BYSOL ENTERPRISES PRIVATE LIMITED, MUMBAI vs. ACIT, CIRCLE 4(1)(1), MUMBAI
Facts
The assessee, Bysol Enterprises Pvt Ltd, filed its return of income for AY 2017-18. The Assessing Officer (AO) initiated reassessment proceedings under section 147 of the Income-tax Act, alleging that the assessee had inflated purchases from KMP and Sons Trading Ltd. amounting to Rs. 4,66,01,531/-. This led to the issuance of notices under section 148A and 148 of the Act. The assessee contested the validity of these proceedings on various grounds, including jurisdictional issues.
Held
The Tribunal noted that the reassessment proceedings were initiated after the expiry of three years from the end of the relevant Assessment Year (2017-18). According to section 151(ii) of the amended law, for cases where more than three years have elapsed, approval must be obtained from a higher authority, specifically the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General. However, in this case, the approval was obtained from the Principal Commissioner of Income Tax-1, Thane. The Tribunal held that since a proper sanction from the specified higher authority was not obtained, the notice issued under section 148 was invalid and bad in law.
Key Issues
Whether the reassessment proceedings initiated under section 147/148 were valid, specifically concerning the approval obtained from the appropriate authority under section 151 of the Income-tax Act, especially when the notice was issued beyond three years from the end of the assessment year.
Sections Cited
147, 148, 148A, 151, 151A, 149(1)(b)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH MUMBAI
Before: AMIT SHUKLA & SHRI GIRISH AGRAWAL
IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH MUMBAI BEFORE AMIT SHUKLA, JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA No. 5898/MUM/2025 Assessment Year: 2017-18
Bysol Enterprises Pvt Ltd, Assistant Commissioner of 202, 2nd Floor Doulat Bhavan, Income Tax, Circle 4 (1) (1), Kalbadevi, Vs. Mumbai Mumbai - 400002 (PAN: AAFCB7625N) (Appellant) (Respondent)
Present for: Assessee : Shri Kapil Hirani, Advocate Revenue : Shri Leyaqat Ali Aafaqui, Sr. AR Date of Hearing : 20.11.2025 Date of Pronouncement : 29.01.2026 O R D E R PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of National Faceless Appeal Centre, Delhi, vide order no. ITBA/NFAC/S/250/2025- 26/1079909142(1), dated 22.08.2025, passed against the assessment order by Assistant Commissioner of Income-tax, Circle–4(1)(1), Mumbai, u/s. 147 of the Income-tax Act (hereinafter referred to as the “Act”), dated 18.05.2023 for Assessment Year 2017-18.
Grounds taken by assessee are reproduced as under: 1. On the facts and circumstances of the case and in law, the reopening of the assessment and the assessment as completed is illegal, invalid, without jurisdiction, on borrowed satisfaction, without independent application of mind, violative of the principal of natural justice and which deserves to be quashed as per law and in the interest of justice.
2 ITA No. 5898/Mum/2025 Bysol Enterprises Pvt Ltd. AY 2017-18 2. On the facts and circumstances of the case and in law, the entire orders and notices issued under section 148A and 148 of the Income Tax Act, 1961 ("Act") are in contravention of the provisions of section 151A of the Act and Notification No. 18/2022 dated 29.3.2022 which makes the said notices and orders grossly illegal, unsustainable in law and which deserves to be quashed as per law and in the interest of justice. 3. On the facts and circumstances of the case and in law, the order passed under section 148A(d) and the notice issued under section 148 of the Act are without proper sanction under section 151 of the Act making the same illegal and which deserves to be quashed as per law and in the interest of justice. 4. On the facts and circumstances of the case and in law, the AO grossly erred in treating the purchases made by the Appellant amounting to Rs. 4,66,01,531 as non-genuine ignoring the evidence filed and the submissions of the Appellant and the legal proposition on the same and proceeded to make the addition on mere assumptions, presumptions, surmises and conjectures, without giving opportunity of cross examination and without furnishing the appellant with a copy of the report, information, or any material relied upon for such adverse conclusion, which makes the addition illegal, bad in law, violative of the principles of natural justice and liable to be deleted as per law and in the interest of justice. 5. On the facts and circumstances of the case and in law, the entire purchases allegedly held to be bogus being duly supported by third party evidences, the addition made by the AO without objectively and subjectively disproving the evidences so filed, and solely on the basis of information shared by officers other than the Assessing Officer, makes the addition grossly illegal and liable to be deleted as per law and in the interest of justice. 6. On the facts and circumstances of the case and in law the entire purchases made by the Appellant are genuine and which deserve to be accepted as such. 7. On the facts and circumstances of the case and in law, the books of accounts having been accepted as well as the sales made by the Appellant, the corresponding purchases also ought to have been accepted as per law and in the interest of justice. 8. Without prejudice, in case any purchases made by the Appellant are held to be non-genuine, then the addition deserves to be restricted only to the gross profit on the same as per law and in the interest of justice.
Ground No.1, 2 and 3 are in regard to jurisdictional issues raised by the assessee for the reassessment proceeding initiated u/s. 148 and reassessment order passed thereafter.
Brief facts of the case are that assessee filed its return of income originally u/s.139(1) on 31.10.2017 reporting total income at
3 ITA No. 5898/Mum/2025 Bysol Enterprises Pvt Ltd. AY 2017-18 Rs.6,05,000/-. Subsequently, information came in the possession of ld. Assessing Officer that assessee has indulged in inflating its purchases by way of arranging bogus purchase bills from KMP and Sons Trading ltd. (KMP) amounting to Rs.4,66,01,531/- which led to invocation of reassessment proceedings by issuing a notice dated 07.04.2021 under the erstwhile regime of reassessment under the Act. Since this notice was issued under the erstwhile regime of re-assessment as provided u/s.148 r.w.s. 147 which has undergone total revamp by the Finance Act, 2021, the amendments brought in by the Finance Act 2021 led to several jurisdictional issues in respect of reassessment proceeding for which the matter travelled up to the Hon'ble Supreme Court with the lead case of Union of India vs. Ashish Agarwal [2022] 130 taxmann.com 64 (SC) followed by the decision in the case of Union of India vs. Rajeev Bansal [2024] 167 taxmann.com 70 (SC). As a fall out of the directions given in the case of Ashish Agarwal (supra), ld. Assessing Officer in the present case complied with the same, after which an order u/s.148A(d) was passed dated 19.07.2022 recommending the reopening of the case u/s.148. Subsequent to this, notice u/s.148 was issued, dated 19.07.2022.
We have heard both the parties on their submissions relating to legal ground. We have also perused the judicial precedents relied upon for which relevant judicial orders are placed on record. Merits of the case have not been argued upon by either party, nor any submission made to that effect. Reasons to believe were recorded for initiating the reopening of proceedings and issuance of notice u/s.148 which was issued on 07.04.2021, placed in the paper book at page 550. This notice contains the fact about obtaining necessary satisfaction from Range-1, Thane. Since this notice was issued under the erstwhile regime of re- assessment as provided u/s.148 r.w.s. 147 which has undergone total
4 ITA No. 5898/Mum/2025 Bysol Enterprises Pvt Ltd. AY 2017-18 revamp by the Finance Act, 2021, the amendments brought in by the Finance Act 2021 led to several jurisdictional issues in respect of reassessment proceeding for which the matter travelled up to the Hon'ble Supreme Court with the lead case of Union of India vs. Ashish Agarwal [2022] 130 taxmann.com 64 (SC) followed by the decision in the case of Union of India vs. Rajeev Bansal [2024] 167 taxmann.com 70 (SC). As a fall out of the directions given in the case of Ashish Agarwal (supra), ld. Assessing Officer in the present case issued a letter dated 25.05.2022 with the subject heading “subsequent proceeding with reference to section 148A(b) in consequence to Hon'ble Supreme Order dated 04.05.2022 – letter”.
5.1. An order u/s. 148A(d) was passed by Income Tax Officer, Ward- 2(1), Thane, dated 19.07.2022 recommending the re-opening of the case u/s. 148. Subsequent to this, a notice u/s.148 was issued on 19.07.2022 wherein, in para-3, it is noted that prior approval of PCIT- 1, Thane, vide letter No. THN/Pr.CIT/1/148/2022-23/1360, dated 12.07.2022 was obtained.
On these set of facts, submission of the ld. Counsel is that in the provisions for re-opening of assessment upon amendment by Finance Act, 2021, the first proviso to section 148 refers to approval by specified authority which is to be obtained before issuing notice u/s. 148. Section 151 describes specified authority for the purpose of section 148 and 148A, based upon the time limits within which the reopening proceedings are to be initiated i.e., i. By Principal Commissioner of Income Tax or Principal Director or Commissioner or Director, if three years or less than three years have lapsed from the end of the Assessment Year.
5 ITA No. 5898/Mum/2025 Bysol Enterprises Pvt Ltd. AY 2017-18 ii. By Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General, if more than three years have been lapsed from the end of the relevant Assessment Year.
Admitted position of fact in this case is that income chargeable to tax which escaped assessment is more than Rs.50,00,000/-, since ld. Assessing Officer has alleged that the income chargeable to tax of Rs. 4.66 Crs. has escaped assessment. Also, it is undisputed that notice u/s.148 has been issued after the expiry of three years from the end of the relevant Assessment Year. Three years from the end of the Assessment Year 2017-18 lapsed on 31.03.2021. As per section 149(1)(b) of the Act (new regime), re-assessment proceedings could have been initiated after the expiry of three years from the end of the relevant Assessment Year only if the income chargeable to tax which escaped assessment is more than Rs.50,00,000/-. These admitted facts are relevant on the legal aspect relating to obtaining prior approval from the specified authority which are undisputed and nothing has been brought on record by the Revenue to controvert the same.
7.1. We find that in the decision by the Hon'ble Supreme Court in the case of Union of India v. Rajeev Bansal (supra), Hon'ble Court after the fall out of its own decision in the case of Ashish Agarwal (supra) had dealt with the issue in respect of sanction of the specified authority and concluded that TOLA will extend the time limit for the grant of sanction by the authority specified u/s.151. According to the Hon'ble Court, the test to determine whether TOLA will apply to section 151 of the new regime is that if the time limit of three years from the end of the Assessment Year falls between 20.03.2020 and 31.03.2021 then, the specified authority u/s.151(i) has extended time till 30.06.2021 to grant the approval. According to the Hon'ble Court, Assessing Officers were
6 ITA No. 5898/Mum/2025 Bysol Enterprises Pvt Ltd. AY 2017-18 required to issue the re-assessment notice u/s.148 of the new regime within the time limit surviving under the Act read with TOLA. All notices issued beyond the surviving period are time barred and liable to be set aside. Hon'ble Court had elaborately dealt with this issue in Part E of its decision in para 73 to 78 which are extracted below: 73. Section 151 imposes a check upon the power of the Revenue to reopen assessments. The provision imposes a responsibility on the Revenue to ensure that it obtains the sanction of the specified authority before issuing a notice under Section 148. The purpose behind this procedural check is to save the assesses from harassment resulting from the mechanical reopening of assessments. 128 A table representing the prescription under the old and new regime is set out below:
The above table indicates that the specified authority is directly co- related to the time when the notice is issued. This plays out as follows under the old regime: (i) If income escaping assessment was less than Rupees one lakh: (a) a reassessment notice could be issued under Section 148 within four years after obtaining the approval of the Joint Commissioner, and (b) no notice could be issued after the expiry of four years; and (ii) If income escaping was more than Rupees one lakh: (a) a reassessment notice could be issued within four years after obtaining the approval of the Joint Commissioner; and (b) after four years but within six years after obtaining the approval of the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner.
7 ITA No. 5898/Mum/2025 Bysol Enterprises Pvt Ltd. AY 2017-18
After 1 April 2021, the new regime has specified different authorities for granting sanctions under Section 151. The new regime is beneficial to the assessee because it specifies a higher level of authority for the grant of sanctions in comparison to the old regime. Therefore, in terms of Ashish Agarwal (supra), after 1 April 2021, the prior approval must be obtained from the appropriate authorities specified under Section 151 of the new regime. The effect of Section 151 of the new regime is thus: (i) If income escaping assessment is less than Rupees fifty lakhs: (a) a reassessment notice could be issued within three years after obtaining the prior approval of the Principal Commissioner, or Principal Director or Commissioner or Director; and (b) no notice could be issued after the expiry of three years; and (ii) If income escaping assessment is more than Rupees fifty lakhs: (a) a reassessment notice could be issued within three years after obtaining the prior approval of the Principal Commissioner, or Principal Director or Commissioner or Director; and (b) after three years after obtaining the prior approval of the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General. 76. Grant of sanction by the appropriate authority is a precondition for the assessing officer to assume jurisdiction under Section 148 to issue a reassessment notice. Section 151 of the new regime does not prescribe a time limit within which a specified authority has to grant sanction. Rather, it links up the time limits with the jurisdiction of the authority to grant sanction. Section 151(ii) of the new regime prescribes a higher level of authority if more than three years have elapsed from the end of the relevant assessment year. Thus, non-compliance by the assessing officer with the strict time limits prescribed under Section 151 affects their jurisdiction to issue a notice under Section 148. 77. Parliament enacted TOLA to ensure that the interests of the Revenue are not defeated because the assessing officer could not comply with the pre- conditions due to the difficulties that arose during the COVID-19 pandemic. Section 3(1) of TOLA relaxes the time limit for compliance with actions that fall for completion from 20 March 2020 to 31 March 2021. TOLA will accordingly extend the time limit for the grant of sanction by the authority specified under Section 151. The test to determine whether TOLA will apply to Section 151 of the new regime is this: if the time limit of three years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under Section 151(i) has an extended time till 30 June 2021 to grant approval. In the case of Section 151 of the old regime, the test is: if the time limit of four years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under Section 151(2) has time till 31 March 2021 to grant approval. The time limit for Section 151 of the old regime
8 ITA No. 5898/Mum/2025 Bysol Enterprises Pvt Ltd. AY 2017-18 expires on 31 March 2021 because the new regime comes into effect on 1 April 2021. 78. For example, the three years time limit for assessment year 2017-2018 falls for completion on 31 March 2021. It falls during the time period of 20 March 2020 and 31 March 2021, contemplated under Section 3(1) of TOLA. Resultantly, the authority specified under Section 151(i) of the new regime can grant sanction till 30 June 2021….. 81. This quote in Ashish Agrawal (supra) directed the Assessing Officers to “pass orders in terms of Section 148-A(d) in respect of each of the assessee concerned.” Further, it directed the Assessing Officers to issue a notice u/s.148 of the new regime “after following the procedure as required u/s.148-A.” Although this quote waived off the requirement of obtaining prior approval u/s.148A(a) and section 148A(b), it did not waive the requirement for section 148A(d) and section 148. Therefore, the Assessing Officer was required to obtain prior approval of the specified authority according to section 151 of the new regime before passing an order u/s. 148A(d) or issuing a notice u/s.148. These notices ought to have been issued following the time limits specified u/s.151 of the new regime r.w. TOLA, where applicable…. 114. ……d. TOLA will extend the time limit for the grant of sanction by the authority specified u/s.151. The test to determine whether TOLA will apply to section 151 of the new regime is this: if the time limit of three years from the end of an Assessment Year falls between 20 March 2020 and 31 March 2021, then the specified authority u/s.151(i) has extended time till 30 June 2021 to grant approval; …”
7.2. From the above, we note that in para 73, in the table last two rows relate to provisions of Section 151(i) and (ii) of the new regime prescribing the time limit as well as the specified authority. In para 75, it is very categorically mentioned by the Hon’ble Court that after 01.04.2021, in terms of Ashish Agrawal (supra) the prior approval must be obtained from the appropriate authorities specified u/s.151 of the new regime. This abundantly brings clarity on the aspect of obtaining approval for issue of notice u/s.148 which are fall out of the decision in Ashish Agrawal (supra). In para 77, objective of section 3(1) of TOLA is mentioned which is to relax the time limit for compliance with actions that fall for completion from 20.03.2020 to 31.03.2021. Thus, the
9 ITA No. 5898/Mum/2025 Bysol Enterprises Pvt Ltd. AY 2017-18 objective is specific for providing temporal flexibility. In para 78, the same has been explained by an example taking Assessment Year 2017- 18 which also in specific terms mentions that the authority specified u/s.151(i) of the new regime can grant sanction till 30.06.2021. Thus, while concluding in para 81 on the issue obtaining approval, Hon’ble Court has specifically stated that the Assessing Officer is required to obtain prior approval of the specified authority according to section 151 of the new regime before passing an order u/s.148A(d) or issuing a notice u/s.148. According to the Hon’ble Court, though it had waived off the requirement obtaining prior approval u/s.148A(a) and Section 148Ab, it did not waive the requirement for section 148A(d) and Section 148.
7.3. Taking into consideration the submissions made by both the sides and findings of the Hon’ble Court, we note that the issue we are presently addressing raised before us is not on the aspect of “when” for the procedural compliance for issuance of notice u/s.148 but on the aspect of “by whom” it ought to have been issued. Ld. DR has contended that there is hierarchical escalation vis-à-vis obtaining approval for issuing notice u/s.148. In this respect, Hon’ble Court has very categorically held in para 75 that the prior approval must be obtained from the appropriate authorities specified u/s.151 of the new regime for the notices issued in terms of Ashish Agrawal (supra) after 01.04.2021. Reference by ld. DR to Section 149(1)(a) deals with time limit for issuing notice u/s.148. Contention of the ld. Sr. DR that there is no hierarchical escalation for obtaining prior approval for issuing notice u/s.148 is not in coherence with the guidelines mandated by the Hon’ble Apex Court as enunciated above. Repeatedly, Hon’ble Court has stated including by way of illustration that TOLA extends time line from the old regime which survives making the notice validly issued subject to the approval
10 ITA No. 5898/Mum/2025 Bysol Enterprises Pvt Ltd. AY 2017-18 requirements of Section 151 under the new regime. Accordingly, the prior approval requirement is mandated under the section 151 of new regime.
7.4. Thus, on the above stated facts and law, in the present case, three years had lapsed from the end of the Assessment Year when the order u/s.148A(d) and notice u/s.148 were issued on 19.07.2022. In the present case, since the notice u/s. 148 and order u/s. 148A(d) have been issued beyond the period of three years from the end of the relevant Assessment Year, case of the assessee falls within the provisions of section 151(ii) of the amended law whereby the specified authority for grant of approval is specified as Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General. Contrary to this requirement, the approval obtained is by Principal Commissioner of Income Tax-1, Thane. Accordingly, since a proper sanction by the specified authority had not been obtained for issue of notice u/s.148 under the applicable provisions of law, said notice is invalid and bad in law.
7.5. Keeping in juxtaposition the undisputed and the uncontroverted facts as stated above and the judicial precedent of the Hon'ble Supreme Court in the case of Ashish Agarwal and Rajiv Bansal (supra), we hold that sanction by specified authority has not been obtained by the ld. Assessing Officer in accordance with the provisions contained in section 151 of the Act under the new regime, since notice u/s.148 has been issued beyond three years from the end of the relevant Assessment Year. Accordingly, the said notice issued is invalid and thus quashed. Resultantly, the impugned re-opening proceedings so initiated and the impugned re-assessment order passed thereafter are also quashed.
11 ITA No. 5898/Mum/2025 Bysol Enterprises Pvt Ltd. AY 2017-18 7.6. We also find our force from the decision of Hon'ble Jurisdictional High Court of Bombay in the case of Ramesh Bachulal Mehta vs. Income Tax Officer [2025] 177 taxmann.com 606 (Bom) which dealt with similar issue on an identical fact pattern. Hon'ble Court held that “where re- assessment proceedings for Assessment Year 2016-17 were initiated after expiry of three years, from end of relevant year, approval u/s.151(ii) was mandatorily required from higher authority, i.e., Pr. Chief Commissioner/Chief Commissioner and sanction by Pr. Commissioner was not valid”. It thus, held that “order passed u/s.148A(d) and consequential notice issued u/s.148, dated 15.07.2022 were bad in law for being violative of provisions of section 151(ii).” Hon'ble Court gave similar findings in its decision in the case of Alag Property [2025] 179 taxmann.com 578 (Bom), dated 08.09.2025.
7.7. Since legal issue raised by the assessee is held in favour of the assessee, grounds raised on the merits of the case needs no separate adjudication.
In the result, appeal filed by the assessee is allowed.
Order is pronounced in the open court on 29 January, 2026
Sd/- Sd/- (Amit Shukla) (Girish Agrawal) Judicial Member Accountant Member
Dated: 29 January, 2026 MP, Sr.P.S.
12 ITA No. 5898/Mum/2025 Bysol Enterprises Pvt Ltd. AY 2017-18 Copy to : 1 The Appellant 2 The Respondent 3 DR, ITAT, Mumbai 4 Guard File 5 CIT BY ORDER,
(Dy./Asstt.Registrar) ITAT, Mumbai
