Ratan N. Motwani (HUF) Vs ITO (ITAT Mumbai)
ITAT Mumbai Quashes Reassessment for Want of Proper Sanction; PCIT’s Approval Invalid When Notice Issued After 3 Years
Assessee–HUF appealed against reassessment u/s 147 where the AO made additions of ₹51,90,400 & ₹51,89,440 towards alleged accommodation-entry sales to Abhinandan Diamond Pvt Ltd & Aisshpra Gems/Gravit Diamonds Pvt Ltd, & ₹22,00,000 as unexplained loan repayment. Along with merits, Assessee raised strong legal grounds against reopening—primarily invalid sanction u/s 151, lack of jurisdiction, & limitation under Section 149 after TOLA & SC in Rajeev Bansal.
The ITAT focused first on the validity of sanction. The reassessment notice u/s 148 was issued on 24.06.2021, & the order u/s 148A(d) was passed on 27.07.2022. Since more than three years had elapsed from the end of AY 2017-18, the “specified authority” under Section 151(ii) had to be the PCCIT/CCIT, not the PCIT. However, the AO had obtained approval only from PCIT-19, Mumbai.
Assessee relied on Bombay High Court in Ramesh Bachulal Mehta (2025), which held that for notices issued after three years, sanction by PCIT is invalid. The Department relied heavily on the Supreme Court’s decision in Rajeev Bansal & CBDT Instruction 1/2022, arguing that the case still fell under Section 151(i). The Tribunal rejected this contention.
