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Income Tax Appellate Tribunal, DELHI BENCH ‘E’, NEW DELHI
Before: SH. SUDHIR KUMAR & SH. MANISH AGARWAL
ORDER
PER SUDHIR KUMAR, JM:
This appeal by the Revenue and Cross Objection by the assessee are directed against the order of National Faceless Appeal Centre, Delhi [hereinafter referred to as “NFAC”], vide order dated 11.07.2024 pertaining to A.Y. 2016-17 arising out the assessment order dated 26-05-2023 under section 147 r.w.s 144B of the Income Tax Act,1961, (in short ‘the Act’).
2. The Revenue has raised following grounds of appeal :-
1. That on facts and circumstances of the case and in law, the CIT(A) has erred by ignoring that the Instruction No.1/2022 dated 11/05/2022 was issued by CBDT in compliance of the judgement of Hon'ble Supreme Court dated 04/05/2022 in the case of Union of India vs Ashish Aggarwal, for implementation of said judgement in uniform manner after considering the time extension provided by taxation and Other Law (Relaxation and amendment of certain provisions) Act 2020 and the case of the assessee falls under the ambit of para 6.2(ii) this instruction No. I and therefore prior approval in this case for order u/s 148A(d) of the Act & Notice u/s 148 of the Act for A.Y. 2016-17 (both dated 19/07/2022) has rightly been taken from the specified authority as per clause (i) of Section 151 of the Income Tax Act i.e. Pr. Commissioner of Income Tax, Delhi-10, New Delhi.
2. The Ld. CIT(A) has failed to appreciate that the notices issued u/s 148 by the JAO are as per automated allocation and risk management strategies and therefore, in alignment with the provisions of Section 151A r.w.s. 144B of the Income Tax Act, 1961 and the both JAO as well as units under NFAC have concurrent jurisdiction under the Income-tax Act 1961, which has also recently been held by Hon'ble Kolkata High Court in its order in WP No WPO/1566/2023 dt. 13.09.2023.
3. That on facts and circumstances of the case in law, the Ld. CIT(A) has erred in ignoring the facts. Cross Objection No. 45/Del/2025 A.Y. 2016-17 The assessee raised the following grounds in cross objection: (i) That Approval u/s 151 has been taken by Ld. AO from Ld. PCIT instead of Pr. CCIT.
(ii) That the impugned reassessment could not be done after the expiry of three years from the end of the relevant assessment year in view of the provisions of section 149(1) (b) which requires that after three years from the end of the relevant assessment year, a case can be reopened only if income is represent by the Asset. (iii) That other mandatory and statutory conditions of section 147 to 151 A have not been complied with. (2) That having regard to the facts and circumstances of the case Ld. CIT(A) ought to have deleted the impugned addition of Rs.144,15,042/- on merit also made by Ld. AO on account of alleged bogus purchase by treating the same as unexplained expenditure. (3) That having regard to the facts and circumstances of the case Ld. CIT(A) ought to have deleted the impugned addition of Rs.44,66,376/- on merit also made by Ld. AO on account of alleged bogus sale by treating the same as unexplained credits. (4) That the cross objection craves the leave to add, amend, modify delete any of the ground(s) of cross objection before or at the time of hearing.
The brief facts of the case are that the assesse is a firm and filed return of income declaring total income of Rs.2,55,790/- on 30-08-2016 for the A.Y.2016- 17. A survey was conducted u/s 133A of the Act in the case of Sh. Ashok Kumar Gupta, Sandeep Gupta and Anuj Gupta at room no. 210 & 212 Naya Bazar Delhi-110006 on 30-11-2018. During the survey proceedings it was found that Sh. Ashok Kumar Gupta in his statement admitted that he has given the both purchases and sale related entries through his entities M/s Parth International (Prop. Mr. Anuj Kumar Gupta), M/s Gunn Enterprises (Shweta Bhuraria) and others to various persons during F.Y.2012-13 to 2018-19. On the basis of the statement of the Ashok Kumar Gupta, the case of the assessee was re-opened u/s 147 of the Act and notice u/s 148 of the Act was issued on 19-07-2022 after passing of the order u/s 148A(d) of the Act after the due approval. According to AO the assessee had claimed bogus purchases from M/s Parth International and declared bogus sales to M/s Gunn Enterprises. The Ld. assessing Officer made the addition of Rs.1,44,15,042/- on account of bogus purchases and Rs.44,66,376/- on account of unexplained credit u/s 68 of the Act.
Aggrieved the order of the AO the assessee preferred the appeal before the Ld. NFAC, who vide its order dated 11-07-2024 partly allowed the appeal. Being aggrieved the order of the Ld. NFAC the revenue preferred the appeal before the tribunal. The assessee also filed the cross objection in this appeal. The Ld. NFAC has observed in his order as under:
“5.8 In regard to the issue at hand, it is imperative to examine the provisions of section 151A which have been inserted by Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, w.e.f. 01.11.2020: Faceless assessment of income escaping assessment. 151A. (1) The Central Government may make a scheme, by notification in the Official Gazette, for the purposes of assessment, reassessment or recomputation under section 147 or issuance of notice under section 148 35[or conducting of enquiries or issuance of show-cause notice or passing of order under section 148A] or sanction for issue of such notice under section 151, so as to impart greater efficiency, transparency and accountability by— (a) eliminating the interface between the income-tax authority and the assessee or any other person to the extent technologically feasible; (b) optimising utilisation of the resources through economies of scale and functional specialisation; (c) introducing a team-based assessment, reassessment, recomputation or issuance or sanction of notice with dynamic jurisdiction. (2) The Central Government may, for the purpose of giving effect to the scheme made under sub-section (1), by notification in the Official Gazette, direct that any of the provisions of this Act shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the notification: Provided that no direction shall be issued after the 31st day of March, 2022. (3) Every notification issued under sub-section (1) and sub-section (2) shall, as soon as may be after the notification is issued, be laid before each House of Parliament. 5.9 As per the provisions of section 151A, the CBDT has the power to notify a scheme for the purpose of 1. the purpose of assessment, reassessment or re-computation under Section 147; or 2. issuance of notice under Section 148; or 3. conducting of inquiry or issuance of show cause notice or passing of order under Section 148A; or 4. sanction for issuance of notice under Section 151 5.10 The CBDT also amended section 130 of the I.T. Act, 1961 vide Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, w.e.f. 01.11.2020: Faceless jurisdiction of income-tax authorities. 130. (1) The Central Government may make a scheme, by notification in the Official Gazette, for the purposes of— (a) exercise of all or any of the powers and performance of all or any of the functions conferred on, or, as the case may be, assigned to income-tax authorities by or under this Act as referred to in section 120; or (b) vesting the jurisdiction with the Assessing Officer as referred to in section 124; or (c) exercise of power to transfer cases under section 127; or (d) exercise of jurisdiction in case of change of incumbency as referred to in section 129, so as to impart greater efficiency, transparency and accountability by— (i) eliminating the interface between the income-tax authority and the assessee or any other person, to the extent technologically feasible; (ii) optimising utilisation of the resources through economies of scale and functional specialisation; (iii) introducing a team-based exercise of powers and performance of functions by two or more income-tax authorities, concurrently, in respect of any area or persons or classes of persons or incomes or classes of income or cases or classes of cases, with dynamic jurisdiction. (2) The Central Government may, for the purpose of giving effect to the scheme made under sub-section (1), by notification in the Official Gazette, direct that any of the provisions of this Act shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in the notification: Provided that no direction shall be issued after the 31st day of March, 2022. (3) Every notification issued under sub-section (1) and sub- section (2) shall, as soon as may be after the notification is issued, be laid before each House of Parliament. 5.11 In exercise of the powers u/s 151(1) and 151(2), CBDT issued a notification on 29.3.2022 vide notification No.18/2022/F.No.370142/16/2022-TPL wherein scheme called as e- assessment of Income Escaping Assessment Scheme 2022 was laid out which provided that the (a) the assessment, reassessment or re- computation under Section 147 of the Act, (b) and the issuance of notice under Section 148 of the Act, shall be through automated allocation, in accordance with risk management strategy formulated by the Board as referred to in Section 148 of the Act for issuance of notice and in a faceless manner, to the extent provided in Section 144B of the Act with reference to making assessment or reassessment of total income or loss of assessee.
5.12 Further, in exercise of powers under sub-section 1 & 2 of section 130, the CBDT framed a scheme called “Faceless Jurisdiction of Income Tax Authority Scheme 2022”.It specifically defines automated allocation which is defined under Section 2 (1)(b), which is being re- produced herein under: “In this Scheme, unless the context otherwise requires, - (a) “Act” means the Income-tax Act, 1961 (43 of 1961); (b) “automated allocation” means an algorithm for randomised allocation of cases, by using suitable technological tools, including artificial intelligence and machine learning, with a view to optimise the use of resources;” Further Section 3 of the said scheme deals with vesting of the jurisdiction with the Assessing Officer, which is being reproduced herein under: “vesting the jurisdiction with the Assessing Officer as referred to in section 124 of the Act, shall be in a faceless manner, through automated allocation, in accordance with and to the extent provided in- (i) Section 144B of the Act with reference to making faceless assessment of total income or loss of assessee;” 5.13 In the instant appeal, it is a matter of fact that the order u/s 148A(d) was passed on 19.07.2022 and notice u/s 148 was issued on 19.07.2022 by the JAO and not the NFAC which is contrary to the aforesaid schemes “Faceless Jurisdiction of the Income Tax Authorities Scheme, 2022” and the “e-Assessment of Income Escaping Assessment Scheme, 2022” issued by CBDT much prior to the issuance of the above notices. The Hon’ble High Court of Telangana has taken a view in the case mentioned above that it is only the FAO which can issue the notice u/s 148 of the Act and not the JAO. 5.14 The Hon’ble High Court of Telangana has observed as under while quashing the notices issued u/s 147 and 148 by the jurisdictional AO: 31. It is well settled principle of law that where the power is given to do certain things in certain way, the thing has to be done in that way alone and no any other manner which is otherwise not provided under the law.
The Honhle Supreme Court in the case of Chandra Kishore Jha Vs. Mahaveer and others2in paragraph No. 17 laying down the aforesaid principle held as under “it is well settled solitary principle that if statute provides for a thing to be done in a particular manner, then it has to be done in that manner and in no other manner. The said principle of law was further reiterated in the case of Cherrukurimani Vs. Chief Secretary Government of Andhra Pradesh and others, wherein, again in paragraph No. 14, the aforesaid principle has been reinforced by the Hon’ble Supreme Court holding that "where law prescribe a thing to be done in a particular manner following a particular procedure, it shall have to be done in the same manner following the provisions of law without deviating from the prescribed procedure. The said principle has again recently been reiterated and followed in the case of Municipal Corporation Greater Mumbai vs. Abhilash Lal and others, and in the case of Opto Circuit India Limited. Vs. Axis Bank and others and again in the case of Union of India Vs. Mahesh Singh. In the case of Tata Chemicals Limited Vs. Commissioner of Customs {preventive) Jam Nagar, wherein it has been held that there can be no stopple against the law. If the law requires something to be done in a particular manner, then it must be done in that manner, if it is not done in that manner then it would have no existence in the eye of law. In paragraph 18 of the said judgment, the Hon’ble Supreme Court held as under: “The Tribunal's judgment has proceeded on the basis that even though the samples were drawn contrary to Law, the appellants would be estopped because their representative was present when the samples were drawn and they did not object immediately. This is a completely perverse finding both on fact and law. On fact.it has been more than amply proved that no representative of the appellant was, in fact, present at the time the Customs Inspector took the samples. Shri KKM Jani who was allegedly present not only Stated that he did not represent the Clearing Agent of the appellants in that he was not their employee but also stated that he was not present when the samples were taken. In fact, therefore, there was not representative of the appellants when the Samples were taken. In law equally the Tribunal ought to have realized that there can be no estoppel against law. If the law requires that something be done in a particular manner, it must be done in that manner, and if not done in that manner, and if not done in that manner has no existence in the eyes of law at all. The Customs Authorities are not absolved from following the law depending upon the acts of a particular assessee. Something that is illegal cannot convert itself into something legal by the act of a third person- " If we look into the principle of law laid down by the Honhle 33. Supreme Court as enumerated in the preceding paragraphs and when we look into the facts of the present case, it would clearly reflect that the Parliament had by virtue of the Finance Act 2021, brought certain amendments to the provisions of the Income Tax Act, more particularly, in respect of the manner in which the reassessment and the procedure to be adopted by the Income Tax Department. The amendment was brought with an intention to make the law more transparent and effective. The Hon tie Supreme Court also while deciding the case of Ashish Agarwal, supra, as is discussed with in the preceding paragraph had specifically directed the Union of India to proceed further in terms of the substituted provisions brought in by way of Finance Act 2021. What is also relevant to take note of the fact that the Hon’ble 34. Supreme Court while exercising its power under Article 143 of the Constitution of India has also not relaxed the applicability of the Finance Act 2021. Rather, the Hon’ble Supreme Court in very clear and unambiguous terms had held that the notices issued under the un amended provisions, which were struck down by the High Court, shall be treated as a notice under new amended provisions and the Union of India was directed to proceed further from that stage in terms of the amended provisions of law. In spite of such specific clear directions by the Hon’ble Supreme Court, the Union of India for reasons best known again proceeded with the procedure as it stood prior to the amended provisions which came into force from 01.04.2O21. In view of the aforesaid discussions, it is by now very clear that 35. the procedure to be followed by the respondent-Department upon treating the notices issued for reassessment being under Section 148A. The subsequent proceedings was mandatorily required to be undertaken under the substituted provisions as laid down under the Finance Act, 2021. In the absence of which, we are constrained to hold that the procedure adopted by the respondent Department is in contravention to the statute i.e. the Finance Act, 2021, at the first instance. Secondly, it is also in direct contravention to the directives issued by the Hon’ble Supreme Court in the case of Ashish Agarwal, supra. For all the aforesaid reasons, the impugned notices issued and 36. the proceedings drawn by the respondent-Department is neither tenable, nor sustainable. The notices so issued and the procedure adopted being per se illegal, deserves to be and are accordingly set a side/quashed. As a consequence, all the impugned orders getting quashed, the consequential order's passed by the respondent Department pursuant to the notices issued under Section 147 and 148 would also get quashed and it is ordered accordingly. The reason we are quashing the consequential order is on the principles that when the initiation of the proceedings itself was procedurally wrong, the subsequent order's also gets nullified automatically. 5.15 In view of the above discussion, the facts of the appeal and respectfully following the decision of Hon’ble High Court of Telangana in the case of Kankanala Ravindra Reddy vs. ITO, it is held that the initiation of re-assessment proceedings by order/notice u/s 148A(d) and 148 is bad in nature being issued by the jurisdictional AO and not the faceless AO. Hence, the appellant succeeds on the grounds of appeal No. 1 & 2 and thereby the notice u/s 148 is held to be invalid for the reasons stated above. Due to the initiation of the proceeding being wrong, the subsequent order u/s 147 r.w.s. 144B dated 26.05.2023 gets nullified accordingly. As a result, the grounds of appeal
No. 1 & 2 are hereby allowed.”
5. The Ld. DR submitted that the order was passed by ignoring the departmental instruction No.1/2022 dated 11/05/2022 issued by CBDT in the compliance of the judgment of the Hon’ble Supreme Court dated 04-05-20222 in the case of Union of India vs. Ashish Aggarwal. The assessee’s case falls under the ambit of para 6.2 (ii) of the instruction No1 and the approval was obtained from the specified authority as per the Clause (i) of section 151 of the Act i.e Pr. Commissioner of Income Tax , Delhi-10. She further submitted that the Jurisdictional Assessing Officer and the NFAC have the concurrent jurisdiction. She further submitted that the case Kankanala Ravindra Reddy v. Income tax Officer (2023) was not accepted by the department and SLP was filed before the Hon’ble Supreme Court.
6. The Ld. AR of the assessee submitted that the in the present case, re-opening was taken in face less manner but the assessment was completed by the JAO after issuing the notice u/s 148 A(b) and order u/s 148A(d) and notice u/s 148 of the Act. The impugned assessment was not initiated in a faceless manner and it is bad and void. Reliance has placed on the following decisions: (i) M/s Addhar Tools & Travels Pvt. Ltd. v. Union of India & Ors dated 10-01- 2023 W.P.(C) 262/2023 (ii) Kankanala Ravindra Reddy v. ITO [2023] 156 taxmann.com 178 (High Court) (Telangana)
7. In the case in hand the case the notices u/s 148A(b), order u/s 148A(d) and notice u/s 148 of the Act were issued by the Jurisdictional Assessing Officer. It is alleged by the assessee that as per the section 151A of the Act all enquiries u/s 148A and notice u/s 148 of the Act should have been issued in a faceless manner. Ld. NFAC relied upon the judgment of the Hon’ble High Court of Telangana rightly held that the initiation of re-assessment proceedings by order/ notice u/s 148A(d) and 148 of the Act is bad in nature, because these were issued by the Jurisdictional Assessing Officer. The Revenue has filed the appeal before the Hon’ble Supreme Court is not a ground to accept the appeal. Ld. NFAC has examined this issue in the correct prospective and rightly quashed the assessment proceedings. The reasoning and findings of the Ld. NFAC, while granting the relief is on proper appreciation of law expounded by the judicial dicta. We do not find any reasons to interfere with the findings of the Ld. NFAC. The appeal of the revenue is liable to be dismissed and dismissed accordingly. Assessee’s Cross objection ground no.1: 8. The Ld. Counsel for the assessee submitted that approval has taken by the Assessing officer from the Ld. PCIT instead of Pr. CCIT. He further submitted that the case of the assessee was re-opened after the three years rom the end of the relevant assessment year on the basis of the sale and purchases. The case can be re-opened only if income escaping is represented by the Asset. Reliance has placed on the following decisions; - Mrs. Chitra Supeakar V. ITO [2023] 149 taxmann.com 26 (Bombay) High Court. In this case the Hon’ble High Court held that under section 151read with section 147 and 148 of the Income Tax act 1961 Income- Income escaping assessment – section for issue of notice (illustrations) – Assessment year 2018-19 Assessee did not file her return of income as per provisions of section 139- Since there was concrete information related to financial transaction of assessee during the assessment year 2018-19 which was escaped assessment, a notice under section 148A(b) was issued to assessee and there after an order dated 05-04- 2022 was passed under section 148A(d) – Thereafter on 13-04-2022, a reopening notice under section 148 was issued- Assessee filed instant writ petition and challenged order dated 05-04-2022 on ground of sanction i.e. since it was passed after expiry of three years approval of PCCIT would have to be taken as contemplated by section 151(ii) read with section 148(d) and previous section taken from PCIT would not suffice- Whether sanction from PCCIT as contemplated under section 151(ii) ought to have been taken when order was sought be passed beyond period of three years i.e. beyond 31-03-2022 on 5-04- 2022- Held, yes whether consequently, order dated 5-4-2022 deserves to be set aside for non –compliance with provisions of the Act –Held, yes[Paras 8,9,and 10] in favour of assessee] “In the case of Kusum Health Care Private Limited v The Deputy Commissioner of Income Tax Circle 13(1), New Delhi The Hon’ble Delhi High Court held as under:
1. This writ petition has been preferred seeking the following reliefs:- “a) issue a writ of and/or order and or directions in the nature of certiorari, prohibition, mandamus or any other appropriate writ, order or direction for quashing of the impugned notice dated 01.06.2022 issued under section 148A(b) of the Act, order dated 29.07.2022 passed under section 148A(d) of the Act and consequential notice issued under section 148 of the Act dated 29.07.2022 by the Respondent No. 1 for the assessment year 2016-17; b) set aside the Instruction No. 1 dated 11.05.2022 issued by Respondent No. 4 (CBDT) which ultra- virus to the Act;”
Before us the solitary argument which is addressed today is with respect to the validity of the sanction which was accorded to the reassessment action by the Principal Commissioner of Income Tax
3. Mr. Kalra, learned counsel for the writ petitioner, draws our attention to the provisions of Section 151 of the Income Tax Act, 1961. “151. Specified authority for the purposes of section 148 and section 148A shall be,— as they stood at the relevant time and which read as follows:- (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.”
4. Undisputedly, we are in this writ petition concerned with Assessment Year 2016-17 and in respect of which the notice under Section 148 of the Act ultimately came to be issue don 29th July, 2022. It is thus apparent that the action had come to be initiated after the expiry of three years from the end of the relevant AY. It is in the aforesaid context that the petitioner contends that the sanction accorded by the PCIT would not sustain.
In cases where reassessment is sought to be commenced after the lapse of three years from the end of the relevant AY, undisputedly, it would be the Principal Chief Commissioner who would be liable to be recognised as being the competent authority. Viewed in that light, it 2016-17 and in respect of which the notice under Section 148 of the Act ultimately came to be issued on 29 July 2022. It is thus apparent that the action had come to be initiated after the expiry of three years from the end of the relevant AY. It is in the aforesaid context that the petitioner contends that the sanction accorded by the PCIT would not sustain..
Dealing with an identical question, we had in Abhinav Jindal HUF v. Commissioner of Income Tax and Ors held as under:- “30. Tested on the principles which were enunciated in Suman Jeet Agarwal v. ITO [(2022) 449 ITR 517 (Delhi); 2022 SCC OnLine Del 3141.], the petitioners would appear to be correct in their submission of the date liable to be ascribed to the impugned notices and those being viewed as having been issued and dispatched after April 1,2021. However, and in our considered opinion, the same would be of little relevance or significance when one bears in mind the indubitable fact that all the notices were approved by the Joint Commissioner of Income-tax and which was an authority recognised under the unamended section 151. The answer to the argument based on theprovisions of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act would also largely remain unimpacted by our finding on this score as would become evident from the discussion which ensues. XXXX XXXX XXXXX 33. A plain reading of section 3 establishes that where the time limit for the completion or compliance of any action under a specified Act were to fall between March 20, 2020 to December 31, 2020, the period for completion and compliance would stand extended up to March 31, 2021 or such other date thereafter as may be specified by the Union Government by way of a notification Undisputedly, the date of March 31, 2021 came to be extended thereafter up to April 30, 2021 and lastly up to June 30, 2021. 34.Concededly, the Finance Act, 2021 was enacted thereafter and came into effect from April 1, 2021. It is admitted by the respondents that the terminal point for initiation of reassessment for the assessment year 2015-2016 in ordinary circumstances would have been March 31, 2020 and that date clearly fell within the period spoken of in section 3 of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act. The period for issuance of notice for the assessment year 2015-2016, thus and principally speaking, stood extended up to June30, 2021.
However, the key to answering the argument which was canvassed on behalf of the respondents is contained in section 3 itself and which purported to extend the period for completion of proceedings, passing of an order, issuance of a notice, intimation, notification, sanction or approval. The provision extended the time limit for such action, notwithstanding anything contained in the specified Act, initially up to March 31, 2021 and which date was extended subsequently to April 30, 2021 and lastly up to June 31, 2021. 36 . Section 3 thus essentially extended the time period statutorily prescribed for initiation and compliance up to the dates notified by the Union Government from time to time. The extension of these timelines was intended to apply to all statutes which were included in the expression “specified Act” as defined in section 2(b) of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act.
The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act was thus concerned with overcoming the statutory closure and eclipse which would have otherwise descended upon the authority to act and take action under the specified statutes. It was essentially concerned with tiding over the insurmountable hurdles which arose due to the pandemic and the disruption that followed in its wake. The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, viewed in that light, was neither aimed at nor designed or intended to confer a new jurisdiction or authority upon an officer under a specified enactment. On a fundamental plane, it was a remedial measure aimed at overcoming a position of irretrievable and irreversible consequences which were likely to befall during the nationwide lockdown. It was principally aimed at enabling authorities to take and commence action within the extended timelines that the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act introduced. However, it neither altered nor modified or amended the distribution of functions, the command structure or the distribution of powers under a specified Act. It was in that light that we had spoken of the carving or conferral of a new or altered jurisdiction.
It would therefore be wholly incorrect to read the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act 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 assessment year or as per the amended regime dependent upon whether action was being proposed within three years of the end of the relevant assessment year or thereafter. The bifurcation of those powers would continue unaltered and unaffected by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act.
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 Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act 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.
The bifurcation of those powers would continue unaltered and unaffected by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act. 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 assessment year and the date when reassessment was proposed. Thus even if the reassessment was proposed to be initiated with the aid of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act after the expiry of four years from the end of the relevant assessment year, 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 assessment year that approval could have been accorded by the Joint Commissioner of Income-tax. 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.
What we seek to emphasise is that the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act authorisation merely enables the competent authority to take action within the extended time period and irrespective of the closure which would have ordinarily come about by virtue of the provisions contained in the Act. It does not alter or amend the structure for approval and sanction which stands erected by virtue of section 151. The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act merely extended the period within which action could have been initiated and which would have otherwise and ordinarily been governed and regulated by sections 148 and 149 of the Act. If the contention of the respondents were to be accepted it would amount to us virtually ignoring the date when reassessment is proposed to be initiated and the same being indelibly tied to the end of the relevant assessment year. Once it is conceded that the notice came to be issued four or three years after the end of the relevant assessment year, the approval granted by the Joint Commissioner of Income-tax would not be compliant with the scheme of section 151.
It is pertinent to note that the respondents had feebly sought to urge that the use of the expression “sanction” in section 3 of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act also merits due consideration and is liable to be read as supportive of the contentions that were addressed on their behalf. The argument is however clearly meritless when one bears in consideration the indisputable fact that the set of provisions with which we are concerned nowhere prescribe a timeframe within which sanction is liable to be accorded. “Sanction” when used in section 3 of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act caters to those contingencies where a specified Act may have prescribed a particular time limit within which an action may be approved. That is clearly not the position which obtains here. We thus find ourselves unable to sustain the impugned action of reassessment. The impugned notices which rest on a sanction obtained from the Joint Commissioner of Income-tax would thus be liable to be quashed.”
Consequently, and for the aforesaid reasons, we find ourselves unable to sustain the reassessment action on this short score alone.
Accordingly, the writ petition is allowed. The impugned order referable to Section 148A(d) and notice under Section 148, both dated 29 July 2022 are quashed. However, the present order shall be without prejudice to the right of the respondent to draw such other proceedings as may be permissible in law.”
The case of the assessee relates to the A.Y. 2016-17 and the order was passed on 19-07-2022 and notice u/s 148 of the Act was issued on 19-07-2022 after a period of three years from the end of relevant Assessment Year, the sanctioning authority as per the section 151(ii) of the Act should have been Principal Chief Commissioner or Principal Director General or Chief commissioner but in this case the approval has been obtained from the Pr. Commissioner of Income Tax, which is not the competent authority to grant the permission. The case was re- opened on the basis that the purchase and sales both were the paper transaction.
Respectfully following the decision of the Hon’ble High Court we allowed the ground no-1 raised by the assessee in its cross objection. We allowed the cross objection of the assessee on legal ground, as a result thereof, other grounds have become academic and keep them open for adjudication. 10. In the result the appeal of the Revenue is dismissed and the cross objection of the assessee is partly allowed. Order pronounced in the open court on 12.12.2025.