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Judgment
PER MANISH AGARWAL, AM:
The captioned appeal is filed by the assessee against the order of Commissioner of Income Tax (Appeal), [“CIT(A)”, in short] National Faceless Appeal Centre (NFAC), Delhi passed u/s 250 of the Income Tax Act, 1961 (“the Act”) dt. 25.09.2024 arising out of the reassessment order passed u/s 147 r.w.s. 144 of the Act for Assessment Year 2016-17. Assessee has also filed Cross Objection (C.O) separately.
In the Cross-objection filed by the assessee regarding cross objection No.1, assessee has challenged the reassessment order passed u/s 147 of the Act on the ground that the order passed us 148A(d) and notice issued u/s148 are without jurisdiction and issued after obtaining approval from the authority which was not competent to grant approval u/s 151 of the Act thus bad in law.
Heard both the parties at length and perused the material available on record. Claim of the assessee is that the fresh notice u/s 148 of the Act on 27.07.2022 after passing the order u/s 148A(d) on even date was issued after obtaining the approval from the Pr. Commissioner of Income Tax-4, Delhi dt. 14.07.2022 vide reference No. 741. Similarly, the order u/s 148A(d) was passed after obtaining prior approval from the Pr. Commissioner of Income Tax-4, Delhi and approval was not taken from the authority prescribed u/s 151(ii) of the Act. Both the order u/s 148A(d) and the notice u/s 148 of the Act are placed in the paper book pages 39 to 45 filed before us.
Section 148 of the Act is substituted by the Finance Act, 2021 w.e.f. 01.04.2021 and notice u/s 148 of the Act under the old provisions applicable till 31.03.2021 could be issued only upto 31.03.2021. This issue stands settled by the Hon’ble Supreme Court in Union of India vs. Ashish Agarwal reported in 444 ITR 1 (SC). Under the amended provisions for reopening the assessment, the earlier notice issued u/s 148 under old provision was treated as the notice u/s 148A(b) and after considering the submission of the assessment order u/s 148A(d) of the Act, should be passed. Thereafter, the notice u/s 148 of the Act could be issued only after getting the approval from the authority prescribed u/s 151 of the Act. The provisions as contained in section 151 regarding approval (as was applicable at the relevant point of time) is reproduced as under:
151.“Sanction for issue of notice:- 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 Chief Commissioner or Director General, if more than three years have elapsed from the end of the relevant assessment year:
Provided that the period of three years for the purposes of clause (i) shall be computed after taking into account the period of limitation as excluded by the third or fourth or fifth provisos or extended by the sixth proviso to sub-section (1) of Section 149.”
It is thus, clear that notice u/s 148 after the expiry of three years from the end of the relevant assessment year could be issued only after getting approval from the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General of Income Tax. In the instant case admittedly, it is a matter of fact discernible from the record that the notice u/s 148 of the Act, dated 27.07.2022, had been issued by the ITO, Ward 13(3), New Delhi, after obtaining prior approval of Pr. Commissioner of Income-Tax, Delhi-4 dated 14.07.2022 vide reference No.741, the copy of the notice issued u/s 148 is placed at page 44-45 of PB. The approval so obtained is contrary to the provisions of section 151(ii) of the Act as amended/substituted by the Finance Act, 2021, as it was issued on 27.07.2022 i.e. after the expiry of three years from the end of relevant assessment year and therefore, statutory sanction/approval from Principal Chief Commissioner of Income-tax or Chief Commissioner of Income is mandatory. In this regard reliance is placed on the decision of the Hon’ble Supreme Court in Union of India vs. Rajeev Bansal, [2024] 469 ITR 46 (SC). Further the Hon’ble Jurisdictional High Court in the case of Communist Party of India (Marxist) vs. CIT Exmpt. reported in [2025] 174 taxmann.com 925 (Delhi), the Hon'ble Delhi High Court has held as under:
“10.The impugned notice is also liable to be set aside on the ground that it was issued without the approval of the authority specified under Section 151 of the Act. Since the impugned notice was issued beyond the period of three years from the end of the relevant assessment year, thus, in terms of Section 151(ii) of the Act, the same was required to be approved by the Principal Chief Commissioner or Principal Director General or where there is no such authority, by Chief Commissioner or Director General. The determination of the specified authority for grant of approval under Section 151 of the Act depends on whether the notice under Section 148 of the Act has been issued after the expiry of three years from the end of the relevant assessment year or within the said period."
As observed above, notice u/s 148 of the Act was issued on 27.07.2022 after obtaining the approval of Pr.CIT-120 Delhi and not from the authority prescribed u/s 151(ii) of the Act thus, such notice is not sustainable and is hereby quashed. Accordingly, Cross objection No.1 of the assessee is allowed.
Since we have allowed the cross objection taken by the assessee, the appeal of the assessee against the order of ld. CIT(A) become infructuous and thus, dismissed.
In the result, appeal of the revenue in ITA No.5060/Del/2024 [Assessment Year 2016-17] is dismissed and Cross-objection of the assessee in C.O.No.37/Del/2026 [Assessment Year 23016-17] is allowed.