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Facts
The assessee filed two appeals for AY 2016-17 and 2020-21. For AY 2016-17, the assessment was reopened via a notice under section 148, which the assessee challenged on grounds of limitation and improper approval. For AY 2020-21, the assessee's claim for exemption under section 54F for investment in residential property was partly disallowed by the Assessing Officer and confirmed by the CIT(A) due to alleged lack of documentary evidence.
Held
For AY 2016-17, the Tribunal held that the reassessment notice issued under section 148 was time-barred and invalid due to lack of proper approval from the competent authority (Principal Chief Commissioner of Income-tax instead of Principal Commissioner of Income-tax) as required under section 151(ii) for assessments reopened after three years, and also violated the faceless assessment scheme. Consequently, the notice and subsequent reassessment order were quashed. For AY 2020-21, the Tribunal remanded the matter back to the Assessing Officer for fresh adjudication because the CIT(A) failed to consider all documentary evidences submitted by the assessee for the section 54F exemption claim.
Key Issues
1. Validity of reassessment notice u/s 148 challenged on grounds of being time-barred and issued without proper approval from the competent authority as per section 151(ii). 2. Whether reassessment proceedings conducted by the Jurisdictional Assessing Officer (JAO) manually violated the National Faceless Assessment Scheme. 3. Disallowance of exemption u/s 54F due to alleged lack of documentary evidence not considered by the CIT(A).
Sections Cited
147, 148, 148A, 149, 151, 54F, 234A, 234B, 234C, 143(1)(a), 143(3), 133A, 144B
AI-generated summary — verify with the full judgment below
सुनवाई की तारीख/Date of hearing: 17.11.2025 घोषणा की तारीख/Pronouncement: 28.11.2025 आदेश/ORDER PER VIJAY PAL RAO, VICE PRESIDENT : These two appeals by the Assessee are directed against the two separate Orders of the learned CIT(A)- National Faceless Appeal Centre [in short “NFAC], Delhi, both dated 22.09.2025, for the assessment years 2016-2017 and 2020-2021, respectively.
2 ITA.No.1527 & 1528/Hyd./2025 ITA.No.1527/Hyd./2025 – A.Y. 2016-2017 :
For the assessment year 2016-2017 the assessee has raised the following grounds :
1. “The order of the learned Authorities below in so far as it is against the Appellant is opposed to law, equity, weight of evidence, probabilities and the facts and circumstances in the Appellant's case.
2. Whether the learned Authorities below are justified in reopening the assessment under section 147 of the Act, by issue of notice dated 29/07/2022 under section 148 of the Act, which is bad in law and without jurisdiction and is merely based on external information with which the Appellant has no nexus, it can be construed as change of opinion, under the facts and circumstances of the case.
Whether the learned Authorities below are justified in relying on the third-party statements recorded during the survey action under section under section 133A of the Act, carried out in the case of JM Financial Asset Management Limited, for reopening a concluded assessment, under the facts and circumstances of the case.
4. Whether the learned Authorities below are justified in issuing notice under section 148 of the Act, beyond the limitation period which is bad in law, under the facts and circumstances of the case.
3 ITA.No.1527 & 1528/Hyd./2025 5. Whether the learned Authorities below are justified in taking approval while issuing notice under section 148 of the Act, from the Honorable Pr. Commissioner of Income-tax 1, Hyderabad, even when the case is beyond the three years, under the facts and circumstances of the case.
6. Whether the learned Authorities below (i.e.) Jurisdictional Assessing Officer (JAO) is justified to initiate proceedings pertaining to re-assessment under section 148A and 148 of the Act, under the facts and circumstances of the case.
The Appellant denies himself liable to be assessed for an amount being Rs.48,14,31,240/-, as against the returned income of Rs.12,74,95,910/-, under the facts and circumstances of the case.
8. Whether the learned Authorities below are justified in disallowing the short term capital loss of an amount being Rs.35,39,35,330/-, under the facts and circumstances of the case.
Whether the learned Authorities below are justified in arriving at the unit loss of Rs. 1,53,71,792/-, and recalculating the short term capital gain, under the facts and circumstances of the case.
10. The Appellant denies himself liable to interest under section 234A, 2348 and 234C of the Act, under the facts and circumstances of the case.
11. The Appellant craves leave to add, alter, delete or substitute any of the grounds urged above.
4 ITA.No.1527 & 1528/Hyd./2025 12. In the view of the above and other grounds that may be urged at the time of the hearing of the appeal, the Appellant prays that the appeal may be allowed in the interest of justice and equity.”
3. Through ground no.4, the assessee has raised the legal issue challenging the validity of the notice issued u/sec.148 being barred by limitation beyond the surviving period.
The assessee is an individual and filed his return of income for the year under consideration on 20.07.2016 admitting total income of Rs.12,74,95,910/-. The return was processed u/sec.143(1)(a) of the Act accepting the return of income and thereafter, the assessment was selected for scrutiny and scrutiny assessment u/sec.143(3) was completed on 19.12.2018. The Assessing Officer thereafter issued notice u/sec.148 dated 30.06.2021 and subsequently, in pursuance to Judgment of Hon’ble Supreme Court in the case of Union of India And Ors. vs. Ashish Agarwal [2022] 444 ITR 1 (SC), the Assessing Officer issued notice u/sec.148A(b) on 25.05.2022. The assessee did not file any reply to the said show cause notice and the Assessing Officer
5 ITA.No.1527 & 1528/Hyd./2025 passed the order u/sec.148A(d) on 29.07.2022. On the same day, the Assessing Officer has also issued notice u/sec.148 dated 29.07.2022.
Before the Tribunal, the learned Authorised Representative of the Assessee has submitted that the notice issued u/sec.148 on 29.07.2022 is barred by limitation and liable to be quashed. The learned Authorised Representative of the Assessee has submitted that since the original notice u/sec.148 was issued by the Assessing Officer on 30.06.2021, therefore, the number of days available to the Assessing Officer for issuing the final notice under the new Scheme of Re-Assessment was zero as observed by the Hon’ble Supreme Court in the case of Union of India vs. Rajeev Bansal [2024] 469 ITR 46 (SC). The period as per the Hon’ble Supreme Court in the case of Union of India And Ors., vs. Ashish Agrawal (supra) has to be excluded up-to the date of the said Judgment i.e., 04.05.2022. Consequently, the Assessing Officer issued show cause notice u/sec.148A(b) on 25.05.2022 granting the time to assessee to file the reply up- to 05.06.2022. The assessee did not file any reply in response
6 ITA.No.1527 & 1528/Hyd./2025 to the show cause notice issued u/sec.148A(b). Therefore, since there was a zero surviving period with the Assessing Officer due to the reason that original notice u/sec.148 was issued on 30.06.2021 the last day of the limitation extended by TOLA Notification, therefore, the minimum period available as per the Judgment of Hon’ble Supreme Court in the case of Union of India And Ors., vs. Ashish Agrawal (supra), would be 07 days with the Assessing Officer i.e., up- to 07.06.2022. However, the Assessing Officer passed the order u/sec.148A(d) on 29.07.2022 and then, issued notice u/sec.148 dated 29.07.2022 which is beyond the period of limitation as the surviving period was available to the Assessing Officer up-to 07.06.2022. Thus, the learned Authorised Representative of the Assessee has submitted that the notice issued by the Assessing Officer u/sec.148 dated 29.07.2022 is barred by limitation as it is beyond the surviving period specified and explained by the Hon’ble Supreme Court in the case of Union of India vs. Rajeev Bansal (supra). He has referred to Para-108 of the Judgment of Hon’ble Supreme Court in the case of Union of India vs.
7 ITA.No.1527 & 1528/Hyd./2025 Rajeev Bansal (supra), wherein the Hon’ble Supreme Court has clarified that the surviving period has to be calculated by computing the number of days between the date of issuance of deemed notice and the limitation extended by TOLA up-to 30.06.2021. Since, in the case of the assessee, the deemed notice was issued on 30.06.2021 itself, therefore, the surviving period would be zero days. The learned Authorised Representative of the Assessee has thus submitted that the Assessing Officer has to consider response of the assessee u/sec.148A(c) of the Act and then, pass the order u/sec.148A(d) and thereafter, issue notice u/sec.148 under new tax regime. All these procedures has to be completed within the surviving period and the notice issued beyond the surviving period is time barred and liable to be set-aside. The Hon’ble Supreme Court in Paras-113 and 114 in the case of Union of India vs. Rajeev Bansal (supra) has set-aside such notice which are beyond the surviving period. Thus, The learned Authorised Representative of the Assessee has submitted that applying the above principle laid down by the Hon’ble Supreme Court, the notice issued by the Assessing
8 ITA.No.1527 & 1528/Hyd./2025 Officer u/sec.148 in the case of the assessee on 29.07.2022 is barred by 45 days. He has referred to the relevant details of the limitation period as well as surviving period after the extension of limitation under TOLA as under :
Particulars Dates Date of issue of original notice under section A 30.06.2021 148 of the Act, within the TOLA Period Last date of TOLA B 30.06.2021 Balance (On inclusive method) C = A-B 0 Minimum days available as per 4th proviso D 7 of section 149[1] of the Act Then surviving period (Para 108 to 113 of E = 7 Rajeev Bansal) Higher of C & D Due date of response to be filed by the F 07.06.2022 Appellant to notice under section 148A[b] of the Act. Date on which period of two weeks allowed G 07.06.2022 G to assessee to respond to notice ends [deemed stay as per 3rd proviso to section 149 and para 114[g] of Rajeev Bansal] Last date for issuing notice under section H = G+E 14.06.2022 148 of the Act (i.e.) Actual date of issuance of notice under I 29.07.2022 section 148 of the Act. Actual date of service of notice through mail. J 29.07.2022 Then the notice is barred by [para 114(h) of K = H-J 45 Rajeev Bansal.
Thus, the learned Authorised Representative of the Assessee has submitted that the notice issued u/sec.148 for the assessment year 2016-2017 is invalid and liable to be quashed and consequently, the re-assessment order passed
9 ITA.No.1527 & 1528/Hyd./2025 by the Assessing Officer is also liable to be quashed. In support of his contention, he has relied upon the Judgment of Hon’ble Madras High Court in the case of Thulasidass Prabhavati vs. ITO [2025] 174 taxmann.com 508 (Mad.). He has also relied upon Judgment of Hon’ble Supreme Court in the case of ACIT vs. Amit Jain [2025] 303 Taxman 163 (SC). In the case of Kulwant Singh vs. Union of India the Hon’ble Punjab & Haryana High Court in Civil WP.No.18032 of 2024 etc., after considering the Judgment of Hon’ble Supreme Court in the case of Union of India vs. Rajeev Bansal (supra), has quashed the notice issued u/sec.148 beyond the surviving period being barred by limitation. The learned Authorised Representative of the Assessee has pointed-out that the Hon’ble Punjab & Haryana High Court has disposed of 152 writ petitions vide the said common Judgment. He has also relied upon Judgment of Hon’ble Delhi High Court in the case of Ram Balram Buildhome (P.) Ltd., vs. ITO [2025] 171 taxmann.com 99 (Del.). The learned Authorised Representative of the Assessee has also relied upon the following decisions :
10 ITA.No.1527 & 1528/Hyd./2025 Kanwaljeet Kaur vs., ACIT [2025] 171 taxmann.com 174 (Del.) 1. (HC). Order of ITAT Raipur in Kachrulal Jitendra Kumar vs., ITO 2. [ITA.No.307/RPR/2024, dated 05.02.2025. Order of ITAT Raipur in DCIT vs., Vinay Agrawal [ITA.No.29 & 3. 30/RPR/2025, dated 17.02.2025. Order of ITAT, Mumbai in ACIT vs., Ramchand Thakurdas 4. Jhamtani [2025] 174 taxmann.com 783. Order of ITAT, Mumbai in ITO vs., Sumitra Rajeshbhai Jain 5. ITA.No.2459/Mum,/2024 dated 06.03.2025. Order of ITAT, Mumbai in Nilanjana Arvinder Singh vs., DCIT 6. [2025] 173 taxmann.com 499 (Mum.). Order of ITAT, Mumbai in DCIT vs., Larsen & Toubro Ltd., 7. [2025] 175 taxmann.com 582 (Mum.) Order of ITAT, Pune in DCIT vs., Kolte Patil [2025] 235 TTJ 113 8. (Pune).
6.1. On the strength of the catena of Judgments/ decisions, the learned Authorised Representative of the Assessee has submitted that the notice issued by the Assessing Officer u/sec.148 dated 29.07.2022 is barred by limitation and consequently, the re-assessment order passed by the Assessing Officer is also invalid and liable to be quashed.
11 ITA.No.1527 & 1528/Hyd./2025 7. The learned DR, on the other hand, has relied upon the orders of the Assessing Officer as well as the learned CIT(A) and submitted that once the Hon’ble Supreme Court has allowed the Assessing Officer to treat the original notice u/sec.148 as the show cause notice u/sec.148A(b) of the Act and to consider the reply of the assessee and pass the order u/sec.148A(d) of the Act and then issue the final notice u/sec.148 which is duly followed by the Assessing Officer and, therefore, the proceedings completed by the Assessing Officer in pursuance to the directions of the Hon’ble Supreme Court are valid.
We have considered the rival submissions as well as the relevant material on record. In the case of the assessee, the original assessment order u/sec.143(3) was passed on 29.12.2018 and thereafter, the Assessing Officer issued notice u/sec.148 of the Act on 30.06.2021 placed at page-45 of the paper book as under :
12 ITA.No.1527 & 1528/Hyd./2025
9. Since the notice was issued after 01st April, 2021, therefore, the notice ought to have been issued as per the new scheme of re-assessment under the Amended Provisions of Sec.148 of the Act. The Hon’ble Supreme Court in the case of Union of India vs. Ashish Agarwal (supra), has treated the notice issued under the old provisions of the Act as deemed notice issued u/sec.148A(b) of the Act and directed the 13 ITA.No.1527 & 1528/Hyd./2025 Assessing Officer to allow the assessee to file objections/reply to the said show cause notice and thereafter, by following the procedures as per the new regime issue notice u/sec.148 of the Act. The Hon’ble Supreme Court in the case of Union of India vs. Rajeev Bansal (supra) while considered the deemed notice issued u/sec.148A(b) of the Act as per the earlier Judgment of the Hon’ble Supreme Court in the case of Union of India vs. Ashish Agrawal (supra) has observed in Paras 108 to 111 as under :
“108. The Income-tax Act read with TOLA extended the time limit for issuing reassessment notices under section 148, which fell for completion from 20 March 2020 to 31 March 2021, till 30 June 2021. All the reassessment notices under challenge in the present appeals were issued from 1 April 2021 to 30 June 2021 under the old regime. Ashish Agarwal (supra) deemed these reassessment notices under the old regime as show cause notices under the new regime with effect from the date of issuance of the reassessment notices. The effect of creating the legal fiction is that this Court has to imagine as real all the consequences and incidents that will inevitably flow from the fiction. East End Dwellings Co. Ltd. v. Finsbury Borough Council [1952] AC 109.
14 ITA.No.1527 & 1528/Hyd./2025 [Lord Asquith, in his concurring opinion, observed: "If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it."] Therefore, the logical effect of the creation of the legal fiction by Ashish Agarwal (supra) is that the time surviving under the Income-tax Act read with TOLA will be available to the Revenue to complete the remaining proceedings in furtherance of the deemed notices, including issuance of reassessment notices under section 148 of the new regime. The surviving or balance time limit can be calculated by computing the number of days between the date of issuance of the deemed notice and 30 June 2021.
If this Court had not created the legal fiction and the original reassessment notices were validly issued according to the provisions of the new regime, the notices under section 148 of the new regime would have to be issued within the time limits extended by TOLA. As a corollary, the reassessment notices to be issued in pursuance of the deemed notices must also be within the time limit surviving under the Income-tax Act read with TOLA. This construction gives full effect to the legal fiction created in Ashish Agarwal (supra) and enables both the 15 ITA.No.1527 & 1528/Hyd./2025 assesses and the Revenue to obtain the benefit of all consequences flowing from the fiction. See State of A P v. A P Pensioners Association [2005] 13 SCC 161. [This Court observed that the "legal fiction undoubtedly is to be construed in such a manner so as to enable a person, for whose benefit such legal fiction has been created, to obtain all consequences flowing therefrom."]
The effect of the creation of the legal fiction in Ashish Agarwal (supra) was that it stopped the clock of limitation with effect from the date of issuance of Section 148 notices under the old regime [which is also the date of issuance of the deemed notices]. As discussed in the preceding segments of this judgment, the period from the date of the issuance of the deemed notices till the supply of relevant information and material by the assessing officers to the assesses in terms of the directions issued by this Court in Ashish Agarwal (supra) has to be excluded from the computation of the period of limitation. Moreover, the period of two weeks granted to the assesses to reply to the show cause notices must also be excluded in terms of the third proviso to Section 149.
The clock started ticking for the Revenue only after it received the response of the assesses to the show causes notices. After the receipt of the reply, the assessing officer had to perform the following 16 ITA.No.1527 & 1528/Hyd./2025 responsibilities: (i) consider the reply of the assessee under section 149A(c); (ii) take a decision under section 149A(d) based on the available material and the reply of the assessee; and (iii) issue a notice under section 148 if it was a fit case for reassessment. Once the clock started ticking, the assessing officer was required to complete these procedures within the surviving time limit. The surviving time limit, as prescribed under the Income-tax Act read with TOLA, was available to the assessing officers to issue the reassessment notices under section 148 of the new regime.”
10. Thus, the effect of creation of legal friction by Ashish Agrawal Judgment was considered by the Hon’ble Supreme Court and held that the time/surviving period under the Income Tax Act read with TOLA will be available to the Revenue to complete remaining proceedings in- furtherance of the deemed notice including issuance of re- assessment notice u/sec.148 under new regime. The surviving or balance time limit can be calculated by computing the number of days between date of issuance of the deemed notice and 30.06.2021. In the case of the assessee, the deemed notice itself was issued on 30.06.2021 17 ITA.No.1527 & 1528/Hyd./2025 and, therefore, there was a zero days surviving period with the Assessing Officer, which means, the Assessing Officer was not having any surplus time period to complete the further proceedings up-to the issuance of notice u/sec.148 of the Act under new regime. The period of two weeks was granted to the assessee to reply the show cause notice and that must be excluded in terms of third proviso to sec.149. Therefore, zero period was available with Assessing Officer after two weeks to pass the order u/sec.148(d) as well as issue notice u/sec.148. However, as per 4th proviso to sec.149(1), the minimum days available with the Assessing Officer shall not be less than 7 days. Therefore, the Assessing Officer was having 7 days as a surviving period + 14 days on account of the reply to be filed by the assessee to the notice issued u/sec.148A(b) of the Act. The due date of filing the reply in the case of the assessee after allowing the 14 days/2 weeks as per third proviso to sec.149 comes to 07.06.2022 because the Assessing Officer issued the show cause notice u/sec.148A(b) on 25.05.2022. The minimum 7 days available with the Assessing Officer as per 4th proviso to sec.149(1)
18 ITA.No.1527 & 1528/Hyd./2025 is added to this time limit for issue of notice u/sec.148 would be extended up-to 14.06.2022. However, the Assessing Officer has issued notice u/sec.148 on 29.07.2022 which is beyond the surviving period and time limit. The Hon’ble Supreme Court in the case of Union of India vs. Rajeev Bansal (supra), has finally concluded in Para Nos.113 and 114 as under :
“113. In Ashish Agarwal (supra), this Court allowed the assesses to avail all the defences, including the defence of expiry of the time limit specified under section 149(1). In the instant appeals, the reassessment notices pertain to the assessment years 2013-2014, 2014-2015, 2015-2016, 2016-2017, and 2017-2018. To assume jurisdiction to issue notices under section 148 with respect to the relevant assessment years, an assessing officer has to: (i) issue the notices within the period prescribed under section 149(1) of the new regime read with TOLA; and (ii) obtain the previous approval of the authority specified under section 151. A notice issued without complying with the preconditions is invalid as it affects the jurisdiction of the assessing officer. Therefore, the reassessment notices issued under section 148 of the new regime, which are in pursuance of the deemed notices, ought to be issued within the time limit surviving under the Income-tax Act read with TOLA. A reassessment notice issued beyond the surviving time limit will be time-barred.
19 ITA.No.1527 & 1528/Hyd./2025 G. Conclusions 114. In view of the above discussion, we conclude that: a. After 1 April 2021, the Income-tax Act has to be read along with the substituted provisions; b. TOLA will continue to apply to the Income-tax Act after 1 April 2021 if any action or proceeding specified under the substituted provisions of the Income-tax Act falls for completion between 20 March 2020 and 31 March 2021; c. Section 3(1) of TOLA overrides Section 149 of the Income-tax Act only to the extent of relaxing the time limit for issuance of a reassessment notice under section 148; d. TOLA will extend the time limit for the grant of sanction by the authority specified under section 151. The test to determine whether TOLA will apply to Section 151 of the new regime is this: if the time limit of three years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under section 151(i) has extended time till 30 June 2021 to grant approval; e. In the case of Section 151 of the old regime, the test is: if the time limit of four years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under section 151(2) has extended time till 31 March 2021 to grant approval; f. The directions in Ashish Agarwal (supra) will extend to all the ninety thousand reassessment notices issued under the old regime during the period 1 April 2021 and 30 June 2021; 20 ITA.No.1527 & 1528/Hyd./2025 g. The time during which the show cause notices were deemed to be stayed is from the date of issuance of the deemed notice between 1 April 2021 and 30 June 2021 till the supply of relevant information and material by the assessing officers to the assesses in terms of the directions issued by this Court in Ashish Agarwal (supra), and the period of two weeks allowed to the assesses to respond to the show cause notices; and h. The assessing officers were required to issue the reassessment notice under section 148 of the new regime within the time limit surviving under the Income-tax Act read with TOLA. All notices issued beyond the surviving period are time barred and liable to be set aside;”
11. Thus, after 01.04.2021 the Income Tax Act has to be read along with substituted provisions including application of TOLA if action or proceedings specified under the substituted provisions of the Act falls for completion between March, 2020 and 31.03.2021. In the case of the assessee, there is no dispute that the time limit for issuing the notice u/sec.148 was expired within this period. It is specifically concluded by the Hon’ble Supreme Court that the Assessing Officer required to issue re-assessment notice u/sec.148 of the new regime within the time limit surviving under the Act read with TOLA and the notice issued beyond the surviving period is time barred and liable to be set-aside.
21 ITA.No.1527 & 1528/Hyd./2025 Therefore, the notice issued beyond the surviving period is time barred and liable to be set-aside. The Hon’ble Madras High Court in the case of Thulasidass Prabavathi vs. ITO (supra), while considering an identical issue has held in Paras-16 to 18 as under :
“16. However, the first proviso to Section 149 prohibits issuance of a reassessment notice under the new regime if such notices have become time-barred under the old regime. Therefore, the last date for issuance of Notice under Section 148 of the Act would have expired on 30.06.2021, as per the third Proviso 149(1)(b) of the Act as in force with effect from 01.04.2021. The time during which stay was in operation or the time during which, the assessee took time to file the reply, the Notice issued under Section 148 (A)(b) of the Act stands expelled. In this case, the reply itself was filed by the petitioner only on 31.05.2022, pursuant to which the Impugned Order was passed on 30.06.2022 under Section 148(A)(d) of the Act and Notice under Section 148 of the Act was issued. Though the limitation for issuance of a Notice under Section 148 of the Act under the old regime would have expired on 31.03.2024, a reading of conclusion in Paragraph 114 of the decision of the Hon'ble Supreme Court in Union of India v. Rajeev Bansal, 2024 SCC OnLine SC 2693 however indicates that the Impugned Notice dated 30.06.2022 has to be treated as having been issued beyond the limitation 22 ITA.No.1527 & 1528/Hyd./2025 period. Relevant paragraph of the aforesaid Judgment reads as under:-
114. In view of the above discussion, we conclude that: a. ..... ..... b. c. ..... ..... d. e. ..... f. ..... g. The time during which the show cause notices were deemed to be stayed is from the date of issuance of the deemed notice between 1 April 2021 and 30 June 2021 till the supply of relevant information and material by the assessing officers to the assessees in terms of the directions issued by this Court in Ashish Agarwal (supra), and the period of two weeks allowed to the assessees to respond to the show cause notices; and h. The assessing officers were required to issue the reassessment notice under Section 148 of the new regime within the time limit surviving under the Income-tax Act read with TOLA. All notices issued beyond the surviving period are time barred and liable to be set aside.
Dealing with almost an identical situation pursuant to the decision of the Hon'ble Supreme Court in Union of India v. Rajeev Bansal, 2024 SCC OnLine SC 2693, the Delhi High Court quashed the notice dated 31.03.2021 issued to the assessee under Section 148 of the Act and the proceedings. Since the law laid down by the Hon'ble Supreme Court in Union of India v. Rajeev Bansal, 2024 SCC OnLine SC 2693 is a settled law, it is binding 23 ITA.No.1527 & 1528/Hyd./2025 on this Court. I am therefore unable to take a contra view in the light of the aforesaid decision of the Hon'ble Supreme Court in Union of India v. Rajeev Bansal, 2024 SCC On Line SC 2693.
18. Therefore, this Writ Petition deserves to be allowed and is accordingly allowed. No costs. Connected miscellaneous petitions are closed.”
12. Thus, by following Judgment of Hon’ble Supreme Court in the case of Union of India vs. Rajeev Bansal (supra), the Hon’ble Madras High Court has held that notice issued u/sec.148 beyond the surviving period is invalid and liable to be set-aside. The Hon’ble Punjab and Haryana High Court in the case of Kulwant Singh vs. Union of India (supra) while disposing of batch of 152 writ petitions vide Judgment dated 19.10.2024 has held In Paras-7 and 8 as under :
“7. While examining the cases, the example as mentioned by the Apex Court in its judgment in Rajeev Bansal's case (supra) in paragraph No. 112 and observations made in paragraph Nos. 110 and 111, shall also be taken into consideration. Cases, which fall less than the value of Rs.50,00,000/- would have to be dropped keeping in view the stand taken by the revenue before the Apex Court, as observed in paragraph No.53.
8. The aforesaid exercise shall be conducted by the concerned competent Officer of the Department expeditiously, preferably, within a period of two months without any further delay. The 24 ITA.No.1527 & 1528/Hyd./2025 decision shall be conveyed to the assessee in terms of the faceless regime by the concerned Officer keeping in view the provision of Section 144-B of the Act.
If any of the petitioner/assessee is still aggrieved of the order passed, remedy in terms of the provision of the Act can be availed by him.
With the aforementioned observations, the writ petitions are disposed of.”
Accordingly, the Hon’ble High Court held that the notice issued u/sec.148 on 30.07.2022 is invalid, being barred by limitation and accordingly set-aside.
14. The Hon’ble Delhi High Court in the case of Ram Balram Buildhome (P.) Ltd., vs. ITO (supra), while deciding identical case, has held in Paras 63 to 73 as under :
“63. It is clear from the above that the Supreme Court had in unambiguous terms held that (a) the date of notices issued under Section 148 of the Act, under the old regime which was subject matter of challenge in Ashish Agarwal (supra), has not been struck off and further notices and orders issued under Section 148 of the Act were in continuance of the proceedings that had commenced on the date of issuance of such notices; (b) the period from the date of issuance of such notices till the date of the decision in the case of Ashish Agarwal (supra), that is 04.05.2021, was required to be excluded for the period of calculation of limitation by virtue of the third proviso to Section 149(1) of the Act. The AO could not continue 25 ITA.No.1527 & 1528/Hyd./2025 any proceeding till the Supreme Court rendered its decision to treat the notices issued under Section 148 of the Act as notices issued under Section 148A(b) of the Act; and, (c) the period from the date of the decision in Ashish Agarwal (supra), that is 04.05.2022, to the date when the material was supplied by the AO to the Assessee, as was required under Section 148A(b) of the Act, was also required to be excluded. The Supreme Court reasoned that the AO could not proceed further till the said material was supplied. Therefore, the said period is also required to be excluded by virtue of the third proviso to Section 149(1) of the Act.
It is material to note that the Supreme Court had also explained that provision of TOLA would be applicable to notices which were subject matter of challenge in Ashish Agarwal (supra)
Analysis - in the factual context
Thus, in the facts of the present case, the last date for issuance of notice under Section 148 of the Act for AY 2013-14 under the statutory framework, as was existing prior to 01.04.2021 was 31.03.2020, that is, six years from the end of the relevant assessment year.
By virtue of Section 3(1) of TOLA time for completion of specified acts, which fell during the period 20.03.2020 to 31.12.2020 were extended till 30.06.20212. Thus, the notice dated 01.06.2021 was issued twenty-nine days prior to the expiry of period of limitation for issuing a notice under Section 148 of the Act as was extended by TOLA. As noted above, the period from 01.06.2021, the date of issuance of notice, and 04.05.2022, being the date of decision of the Supreme Court in Ashish Agarwal (supra) is required to be excluded by virtue of the third proviso to Section 149(1) of the Act.
26 ITA.No.1527 & 1528/Hyd./2025 67. Additionally, the period from the date of decision in Ashish Agarwal (supra) till the date of providing material, as required to the accompanied with a notice under Section 148A(b) of the Act, is required to be excluded. Thus, the period between 04.05.2022 to 30.05.2022, the date on which the AO had issued the notice under Section 148A(b) of the Act in furtherance of his earlier notice dated 01.06.2021, is also required to be excluded by virtue of the third proviso to Section 149(1) of the Act as held by the Supreme Court in Rajeev Bansal (supra).
In addition to the above, the time granted to the petitioner to respond to the notice dated 30.05.2022 - the period of two weeks -is also required to be excluded by virtue of the third proviso to Section 149(1) of the Act. The petitioner had furnished its response to the notice under Section 148A(b) of the Act on 13.06.2022. Thus, the period of limitation began running from that date.
As noted above, by virtue of TOLA, the AO had period of twenty-nine days limitation left on the date of commencement of the reassessment proceedings, which began on 01.06.2021, to issue a notice under Section 148 of the Act. The said notice was required to be accompanied by an order under Section 148A(d) of the Act. Thus, the AO was required to pass an order under Section 148A(d) of the Act within the said twenty-nine days notwithstanding the time stipulated under Section 148A(d) of the Act. This period expired on 12.07.2022.
Since the period of limitation, as provided under Section 149(1) of the Act, had expired prior to issuance of the impugned notice on 30.07.2022. The said is squarely beyond the period of limitation.
27 ITA.No.1527 & 1528/Hyd./2025 71. It is contended on behalf of the Revenue that the AO is required to pass an order under Section 148A(d) of the Act by the end of the month following the month on which the reply to the notice under Section 148A(b) of the Act was received. Thus, the order under Section 148A(d) of the Act as well as the notice under Section 148 of the Act (both dated 30.07.2022) are within the prescribed period. This contention is without merit as it does not take into account that proceedings under Section 148A of the Act necessarily required to be completed within the period available for issuing notice under Section 148 of the Act, as prescribed under Section 149 of the Act. Thus, the time available to the AO to pass an order under Section 148A(d) of the Act was necessarily truncated and the same was required to be passed on or before 12.07.2022. The fourth proviso to Section 149 of the Act did not come into play as the time period available for the AO to pass an order under Section 148A(d) of the Act was in excess of the seven days.
In view of the above, we find merit in Mr. Sehgal's contention that the impugned notice dated 30.07.2022 has been issued beyond the period of limitation.
The petition is accordingly allowed and the impugned order dated 30.07.2022 passed under Section 148A(d) of the Act; the impugned notice dated 30.07.2022 issued under Section 148 of the Act; and the assessment order dated 30.05.2023 framed under Section 147 of the Act pursuant to the notice dated 30.07.2022 for AY 2013-14, are set aside. Pending application is also disposed of.”
28 ITA.No.1527 & 1528/Hyd./2025 15. In the case in hand, the period of 03 years lapsed on 31.03.2020 and thereafter, getting the benefit of TOLA as well as Judgment of Hon’ble Supreme Court in the case of Ashish Agrawal (supra), the notice u/sec.148 of the Act was issued on 29.07.2022 by the Assessing Officer beyond the surviving period up-to 14.06.2022 is barred by limitation and liable to be set-aside. We order accordingly.
16. Since the notice u/sec.148 itself is set-aside being barred by limitation, therefore, the subsequent re- assessment order also gets vitiated and liable to be set-aside.
17. Ground No.5, the assessee challenged the notice issued u/sec.148 for lack of valid approval from the Competent Authority as per the new re-assessment regime.
18. The learned Authorised Representative of the Assessee has submitted that the Assessing Officer has passed the order under section 148A(d) of the Act, dated 29.07.2022 and issued notice under section 148 of the Act, dated 29.07.2022 by taking approval of the Pr. Commissioner of Income-tax-1, Hyderabad. The learned Authorised 29 ITA.No.1527 & 1528/Hyd./2025 Representative of the Assessee has submitted that the notice under section 148 of the Act, dated 29.07.2022 was issued for the impugned assessment year 2016-2017 which is after 3 years from the end of the relevant assessment year which makes it subject to compliance with the mandate of the provision of section 149(1) of the Act. He submitted that in the case on hand, the notice under section 148 of the Act was issued for assessment year 2016-2017 which falls under section 149(1)(b) of the Act. Further, the learned Authorised Representative of the Assessee has submitted that the Specified Authority for the purposes of section 148 and 148A has been provided in section 151 of the Act. The learned Authorised Representative of the Assessee has relied upon Judgment of Hon’ble Supreme Court in the case of Union of India vs. Rajeev Bansal (supra), wherein the Hon’ble Supreme Court has considered the issue of Competent authority for granting approval for the purpose of issue of notice after 01.04.2021 under the new regime. The learned Authorised Representative of the Assessee has submitted that in the Appellant’s case from the perusal of the notice issued under 30 ITA.No.1527 & 1528/Hyd./2025 section 148 of the Act for the assessment year 2016-17, it can be discern that, the notice is issued with the prior approval of Pr. Commissioner of Income-tax-1, Hyderabad. He submitted that the period of three years has lapsed as of 31.03.2020 and the notice is issued beyond three years on 29.07.2022. Therefore, as per the decision of the Hon'ble Supreme Court, the approval should have been obtained under the amended provisions of Section 151(ii) of the Act which is the Principal Chief Commissioner of Income-tax, whereas the approval has been obtained from Principal Commissioner of Income-tax-1, Hyderabad, as stated in the notice under section 148 of the Act, itself. He, therefore, submitted that the notice under section 148 of the Act, for the assessment year 2016-2017 is issued without obtaining the prior approval from the Appropriate Authority is invalid and consequently the assessment order passed under section 147 of the Act is also liable to be quashed. In support of his contention, the learned Authorised Representative of the Assessee has relied upon the following decisions :
31 ITA.No.1527 & 1528/Hyd./2025 a. UOI Vs. Rajeev Bansal (SC) 167 taxmann.com 70; b. Deloitte Consulting India Pvt. Ltd., Vs. The Assessment Unit, Income Tax Department, CWP No. 4061 of 2024, dated 25/09/2025; c. Prakash Pandurang Patil Vs. ITO WP No. 10749 of 2024, dated 12/08/2024; The SLP filed by the department is dismissed on merits; d. Core Logistic Company Vs. ACIT in WP NO. 18168 of 2023, dated 05/06/2025: e. Nandita Sikka Vs. ITO, in W.P. No. 3151/2022, (Del.); f. Gemini Overseas Limited Vs. UOI, In WPO/1207/2023, (Cal.); g. S. ITO Vs. Suryaprakash Rao Kanaparthy in dated 17/10/2025 (Viz. Trib); h. Bhushan Gupta Vs. ITO in & 1113/Del/2025, dated 31/07/2025 (Del. Trib); i. Addl. CIT Vs. Ramchand Thakurdas Jhamtani in dated 28/02/2025 (Mum. Trib); j. J. Davos International Fund Vs. ACIT, in ITA NO.1190/ Mum/ 2024, (Mum Trib); k. Arnab Kumar Goswami Vs. ITO, in ITA No. 1710/Kol/2024, (Kol Trib); 1. Satish Harnamdas Sethi Vs. NFAC, ITA No.3091/Mum/2024, (Mum Trib); m. ACIT Vs. Manish Financials, ITA No.5055/Mum/2024, (Mum-Trib). n. DCIT vs., Divya Shakti Granites Limited, ITA No.887/Hyd/2015 & CO.No.59/Hyd/2015, (Hyd-Trib).
19. On the other hand, the learned DR has relied upon the orders of the authorities below.
32 ITA.No.1527 & 1528/Hyd./2025 20. We have considered the rival submissions as well as relevant material on record. The Assessing Officer has issued notice u/sec.148 of the Act dated 29.07.2022 by taking approval from the Pr. CIT-1, Hyderabad, which reads as under :
33 ITA.No.1527 & 1528/Hyd./2025 21. It is not in dispute that the said notice u/sec.148 of the Act was issued after the expiry of three years from the end of the relevant assessment year under consideration. It is also not in dispute and also manifest from Para-3 of the notice that an approval was obtained from the Pr. CIT-2, Hyderabad, whereas as per the provisions of sec.151 of the Act, if a notice u/sec.148 is issued after three years from the end of the assessment year, then, the Competent Authority to grant approval is CCIT and not Pr. CIT. An identical issue has been considered by this Tribunal in the case of Iqbal Ali Jaweed, Hyderabad vs. The Income Tax Officer, [INT. TAXN]-1, Hyderabad (supra) in Paras-11 and 12 as under :
“11. We have heard both the parties, perused the material on record and the orders of the authorities below. There is no dispute with regard to the fact that, reopening in the present case has been taken-up as per the amended provisions of sec.147, 148, 149, 151 of the Income Tax Act, 1961. As per the amended provisions of sec.148 of the Act which is evident from subsequent notices issued by the Assessing Officer u/sec.148 of the Act dated 27.07.2022 where the Assessing Officer in light of the decision of Hon’ble Supreme Court in the case 34 ITA.No.1527 & 1528/Hyd./2025 of Union of India vs., Ashish Agarwal (supra), has considered the earlier notice issued u/sec.148, as fresh notice in light of provisions of sec.148A(d) of the Act. Therefore, it is necessary for us to examine the validity of notice issued by the Assessing Officer u/sec.148 of the Act, after obtaining prior approval of the Commissioner of Income Tax [International Taxation]-2, Mumbai accorded on 25.07.2022. Admittedly, the Assessing Officer issued notice u/sec.148 of the Act, after obtaining prior approval of the Commissioner of Income Tax [International Taxation]-2, Mumbai, dated 25.07.2022, but, as per the amended provisions of sec.151(ii) of the Act, the Competent Authority for granting sanction u/sec.151(ii) of the Act, in a case where the assessment has been reopened after 3 years from the end of the relevant assessment year is Pr. CCIT or Pr. Director General of Income Tax, but, not CIT as considered by the learned Assessing Officer. This legal principle is supported by the decision of ITAT, Hyderabad in the case of Raziulla Syed, Hyderabad vs., ITO [Intl. TAXN]-2, Hyderabad in ITA.No.986/Hyd./2024, dated 11.03.2025 for the assessment year 2017-2018, where under identical set of facts, the Tribunal by following certain judicial precedents including the decision of Hon’ble Bombay High Court in the case of Siemens Financial Services (P.) Ltd., vs., DCIT [2023] 457 ITR 647 (Bom.) held as under:
35 ITA.No.1527 & 1528/Hyd./2025 “7. We have heard the rival submissions of both the parties and perused the material available on record. There is no dispute between the parties that the assessee is a Non- Resident Indian. Admittedly, in the instant case, the assessment has been reopened u/sec.147 of the Act by issuance of notice u/sec.148 of the Act dated 23.04.2021 and by virtue of the order of Hon’ble Supreme Court in the case of Union of India vs. Ashish Agarwal reported in 2022- SC-Online-SC-543, re-assessment notice issued has been treated as notice issued u/sec.148A of the Act and after due procedure final notice u/sec.148 of the Act dated 30.07.2022 was issued. The assessee contends that any re- assessment notice issued u/sec.148 of the Act after 1st April, 2021 falls under New Scheme of re-assessment proceedings and as per sec.151, the approval of the Specified Authority as specified therein should be obtained. According to the assessee, under New Scheme of re-assessment proceedings, the Specified Authority u/sec. 151(ii) of the Act, in case an assessment is reopened after a period of three years from the end of the relevant assessment year, the Principal Chief Commissioner or Principal Director General are the Specified Authority(ies). Since in the present case, the Assessing Officer has issued notice u/sec.148 of the Act dated 30.07.2022 after approval from Principal Commissioner of Income Tax-1, Hyderabad, the said approval is not in accordance with provision of sec.151(ii) of the Act and consequently, the notice issued by the Assessing Officer and assessment order passed u/sec.147 r.w.s.144C(13) of the Act dated 02.03.2024 is illegal, void abinitio and liable to be quashed.
36 ITA.No.1527 & 1528/Hyd./2025 7.1. There is no dispute with regard to the fact that the Assessing Officer issued original notice u/sec.148 of the Act for the assessment year in question on 23.04.2021 and as per new scheme of re-assessment procedure, the same has been treated as notice issued u/sec.148A of the Act in light of decision of Hon’ble Supreme Court in the case of Union of India vs. Ashish Agarwal (supra) and finally re- assessment notice u/sec.148 was issued to the assessee on 30.07.2022 after approval from the Principal Commissioner of Income Tax-1, Hyderabad dated 27.07.2022. As per the provisions of sec.151(ii) of the Act, if the reopening of the assessment is after three years from the end of the relevant assessment year, then the Specified Authority for grant of approval is Principal Chief Commissioner of Income Tax or Principal Director General of Income Tax and this legal principle is supported by the decision of Hon’ble Supreme Court in the case of Union of India vs. Rajeev Bansal [2024] 167 taxmann.com 70 (SC) wherein the Hon’ble Supreme Court has analysed the issue in light of decision of Hon’ble Supreme Court in the case of Union of India vs. Ashish Agarwal (supra), relevant Circulars/Notifications issued by CBDT and provisions of Taxation and Other Laws Amendment Act, 2021 [in short “TOLA”] and after considering relevant facts held that after 01.04.2021, the New Regime has specified different authorities for granting sanction u/sec.151(ii) of the Act and in case the assessment is reopened after three years from the end of the relevant assessment year, then the Specified Authority to grant sanction is the Principal Chief Commissioner of Income Tax or Principal Director General of Income Tax. In the present 37 ITA.No.1527 & 1528/Hyd./2025 case, there is no dispute with regard to the fact that the Assessing Officer issued notice u/sec.148 of the Act dated 30.07.2022 with the prior approval of Principal Commissioner of Income Tax-1, Hyderabad accorded on 27.07.2022 vide Ref.F.No.Pr.CIT-1/Hyd/147/2022-23. Therefore, in our considered view, notice issued by the Assessing Officer u/sec.148 of the Act dated 30.07.2022 with the approval of Principal Commissioner of Income Tax-1, Hyderabad dated 27.07.2022 is not in accordance with the provisions of sec.151(ii) of the Act and consequently, the re-assessment order passed by the Assessing Officer u/sec.147 r.w.s.144C(13) of the Act is illegal, void abinitio and liable to be quashed. 7.2. The assessee has relied upon the decision of ITAT, Mumbai in the case of ACIT vs. Manish Financial ITA.No.5055/Mum./2024 wherein the Tribunal after considering the relevant provisions of law and also by following decision of Hon’ble Supreme Court in the case of Union of India vs., Rajeev Bansal (supra) held as under :
In assessee's case from the perusal of para 3 of the notice issued under section 148 for AY 2016-17 we notice that the same is issued with the prior approval of Pr.CIT-19 Mumbai accorded on 29.07.2022 vide reference No.Pr.CIT-19/148/2022-23 and this fact is not contravened by the ld DR. For AY 2016-17, the period of three years have elapsed as of 31.03.2020 and the notice is issued beyond three years on 30.07.2022. Therefore as per the decision of the Hon'ble Supreme Court, the approval should have been obtained under the amended provisions of section 151(ii) of the Act i.e. the approval should have been obtained from the 38 ITA.No.1527 & 1528/Hyd./2025 Principal Chief Commissioner whereas the approval has been obtained from Pr. CIT as stated in the notice under section 148 itself. Therefore we see merit in the contention of the assessee that the notice under section 148 for AY 2016-17 is issued without obtaining the prior approval from the appropriate authority. Accordingly we hold that the notice under section 148 is invalid and the consequent assessment under section 147 is liable to be quashed.
7.3. The assessee also relied upon the decision of ITAT, Mumbai Bench in the case of Manish Jagdish Joshi vs. CIT ITA.No.1617/Mum./2024 and the Mumbai Bench of the Tribunal by following the decision of Hon’ble Bombay High Court in the case of Siemens Financial Services (P.) Ltd., vs. DCIT [2023] 457 ITR 647 (Bom.) held as under :
We find that while considering the similar issue and similar submissions the Hon'ble Jurisdictional High Court in Siemens Financial Services (P.) Ltd. v/s DCIT, (2023) 457 ITR 647 (Bom.) held that TOLA would not affect the scope of section 151 and sanction of Specified Authority was to be obtained in accordance with the law existing when the sanction was obtained. It was further held that where the Assessing Officer issued a reopening notice beyond the period of three years, approval was required to be taken as per provisions of amended section 151 from the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General. Therefore, respectfully following the aforesaid decision of the Hon'ble Jurisdictional High Court we find no merits in the reliance placed by the Revenue on the provisions of TOLA. As, in the present case, the period of three years has elapsed from the 39 ITA.No.1527 & 1528/Hyd./2025 end of the relevant assessment year and the order dated 23/05/2022 was passed under section 148A(d) of the Act after obtaining the approval of the Principal CIT-1, Mumbai vide letter dated 15/07/2022, we are of the considered view that the Revenue has not followed the mandatory provisions of the Act while initiating the reassessment proceedings and sanction of the Specified Authority is not in conformity with the law prevalent at the time of grant of sanction.
7.4. In this view of the matter and by respectfully following the decision of Hon’ble Supreme Court in the case of Union of India vs. Rajeev Bansal (supra) and also the decisions of ITAT, Mumbai Benches, Mumbai in the cases of ACIT vs. Manish Financial and Manish Jagdish Joshi vs. CIT (supra), we are of the considered view that the notice issued by the Assessing Officer u/sec.148 of the Act dated 30.07.2022 by obtaining prior approval from the Principal Commissioner of Income Tax-1, Hyderabad dated 27.07.2022 and consequential final assessment order dated 02.03.2024 passed by the Assessing Officer u/sec.147 r.w.s.144C(13) of the Act is illegal, void abinitio and thus, we quash the final assessment order dated 27.07.2022 passed by the Assessing Officer.”
12. In this view of the matter and considering the facts and circumstances of the present case and also by following the decision of ITAT, Hyderabad Bench, Hyderabad in the case of Raziulla Syed, Hyderabad vs., ITO [Int. TAXN]-2, Hyderabad (supra), we are of the considered view that the notice issued u/sec.148 of the 40 ITA.No.1527 & 1528/Hyd./2025 Act dated 27.07.2022 by obtaining prior approval from the Commissioner of Income Tax [International Taxation]- 2, Mumbai dated 25.07.2022 is not in accordance with sec.151(ii) of the Income Tax Act, 1961 as applicable from 01.04.2021 onwards. Therefore, we quash the notice issued u/sec.148 of the Act dated 01.04.2021 and 27.07.2022 and consequent Final Assessment Order dated 13.03.2024 passed by the Assessing Officer u/sec.147 r.w.s.144C(13) of the Income Tax Act, 1961. Accordingly, the grounds raised by the assessee for the assessment year 2016-2017 are allowed.”
Further, the Hon’ble Supreme Court in the case of Union of India vs. Rajeev Bansal (supra) has held in Para Nos-74 to 81 held as under :
“74. The above table indicates that the specified authority is directly co-related to the time when the notice is issued. This plays out as follows under the old regime:
(i) If income escaping assessment was less than Rupees one lakh: (a) a reassessment notice could be issued under section 148 within four years after obtaining the approval of the Joint Commissioner; and (b) no notice could be issued after the expiry of four years; and (ii) If income escaping was more than Rupees one lakh: (a) a reassessment notice could be issued within four years after obtaining the approval of the Joint Commissioner; and (b) after 41 ITA.No.1527 & 1528/Hyd./2025 four years but within six years after obtaining the approval of the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner.
After 1 April 2021, the new regime has specified different authorities for granting sanctions under section 151. The new regime is beneficial to the assessee because it specifies a higher level of authority for the grant of sanctions in comparison to the old regime. Therefore, in terms of Ashish Agarwal (supra), after 1 April 2021, the prior approval must be obtained from the appropriate authorities specified under section 151 of the new regime. The effect of Section 151 of the new regime is thus:
(i) If income escaping assessment is less than Rupees fifty lakhs: (a) a reassessment notice could be issued within three years after obtaining the prior approval of the Principal Commissioner, or Principal Director or Commissioner or Director; and (b) no notice could be issued after the expiry of three years; and (ii) If income escaping assessment is more than Rupees fifty lakhs: (a) a reassessment notice could be issued within three years after obtaining the prior approval of the Principal Commissioner, or Principal Director or Commissioner or Director; and (b) after three years after obtaining the prior approval of the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General.
Grant of sanction by the appropriate authority is a precondition for the assessing officer to assume jurisdiction under section 148 to issue a reassessment notice. Section 151 of the new regime does not prescribe a time limit within which a specified 42 ITA.No.1527 & 1528/Hyd./2025 authority has to grant sanction. Rather, it links up the time limits with the jurisdiction of the authority to grant sanction. Section 151(ii) of the new regime prescribes a higher level of authority if more than three years have elapsed from the end of the relevant assessment year. Thus, non-compliance by the assessing officer with the strict time limits prescribed under section 151 affects their jurisdiction to issue a notice under section 148.
Parliament enacted TOLA to ensure that the interests of the Revenue are not defeated because the assessing officer could not comply with the pre conditions due to the difficulties that arose during the COVID-19 pandemic. Section 3(1) of TOLA relaxes the time limit for compliance with actions that fall for completion from 20 March 2020 to 31 March 2021. TOLA will accordingly extend the time limit for the grant of sanction by the authority specified under section 151. The test to determine whether TOLA will apply to Section 151 of the new regime is this: if the time limit of three years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under section 151(i) has an extended time till 30 June 2021 to grant approval. In the case of Section 151 of the old regime, the test is: if the time limit of four years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under section 151(2) has time till 31 March 2021 to grant approval. The time limit for Section 151 of the old regime expires on 31 March 2021 because the new regime comes into effect on 1 April 2021.
For example, the three year time limit for assessment year 2017-2018 falls for completion on 31 March 2021. It falls during the time period of 20 March 2020 and 31 March 2021, contemplated under section 3(1) of TOLA. Resultantly, the 43 ITA.No.1527 & 1528/Hyd./2025 authority specified under section 151(i) of the new regime can grant sanction till 30 June 2021.
Under Finance Act 2021, the assessing officer was required to obtain prior approval or sanction of the specified authorities at four stages: a. Section 148A(a) - to conduct any enquiry, if required, with respect to the information which suggests that the income chargeable to tax has escaped assessment; b. Section 148A(b) - to provide an opportunity of hearing to the assessee by serving upon them a show cause notice as to why a notice under section 148 should not be issued based on the information that suggests that income chargeable to tax has escaped assessment. It must be noted that this requirement has been deleted by the Finance Act 2022; c. Section 148A(d) - to pass an order deciding whether or not it is a fit case for issuing a notice under section 148; and d. Section 148 - to issue a reassessment notice.
In Ashish Agarwal (supra), this Court directed that Section 148 notices which were challenged before various High Courts "shall be deemed to have been issued under section 148-A of the Income-tax Act as substituted by the Finance Act, 2021 and construed or treated to be show-cause notices in terms of Section 148-A(b)." Further, this Court dispensed with the requirement of conducting any enquiry with the prior approval of the specified authority under section 148A(a). Under Section 148A(b), an assessing officer was required to obtain prior approval from the specified authority before issuing a show cause notice. When this Court deemed the Section 148 notices under the old regime as 44 ITA.No.1527 & 1528/Hyd./2025 Section 148A(b) notices under the new regime, it impliedly waived the requirement of obtaining prior approval from the specified authorities under section 151 for Section 148A(b). It is well established that this Court while exercising its jurisdiction under Article 142, is not bound by the procedural requirements of law High Court Bar Association v. State of U P [2024] 160 taxmann.com 32/299 Taxman 21 (SC)/[2024] 6 SCC 267.
This Court in Ashish Agarwal (supra) directed the assessing officers to "pass orders in terms of Section 148-A(d) in respect of each of the assesses concerned." Further, it directed the assessing officers to issue a notice under Section 148 of the new regime "after following the procedure as required under section 148-A." Although this Court waived off the requirement of obtaining prior approval under section 148A(a) and Section 148A(b), it did not waive the requirement for Section 148A(d) and Section 148. Therefore, the assessing officer was required to obtain prior approval of the specified authority according to Section 151 of the new regime before passing an order under section 148A(d) or issuing a notice under section 148. These notices ought to have been issued following the time limits specified under section 151 of the new regime read with TOLA, where applicable.”
The Hon’ble Supreme Court has observed that the requirement of obtaining prior approval u/sec.148A(a) and 148A(b) of the Act was waived-off by the Judgment of Hon’ble Supreme Court in the case of Union of India vs. Ashish Agarwal (supra), however, the same did not waive-off the requirement of obtaining prior approval for the order 45 ITA.No.1527 & 1528/Hyd./2025 u/sec.148A(d) and the re-assessment notice u/sec.148 of the Act. Accordingly, in the facts and circumstances of the case and by following the Judgment of Hon’ble Supreme Court in the case of Union of India vs. Rajeev Bansal (supra) and the decision of Hon’ble Bombay High Court in the case of Siemens Financial Services (P.) Ltd., vs. DCIT [2023] 457 ITR 647 (Bom.) as well as the decision of this Tribunal in the case of Iqbal Ali Jaweed, Hyderabad vs. The Income Tax Officer, [INT. TAXN]-1, Hyderabad (supra), we hold that the notice issued by the Assessing Officer u/sec.148 of the Act in the case of the assessee is not valid for want of a valid approval/ sanction u/sec.151 of the Act and consequently, the same is quashed. Once the notice issued u/sec.148 of the Act is quashed being invalid, the same also vitiates the consequential Order passed by the Assessing Officer u/sec.147 of the Income Tax Act, 1961. Accordingly, the appeal of the Assessee is allowed on this ground alone.
Ground No.6 the assessee challenged validity of notice u/sec.148 as the same was issued without following National Faceless Assessment Scheme notified by the CBDT.
46 ITA.No.1527 & 1528/Hyd./2025 25. The learned Authorised Representative of the Assessee has submitted that the Jurisdictional Assessing Officer [in short “JAO”] has issued notice under section 148A[b] of the Act, dated 25.05.2022, directing the Appellant to submit the response through e-filing portal. Thereafter, the learned JAO has passed the order under section 148A(d) of the Act, dated 29.07.2022. The learned Authorised Representative of the Assessee has submitted that the Central Board of Direct Taxes, have issued the notification dated 29.03.2022, whereby a scheme called e-assessment of Income Escaping Assessment Scheme 2022 which came into force with effect from 29.03.2022 itself; the assessment, re- assessment or re-computation under Section 147 and the issuance of notice under Section 148A shall be done through the automated allocation. Further the notices, to be issued, have to be in a faceless manner as is provided under Section 144B of the Act. The learned Authorised Representative has further submitted that the learned JAO has acted in a mechanical and arbitrary manner while issuing notices. This act of the learned Assessing Officer is without taking into 47 ITA.No.1527 & 1528/Hyd./2025 consideration the amended provisions under the Income-tax Act, 1961, as introduced under the Finance Act, 2021. He submitted that after the introduction of the above two schemes, it becomes mandatory for the Revenue to conduct /initiate proceedings pertaining to reassessment under section 147, 148 and 148A of the Act in a faceless manner. Further, the proceedings under sections 147 and 148 of the Act, would now have to be taken as per the procedure legislated by the Parliament in respect of re-opening/re- assessment i.e., proceedings under section 148A of the Act. Thus, the learned Authorised Representative of the Assessee has submitted that in the case on hand, both the proceedings i.e., the impugned proceedings under section 148A of the Act as well as the consequential notice under section 148 of the Act, were issued by the local JAO and not in the prescribed Faceless manner. He submitted that the order under section 148A(d) of the Act, dated 29.07.2022 and the notice under section 148 of the Act, dated 29.07.2022 i.e., after the "Faceless Jurisdiction of the Income Tax Authorities Scheme, 2022". In support of his contentions, the learned Authorised 48 ITA.No.1527 & 1528/Hyd./2025 Representative of the Assessee has relied upon the Judgement of the Hon’ble jurisdictional High Court in the case of Shri Kankanala Ravindra Reddy vs. ITO 156 taxmann.com 178 (Telangana-HC), dated 14.09.2023 and accordingly submitted that the notice issued under section 148A(d) of the Act, and notice under section 148 of the Act, issued by the learned JAO is in violation of the new scheme of the Finance Act, 2021, is invalid and consequential assessment order is also bad in law. In the alternative, the learned Authorised Representative of the Assessee has fairly submitted that the parties may be given liberty to get this appeal revived as per the outcome of the proceedings pending before the Hon’ble Supreme Court on this issue.
On the other hand, the learned DR for the Revenue has submitted that the issue of validity of notice issued u/sec.148 by the Jurisdictional Assessing Officer [in short “JAO”] vs., Faceless Assessment Officer [in short “FAO”] is pending before the Hon’ble Supreme Court and, therefore, this issue may be kept open to be decided in accordance with the Judgment of Hon’ble Supreme Court on this issue.
49 ITA.No.1527 & 1528/Hyd./2025 27. We have considered the rival submissions as well as relevant material on record. The assessee raised this issue before the learned CIT(A), but, the same was rejected in Para- 6.1.1 of the impugned order as under :
6.1.1 Faceless Reassessment Scheme: The appellant contends that the notice under Section 148 was manually issued by the jurisdictional AO on 29.07.2022, in violation of CBDT Notification No. 18/2022 dated 29.03.2022, mandating reassessment under the faceless regime post- 01.04.2022. While the procedural compliance under the Faceless Scheme is important, minor procedural lapses cannot vitiate the reassessment where substantive compliance with Section 147 has been ensured. The Hon'ble Supreme Court in Union of India v. Ashish Agarwal [(2022) 444 ITR 1 (SC)] held that where reassessment notices were issued under the old regime but during the transition to the new faceless regime, such notices shall be treated as issued under Section 148A, thereby saving reassessment proceedings from being declared void. Though Ashish Agarwal dealt with notices issued between April and June 2021, the principle of substance over form is equally applicable here where reassessment proceedings have been substantially carried out and opportunity of hearing was granted.
27.1. This view of the learned CIT(A) is contrary to the Judgment of Hon’ble jurisdictional High Court in the case of Kankanala Ravindra Reddy vs. ITO (supra). Further we note that an identical issue has been considered by this 50 ITA.No.1527 & 1528/Hyd./2025 Tribunal in series of decisions and in case of M/s. Pitti Holdings Pvt. Ltd., Hyderabad vs. ACIT, Central Circle- 1(1), Hyderabad, in ITA.No.450/Hyd./2025 for the assessment year 2018-2019 vide order dated 08.10.2025 has considered this issue in Paras-5 to 5.1 as under :
“5. We have heard the Learned Authorised Representative and Learned Departmental Representative on this issue which is pending adjudication before the Hon’ble Supreme Court. Ld. AR has relied upon the judgment of Hon’ble jurisdictional High Court in the case of Kanakala Ravindra Reddy Vs. ITO 156 taxman.com 478 and submitted that the impugned reassessment order is not valid and liable to be set aside. Having considered the rival submissions as well as relevant material on record, at the outset we note that the co-ordinate bench of this Tribunal in the case of Kanakala Ravindra Reddy Vs. ITO (supra) [As per Corrigendum dated 10th October, 2025 the correct citation is Kotha Kanthaiah, Karimnagar vs., The Income Tax Officer, Ward-2, Karimnagar in ITA.No.1259/Hyd./2024] has considered an identical issue vide order dated 04.09.2025 in para Nos.9 to 16 as under :
51 ITA.No.1527 & 1528/Hyd./2025 “9. We have considered the rival submissions as well as material on record. In the case of the assessee, notice u/sec.148A(b) was issued on 21.02.2023 by JAO. For ready reference, the same is reproduced as under :
52 ITA.No.1527 & 1528/Hyd./2025
Thereafter, the AO also passed an order u/s 148A(d) on 29.03.2023, wherein, the AO has recorded that, despite sufficient time allowed to the assessee in accordance with the provisions of section 148A(b) for compliance to the show cause notice dated 21.02.2023, there is no compliance on behalf of the assessee to the said show cause notice. The AO decided that it is a fit case for issue of notice u/s 148 of the Act and consequently notice u/s 148 was issued on 30.03.2023 as under :
53 ITA.No.1527 & 1528/Hyd./2025
Undisputedly, the show cause notice u/s 148A(b) as well as notice u/s 148 were issued by the JAO and not by the faceless Assessing Officer. At the outset, we note that the Hon’ble Jurisdictional High Court has considered an identical issue in assessee's own case for the immediate preceding assessment year i.e. 2015-16 vide judgement dated 24.04.2025 in W.P.No.344 of 2025 and has recorded the issue involved in the said petition in para 4 of the said judgement as under :
“4. The contention of the petitioner is that the issue of proceedings being in violation of the Finance Act, 2021 ie., the impugned notices under Section 148A and Section 148 of the Act not being issued in a faceless manner, have already been dealt with and decided by this Court in the case of KANKANALA RAVINDRA REDDY vs. INCOME-TAX OFFICER decided on 14.09.2023 whereby a batch of writ petitions were allowed and the proceedings initiated under Section 148A as also under Section 148 of the Act were held to be bad with consequential reliefs on the ground of it being in violation of the provisions of Section 151A of the Act read with Notification 18/2022 dated 29.03.2022. The said judgment passed by this Court has also been subsequently followed in a large number of writ petitions which were allowed on similar terms.
12. It was further noted by the Hon’ble jurisdictional High Court that this issue has been decided against the Revenue by various High Courts and the details 54 ITA.No.1527 & 1528/Hyd./2025 of all the judgements of various High Courts are given in para 5 of the said judgement as under :
5. Down the line, we find that the same issue has also been decided against the Revenue by various High Courts i.e.. by the Bombay High Court in the case of HEXAWARE TECHNOLOGIES LTD., vs. ASSISTANT COMMISSIONER OF INCOME TAX & OTHERS, Gauhati High Court in the case of RAM NARAYAN SAH vs. UNION OF INDIA', Punjab and Haryana High Court in the case of JATINDER SINGH BANGU vs. UNION OF INDIA, and Telangana High Court in the case of SRI VENKATARAMANA REDDY PATLOOLA vs. DEPUTY COMMISSIONER OF INCOME TAX where the issue was in respect of international taxation, Bombay High Court in the case of ABHIN ANILKUMAR SHAH vs. INCOME TAX OFFICER, INTERNATIONAL TAXATION which again on is international taxation and central circle, High Court of Himachal Pradesh in the case of GOVIND SINGH vs. INCOME TAX OFFICER, Gujarat High Court in the case of MANSUKHBHAI DAHYABHAI RADADIYA VS. INCOME TAX OFFICER, WARD 3(3)(5)
, Jharkand High Court in the case of SHYAM SUNDAR SAW vs. UNION OF INDIA", Rajasthan High Court in the case of SHARDA DEVI CHHAJER vs. INCOME TAX OFFICER & ANOTHER and batch of writ petitions" which stood decided on 19.03.2024. Similar views have also been taken by the Division Bench of Calcutta High Court in the case of GIRDHAR GOPAL DALMIA vs. UNION OF INDIA & ORS (Μ.Α.Τ 1690 of 2023), decided on 25.09.2024.”
55 ITA.No.1527 & 1528/Hyd./2025 13. In light of various judgements of the Hon’ble High Courts, including the judgement of the jurisdictional High Court in the case of Kankanala Ravindra Reddy Vs. Income Tax Officer [2024] 156 taxmann.com 478 (Gauhati), the Hon’ble High Court has held in para 13 to 19 as under: “13. Another aspect which needs to be considered is that in fact it should have been realized by the Income Tax Department itself and should have found out via media in ensuring that proceedings under Sections 148-A and 148 should not have been issued in n faceless manner, at least till the Hon'ble Supreme Court decide the twelve hundred (1200) odd SLPs which it is already seized of or, at least the Income Tax Department should have found out some remedial steps to ensure that wherever the authorities intend to initiate proceedings under Sections 148-A and 148, other than in a faceless manner, the proceedings should have been deferred without precipitating the matter further intimating the assessee that they shall initiate appropriate proceedings only after the SLP's are decided by the Hon'ble Supreme Court on the very same issue. This again, the Income Tax Department, has not been able to give a convincing reply, except for the fact that such a decision if at all has to be taken, has to be taken for the whole of India, and which otherwise has to be by way of a policy decision and that too at the level of Central Board of Direct Taxes. Though the learned Standing Counsel for the Income Tax Department contended that the Delhi High Court dismissed a writ petition of similar nature, on the one hand 56 ITA.No.1527 & 1528/Hyd./2025 when the High Court is struggling to reduce its pendency, such notices which are under challenge in this writ petition are forcing the assessee to knock the doors of this High Court resulting in filing of hundreds of new writ petitions which in the long run not only affects the disposal of the writ petitions but also consumes substantial time of the Bench in hearing these matters again and again on daily basis. Admittedly, in spite of the matter before the Hon'ble Supreme Court having been taken on many occasions, the Hon'ble Supreme Court which is seized of the matter has been reluctant in granting any interim protection to the Income Tax Department. Yet, the authorities concerned at the State level are not ready to accept the verdict passed by a majority of High Courts of different States on the same issue; and to make things further worse, the Income Tax Department is showing audacity by issuing notices continuously under Sections 148-A and 148 through the jurisdictional Assessing Officer whereas it ought to have been only in the faceless manner.
14. In the case of BANK OF INDIA vs. ASSISTAN COMMISSIONER, INCOME TAX", on an issue whether it was justifiable on the part of the Income Tax Department in no following an order passed by the adjudicating authority only on the ground that the appeals are pending, the Division Bench of the High Court of Bombay held at paragraph No.25 as under, viz.,:
57 ITA.No.1527 & 1528/Hyd./2025 "25. Mr. Paridwalla has rightly drawn out attention to the decision of this Court in Commissioner of Income Tax vs. Smt. Godavaridevi Saraf¹ as also the recent decision of the co-ordinate Bench of this Court in Samp Furniture (P) Ltd. v. ITO of which one of us (Justice G.S. Kulkarni) was a member, wherein the Court categorically observed that the Revenue having not "accepted" the judgment of the High Court would not mean that till the same is set aside in a manner known to law, it would loose its binding force. Referring to the decision of the Supreme Court in Union of India vs. Kamlakshi Finance Corporation Ltd.", the Court observed that the approach of the officials of Revenue of treating decisions being "not acceptable" was criticized by the Supreme Court. In such decision, following are the relevant observations made by the Supreme Court. [(2025) 170 taxmann.com 422 (Bombay)] 12 [1978] 113 ITR 589 (Bombay) 13 [2024] 165 taxmann.com 581/300 Taxman 452 (Bombay) 14 [1992] taxmann.com 16/55 ELT 433 (SC)
6. Sri Reddy is perhaps right in saying that the officers were not actuated by any mala fides in passing the impugned orders. They perhaps genuinely felt that the claim of the assessee was not tenable and that, if it was accepted, the Revenue would suffer. But what Sri Reddy overlooks is that we are not concerned here with the correctness or otherwise of their conclusion or of any factual malafides but with the fact that the officers, in reaching In their conclusion, by-passed two appellate orders in regard to the same issue which were placed 58 ITA.No.1527 & 1528/Hyd./2025 before them, one of the Collector (Appeals) and the other of the Tribunal. The High Court has, in our view, rightly criticized this conduct of the Assistant Collectors and the harassment to the assessee caused by the failure of these officers to give effect to the orders of authorities higher to them in the appellate hierarchy. It cannot be too vehemently emphasized that it is of utmost importance that, in disposing of the quasi-judicial issues before them, revenue officers are bound by the decisions of the appellate authorities. The order of the Appellate Collector is binding on the Assistant Collectors working within his jurisdiction and the order of the Tribunal is binding upon the Assistant Collectors and the Appellate Collectors who function under the jurisdiction of the Tribunal. The principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not acceptable" to the department in itself an objectionable phrase and is the subject matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent court. If this healthy rule is not followed, the result will only be undue harassment to assesses and chaos in administration of tax laws. … …. ….
We have dealt with this aspect at some length, because it has been suggested by the learned Additional Solicitor General that the observations made by the High Court, have been harsh on the officers. It is clear that the observations of the High Court, seemingly 59 ITA.No.1527 & 1528/Hyd./2025 vehement, and apparently unpalatable to the Revenue, are only intended to curb a tendency in revenue matters which, if allowed to become widespread, could result in considerable harassment to the assesses-public without any benefit to the Revenue. We would like to say that the department should take these observations in the proper spirit. The observations of the High Court should be kept in mind in future and the utmost regard should be paid by the adjudicating authorities and the appellate authorities to the requirements of judicial discipline and the need for giving effect to the orders of the higher appellate authorities which are binding on them."
What is worrying this Bench more is the fact that an endeavour is being made whole heartedly to ensure not to generate further litigation on issues which have been laid to rest by a large number of High Courts all of whom have taken a consistent stand that the action of the Income Tax Department being violative of the Finance Act, 2020 and Finance Act, 2021. Now, in order to protect the interest of the Revenue as also that of the assessee, it would be trite at this juncture, if we dispose of the writ petition with an observation/direction that the disposal of the instant writ petition in terms of the judgment rendered by this High Court in the case of Kankanala Ravindra Reddy (1 supra) shall however be subject to the outcome of the SLPs which were filed by the Income Tax Department and which is pending consideration before the Hon'ble Supreme Court.
16. In the given facts and circumstances, this Bench is of the considered opinion that unless and until we do not timely dispose of matters which are squarely covered by the 60 ITA.No.1527 & 1528/Hyd./2025 decision of this Court and which stands fortified by the decisions of the various other High Courts on the very same issue, the pendency of this High Court would further be burdened which otherwise can be decided and disposed of as a covered matter.
17. So far as the interest of the Revenue is concerned, we are of the considered opinion that the interest of the Revenue has already been considered and protected, as has been observed in paragraphs 36, 37 and 38 of the order which, for ready reference, is reproduced hereunder:
“36. For all the aforesaid reasons, the impugned notices issued and the proceedings drawn by the respondent-Department is neither tenable, nor sustainable. The notices so issued and the procedure adopted being per se illegal, deserves to be and are accordingly set aside/ quashed. As a consequence, all the impugned orders getting quashed, the consequential orders passed by the respondent-Department pursuant to the notices issued under Section 147 and 148 would also get quashed and it is ordered accordingly. The reason we are quashing the consequential order is on the principles that when the initiation of the proceedings itself was procedurally wrong, the subsequent orders also gets nuliified automatically.
37. The preliminary objection raised by the petitioner is sustained and all these writ petitions stands allowed on this very jurisdictional issue. Since the impugned notices and orders are getting quashed on the 61 ITA.No.1527 & 1528/Hyd./2025 point of Jurisdiction, we are not inclined to proceed further and decide the other issues raised by the petitioner which stands reserved to be raised and contended in an appropriate proceedings.
Since the Hon'ble Supreme Court had, in the case of Ashish Agarwal, supra, as a one-time measure exercising the powers under Article 142 of the Constitution of India, permitted the Revenue to proceed under the substituted provisions, and this Court allowing the petitions only on the procedural flaw, the right conferred on the Revenue would remain reserved to proceed further if they so want from the stage of the order of the Supreme Court in the case of Ashish Agarwal, supra.”
We would only further like to make observations that since we are inclined to dispose of the instant writ petition, conscious of the fact that the earlier order of this High Court in the case of Kanakala Ravindra Reddy (1 supra) is subjected to challenge before the Hon'ble Supreme Court in SLP No.3574 of 2024, preferred by the Income Tax Department, we make it clear that allowing of the instant writ petition is subject to outcome of the aforesaid SLP preferred by the Revenue against the decision of this High Court in the case of Kanakala Ravindra Reddy (1 supra). This, in other words, would mean that either of the parties, if they so want, may move an appropriate petition seeking revival of this writ petition in the light of the decision of the Hon'ble Supreme Court in the pending SLP on the very same issue.
Accordingly, the instant writ petition stands allowed in favour of the assessee so far as the issue of jurisdiction is concerned. As a consequence, the impugned notice under challenge under Sections 148- 62 ITA.No.1527 & 1528/Hyd./2025 A and 148 stands set aside/quashed. The consequential orders, if any, also stand set aside/quashed in similar terms as have been passed by this High Court in the case of Kankanala Ravindra Reddy (1 supra). There shall be no order as to costs. Consequently, miscellaneous petitions pending, if any, shall stand closed.
Thus, it is clear that the issue raised by the assessee in the present appeal is now covered by the decision of Hon’ble Jurisdictional High Court in the assessee’s own case for the A.Y.2016-17. As regards the contention of the Ld.DR that no such issue was raised by the assessee before the authorities below, we find from the Grounds of Appeal
raised before the CIT(A) that the assessee had raised this issue in ground No.2 to 5 as under : “2. On the facts and in the circumstances of the case and in law, the Jurisdictional Assessing Officer erred by initiating proceedings u/s 147 of the Act, simply relied on the SFT information shown in the verification module of Insight Portal at the time of reopening, however, either no information gathered or not conducted any Inquiry further in order to form an honest, and a reasonable belief that certain income had escaped assessment in the case of the appellant, As such, said proceedings and the consequent order ought to be declared full and void-ab- Initio.
3. The Notice issued up 148 of the Act, 1901dated 30.03.2023 is illegal and unsustainable in law since the income alleged to have escaped assessment, actually is far below the threshold limit of Rs50 Lacs in the present case, it is actually Rs.30.61,000/- only and thereby, barred by limitation under the 63 ITA.No.1527 & 1528/Hyd./2025 provisions of section 149(1) (a) of the Act. Since the impugned notice issued u/s.148 of the LT Act, 1961 dated 30.03.2023, legal and unsustainable in law, accordingly, the impugned reassessment order u/s.147 r.w.s.144B of the Act dated 01.03.2024 and the notice of demand dated 01.03.2024 Issued u/s 158 of the Act are also bad in law and unsustainable and the same, is hereby, quashed and set aside. 4 On the facts and in the circumstances of the case and in law, the Assessment Unit/NaFAC erred by making the additions without supplying the relevant documents or tangible material to the appellant and without obtaining the bank account statement(s) relied on which the case was reopened by the JAO, as such, said proceedings and the consequent order ought to be declared null and vold-ab-Initio.
5. On the facts and in the circumstances of the case and in law, the Jurisdictional Assessing Officer erred in the proceedings Initiated u/s 147 of the Act without following due procedure prescribed by CBDT vide Instruction No F.No.299/ 10/2022- Dir(Inv.1)/647 dt., 22.08.2022 and accordingly the said proceedings and the consequent order ought to be declared null and void ab initio.”
15. In view of the facts emanating from the record, we find that the assessee has duly raised this issue before the CIT(A) and therefore, the contention raised by the Ld.DR is devoid of any merit. Accordingly, the show cause notice issued u/s 148A(b) dated 21.02.2023 as well as notice issued u/s 148 dated 30.03.2023 by the JAO are not valid and liable to be quashed. We order accordingly.
However, since the matter is pending adjudication before the Hon’ble Supreme Court and Hon’ble High Court has also given the 64 ITA.No.1527 & 1528/Hyd./2025 liberty to the parties to move an appropriate petition, seeking revival of W.P. in light of judgement of Hon’ble Supreme Court on this very issue, we also grant liberty to the parties to get this appeal revived, if, in case the judgement of the Hon’ble Supreme Court on this issue necessitate to modify this order.” 5.1. In the case in hand it is not disputed that the notice u/s. 148 of the Act was issued by the JAO and not by the Faceless Assessing Officer. By following the judgment of Hon’ble jurisdictional High Court in the case of Kotha Kanthaiah dated 24.04.2025 in Writ Petition No.344 of 2025 as well as the decision of co-ordinate bench of this Tribunal (supra), we hold that the notice issued u/s. 148A(b) of the Act as well as the decision of co-ordinate bench as well as u/s. 148 of the Act in the case of the assessee by the JAO are not valid and liable to be set aside. We order accordingly.”
Following the Judgment of Hon’ble Jurisdictional High Court as well as the decision of this Tribunal in the case of M/s. Pitti Holdings Pvt. Ltd., Hyderabad vs. ACIT, Central Circle-1(1), Hyderabad (supra), we hold that the notice u/sec.148 issued by JAO without following the procedure as per NFAC Scheme is invalid and liable to be set- aside. We Order accordingly. However, an identical issue is pending adjudication before the Hon'ble Supreme Court and the Hon’ble Jurisdictional High Court in the case of Kotha 65 ITA.No.1527 & 1528/Hyd./2025 Kanthaiah (supra) has also given the liberty to the parties to move an appropriate petition seeking revival of the case in light of Judgement of Hon'ble Supreme Court on this very issue. Therefore, we also grant the liberty to the parties to get this appeal revived, if Judgment of Hon'ble Supreme Court on this issue necessitate to modify this order.
In the result, appeal of the Assessee for the assessment year 2016-2017 is allowed.
ITA.No.1528/Hyd./2025 – A.Y. 2020-2021 :
The assessee has raised the following grounds :
1. “The order of the learned Authorities below in so far as it is against the Appellant is opposed to law, equity, weight of evidence, probabilities and the facts and circumstances in the Appellant's case.
2. The Appellant denies himself liable to assessed on a total income of Rs.7,73,80,535/-, as against the returned income of Rs.5,32,29,560/-, under the facts and circumstances of the case.
3. Whether the learned Authorities below are justified in disallowing an amount of Rs.241,50,975/-, as excess exemption claimed by the Appellant under section 54F of the Act, under the facts and circumstances of the case.
66 ITA.No.1527 & 1528/Hyd./2025 4. Whether the learned Authorities below are justified in not accepting the bills and documentary evidences produced by the Appellant, to sustain the disallowance of an amount being Rs.2,41,50,975/-, under the facts and circumstances of the case.
5. The Appellant craves leave to add, alter, delete or substitute any of the grounds urged above.
6. In the view of the above and other grounds that may be urged at the time of the hearing of the appeal, the Appellant prays that the appeal may be allowed in the interest of justice and equity.”
The assessee has filed it’s return of income for the assessment year 2020-2021 on 10.01.2021 admitting total income at Rs.5,32,29,560/-. The assessee has sold the land and also invested in the residential property to claim deduction u/sec.54F of the Act to the tune of Rs.4,82,58,378/-. The Assessing Officer has restricted the claim of the assessee to Rs.2,41,07,403/- for want of supporting bills and documentary evidences. He challenged the Order of the Assessing Officer before the learned CIT(A), but, could not succeed.
32. Before the Tribunal, the learned Authorised Representative of the Assessee has submitted that the assessee filed all the relevant details and supporting 67 ITA.No.1527 & 1528/Hyd./2025 documents vide acknowledgment dated 15.03.2024 before the learned CIT(A). However, the learned CIT(A) has sustained the addition/disallowance made by the Assessing Officer. He has referred to the acknowledgment placed in the paper book and submitted that the assessee produced all the relevant details and supporting evidences, however, the learned CIT(A) has not considered the same while passing the impugned order. Thus, he has pleaded that the matter may be remanded to the record of the learned CIT(A)/Assessing Officer to consider the relevant documentary evidences filed by the assessee in support of the claim u/sec.54F of the Act.
On the other hand, the learned DR has principally agreed to the request of the assessee. However, she has submitted that since the record is required to be verified and examined, therefore, it will be appropriate if the matter is remanded to the record of the Assessing Officer.
We have considered the rival submissions as well as relevant material on record. At the outset, we note that the learned CIT(A) has given it’s finding in Paras-6 and 7 of the impugned order as under :
68 ITA.No.1527 & 1528/Hyd./2025 “6. Analysis and Findings :
Section 54F allows exemption of capital gains if the net sale consideration from the transfer of a long-term capital asset (other than a residential house) is invested in the purchase or construction of one residential house within the prescribed time limits. The "cost of the new asset includes both the purchase price and the cost of construction or improvement of the residential house. The Assessing Officer accepted the purchase price paid to the builder but rejected the development cost for lack of documentary proof such as invoices or bills. The appellant submitted only an Excel sheet and stated that payments were made through banking channels. However, judicial pronouncements consistently hold that, for a claim of exemption under section 54F, the expenditure must be supported by valid documentary evidence to substantiate the genuineness and eligibility of the claim. Mere submission of payment details without supporting bills or invoices is insufficient to establish the claim. The requirement of verification and evidentiary proof is mandatory and cannot be dispensed with, especially in a scrutiny case. Despite repeated requests and opportunities during the assessment and appellate. proceedings, the appellant failed to produce the requisite documentary evidence for the development cost, thereby making the claimed expenditure unverifiable, Hence, the 69 ITA.No.1527 & 1528/Hyd./2025 AO's action to disallow the portion of exemption proportionate to the unverifiable development cost is justified and in accordance with law.
7. Decision : The appellant's claim of exemption under section 54F is allowed to the extent of Rs. 4,99,27,937/- paid to the builder as purchase price of residential house. The disallowance of exemption to the extent of Rs. 2,41,50,975/- on account of unverifiable development cost is upheld. Consequently, the addition made by AO on this issue is confirmed. Accordingly grounds of appeal no.03 & 04 are dismissed.”
34. Thus, it is clear that the claim of exemption u/sec.54F was disallowed by the Assessing Officer and confirmed by the learned CIT(A) on the ground of verifiable evidentiary proof not produced by the assessee despite repeated opportunities. It is pertinent to note that the assessee filed the relevant documents along with written submissions before the learned CIT(A) vide acknowledgment dated 15.03.2024 placed at Pages-1 and 2 of the paper book which is as under:
70 ITA.No.1527 & 1528/Hyd./2025 71 ITA.No.1527 & 1528/Hyd./2025
Thus, it is clear that the assessee has made as many as 10 Annexures to the written submissions in support of it’s claim u/sec.54F of the Act. Therefore, it is apparent from the record that the learned CIT(A) while passing the impugned order has not considered these documents filed by 72 ITA.No.1527 & 1528/Hyd./2025 the assessee vide acknowledgment dated 15.03.2024. Thus, the impugned order passed by the learned CIT(A) without considering the relevant supporting evidences filed by the assessee is not sustainable and liable to be set-aside. We Order accordingly. Since the record and documentary evidences filed by the assessee are required to be verified and examined therefore, the matter is remanded to the record of the Assessing Officer for fresh adjudication after verification and examination of all the relevant documentary evidences filed by the assessee. Needless say, the Assessing Officer shall provide adequate opportunity of being heard to the assessee before passing the order.
In the result, appeal of the assessee for the assessment year 2020-2021 is allowed for statistical purposes.
To sum-up, ITA.No.1527/Hyd./2025 of the Assessee is allowed and ITA.No.1528/Hyd./2025 of the Assessee is allowed for statistical purposes. A copy of this common order be placed in the respective case files.
73 ITA.No.1527 & 1528/Hyd./2025 Order pronounced in the open Court on 28.11.2025.