TaxTMI 
TaxTMI 
2026 (8) TMI 1478
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....Tax Net regarding cash deposits and share transactions, the Assessing Officer reopened the assessment by issuing notice under section 148 on 31.03.2017 and, by order dated 22.12.2017 passed under section 143(3) read with section 147 of the Act, assessed the total income at Rs. 50,54,620/- after making additions of Rs. 13,80,000/- towards unexplained cash deposits under section 68 and Rs. 35,24,618/-on account of the difference in share-transaction data. By the impugned order dated 17.07.2025 passed under section 250 of the Act, the learned CIT(A) upheld the validity of the reassessment as well as both additions and dismissed the appeal. 3. Aggrieved thereby, the assessee is in appeal before us, challenging the validity of the reassessment, the aforesaid additions and, alternatively, seeking restriction of the additions to 1% of the disputed amounts. The assessee has raised the following specific grounds of appeal: 1. On the facts and in the circumstances of the case and in law, the Learned CIT(A) erred in upholding the action of the Ld. Assessing Officer in initiating reassessment proceedings under section 148 without any tangible material that came into the possession ....
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.... a Section 148 notice for cases beyond four years required specific procedural steps. If the escaped income was more than Rs. 1 Lakh, the notice was valid only with prior approval from the Principal Chief Commissioner or Principal Commissioner of Income Tax (Pr. CIT) or similar high-ranking authorities without invalid without jurisdiction. 2. Whether mandate that this approval cannot be a mechanical ritual or a rubber stamp. The officer must apply their mind to the reasons recorded. In our case this is not done, the entire reassessment proceedings are void and invalid. 3. Assessing Officer (AO) cannot send a file for approval to reopen a case without first writing down the reasons. By law, the AO must write down why they want to reopen the case. Once this is recorded, the AO can ask for approval to issue a notice without invalid proceeding. 4. The appellant craves leave to add to alter, amend, modify and /or delete any or all of the above said grounds of appeal and the appellant reserves its right to file further submissions in the appeal. 5. The learned Authorised Representative (AR) submitted that the additional grounds raised jurisdictional question....
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....er of Income-tax-31, Mumbai, and a date stamp of 31.03.2017. It was argued that no independent satisfaction of the Principal Commissioner was discernible from the document. 11. The learned AR contended that, since more than four years had expired from the end of the relevant assessment year, approval was required from the Principal Chief Commissioner and that approval by the Principal Commissioner was insufficient. Reliance was placed upon the judgment of the Hon'ble Supreme Court in Union of India v. Rajeev Bansal [2024] 167 taxmann.com 70/301 Taxman 238/469 ITR 46 (SC). 12. At this stage, it would be apposite to reproduce the relevant approval form placed on record by the assessee, containing the proposal of the Assessing Officer and the endorsements of the Joint Commissioner of Income-tax and the Principal Commissioner of Income-tax-31, Mumbai. The same is reproduced below: 13. A perusal of the aforesaid approval form shows that the proposal bears the date 27.03.2017; the Joint Commissioner of Income-tax recorded the endorsement, "I am satisfied on the reason recorded by AO," on 30.03.2017; and the form bears the signature of the Principal Commissioner of Income-tax-31,....
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....ity was the Joint Commissioner. In case the notice was issued after the expiry of four years, the sanctioning authority was the Principal Chief Commissioner, Chief Commissioner, Principal Commissioner or Commissioner." 19. The Hon'ble Supreme Court reiterated the position in paragraph 74(ii) as follows: "If income escaping was more than Rupees one lakh: (a) a reassessment notice could be issued within four years after obtaining the approval of the Joint Commissioner; and (b) after four years but within six years after obtaining the approval of the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner." 20. In the present case, the approval form bears the signature of the Principal Commissioner of Income-tax-31, Mumbai, together with the date stamp of 31.03.2017. The Principal Commissioner was one of the authorities expressly empowered under section 151(1) to grant sanction. We, therefore, reject the contention that the sanction was invalid merely because it was granted by the Principal Commissioner instead of the Principal Chief Commissioner. Additional Ground No.1, to this limited extent, is dismissed. 21. The matter, howeve....
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.... also find that the reasons merely refer to cash transactions of Rs. 1,00,000/- and above, share transactions of Rs. 20,000/- or more and TDS information relating to commission or brokerage under section 194H. These are broad reporting categories or thresholds. The reasons do not disclose the identity of the bank account, the dates and amounts of the cash deposits, the particulars of the share transactions, the value of the transactions or the amount of income which was believed to have escaped assessment. 26. This omission assumes greater significance because the notice was issued after the expiry of four years. Under section 149(1)(b), as applicable at the relevant time, a notice beyond four years could be issued only where the income chargeable to tax which had escaped assessment amounted to, or was likely to amount to Rs. 1,00,000/- or more. The recorded reasons do not state that the income which had escaped assessment amounted to or was likely to amount to Rs. 1,00,000/- or more. A reference to a transaction of a particular value cannot, without further examination, be equated with income chargeable to tax escaping assessment. 27. Consistent with this omission, column 6 ....
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....l contains an incorrect PAN, an objectively incorrect statement regarding non-filing of the return and no quantification of the income alleged to have escaped assessment. Had the reasons and proposal been examined with the care contemplated by section 151, these foundational discrepancies could not reasonably have remained unnoticed. 32. The defects in the present case are cumulative and go to the root of the jurisdiction assumed under sections 147 and 148. The incorrect PAN may, if considered in isolation, be capable of being regarded as a clerical error. However, when it is read with the incorrect assertion that no return had been filed, the absence of particulars connecting the reported transactions with taxable income, the failure to quantify the alleged escapement and the blank column in the approval form, the record does not disclose a valid and independent formation of belief followed by meaningful statutory satisfaction. 33. The contention of change of opinion cannot, however, be accepted because the material before us does not show that an assessment under section 143(3) had earlier been completed for the relevant assessment year. Nevertheless, even in the absence of....
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.... for the year under consideration. Therefore, I have reason to believe that the income chargeable to tax has aped assessment for A.Y. 2010-11 in the case of the said assessee within the meaning of section 147 of the Income Tax Act, 1961. The ense of the Bisessee is therefore proposed to be reopened by issue of notice u/s 148 of the 17 Act, 1961. Accordingly proposal for re-opening the assessment of the above stted anosux a bung sulanitted fur necessary sanction as per provisions of section 151(1) of the I. T., 1961. Date: 28.03.2017 Seen 1 Alle (Amr Babu) Income Tax Officer, 31 (2) (1), Mumbal Perez1 nun 67 Document 2 VI Enim.fer.recording the reasons for Initiation of proceedings under section 148 209.02. xaanslag the approval of the Pr. Commissioner of Insome-fax L. Name and address of the assesteo : SHRI JITESH PRAKASHCHANDRA JADAV 41, 250 FLOOR, KRISHNA BHUVAN PARSI PANCHAYAT ROAD, ANDHERI (EAST) MUMBAI - 400059 2 Permanent Account No. 1 AFVPJ1450P 3 Status 4 District / Ward / Circle / Range Individual .- 31(2)(1). Mumbal. 5 Assessment Year in respect of which it proposed to issue notice u/s 148 : : I.T.O : 2010-11 6 The quantum of income whi....