Suresh vs ITO Ward -2 (2)

“1.

That on the facts, circumstances of the case and in law, the Ld. CIT(A) has erred in treating the approval of the Pr.CIT-15, Delhi accorded on 04/04/2022 as valid for initiating income escaped assessment proceeding u/s.147 for the assessment year 2018-19 and failed to consider the fact that due date for approval u/s.151(1) by the Pr.CIT within a period of three years was up to 31/03/2022 and the proviso inserted by the Finance Act-2023 is applicable prospectively, accordingly the assessee-appellant prays that the approval u/s.151(i) by the Pr.CIT-15, Delhi, dated 04/04/2022 may kindly be held as time barred, thus the preliminary jurisdiction section 148 notice, dated 04/04/2022 and the assessment order u/s.147 r.w.s 144, dated 30/03/2024 vitiated in law and liable to be quashed.

2.

That without prejudice to the grounds of appeal no.1 raised above, the Ld.CIT(A) erred in treating the approval of the Pr.CIT-15, Delhi accorded on 04/04/2022 as valid for initiating income escaped assessment proceeding u/s.147 for the assessment year 2018-19 and failed to consider the fact that approval dated 04/04/2022 is beyond three years from the end of the relevant assessment year 2018-19, accordingly the Pr.CIT is not the appropriate authority for approval and the assessee-appellant prays that the approval u/s.151(i) by the Pr.CIT-15, Delhi, dated 04/04/2022 may kindly be held as bad in law, illegal and void-ab initio, thus the preliminary jurisdiction section 148 notice, dated 04/04/2022 and the assessment order u/s.147 r.w.s 144, dated 30/03/2024 vitiated in law and liable to be quashed.

3.

That the appellant craves leave to adduce additional grounds and/or amend or withdraw any of the aforesaid Grounds before or at the time of hearing of appeal.”

A. Grounds of appeal raised before the Tribunal is relating to sanction u/s.151 of the I.Tax Act,1961,dated 04/04/2022,accorded by the PCIT,Delhi-15 for the AY.2018-19 being time barred or sanction granted by an inappropriate authority:

Written Submission before the Tribunal:

A.FACTS OF THE CASE:

A.1.In the present case, no return of income was filed by the assessee.Inocme escaped assessment proceeding was initiated by the ITO,Ward 44(1),Delhi and notice u/s.148A(b),dated 25/03/2022 was issued allowing time for reply up on or before 31/03/2022 and through corrigendum letter dated 31/03/2022, the due date for reply was extended to 02/04/2022.[PB.Pg.Nos.1 to 3] & [PB.Pg.Nos.4].

A.2.Neither any reply was filed nor time extension was applied for replying against the notice issued u/s.148A(b),accordingly order u/s.148A(d),dated 04/04/2022 was passed by obtaining approval from the PCIT,Delhi-15.[PB.Pg.Nos.4 to 6].

A.3.Jurisdictional section 148 notice,dated 04/04/2022 was issued by approval of the PCIT,Delhi-15 on 04/04/2022.[PB.Pg.Nos.7].

A.4.During the Assessment proceedings, the Assessee has not submitted any reply and assessment was completed vide order dated 26/03/2024. [PB.Pg.Nos.8 to 16].

B.APPEAL BEFORE THE CIT(A):

B.1.Against the assessment order,appeal was filed before the CIT(A) and grounds of appeal was raised challenging the sanction of the PCIT,Delhi-15,dated 04/04/2022 as time barred.

B.2.CIT(A) vide order dated 04/02/2026 held that the sanction u/s.151(i),dated 04/04/2022 was within the time by considering the time allowed for replying section 148A(b) notice as specified in fifth proviso to section 149(1).[Para.9.5 & 9.6 of the CIT(A) Order].

(i).Principal Commissioner principal Commissioner or Principal Director or Commissioner, 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.

By the Finance Act-2023 proviso was inserted which reads as under:

Provided that the period of three years for the purposes of clause (i) shall be computed after taking in to account the period of limitation as excluded by the third or fourth or fifth proviso to sub-section (1) of section 149.

C.2.It is submitted that the proviso to Section 151 has been inserted by the Finance Act, 2023 only with effect from 01.04.2023. Therefore, cannot be applied retrospectively to exclude the days allowed in furnishing the reply to the notice under Section 148A(b) of the Act by the assessee. The CIT(A) could not have assumed exclusion of such a period while issuing notice under Section 148 of the Act on 04.04.2022 that such a proviso excluding the period consumed in furnishing the reply is going to be brought into the statute book by amendment by the Finance Act, 2023 with effect from 01.04.2023 and operates prospectively.

C.3.Further it is submitted that the law has to be applied on the date of sanction u/s.151(i) that is 04/04/2022 and the first proviso to section 151 was not enacted on the date of sanction that is 04/04/2022, accordingly the sanction u/s.151 is time barred for issuance of section 148 notice,dated 04/04/2022 that is within a period of three years from the end of the relevant assessment year that is AY.2018-19.

C.4.The proviso inserted to Section 151 with effect from 01 April 2023 cannot be treated as retrospective. The Legislature has consciously inserted the proviso prospectively. There cannot be retrospective conferment of jurisdiction upon an authority where such jurisdiction did not exist on the date when the sanction u/s.151(i) was obtained from the Pr.CIT-15.Delhi on 04/04/2022. This view is fortified by the judgment of the Bombay High Court in the case of "Vodafone Idea Ltd Vs.DCIT.WP No:2768 of 2022,dated 06/02/2024 (Bom.HC).[PB.Pg.Nos.49 to 51]"."Skypak Travels Pvt. Ltd Vs.ITO.[2026] 185 taxmann.com 963 (Bom.HC).PB.Pg.Nos.42to48]"."Deloittee Consulting India (P.) Ltd Vs.NFAC,Delhi.[2025] 481 ITR 175 (Telangana.HC).[PB.Pg.Nos.52 to 55]".

C.5. In the present case, the section 148, dated 04/04/2022 was issued after a period of three years from the end of the relevant assessment year 2018-19, accordingly the appropriate authorities for sanction under section 151 shall be granted by the authorities specified u/s.151(ii). This view is supported by the Tribunal Orders in the following cases:

(i). Lunar Gems Vs. ACIT.ITA No:3450/Mum/2025, dated 11/11/2025. (Mum.Trib). [PB.Pg.Nos.56 to 61].

(ii). Vasanthi Raghunathan Vs. ITO.ITA No.2896/Chny/2025, dated 25/03/2026. [Chennai.Trib]. [PB.Pg.Nos.62 to 71].

(iii). Yashovrdhan Sanjay Malpani Vs. ITO.ITA No:2280/Pun/2025, dated 24/02/2026. [Pune.Trib]. [PB.Pg.Nos.72 to 83].

C.6. When section 148 was issued after a period of three years from the end of the relevant assessment year, the appropriate sanctioning authority are those authorities as specified u/s.151(ii) that is either Pr.CCIT or Principal Director General is supported by the judgment of the Delhi Tribunal in the following cases:

(i). Rama Associates Pvt Ltd Vs. NFAC.ITA No:316/Del/2025, dated 09/09/2025. [Del.Trib]. [PB.Pg.Nos.84 to 88].

(ii). Jackson Ltd Vs. DCIT.ITA No:5014/Del/2024, dated 23/12/2025. [Del.Trib]. [PB.Pg.Nos.89 to 98].

D. HUMBLE PRAYER BEFORE THE TRIBUNAL TO QUASH THE REASSESSMENT ORDER, DATED 26/03/2024 PASSED U/S.144 R.W.S 147:

In view of above discussions and documentary evidences including that of judicial precedents, in the present case the sanction u/s.151(i) given by the Pr.CIT-15, Delhi, dated 04/04/2022 for initiating income escaped assessment proceeding u/s.147 for the AY.2018-19 within a period of three years from the end of the relevant assessment year is time barred, hence the reassessment order deserves to be quashed.

Similarly as section 148 notice, dated 04/04/2022 was issued after a period of three years from the end of the end of the relevant assessment year i.e 2018-19, accordingly the appropriate authority for grant of sanction u/s.151(ii) are Pr.CCIT or or Principal Director General, however in the present case, the approval u/s.151 was taken from Pr.CIT-15, Delhi, accordingly the sanction u/s.151 is not proper, hence the section 148, dated 04/04/2022 is not valid, accordingly the reassessment order dated 30/03/2024 deserves to be quashed.

“8.

At this juncture we find it appropriate to deal with the additional ground taken by the assessee that approval in terms of section 151 of the IT Act has not been obtained by the AO. Order under section 148A(d) was passed on 26/07/2022 and notice under section 148 was issued on 27/07/2022 after obtaining prior approval of the Commissioner of Income Tax-1. (International Taxation). The relevant portions of section 148, 149 and 151 as amended by Finance Act, 2021 which governs the issue of approval at hand, are reproduced hereunder:

Ist Proviso to Section 148.

"Provided that no notice under this section shall be issued unless there is information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the relevant assessment year and the Assessing Officer has obtained prior approval of the specified authority to issue such notice:

"Section 149 reads as under:

149.

(1) No notice under section 148 shall be issued for the relevant assessment year,-

(a)

if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b);

(b)

if three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income chargeable to tax, represent in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more that year."

Section 151 reads as under:

151.

Sanction for issue of notice:- Specified authority for the purposes of section 148 and section 148A shall be,-

(i)

Principal Commissioner of 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 of Principal Director General, Chief Commissioner or Director General, if more than three years have elapsed from the end of the relevant assessment year.

9.

In the instant case, notice under section 148 dated 27.02.2022 was issued for escapement of income of Rs. 2.27.31.635/- which is above Rs 50 lakh. The notice u/s 148 was issued for a period beyond three years from the relevant assessment year. In terms of provisions of Section 151, as amended by Finance Act, 2021, therefore, the specified authority for grant of approval becomes Principal Chief Commissioner or Principal Director General or where there is no Principal Chief Commissioner of Principal Director General, Chief Commissioner or Director General. We find that in the instant case, the approval ws 151 has been obtained from the Principal Commissioner of Income Taxl (International Taxation). We are therefore, of the considered view that the impugned re-assessment is vitiated for want of proper, legal and valid approval u/s 151(ii). Accordingly, the reassessment made in the instant case can not be sustained and we hereby quash the said reassessment. The additional ground of appeal is hereby allowed.

10.

We are fortified in our view by the decision of the Hon'ble Delhi High Court in the case of Twilight Infrastructure Private Limited Vs Income Tax Officer Ward 25(3), Delhi, which held as under:

"12.3

In these cases, there is no dispute that although three (3) years had elapsed from the end of the relevant AY, the approval was sought from authorities specified in clause (1), as against clause (ii) of Section 151.

12.4

Before us, the counsel for the revenue continue to hold this position. The only liberty that they seek is that if, based on the judgement in Ganesh Dass Khanna, the impugned orders and notices are set aside, liberty be given to the revenue to commence reassessment proceedings afresh.

13.

Therefore, having regard to the aforesaid, the impugned notices and orders in each of the above-mentioned writ petitions are quashed on the ground that there is no approval of the specified authority, as indicated in Section 151(ii) of the Act. The direction is issued with the caveat that the revenue will have liberty to take steps, if deemed necessary, albeit as per law."

6.

Learned AR further submitted that the aforesaid view has been followed by the Coordinate Bench in the case of DCIT, CC-13 v. Paragon Industries Limited TA No. 5093/Del/2024 order dated 20.08.2025], copy whereof has also been considered by us.

7.

Having heard the respective parties and considering the facts and circumstances of the matter, particularly the order passed by the Coordinate Bench, involving identical issue for adjudication, as mentioned herein above we find that the impugned notice u/s 148 of the Act is bad in the eyes of law as the same was issued by obtaining approval from the Pr. CIT which ought to have been obtained from the PCCIT as per section 151(ii) of the Act. In that view of the matter we are of the considered opinion that the impugned re-assessment in the instant case is vitiated for want of proper, legal and valid approval u/s 151(ii), and thus the entire proceeding is hereby quashed.”