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Judgment
PER MAHAVIR SINGH, VP
This appeal by the Revenue and the cross-objection by the assessee are arising out of the order of learned CIT(A), NFAC, Delhi in appeal No.NFAC/2016-17/10280100 dated 24 September, 2025. Assessment was framed by the Assessing Officer of NFAC for the assessment year 2017-18 under Section 147 read with Section 144B of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) vide order dated 18 May, 2023.
At the outset, learned Counsel for the assessee stated that the assessee has filed cross-objection raising the issue of jurisdiction that the approval given by the Principal CIT-10, Delhi for the order passed under section 148A(d) of the Act dated 30 July, 2022 is without authority and hence, out of jurisdiction and accordingly, assessment order passed under Section 147 read with Section 144B of the Act is invalid and bad in law. Learned Counsel for the assessee stated that the notice under Section 148 of the Act dated 30 April, 2021 is without following mandate of the provisions of Section 148A of the Act and for this, he referred to page 1 of assessee’s paper book wherein copy of notice is enclosed. Learned Counsel stated that the validity of notices issued under Section 148 of the Act between 1 April, 2021 to 30 June, 2021 became the subject-matter of writ petition before different High Courts of India and finally, the issue was decided by Hon'ble Supreme Court in the case of Union of India Vs. Ashish Agarwal – [2022] 444 ITR 1 (SC), wherein Hon'ble Supreme Court has held as under:-
“The notices under Section 148 issued to the respective assessees which were issued under un-amended Section 148 of the IT Act, which were the subject matter of writ petitions before the various respective High Courts shall be deemed to have been issued under Section 148A of the IT Act as substituted by the Finance Act, 2021 and construed or treated to be show-cause notices in terms of Section 148A(b) of the Act.”
Learned Counsel for the assessee stated that after issuance of notice under Section 148 of the Act dated 30 April, 2021, notice under Section 148A(b) was issued on 30 May, 2022 by the Department to the assessee whereby the assessee was asked to make the relevant submissions till 15 June, 2022. Consequently, order under Section 148A(d) was passed by the Assessing Officer on 30 July, 2022. Learned Counsel for the assessee now before us pointed out towards the order passed by the Assessing Officer under Section 148A(d) of the Act, which is enclosed in assessee’s paper book pages 7 to 14. He argued that the approval for passing of this order along with approval for initiation of proceedings is granted by the PCIT-10, Delhi. He pointed out that as per the provisions of Section 151 of the Act for granting of approval, approval after the lapse of three years from the relevant specified authority granting approval is Principal Chief Commissioner of Income Tax (PCCIT) or Principal Director General of Income Tax (PDGIT). The notice in the present case has been issued after the lapse of three years and hence, the approval is to be granted by PCCIT or PDGIT. For this, learned Counsel for the assessee drew our attention to the following provisions of Section 151 of the Act, which read as under:-
“Section 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 Chief Commissioner of Director General, if more than three years have elapsed from the end of the relevant assessment year.”
Learned Counsel further pointed out that the assessee falls under clause (a) of Section 149(1) of the Act and therefore, the approval under Section 151(ii) of the Act was to be taken from the PCCIT and not PCIT as is done in the present case. He further pointed out that this issue is covered by the decision of Hon'ble Supreme Court in the case of Rajeev Bansal – [2024] 469 ITR 46 (SC), wherein it is held 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.128 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 new regime
More than three years have
elapsed from the end of the
relevant assessment year
Principal Chief Commissioner or Principal Director General or 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 assesse 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 relevant 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 preconditions 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 March2020 and 31 March 2021, then the specified authority under Section 151(i) has an extended time till 30 June2021 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 2017-2018 falls 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.
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. This notice sought to have been issued following the time limits specified under Section 151 of the new regime read with TOLA, where applicable."
Learned Counsel for the assessee, in view of the above decision, stated that the notice under Section 148 and consequent assessment under Section 147 read with Section 144B of the Act is bad in law and is liable to be quashed.
When these facts were confronted to the learned Senior DR, she could not controvert the above fact situation and could also not controvert that the approval is given by the PCIT under Section 1512 of the Act instead of PCCIT.
We have heard the rival contentions and perused the material placed before us. We noted that this issue stands covered in favour of the assessee by the decision of Hon'ble Supreme Court in the case of Rajeev Bansal (supra), wherein it is clearly held that wherever the period of three years is elapsed, the approval under Section 151 of the Act is to be granted by the PCCIT and not PCIT. Hence, on this jurisdictional issue, the assessee’s cross-objection is allowed and consequently, the assessment framed under Section 147 read with Section 144B of the Act is quashed.
Coming to the Revenue’s appeal, since we have already adjudicated the issue of assumption of jurisdiction in the case of assessee’s cross-objection and quashed the assessment framed under Section 147 read with Section 144B of the Act, the issues on merits in the Revenue’s appeal have become academic and need no adjudication. Consequently, the appeal of the Revenue is dismissed.
In the result, the appeal of the Revenue is dismissed and the cross-objection of the assessee is allowed.
Decision pronounced in the open Court on conclusion of hearing on 8 April, 2026.