2026 (2) TMI 813

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....s cast upon him u/s 68 to establish the identity, creditworthiness or genuineness of the transaction during the assessment proceedings. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in appreciating that the loss of Rs. 10,25,756/- was not a mere business loss but an instrument of an accommodation entry. The assessee's failure to offer any explanation during assessment proceedings itself justified the addition. 4. The Learned CIT(A) has erred in law and on facts by admitting additional evidence in violation of the mandatory procedure under Rule 46A of the Income-tax Rules, 1962, thereby vitiating the appellate order. 5. The assessee craves leave to add, amend alter or withdraw any of the above grounds of appeal at or before the time of hearing." 2.1. The assessee has raised the following grounds of appeal in its cross-objections:- "1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not holding the notice u/s 148 of the Act as invalid and bad in law without appreciating the fact that when the notice issued u/s 148 of the Act was beyond period of three years, approv....

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....irect violation of the Act. 8. On the facts and in the circumstances of the case and in law, the assessment order passed by the Assessing Officer u/s. 147 r.w.s. 143(3) of the Act is bad in law without appreciating the fact that the conditions laid down under the Act for initiating reassessment proceeding u/s 147 of the Act have not been satisfied. 9. The Respondent craves to add, alter, classify, reclassify, delete or modify any of the above grounds of appeal and requests to consider cach of the above grounds without prejudice to one another." 3. Since the issue raised in the cross-objection challenging the validity of the notice issued u/s 148 of the Act goes to the root of the assessment proceedings and strikes at the very jurisdiction assumed by the Ld. AO, we deem it appropriate to adjudicate the same at the outset. The validity of the reassessment notice being a foundational issue, its determination is essential before proceeding to examine the merits of the additions made in the impugned assessment order. Accordingly, we first take up the grounds raised in the cross-objection relating to the legality and validity of the notice issued u/s 148 of the Act. ....

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.... specified authority 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 assessee's from harassment resulting from the mechanical reopening of assessments Sri krishna (P.) Ltd. v. ITO [1996] 87 Taxman 315/221 ITR 538 (SC)/[1996] 9 SCC 534. 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 ne....

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....rity 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, noncompliance 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 pre conditions 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 20th March 2020 to 31st 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 Sect....

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....ection 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 High Court Bar Association v. State of UP [2024] 160 taxmann.com 32/299 Taxman 21 (SC)/[2024] 6 SCC 267. 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....