INCOME TAX OFFICER, WARD-1, NELLORE vs. VENKATA RAMANAMMA SAKAMURI, NELLORE

PER RAVISH SOOD, JM: The present appeal filed by the revenue is directed against the order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, dated 31/12/2024, which in turn arises from the order passed by the Assessing Officer (for short, “AO”) under section 147 r.w.s 144 r.w.s 144B of the Income Tax Act, 1961 (for 2 ITO vs. Venkata Ramanamma Sakamuri short, “the Act”), dated 19/02/2024 for the Assessment Year 2018–19. The revenue has assailed the impugned order on the following grounds of appeal before us: (i) Whether the Ld. CIT(A) is correct in allowing the assessee's appeal on 31.12.2024 relying on the order dated 01.10.2024 of the Hon'ble ITAT, Mumbai, which in turn relied on the judgement of Hon'ble Bombay High Court in Siemens Financial Services (P.) Ltd. v/s DCIT, (2023) 457 ITR 647 (Bom.), which was overturned by the Hon'ble Supreme Court vide judgement dated 03.10.2024 in TOLA case in Civil Appeal No. 8629 of 2024? (ii) Whether the order of the Ld. CIT(A) is correct in quashing the notice u/s. 148 of the Act when the show cause notice u/s. 148A(b) was issued before 31.03.2022 and order u/s 148A(d) & notice u/s 148 were also issued on 07-04-2022 ie. within the time limits prescribed by the Act, with the prior approval of the Pr. Commissioner of Income Tax, Tirupati, being Specified Authority u/s. 151 of the Act? (iii) Whether the order of the Ld. CIT(A) is correct in violating the Rule 46 of Income Tax Rules, 1962, by not calling for Remand Report even though the assessee filed new submissions during the appellate proceedings which were not furnished before the AO? (iv) In this case as the show cause notice u/s 148A(b) was issued within three years from the end of the relevant A.Y. 2018-19 and the specified Authority is the Pr. CIT, Tirupati only and not the Pr. CCIT/CCIT as mentioned in the order. Hence the order of the CIT(A) in quashing notice uls 148 on the ground that it is not approved by the specified authority is not acceptable. (v) Any other additional ground that may be urged at the time of the appeal hearing.

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Bank: Rs.1,45,89,000/-; (iii) cash withdrawals from bank account maintained with Andhra Pragati Grameena Bank: Rs. 3,65,500/-; and (iv) tax collected at source (TCS) on transaction of liquor with DEP
Commissioner of Prohibition and Excise, Nellore: Rs.1,74,11,245/-, but had not filed his return of income for the subject year, issued notice under section 148 of the Act.
3. Thereafter, the AO vide his order passed under section 147
r.w.s.144 r.w.s. 144B of the Act, dated 19/02/2024 determined the income of the assessee at Rs. 3,53,21,425/- after making certain additions, viz., (i) addition on account of cash deposits/cash withdrawals made in bank accounts: Rs.3,35,80,300/-; and (ii) addition from business or profession: Rs.17,41,125/-.
4. Aggrieved, the assessee carried the matter in appeal before the CIT(A). It was, inter alia, the claim of the assessee before the CIT(A) that as the AO had reopened his case vide notice issued under section 148 of the Act, dated 07/04/2022 i.e., beyond the period of three years from the end of the relevant assessment year without obtaining the approval of the appropriate authority as envisaged under section 151(ii) of the Act, therefore, the impugned assessment framed in her case vide order passed under section 147 r.w.s 144 r.w.s.144B of the Act, dated
19/02/2024 could not be sustained and was liable to be quashed for want of valid assumption of juri iction.

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5. We find that the CIT(A) found favour with the aforesaid contention of the assessee and quashed the notice issued by the AO under section 148 of the Act, dated 07/04/2022 in absence of the sanction of the concerned specified authority as contemplated under section 151 of the Act. For the sake of clarity, we deem it apposite to cull out the observations of the CIT(A), as under:
“4. Appellate Findings:
4.1 Appeal Notices were issued to the assessee on 03.09.2024,
24.09.2024, 22.11.2024 fixing the case for 18.09.20204, 09.10.2024,
09.12.2024 respectively. The assessee has filed written submission on 09.09.2024, 21.09.2024, 08.10.2024. The appeal has been filed delayed as per column number 14 of Form 35. The reasons for this delay is that “In the matter of Scrutiny Assessment u/s.147rws144
rws144B for the Assessment Year: 2018-19. Affidavit of Smt. Venkata
Ramanamma Sakamuri aged 55 years W/o Mr.Sakamuri Prasad R/o
Pallavolu village SPSR Nellore Dist, A.P.PIN-524312. 1. The Deponent Smt. Venkata ramanamma Sakamuri [PAN:CXQPS1340L]
is the appellant in the present case and hence is fully conversant of the facts deposed below: 2. That the deponent received assessment order on 21-02-2024 3. That appeal was to be filed by 23-03-2024. 4. That deponent was unwell JANUARY 2024 and was under the treatment of KVR Multispecialty hospital, Produtur, YSR Kadapa
Dist,A.P.Dr. who advised her complete rest up to August 2024. 5. That the deponent filed the appeal on 26-08-2024 alongwith medical certificate. 6. That in this way there is a delay for six months which an application under Section 5 of the Limitation Act has been filed along- with memorandum of appeal. 7. That delay in filing the appeal is because of illness of the deponent and not knowing the e-proceedings under the Act for which deponent cannot be held responsible”.
However, in the interest of justice the delay is condoned.
4.2 I have gone through the assessment order and record available.
Brief facts of the case are that the case pertains to the reopening of assessment under Section 148 of the Income Tax Act, 1961, for AY
2018-19, triggered by substantial cash deposits, withdrawals, and liquor purchases by the assessee, Smt. Venkata Ramanamma
Sakamuri. The flagged transactions included cash deposits of 1,51,39,225/- in Andhra Pragathi Grameena Bank and 1,45,89,000/- in Canara Bank, cash withdrawals of 3,65,500/-, and TCS on liquor purchases amounting to 1,74,11,245/-. The total transactions amounted to 4,75,04,970/-. The assessee did not file a return of income for the relevant year, prompting concerns about income escaping assessment. Numerous notices were issued under Sections

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148 and 142(1), including show cause notices, all of which went unanswered, barring one adjournment request. Despite being granted multiple opportunities via email and speed post, the assessee failed to provide any explanations or substantiate the source of funds. The AO verified bank statements under Section 133(6) and identified total cash deposits of 3,32,14,750/-, alongside other high-value transactions. In the absence of any compliance from the assessee, the proceedings continued under Section 144 (best judgment assessment), culminating in proposed additions based on unsubstantiated transactions. The non-compliance and failure to file returns, despite substantial financial activity, indicated probable income suppression. The AO relied on flagged insights under the Risk
Management Strategy (RMS) and substantiated the proceedings with bank data and TCS records.
4.3 I have gone through the assessment order and record available.
The appellant has argued that the appellant, Smt. Venkata
Ramanamma Sakamuri, a resident of SPSR Nellore District, Andhra
Pradesh, appeals against the assessment order passed for AY 2018–
19. She attributes non-compliance with faceless income tax proceedings to lack of awareness, health issues, and mental distress caused by business losses. During the relevant period, the appellant operated an IMFL retail outlet and a Bharat Petroleum petrol pump.
Sale proceeds from these businesses were deposited into designated bank accounts. The deposits, corroborated by turnover statements and Form 26AS, amounted to Rs. 2,97,28,225/- after adjusting withdrawals and TCS. Despite this, the AO treated significant cash deposits as unexplained income under Section 69A and taxed it at higher rates under Section 115BBE. The case was scrutinized due to reported cash deposits. A notice under Section 148A(b) was issued with insufficient statutory notice time, violating procedural requirements. Subsequently, a notice under Section 148 was issued on 07.04.2022, beyond the permissible three-year limit under Section 149. Approval for this notice was not obtained from the competent authority as required under Section 151, rendering the notice invalid.
The Faceless AO completed the assessment under Section 147 on 19.02.2024, making additions of Rs. 3,53,21,425/- and raising a demand of Rs. 6,13,76,008/-. The additions included cash deposits, withdrawals, and TCS-related income. Penalty proceedings were initiated under Sections 271AAC and 270A.
The appellant challenged the procedural lapses, including non- compliance with Sections 148A(b), 149, and 151, and seeks relief on these grounds. Reliance is placed on relevant case law, including the decision in Kankanala Ravindra Reddy v. ITO, favoring procedural adherence. The appellant requests a condonation of delay in filing the appeal, citing health and mental distress.
4.4 I have gone through the assessment order and record available. In the instant case, there is reopening of assessment under Section 147
of the Income Tax Act, 1961, based on flagged transactions indicating substantial cash deposits, cash withdrawals, and liquor purchases during FY 2017-18 (AY 2018-19). The AO reopened the case after

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Bank), and TCS on liquor transactions of 1.74 crore. The assessee failed to file their return of income, justifying the AO’s belief of potential income escapement. However, it is seen from the record available in the system that the approval for re-opening of the case has been obtained from Principal Commissioner of Income Tax, Tirupati
Charge, Tirupati while the notice for the relevant assessment year has been issued on 07.04.2022 and the income escaping assessment is more than 50,00,000/-.
The order of under clause (d) of section 148A of the Income-tax Act,
1961 by Principal Commissioner of Income Tax, Tirupati Charge,
Tirupati is pasted below:

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In the case of [2024] 167 taxmann.com 120 (Mumbai - Trib.)
IN THE ITAT MUMBAI BENCH 'H (SMC)'
Arihant Engineers v. Income-tax Officer*
PRASHANT MAHARISHI, ACCOUNTANT MEMBER AND SANDEEP SINGH KARHAIL, JUDICIAL MEMBER
IT APPEAL NO. 3660 (MUM.) OF 2024 [ASSESSMENT YEAR 2018-
19] OCTOBER 1, 2024
10. Therefore, from the plain reading of section151of the Act, it is evident that in the case where more than three years have elapsed from the end of the relevant assessment year, the Specified Authority for the purpose of granting prior approval, as required under section 148 of the Act, is Principal Chief Commissioner or Principal Director
General or Chief Commissioner or Director General.
11. We find that while considering a similar issue the Hon'ble
Juri ictional High Court in Siemens Financial Services (P.) Ltd. v. Dy.
CIT [2023] 154 taxmann.com 159/457 ITR 647 (Bombay), 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. The relevant observations of the Hon'ble High Court, in the aforesaid decision, are reproduced as follows: -
"20. Under Section 151 "specified authority" for the purposes of section 148 and section 148A shall be, if three years or less than three years have elapsed from the end of the relevant assessment year,
Principal Commissioner or Principal Director or Commissioner or Director. If more than three years have elapsed from the end of the relevant assessment year, then Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General.
21. Admittedly, in this case, the approval/sanction for order under section 148A(d) of the Act has been granted by the Principal
Commissioner of Income Tax-8. The entire controversy is, therefore,
(a) whether the Principal Commissioner was the specified authority, who could have granted the approval/sanction ?, (b) if not, the effect thereof?
22. In our view, the approval is not valid. Hence, the impugned order passed under section 148A(d) read with notice issued under section 148 of the Act dated 31st July 2022 is not valid and has to be quashed and set aside.

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23. The first proviso to section 148 of the Act refers to the approval of the specified authority being obtained before a notice under section 148 of the Act can be issued. Explanation 3 to section 148 of the Act specifies that the meaning of the term 'specified authority' as provided for in section 151 of the Act is to apply for the purpose of section 148. Section 148A(d) of the Act also requires the Assessing Officer to pass an order after considering the reply of the assessee as to whether or not it is a fit case to issue a notice under section 148 of the Act and such an order under section 148A(d) of the Act has to be passed with the prior approval of the specified authority. The Explanation to section 148A of the Act also incorporates the meaning of 'specified authority' as provided for in section 151 of the Act.
24. As per section 151 of the Act, the 'specified authority' who has to grant his sanction for the purposes of section 148 and section 148A is the Principal Chief Commissioner or Principal Director General or where there is no Principal Chief Commissioner or Principal Director
General, the Chief Commissioner or Director General if more than three years have elapsed from the end of the relevant assessment year. The present petition relates to the AY 2016-17, and as the impugned order and impugned notice are issued beyond the period of three years which elapsed on 31st March, 2020 the approval as contemplated in section 151(ii) of the Act would have to be obtained which has not been done by the Assessing Officer. The impugned notice mentions that the prior approval has been taken of the 'Principal Commissioner of Income-tax - 8' ('PCIT-8') which is bad in law as the approval should have been obtained in terms of section 151(ii) and not section 151(i) of the Act and the PCIT-8 cannot be the specified authority as per section 151 of the Act. Further, even in the affidavit-in-reply, the department has accepted that the approval obtained is of the 'Principal Commissioner of Income-tax - 8' and, hence, such an approval would be bad in law.
25. TOLA, enacted on 29th September 2020 and came into force on 31st March 2020. It inter alia, provided for a relaxation of certain provisions of the Income-tax Act, 1961. Where any time limit for completion or compliance of an action such as completion of any proceedings or passing of any order or issuance of any notice fell between the period 20th March 2020 to 31st December 2020, the time limit for completion of such action stood extended to 31st March 2021. Thus, TOLA only seeks to extend the period of limitation and does not affect the scope of section 151. 26. The Assessing Officer cannot rely on the provisions of TOLA and the notifications issued thereunder as section 151 has been amended by Finance Act, 2021 and the provisions of the amended section would have to be complied with by the Assessing Officer, w.e.f., 1st
April 2021. Hence, the Assessing Officer cannot seek to take the shelter of TOLA as a subordinate legislation cannot override any statute enacted by the Parliament. Further, the notification extending the dates from 31st March 2021 till 30th June 2021 cannot apply once the Finance Act, 2021 is in existence. The sanction of the specified

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ITO vs. Venkata Ramanamma Sakamuri authority has to be obtained in accordance with the law existing when the sanction is obtained and, therefore, the sanction is required to be obtained by applying the amended section 151(ii) of the Act and since the sanction has been obtained in terms of section 151(i) of the Act, the impugned order and impugned notice are bad in law and should be quashed and set aside."
12. Therefore, respectfully following the aforesaid decision of the Hon'ble Juri ictional High Court as, in the present case, the period of three years has elapsed from the end of the relevant assessment year and the order dated 22/04/2022 was passed under section 148A(d) of the Act after obtaining the approval of the Principal CIT-27, Mumbai, 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.
13. Thus, in the present case, it is discernible that the notice under section 148 of the Act was issued on 22/04/2022 in contravention of the provisions of section 151 as the sanction of the concerned
Specified Authority was not obtained. Accordingly, we are of the considered view that the notice issued under section 148 of the Act is void abinitio and bad in law and therefore is quashed. Consequently, the entire reopening proceedings and assessment order passed under section 147 r/w section 144B of the Act is also quashed.
14. Since the relief has been granted to the assessee on the aforenoted juri ictional aspect, the other grounds raised by the assessee in the present appeal on merits as well as on juri iction are rendered academic and therefore are left open.
15. In the result, the appeal by the assessee is allowed.
4.6 Considering the ratio of above judgement, in the present case, it is discernible from the assessment order para 2, page no. 2(details of opportunities given) that the notice under section 148 of the Act was issued on 07/04/2022 in contravention of the provisions of section 151
as the sanction of the concerned Specified Authority was not obtained.
Accordingly, in my considered view that the notice issued under section 148 of the Act is void abinitio and bad in law and therefore is quashed. Hence, the other grounds are not being adjudicated.
5. As a result, the appeal of the assessee is allowed.”
6. The revenue being aggrieved with the order of the CIT(A) has carried the matter in appeal before us.

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8. Sri K.A. Sai Prasad, the Learned Authorized Representative (for short, “Ld. AR”) for the assessee respondent, at the threshold of hearing of the present appeal supported the order of the CIT(A). Elaborating on his contention, the Ld. AR submitted that as the AO had issued notice under section 148 of the Act, dated 07/04/2022 without obtaining approval of the specified authority as contemplated under section 151(ii) of the Act, therefore, the CIT(A) had rightly quashed the assessment for want of valid assumption of juri iction. The Ld. AR to buttress his contention had drawn our attention to the notice issued under section 07/04/2022 which revealed that the Income Tax Officer, Ward-1, Nellore had issued the said notice after obtaining the prior approval of the Principal Commissioner of Income Tax, Tirupati accorded on 06/04/2022, vide Reference No.100000029814100. Apart from that the order passed under section 148A(d) of the Act, also makes a reference to the fact that the said order was passed with the prior approval of the Principal Commissioner of Income Tax, Tirupati. For the sake of clarity, we deem it fit to cull out the notice u/s 148 dated 07.04.2022, as under:-

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10. Apropos the challenge thrown by the Ld. AR regarding the validity of the juri iction assumed by the A.O. for initiating proceedings u/s.
147 of the Act, i.e., without obtaining the approval of the specified authority u/s. 151(ii) of the Act, we find substance in the same.
Admittedly, the reassessment proceedings u/s. 147 of the Act had been revamped vide the Finance Act, 2021 w.e.f. 01.04.2021. The substituted
Sections 147 to 149 and Section 151 of the Act, applicable w.e.f.
01.04.2021 are culled out as under:

“Income escaping assessment-
147. If any income chargeable to tax, in the case of an assessee, has escaped assessment for any assessment year, the Assessing
Officer may, subject to the provisions of sections 148 to 153, assess or reassess such income or recompute the loss or the depreciation allowance or any other allowance or deduction for such assessment year (hereafter in this section and in sections
148 to 153 referred to as the relevant assessment year).
Explanation.—For the purposes of assessment or reassessment or recomputation under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, irrespective of the fact that the provisions of section 148A have not been complied with.”.
Issue of notice where income has escaped assessment
148. Before making the assessment, reassessment or recomputation under section 147, and subject to the provisions of section 148A, the Assessing Officer shall serve on the 14
ITO vs. Venkata Ramanamma Sakamuri assessee a notice, along with a copy of the order passed, if required, under clause (d) of section 148A, requiring him to furnish within such period, as may be specified in such notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139:
Provided that no notice under this section shall be issued unless there is information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the relevant assessment year and the Assessing Officer has obtained prior approval of the specified authority to issue such notice.
Explanation 1.—For the purposes of this section and section 148A, the information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment means,—
(i) any information flagged in the case of the assessee for the relevant assessment year in accordance with the risk management strategy formulated by the Board from time to time;
(ii) any final objection raised by the Comptroller and Auditor
General of India to the effect that the assessment in the case of the assessee for the relevant assessment year has not been made in accordance with the provisions of this Act.
Explanation 2.—For the purposes of this section, where,—
(i) a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A, on or after the 1st day of April, 2021, in the case of the assessee; or (ii) a survey is conducted under section 133A, other than under subsection (2A) or subsection (5) of that section, on or after the 1st day of April, 2021, in the case of the assessee; or (iii) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner, that any money, bullion, jewellery or other valuable article or thing, seized or requisitioned under section 132 or under section 132A in case of any other person on or after the 1st day of April, 2021, belongs to the assessee; or 15
(iv) the Assessing Officer is satisfied, with the prior approval of Principal Commissioner or Commissioner, that any books of account or documents, seized or requisitioned under section 132 or section 132A in case of any other person on or after the 1st day of April, 2021, pertains or pertain to, or any information contained therein, relate to, the assessee, the Assessing Officer shall be deemed to have information which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the three assessment years immediately preceding the assessment year relevant to the previous year in which the search is initiated or books of account, other documents or any assets are requisitioned or survey is conducted in the case of the assessee or money, bullion, jewellery or other valuable article or thing or books of account or documents are seized or requisitioned in case of any other person. Explanation 3.—For the purposes of this section, specified authority means the specified authority referred to in section 151.”
Conducting inquiry, providing opportunity before issue of notice under section 148-
“148A. The Assessing Officer shall, before issuing any notice under section 148,—
(a) conduct any enquiry, if required, with the prior approval of specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment;
(b) provide an opportunity of being heard to the assessee, with the prior approval of specified authority, by serving upon him a notice to show cause within such time, as may be specified in the notice, being not less than seven days and but not exceeding thirty days from the date on which such notice is issued, or such time, as may be extended by him on the basis of an application in this behalf, as to why a notice under section 148 should not be issued on the basis of information which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year and results of enquiry conducted, if any, as per clause (a);
(c) consider the reply of assessee furnished, if any, in response to the showcause notice referred to in clause (b);
(d) decide, on the basis of material available on record including reply of the assessee, whether or not it is a fit case to issue a notice under section 148, by passing an order, with the prior approval of specified authority, within one month from the end of the month in which the reply referred to in clause (c) is received

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ITO vs. Venkata Ramanamma Sakamuri by him, or where no such reply is furnished, within one month from the end of the month in which time or extended time allowed to furnish a reply as per clause (b) expires:
Provided that the provisions of this section shall not apply in a case where,—
(a) a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A in the case of the assessee on or after the 1st day of April,
2021; or (b) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any money, bullion, jewellery or other valuable article or thing, seized in a search under section 132 or requisitioned under section 132A, in the case of any other person on or after the 1st day of April, 2021, belongs to the assessee; or (c) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any books of account or documents, seized in a search under section 132 or requisitioned under section 132A, in case of any other person on or after the 1st day of April, 2021, pertains or pertain to, or any information contained therein, relate to, the assessee.
Explanation.—For the purposes of this section, specified authority means the specified authority referred to in section 151.”
Time limit for notice-
“149. (1) No notice under section 148 shall be issued for the relevant assessment year,—
(a) if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b);
(b) if three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing
Officer has in his possession books of account or other documents or evidence which reveal that the income chargeable to tax, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more for that year:
Provided that no notice under section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before 1st day of April, 2021, if such notice could not have been issued at that time on account of being beyond the time limit specified under the provisions of clause (b) of subsection (1) of 17
ITO vs. Venkata Ramanamma Sakamuri this section, as they stood immediately before the commencement of the Finance Act, 2021:
Provided further that the provisions of this subsection shall not apply in a case, where a notice under section 153A, or section 153C read with section 153A, is required to be issued in relation to a search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A, on or before the 31st day of March, 2021:
Provided also that for the purposes of computing the period of limitation as per this section, the time or extended time allowed to the assessee, as per show cause notice issued under clause (b) of section 148A or the period during which the proceeding under section 148A is stayed by an order or injunction of any court, shall be excluded:
Provided also that where immediately after the exclusion of the period referred to in the immediately preceding proviso, the period of limitation available to the Assessing Officer for passing an order under clause (d) of section 148A is less than seven days, such remaining period shall be extended to seven days and the period of limitation under this subsection shall be deemed to be extended accordingly.
Explanation.—For the purposes of clause (b) of this subsection,
“asset” shall include immovable property, being land or building or both, shares and securities, loans and advances, deposits in bank account.
(2) The provisions of subsection (1) as to the issue of notice shall be subject to the provisions of section 151.’
Sanction for issue of notice-
“151. Specified authority for the purposes of section 148 and section 148A shall be—
(i) Principal Commissioner or Principal Director or Commissioner or Director, if three years or less than three years have elapsed from the end of the relevant assessment year;
(ii) Principal Chief Commissioner or Principal Director General or where there is no Principal Chief Commissioner or Principal
Director General, Chief Commissioner or Director General, if more than three years have elapsed from the end of the relevant assessment year.”

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11. The Hon’ble Apex Court in the case of Union of India & Ors.
Vs. Ashish Agrawal, Civil Appeal No.3005/2022, dated 04.05.2022, after deliberating at length on the aforesaid amended provisions had, inter alia, observed as under:
“5. We have heard Shri N. Venkataraman, learned ASG appearing on behalf of the Revenue and Shri C.A. Sundaram and Shri S.
Ganesh, learned Senior Advocates and other learned counsel appearing on behalf of the respective assessee.
6. It cannot be disputed that by substitution of sections
147 to 151 of the Income Tax Act (IT Act) by the Finance Act, 2021, radical and reformative changes are made governing the procedure for reassessment proceedings.
Amended sections
147
to 149 and section 151 of the IT Act prescribe the procedure governing initiation of reassessment proceedings. However, for several reasons, the same gave rise to numerous litigations and the reopening were challenged inter alia, on the grounds such as (1) no valid “reason to believe” (2) no tangible/reliable material
/information in possession of the assessing officer leading to formation of belief that income has escaped assessment, (3) no enquiry being conducted by the assessing officer prior to the issuance of notice; and reopening is based on change of opinion of the assessing officer and (4) lastly the mandatory procedure laid down by this Court in the case of GKN Driveshafts (India) Ltd. Vs.
Income Tax Officer and ors; (2003) 1 SCC 72, has not been followed.
6.1 Further pre Finance Act, 2021, the reopening was permissible for a maximum period up to six years and in some cases beyond even six years leading to uncertainty for a considerable time.
6.3 But prior to pre-Finance Act, 2021, while reopening an assessment, the procedure of giving the reasons for reopening and an opportunity to the assessee and the decision of the objectives were required to be followed as per the judgment of this Court in the case of GKN Driveshafts (India) Ltd. (supra).
6.4 However, by way of section 148A, the procedure has now been streamlined and simplified. It provides that before issuing any notice under section 148, the assessing officer shall (i) conduct any enquiry, if required, with the approval of specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment; (ii) provide an opportunity of being heard to the assessee, with the prior approval of specified authority; (iii) consider the reply of the assessee furnished, if any, in response to the showcause notice referred to in clause (b); and (iv) decide, on the basis of material available on record including reply of the assessee, as to whether or not it is a fit case to issue a notice under section 148 of the IT Act and (v) the AO is required to pass a specific order within the time stipulated.
6.5 Therefore, all safeguards are provided before notice under section 148 of the IT Act is issued. At every stage, the prior approval of the specified authority is required, even for conducting the enquiry as per section 148A(a). Only in a case where, the assessing officer is of the opinion that before any notice is issued under section 148A(b) and an opportunity is to be given to the assessee, there is a requirement of conducting any enquiry, the assessing officer may do so and conduct any enquiry. Thus if the assessing officer is of the opinion that any enquiry is required, the assessing officer can do so, however, with the prior approval of the specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment.
6.6 Substituted section 149 is the provision governing the time limit for issuance of notice under section 148 of the IT Act. The substituted section 149 of the IT Act has reduced the permissible time limit for issuance of such a notice to three years and only in exceptional cases ten years. It also provides further additional safeguards which were absent under the earlier regime preFinance
01.04.2021, under the unamended section 148. In our view the same ought not to have been issued under the unamended Act and ought to have been issued under the substituted provisions of sections 147 to 151 of the IT Act as per the Finance Act, 2021. There appears to be genuine nonapplication of the amendments as the officers of the Revenue may have been under a bonafide belief that the amendments may not yet have been enforced. Therefore, we are of the opinion that some leeway must be shown in that regard which the High Courts could have done so. Therefore, instead of quashing and setting aside the reassessment notices issued under the unamended provision of IT Act, the High Courts ought to have passed an order construing the notices issued under unamended Act/unamended provision of the IT Act as those deemed to have been issued under section 148A of the IT Act as per the new provision section 148A and the Revenue ought to have been permitted to proceed further with the reassessment proceedings as per the substituted provisions of sections
147 to 151 of the IT Act as per the Finance Act, 2021, subject to compliance of all the procedural requirements and the defences, which may be available to the assessee under the substituted provisions of sections 147 to 151 of the IT Act and which may be available under the Finance Act, 2021 and in law. Therefore, we propose to modify the judgments and orders passed by the respective High Courts as under:
(i) The respective impugned section 148 notices issued to the respective assessees shall be deemed to have been issued

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2021 and treated to be showcause notices in terms of section 148A(b). The respective assessing officers shall within thirty days from today provide to the assessees the information and material relied upon by the Revenue so that the assessees can reply to the notices within two weeks thereafter;
(ii) The requirement of conducting any enquiry with the prior approval of the specified authority under section 148A(a) be dispensed with as a onetime measure visàvis those notices which have been issued under Section 148 of the unamended Act from 01.04.2021 till date, including those which have been quashed by the High Courts;
(iii) The assessing officers shall thereafter pass an order in terms of section 148A(d) after following the due procedure as required under section 148A(b) in respect of each of the concerned assessees;
(iv) All the defences which may be available to the assessee under section 149 and/or which may be available under the Finance
Act, 2021 and in law and whatever rights are available to the Assessing Officer under the Finance Act, 2021 are kept open and/or shall continue to be available and;

(v) The present order shall substitute/modify respective judgments and orders passed by the respective High Courts quashing the similar notices issued under unamended section 148 of the IT Act irrespective of whether they have been assailed before this Court or not.
9. There is a broad consensus on the aforesaid aspects amongst the learned ASG appearing on behalf of the Revenue and the learned Senior Advocates/learned counsel appearing on behalf of the respective assessees.
524/2021
and other allied tax appeals/petitions, is/are hereby modified and substituted as under:
(i) The impugned section 148 notices issued to the respective assessees which were issued under unamended section 148 of the IT Act, which were the subject matter of writ petitions before the various respective High Courts shall be deemed to have been issued under section 148A of the IT Act as substituted by the Finance Act, 2021 and construed or treated to be showcause notices in terms of section 148A(b). The assessing officer shall, within thirty days from today provide to the respective assessees information and material relied upon by the Revenue, so that the assessees can reply to the showcause notices within two weeks thereafter;

(ii) The requirement of conducting any enquiry, if required, with the prior approval of specified authority under section 148A(a) is hereby dispensed with as a onetime measure visàvis those notices which have been issued under section 148 of the unamended Act from 01.04.2021 till date, including those which have been quashed by the High
Courts. Even otherwise as observed hereinabove holding any enquiry with the prior approval of specified authority is not mandatory but it is for the concerned Assessing Officers to hold any enquiry, if required;
(iii) The assessing officers shall thereafter pass orders in terms of section 148A(d) in respect of each of the concerned assessees; Thereafter after following the procedure as required under section 148A may issue notice under section 148 (as substituted);
(iv) All defences which may be available to the assesses including those available under section 149 of the IT Act and 23
12. The impugned common judgments and orders passed by the High Court of Allahabad and the similar judgments and orders passed by various High Courts, more particularly, the respective judgments and orders passed by the various High Courts particulars of which are mentioned hereinabove, shall stand modified/substituted to the aforesaid extent only.

All these appeals are accordingly partly allowed to the aforesaid extent.
In the facts of the case, there shall be no order as to costs.
(emphasis supplied by us)

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The Assessing Officer could not have assumed exclusion of such a period while passing the order under Section 148A(d) of the Act or issuing notice under Section 148 of the Act on 07.04.2022 that such a proviso excluding the period consumed in furnishing the reply is going to be brought into the statute book by amendment by the Finance Act, 2023 with effect from 01.04.2023. In taxing statutes, intendment cannot be assumed unless specifically expressed in the provision enacted by the legislature. Therefore, the reopening of assessment without sanction/approval of the specified authority in accordance with Section 151 of the Act was bad in law. Consequently, reassessment order dated 16.01.2024 also is bad in law.”
(emphasis supplied by us)

Order pronounced in the open court on 14th November, 2025. S / -
(मधुसूदन सावͫडया)
(MADHUSUDAN SAWDIA)
लेखासदèय/ACCOUNTANT MEMBER - (रवीश सूद)
(RAVISH SOOD)
ÛयाǓयकसदèय/JUDICIAL MEMBER d/- Hyderabad, dated 14.11.2025. OKK/sps

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आदेशकȧĤǓतͧलͪपअĒेͪषत/ Copy of the order forwarded to:-

आदेशानुसार / BY ORDER

Sr. Private Secretary
ITAT, Hyderabad.