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Facts
The assessee's appeal is against an order passed under Section 250 of the Income Tax Act for AY 2016-17, stemming from an assessment order under Section 147 read with Section 144B. The primary issue is the validity of the notice issued under Section 148.
Held
The Tribunal held that the order u/s.148A(d) and the subsequent notice u/s.148 were bad in law because they were issued after the lapse of three years from the end of the assessment year, and the income escaped was less than Rs. 50 lakhs, violating Section 149. Furthermore, the approval for the notice was not obtained from the statutorily prescribed authority under Section 151.
Key Issues
Whether the reassessment notice issued under Section 148 was validly passed after the expiry of the three-year limitation period as prescribed under Section 149 of the Income Tax Act, and if the approval for issuing the notice was granted by the competent authority as per Section 151.
Sections Cited
147, 148, 144B, 250, 149, 151, 68, 271(1)(c), 234A, 234B, 234C, 234D, 153C, 153A, 132, 132A, 151A
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Income Tax Appellate Tribunal, PUNE BENCHES “SMC” :: PUNE
Before: DR.DIPAK P. RIPOTE & SHRI VINAY BHAMORE
Assessment Year: 2016-17 Amit Suresh Agrawal, V The Income Tax Officer, Amit Trading Co, Plot No.35, s Ward-2, Satara. Satara – 415002. Maharashtra. PAN: ABGPA2925D Appellant/ Assessee Respondent / Revenue Assessee by Shri Suhas Kulkarni – Advocate Revenue by Shri Eknath Abhang – Add.CIT(DR) Date of hearing 30/10/2025 Date of pronouncement 30/10/2025 आदेश/ ORDER
PER DR. DIPAK P. RIPOTE, AM:
This appeal filed by the Assessee against the order of ld.Commissioner of Income Tax(Appeal)[NFAC] passed under section 250 of the Income Tax Act, 1961 for the A.Y.2016-17 dated 02.04.2025 emanating from the Assessment Order passed under section 147 r.w.s 144B of the Income Tax Act, 1961 dated 10.05.2023. The Assessee has raised the following grounds of appeal :
[A] ―1. The reopening of assessment for Assessment Year 2016-17, alleging escapement of income of 43,22,430/-, is erroneous and unsustainable. The impugned notice issued under Section 148 of the Income Tax Act, 1961, dated 27th August 2022, is void ab initio and bad in law, having been issued in violation of the mandatory monetary threshold prescribed under Section 149(1)(b) of the Act, and is therefore liable to be quashed.
2. The sanction under Section 151 of the Income Tax Act required for issuing the notice under Section 148 has been obtained from an Authority lacking jurisdiction to grant such approval, thereby rendering the entire reassessment proceedings null and void.
The Assessing Officer has erroneously reopened the appellant's case under Section 147 based on a search operation conducted at the premises of M/s. Renuka Mata Multi State Urban Co-op Credit Society Ltd. Since the foundation of the present case emanates from search action wherein materials were seized, explored and enquired into, the provisions of Section 153C read with Section 153A of the Income Tax Act, 1961 would be applicable. Notice under Section 147 is therefore bad in law.
4. The impugned notice issued under Section 148 dated 27th August, 2022 has been issued by the JAO (Income-tax Officer Ward-2, Satara). Such issuance of notice is not in accordance with the provisions of Section 151A of the Income Tax Act, 1961. Therefore, the impugned notice under Section 147 is issued by the JAO without having the jurisdiction to issue such notice.
5. The learned Assessing Officer and the learned CIT(A) have proceeded in a mechanical manner without considering the submissions made by the appellant and without conducting any independent 2
The learned Assessing Officer has grossly erred in making addition under Section 68 of the Income Tax Act, 1961 in respect of cash deposited in the bank account. The impugned addition does not represent any unexplained cash credit as envisaged under Section 68 of the Act. Section 68 is not attracted in this case. The addition is wholly unjustified and deserves to be deleted in its entirety.
Without prejudice to the legal grounds above, the learned CIT(A) has erroneously dismissed the appeal ex-parte without proper examination of facts and merits of the case. The learned CIT(A) has ignored the genuine reasons, including health-related disabilities of the appellant and dependence on the Chartered Accountant, which prevented compliance with the notices issued during the appellate proceedings. The proceedings have been completed in gross violation of the principles of natural justice and are required to be quashed or remanded for fresh adjudication on merits.
8. The Assessing Officer has erroneously initiated penalty proceedings under Section 271(1)(c) of the Income Tax Act, 1961 without any legal basis. The penalty proceedings are not sustainable in law as the primary addition itself is unjustified and liable to be deleted. In the absence of any concealment of income or furnishing of inaccurate particulars, no penalty can be levied.
The Assessing Officer has erroneously charged interest under Sections 234A, 234B, 234C and 234D of the Income Tax Act, 1961. Since the primary addition itself is unjustified and liable to be deleted, the consequential interest charges are also unwarranted and liable to be deleted. 3 The appellant craves leave to add, amend, modify, or withdraw any of the aforesaid grounds, or to submit additional legal/factual grounds or evidence during the course of appellate proceedings, in the interest of substantial justice and fair adjudication.‖ Submission of ld.AR : 2. The ld.Authorised Representative(ld.AR) for the Assessee filed a paper book. Ld.AR invited our attention to the order u/s.148A(d) of the Act, dated 22.07.2022 which is at page no.3 to 5 of the paper book. Ld.AR read out the paragraph no.7 and 8 of the said order. He further submitted that it is specifically mentioned in the order that income which has escaped assessment is Rs.43,22,430/- for A.Y.2016-17. Thus, the order u/s.148A(d) was passed after lapse of three years. Therefor, as per Section 149 of the Act, no order can be issued after a lapse of three years, where income escaping assessment is less than Rs.50 lakhs. Therefore, the order u/s.148A(d) of the Act, and the notice u/s.148 dated 22.07.2022 is bad in law.
2.1 Ld.AR submitted that the order u/s.148A(d) is bad in law, as it has been approved by Ld.Pr.CIT-3, Pune whereas, as per provisions of Section 151, it should have been approved by Principal Chief Commissioner of Income Tax. Ld.AR relied on following case laws: Taradevi Ratanlal Bafna – order dated 24.10.2025. Shri Ritvik Sandeep Kolatkar in order dated 28.05.2024 Kalpana Vijay Kadam in ITA No.841/PUN/2025 dated 23.05.2025 UNION OF INDIA & ORS. vs. RAJEEV BANSAL MS Larsen & Toubro Limited & Anr vs State Of Karnataka & Anr Mahesh Subhash Shukla Vs. ITO - Mumbai ITAT Pune ITAT - Arthbharati Nagari Sahakari Patsanstha Maryadit Vs. ITO Raju Shreedhar Ghodake Vs. ITO - Pune ITAT Submission of ld.DR : 3. Ld.Departmental Representative(ld.DR) for the Revenue relied on the order of the Assessing Officer and ld.CIT(A).
Findings & Analysis : 4. We have heard both the parties and perused the records. In this appeal, we are going to deal with only the legal ground raised by the Assessee.
4.1 It can be observed that order u/s.148A(d) for A.Y.2016-17 was passed after a lapse of three years from the end of the Assessment Year. The income alleged to have been escaped for the year is less than Rs.50 lakhs.
4.2 The relevant paragraph of the order u/s.148A(d) is reproduced here as under :
4.3 It is an admitted fact that notice u/s.148A(d) was issued on 22.07.2022 for A.Y.2016-17. Assessee filed an elaborate submission. The ITO, Ward-2, Satara passed an order u/s.148A(d) for A.Y.2016-17 on 22.07.2022. It is noted that said order has been approved by Pr.CIT-3, Pune.
In this case, order u/s.148A(d) was passed on 22.07.2022 for A.Y.2016-17, thus, the order u/s.148A(d) was passed after the lapse of three years from the end of the Assessment Year. Section 149 & 151 are reproduced here as under : ―Section – 149 : 6 [Time limit for notice.
(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 sub-section (1) of this section, as they stood immediately before the commencement of the Finance Act, 2021: Provided further that the provisions of this sub-section 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 sub-section shall be deemed to be extended accordingly. Explanation.—For the purposes of clause (b) of this sub-section, "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 sub-section (1) as to the issue of notice shall be subject to the provisions of section 151.] 7 Section – 151 : [Sanction for issue of notice.
Specified authority for the purposes of section 148 and section 148A shall be,— (i) Principal Commissioner or Principal Director or Commissioner or Director, if three years or less than three years have elapsed from the end of the relevant assessment year; (ii) Principal Chief Commissioner or Principal Director General or 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.] 6. As per Section 149 of the Act, after the lapse of three years from the end of the Assessment Year, no notice can be issued unless the income chargeable to tax which has escaped assessment is likely to be Rs.50 lakhs or more.
6.1 Thus, it can be observed from the said order u/s.148A(d) that the income alleged to have escaped assessment is only Rs.43,22,430/-. Since three years from the end of the assessment year have elapsed and the amount of alleged escapement is only Rs.43,22,430/- which is less than Rs.50 lakhs, no order under section 148A(d) could be passed.
6.2 Therefore, order u/s.148A(d) is bad in law. Hence, notice u/s.148 dated 22.07.2022 and consequential Assessment Order is bad in law. 8 7. It is also observed that order u/s.148A(d) was approved by Pr.CIT-3, Pune. Since three years from the end of the Assessment Years have been elapsed, as per Section 151 of the Act, the order should have been approved by Principal Chief Commissioner of Income Tax(Pr.CCIT). Therefore, the order u/s.148A(d) is bad in law.
7.1 The Hon’ble Jurisdictional High Court in the case of Holiday Developers Private Limited Vs. ITO 159 taxmann.com 178(Bombay) dated 29.01.2024 held as under : ―1. Petitioner is impugning a order under section 148A(d) and the notice, both dated 7th April 2022 passed under section 148 of the Income Tax Act, 1961 ("Act"). Of-course Petitioner has also impugned the notice dated 17th March 2022 issued under section 148A(b) of the Act. Various grounds have been raised but one of the primary grounds for challenging the notice under section 148A(d) and the notice under section 148 of the Act both dated 7th April 2022 is that order as well as the notice both mention the authority that has granted approval, is the Principal Commissioner of Income Tax ("PCIT"), Mumbai 5 and the approval has been granted on 7th April 2022.
Mr. Gandhi is correct in saying that the Assessment Year ("AY") is 2018-19 and, therefore, since more than three years have expired from the end of the assessment year, Sanctioning Authority under section 151(ii) of the Act should be the Principal Chief Commissioner of Income Tax ("PCCIT") and not the PCIT. Mr. Gandhi says, as held in Siemens Financial Services (P.) Ltd. v. Dy. CIT [2023] 154 9 [A] taxmann.com 159/457 ITR 647 (Bom.),the sanction is invalid and consequently, the order and the consequent notice under section 148A(d) and section 148, respectively, of the Act should be quashed and set aside.
3. In view of these facts and circumstances, we do not see any reason to just grant Rule and keep the matter pending.
As held in Siemens (Supra), the order passed under section 148A(d) and notice issued under section 148 of the Act both are quashed and set aside.‖ 7.2 Thus, the facts of the Holiday Developers Private Limited(supra) are identical to the facts of the present case of the assessee. In Holiday Developers Private Limited for A.Y.2018-19, order u/s.148A(d) was issued on 07.04.2022 and in the present case of Assessee Amit Suresh Agrawal, the order u/s.148A(d) was passed on 22.07.2022. Therefore, respectfully following Hon’ble Jurisdictional High Court, it is held that the order u/s.148A(d) is bad in law and notice u/s.148 dated 22.07.2022 is bad in law. Therefore, the Assessment Order is void ab initio.
7.3 Similarly, Hon’ble Madras High Court in the case of Core Logistic Company Vs. ACIT 175 taxmann.com 453(MADRAS) dated 05.06.2025 has held as under : “9. A perusal of Section 151(i) would show that, the specified authority 10 for the purpose of issuing notice underSection 148 within a period of PrincipalCommissioner or Principal Director or Commissioner or Director. Further, in terms of provision of Section149, three year time period is fixed for issuance of 148 notice, in the event of the amount is below 50 lakhs. Inthe present case, the amount involved is Rs.3,65,09,748/-, which is more than 50 lakhs. 148 notice was issuedon 25.07.2022, which is beyond the period of three years. So admittedly, the approval has to be obtained fromthe Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director Generalas defined under Section 151(ii). But, in the present case, the approval was obtained from the PrincipalCommissioner in terms of Section 151(i) and no approval was obtained before issuance of 148 notice in termsof provision of Section 151(ii), which is mandatory. Therefore, the notice under Section 148 was issued in thepresent case in violation of provision of Section 151(ii) of the Income Tax Act. In view thereof, the initiationof proceedings itself is without any jurisdiction. Hence, the same is liable to be quashed.
Accordingly, the impugned proceedings of the 3rd respondent dated 30.05.2023 is hereby quashed.‖ 7.4 Accordingly, for all the reasons mentioned above, the Grounds No.1 and 2 raised by the assessee are allowed.
Since we have allowed the appeal of the assessee on legal ground, remaining ground becomes academic in nature. Hence, Ground No.3 to 9 are dismissed as unadjudicated.
Delay : 9. There was delay of 91 days. Assessee filed an Affidavit. We have perused the Affidavit and are convinced that there is sufficient and reasonable cause for delay. Hence, the Delay is condoned. 11