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Facts
The assessee filed an appeal with a delay of 345 days for AY 2015-16 against an assessment order passed u/s.147 for an addition of Rs.22,68,500/-. The core challenge was to the validity of the reassessment notice issued u/s.148, arguing it was invalid due to improper approval u/s.151, as approval was obtained from PCIT instead of the competent authority, JCIT, under the old regime for the relevant period.
Held
The Tribunal condoned the delay in filing the appeal, finding 'reasonable cause'. Following the jurisdictional High Court decision in *Prabhakar Nerulkar Vs. PCIT*, it was held that the notice u/s.148 was invalid because the Assessing Officer obtained approval from the PCIT instead of the JCIT, as mandated by Section 151 for AY 2015-16 prior to 01.04.2021. Consequently, the re-assessment proceedings were quashed due to lack of valid jurisdiction.
Key Issues
Whether the delay of 345 days in filing the appeal should be condoned and whether the reassessment proceedings initiated u/s.148 were valid given that the required sanction u/s.151 was obtained from PCIT instead of JCIT for AY 2015-16.
Sections Cited
147, 148, 151, 144, 144B, 250, 56(2)(vib), 264, 2(28C)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCHES “SMC”, PUNE
Before: DR.MANISH BORAD
आदेश / ORDER
PER DR. MANISH BORAD, ACCOUNTANT MEMBER :
The captioned appeal at the instance of assessee pertaining to A.Y. 2015-16 is directed against the order dated 29.05.2024 of National Faceless Appeal Centre (NFAC) Delhi passed u/s.250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) arising out of Assessment Order dated 29.03.2022 passed u/s.147 r.w.s144 r.w.s144B of the Act.
Registry has informed that there is delay of 345 days in preferring the instant appeal before this Tribunal. Appellant has filed an application for condonation of delay explaining the reasons which led to delay in filing of the appeal.
After hearing both the sides and perusing the averments made in the condonation application, I am satisfied that due to ‘reasonable cause’ appellant failed to file the appeal within the stipulated time. I note that the appellant would not have gained from filing the appeal with a delay. I therefore in light of judgments of Hon’ble Apex Court Court in the case of Collector, Land Acquisition, Anantnag & Anr. Vs. Mst. Katiji & Ors. reported in (1987) 2 SCC 107 and in the case of Inder Singh Vs. State of Madhya Pradesh judgment dated 21.03.2025 (2025 INSC 382) condone the delay of 345 days in filing the appeal before this Tribunal.
Assessee has raised following grounds of appeal :
“1. On the facts and circumstances prevailing in the case and as per provisions and scheme of the Income-tax Act, 1961 ('the Act') it be held that the addition of Rs.22,68,500/- so made by Ld. AO and that upheld by Ld. CIT(A), NFAC is incorrect and not in accordance with the provisions of the Act. Accordingly, the addition so made be kindly deleted and Appellant be granted just and proper relief in this respect 2. On the facts and circumstances prevailing in the case and as per provisions and scheme of the Income-tax Act, 1961 ('the Act') it be held that the addition of Rs.22,68,500/- so made u/s 56(2)(viib) of the Act is not in accordance with the provisions of the Act. Accordingly, the addition so made be kindly deleted and Appellant be granted just and proper relief in this respect.
3. On the facts and circumstances prevailing in the case and as per provisions and scheme of the Income-tax Act, 1961 ('the Act') Appellant be kindly allowed to produce additional evidence, if required, in the interest of justice..
4. The appellant prays to be allowed to add, amend, modify, rectify, delete, raise any grounds of appeal at the time of hearing.” 4.1 Apart from the grounds raised on merit against the addition of Rs.22,68,500/-, assessee has also raised the following additional ground challenging the validity of notice issued u/s.148 of the Act being invalid and void ab-initio since the same has been initiated without proper approval/sanction as required u/s.151 of the Act.
“On the facts and circumstance prevailing in the case and as per provisions and scheme of the Act it be kindly held that Assessment Proceeding so initiated u/s 147 r.w.s 148 of the Act are invalid and void-ab-initio since the same is initiated without appropriate approval/sanction as required u/s 151 of the Act. Thus, the Assessment Proceedings so initiated be kindly held to be invalid and be kindly quashed.'
At the outset, ld. Counsel for the assessee referring to the judgment of Hon’ble Jurisdictional High Court in the case of Prabhakar Nerulkar Vs. PCIT – Writ Petition No.443 of 2024 dated 21.07.2025 submitted that the ratio laid down by the Hon’ble High Court is squarely applicable on the facts of the instant case. He submitted that ld. Assessing Officer was required to take prior approval of the Joint Commissioner of Income-tax (JCIT). However, in the instant case, notice has been issued on 29.03.2021 after obtaining approval from Principal Commissioner of Income-tax (PCIT). Therefore, in absence of a valid approval, ld. Assessing Officer failed to assume valid jurisdiction for carrying out the re-assessment proceedings.
On the other hand, ld. Departmental Representative supported the orders of the lower authorities.
I have heard the rival contentions and perused the record placed before us. I observe that the assessee is an individual and income of Rs.6,60,700/- declared in the return for A.Y. 2015-16 furnished on 04.05.2016. Based on the information about purchase of immovable property by the assessee from M/s. Golden Trellis, ld. Assessing Officer issued notice u/s.148 of the Act on 29.03.2021 after obtaining the approval from PCIT. Assessee failed to participate in the assessment as well as appellate proceedings and therefore the assessment order has been framed u/s.144 and ld.CIT(A) has also passed exparte order dismissing the assessee’s appeal for non-appearance. However, ld.CIT(A) has dealt with merits of the case but during the course of hearing before this Tribunal, ld. Counsel for the assessee has raised a legal issue by raising additional ground and after going through the same I find that the same deserves to be admitted in light of National Thermal Power Company Ltd. Vs. CIT (1998) 299 ITR 383 (SC).
Before me, ld. Counsel for the assessee has referred to the judgment of Hon’ble Jurisdictional High Court in the case of Prabhakar Nerulkar Vs. PCIT (supra) where also similar issue came for adjudication and for the notice issued for reopening the assessment for A.Y. 2015-16 prior to 31.03.2021, Hon’ble Court has held that under the old regime for reopening the case before the expiry of 4 years from the Assessment Year, ld. Assessing Officer was required to take approval from JCIT and not PCIT and in absence of proper approval, the notice u/s.148 of the Act deserves to be quashed. Relevant observation of Hon’ble High Court reads as under :
“30. The case before us clearly falls within the aforesaid time line as the AY 2015-16 and the period of four years from the end of the assessment year clearly fell between 20.03.2020 and 31.03.2021 and therefore, the case is governed by the old regime as the new regime came into effect from 01.04.2021. Hence, the case of the Petitioner is governed by clause (2), where it is the Joint Commissioner, who should be satisfied with the reasons recorded by the Assessing Officer that it is a fit case for issuance of notice, and it is not a case governed by clause (1) of Section 151. However, the notice under Section 148 records that it is being issued after obtaining the satisfaction of the PCIT, Panaji, who is not the competent Authority.
The observations in the case of Ghanshyam K. Khabrani (supra) clearly come into play where it was observed thus:
"There is merit in the contention raised on behalf of the assessee that the requirement of section 151(2) could have only been fulfilled by the satisfaction of the Joint Commissioner that this is a fit case for the issuance of a notice under section 148. Section 151(2) mandates that the satisfaction has to be of the Joint Commissioner. That expression has a distinct meaning by virtue of the definition in section 2(28C). The Commissioner of Income-tax is not a Joint Commissioner within the meaning of section 2(28C). In the present case, the Additional Commissioner of Income-tax forwarded the proposal submitted by the Assessing Officer to the Commissioner of Income-tax. The approval which has Page 27 of 29 21st July 2025 WP 443 OF 2024.ODT been granted is not by the Additional Commissioner of Income-tax but by the Commissioner of Income-tax. There is no statutory provision here under which a power to be exercised by an officer can be exercised by a superior officer. When the statute mandates the satisfaction of a particular functionary for the exercise of a power, the satisfaction must be of that authority. Where a statute requires something to be done in a particular manner, it has to be done in that manner. In a similar situation the Delhi High Court in CIT v. SPL's Siddhartha Ltd. (ITA No. 836 of 2011 decided on September 14, 2011)--since reported in (2012) 345 ITR 223 (Delhi) held that powers which are conferred upon a particular authority have to be exercised by that authority and the satisfaction which the statute mandates of a distinct authority cannot be substituted by the satisfaction of another. We are in respectful agreement with the judgment of the Delhi High Court."
In the wake of the above, since we are of the view that the Authority at whose satisfaction must have issued the notice under Section 148 was not the PCIT, Panaji, but the Joint Commissioner as contemplated under sub-section (2) of Section 151, the notice issued under Section 148 on 31.03.2021 at Annexure D-1, is liable to be quashed and set aside as a consequence, the assessment order passed under Section 147 dated 21.03.2022 as well as the order dated 14.11.2023 under Section 264 of the Income Tax also cannot be sustained and are liable to be quashed and set aside.”
Examining the facts of the instant case in light of the above judgment, I find that the notice has been issued u/s.148 of the Act for A.Y. 2015-16 on 29.03.2021, i.e. prior to the new regime of issuing notice which came into effect from 01.04.2021. I further find that the period of four years from the end of the A.Y. 2015-16 clearly fell during 20.03.2020 to 31.03.2021 and after excluding the TOLA period [Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020] the approval in the case of assessee was required to be taken from JCIT as provided in section 151(2) of the Act. For necessary reference section 151 of the Act as it substituted in the Income-tax Act by the Finance Act, 2015 w.e.f. 01.06.2015 reads as under :
“151. (1) No notice shall be issued under section 148 by an Assessing Officer, after the expiry of a period of four years from the end of the relevant assessment year, unless the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner is satisfied, on the reasons recorded by the Assessing Officer, that it is a fit case for the issue of such notice. (2) In a case other than a case falling under sub- section (1), no notice shall be issued under section 148 by an Assessing Officer, who is below the rank of Joint Commissioner, unless the Joint Commissioner is satisfied, on the reasons recorded by such Assessing Officer, that it is a fit case for the issue of such notice. (3) For the purposes of sub-section (1) and sub- section (2), the Principal Chief Commissioner or the Chief Commissioner or the Principal Commissioner or the Commissioner or the Joint Commissioner, as the case Page 12 of 29 21st July 2025 WP 443 OF 2024.ODT may be, being satisfied on the reasons recorded by the Assessing Officer about fitness of a case for the issue of notice under section 148, need not issue such notice himself.”
Now from going through the above provision of section 151, I find that the case of assessee falls in sub-clause (2) of section 151 as the date of notice u/s.148 dated 29.03.2021 falls during the period between 20.03.2020 to 31.03.2021 and therefore if the period referred in TOLA is excluded then the four years will complete on 31.03.2021 and the sanction in this case is to be obtained from JCIT and even if TOLA period is not considered then also the approval as per section 151(1) of the Act was required to be taken from PCCIT or CCIT. However, ld. Assessing Officer in the instant case has taken approval from PCIT which was not the competent authority to grant approval under the applicable provisions of section 151 of the Act. Therefore, respectfully following the ratio laid down in the case of Prabhakar Nerulkar Vs. PCIT (supra). I hold that the notice issued by ld. Assessing Officer u/s.148 is not valid as it has been issued without taking prior approval as provided u/s.151 of the Act. In absence of valid notice u/s.148 of the Act, ld. Assessing Officer failed to assume valid jurisdiction for carrying out the re-assessment proceedings and therefore the re- assessment proceedings deserves to be quashed. Assessee succeeds on this legal issue.
Dealing with remaining grounds raised on merit would be merely academic in nature and thus held to be infructuous.
In the result, appeal of the assessee is allowed as per terms indicated above.
Order pronounced on this 12th day of September, 2025.