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2025 (11) TMI 1845
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....allowing opportunity of cross examination. 3. That on the law and in the facts and in the circumstances of the case, the ld. Lower authorities grossly erred in rejecting Long Term Capital Gain earned from sale of shares amounting Rs. 81,84,838/- claimed by the assessee appellant as exempt u/s 10(38) of the Act. 4. That on the law and in the facts and in the circumstances of the case, the ld. Lower authorities grossly erred in adding Rs. 49,552/- on account of commission paid for acquiring accommodation entries by the assessee appellant and treating the same as undisclosed expenditure. 5. The appellant craves leave to add, alter, modify or amend any ground on or before the date of hearing." 3. The brief facts of the case are that the assessee is an Individual and filed her return of income under section 139 of the Income Tax Act, 1961 on 22.07.2016 declaring total income of Rs. 9,17,230/- for the assessment year 2016-17. As per specific information received through ITBA Software, the assessee has made transactions of Rs. 81,84,838/- during the FY 2015-16 relevant to AY 2016-17 on sale of shares in the scrip named as EML and GBFL which has been establish....
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....ng the norms and guidelines of SEBI. I was not at all in a position to influence the purchase and sale prices of their shares. That the material/information provided by you has nothing adverse evidence to the axiomatic conclusion drawn by you that I had entered into an agreement with the broker or any other person to convert unaccounted money by claiming fictitious LTCG which is exempt u/s 10(38) in a pre-planned manner to evade taxes. That your good self has not provided all the material i.e. attachments to case related information detail from insight portal on which you relied upon as directed in para 8(i) of the order dt. 4th May, 2022 passed by the Hon'ble Supreme Court in the case of Union of India & Ors. Vs. Ashish Agarwal (Civil Appeal No. 3005 of 2022 [reported as (2022) 326 CTR (SC) 473; (2022) 213 DTR (SC) 217]. Your good self is also requested to provide relevant portion of statement(s) in which entry providers had taken my and/or our share broker i.e. Hem Securities Ltd. name in wrong doings so that we can file meaningful further our reply. The assessee, further, in reply to AO letter dated 23.06.2022, submitted reply through e-proceedings dated 27.....
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.... require any interference. Hence, action of AO in treating entire sale consideration of scrip of M/s. AAML/EML as unexplained cash credit within meaning of section 69A of Act is in order and needs no modification. Accordingly, order of Assessing Officer is hereby upheld and addition of Rs. 81,84,838/- is confirmed." Being aggrieved, the assessee has filed the present appeal before us on the grounds reproduced hereinabove. 4. Before us, the ld. AR of the assessee reiterated the submissions as were made before the lower authorities. The ld. AR further submitted his written submissions, in support of his case, which are being reproduced hereunder :- "GROUND NO.1 :Proceeding initiated u/s 147/148 of the Income Tax Act, 1961 is void ab initio and deserves to be quashed. 1. A notice dated 08.04.2021 for A.Y. 2016-2017 was initially issued to the assessee appellant u/s. 148 of the Act by the ITO, Ward 1(3), Jaipur which was served on 08.04.2021. 2. Subsequently, an order dated 26.07.2022 was passed u/s. 148A(d) of the Act and a notice dated 26.07.2022 was issued u/s. 148 of the Act by the Assessing Officer. 2.1 The order u/s. 148A(d) & the notice ....
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....) 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 assessee 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) n....
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.... 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;129 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 reas....
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....al; e. 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 extended time till 31 March 2021 to grant approval. 2.3 Hon'ble Bombay High Court in the case of Ramesh Bachulal Mehta v. ITO [2025] 8 TMI 1322 vide order dated 11.08.2025 subsequent to aforesaid judgment of Hon'ble Supreme Court in Rajeev Bansal (supra) has held: Reopening of assessment u/s 147 - no appropriate prior approval/sanction mandated u/s 151 - order passed beyond three years from the end of the relevant Assessment Year 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. In the present case the period of three years from the end of the Assessment Year 2016-17 fell for completion on 31st March 2020. Since the expiry date fell during the time period of 20th March 2020 and 31st March 2021 contemplated under Section 3(1) of Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, ....
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....r thereafter. The impugned notice is liable to be set aside on this ground alone. Assessee appeal allowed. 2.5 Hon'ble Madras High Court in the case of Core Logistic Company v. ACIT [W.P. No. 18168/2023] vide order dated 05.06.2025 subsequent to aforesaid judgment of Hon'ble Supreme Court in Rajeev Bansal (supra) has held: A perusal of Section 151(i) would show that, the specified authority for the purpose of issuing notice under Section 148 within a period of three years from the end of the relevant assessment year is, the Principal Commissioner or Principal Director or Commissioner or Director. Further, in terms of provision of Section 149, three year time period is fixed for issuance of 148 notice, in the event of the amount is below 50 lakhs. In the present case, the amount involved is Rs. 3,65,09,748/-, which is more than 50 lakhs. 148 notice was issued on 28.07.2022, which is beyond the period of three years. So admittedly, the approval has to be obtained from the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General as defined under Section 151(ii). But, in the present case, the approval was obtained from the Principal ....
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....cision in the case of Ashish Agarwal case, for issuance of notice u/s 148A(a) and 148 on or after 1-04-2021, prior approval was required to be obtained from the appropriate authority specified u/s 151 of the New Regime. As per report from the AO, the assessee was issued notice under section 148 of the Act after obtaining sanction under section 151 from the JCIT, Range-4, Jaipur; that subsequently, an opportunity of being heard as per provisions of section 148A(b) of the Income Tax Act, 1961 was provided to the assessee with prior approval from the competent authority vide DIN and Notice dated 25.5.2022. In said report, the Assessing Officer has further reported that the competent authority for approving the proposal order u/s 148A(d) was Pr. CIT-2, Jaipur. In this way, the Assessing Officer has admitted the case of the assessee that for the relevant Assessment Year 2016-17, Pr. CIT-2 Jaipur was the competent authority for the purposes of sanction under section 151 of the Act. Copy of approval for passing order under section 148A(d), dated 22/25.7.2022, as per directions of Hon'ble Apex Court would reveal that said order was passed with the approval of the Principa....
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....al of the Assessee is allowed. 2.10 Hon'ble ITAT, Mumbai Bench in the case of Addl. CIT v. Ramchand Thakurdas Jhamtani[2025] 4 TMI 585 vide order dated 28.02.2025 after considering the aforesaid judgment of Hon'ble Supreme Court in Rajeev Bansal (supra) has held: Validity of reopening of assessment - jurisdictional requirements of Sections 147 to 151 - whether approval obtained from the appropriate authority? - whether the Principal Commissioner of Income Tax or the Principal Chief Commissioner of Income Tax was the Specified Authority for seeking approval for passing order u/s 148A(d) of the Act and issuance of notice under Section 148 - HELD THAT:- In the present case the period of 3 years from the end of the Assessment Year 2017-2018 fell for completion on 31st March 2021. The expiry date fell during the time period of 20th March 2020 and 31st March 2021, contemplated under Section 3(1) of TOLA. Resultantly, the authority specified under Section 151(i) of the new regime could have granted sanction till 30th June 2021. On perusal of the order passed u/s 148A(d) of the Act we find that the aforesaid order was passed after taking approval from Principal Commission....
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.... provisions of section 151(ii) the sanctioning authority under the new regime are Principal Chief Commissioner or Principal Director General or Where there is no Principal Chief Commissioner or Principal Director General, Chief Commissioner or Director General, whereas in present case, the approval was granted by Ld. PCIT-1, Raipur, vide his approval letter F. No. Pr. CIT- 1/RPR/Tech/2022-23 dated 28.06.2022. The aforesaid facts are on records and are not disputed by the revenue. Since, the issue of sanctioning authority is no more res integra, as has been specifically deliberated upon and guided by the Hon'ble Apex Court in the case of Rajeev Bansal (supra), analyzing the order of Hon'ble Apex Court in the case of Ashish Agrawal (supra), wherein it is categorically held that, as per the provisions of new regime the sanctioning authority shall be decided as prescribed amended section 151(new regime). In the present case because the reopening has been initiated after 3 years therefore, clause(ii) of section 151 shall apply. We, thus, find substance in the contention of the Ld. AR that the approval granted u/s 151(ii) (new regime) was not by the Ld. PCIT, who do not have juri....
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...., in the present case, since the notice u/s. 148 and order u/s. 148A(b) have been issued beyond the period of three years from the end of the relevant Assessment Year, case of the assessee falls within the provisions of section 151(ii) of the amended law whereby the specified authority for grant of approval is specified as Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General. Contrary to this requirement, the approval obtained is by Principal Commissioner of Income Tax-17, Mumbai. Accordingly, since a proper sanction by the specified authority had not been obtained for issue of notice u/s. 148 under the applicable provisions of law, said notice is invalid and bad in law. Referring to judicial precedent in the case of Ashish Agarwal [2022 (5) TMI 240 - SUPREME COURT] and Rajiv Bansal [2024 (10) TMI 264 - SUPREME COURT (LB)] we hold that sanction by specified authority has not been obtained by the Assessing Officer in accordance with the provisions contained in section 151 of the Act under the new regime, since notice u/s. 148 has been issued beyond three years from the end of the relevant Assessment Year. Accordingly, the said....
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....21), therefore, the assessment so framed by him u/s. 147 r.w.s. 144 r.w.s. 144B of the Act, dated 11.05.2023 being devoid and bereft of valid assumption of jurisdiction is liable to be quashed. Accordingly, we quash the assessment framed by the A.O u/s. 147 r.w.s. 144 r.w.s. 144B of the Act, dated 11.05.2023 in terms of our aforesaid observations. 2.15 Hon'ble ITAT, Mumbai Bench in the case of Ashok Amratlal Shah v. ITO [ITA 4287/Mum/2024] vide order dated 31.12.2024 after considering the aforesaid judgment of Hon'ble Supreme Court in Rajeev Bansal (supra) has held: 10. As per the provisions of Section 151(ii) under the new procedural regime, for assessment years where the notice under Section 148 is issued after more than three years from the end of the relevant assessment year, the sanction must be obtained from the Principal Chief Commissioner or Principal Director General. The ITAT's ruling in Manish Financials clarified that while the Hon'ble Supreme Court in Ashish Agarwal (supra) allowed certain procedural relaxations for notices issued during the transition period, post-01/04/2021, the amended provisions under Section 151 must be strictly adhered to. Specifically, ....
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....tor, 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. 15. In assessee's case from the perusal of para 3 of the notice issued under section 148 for AY 2016-17 we notice that the same is issued with the prior approval of Pr .CIT-19 Mumbai accorded on 29.07.2022 vide reference No. Pr. CIT19/148/2022-23 and this fact is not contravened by the ld DR. For AY 2016-17, the period of three years have elapsed as of 31.03.2020 and the notice is issued beyond three years on 30.07.2022. Therefore as per the decision of the Hon'ble Supreme Court, the approval should have been obtained under the amended provisions of section 151(ii) of the Act i.e. the approval should have been obtained from the Principal Chief Commissioner whereas the approval has been obtained from Pr. CIT as stated in the notice under section 148 itself. Therefore we see merit in....
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....ssary. SUMMARY The impugned notice issued u/s. 148 of the Act dated 26.07.2022 for A.Y. 2016-2017 is bad in law in light of judgment of Hon'ble Supreme Court in the case of Rajeev Bansal (supra) for the reason of Sanction not obtained from PCCIT u/s. 151(ii) of the Act. PRAYER In view of the above facts, statutory provisions, and judicial precedents, it is most respectfully prayed that: 1. The impugned notice dated 26.07.2022 issued under Section 148 for A.Y.2016- 2017 be quashed and set aside. 2. The consequential reassessment order dated 29.05.2023 passed under section 147 r.w.s 144B along with all consequential additions be quashed. 3. Any other relief deemed fit in the interest of justice may please be granted." The ld. AR further filed the Paper Book in support of his case as under :- PAPER BOOK S. No. Particular Page No. From To 1. Written Submission. 01 12 2. Copy of Notice dated 08.04.2021 issued u/s 148 of the Act. 13 13 3. Copy of Order dated 26.07.2022 passed u/s 148A(d) of the Act. 14 19 4. Copy of Notice dated 26.07.2022 issued u/s 148 of the Act. 20 ....
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....'ble Supreme Court that the Supreme Court did not waive the requirement of section 148A(d) and section 148 and the AO was required to obtain prior approval of the specified authority according to section 151 of the new regime. Section 151 of the New regime is as under :- [Sanction 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 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.] Therefore, under new regime the order u/s 148A(d) and notice u/s 148 after expiry of three years was required to be issued with the sanction obtained from PCCI/ PDGIT/ CCIT/ DGIT as against which the same has been issued with the sanction of PCIT and the same is not in accordance with the provisions of section 151 of the new....
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....f Income-tax would not be compliant with the scheme of section 151. We thus find ourselves unable to sustain the grant of approval by the Joint Commissioner of Income-tax." The Hon'ble Delhi High Court has also very categorically mentioned that approval for issuance of notice u/s 148 was required to be taken as per time gap between the Assessment Year and time when this notice was to be issued and TOLA did not amend the hierarchy set up under section 151. Hence in this judgement also the Hon'ble Delhi High Court opined that sanction for notice u/s 148 was required to be taken from authority specified under amended section 151 as per time gap existing between the assessment year and time of issue of notice. Further, very recently in a judgment decided by Co-ordinate Bench of the Tribunal, Jaipur in ITA No. 1320/JPR/2024 dated 06.08.2025 in the case of RSD Containers Private Limited v/s ITO, Ward 7(1), Jaipur the issue of sanction in cases wherein as per order of the Hon'ble Supreme Court in the case of Ashish Agarwal notice u/s 148 were again issued the following was held :- 10. Even if the argument of the revenue is accepted that the since the time limit for issuance....
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....ose behind this procedural check is to save the assessees 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 of Principal Director of 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 of 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 r....
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....rity 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 limit a 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 March 2020 and 31 March 2021, then the specified authority under. Section 151(1) has an extended time till 30 June 2021 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 2....
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....e fall out of the decision in Ashish Agrawal (supra). In para 77, objective of section 3(1) of TOLA is mentioned which is to relax the time limit for compliance with actions that fall for completion from 20.03.2020 to 31.03.2021. Thus, the objective is specific for providing temporal flexibility. In para 78, the same has been explained by an example taking Assessment Year 2017-18 which also in specific terms mentions that the authority specified u/s. 151 (i) of the new regime can grant sanction till 30.06.2021. Thus, while concluding in para 81 on the issue obtaining approval, Hon'ble Court has specifically stated that the Assessing Officer is required to obtain prior approval of the specified authority according to section 151 of the new regime before passing an order u/s. 148A(d) or issuing a notice u/s. 148. According to the Hon'ble Court, though it had waived off the requirement obtaining prior approval u/s. 148A(a) and Section 148Ab, it did not waive the requirement for section 148A(d) and Section 148. 8.2. Taking into consideration the submissions made by the Id. Sr. DR and keeping the same in juxtaposition with the above observations and findings of the Hon&....
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.... the approval obtained is by Principal Commissioner of Income Tax-17, Mumbai. Accordingly, since a proper sanction by the specified authority had not been obtained for issue of notice u/s. 148 under the applicable provisions of law, said notice is invalid and bad in law. 8.4. Keeping in juxtaposition the undisputed and the uncontroverted facts as stated above and the judicial precedent of the Hon'ble Supreme Court in the case of Ashish Agarwal and Rajiv Bansal (supra), we hold that sanction by specified authority has not been obtained by the ld. Assessing Officer in accordance with the provisions contained in section 151 of the Act under the new regime, since notice u/s. 148 has been issued beyond three years from the end of the relevant Assessment Year. Accordingly, the said notice issued is invalid and thus quashed. Resultantly, the impugned re-opening proceedings so initiated and the impugned re-assessment order passed thereafter are also quashed." We further find that the issue under consideration is also covered by the decision of the Coordinate Bench of the Tribunal, Jaipur in the case of Late Shri Jitendra Nagar vs. ITO in ITA No. 1382/JP/2024 dated 01.10.202....