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Facts
The assessee filed an appeal against a reassessment order for A.Y. 2017-18, challenging the validity of the notice issued under Section 148 of the Income Tax Act. The notice was issued on 20.07.2022, which is more than three years from the end of the relevant assessment year, and was approved by the Principal Commissioner of Income Tax, which the assessee contended was not the correct authority as per Section 151(ii). The assessee also raised other grounds including the CIT(A)'s dismissal for non-prosecution and an addition made under Section 69A.
Held
The Tribunal quashed the reassessment notice issued under Section 148, holding that the approval for issuing the notice after three years from the end of the assessment year must be granted by the Principal Chief Commissioner of Income Tax or Chief Commissioner of Income Tax, as per Section 151(ii). Since the approval was obtained from the Principal Commissioner of Income Tax, which is the authority for cases within three years, the notice was deemed bad in law. The Tribunal relied on several High Court decisions to support its finding.
Key Issues
Whether the reassessment notice issued under Section 148 of the Income Tax Act for A.Y. 2017-18 was valid when the approval for its issuance was granted by the Principal Commissioner of Income Tax, instead of the Principal Chief Commissioner of Income Tax or Chief Commissioner of Income Tax, given that the notice was issued beyond three years from the end of the relevant assessment year.
Sections Cited
250, 147, 144, 144B, 153C, 148, 151, 151A, 69A, 148A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCHES “SMC” :: PUNE
Before: DR.DIPAK P. RIPOTE & SHRI VINAY BHAMORE
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 26.09.2025 emanating from the Assessment Order passed under section 147r.w.s 144 read with Section 144B of the I.T.Act, 1961 dated 20.04.2023. The Assessee has raised the following grounds of appeal :
The learned CIT(A) erred in dismissing the appeal in limine for non-prosecution of appeal without passing a speaking order adjudicating the grounds of appeal and detailed contentions advanced vide Statement of Facts uploaded electronically at the time of filing appeal, without appreciating that the said action of the Id. CIT(A) was not justified in view of the law laid down by Hon'ble Jurisdictional Bombay High Court in Premkumar Arjundas Luthra [(2017) 297 CTR 614].
2] The assessee submits that in this case, reassessment proceedings were initiated on basis of documents relating to assessee, found during search action conducted on M/s Shrt Renuka Mata Multi State Urban Cooperative Credit Society Ltd and hence, action, if any, in case of assessee ought to have been initiated under the specific provisions of section 153C which were applicable in the above scenario and not under the general provisions of section 148 and therefore, the notice issued u/s 148 in the present case may be declared as null and void in law.
3] Without prejudice to the above ground, the appellant submits that the approval obtained by the JA.O. for issuing notice u/s 148 beyond the period of three years from the end of the relevant A.Y. i.c. 2017 18 is of Pr CIT as against the approval of Pr. CCIT as contemplated u/s 151 and therefore, the notice issued a/s 148 is bad in law being without proper approval 4] Without prejudice to the above grounds, the assessee submits that the notice u/s 148 dated 20.07.2022 issued by the J.A.O. without mentioning DIN in the body of notice u/s 148 is contrary to the mandate of CBDT Instructions and hence, the said notice u/s 148 itself was unsustainable in view of the law laid down by Hon'ble Jurisdictional High Court and hence, the appeal ought to have been adjudicated and the asst, order u/s 147 ought to have been declared as null and void in 2 law 5] Without prejudice to the above grounds, the assessee submits that the notice u/s 148 issued on 20.07.2022 issued by the Jurisdictional A.O. ic ITO Ward 1(1). Nashik without following the mandate of CBDT Notification dated 29.03.2022 read with section 151A is unsustainable in view of the law consistently laid down by Hon'ble Courts and hence, the reassessment order u/s 147 may be declared as null and void in law.
6] Without prejudice to the above grounds, the appellant submits that the application sent by the A.O. to the higher authority for obtaining approval u/s 151 and the approval u/s 151 obtained from the Higher Authority u/s 151 has not been confronted to the appellant along with the Notice u/s 148 and hence, the notice u/s 148 may be declared as null and void in view of CBDT instructions F.No.299/10/2022- Dir(Inv.III)/611 Dated: 01.08.2022 as well as the law laid down by Hon'ble Delhi High Court in Tia Enterprises (P) Ltd. Vs. ITO [(2024) 468 ITR 5), with the SLP in this case being dismissed by the Hon'ble Supreme Court.
7] Without prejudice to the above grounds, the learned CIT(A) ought to have appreciated that the addition made by the A.O. u/s 69A of Rs.35,89,630 by holding that entire cash deposits made in bank account held with M/s. Shri Renuka Mata Multi State Urban Cooperative Credit Society Ltd. was not justified in law and on facts.
8] The appellant craves leave to add/ alter/ amend any of the grounds of appeal.”
Delay : 1.1 There is a delay of 23 days for filing appeal before this Tribunal. As per the Affidavit filed by the Assessee, due to heart Submission of ld.AR : 2. Ld.AR for the Assessee filed paper book. Ld.AR pleaded only with respect to Ground No.3 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 20.07.2022. The said notice has been approved by Principal Commissioner of Income Tax. 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.
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.
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 5 initiated under Section 148A of the Act prior to 30.06.2021 [the 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)/ 2024:DHC:259-DBand 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.
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. 6 39. 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 7 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 8 ITR 546 (Delhi)/Ganesh Dass Khanna v. ITO [2023] 156 [A] 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 impugned notice is, accordingly, set aside. Thus, proceedings initiated pursuant to the said notice are also set aside.
The petition is allowed in the aforesaid terms.”Unquote. 9 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.
Respectfully following the judicial precedence, we quash the notice u/s.148 of the Act, accordingly, grounds of Ground No.3 raised by the Assessee is allowed.
In the result, appeal of the assessee is allowed. Order pronounced in the open Court on 11 February, 2026.