KAI GANPATRAO SAKHARAM PAWAR NAGARI SAHAKARI PATSANSTHA, MARYADIT,KARAD vs. ITO, WARD-1, SATARA, SATARA

On the facts and in the circumstances of the case and in law, the cash deposited in bank Rs.27,01,120/-is out of regular business from explainable sources and duly reflected in the books of accounts in view of above addition made may please be deleted.

The appellant craves, to consider each of the above grounds of appeal without prejudice to each other and craves leave to add, alter, delete or modify all or any of the above grounds of appeal.”

1 The Assessee raised a Legal Ground which is as under :

Ld.AR for the Assessee filed a paper book. Ld.AR submitted that in this case, a notice u/s.148 of the Act and order u/s.148A(d) was approved by ld.Principal Commissioner of Income Tax, Pune whereas, as per section 151 of the Act, the Competent Authority to approve notice u/s.148 of the Act and an order u/s.148A(d) was ld.Principal Chief Commissioner of Income Tax. Therefore, the notice is ab-intio-void. The ld.AR for the Assessee relied on the following decisions : “1. Holiday Developers (P.) Ltd vs. ITO [2024] 159 taxmann.com 178 (Bombay).

HareshkumarDungarmal Jina vs. DCIT & Others in ITA No.1933 & 1934/PUN/2024

1 The ld.AR filed copies of all the above decisions.

The ld.DR for the Revenue relied on the order of Assessing Officer and ld.CIT(A). Ld.DR also filed a report from ITO, Ward- 1, Satara, dated 16.04.2025. 3.1 The ld.DR further pleaded that there has been an Amendment in the Section 151 in 2023 which needs to be considered as retrospective. The ld.DR also relied on the Hon’ble Supreme Court in the case of Ashish Agarwal. In the written submission, ld.DR has submitted as under : “3.3.14 Upon holistic reading of the judgment, it can be inferred that retrospective amendments are generally not acceptable in cases involving substantive changes to the Act or introduction of new tax concepts. The Hon'ble Court emphasized that the lawmakers' intent is paramount in enacting statutes. The Court also held that if a literal interpretation of a statute leads to ambiguity or undermines its intended purpose, any subsequent clarificatory amendment should be construed retrospectively. The Court further held that the mere mention or omission of a term suggesting retroactivity is not, in itself, sufficient to determine the retrospective application of an amendment. However, it has to be ensured that the clarificatory amendment doesn't introduce

We have heard both the parties and perused records. Both the parties have argued only on the Legal Issue. In this case, during the hearing on 08.04.2025, ld.DR sought time to obtain comments from AO and verify the Legal Ground raised by the Assessee. Accordingly, the case was adjourned to 24.04.2025. Today i.e.24.04.2025 we heard the case. The ld.DR filed a report of the Assessing Officer.

1 It is an admitted fact that notice u/s.148 was issued on 18.07.2022 and order u/s.148A(d) was passed on 18.07.2022.Both these were approved by the ld.Principal Commissioner of Income Tax-3, Pune vide No.PN/Pr.CIT-3/148/APPROVAL/2022-23/1021 dated 08/07/2022. Section 151 of the Income Tax Act is reproduced here as under : [Sanction for issue of notice. 151. Specified authority for the purposes of section 148 and section 148A shall be,—

In this case, it is an admitted fact that more than three years have been 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.

1 The Hon’ble Juri ictional 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. 2. 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 taxmann.com 159/457 ITR 647 (Bom.),the sanction is invalid and ITA No.356/PUN/2025 [A]

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.

2 Similarly, the Hon’ble Bombay High Court in the case of Pradeep Himatlal Shah Vs. ITO [2025] 170 taxmann.com 471(Bombay) has held as under : “4. The impugned order and the impugned notice both dated 7th April 2022 state that the Authority that hasaccorded the sanction is the PCIT, Thane-1. The matter pertains to Assessment Year ("AY") 2018-2019 andsince the impugned order as well as the notice are issued on 7th April 2022, both have been issued beyond aperiod 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 (Bombay)., the sanction is invalid and consequently, the impugned order andimpugned notice both dated 7th April 2022 under Sections 148A(d) and 148 of the Act are hereby quashedand set aside.”(emphasis supplied)

3 The Hon’ble Juri ictional 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

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.”

4 Thus, Hon’ble Bombay High Court explained the Amendment made in 2023 is applicable w.e.f. 01.04.2023. 5.5 And also, ITAT Pune in the case of Hareshkumar Dungarmal Jain vs. DCIT in ITA No.1933/PUN/2024, quashed the Notice u/s.148 of the Act, dated 13.04.2022 for A.Y.2018-19. 6. In the above referred decision of Hon’ble Bombay High Court, the assessment year involved is A.Y.2018-19 and order udder section 148A(d) of the Act, was passed on 07.04.2022. In the case of the assessee, Kai Ganpatrao Sakharam Pawar Nagari Sahakari Patsnastha, the assessment year is A.Y.2017-18 and order under section 148A(d) of the Act, is dated 18.07.2022. Therefore, the facts are absolutely identical. Hence, respectfully following the decision of Hon’ble Bombay High Court(supra) and ITAT Pune(supra), the order under Section 148A(d) of the Act, and notice under section 148 are quashed. Accordingly, the legal ground raised by the assessee is allowed. We have already mentioned that both parties

In the result, appeal of the assessee is partly allowed.

गाडᭅफ़ाइल / Guard File. आदेशानुसार / BY ORDER,