2026 (1) TMI 1551

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....nsequent issuance of the Notice issued under Section 148, is bad in law because Respondent No. 1 has not obtained appropriate prior approval/sanction mandated under Section 151. 4. Initially, Respondent No. 1 had issued a notice under Section 148 (under the erstwhile law of re-assessment) on 28.06.2021 [placed at Exhibit 'C' to the Petition] for A.Y. 2016-17. Subsequently, in consequence of the judgment of the Hon'ble Supreme Court in the case of Union of India vs. Ashish Agarwal [(2022) 444 ITR 1 (SC)], the communication dated 27.05.2022 [placed at Exhibit 'I' of the Petition], was sent to the Petitioner intimating that the aforesaid notice issued under Section 148 of the Act (under old regime) would be treated as a show-cause notice issued in terms of Section 148A(b) of the Act (under new regime introduced by the Finance Act, 2021 w.e.f. 01.04.2021). In response to this, the Petitioner filed its submissions on 01.07.2022. Thereafter, Respondent No. 1 passed an order under Section 148A(d) on 30.07.2022 along with the notice dated 30.07.2022 issued under Section 148 of the Act. Undisputedly, the above referred order passed under Section 148A(d) and notice issued under Sectio....

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....eafter. This aspect remains uncontroverted by the Respondents. Since as on the date of passing of the order under Section 148A(d) of the Act and consequent issuance of the said notice under Section 148, the period of 3 years from the end of A.Y. 2016-17 had already expired, Respondent No. 1 was required to obtain prior approval from the authority specified under Section 151(ii) and not from the authority specified under Section 151(i), was the submission. 6. Considering the facts narrated above, the limited point to be examined is whether the order dated 30.07.2022 passed under Section 148A(d) of the Act and issuance of notice dated 30.07.2022 under Section 148 of the Act [for the A.Y. 2016-17], after obtaining approval of Respondent No. 2 [i.e., the PCIT-2, Mumbai], was in accordance with the provisions of Section 151. 7. In this regard, the Petitioner has drawn our attention to the decision of the Hon'ble Supreme Court in the case of Union of India V/S Rajeev Bansal [(2024) 167 taxmann.com 70 (SC) ; (2024) 301 Taxman 238 (SC) ; (2024) 469 ITR 46 (SC)], and we deem it appropriate to refer to the said judgment. The Hon'ble Supreme Court, while dealing with the issue o....

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....fter 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) 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 Chie....

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....er 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....

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....obtaining prior approval under Section 148A(a) and Section 148A(b) of the Act only. 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 for issuing a notice under Section 148. 8.2 Under the new regime, if income escaping assessment is more than Rs.50 lakhs, a reassessment notice could be issued after the expiry of three years from the end of the relevant assessment year only after obtaining the prior approval of the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General. 8.3 Section 151(ii) of the substituted provisions [the new regime] mandates obtaining approval of a higher authority, if more than three years have elapsed from the end of the relevant assessment year. Thus, non-compliance with the provisions of Section 151 vitiates the jurisdiction of the Assessing Officer to issue a notice under section 148. 8.4 Grant of sanction by the appropriate authority is a precondition for the assessing officer to assume jurisdiction under section 148 to issue a reassessme....

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....the present case, the approval has been obtained from the authority specified under Section 151(i) of the new regime instead of the authority specified under Section 151(ii) of the new regime. Non-compliance by Respondent No. 1 with the provisions contained in Section 151(ii) vitiates the jurisdiction of Respondent No. 1 to issue a notice under Section 148 of the Act. 11. We are clearly of the view that the present matter stands covered by the decision of Hon'ble Supreme Court in the case of UOI V/S Rajeev Bansal (supra) and decision of this Court in the case of Ramesh Bachulal Mehta (supra). We accordingly hold that the order dated 30.07.2022 passed under Section 148A(d) of the Act and the consequential notice issued under Section 148 dated 30.07.2022, are bad in law for being violative of the provisions of Section 151(ii) of the Act. Hence, they are required to be quashed and set aside. Accordingly, the consequential reassessment order dated 30.10.2025 passed under Section 147 of the Act and issuance of penalty Notice dated 07.11.2025 under Section 274 read with Section 271(1)(c) of the Act are also quashed and set aside. 12. In view of the foregoing discussion, we set ....