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Judgment
PER C.N. PRASAD, J.M.
These appeals and cross objections are filed by the revenue and assessee respectively against the orders of the Ld. CIT(A) for the A.Y.2013-14 and 2014-15.
The revenue has raised following common grounds in its appeals for the A.Y.2013-14 and 2014-15:-
1.Since we have quashed the assessment on legal issue by allowing additional ground of appeal raised by the assessee, all other ground need not be adjudicated at this stage as they become only academic in nature and they are left open.
2.That the Ld. CIT(A) has erred in admitting and allowing an additional ground on limitation without calling for a remand report or comments from the Assessing Officer, as required under section 250(4) of the Income-tax Act, 1961 and the principles of Rule 46A(3) of the Income-tax Rules, 1962. The order has thus been passed in violation of the principles of natural justice and is procedurally defective.
(3)That the Ld. CIT(A) has erred in quashing the reassessment proceedings solely on the ground of limitation without adjudicating the additions of Rs. 3.80 crore on merits. This failure to dispose of all grounds by a reasoned order is contrary to the mandate of section 250(6) of the Act, and renders the appellate order incomplete and unsustainable.
(4)That the order of the Ld. CIT(A) is erroneous, prejudicial to the interests of the Revenue, and liable to be set aside.
(5)That the appellant craves leave to add, amend, modify, or withdraw any ground of appeal at the time of hearing. .
The Ld. DR vehemently requested for adjournment on the ground that a report is called for from the AO which is still awaited.
On the other hand the Ld. Counsel for the assessee submitted that the issue in appeals of the revenue is squarely covered by the decision of the Hon’ble Supreme Court in the case of Rajeev Bansal as the notice u/s.148 of the Act was issued beyond the surviving period and therefore, the assessments framed pursuant to such invalid notice, are bad in law.
Ld. Counsel for the assessee submitted that the Ld. CIT(A) following the decision of the Hon’ble Supreme Court in the case of Rajeev Bansal (supra) quashed the reassessments framed pursuant to the notice issued u/s.148 of the Act since the notice issued u/s.148 of the Act was beyond the surviving period and therefore, it is submitted since the issue is squarely covered by the Hon’ble Supreme Court the appeals may be disposed off.
Coming to the cross objections filed by the assessee Ld. Counsel for the assessee submitted that in both these cases approval obtained for issue of notice u/s.148 of the Act for the A.Y.2013-14 and 2014-15 was from PCIT, Delhi-7 while the specified authority under provisions of section 151(ii) of the Act was from PCCIT, as the assessments sought to be reopened u/s.148 of the Act was beyond the period of three years from the end of the relevant assessment years. Therefore, the ld. Counsel submitted that the notices issued u/s.148 of the Act dated 24.05.2021 for A.Y.2013-14 and 2014-15 are bad in law and therefore, pursuant to such notices reassessments framed u/s.148 of the Act are also bad in law.
We have heard the rival submissions and perused the orders of the authorities below and the case laws relied upon. The request for adjournment sought by the Ld. DR is rejected since in our view there is no need for any report from the AO on the issues in appeal. Further, no purpose would be served in granting adjournment as the issue is squarely covered by the decision of the Hon’ble Supreme Court. Thus, we proceed to dispose off these appeals.
On perusal of the order of the Ld. CIT(A), we observed that the Ld. CIT(A) quashed the reassessments framed for the A.Y.s 2013-14 and 2014-15 for the reason that the notices issued u/s.148 of the Act were beyond the surviving period as per the decision of the Hon’ble Supreme Court in the case of Union of India Vs. Rajiv Bansal. The relevant portion of the findings of the Ld. CIT(A) which are as under :-
11.On perusal of the notice issued u/s.148 of the Act for the A.Y. 2014-15 we find that such notices were issued after obtaining approval of PCIT, Delhi as per the provision of section 5(2)(ii) of the Act. Since the notices issued u/s.148 of the Act both the two assessment years was beyond the period of three assessment years from the end of the relevant assessment year such notices shall be issued after obtaining the approval from PCCIT and PCIT we find that on identical issue the coordinate Bench of the Tribunal in the case of Ajay Duggal in ITA No.5612/Del/2024 order dated 30.07.2025 held as under :- In view of above, in the present case, concept of “surviving Period” is discussed in the following table :
The AO issued a notice dated 26.07.2022 under Section 148 of the Act accompanied with the order dated-2667-2022 passed under Section (6) of the Act. It is the petitioner's case that the said notice is barred by limitation.
It is material to note that the original notice under Section 148 of the Act [deemed to be a show cause notice under Section 148A(b) of the Act in terms of the decision in the case of Union of India & Ors. v. Ashish Agarwal (supra)] was issued on 24.05.2021, that is, 38 days prior to the expiry of the limitation period as extended by virtue of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 [TOLA). TOLA, 2020 is explained in Paras 65-69 of the decision of Rajeev Bansal (supra). which is reproduced as under for ready reference:-
“......65. Section 3(1) of TOLA applies to the action of "issuance of any notice" under the Income-tax Act. The relaxation provided under section 3(1) of TOLA will apply to the issuance of a reassessment notice under section 148 of the Income-tax Act. TOLA did not amend the time limits of four years and six years from the end of the relevant assessment years as specified under the Income-tax Act. It merely provided a relaxation of the time period for issuance of a reassessment notice under section 148. TOLA has no application in situations where the time limit specified under section 149 expired before 20 March 2020. The effect of TOLA is that at the time of issuance of a reassessment notice under section 148, the Revenue has to determine two things: (i) the time limit specified under section 149; and (ii) the extent of relaxation provided by TOLA and its notifications for issuance of notices. Thus, although TOLA did not amend Section 149 of the Income-tax Act, it has to be read with Section 149 to determine the time limit for issuance of a notice. This was the legislative intent behind the enactment of TOLA. For instance, the six year time limit for assessment year 2013-2014 under section 149(1)(b) of the old regime expired on 31 March 2020. TOLA extended the period for issuing notice until 30 June 2021. given the difficulties that arose because of the COVID-19 pandemic.
66.Section 3(1) of TOLA allowed the Central Government to specify by notification "such other date after the 31st day of March, 2021" as the time limit for completion or compliance of any action under the specified Acts. The provision also empowered the Central Government to specify different dates for completion or compliance of different actions. The notifications dated 21 March 2021 and 27-April 2021. extend the operation of TOLA by providing an extended time limit for completing actions under the Income-tax Act till 30 June.
67.Section 2(1)(b)(ii) of TOLA defines 'specified Act' to include the Income-tax Act. After 1 April 2021. Section 2(1)(b)(i) must be read to mean the Income Tax Act as amended by the Finance Acr 2021. The substitution of Sections that not affect the purpose of TOLA, which is, to provide relaxation of the time limit for completion or compliance of any actions falling for completion between 20 March 2020 and 31 March 2021. TOLA will continue to apply to the Income-tax Act after 1 April 2021 if any action or proceeding specified under the substituted provisions of the Income-tax Act falls for completion between 20 March 2020 and 31 March 2021.
68.After 1 April 2021, the Income-tax Act has to be read along with the substituted provisions. The substituted provisions apply retrospectively for past assessment years as well. On 1 April 2021, TOLA was still in existence, and the Revenue could not have ignored the application of TOLA and its notifications. Therefore, for issuing a reassessment notice under section 148 after 1 April 2021, the Revenue would-still have to look at: (i) the time limit specified under section 149 of the new regime; and (ii) the time limit for issuance of notice as extended by TOLA and its notifications. The Revenue cannot extend the operation of the old law under TOLA, but it can certainly benefit from the extended time limit for completion of actions falling for completion between 20 March 2020 and 31 March 2021.
69.For instance, Section 149(1)(a) of the new regime specified the time limit of three years from the end of the relevant assessment year for reopening of the assessment. For assessment year 2017-2018, the three year period expired on 31 March 2021. The expiry of time fell within the time period contemplated by Section 3 of TOLA read with its notifications. Resultantly, the Revenue had time until 30 June 2021 to issue a reassessment notice for assessment year 2017-2018 under section 149(1)(a). This harmonious reading gives effect to the legislative intention of both the Income-tax Act and TOLA. Moreover, Sections 147 to 151 are machinery provisions. Therefore, they must be given an interpretation that is consistent with the object and purpose of the Income-tax Act
Thus, it emanates from the understanding of above paras that the AO had 38 days to issue the notice under Section 148 of the Act after receiving the reply dated 15.06.2022 filed by the appellant. Therefore, the AO had, 38 days to pass an order under Section 148A(d) of the Act (which was necessarily required to accompany a notice under Section 148 of the Act). The said period expired on 23.07.2022. Therefore, the order passed under Section 148A(d) of the Act was beyond the period of limitation.
In view of above stated deliberation, both on facts and law including the applicable jurisprudence, prima-facie it appears that notice for A.Y. 2013-14 issued on 26.07.2022 u/s 148 of the new regime is barred by limitation and hence bad in law, liable to be quashed, resulting in impugned reassessment proceedings as well as the impugned reassessment order bad in law. In the given position of law & facts, the appeal filed by the appellant is allowed subject to verification of above dates w.r.t the surviving period by the AO keeping in view the judgment of the Hon'ble SC in the case of Rajeev Bansal (supra) as per law.
On careful perusal of the order of the Ld. CIT(A) we find no infirmity in the order passed by the ld. CIT(A) in quashing the reassessments framed for the A.Y.2013-14 and 2014-15 as the notices issued u/s.148 of the Act were beyond the period of limitation and consequently the reassessments framed are bad in law and void-ab-initio. Grounds raised by the revenue are rejected.
Coming to cross objections filed by the assessee ground No.1 of cross objection is with regard to validity of notice issued u/s.148 of the Act for lack of approval of appropriate authority.
On perusal of notices issued u/s.148 of the Act for the A.Y.2013-14 and 2014-15 we find that such notices were issued after obtaining approval from PCIT Delhi. As per the provisions of section 52(ii) of the Act, since the notice issued u/s.148 of the Act both these assessment years was beyond the period of three assessment years from the end of the relevant assessment year such notices shall be issued after obtaining the approval from PCCIT and not from PCIT.
We find that on identical issue the coordinate Bench of the Tribunal in the case of Ajay Duggal in ITA No.5612/Del/2024 dated 30.07.2025 held as under :-
“8.We observed that the Hon’ble Supreme Court in the case of Rajiv Bansal (supra) decided the time limits of getting an approval from the appropriate authority u/s 151 of the Act before issue of notice u/s 148 to the cases where the Revenue has invoked the provisions of section 148 of the Act pursuant to the directions of the Hon’ble Supreme Court in the case of Union of India vs. Ashish Agarwal. The observations of the Hon’ble Supreme Court are as under: -
“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. A table representing the prescription under the old and new regime is set out below:
Regime Time limits Specified authority Section 151(2) of the old regime Before expiry of four years from the end of the relevant assessment year Joint Commissioner Section 151(1) of the old regime After expiry of four years from the end of the relevant assessment year Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner Section 151(i) of the new regime Three years or less than three years from the end of the relevant assessment year Principal Commissioner or Principal Director or Commissioner or Director Section 151(ii) of the More than three years have elapsed from the end Principal Chief Commissioner or Principal new of the relevant Director regime assessment General or year Chief Commissioner or Director General
74.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.
75.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 "elevant 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 expires on 31 March 2021 because the new regime comes into effect on 1 April 2021.
78.For example, the three year time limit for assessment year 2017-2018falls 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.
79.Under Finance Act 2021, the Assessing Officer was required to obtain prior approval or sanction of the specified authorities at four stages:
a. Section 148A(a) to conduct any enquiry, if required, with respect to the information which suggests that the income chargeable to tax has escaped assessment;
b. Section 148A(b) - to provide an opportunity of hearing to the assessee by serving upon them a show cause notice as to why a notice under Section 148 should not be issued based on the information that suggests that income chargeable to tax has escaped assessment. It must be noted that this requirement has been deleted by the Finance Act 2022;
c. Section 148A(d) - to pass an order deciding whether or not it is a fit case for issuing a notice under Section 148; and
d. Section 148-to issue a reassessment notice.
80.In Ashish Agarwal (supra), this Court directed that Section 148 notices which were challenged before various High Courts "shall be deemed to have been issued under Section 148-A of the Income Tax Act as substituted by the Finance Act, 2021 and construed or treated to be show-cause notices in terms of Section 148-A(b)." Further, this Court dispensed with the requirement of conducting any enquiry with the prior approval of the specified authority under Section 148A(a). Under Section 148A(b), an assessing officer was required to obtain prior approval from the specified authority before issuing a show cause notice. When this Court deemed the Section 148 notices under the old regime as Section 148A(b) notices under the new regime, it impliedly waived the requirement of obtaining prior approval from the specified authorities under Section 151 for Section 148A(b). It is well established that this. Court while exercising its jurisdiction under Article 142, is not bound by the procedural requirements of law. 130
81.This Court in Ashish Agarwal (supra) directed the assessing officers to "pass orders in terms of Section 148-A(d) in respect of each of the assesses concerned." Further, it directed the assessing officers to issue a notice under Section 148 of the new regime "after following the procedure as required under Section 148-A." Although this Court waived off the requirement of obtaining prior approval under Section 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 under Section 148A(d) or issuing a notice under Section 148. These notices ought to have been issued following the time limits specified under Section 151 of the new regime read with TOLA, where applicable.”
9.We further find that the Mumbai Bench of the Tribunal in the case of Manish Financials vs. ACIT (supra) considering the decision of the Hon’ble Supreme Court in the case of Rajiv Bansal (supra) held that notice dated 29.07.2022 issued u/s 148 of the Act with the prior approval of Pr. CIT for reopening an assessment for the AY 2016-17 beyond a period of three years from the end of the relevant assessment year is bad in law. While holding so the Tribunal observed as under: -
“14.We heard the parties and perused the material on record. In assessee's case for AY 2016-17 pursuant to the directions of the Hon'ble Supreme Court in the case of Ashish Agrawal, the AO passed an order under section 148(d) of the Act and issued a notice under section 148 on 30.07.2022. From the above observations of the Hon'ble Supreme Court it is clean that the though the prior approval under section 148A(b) and 148(d) were waived in terms of the decision of Ashish Agarwal (supra), for issue of notice under section 148A(a) and under section 148 on or after 1 April 2021, the prior approval should be obtained from the appropriate authorities specified under Section 151 of the new regime. The provisions of section 151 of the Act under the new regime read as under:
Sanction for issue of notice.
151.Specified authority for the purposes of section 148 and section 148A shall 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.
15.In assessee's case from the perusal of para 3 of the notice issued under section 148 for AY 2016-17 we notice that the same is issued with the prior approval of Pr.CIT-19 Mumbai accorded on 29.07.2022 vide reference No. Pr. CIT- 19/148/2022-23 and this fact is not contravened by the Id DR. For AY 2016-17, the period of three years have elapsed as of 31.03.2020 and the notice is issued beyond three years on 30.07.2022. Therefore as per the decision of the Hon'ble Supreme Court, the approval should have been obtained under the amended provisions of section 151 (ii) of the Act i.e. the approval should have been obtained from the Principal Chief Commissioner whereas the approval has been obtained from Pr.CIT as stated in the notice under section 148 itself. Therefore, we see merit in the contention of the assessee that the notice under section 148 for AY 2016-17 is issued without obtaining the prior approval from the appropriate authority. Accordingly, we hold that the notice under section 148 is invalid and the consequent assessment under section 147 is liable to be quashed.”
10.In the case before us the Assessing Officer while issuing notice u/s 148 dated 25.07.2022 for reopening of an assessment for the AY 2016-17 obtained prior approval from Pr. CIT instead of Pr. Chief Commissioner/Chief Commissioner of Income Tax under the provisions of section 151(2) of the Act and therefore we hold that the notice issued u/s 148 for reopening an assessment for AY 2016-17 is bad in law and consequently the assessment made u/s 144 r.w.s. 147 of the Act pursuant to such notice is bad in law and void ab initio. Hence, the same is hereby quashed.
11.Since we have quashed the reassessment on legal issue allowing the additional ground, all other grounds raised by the assessee in the appeal are not adjudicated as they are of only academic at this stage.
12.In the result, appeal of the assessee is partly allowed as indicated above.
Thus, respectfully following the above said decision we hold that the notices issued u/s.148 of the Act are without the approval of appropriate authority and thus the same are bad in law. Consequently, the reassessments framed pursuant to such invalid notices are hereby quashed. Ground No.1 of cross objection of the assessee is allowed for the A.Y. 2013-14 and 2014-15.
Since we have quashed the reassessment on legal issue by allowing ground No.1 of cross objection raised by the assessee, all other grounds need not be adjudicated at this stage as they become only academic in nature and they are left open.
In the result, the appeals of the revenue are dismissed and cross objection of the assessee are partly allowed.