admission. 16. As the Ld. AR has assailed the validity of the juri iction assumed by the A.O. for issuing notice u/s 148 dated 29/07/2022 without obtaining approval from any of the authorities specified u/s 151 of the Act (as was applicable at the relevant point of time), therefore, we shall first deal with the same. 17. Admittedly, it is a matter of fact discernible from the record that the notice u/s 148 of the Act, dated 29/07/2022, had been issued by the ITO, Ward-1, Warangal after obtaining the prior approval of the Pr. Commissioner of Income-Tax-1, Hyderabad, AP & Telangana, dated 29/07/2022 vide reference F/No. Pr.CIT-
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1/Hyd/147/Approval/2022-23. For the sake of clarity, we deem it fit to cull out the notice u/s 148 dated 29/07/2022. 16
19. Apropos the challenge thrown by the Ld. AR regarding the validity of the juri iction assumed by the A.O. for initiating proceedings u/s. 147 of the Act, i.e., without obtaining the approval of the specified authority u/s. 151(ii) of the Act, we find substance in the same. Admittedly, the reassessment proceedings u/s. 147 of the Act had been revamped vide the Finance Act, 2021 w.e.f.
01.04.2021. The substituted Sections 147 to 159 and Section 151
of the Act, applicable w.e.f. 01.04.2021 are culled out as under:
“Income escaping assessment-
147. If any income chargeable to tax, in the case of an assessee, has escaped assessment for any assessment year, the Assessing
Officer may, subject to the provisions of sections 148 to 153, assess or reassess such income or recompute the loss or the depreciation allowance or any other allowance or deduction for such assessment year (hereafter in this section and in sections
148 to 153 referred to as the relevant assessment year).
Explanation.—For the purposes of assessment or reassessment or recomputation under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, irrespective of the fact that the provisions of section 148A have not been complied with.”.
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148. Before making the assessment, reassessment or recomputation under section 147, and subject to the provisions of section 148A, the Assessing Officer shall serve on the assessee a notice, along with a copy of the order passed, if required, under clause (d) of section 148A, requiring him to furnish within such period, as may be specified in such notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139:
Provided that no notice under this section shall be issued unless there is information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the relevant assessment year and the Assessing Officer has obtained prior approval of the specified authority to issue such notice.
Explanation 1.—For the purposes of this section and section 148A, the information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment means,—
(i) any information flagged in the case of the assessee for the relevant assessment year in accordance with the risk management strategy formulated by the Board from time to time;
(ii) any final objection raised by the Comptroller and Auditor
General of India to the effect that the assessment in the case of the assessee for the relevant assessment year has not been made in accordance with the provisions of this Act.
Explanation 2.—For the purposes of this section, where,—
(i) a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A, on or after the 1st day of April, 2021, in the case of the assessee; or (ii) a survey is conducted under section 133A, other than under subsection (2A) or subsection (5) of that section, on or after the 1st day of April, 2021, in the case of the assessee; or 19
(iii) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner, that any money, bullion, jewellery or other valuable article or thing, seized or requisitioned under section 132 or under section 132A in case of any other person on or after the 1st day of April, 2021, belongs to the assessee; or (iv) the Assessing Officer is satisfied, with the prior approval of Principal Commissioner or Commissioner, that any books of account or documents, seized or requisitioned under section 132 or section 132A in case of any other person on or after the 1st day of April, 2021, pertains or pertain to, or any information contained therein, relate to, the assessee, the Assessing Officer shall be deemed to have information which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the three assessment years immediately preceding the assessment year relevant to the previous year in which the search is initiated or books of account, other documents or any assets are requisitioned or survey is conducted in the case of the assessee or money, bullion, jewellery or other valuable article or thing or books of account or documents are seized or requisitioned in case of any other person. Explanation 3.—For the purposes of this section, specified authority means the specified authority referred to in section 151.”
Conducting inquiry, providing opportunity before issue of notice under section 148-
“148A. The Assessing Officer shall, before issuing any notice under section 148,—
(a) conduct any enquiry, if required, with the prior approval of specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment;
(b) provide an opportunity of being heard to the assessee, with the prior approval of specified authority, by serving upon him a notice to show cause within such time, as may be specified in the notice, being not less than seven days and but not exceeding thirty days from the date on which such notice is issued, or such time, as may be extended by him on the basis of an application in this behalf, as to why a notice under section 148 should not be issued on the basis of information which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year and results of enquiry conducted, if any, as per clause (a);
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(c) consider the reply of assessee furnished, if any, in response to the showcause notice referred to in clause (b);
(d) decide, on the basis of material available on record including reply of the assessee, whether or not it is a fit case to issue a notice under section 148, by passing an order, with the prior approval of specified authority, within one month from the end of the month in which the reply referred to in clause (c) is received by him, or where no such reply is furnished, within one month from the end of the month in which time or extended time allowed to furnish a reply as per clause (b) expires:
Provided that the provisions of this section shall not apply in a case where,—
(a) a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A in the case of the assessee on or after the 1st day of April,
2021; or (b) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any money, bullion, jewellery or other valuable article or thing, seized in a search under section 132 or requisitioned under section 132A, in the case of any other person on or after the 1st day of April, 2021, belongs to the assessee; or (c) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any books of account or documents, seized in a search under section 132 or requisitioned under section 132A, in case of any other person on or after the 1st day of April, 2021, pertains or pertain to, or any information contained therein, relate to, the assessee.
Explanation.—For the purposes of this section, specified authority means the specified authority referred to in section 151.”
Time limit for notice-
“149. (1) No notice under section 148 shall be issued for the relevant assessment year,—
(a) if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b);
(b) if three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing
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Officer has in his possession books of account or other documents or evidence which reveal that the income chargeable to tax, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more for that year:
Provided that no notice under section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before 1st day of April, 2021, if such notice could not have been issued at that time on account of being beyond the time limit specified under the provisions of clause (b) of subsection (1) of this section, as they stood immediately before the commencement of the Finance Act, 2021:
Provided further that the provisions of this subsection shall not apply in a case, where a notice under section 153A, or section 153C read with section 153A, is required to be issued in relation to a search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A, on or before the 31st day of March, 2021:
Provided also that for the purposes of computing the period of limitation as per this section, the time or extended time allowed to the assessee, as per show cause notice issued under clause (b) of section 148A or the period during which the proceeding under section 148A is stayed by an order or injunction of any court, shall be excluded:
Provided also that where immediately after the exclusion of the period referred to in the immediately preceding proviso, the period of limitation available to the Assessing Officer for passing an order under clause (d) of section 148A is less than seven days, such remaining period shall be extended to seven days and the period of limitation under this subsection shall be deemed to be extended accordingly.
Explanation.—For the purposes of clause (b) of this subsection,
“asset” shall include immovable property, being land or building or both, shares and securities, loans and advances, deposits in bank account.
(2) The provisions of subsection (1) as to the issue of notice shall be subject to the provisions of section 151.’
Sanction for issue of notice-
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“151. Specified authority for the purposes of section 148 and section 148A shall be—
(i) 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.”
The Hon’ble Apex Court in the case of Union of India & Ors. Vs. Ashish Agrawal, Civil Appeal No.3005/2022, dated 04.05.2022, after deliberating at length on the aforesaid amended provisions had, inter alia, observed as under: “5. We have heard Shri N. Venkataraman, learned ASG appearing on behalf of the Revenue and Shri C.A. Sundaram and Shri S. Ganesh, learned Senior Advocates and other learned counsel appearing on behalf of the respective assessee.
It cannot be disputed that by substitution of sections 147 to 151 of the Income Tax Act (IT Act) by the Finance Act, 2021, radical and reformative changes are made governing the procedure for reassessment proceedings. Amended sections 147 to 149 and section 151 of the IT Act prescribe the procedure governing initiation of reassessment proceedings. However, for several reasons, the same gave rise to numerous litigations and the reopening were challenged inter alia, on the grounds such as (1) no valid “reason to believe” (2) no tangible/reliable material /information in possession of the assessing officer leading to formation of belief that income has escaped assessment, (3) no enquiry being conducted by the assessing officer prior to the issuance of notice; and reopening is based on change of opinion of the assessing officer and (4) lastly the mandatory procedure laid down by this Court in the case of GKN Driveshafts (India) Ltd. Vs. Income Tax Officer and ors; (2003) 1 SCC 72, has not been followed.
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6.3 But prior to pre-Finance Act, 2021, while reopening an assessment, the procedure of giving the reasons for reopening and an opportunity to the assessee and the decision of the objectives were required to be followed as per the judgment of this Court in the case of GKN Driveshafts (India) Ltd. (supra).
4 However, by way of section 148A, the procedure has now been streamlined and simplified. It provides that before issuing any notice under section 148, the assessing officer shall (i) conduct any enquiry, if required, with the approval of specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment; (ii) provide an opportunity of being heard to the assessee, with the prior approval of specified authority; (iii) consider the reply of the assessee furnished, if any, in response to the showcause notice referred to in clause (b); and (iv) decide, on the basis of material available on record including reply of the assessee, as to whether or not it is a fit case to issue a notice under section 148 of the IT Act and (v) the AO is required to pass a specific order within the time stipulated.
5 Therefore, all safeguards are provided before notice under section 148 of the IT Act is issued. At every stage, the prior
24
Act/unamended provision of the IT Act as those deemed to have been issued under section 148A of the IT Act as per the new provision section 148A and the Revenue ought to have been permitted to proceed further with the reassessment proceedings as per the substituted provisions of sections 147 to 151 of the IT Act as per the Finance Act, 2021, subject to compliance of all the procedural requirements and the defences, which may be available to the assessee under the substituted provisions of sections
147 to 151 of the IT Act and which may be available under the Finance Act, 2021 and in law. Therefore, we propose to modify the judgments and orders passed by the respective High Courts as under:
(i) The respective impugned section 148 notices issued to the respective assessees shall be deemed to have been issued under section 148A of the IT Act as substituted by the Finance Act,
2021 and treated to be showcause notices in terms of section 148A(b). The respective assessing officers shall within thirty days from today provide to the assessees the information and material relied upon by the Revenue so that the assessees can reply to the notices within two weeks thereafter;
(ii) The requirement of conducting any enquiry with the prior approval of the specified authority under section 148A(a) be dispensed with as a onetime measure vis-à-vis those notices which have been issued under Section 148 of the unamended Act from 01.04.2021 till date, including those which have been quashed by the High Courts;
(iii) The assessing officers shall thereafter pass an order in terms of section 148A(d) after following the due procedure as required under section 148A(b) in respect of each of the concerned assessees;
(iv) All the defences which may be available to the assessee under section 149 and/or which may be available under the Finance
Assessing Officer under the Finance Act, 2021 are kept open and/or shall continue to be available and;
(v) The present order shall substitute/modify respective judgments and orders passed by the respective High Courts quashing the similar notices issued under unamended section 148 of the IT Act irrespective of whether they have been assailed before this Court or not.
There is a broad consensus on the aforesaid aspects amongst the learned ASG appearing on behalf of the Revenue and the learned Senior Advocates/learned counsel appearing on behalf of the respective assessees.
We are also of the opinion that if the aforesaid order is passed, it will strike a balance between the rights of the Revenue as well as the respective assesses as because of a bonafide belief of the officers of the Revenue in issuing approximately 90000 such notices, the Revenue may not suffer as ultimately it is the public exchequer which would suffer.
Therefore, we have proposed to pass the present order with a view avoiding filing of further appeals before this Court and burden this Court with approximately 9000 appeals against the similar judgments and orders passed by the various High Courts, the particulars of some of which are referred to hereinabove. We have also proposed to pass the aforesaid order in exercise of our powers under Article 142 of the Constitution of India by holding that the present order shall govern, not only the impugned judgments and orders passed by the High Court of Judicature at Allahabad, but shall also be made applicable in respect of the similar judgments and orders passed by various High Courts across the country and therefore the present order shall be applicable to PAN INDIA.
In view of the above and for the reasons stated above, the present Appeals are ALLOWED IN PART. The impugned common judgments and orders passed by the High Court of Judicature at Allahabad in W.T. No. 524/2021 and other allied tax appeals/petitions, is/are hereby modified and substituted as under:
(i) The impugned section 148 notices issued to the respective assessees which were issued under unamended section 148 of the IT Act, which were the subject matter of writ petitions before the various respective High Courts shall be deemed to have been 27
ITO vs. Shiva Kumar Thota issued under section 148A of the IT Act as substituted by the Finance Act, 2021 and construed or treated to be showcause notices in terms of section 148A(b). The assessing officer shall, within thirty days from today provide to the respective assessees information and material relied upon by the Revenue, so that the assesees can reply to the showcause notices within two weeks thereafter;
(ii) The requirement of conducting any enquiry, if required, with the prior approval of specified authority under section 148A(a) is hereby dispensed with as a onetime measure vis-
àvis those notices which have been issued under section 148 of the unamended Act from 01.04.2021 till date, including those which have been quashed by the High
Courts. Even otherwise as observed hereinabove holding any enquiry with the prior approval of specified authority is not mandatory but it is for the concerned Assessing Officers to hold any enquiry, if required;
(iii) The assessing officers shall thereafter pass orders in terms of section 148A(d) in respect of each of the concerned assessees; Thereafter after following the procedure as required under section 148A may issue notice under section 148 (as substituted);
(iv) All defences which may be available to the assesses including those available under section 149 of the IT Act and all rights and contentions which may be available to the concerned assessees and Revenue under the Finance Act,
2021 and in law shall continue to be available.
The present order shall be applicable PAN INDIA and all judgments and orders passed by different High Courts on the issue and under which similar notices which were issued after 01.04.2021 issued under section 148 of the Act are set aside and shall be governed by the present order and shall stand modified to the aforesaid extent. The present order is passed in exercise of powers under Article 142 of the Constitution of India so as to avoid any further appeals by the Revenue on the very issue by challenging similar judgments and orders, with a view not to burden this Court with approximately 9000 appeals. We also observe that present order shall also govern the pending writ petitions, pending before various High Courts in which similar notices
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Courts particulars of which are mentioned hereinabove, shall stand modified/substituted to the aforesaid extent only.
All these appeals are accordingly partly allowed to the aforesaid extent.
In the facts of the case, there shall be no order as to costs.”
(emphasis supplied by us)
Apart from that, we find that the CBDT vide Instruction No.01/2022 while directing implementation of the judgment of the Hon’ble Supreme Court in the case of Union of India & Ors Vs. Ashish Agrawal, Civil Appeal No.3005/2022, dated 04.05.2022, while laying down the procedure that is required to be followed by the Assessing Officer had, inter alia, held that if it is a fit case to issue notice u/s. 148 of the Act, the Assessing Officer shall serve on the assessee a notice u/s 148 after obtaining approval of the specified authority u/s. 151 of the new law. 22. At this stage, we may herein observe that our aforesaid view that in a case where a period of more than three years have elapsed
29
ITO vs. Shiva Kumar Thota from the end of the relevant assessment year, then, approval for issuing the notice under section 148 of the Act has to be taken from the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General for issuing the notice under section 148 of the Act is supported by the recent judgment of the Hon’ble Juri ictional High Court of Telangana in Deloitte
Income Tax Department, Civil Writ Petition No. 4061 of 2024, dated 25/09/2025. For the sake of clarity, we deem it apposite to cull out the observations of the Hon’ble juri ictional High Court in the case of Deloitte Consulting India Private Limited vs. The Assessment Unit, Income Tax Department (supra), as under:
“48. The proviso to Section 151 has been introduced by the Finance
Act, 2023 with effect from 01.04.2023. The relevant Section 151 with its proviso is applicable to the case of the petitioner is quoted hereunder:
151. Sanction for issue of notice:- Specified authority for the purposes of Section 148 and Section 148A shall be,-
(i) 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 Chief
Commissioner or Director General, if more than three years have elapsed from the end of the relevant assessment year:
Provided that the period of three years for the purposes of clause (i) shall be computed after taking into account the period of limitation as 30
ITO vs. Shiva Kumar Thota excluded by the third or fourth or fifth provisos or extended by the sixth proviso to sub-section (1) of Section 149. 49. In the present case, the order under Section 148A(d) and notice under Section 148 have been issued on 07.04.2022 relatable to the relevant Assessment Year 2018- 19 i.e., after more than three years from the end of the relevant assessment year. The approval before passing the order under Section 148A(d) of the Act and before issuing of notice under Section 148 of the Act has been taken from the Principal Commissioner of Income Tax by the respondent No.1, which is permissible only if three years or less than three years have lapsed from the end of the relevant assessment year. In the present case, the relevant three years lapsed on 31.03.2022. Therefore, the prior approval of the Principal Chief Commissioner or Principal Director General or the Chief Commissioner or the Director General was required to be obtained before passing of the order under Section 148A(d) or before issuance of the notice under Section 148 of the Act.
50. Learned counsel for the respondent has relied upon the proviso to Section 151 of the Act inserted by the Finance Act, 2023 with effect from 01.04.2023 quoted above to contend that the period of seven days furnished to the assessee to submit reply to the notice under Section 148A(b) issued on 23.03.2022 has to be excluded for counting the period of three years. It is submitted that the proviso is clarificatory in nature and as such, it would operate from the date when the amended Section 151 was brought into force i.e., 01.04.2021. However, such a contention is fit to be rejected since the proviso to Section 151 has been inserted by the Finance Act, 2023 only with effect from 01.04.2023. It, therefore, cannot be applied retrospectively to exclude the period of seven days in furnishing the reply to the notice under Section 148A(b) of the Act by the assessee.
The Assessing Officer could not have assumed exclusion of such a period while passing the order under Section 148A(d) of the Act or issuing notice under Section 148 of the Act on 07.04.2022 that such a proviso excluding the period consumed in furnishing the reply is going to be brought into the statute book by amendment by the Finance Act, 2023 with effect from 01.04.2023. In taxing statutes, intendment cannot be assumed unless specifically expressed in the provision enacted by the legislature. Therefore, the reopening of assessment without sanction/approval of the specified authority in accordance with Section 151 of the Act was bad in law. Consequently, reassessment order dated 16.01.2024
also is bad in law.”
(emphasis supplied by us)
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23. We find that the Hon’ble High Court in its aforesaid order had not only observed that in the case of the assessee before them ie., for AY 2018-19 the specified authority for granting approval under section 151 of the Act was the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director
General as a period of more than three years had lapsed from the end of the relevant Assessment Year, but had also rejected the claim of the revenue that the “proviso” to section 151 of the Act as had been made available on the statute vide the Finance Act, 2023
w.e.f. 01/04/2023 was to be given a retrospective effect.
24. We, thus, in terms of our aforesaid observation, concur with the Ld. AR that in the present case before us for A.Y. 2018-19, wherein notice under Section 148 of the Act was issued on 29/07/2022, i.e., beyond a period of three years from the end of the assessment year, the A.O. was statutorily obligated to have obtained the approval from either of the authorities specified u/s.
151(ii) of the Act (as was then available on the statute), viz.
(as made available on the statute w.e.f 01.04.2021), therefore, the assessment so framed by him u/s.147 r.w.s. 144B of the Act, dated
26/05/2023, being devoid and bereft of any valid assumption of juri iction, is liable to be quashed. Accordingly, we quash the assessment framed by the A.O. under Section 147 r.w.s. 144B of the Act, dated 26/05/2023, in terms of our aforesaid observations.
25. As we have quashed the assessment framed by the A.O.
under Section 147 r.w.s.. 144B of the Act, dated 26/05/2023, for want of a valid assumption of juri iction for issuing notice u/s. 148
of the Act, dated29/07/2022, therefore, we refrain from adverting to and dealing with the other grounds raised by the assessee before us.
26. In the result, the primary objection filed by the assessee vide his letter, dated 02/06/2025 is allowed while for the appeal filed by 33
Dated: 10th December, 2025
OKK / SPS
Copy to:
S.No Addresses
1
Income Tax Officer, Ward-1, Warangal, C/o. BSNL
Bhavan, Beside KMC, Warangal-506007. 2
Shiva
Kumar
Thota,
8-11-68,
Pinnavari
Street,
Warangal-506002. 3
The Pr. CIT, Hyderabad
4
The DR, ITAT Hyderabad Benches
5
Guard File
By Order
Sr. Private Secretary,
ITAT, Hyderabad.