Bysol Enterprises Pvt Ltd Vs ACIT (ITAT Mumbai)
The assessee’s assessment for AY 2017-18 was reopened alleging bogus purchases of ₹4.66 crore from an alleged accommodation entry provider. Though the original notice was issued in April 2021 under the old law, after the Supreme Court’s decision in Ashish Agarwal the proceedings were converted to the new regime and a fresh order under section 148A(d) and notice under section 148 were issued on 19.07.2022.
By that date, more than three years had elapsed from the end of AY 2017-18 (i.e. beyond 31.03.2021). Under the post-2021 reassessment law, where (i) notice is issued after three years and (ii) alleged escaped income exceeds ₹50 lakh, prior sanction must be obtained from the higher authority specified in section 151(ii) – namely the Principal Chief Commissioner/Chief Commissioner (Pr.CCIT/CCIT).
In this case, approval was obtained only from the Principal Commissioner of Income Tax, Thane. Relying on the Supreme Court ruling in Rajeev Bansal, the Tribunal held that after 01.04.2021 approvals must strictly follow section 151 of the new regime; TOLA can extend time limits but cannot dilute the level of the approving authority. Hence, once three years had lapsed, sanction by Pr.CIT was legally insufficient.
Following binding Supreme Court law and the Bombay High Court judgments in Ramesh Bachulal Mehta and Alag Property on identical facts, the Tribunal held that lack of approval from the correct specified authority rendered the notice under section 148 void ab initio.
Accordingly, the entire reopening and consequential reassessment order were quashed on this jurisdictional defect, and the Tribunal did not examine the merits of the alleged bogus purchases.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
