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Judgment
PER SANJAY AWASTHI, ACCOUNTANT MEMBER:
This is a batch of two appeals pertaining to the same assessee. ITA No.636/Del/2026 pertains to the quantum for AY 2017-18, while ITA No.637/Del/2026 pertains to a penalty levied u/s 271AAC(1) of the Income Tax Act, 1961 (hereafter as “the Act”). ITA 636 arises from order dated 12.11.2025, passed u/s 250 of the Act, by Ld. CIT(A)-NFAC. ITA 637 arises from order dated 13.11.2025, passed u/s 250 of the Act, by Ld. CIT(A)-NFAC.
In the quantum matter apparently there was an investigation carried out on one Shri Joginder Pal Gupta, an entry operator. It was alleged that the assessee had benefitted from bogus entries provided by one of the shell companies controlled by said Shri Joginder Pal Gupta. Admittedly during the course of assessment proceedings no worthwhile compliance was made and the Ld. AO held that the unsecured loan amounting to Rs.2,25,00,000/- was added u/s 69D of the Act.
The assessee approached the Ld. CIT(A) where he could not succeed on the ground that the delay of six months in the filing of first appeal was not condoned and the appeal was dismissed in limine.
Thereafter the assessee has approached the ITAT with grounds challenging the action of authorities below and more importantly, has challenged the assumption of jurisdiction in the matter by stating that the approval u/s 151 of the Act was not obtained from the designated officer, but from a lower ranked officer.
Before us the Ld. AR filed a brief written submission in which a table of dates was filed. The Ld. AR used this table of dates to demonstrate that following the case of Rajeev Bansal reported in 469 ITR 46 (SC), the approval was required from the Pr. CCIT and not the PCIT as has been done in the case. For the sake of reference, this particular table deserves to be extracted as under: -
The Ld. AR argued that the notice dated 18.07.2022 was issued u/s 148 of the Act, after seeking approval from PCIT-12, Delhi. It was the submission that following the Rajeev Bansal case (supra) the competent authority for granting such approval for a notice issued beyond three years from the end of AY 2017-18 was the PCCIT as per section 151(ii) of the Act. It was the further submission that even with the benefit of TOLA the maximum extended time for the PCIT to grant approval for AY 2017-18 was 30.06.2021 [section 151(i) of the Act]. It was pointed out that the necessary approval was granted on 18.07.2022, nearly 12 months after the extended deadline.
The Ld. DR relied on the orders of the authorities below and stated that none of the facts had been examined at lower levels and therefore it was not possible to comment with any degree of accuracy about the dates mentioned.
We have carefully considered the submissions of Ld. AR/DR and have gone through the records and documents before us. While it deserves to be noted with a sense of concern that the assessee has been very casual in terms of complying before the authorities below and thus, we are faced with a situation where the issue of assumption of jurisdiction is coming up for the first time before the ITAT only. However, the Ld. AR has been able to demonstrate that the notice dated 18.07.2022 issued u/s 148 of the Act should have been issued only after obtaining the prior approval of the PCCIT u/s 151(ii) of the Act. In paras 77 to 78 of the Rajeev Bansal case (supra), it is clearly mentioned as an illustration for AY 2017-18 that even after the extended period under TOLA the specified authority u/s 151(i) of the Act, being the PCIT, could grant sanction till 30.06.2021 only. Thus, as a logical corollary to this illustration any notice beyond three years would need to be approved by the PCCIT u/s 151(ii) of the Act. Considering this position of law it is held that the assumption of jurisdiction was illegal and thereafter the consequential assessment order is invalid in the eyes of law.
Regarding ITA 637, which is a penalty emanating from the quantum order, it deserves to be held that since the quantum order has been quashed hence, this penalty also cannot survive. The same is directed to be deleted.
In the result, both the appeals of the assessee are allowed.
Order pronounced in the open court on 06.05.2026