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Facts
The assessee appealed against a reassessment order for A.Y. 2017-18, initiated by a notice under section 148 issued on 27.07.2022. The core challenge was that the notice was issued after three years from the end of the assessment year and received approval from the Principal Commissioner of Income Tax (PCIT) under section 151(i) instead of the Principal Chief Commissioner (PCCIT) or Chief Commissioner (CCIT) as required by section 151(ii) of the Income Tax Act.
Held
The Tribunal held that since the notice under section 148 was issued beyond three years from the end of A.Y. 2017-18, the approval for its issuance should have been from the Principal Chief Commissioner or Chief Commissioner under section 151(ii) of the Act. As the approval was obtained from the Principal Commissioner, it was deemed not in accordance with law, making the reassessment proceedings invalid.
Key Issues
Whether a reassessment notice issued under Section 148 of the Income Tax Act, after three years from the end of the relevant assessment year, is valid if the approval for its issuance was granted by the Principal Commissioner of Income Tax (under Section 151(i)) instead of the Principal Chief Commissioner or Chief Commissioner (under Section 151(ii)).
Sections Cited
Section 148, Section 250, Section 147, Section 144B, Section 151, Section 151(i), Section 151(ii), Section 148A
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Income Tax Appellate Tribunal, PUNE BENCHES “SMC” :: PUNE
Before: MS.ASTHA CHANDRA & DR.DIPAK P. RIPOTE
ORDER
PER DR. DIPAK P. RIPOTE, AM:
This is an appeal filed by the Assessee against the order of ld.Commissioner of Income Tax(Appeal)[NFAC], passed under section 250 of the Income Tax Act, 1961 for the A.Y.2017-18 dated 16.10.2025 emanating from the Assessment Order passed under section 147 read with section 144B of the I.T.Act, 1961 dated 03.05.2023. The Assessee has raised the following grounds of appeal :
[A] “1. Ground No 1: Notice issued under section 148 of the Act dated 27 July 2022 for AY 2017-18 is time barred 11 In the facts and circumstances of the case and in law the learned AO erred in issuing the notice under section 148 of the Act dated 27 July 2022 for AY 2017-18 is time barred after taking into consideration the surviving period for the reassessment notices issued between 01 April 2021 to 30 June 2021 hence the impugned reassessment notice issued and the consequential order passed may quashed and set aside 2. Ground No 2: Approval obtained under section 151 of the Act from the incorrect authority 21 In the facts and circumstances of the case and in law, the learned AO erred in obtaining the approval from the learned Principal Commissioner of Income-tax-Pune-3 under section 151(i) of the Act while issuing the notice under section 148 of the Act dated 27 July 2022 instead of obtaining approval from the learned Principal Chief Commissioner of Income-tax under section 151 (ii) of the Act, hence the reassessment notice issued and consequential order passed may be quashed and set aside.
Ground No 3: Copy of sanction obtained under section 151(i) of the Act and relied upon material not provided during the reassessment proceedings 3.1 In the facts and circumstances of the case and in law, the learned AO erred in not providing the relied upon material and copy of sanction obtained under section 151(i) of the Act, hence the reassessment notice issued and the consequential order passed may be quashed and set aside.
Ground No 4: Cross examination of Mr. Sachin Nahar not provided 4.1 In the facts and circumstances of the case and in law, the learned AO erred in not providing a cross examination of Mr. Sachin Nahar from whose premises the material was seized and relied upon by the learned AO for framing the reassessment order despite a written request vide submission filed on 22 December 2022. Hence the notice issued and reassessment order passed may be quashed and set aside. The Appellant craves leave to add, alter, vary, omit, substitute or amend the above grounds of appeal
, at any time before or at, the time of hearing of the appeal, so as to enable the Hon'ble Tribunal to decide this appeal according to law.” Submission of ld.AR :
2. Ld.Authorised Representative(Ld.AR) for the Assessee filed two paper books. Ld.AR pleaded only with respect to Ground No.2 which is a Legal Ground.
Submission of ld.DR : 3. Ld.Departmental Representative(ld.DR) for the Revenue relied on the order of Assessing Officer &ld.CIT(A).
Findings & Analysis : 4. We have heard both the parties and perused the records. In this case, notice u/s.148 for A.Y.2017-18 was issued on 27.07.2022. Copy of the said notice has been filed by ld.AR in the paper book. The said notice has been approved by Principal Commissioner of Income Tax, Pune-3. As it can be seen that the notice u/s.148 has been issued for A.Y.2017-18 after a lapse of three years from the end of A.Y.2017-18. As per section 151(ii) of the Act, after lapse of three years from the end of assessment year approval of Principal Chief Commissioner of Income Tax(Pr.CCIT) or Chief Commissioner of Income Tax(CCIT) was required.
Ld.AR for the assessee relied on the following decisions : Decision of the Hon'ble SC in the case of UOI v Ashish Agarwal (2022) 444 ITR 1 dated 04 May 2022 2. Decision of the Hon'ble SC in the case of UOI v Rajeev Bansal (2024) 469 ITR 46 dated 03 October 2024 3. Decision of the Hon'ble Bom HC in the case of Gurpreet Singh v DCIT (2025) 176 taxmann.com 673 4. Decision of the Hon'ble Bom HC in the case of Alag Property Construction (P) Ltd v ACIT (2025) 179 taxmann.com 578 dated 08 September 2025 5. Decision of the Hon'ble Pune ITAT in the case of Soft Zone v DCIT (ITA No 724/PUN/2025) dated 21 May 2025 6. Decision of the Hon'ble Pune ITAT in the case of ITO v Santosh Sharma (ITA No 2324/PUN/2025) dated 06 January 2026 7. Decision of the Hon'ble Pune ITAT in the case of ITO v Karia Builders (ITA No 2401/PUN/2024) dated 23 July 2025 8. Decision of the Hon'ble Bom HC in the case of Tata Capital Financial Services Ltd v ACIT (2022) 443 ITR 127 dated 15 February 2022 9. Decision of the Hon'ble Del HC in the case of Tia Enterprises 1 (P.) Ltd. vs. ITO [2024] 158 taxmann.com 63 (Delhi) [26-09-2023] 10. Decision of the Hon'ble SC in the case of ITO vs. Tia Enterprises (P.) Ltd. [2024] 167 taxmann.com 56 (SC) [13-09-2024] where the SLP is dismissed 11. Decision of the Hon'ble Delhi ITAT in the case of Deepak Agarwal v DCIT (ITA No 2305/2306/2308/2029 Des/52023 dated 15 October 2025 OF T 12. Decision of the Hon'ble Delhi ITAT in the case of Sunil Kumar v DCIT (ITA No 2429/Del/2023) dated 15 April 2035 FEB 2026 13. Decision of the Hon'ble Rajasthan HC in the case of Micro Marbles (P) Ltd v ITO (2023) 457 ITR 569 dated 04 January 2023
15. Decision of the Hon'ble Bom HC in the case of H.R. Mehta vs. Assistant Commissioner of Income-tax, Mumbai [2016] 72 taxmann.com 110 (Bombay) dated 30-06-2016 6. The Hon’ble Delhi High Court in the decision of Bhagwan Sahai Sharma Vs. DCIT [2025] 174 taxmann.com 916 (Delhi) vide order dated 14.05.2025 has held as under : “11. The AO issued a notice dated 29.07.2022 under Section 148 of the Act accompanied with the order dated29.07.2022 passed under Section 148A(d) of the Act. 12. It is apparent from the said notice that it was not issued with the prior approval of the Principal Chief Commissioner of Income Tax (PCCIT) or any other authority specified under Section 151(ii) of the Act. Such approval is mandatory for issuance of a notice issued under Section 148 of the Act beyond the period of three years from the end of the relevant assessment year. 13. Section 151 of the Act (as amended by the Finance Act, 2021) as in force on the date of issuance of notice reads as under: "151. Sanction for issue of notice.- Specified authority for the purposes of section 148 and section 148Ashall be,— (i) Principal Commissioner or Principal Director or Commissioner or Director, if three years or less than three years have elapsed from the end of the relevant assessment year; (ii) Principal Chief Commissioner or Principal Director General or where there is no Principal Chief Commissioner or Principal Director General, Chief Commissioner or Director General, if more than three years have elapsed from the end of the relevant assessment year."
The question as to which would be the specified authority under Section 151 of the Act in respect of approval of notices under Section 148 of the Act that were issued pursuant to proceedings that were initiated under Section 148A of the Act prior to 30.06.2021 [the extended limitation under TOLA] has been considered by this Court in several cases including Twylight Infrastructure (P.) Ltd. v. ITO [2024] 158 taxmann.com 378(Delhi)/[2024] 463 ITR 702 (Delhi)/ Abhinav Jindal HUFv. ITO [2024] 166taxmann.com 536 (Delhi)/2024:DHC:7238-DB. This Court has consistently held that TOLA would have no relevance for determining the specified authority whose approval was mandatory under Section 151 of the Act for issuance of a notice under Section 148 of the Act. We consider it apposite to refer to the following extract from the decision of this court in Abhinav Jindal HUF(supra). The same is set out below: "17. As was noticed in the introductory parts of this decision, the respondents had, contrary to the above, argued that once a notice for reassessment comes to be issued after the expiry of four years by virtue of the extended period of time made available by TOLA, all the impugned notices would fall within the ken of sub-section (2) of the pre-amendment Section 151 and consequently the sanction and approval accorded by the JCIT would be in accordance with law. *** *** *** 38. It would therefore be wholly incorrect to read TOLA as intending to amend the distribution of power or the categorisation envisaged and prescribed by Section 151. The additional time that the said statute provided to an authority cannot possibly be construed as altering or modifying the hierarchy or the structure set up by Section 151 of the Act. The issue of approval would still be liable to be answered based on whether the reassessment was commenced after or within a period of four years from the end of the relevant AY or as per the amended regime dependent upon whether action was being proposed within three years of the end of the relevant AY or thereafter. The bifurcation of those powers would continue unaltered and unaffected by TOLA.
The fallacy of the submission addressed by the respondents becomes even more evident when we weigh in consideration the fact that even if the reassessment action were initiated, as per the extended TOLA timelines, and thus after the period of four years, Section 151 incorporated adequate measures to deal with such a contingency and in unambiguous terms identified the authority which was to be moved for the purposes of sanction and approval. Section 151 distributed the powers of approval amongst a set of specified authorities based upon the lapse of time between the end of the relevant AY and the date when reassessment was proposed. Thus even if the reassessment was proposed to be initiated with the aid of TOLA after the expiry of four years from the end of the relevant AY, the authority statutorily empowered to confer approval would be the Principal Chief Commissioner /Chief Commissioner/principal Commissioner /Commissioner. It would only be in a case where the reassessment was proposed to be initiated before the expiry of four years from the end of the relevant AY that approval could have been accorded by the JCIT. Similar would be the position which would emerge if the actions were tested on the basis of the amended Section 151 and which divides the power of sanction amongst two sets of authorities based on whether reassessment is commenced within three years or thereafter."
The aforesaid issue is also covered by the earlier decisions of this Court in Cadence Real Estates (P.) Ltd. v. ITO [W.P.(C) 482/2023, dated 24-04-2025]; Twylight Infrastructure (P.) Ltd. (supra) as well as the decision in the case of Ganesh Dass Khanna v. ITO [2023] 156 taxmann.com 417/460 ITR 546 (Delhi)/2023:DHC:8187-DB.
In Twylight Infrastructure (P.) Ltd. (supra), this Court had held as under: "12. Clearly, the revenue advanced the argument of interlinkage between limitation and the ascertainment of the specified authority due to the plain language of the amended Section 151 of the Act. Section 151,when read alongside the first proviso to Section 148, brings the aspect of inextricable linkage to the fore. 12.1. Clauses (i) and (ii) of Section 151 of the amended Act (which has been extracted hereinabove)clearly specify the authority whose approval can trigger the reassessment proceedings. Thus, if three (3)years or less have elapsed from the end of the relevant AY, the specified authority who would grant approval for initiation of reassessment proceedings will be the Principal Commissioner or Principal Director or Commissioner or Director. However, if more than three (3) years from the end of the relevant AY have elapsed, the specified authority for according approval for reassessment shall be the Principal Chief Commissioner or Principal Director General or, where there is no Principal Chief Commissioner or Principal Director General, Chief Commissioner or Director General. 12.2. That the approval is mandatory is plainly evident on perusal of the first proviso appended to section148 of the Act. The said proviso, at the risk of repetition, reads as follows: "Provided that no notice under this section shall be issued unless there is information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the relevant assessment year and the Assessing Officer has obtained prior approval of the specified authority to issue such notice." 12.3. In these cases, there is no dispute that although three (3) years had elapsed from of the end of the relevant AY, the approval was sought from authorities specified in clause (i), as against clause (ii) of Section 151." 12.4. Before us, the counsel for the Revenue continue to hold this position. The only liberty that they seek is that if, based on the judgment in Ganesh Dass Khanna [Ganesh Dass Khanna v. ITO, (2024) 460ITR 546 (Delhi); 2023 SCC On Line Del 7286; Ganesh Dass Khanna v. ITO [2023] 156 taxmann.com417/460 ITR 546 (Delhi)/Ganesh Dass Khanna v. ITO [2023] 156 taxmann.com 417/460 ITR 546(Delhi)/2023: DHC:8187-DB.], the impugned orders and notices are set aside, liberty be given to the Revenue to commence the reassessment proceedings afresh.
Therefore, having regard to the aforesaid, the impugned notices and orders in each of the above captioned writ petitions are quashed on the ground that there is no approval of the specified authority, as indicated in section 151(ii) of the Act. The direction is issued with the caveat that the Revenue will have liberty to take steps, if deemed necessary, albeit as per law."
In the recent decision of Communist Party of India (Marxist) v. Income Tax Department [2025] 174taxmann.com 925 (Delhi)/ W.P.(C) 9031/2023 decided on 28.04.2025, this Court had referred to the earlier decisions including the decision rendered by the Bombay High Court in J M Financial & Investments Consultancy Services (P.) Ltd. v. ACIT [W.P. No. 1050 of 2020, dated 04-04-2022] and Siemens Financial Services (P.) Ltd. v. Dy. CIT [2023] 154 taxmann.com 159 (Bombay)/[2023] 457 ITR 647 / 2023 SCC On Line Bom 2822 ; the Madras High Court in Ramachandran Shivan v. ITO [W.P. No.8570 Of 2023, dated 4-3-2024]and other connected matters, decided on 04.03.2024 and the Orissa High Court in Ambika Iron and Steel (P.)Ltd. v. Pr. CIT [2023] 452 ITR 285 (Ori.)/2022 SCC On Line Ori 4162 and had noted that the question as to which is the specified authority whose approval is mandatory, would depend on whether the notice under Section 148 of the Act was issued within a period of three years from the end of the relevant assessment year or thereafter.
In view of the above, the impugned notice is liable to be set aside on this ground alone.
The petition is allowed in the aforesaid terms.”Unquote. 7. Assessee also relied on Hon’ble Bombay High Court’s decision in the case of Alag Property Construction Private Limited Vs. ACIT in Writ Petition No.3938 of 2022 order dated 08.09.2025, wherein the Hon’ble Bombay High Court has quashed the notice u/s.148 dated 23.08.2022 which was issued with the approval of Principal Commissioner of Income Tax, Mumbai-6, for Assessment Year 2017-18.
Assessee also relied on the decision of ITAT Pune of Karia Builders Vs. ITO in for A.Y.2017-18 vide order dated 23.07.2025 wherein ITAT Pune has held as under : “24. Since the notice has been issued beyond the period of three years from the end of the relevant assessment year, therefore, in view of the provisions of section 151, the competent authority for granting the approval for issue of notice u/s 148 of the Act is the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General. Since the approval in the instant case has been granted by the PCIT instead of any of the above authorities, therefore, such approval being not in accordance with law, the re-assessment proceedings are invalid.”
Respectfully following the judicial precedence, we quash the notice u/s.148 of the Act, accordingly, grounds of Ground No.2 i.e Legal Ground raised by the Assessee is allowed. Accordingly, the reassessment order is bad in law.
9.1 Since we have allowed the Legal Ground, remaining grounds become academic, accordingly, dismissed as unadjudicated.
In the result, appeal of the assessee is allowed. Order pronounced in the open Court on 12 February, 2026.