ESSEN CONSULTING ,MUMBAI vs. DCIT CIRCLE 23(1), MUMBAI

The Ld. DR argued & stands in favour of the orders of revenue authorities.

We have carefully considered the rival submissions, examined the material available on record, and taken note of the judicial precedents. The assessee’s challenge is fundamentally on the jurisdictional ground namely, that the notice issued under section 148 dated 26/07/2022 is void ab initio, being issued beyond the period of limitation for A.Y. 2015-16, and squarely covered by the binding decisions of the Hon’ble Supreme Court in. Rajeev Bansal (supra) and the Hon’ble Bombay High Court in Verjinia Foods Limited vs the Income Tax Officer, Ward- ESSEN Consulting 1(1), Kalyan W.P. No.1428 OF 2023, date of order 06/10/2025 and in Cherian Nallathu Abraham Annamma vs ITO WP(L) no. 32774 of 2025 date of order 13/10/2025. The legal position that emerges from these authorities is unambiguous & all reassessment notices issued for A.Y. 2015-16 on or after 01/04/2021 are barred by limitation and must be dropped, as they do not fall within the extended period permissible under TOLA. The Hon’ble Bombay High Court has repeatedly applied this principle and quashed reassessment notices in identical fact situations. In the present case, the impugned notice under section 148 was issued on 26/07/2022, well beyond the legally permissible period. Consequently, the reassessment proceedings lack jurisdiction from their inception. The Ld. DR, despite relying on the orders of the revenue authorities, was unable to produce any contrary decision to rebut the judicial precedents cited by the Ld. AR. In view of the above, the legal ground pertaining to the validity of the reassessment notice goes to the root of jurisdiction and is sufficient to vitiate the entire proceedings. Once the notice itself is void ab initio, the consequent reassessment order cannot survive. Accordingly, the additions made by the Ld. AO become purely academic and need not be adjudicated on merits. We therefore hold that the reassessment proceeding initiated under section 148 is invalid, and the reassessment order passed pursuant thereto is liable to be quashed. As the issue is decided on the jurisdictional legal ground, the grounds on merits are rendered academic and are kept open. So, the appeal of the assessee stands allowed.

The Ld. AR further contended that the aforesaid issue has already been examined and adjudicated by the Coordinate Bench of the ITAT, Mumbai ‘A’ Bench, in the case of Ashok Amritlal Shah vs. ITO in to 4288/Mum/2024, vide order dated 31.12.2024. The relevant observations of the Coordinate Bench are reproduced below:

In Manish Financials, for AY 2016–17, the Bench found that the notice issued under Section 148 was approved by the Principal Commissioner of Income Tax (Pr.CIT) instead of the Principal Chief Commissioner, as mandated. Consequently, the notice and the subsequent assessment order were deemed invalid. Applying the same rationale here, it is evident that for both assessment years under consideration, the sanctioning authority failed to comply with the specific requirements of Section 151(ii) of the Act. Since the notices were issued under the new regime but lacked the necessary approval from the appropriate authority, the sanction process stands invalid. As a result, the notices under Section 148 are deemed to have no legal foundation. In light of this, the assessment orders passed by the Ld. AO under Sections 148/143(3) are quashed. This decision reinforces the principle that procedural compliance, particularly regarding approval from the correct authority, is a fundamental requirement under the Act.

Accordingly, the ground no-2 of the appeal for AYs. 2016-17 & 207-18 are allowed. As the legal ground of the assessee is survived, the other grounds are only for academic purposes and do not require further deliberation.”

We have carefully considered the rival submissions and perused the material available on record. It is an undisputed fact that the notice under section 148 of the Act dated 30/06/2021 was issued with the prior approval of the Ld. Pr. CIT-19, Mumbai, as is evident from the order passed under section 148A(d) of the Act dated 29.07.2022. However, as per the amended provisions of section 151(ii) of the Act, where the notice under section 148 is issued after the expiry of three years from the end of the relevant assessment year, the mandatory sanction is required to be obtained from the Principal Chief Commissioner or the Principal Director General, and not from the Principal Commissioner of Income-tax. The Coordinate Bench of the ITAT, Mumbai, in Ashok Amritlal Shah (supra), after considering the statutory scheme under the new reassessment regime and the binding judicial precedents, has categorically held that sanction granted by an authority not competent under section 151(ii) vitiates the entire reassessment proceedings and renders the notice issued under section 148 invalid in law. Respectfully following the ratio laid down by the Coordinate Bench and applying the same to the facts of the present case, we hold that the approval granted by the Ld. Pr. CIT-19, Mumbai, being not in accordance with section 151(ii) of the Act, is invalid. Consequently, the notice issued under section 148 and the subsequent reassessment proceedings lack legal foundation and are liable to be quashed. Accordingly, the legal ground raised by the assessee is allowed. Since the reassessment itself is held to be invalid, the other grounds raised in the appeal become academic in nature and do not require adjudication.