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Judgment
PER VIKAS AWASTHY, JUDICIAL MEMBER:
This appeal by the assessee is directed against the assessment order dated 25.12.2024 passed u/s.147 r.w.s.144 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’), for AY 2018-19.
The assessee in appeal has raised additional ground challenging validity of reopening of assessment inter alia on the ground that mandatory approval from the Competent Authority as prescribed u/s.151 Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) has not been taken by the Assessing Officer (AO). The additional ground of appeal assailing validity of reopening on account of defective approval u/s.151 of the Act is as under:-
"9.On the facts and circumstances of the case, the order passed under 148A(d) of the Act is illegal, without jurisdiction, and void ab initio, as the mandatory approval is not taken from specified authority prescribed u/s.151 of the Act."
The ld. Counsel for the assessee referred to order u/s.148A(d) of the Act dated 22.04.2022 where in para 7 of the order, the AO has recorded that order is passed with the prior approval of CIT-2 (IT), New Delhi. The ld. Counsel pointed that after amendment to section 151 of the Act by the Finance Act, 2021. The specified authority for the purpose of section 148 and 148A of the Act is Principal Commissioner of Income Tax (PCIT) or Commissioner of Income Tax (CIT) if three years or less than three years have elapsed from the end of relevant assessment year and Principal Chief Commissioner of Income Tax (PCCIT) or Chief Commissioner of Income Tax (CCIT) if more than three years have elapsed from the end of relevant assessment year. In the present case, undisputedly date of order u/s.148A(d) of the Act and the notice u/s.148 of the Act is after the elapse of more than three years from the relevant assessment year i.e. 2018-19. Therefore, the Competent Authority for granting approval for initiating action u/s.148 and 148A of the Act was PCCIT or CCIT. The documents on record clearly show that the assessee has taken approval from CIT. Since, notice u/s.148 of the Act for reopening has been issued after taking approval from incompetent authority, the notice is defective. The subsequent proceedings arising from the defective notice are vitiated and unsustainable in law. In support of his submissions, the ld. Counsel has placed reliance on the decision of Hon’ble Jurisdictional High Court in the case of Star Global Multi Ventures P. Ltd. vs. ACIT in WP(C) 14237 of 2022 decided on 11.02.2025.
Per contra, Shri M.S. Nethrapal, representing the Department submits that the notice u/s.148 of the Act was issued after taking approval from the Competent Authority. The ld. DR submits that if proviso to section 151 of the Act is considered and while computing the period of limitation of three years, the period specified in 3rd, 4th or 5th proviso to sub section (1) of section 149 of the Act if excluded, the notice issued u/s.148 of the Act is within the period of limitation. In support of his argument, the ld. DR placed reliance on the decision of Tribunal in the case of Albert Joseph Rozario vs. ITO (IT), 176 taxmann.com 995 (Mum-Trib.).
Both sides heard, on the limited issue of validity of approval u/s.151 of the Act for issue of notice u/s.148 of the Act. The contention of the assessee is that the assessment has been reopened beyond the period of three years from the relevant assessment year after taking the approval of CIT instead of PCCIT/CCIT. Before proceeding further, it would be relevant to refer to the provisions of section 151 of the Act as were applicable when the notice dated 22.04.2022 u/s.148 of the Act was issued:
"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 of less than three years have elapsed from the end of the relevant assessment year;
(ii)Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General, if more than three years have elapsed from the end of the relevant assessment year.”
A bare reading of above provisions of section 151 of the Act would show that where assessment is reopened beyond the period of three years, the Competent Authority to grant approval is PCCIT/CCIT. In the instant case, from the order u/s.148A(d) of the Act dated 24.04.2022, it is evident that for issuing notice u/s.148 of the Act, prior approval of CIT (International Taxation) was taken instead of PCCIT/CCIT. However, on examining notice issued u/s.148 dated 22.04.2022 it emerged that approval from PCCIT(IT), Delhi was obtained. To dispel this contradiction, the original assessment folder was directed to be produced vide interim order dated 29.09.2025. Repeated opportunities were granted to the Department to produce assessment folder. Finally, on 05.05.2026, the original assessment folder was placed on record. After examining the same it was observed that only approval from CIT was available on record and there was no approval from PCCIT in the assessment folder, as mentioned in the notice dated 22.04.2022. Therefore, after examining the records, we hold that the notice u/s.148 of the Act was issued after the elapse of more than three years with the approval of CIT as against the Competent Authority PCCIT/CCIT. Hence, the notice u/s.148 of the Act was defective and without jurisdiction. Consequently, assessment proceedings arising from defective notice are vitiated, hence, liable to be quashed.
The ld. DR has placed reliance on the decision rendered in the case of Albert Joseph Rozario vs. ITO (IT)(supra) to contend that for the purpose of computing limitation u/s.149 and 151 of the Act for issuance notice certain periods have to be excluded as per proviso to section 151 of the Act. The proviso to section 151 of the Act was inserted by the Finance Act, 2023 w.e.f. 01.04.2023, hence, the said proviso would not apply in the instant case. Further, the Mumbai Bench of the Tribunal in a subsequent decision rendered in the case of Shabbir Taheri Vs. ITO (IT) in ITA No.1574/Mum/2025 decided on 15.10.2025 after taking note of the decision rendered in the case of Albert Joseph Rozario vs. ITO (IT)(supra) held:-
“9.At this stage, it is to be noted that the Hon’ble Jurisdictional High Court in the decisions referred to by my learned brother Accountant Member in his order has specifically held that the proviso inserted to Section 151 of the Act by Finance Act, 2023, effective from 01.04.2023 will not apply prior to its effective date. Pertinently the line of argument taken by the Department in the case of Albert Joseph Rozario vs. ITO (Supra) was not for the first time. Identical argument was advanced by the Department in following two cases dealt by the Coordinate Benches:
(i).Davos International Fund Vs. ACIT, Mumbai, ITA No. 1190/Mum/2024 dated 13.01.2025.
(ii)ACIT vs. Asha P. Kedia [2025] 174 taxmann.com 99 (Mumbai-Trib.)
10.While dealing with the contentions of learned Departmental Representative in case of Davos International Fund (Supra), the Coordinate Bench has held as under:
“7.We heard the parties and perused the material on record. In assessee's case the 148A notice for AY 2017-18 was issued on 12.03.2022 and the order disposing the objections of the assessee was passed on 04.04.2022 under section 148A(d) of the Act. The AO issued notice under section 148 dated 04.04.2022. On perusal of the order under section 148A(d) of the Act and 148 (page 42 to 46 and 47 of PB) we notice that the impugned notices are issued after obtaining the prior approval of CIT (IT), Mumbai-2. The case of the revenue is that the notice dated 04.04.2022 is issued within three years since as per the 5th proviso to section 149, the AO has got additional 9 days for issue of notice under section 148 i.e. upto 09.04.2022. since the extended time of 9 days i.e. from 22.03.2022 to 31.03.2022 was given to the assessee. Therefore, it is argued by the revenue that notice issued on 04.04.2022 is within period of three years and the approval has been correctly obtained by the authority as specified in section 151(i) of the Act. The assessee is contending that the 5th proviso to section 149 under which the revenue is taking cover is inserted w.e.f. 01.04.2023 and therefore not applicable to assessee's case. In this regard, we notice that the Hon'ble Bombay High Court iIn the case of Vodafone Idea Ltd (supra) has held that-
“1.Petitioner is impugning a notice dated 19th March 2022 issued under Section 148A(b) of the Income Tax Act, 1961 ("the Act"), the order passed under Section 148A(d) of the Act and the notice both dated 7th April 2022 issued under Section 148 of the Act. One of the grounds raised is that the sanction to pass the order under Section 148A(d) of the Act and issuance of notice under Section 148 of the Act is invalid inasmuch as the sanction has been admittedly issued by the Principal Commissioner of Income Tax ("PCIT") and not by the Principal Chief Commissioner of Income Tax (PCCIT"). 2. Petitioner's request for a copy of the sanction has also been denied. Even in the affidavit in reply, the Department is refusing to give the sanction which makes us wonder what is the national secret involved in that, that Assessee is being refused what he is rightfully entitled to receive from the Department. In the affidavit in reply, the stand taken by the Revenue is it will be made available during the re- assessment proceeding. 3. The impugned order and the impugned notice both dated 7th April 2022 state that the Authority that has accorded the sanction is the PCIT, Mumbai 5. The matter pertains to Assessment Year ("AY") 2018-19 and since the impugned order as well as the notice are issued on 7th April 2022, both have been issued beyond a period of three years. Therefore, the sanctioning authority has to be the PCCIT as provided under Section 151 (ii) of the Act. The proviso to Section 151 has been inserted only with effect from 1" April 2023 and, therefore, shall not be applicable to the matter at hand.
4.In this circumstances, as held by this Court in Siemens Financial Services Private Limited Vs. Deputy Commissioner of Income Tax & Ors., the sanction is invalid and consequently, the impugned order and impugned notice both dated 7th April 2022 under section 148A(d) and 148 of the Act are hereby quashed and set aside.”
8.Similar view is held by the jurisdictional High Court also in other cases as listed herein above. In the decision of the Vodafone Idea (supra), the Hon'ble High Court has given a specific finding that the proviso to section 151 extending the time limit as per the third, fourth or fifth proviso to section 149 is not applicable for AY 2018-19 as the same is inserted only w.e.f. 01.04.2023. When we apply the said ratio to assessee's case, in our considered view, the claim of the revenue that the period of 3 years expires only on 09.04.2022 is not correct and that revenue cannot take shelter under the proviso to section 151 which came into effect only from 01.04.2023. Accordingly the notice issued on 04.04.2022 by the AO is issued beyond three years and therefore the approval should have been obtained by the authorities as specified under section 151(ii) Principle Chief Commission. As already stated the approval in assessee's case is obtained from CIT(IT) and therefore we are inclined to agree with the contention of the assessee that the notice under section 148 has been issued without obtaining the approval from the correct authority as specified under section 151. Respectfully following the above decisions of the Hon'ble Bombay High Court we hold that the notice issued by the AO under section 148 without obtaining approval from correct appropriate authority is invalid and the assessment done under section 147 r.w.s. 144(13) of the Act is liable to be quashed.”
11.Similar view was reiterated by the Coordinate Bench in case of ACIT vs. Asha P. Kedia (Supra). It is relevant to observe, though the aforesaid decisions of the Coordinate Benches were rendered at a prior point of time and were available when the appeal of Albert Joseph Rozario (Supra) vs. ITO (Supra) was taken up before another Coordinate Bench, however, either knowingly or unknowingly, these decisions of the Coordinate Benches were not brought to the notice of the learned Bench. It appears so, because, there is no reference of these decisions in case of Albert Joseph Rozario vs. ITO (Supra). Had these decisions of Coordinate Benches been brought to the notice of learned Bench deciding the case of Albert Joseph Rozario (Supra), a different view might have been taken. In any case of the matter, the point of time from which the proviso to Section 151 of the Act would be applicable was considered by the Hon’ble Jurisdictional High Court in at least four judgments. Three of these judgments have already been referred to in the decision of my learned brother Accountant Member. Even in case of Agnello Oswin Dias vs. ACIT [2014] 161 taxmann.com 16 (Bombay), the Hon’ble Jurisdictional High Court, while reiterating the view that after expiry of three years from the end of the relevant assessment year, the specified authority in terms of Section 151(ii) of the Act is PCCIT, has held that the proviso to Section 151 of the Act having been inserted w.e.f. 01.04.2023 shall not be applicable prior to 01.04.2023. Meaning thereby, the proviso will not have retrospective effect. These decisions of the Hon’ble Jurisdictional High Court, being directly on the issue, constitute binding precedents.”
Thus, in light of the above observations of the Co-ordinate Bench, the decision rendered in the case of Albert Joseph Rozario vs. ITO (IT)(supra) would not in any manner support the cause of Department.
In the result, assessment order is quashed and appeal of the assessee is allowed.
Order pronounced in the open court on Thursday the 10th day of September, 2026.