TaxTMI 
TaxTMI 
2026 (7) TMI 1234
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....ified in disallowing deduction under section 80P even though the return was filed in response to notice u/s 148 of the Act. 3) The learned Commissioner of Income Tax (Appeals) is not justified in dismissing the appeal for alleged non-response from the appellant without adjudicating the matter on merits. 4) The appellant craves leave to add to, alter, amend, modify, delete, all OR any of the above grounds of appeal. Also, the assessee society has raised the following additional grounds of appeal: 1. "On the facts and in the circumstances of the case, the order passed u/s 148A(d) and notice issued u/s 148 dated 07.04.2022 for AY 2018-19, having been issued beyond three (3) years without proper sanction as required u/s 151(ii), are bad in law, and consequently the reassessment proceedings initiated pursuant thereto are liable to be quashed." 2. "On the facts and in the circumstances of the case, the notice issued u/s 148A(b) dated 24.03.2022 did not provide the mandatory minimum period of 7 clear days for compliance and therefore the same is invalid in law and consequently the entire reassessment proceedings are liable to be quashed." 3.....
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....r authorities and the material available on record. 8. Shri R Siva Rama Krishna, Learned Authorized Representative (for short, "Ld. AR") for the assessee society, at the threshold of hearing of the appeal, submitted that the AO had grossly erred in law and facts of the case in assuming jurisdiction and framing the impugned assessment vide his order passed under section 147 r.w.s 144B of the Act, dated 06/12/2023. Elaborating on his contention, the Ld. AR submitted that the AO had issued a notice under section 148 of the Act, dated 07/04/2022, without obtaining approval of the specified authority as contemplated under section 151(ii) of the Act. The Ld. AR, to buttress his contention, drew our attention to the notice issued by the AO, i.e., ITO, Ward-1, Eluru, under section 148A(b) of the Act, dated 24/03/2022, Page Nos. 02- 04 of APB. Further, attention was drawn to the order passed by the AO under section 148A(d) of the Act, dated 07/04/2022, Page Nos.05-07 of APB. Also, the Ld. AR had drawn our attention to the notice under section 148 of the Act, dated 07/04/2022, Page No.8 of APB, which revealed that the Income Tax Officer, Ward-1, Eluru had issued the said notice after obta....
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....n such period, as may be specified in such notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139: 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. Explanation 1.-For the purposes of this section and section 148A, the information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment means,- (i) any information flagged in the case of the assessee for the relevant assessment year in accordance with the risk management ....
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.... any enquiry, if required, with the prior approval of specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment; (b) provide an opportunity of being heard to the assessee, with the prior approval of specified authority, by serving upon him a notice to show cause within such time, as may be specified in the notice, being not less than seven days and but not exceeding thirty days from the date on which such notice is issued, or such time, as may be extended by him on the basis of an application in this behalf, as to why a notice under section 148 should not be issued on the basis of information which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year and results of enquiry conducted, if any, as per clause (a); (c) consider the reply of assessee furnished, if any, in response to the show-cause notice referred to in clause (b); (d) decide, on the basis of material available on record including reply of the assessee, whether or not it is a fit case to issue a notice under section 148, by passing an order, with the prior approval of specifi....
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.... specified under the provisions of clause (b) of subsection (1) of this section, as they stood immediately before the commencement of the Finance Act, 2021: Provided further that the provisions of this subsection shall not apply in a case, where a notice under section 153A, or section 153C read with section 153A, is required to be issued in relation to a search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A, on or before the 31st day of March, 2021: Provided also that for the purposes of computing the period of limitation as per this section, the time or extended time allowed to the assessee, as per show cause notice issued under clause (b) of section 148A or the period during which the proceeding under section 148A is stayed by an order or injunction of any court, shall be excluded: Provided also that where immediately after the exclusion of the period referred to in the immediately preceding proviso, the period of limitation available to the Assessing Officer for passing an order under clause (d) of section 148A is less than seven days, such remaining period shall be extended to seven days....
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....n by this Court in the case of GKN Driveshafts (India) Ltd. Vs. Income Tax Officer and ors; (2003) 1 SCC 72, has not been followed. 6.1 Further pre Finance Act, 2021, the reopening was permissible for a maximum period up to six years and in some cases beyond even six years leading to uncertainty for a considerable time. Therefore, Parliament thought it fit to amend the Income Tax Act to simplify the tax administration, ease compliances and reduce litigation. Therefore, with a view to achieve the said object, by the Finance Act, 2021, sections 147 to 149 and section 151 have been substituted. 6.2 Under the substituted provisions of the IT Act vide Finance Act, 2021, no notice under section 148 of the IT Act can be issued without following the procedure prescribed under section 148A of the IT Act. Along with the notice under section 148 of the IT Act, the assessing officer (AO) is required to serve the order passed under section 148A of the IT Act. section 148A of the IT Act is a new provision which is in the nature of a condition precedent. Introduction of section 148A of the IT Act can thus be said to be a game changer with an aim to achieve the ultimate object of....
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....ds which were absent under the earlier regime pre Finance Act, 2021. 7. Thus, the new provisions substituted by the Finance Act, 2021 being remedial and benevolent in nature and substituted with a specific aim and object to protect the rights and interest of the assessee as well as and the same being in public interest, the respective High Courts have rightly held that the benefit of new provisions shall be made available even in respect of the proceedings relating to past assessment years, provided section 148 notice has been issued on or after 1st April, 2021. We are in complete agreement with the view taken by the various High Courts in holding so. 8. However, at the same time, the judgments of the several High Courts would result in no reassessment proceedings at all, even if the same are permissible under the Finance Act, 2021 and as per substituted sections 147 to 151 of the IT Act. The Revenue cannot be made remediless and the object and purpose of reassessment proceedings cannot be frustrated. It is true that due to a bonafide mistake and in view of subsequent extension of time vide various notifications, the Revenue issued the impugned notices under secti....
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.... thereafter pass an order in terms of section 148A(d) after following the due procedure as required under section 148A(b) in respect of each of the concerned assessee's; (iv) All the defences which may be available to the assessee under section 149 and/or which may be available under the Finance Act, 2021 and in law and whatever rights are available to the Assessing Officer under the Finance Act, 2021 are kept open and/or shall continue to be available and; (v) The present order shall substitute/modify respective judgments and orders passed by the respective High Courts quashing the similar notices issued under unamended section 148 of the IT Act irrespective of whether they have been assailed before this Court or not. 9. There is a broad consensus on the aforesaid aspects amongst the learned ASG appearing on behalf of the Revenue and the learned Senior Advocates/learned counsel appearing on behalf of the respective assessee's. We are also of the opinion that if the aforesaid order is passed, it will strike a balance between the rights of the Revenue as well as the respective assesses as because of a bonafide belief of the officers of the Revenue....
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....ed Assessing Officers to hold any enquiry, if required; (iii) The assessing officers shall thereafter pass orders in terms of section 148A(d) in respect of each of the concerned assessee's; Thereafter after following the procedure as required under section 148A may issue notice under section 148 (as substituted); (iv) All defences which may be available to the assesses including those available under section 149 of the IT Act and all rights and contentions which may be available to the concerned assessee's and Revenue under the Finance Act, 2021 and in law shall continue to be available. 11. The present order shall be applicable PAN INDIA and all judgments and orders passed by different High Courts on the issue and under which similar notices which were issued after 01.04.2021 issued under section 148 of the Act are set aside and shall be governed by the present order and shall stand modified to the aforesaid extent. The present order is passed in exercise of powers under Article 142 of the Constitution of India so as to avoid any further appeals by the Revenue on the very issue by challenging similar judgments and orders, with a view not to burden this C....
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....evant assessment year, then, approval for issuing the notice under section 148 of the Act has to be taken from the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General for issuing the notice under section 148 of the Act is supported by the recent judgment of the Hon'ble High Court of Telangana in Deloitte Consulting India Private Limited vs. The Assessment Unit, Income Tax Department, Civil Writ Petition No. 4061 of 2024, dated 25/09/2025. For the sake of clarity, we deem it apposite to cull out the observations of the Hon'ble jurisdictional High Court in the case of Deloitte Consulting India Private Limited vs. The Assessment Unit, Income Tax Department (supra), as under: "48. The proviso to Section 151 has been introduced by the Finance Act, 2023 with effect from 01.04.2023. The relevant Section 151 with its proviso is applicable to the case of the petitioner is quoted hereunder: 151. Sanction for issue of notice:- 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 ye....
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....d not have assumed exclusion of such a period while passing the order under Section 148A(d) of the Act or issuing notice under Section 148 of the Act on 07.04.2022 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. In taxing statutes, intendment cannot be assumed unless specifically expressed in the provision enacted by the legislature. Therefore, the reopening of assessment without sanction/approval of the specified authority in accordance with Section 151 of the Act was bad in law. Consequently, reassessment order dated 16.01.2024 also is bad in law." (emphasis supplied by us) 15. We find that the Hon'ble High Court in its aforesaid order had not only observed that in the case of the assessee before them ie., for AY 2018-19, the specified authority for granting approval under section 151 of the Act was the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General as a period of more than three years had lapsed from the end of the relevant Assessment Year, but had also rejected the claim of the reven....
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....e and gamut of the said statutory provision. On the contrary, we find that in case once the approval for initiation of reassessment proceedings was granted by the Commissioner of Income Tax after expiry of three years from the end of the relevant assessment year, which ought to have been granted by the Principal Chief Commissioner of Income Tax, the Hon'ble Supreme Court in the case of ACIT, International Taxation v. LinkedIn Singapore Pte. Ltd. (2025) 180 Taxmann 158 (SC) had upheld the order of the Hon'ble High Court, and quashed the impugned order passed by the AO under section 148A(d) as well as the notice issued under section 148 of the Act for want of valid assumption of jurisdiction. 18. As we have quashed the assessment framed by the A.O. under Section 147 r.w.s.. 144B of the Act, dated 06/12/2023, for want of a valid assumption of jurisdiction for issuing notice u/s. 148 of the Act, we therefore refrain from adverting to and dealing with the other contentions raised before us, which are thus left open. 19. In the result, the appeal filed by the assessee is allowed in terms of our aforesaid observations. Order pronounced in open court on 10th July, 2026. =======....