AMAN GUPTA,CHENNAI vs. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 1, LTU CHENNAI, CHENNAI

The additional grounds raising jurisdictional objections were never raised before the Assessing Officer during the entire reassessment proceedings or before the Id. CIT(A) during the first appellate stage, despite multiple opportunities (including detailed show-cause notices and personal hearings).

These grounds involve mixed questions of law and fact (mode of issuance, level of sanction, applicability of further proviso to s. 148, etc.) and require fresh examination of internal departmental records, which is impermissible at the Tribunal stage.

Admission at this belated stage would cause serious prejudice to the Revenue and unnecessarily prolong proceedings. The Hon'ble Supreme Court in National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383 (SC) and the Madras High Court in CITY. Indian Bank [2015] 230 Taxman 635 (Mad.) have permitted additional grounds only where they are pure questions of law and beneficial to the party raising them. The present grounds are tactical, dilatory, and not beneficial.

The assessee has raised jurisdictional objections for the first time before this Hon'ble Tribunal on 02.02.2026, after fully participating in the reassessment proceedings for over three years without raising any such grievance.

This is in direct contravention of the procedure mandatorily laid down by the Hon'ble Supreme Court in GKN Driveshafts (India) Ltd. v. ITO [2003] 259 ITR 19 (SC), which clearly holds:

The assessee never filed any such objections before the AO. He is therefore estopped from raising these objections at this stage and the conduct amounts to waiver of the right to object.

Belated raising of jurisdictional grounds at the final appellate stage causes avoidable multiplicity of proceedings, wastage of judicial time, and loss to the government exchequer due to delayed recovery of legitimate revenue.

The Hon'ble Supreme Court has repeatedly expressed grave concern over such belated challenges and frivolous litigation that prejudice public revenue:

Recent observations (2021-2025): The Supreme Court has repeatedly criticized delays and frivolous appeals by both sides that result in loss to the government exchequer (Delay in Filing of Appeals: Judges as Citizens Concerned about Revenue Loss: SC observation, 2021; Supreme Court Raps Income Tax Department for Filing Appeal in Decided Matter, 2025).

Allowing belated jurisdictional grounds at this stage would encourage similar tactics, leading to prolonged litigation and avoidable loss to the exchequer.

The notice dated 30.07.2022 is valid and was issued in strict compliance with the binding directions of the Hon'ble Supreme Court in Union of India v. Ashish Agarwal [2022] 444 ITR 1 (SC):

Finance Bill, 2026: Insertion of Section 147A

Approval was obtained from Pr.CIT-4 (DIN dated 30.07.2022) under the extended TOLA timeline (3-year limit extended to 30.06.2021 Union of India v. Rajeev Bansal [2024] 167 taxmann.com 70 (SC)). Attracts s. 151(1); s. 151 (ii) inapplicable.

Original sanction obtained under unamended provisions in ITBA during TOLA extension prior to original notice (20.04.2021) remains valid and available in the portal.

Ashish Agarwal treats proceedings as continuum; no fresh sanction required for procedural fresh notice.

HCs quashing on sanction under SC appeal and the matter is subjudice. (SLPs supra).

Finance Bill, 2026 clarifications reinforce continuity of jurisdiction.

Original notice u/s 148 (20.04.2021) under unamended provisions; approval under then-s.151 obtained in ITBA prior to 31.03.2021/ during TOLA extension prior to 31.03.2021.

Ashish Agarwal creates procedural continuum; original sanction suffices. No fresh sanction mandated. Finance Bill, 2026 insertion of s.147A further validates JAO jurisdiction retrospectively from 01.04.2021. No fresh sanction is mandared for the "fresh" notice, as it is not a de novo initiation but a procedural step to comply with the SC directions.

The original notice under section 148 was issued on 20.04.2021 under the unamended regime (pre-Finance Act, 2021) and during the extended period under TOLA. Pursuant to the binding judgment of the Hon'ble

These jurisdictional grounds are being raised for the first time at the final hearing stage before this Hon'ble Tribunal on 02.02.2026 after a lapse of more than three years from the issuance of the fresh notice and more than two-and-a-half years after completion of assessment on 23.05.2023.

The assessee fully participated throughout the reassessment proceedings right from the deemed show-cause notice under section 148A(b), the order under section 148A(d), the fresh notice under section 148 dated 30.07.2022, and the entire assessment proceedings culminating in the order dated 23.05.2023 without raising even a whisper about:

Even in the first appeal before the Id. CIT(A), the assessee challenged the reopening only on general grounds (Grounds 2-4 in Form 35) and furnished no specific submissions on jurisdiction. The present detailed jurisdictional objections were never raised at any stage prior to this Tribunal.

27. The Il. CIT(A), after considering the material on record and the conduct of the assessee (închiding non-furnishing of vital documents such as sale deed, proof of cash component, confirmations, etc.), expressed concern over the unexplained cash deposits and credits, and accordingly confirmed the order of assessment and dismissed the appeal.

Further Proviso to Section 148-Waiver of Separate Approval

The assessee's reliance on Core Logistic Company v. ACIT [2025] 175 taxmann.com 453 (Madras) is misplaced because in that case there was no prior approval for the order under section 148A(d) which could trigger the waiver under the further proviso. The facts here are clearly distinguishable.

Without prejudice, even otherwise, in Ashish Agarwal revival cases, approvals granted by the Pr. CIT have been consistently upheld by several Benches of the Tribunal on the ground that the proceedings are governed by the special procedure laid down by the Hon'ble Supreme Court in Union of India v. Ashish Agarwal [2022] 138 taxmann.com 64 (SC). This is a case squarely covered by the special modus operandi directed by the Apex Court. The assessee cannot be permitted to approbate and reprobate. Having submitted to the jurisdiction of the Jurisdictional Assessing Officer (JAO) for over three years without demur, the assessee is estopped from challenging the same at this belated stage.

These grounds are not pure questions of law. Verification of the level of sanction, applicability of the further proviso to section 148, and the conduct of proceedings would require examination of internal departmental approvals and records, a factual inquiry that cannot be undertaken for the first time before this Hon'ble Tribunal.

Accordingly, the additional grounds deserve to be rejected as inadmissible, belated, and prejudicial to public revenue.

We have heard rival submissions and perused the material on record. The Ld.DR has filed written submissions strongly objecting to raising of additional grounds for the first time before the Tribunal. Ground Nos.1 to 4 raised in the additional grounds is with regard to the jurisdictional AO to issue notice u/s.148 of the Act subsequent to the CBDT Notification dated 29.03.2022. In this context, it is to be mentioned that Finance Bill, 2026 has inserted section 147A of the Act with retrospective effect. Hence, we do not propose to adjudicate the issue raised in Ground Nos.1 to 4 in the additional grounds. As regards ground Nos.5 to 7, is regarding the issue of approval obtained from PCIT instead of PCCIT. This issue that is raised is purely legal issue, which does not require examination of fresh facts since the notice issued u/s.148A(d) & 148 of the Act are already on record. Since it is a jurisdictional issue and being a pure legal issue, in view of Hon’ble Apex Court judgment in the case of National Thermal Power Co. Ltd., vs. CIT, [1998] 229 ITR 383 (SC) and the Hon’ble Jurisdicitonal High Court

In the instant case, original notice u/s.148 of the Act was issued on 20.04.2021 under the old regime. Pursuant to the directions of the Hon’ble Apex Court in the case of Union of India vs. Ashish Agarwal reported in 444 ITR 1 (SC), notice issued u/s.148 of the Act was treated as a notice issued u/s.148A(b) of the Act (under new regime) and called for assessee objection for reopening the assessment. Assessee did not respond nor sought time to file the objection to the notice issued u/s.148A(b) of the Act. Accordingly, the AO passed an order u/s.148A(d) of the Act on 30.07.2022 and simultaneously issued notice u/s.148 of the Act. In the instant case, admittedly AO had passed order u/s.148A(d) and issued notice u/s.148 of the Act beyond the period of 3 years from end of the relevant assessment year and obtained prior approval from the PCIT who is not a specified authority u/s.151(ii) of the Act. The notice issued u/s.148 of the Act reads as follows:- “1 I have information in your case under the Income Tax Act, 1961 (hereinafter referred to as 'the Act') for the Assessment Year 2016-17 which requires action in consequence of the judgement of the Hon'ble Supreme Court in the case Union of India Vs. Ashish Agarwal, Civil Appeal 3005/2022, dated 4th May, 2022 suggesting that income chargeable to tax has escaped assessment within the meaning of section

The Hon’ble Jurisdictional High Court in the case of Core Logistic Company (supra) had quashed the notice issued u/s.148 of the Act and consequent reassessment completed. The relevant finding of the Hon’ble Jurisdictional High Court reads as follows:- “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 Section 149, 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.”

In the instant case, since notice u/s.148A(d) and 148 of the Act have been issued on 30.07.2022 (i.e., beyond three years from the end of relevant assessment year) and prior approval has not been obtained in terms of section 151(11) of the Act, we hold the said notices and reassessment order is invalid in light of the judicial pronouncement cited supra. It is ordered accordingly.

Since we have decided Ground Nos.5 to 7 in favour of assessee, other grounds are not adjudicated and are left open.

In the result, the appeal filed by the assessee is partly-allowed.