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Facts
The assessee challenged the reassessment order for AY 2017-18, arguing that the notice issued under Section 148 of the Income Tax Act, 1961, on 30.06.2022 was invalid. The notice was issued beyond three years from the end of the assessment year, and the required approval under Section 151(ii) was obtained from the Principal CIT instead of the Principal CCIT or Principal DGIT, as mandated by the amended provisions.
Held
The Tribunal held that the reassessment notice issued under Section 148 and the subsequent assessment order were illegal, void ab initio, and liable to be quashed. This was because the mandatory approval for reopening an assessment beyond three years was not obtained from the statutorily competent authority (Principal Chief Commissioner or Principal Director General) as per Section 151(ii) of the Income Tax Act, 1961, as amended with effect from 01.04.2021.
Key Issues
Whether the reassessment notice issued under Section 148 of the Income Tax Act, 1961, for Assessment Year 2017-18, beyond three years from the end of the relevant assessment year, is valid when the approval for such notice was obtained from the Principal Commissioner of Income Tax instead of the Principal Chief Commissioner or Principal Director General of Income Tax as mandated by Section 151(ii) of the Act.
Sections Cited
147, 148, 148A(d), 149, 151, 151(ii), 144, 144C(13)
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Income Tax Appellate Tribunal, Hyderabad ‘SMC’ Bench, Hyderabad
Before: SHRI VIJAY PAL RAO & SHRI MADHUSUDAN SAWDIA
PER VIJAY PAL RAO, VICE PRESIDENT :
This appeal by the Assessee is directed against the order dated 30.06.2025 of learned CIT(A)-National Faceless
2 ITA.No.1370/Hyd./2025 Appeal Centre [in short “NFAC], Delhi, for the assessment year 2017-2018.
The assessee has raised the following grounds :
1. “The learned CIT(A) failed to consider the additional ground and submissions filed on 17.06.2025, wherein the appellant challenged the validity of reassessment u/s 147, since the notice u/s 148 was issued without the valid sanction mandated u/s 151, rendering the reassessment void ab initio.
2. The learned CIT(A) failed to appreciate that the notice u/s 148 issued by the Jurisdictional AO was in contravention of the Faceless Assessment/ Reassessment Scheme notified by CBDT, thereby rendering the reassessment void ab initio.
The learned CIT(A) failed to appreciate the fact that the notice u/s.148 did not contain a valid Document Identification Number (DIN) as mandated by CBDT Circular No.19/2019 dated 14.08.2019, thereby rendering the entire reassessment proceedings invalid.
The learned CIT(A) is not justified in upholding the reassessment order passed u/s 144 r.w.s. 147 without appreciating the fact that the Assessing officer failed to supply any material relied upon to the appellant which suggest that investment was Rs.35,00,000/-, thereby failed to adhere to the binding directions of the Hon'ble Supreme Court in the case of Union of India v. Ashish Agarwal (2022) 444 ITR 1 (SC). 5. The learned CIT(A) is not justified in not adjudicating upon the legal grounds specifically raised before him, though in law he was required to decide the same himself, instead of remitting the matter to the Assessing Officer. 6. The appellant craves, leave to add amend or alter any of the grounds at the time of the hearing of the appeal.”
3 ITA.No.1370/Hyd./2025 3. The assessee has raised a legal issue regarding the validity of the notice issued by the Assessing Officer u/sec.148 of the Act for want of valid sanction/approval u/sec.151 of the Income Tax Act, 1961 [in short "the Act"]. The learned Authorised Representative of the Assessee has submitted that the Assessing Officer has issued notice u/sec.148 of the Act on 30.06.2022 which is beyond three years from the end of the assessment year under consideration. Therefore, as per the provisions of sec.151 of the Act, the approval/sanction was to be granted by the CCIT instead of Pr. CIT. He has filed copy of the notice u/sec.148 exhibiting the fact that approval was taken from the Pr. CIT-2, Hyderabad and, therefore, in the absence of a valid approval u/sec.151 of the Act, the notice issued by the Assessing Officer is invalid and liable to be quashed. In support of his contention, he has relied upon the decision of this Tribunal dated 20.06.2025 in the case of Iqbal Ali Jaweed, Hyderabad vs., The Income Tax Officer, [INT. TAXN]-1, Hyderabad in ITA.Nos.447 & 448/Hyd./2024 for the assessment years 2016-2017 & 2017-2018.
4 ITA.No.1370/Hyd./2025 4. On the other hand, the learned DR has relied upon the orders of the authorities below.
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 30.06.2022 as under :
5 ITA.No.1370/Hyd./2025
6 ITA.No.1370/Hyd./2025
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 7 ITA.No.1370/Hyd./2025 Act dated 27.07.2022 where the Assessing Officer in light of the decision of Hon’ble Supreme Court in the case 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
8 ITA.No.1370/Hyd./2025 High Court in the case of Siemens Financial Services (P.) Ltd., vs., DCIT [2023] 457 ITR 647 (Bom.) held as under: “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 9 ITA.No.1370/Hyd./2025 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. 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 10 ITA.No.1370/Hyd./2025 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 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 11 ITA.No.1370/Hyd./2025 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 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 12 ITA.No.1370/Hyd./2025 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 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.”
13 ITA.No.1370/Hyd./2025 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 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.”
Accordingly, in the facts and circumstances of the case and by following the decision of this Tribunal as well as decision of Hon’ble Bombay High Court in the case of Siemens Financial Services (P.) Ltd., vs., DCIT [2023] 457 ITR 647 (Bom.) as relied upon by the Tribunal while passing the Order in the case of in the case of Iqbal Ali Jaweed,
14 ITA.No.1370/Hyd./2025 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 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 which is 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.
In the result, appeal of the Assessee is allowed.
Order pronounced in the open Court on 19.11.2025.