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Facts
The assessee, a trader, filed their return for AY 2017-18. The Assessing Officer issued a notice under Section 148, alleging cash deposits in a cooperative society. The assessee's explanation was rejected, and an assessment order under Section 147 was passed, determining a higher total income. The CIT(A) upheld the addition without considering the assessee's documents.
Held
The Tribunal held that the notice issued under Section 148 and the consequential assessment order were bad in law due to violations of Section 151 of the Income Tax Act regarding the proper sanctioning authority. The Tribunal followed various High Court and ITAT decisions on this matter.
Key Issues
Whether the notice under Section 148 and the reassessment proceedings were validly initiated and sanctioned as per Section 151 of the Income Tax Act, especially when more than three years had elapsed from the end of the assessment year.
Sections Cited
250, 147, 144, 148, 149, 151, 148A, 139(1), 68, 69A, 80C, 234A, 234B, 234C, 271AAC, 270A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCHES “B” :: PUNE
Before: DR.DIPAK P. RIPOTE & SHRI VINAY BHAMORE
Assessment Year: 2017-18 Sanchit Kantilal Ganore, V The Income Tax Officer, 21, Main Road, Bhagur, s. Ward-1(1), Nashik. Nashik - 422502. PAN: APRPG4907J Appellant/ Assessee Respondent / Revenue Assessee by Shri Piyush Bafna Revenue by Shri Aviyogi Ambadkar– Add.CIT(DR) Date of hearing 09/09/2025 Date of pronouncement 19/09/2025 आदेश/ ORDER
PER DR. DIPAK P. RIPOTE, AM:
This appeal is 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 A.Y.2017-18, dated 29.05.2025 emanating from Assessment Order u/s.147 r.w.s 144 of the I.T.Act, dated 21.05.2023. The assessee has raised following grounds of appeal :
1. On the facts and in the circumstances of the case and in law and without prejudice to other grounds, Ld. NFAC has erred in passing a cryptic and non-speaking order upholding the additions of Rs 1,34,39,289 made by Ld.NaFAC without adjudicating the legal grounds raised by the Appellant and hence, the impugned reassessment order as well as the order passed u/s 250 deserves to be quashed.
2. On the facts and in the circumstances of the case and without prejudice to any other grounds, the learned Assessing Officer has erred in law and on facts in passing the assessment under section 147 of the Act and issuing notice under section 148 of the Act, without complying with the various jurisdictional preconditions and statutory safeguards under Income Tax Act, rendering the reassessment proceedings bad in law and liable to be quashed.
3. On the facts and in the circumstances of the case and without prejudice to any other grounds, the learned Jurisdictional Assessing Officer has erred in issuing the notice u/s 148 on 13-04-2022 which is beyond the period of 6 years as per section 149 because fifth proviso to section 148 cannot apply in a case where the first proviso applies and thus, as per the decision of Hon'ble jurisdictional Bombay High Court in the case of Hexaware Technologies - 464 ITR 430 and Godrej Industries Ltd. v. Asstt. CIT [2024] 160 taxmann.com 13, the present notice issued u/s 148 is bad in law and thus, may please be quashed.
4. On the facts and in the circumstances of the case and in law. Ld NFAC has erred in upholding the illegal order passed by the Ld. NaFAG since the Notice u/s 148 dated 13-04-2022 was issued by Jurisdictional Assessing Officer (ITO Ward 2. Pandharpur) and not by the NaFAC and hence, the assumption of jurisdiction by Ld. JAO u/s 148 is in violation of mandatory jurisdictional conditions as stipulated in Notification No 18/2022 dated 29th March 2022, which has been upheld by Jurisdictional Honble Bombay High Court in case of Hexaware Technologies Ltd 464 ITR 430 as mandatory jurisdictional 2 pre-condition and therefore, the impugned reassessment proceedings and the consequential reassessment order may please be quashed
5. On the facts and in the circumstances of the case and in law, Ld. NFAC has erred in upholding the illegal order passed by the Ld. NaFAC since the Notice u/s 148 dated 29-07-2022 issued by Jurisdictional Assessing Officer (ITO Ward 1(1) Nashik) is without the Document Identification Number (DIN) which is in violation of Circular No. 19/2019 (F NO.225/95/2019-ITA.II), dated 14-8-2019, which has been held by Jurisdictional Hon'ble Bombay High Court in case of Hexaware Technologies Ltd. 464 ITR 430 as mandatory jurisdictional pre-condition and therefore, the impugned reassessment proceedings and the consequential reassessment order may please be quashed.
6. On the facts and in the circumstances of the case and in law and without prejudice to other grounds the assessment order passed u/s 147 r.w.s. 144 of the Act is bad in law inasmuch as there was no valid and proper sanction by the prescribed authority under section 151 of the Act and hence the said order deserves to be quashed.
7. On the facts and in the circumstances of the case and in law and without prejudice to other grounds the assessment order passed u/s 147 rws. 144 of the Act is bad in law inasmuch as there was no valid and proper sanction by the prescribed authority under section 151 of the Act as sanction is accorded by Principal Commissioner of Income Tax 1, Nashik whereas since three years were elapsed as held by Hon'ble Supreme Court in the case of Rajeev Bansal - 469 ITR 46, the sanction ought have been obtained from Principal Chief Commissioner of Income Tax, which admittedly not obtained and hence, the said notice as well as consequential assessment order deserves to be quashed
8. On the facts and in the circumstances of the case and in law and without prejudice to other grounds the assessment order passed u/s 147 r.ws 144 of the Act is bad in law inasmuch as the purported sanction granted by the Pr. CIT-1, Nashik under section 151 of the Act was never provided to the Appellant-neither along with notice u/s 148 or during the course of reassessment proceedings, which is mandatory and ought to have been provided by Ld. AO and hence, on this ground too, the said reassessment order deserves to be quashed
9. On the facts and in the circumstances of the case and in law and without prejudice to other Ground, the notice issued u/s 148 of the Act is bad in law since the learned Ld. AO [ITO Ward 1(1) Nashik] had no jurisdiction to reopen the case of the Appellant u/s 148 of the Act on the basis of the information received in the course of search on a third party viz. Renuka Mata Multi State Urban Co-op Credit Society and hence, the consequential reassessment u/s 147 of the Act is null and void
10. On the facts and in the circumstances of the case and in law and without prejudice to other grounds the assessment order passed u/s 147 r.w.s. 144 of the Act is bad in law since there was no application of mind, by Ld. AO while issuing the notices u/s 148A(b) and passing order u/s 148A(d) and notice u/s 148 inasmuch as there is no independent verification of the information with facts already available on record to justify the formation of satisfaction that there is income suggesting escapement of income and hence, the entire proceedings are based on mechanical reproduction of information without due inquiry or examination of the facts specific to the Appellant's case, thereby rendering the initiation and conclusion of reassessment proceedings void ab initio
11. On the facts and in the circumstances of the case and without prejudice to any other grounds, the learned Assessing Officer has erred in issuing notice under section 148 of the Act in a standard format without striking off the inapplicable reasons or specifying the exact basis for reopening, thereby the use of a generic unmodified template without application of mind renders the notice vague. nonspeaking, and invalid in law, as held in various judicial precedents and consequently, the reassessment proceedings initiated pursuant to such defective notice are liable to be quashed.
12. On the facts and in the circumstances of the case and without prejudice to any other grounds. Ld. JAO did not comply with the law laid down by the decision of Honble Supreme court in case of Ashish Agrawal-444 ITR 1 and therefore, the notice u/s 148 of the Act dated 29-07-2022 as well as consequential impugned reassessment proceedings and the consequential reassessment order are liable to be quashed and set aside.
GROUNDS CHALLENGING ADDITION ON MERIT:
On the facts and in the circumstances of the case and in law and without prejudice to other grounds, Ld. NFAC has erred in passing a cryptic and non-speaking order upholding the additions of Rs 1,34,39,289 made by Ld. NaFAC by assigning same reasons that of NaFAC without independently appreciating the written submissions and documentary evidences filed by the Appellant in support of his claims and hence, the impugned order passed u/s 250 is bad in law
On the facts and in the circumstances of the case and in law and without prejudice to other grounds, Ld. NFAC has erred in upholding the addition of Rs 99,82,881/-made under section 68 by Ld. NaFAC without appreciating the valid submission filed by the Appellant and 5 hence, the same is bad in law and thus, the impugned addition may please be deleted.
On the facts and in the circumstances of the case and in law and without prejudice to other grounds, Ld. NFAC has erred in upholding the addition of Rs 33,60,000/-made under section 69A by Ld. NaFAC without appreciating the valid submission filed by the Appellant and hence, the same is bad in law and thus, the impugned addition may please be deleted.
On the facts and in the circumstances of the case and in law and without prejudice to other grounds, Ld. NFAC has erred in upholding the disallowance of deduction of Rs 96,408/- claimed under section 80C by Ld. NaFAC without appreciating the valid submission filed by the Appellant and hence, the same is bad in law and thus, the impugned addition may please be deleted.
OTHER GROUNDS:
On the facts and in the circumstances of the case and in law and without prejudice to any other ground, Ld. NaFAC has erred in levying interest u/s 234A, 234B & 234C and hence, the same may please be quashed.
On the facts and in the circumstances of the case and in law and without prejudice to any other ground, Ld. NaFAC has erred in initiating penalty u/s 271AAC and 270A of the Act and hence, the same may please be quashed.
The appellant craves leave to add, amend, modify, alter, revise, substitute, or withdraw any or all grounds of the appeal, if deemed necessary at the time of hearing of the appeal, in the interest of justice.” 6 Findings & Analysis : 2. We have heard both the parties and perused the records. As per the Assessment Order, Assessee is a Trader, trading in sarees. Assessee filed Return of Income for A.Y.2017-18 on 28.10.2017 u/s.139(1) of the Act, declaring total income at Rs.8,20,450/-. A notice under section 148 of the Act, was issued to the Assessee. It is mentioned in the assessment order that notice u/s.148 was issued for the reason that Assessee has deposited cash of Rs.99,82,881/- in Renukamata Multistate Urban Co-operative Credit Society Ltd. Assessee filed an elaborate submission during the assessment proceedings including copy of bank statements, copy of profit and loss account etc.
3. Ld.Assessing Officer rejected assessee’s explanation stating that Assessee has failed to furnish date-wise sales register, stock register and copy of GST Return for the period 01.04.2016 to 31.03.2017.
4. The Assessing Officer passed an order u/s.147 determining the total income at Rs.1,42,59,739/-. Aggrieved by the assessment order, Assessee filed appeal before ld.CIT(A). Ld.CIT(A) upheld 7 the addition, merely reproducing the Assessment Order. Ld.CIT(A) has not considered the documents filed by Assessee which includes copy of cash book, purchase register, sales register, copy of Shop and Establishment License, copy of Profit and Loss Account, copy of Balance Sheet, elaborate note explaining the cash deposits, LIC Payment Receipts and Ledger Account of Renukamata Multistate Urban Co-operative Credit Society Ltd. In the paper book, at page no.160 to 161 Assessee has filed e-proceeding acknowledgment to demonstrate the document filed by the Assessee before the ld.CIT(A). The ld.CIT(A) has not discussed any of the documents or pleadings of the Assessee in his order. Thus, the order of ld.CIT(A) is without application of mind.
4.1 Aggrieved by the order of ld.CIT(A), Assessee has filed appeal before this Tribunal.
4.2 Assessee has taken various legal grounds. Ld.AR invited our attention to notice u/s.148 of the Act, dated 29.07.2022 which is at page no.10 to 11 of the paper book. It is observed that the said notice was approved by ld.Principal Commissioner of Income Tax- 1, Nashik. It is also observed that the said notice does not have any 8 DIN NUMBER. It is also observed that order u/s.148A(d) dated 29.07.2022 was approved by ld.Principal Commissioner of Income Tax-1, Nashik.
4.3 Section 151 of the I.T.Act is reproduced here as under : [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.]
5. In this case, it is an admitted fact that more than three years have lapsed from the end of the Assessment Year. Therefore, as per Section 151 of the Act, the Competent Authority to approve the notice u/s.148 and order u/s.148A(d) of the Act, is the ld.Principal Chief Commissioner of Income or ld.Chief Commissioner of Income Tax. However, in this case, notice has been approved by ld.Principal Commissioner of Income Tax. 9 5.1 The Hon’ble Jurisdictional High Court in the decision of Holiday Developers (P.) Ltd, Vs. ITO [2024] 159 taxmann.com 178 (Bombay) dated 29.01.2024 has held as under : Quote “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] (Bom.),the sanction is invalid and 154 taxmann.com 159/457 ITR 647 consequently, the order and the consequent notice under section 148A(d) and section 148, respectively, of the Act should be quashed and set aside.
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.” Unquote. 10 5.2 The Hon’ble Jurisdictional High Court in the case of Agnello Oswin Dias Vs. ACIT [2024] 161 taxmann.com 16 (Bombay) has held as under : “4. The impugned order and the impugned notice both dated 22nd April 2022 state that the Authority that has accorded the sanction is the PCIT, Mumbai-5. The matter pertains to Assessment Year ("AY") 2018- 2019 and since the impugned order as well as the notice are issued on 22nd April 2022, both have been issued beyond a period of three years. Therefore, the sanctioning authority has to be the PCCIT as provided under Section151(ii) of the Act. The proviso to Section 151 of the Act has been inserted only with effect from 1st April2023 and, therefore, shall not be applicable to the matter at hand.
In the circumstances, as held by this Court in Siemens Financial Services (P.) Ltd. v. Dy. CIT [2023] 154taxmann.com 159/457 ITR 647 (Bom.), the sanction is invalid and consequently, the impugned order and impugned notice both dated 22nd April 2022 under sections 148A(d) and 148 of the Act are hereby quashed and set aside.”
ITAT Pune in the case of Hareshkumar Dungarmal Jain vs. DCIT in quashed the Notice u/s.148 of the Act, dated 13.04.2022 for A.Y.2018-19.
The Hon’ble Madras High Court in the case of Core Logistic Company vs. ACIT, Writ Petition No.18168 of 2023 order dated 05.06.2025 has held as under :
Quote. “9. A perusal of Section 151(i) would show that, the specified authority for the purpose of issuing notice under Section 148 within a period of three years from the end of the relevant assessment year is, the Principal Commissioner 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. In the present case, the amount involved is Rs.3,65,09,748/-, which is more than 50 lakhs. 148 notice was issued on 25.07.2022, which is beyond the period of three years. So admittedly, the approval has to be obtained from the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General as defined under Section 151(ii). But, in the present case, the approval was obtained from the Principal Commissioner in terms of Section 151(i) and no approval was obtained before issuance of 148 notice in terms of provision of Section 151(ii), which is mandatory. Therefore, the notice under Section 148 was issued in the present case in violation of provision of Section 151(ii) of the Income Tax Act. In view thereof, the initiation of proceedings itself is without any jurisdiction. Hence, the same is liable to be quashed.” Unquote 7.1 Thus, in this case notice u/s.148 dated 29.07.2022 was approved by Principal Commissioner of Income Tax and the order u/s.148A(d) was approved by Principal Commissioner of Income Tax-1, Nashik for A.Y.2017-18, which is after the lapse of three years from the end of Assessment Year. Therefore, as per section 151, the Authority to approve is Principal Chief Commissioner of Income Tax/Chief Commissioner of Income Tax. Thus, Section 151 12 has been violated in this case. Therefore, respectfully following the Hon’ble High Courts(supra) and Hon’ble ITAT, we hold that Notice u/s.148 is bad in law. Accordingly, consequential assessment order is void ab-initio.
Since we have adjudicated the Ground No.6 and 7 in favour of Assessee, we do not intend to adjudicate the remaining grounds of appeal. Accordingly, all other grounds are left open.
In the result, appeal of the assessee is partly allowed. Order pronounced in the open Court on 19 September, 2025.