TaxTMI 
TaxTMI 
2026 (8) TMI 183
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.... 2. On the facts and in the circumstances of the case, the notice issued U/s. 148 of the Act on 26.04.2022 without prior approval of the Pr. Chief Commissioner of Income Tax being the appropriate authority in terms of section 151 (ii) of the Act is invalid. 3. The Learned First Appellate Authority erred in law and on facts in issuing the notice of hearing by granting merely two days' time to the appellant, which is unreasonable, and contrary to the principles of natural justice, as such short notice does not constitute a statutorily permissible or adequate opportunity of being heard. 4. The Learned First Appellate Authority in the facts and circumstances of the case is not justified in confirming the entire purchase value of trucks of Rs. 1,06,45,440/-as unexplained investment u/s. 69A, since payment is sourced through loan taken. 5. The Learned First Appellate Authority in the facts and circumstances of the case is not justified in confirming the addition of Rs. 54,000/- under head business income ignoring the fact that the business income at Rs. 3,13,639/- as returned u/s. 148 was also treated by the Assessing Officer as part of assessed income. ....
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....ons advanced by the appellant in the instant appeal to counter the AO's decision as contained in the assessment order, the total additions/disallowances of Rs. 1,06,99,440/- made by the AO is sustained. Hence, Ground No. 1 to 5 of appeal are being dismissed. 7. In the result, the appeal is dismissed." 6. The assessee, aggrieved with the order of the CIT(A), has carried the matter in appeal before us. 7. We have heard the Learned Authorised Representatives of both parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions. 8. Sri K.A. Sai Prasad, the Learned Authorised Representative (for short, "Ld. AR") for the assessee, at the threshold of hearing of the appeal, submitted that as the AO had issued notice under section 148 of the Act, dated 26/04/2022 without obtaining approval of the specified authority as contemplated under section 151(ii) of the Act, therefore, the assessment order passed by him was liable to be quashed for want of valid assumption of jurisdiction. The Ld. AR, to buttress h....
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....reassessment or recomputation under section 147, and subject to the provisions of section 148A, the Assessing Officer shall serve on the assessee a notice, along with a copy of the order passed, if required, under clause (d) of section 148A, requiring him to furnish within 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 se....
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....uthority means the specified authority referred to in section 151." Conducting inquiry, providing opportunity before issue of notice under section 148- "148A. The Assessing Officer shall, before issuing any notice under section 148,- (a) conduct 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 ....
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.... year: Provided that no notice under section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before 1st day of April, 2021, if such notice could not have been issued at that time on account of being beyond the time limit 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 afte....
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....r leading to formation of belief that income has escaped assessment, (3) no enquiry being conducted by the assessing officer prior to the issuance of notice; and reopening is based on change of opinion of the assessing officer and (4) lastly the mandatory procedure laid down 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 serv....
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....e limit for issuance of notice under section 148 of the IT Act. The substituted section 149 of the IT Act has reduced the permissible time limit for issuance of such a notice to three years and only in exceptional cases ten years. It also provides further additional safeguards 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 R....
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....ction 148A(a) be dispensed with as a onetime measure vis-à-vis those notices which have been issued under Section 148 of the unamended Act from 01.04.2021 till date, including those which have been quashed by the High Courts; (iii) The assessing officers shall 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 defenses 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 appea....
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....issued under section 148 of the unamended Act from 01.04.2021 till date, including those which have been quashed by the High Courts. Even otherwise as observed hereinabove holding any enquiry with the prior approval of specified authority is not mandatory but it is for the concerned 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 s....
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....ervations 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 years have elapsed from the end of the relevant assessment year; (ii) Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General, if more than three years have elapsed from the end of the relevant assessment year: Provided that the period of three years for the purposes of clause (i) shall be computed after taking into account the period of limitation as excluded by the third or fourth or fifth provisos or extended by the sixth proviso to sub-section (1) of Section 149. 49. In the pre....
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.... 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) 14. 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. i.e., 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 revenue that the "proviso" to section 151 of the Act as had been made available on the statute vide the Finance Act, 2023 w.e.f. 01/04/2023 was to be given a retrospective effect. 15. We, thus, in terms of our aforesaid observation, concur with the Ld. AR that in the present case before us for A.Y. 2018-19, wherein notice under Section 148 of the Act was issued on 26/04/2022, i.e., beyond a period of three years from the end of the assessment year, the A.O. was statutorily obligated to have obtained the approval from either of the authorities ....
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.... High Court, which had 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. 17. We thus, in terms of our aforesaid deliberations, quash the assessment framed by the AO under section 147 r.w.s 144 r.w.s. 144B of the Act, dated 15/03/2024, for want of a valid assumption of jurisdiction to issue a notice under section 148 of the Act. As we have quashed the assessment, we refrain from dealing with the other contentions raised before us, which are thus left open. 18. In the result, the appeal filed by the assessee is allowed in terms of our aforesaid observations. Order pronounced in the open court on 10^th July, 2026. ============= Document 1 - GOVERNMENT OF INDIA MINISTRY OF FINANCE INCOME TAX DEPARTMENT OFFICE OF THE INCOME TAX OFFICER WARD-1, WARANGAL/ TO. INDIRA REDDY ANAGANDLA H.NO.23-6-59/65 PROP.M/S.CANAPATHI MINERALS , NEW SHYAMPET HUNTER ROAD, HANAMKONDA WARANGAL 508001 . Telangana India PAN: AGEPA2144B A.Y; 2018-19 Dated: 26/04/2022 DIN & Notice No: ITBA/AST/S/148 1/2022- 23/1042853803(1) Notice under section 148 of the Income....