TaxTMI 
TaxTMI 
2026 (8) TMI 188
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....der consideration. Therefore, the Assessing Officer issued a notice u/s 148 of the Act on 12.04.2022. The assessee did not file any reply to the reopening notice, which was resulted in passing ex-parte reassessment order assessing the total income at Rs. 1,00,49,530/- by making additions of Rs. 97,00,000/- on account of unexplained money u/s 69A of the Act. 3. Aggrieved against the reassessment assessment order, the assessee filed appeal before ld. CIT(A) challenging the assumption of jurisdiction and merits of the case. Both the issues were considered by the ld. CIT(A) and decided against the assessee by dismissing the appeal. 4. Aggrieved against the appellate order, the assessee is in appeal before us, raising the following Grounds of Appeal:- "1. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in reopening the assessment u/s. 147 of the act and issuing notice u/s. 148 of the Income Tax Act, 1961. 2. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner....
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.... 31.03.2019 End of the Relevant Assessment Year 2018-19 31.03.2022 Absolute expiry of three years from the end of the A.Υ. 2018-19 25.03.2022 Issuance of Show Cause Notice u/s. 148A(b) 05.04.2022 Appellant's Response to the Notice 12.04.2022 Passing of the Order u/s. 148A(d) of the Act 12.04.2022 Issuance of the Jurisdictional notice u/s. 148 of the Act 5.1 Ld. Counsel submitted that the statutory sanction for passing the order u/s 148A(d) and issuing the notice u/s 148 of the Act was obtained from the Principal Commissioner of Income Tax. Ld. Counsel submitted that the provisions of section 151 of the Act as they stood on 01.04.2022 alone are applicable for determining the validity of the approval obtained for issuance of notice u/s 148 and passing of order u/s 148A(d) of the Act. The amendment brought by the Finance Act, 2023 inserting the proviso to section 151 of the Act has been specifically made effective from 01.04.2023. Therefore, the legality of proceedings initiated in April, 2022 has to be tested only on the basis of the unamended provisions of the Act. 5.2 Further, this issue is no longer res-integra and various Courts ....
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....ould only have been granted by PCCIT/CCIT. Since approval was admittedly obtained from PCIT/CIT, the jurisdictional requirement prescribed by the statute was not fulfilled and the entire reassessment proceedings are void ab initio. It is therefore respectfully prayed that the additional ground raised by the appellant be allowed and the reassessment proceedings be quashed as being without valid sanction u/s. 151 of the Act. 6. Per contra, ld. Sr. DR appearing for the Revenue heavily relied upon the memorandum explaining the provisions in the Finance Bill Act, 2023 to contend that the amendments are clarificatory in nature and therefore, applicable retrospectively. Thus, the sanction obtained from PCIT is well within the provisions of law. The ld. DR relied upon the following cases laws:- * CIT vs. Gold Coin Health Food P Ltd.[2008] 172 Taxmann 386 (SC) * CIT vs. Poddar Cement Pvt. Ltd. & Others (1997) 226 ITR 625 (SC) * ITO vs. Vikram Sujit kumar Bhatia * Giriraj Commercial (P.) Ltd. Vs. Union of India [2024] 169 taxmann.com 168 (High Court of Calcutta) 7. Heard rival contentions and both the parties were directed to file their respective Wr....
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....47. Any deviation from the authority prescribed by Parliament strikes at the very root of jurisdiction. 7.2. Further, critical reading of the Finance Act, 2023, reveals that the Legislature applied retrospective effects to specific provisions where it was deemed necessary namely: * Section 69 of the Finance Act, 2023: Inserted a proviso to Section 135A, explicitly applicable from 01.04.2022. * Section 70 of the Finance Act, 2023: Amended Section 140A(4), explicitly applicable from 01.04.2022. * Section 100 of the Finance Act, 2023: Substituted Clause (iv) in sub-section 9, explicitly applicable from 01.02.2021. * Section 121 of the Finance Act, 2023: Inserted a proviso to Section 274, explicitly applicable from 01.04.2022. The fact that the Legislature selectively backdated multiple provisions within the very same enactment, while keeping the Section 151 Proviso mapped strictly to 01.04.2023, which clearly confirms that the omission of a retrospective tag was deliberate. 7.3. Therefore, in our considered view, sanction u/s. 151 of the Act, is not a fluid procedural step; it is a jurisdictional mandate designed to protect taxpayers from g....
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....er expiry of three years from the end of the assessment year under dispute, as per Section 151(ii) of the Act, the specified authority, who can grant sanction/approval u/s. 148A and 148 of the Act is the Principal Chief Commissioner of Income Tax (PCCIT) or Principal Director General or Chief Commissioner or Director General. It is the say of the assessee that since approval/sanction in the instant case has been obtained from CIT it is invalid. Hence, all actions taken in pursuance to such approval would also be invalid. In support of such contention, learned counsel has relied upon a number of judicial precedents referred to in the order proposed by my learned brother Accountant Member. 3. Learned Departmental Representative (DR) relied upon a decision of the Coordinate bench in case of Albert Joseph Rozario vs. ITO, Mumbai, ITA No. 1168/Mum/2025 order dated 22.07.2025, wherein, a view has been taken that the limitation prescribed u/s. 149(1) of the Act for issuance of notice u/s. 148 of the Act would also apply to sanction for issue of notice has provided u/s. 151 of the Act. As per the reasoning of the Coordinate Bench in the aforesaid decision, applying the provisions ....
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.... 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; (ii) Principal Chief Commissioner or Principal Director General or C....
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....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's case the 148A notice for AY 2017-18 was issued on 12.03.2022 and the order dispo....
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....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 for AY 2018- 19 as the same is inserted only w.e.f. 01.04.2023. When we apply the sa....
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....ment 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 assessment year is PCCIT/CCIT in terms with Section 151(ii) of the Act. Hence, in absence of an....
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....in by Finance Act, 2023 in introducing the proviso to Section 151 of the Act by giving effect to the exclusion of time limit by operation of 3rd to 5th proviso to Section 149(1) of the Act would take effect only from 01.04.2023. 50. Hence, it can be said that the said amendment would not come to the rescue of the revenue on the facts of the present case in view of the fact that the notice u/s. 148 as well the order u/s. 148A(d) of the Act being issued / passed well prior to the introduction of the said amendment, i.e. on 19.04.2022. 51. Before us, the Ld. DR argued that the said amendment introduced by Finance Act, 2023 ought to be reckoned as clarificatory and would have retrospective applicability, thereby validating the sanction accorded by the PCIT, Madurai - 1 on the facts of the present case. He further relied on the judgement of the Hon'ble Calcutta High Court in the case of Giriraj Commercial (P.) Ltd. v. Union of India reported in 169 taxmann.com 168 in support of his contentions. 52. This argument of the ld.DR is unable to be countenanced by us for the simple reason that the said amendment was introduced specifically with effect from 01.04.2023 ....