AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2026 (4) TMI 90
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....herwise void as no valid order of the AO was passed in the case of the Appellant to justify the revision proceedings by the PCIT. 2. The PCIT erred in holding that that the AO did not make any detailed inquiry and verification which should have been made to examine the issue of escapement of income and that the action of dropping of the proceedings by the AO before allocation of the case to the Faceless Assessing Officer by the DGIT (Systems) as per the SOPs issued on various dates is erroneous and prejudicial to the interest of the revenue. The Appellant submits that he had submitted all the detailed facts along with supporting evidences pertaining to the issue pursuant to the Notice under Section 148A(b) of the Act and also after initiation of reassessment proceedings under Section 147 of the Act. The Appellant further submits that the dropping of the proceedings by the AO (as mentioned in your Notice) cannot be termed as erroneous or prejudicial to the interest of the revenue so as to attract provisions of Section 263 of the Act since all the details / evidences / supporting were on record and the AO has applied his mind, deliberated, and considered the issue i....
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.... reiterating the income originally declared. The ld PCIT, upon examination of records, observed that the Jurisdictional Assessing Officer (JAO) had dropped the reassessment proceedings without conducting enquiry and even prior to allocation under the Faceless Assessment Scheme by the DGIT system as per standard operating procedure (SOP) issued on various dates in regard to reassessment proceedings. Holding such action to be erroneous and prejudicial to the interests of the Revenue, the Principal Commissioner invoked section 263 and set aside the reassessment proceedings for fresh consideration observing as under: "7. The above explanation at clause (c) clearly provides that the instruction by the Board u/s 119 has to be complied with. The contention of the assessee that he had furnished the response before the JAO which was considered for dropping the assessment proceeding by the JAO is however not in accordance with the Faceless Assessment Scheme introduced w.e.f. 13.08.2020 and therefore, the dropping of assessment proceeding is erroneous and prejudicial to the interest of revenue. Further, it is also noted that the AO did not issue notice u/s 133(6), notice u/s 142(1), ....
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....erein the Hon'ble Vice President concurred with the Ld. AM and passed a separate order explaining as from whom the approval u/s 151 of the Act should have been taken. In said case also, the assessment year involved is AY 2018-19 which is in the case of the present appeal. 5.2 On the contrary, the Departmental Representative (DR) submitted that approval had been granted as per the rules and the assessee cannot be allowed to rack up the issue of reassessment in the proceeding u/s 263 of the Act. 6. We have heard rival submissions of the parties and perused the relevant materials on record. The objection raised by the Revenue that the validity of reassessment cannot be examined in proceedings arising from section 263 is devoid of merit. It is well- settled that a jurisdictional defect strikes at the foundation of proceedings and can be examined at any stage. In the case proceedings u/s 148 of the Act was dropped by the Assessing Officer and therefore, there was no occasion for the assessee to challenge said proceedings before appellate authority and only opportunity got to challenge said proceedings u/s 148 in the present proceedings u/s 263 of the Act. 6.1 In the present....
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....l be deemed to have been extended. 5. Interestingly, sub section (2) to Section 149 of the Act provides that the limitation prescribed under sub section (1) of Section 149 of the Act for issuance of notice shall be subject to the provisions of Section 151 of the Act. The use of word 'shall' in sub section (2) of Section 149 of the Act makes it clear that the limitation prescribed u/s. 149 of the Act for issuance of notice u/s. 148 of the Act is subject to the timeline prescribed u/s. 151 of the Act. In other words, the limitation prescribed u/s. 149(1) of the Act would not override the timeline prescribed for grant of approval by the specified authority u/s. 151 of the Act. Section 151 of the Act as it stood after substitution of earlier Section 151 of the Act by Finance Act, 2021 effective from 01.04.2021 and before its amendment by Finance Act, 2023 w.e.f. 01.04.2023 reads as under: "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; ....
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....mendment of section 151 of the Act by Finance Act, 2023. That being the case, the timeline for sanction by specified authority fixed u/s. 151 of the Act has to be scrupulously followed. 9. At this stage, it is to be noted that the Hon'ble Jurisdictional High Court in the decisions referred to by my learned brother Accountant Member in his order has specifically held that the proviso inserted to Section 151 of the Act by Finance Act, 2023, effective from 01.04.2023 will not apply prior to its effective date. Pertinently the line of argument taken by the Department in the case of Albert Joseph Rozario vs. ITO (Supra) was not for the first time. Identical argument was advanced by the Department in following two cases dealt by the Coordinate Benches: (i). Davos International Fund Vs. ACIT, Mumbai, ITA No. 1190/Mum/2024 dated 13.01.2025. (ii). ACIT vs. Asha P. Kedia [2025] 174 taxmann.com 99 (Mumbai-Trib.) 10. While dealing with the contentions of learned Departmental Representative in case of Davos International Fund (Supra), the Coordinate Bench has held as under: "7. We heard the parties and perused the material on record. In assessee&....
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....pril 2022 state that the Authority that has accorded the sanction is the PCIT, Mumbai 5. The matter pertains to Assessment Year ("AY") 2018-19 and since the impugned order as well as the notice are issued on 7th April 2022, both have been issued beyond a period of three years. Therefore, the sanctioning authority has to be the PCCIT as provided under Section 151(ii) of the Act. The proviso to Section 151 has been inserted only with effect from 1" April 2023 and, therefore, shall not be applicable to the matter at hand. 4. In this circumstances, as held by this Court in Siemens Financial Services Private Limited Vs. Deputy Commissioner of Income Tax & Ors, the sanction is invalid and consequently, the impugned order and impugned notice both dated 7th April 2022 under section 148A(d) and 148 of the Act are hereby quashed and set aside." 8. Similar view is held by the jurisdictional High Court also in other cases as listed herein above. In the decision of the Vodafone Idea (supra), the Hon'ble High Court has given a specific finding that the proviso to section 151 extending the time limit as per the third, fourth or fifth proviso to section 149 is not applicable ....
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.... reiterating the view that after expiry of three years from the end of the relevant assessment year, the specified authority in terms of Section 151(ii) of the Act is PCCIT, has held that the proviso to Section 151 of the Act having been inserted w.e.f. 01.04.2023 shall not be applicable prior to 01.04.2023. Meaning thereby, the proviso will not have retrospective effect. These decisions of the Hon'ble Jurisdictional High Court, being directly on the issue, constitute binding precedents. 12. In any case of the matter, Sections 149 and 151 of the Act have been enacted for different purposes and operate in different situations. While Section 149 of the Act, prescribes limitation for issuance of notice u/s. 148 and 148A of the Act, Section 151 of the Act prescribes the timeline for the specified authority to grant sanction for Section 148 and 148A of the Act. At the cost of repetition, it needs to be observed that prior to insertion of proviso u/s. 151 of the Act by Finance Act, 2023 w.e.f. 01.04.2023, the specified authority who can grant sanction for initiating proceedings u/s. 148A and issuing notice u/s. 148 of the Act after expiry of three years from the end of the a....