ITAT Mumbai Quashes Reopening: Approval by Wrong Authority u/s 151 Makes Entire Reassessment Void

Mita Vora Vs ITO (ITAT Mumbai)

ITAT Mumbai Quashes Reopening: Approval by Wrong Authority u/s 151 Makes Entire Reassessment Void

In a decisive ruling, the ITAT Mumbai held that reassessment proceedings are invalid if approval under Section 151 is obtained from the wrong authority, and accordingly quashed the entire reassessment.

The case involved reopening beyond 3 years from the end of the assessment year, where law mandates approval from Principal Chief Commissioner (PCCIT). However, approval was taken from Principal Commissioner (PCIT).

The Tribunal held:

• Sanction under Section 151 is a jurisdictional requirement, not a procedural formality.
• Approval by an incorrect authority renders the notice under Section 148 invalid and non-est.
• Consequently, entire reassessment proceedings collapse.

The Tribunal relied on:

• Coordinate bench rulings in identical cases
• Bombay High Court decision emphasizing strict compliance with sanction requirements

Since the notice itself was invalid, the Tribunal did not examine merits (Section 56 addition).

Result:

• Notice u/s 148 quashed
• Entire reassessment set aside

Bottom line:

A powerful jurisdictional ruling-wrong approval = no reopening, reinforcing that Section 151 compliance is mandatory and fatal if violated.

FULL TEXT OF THE ORDER OF ITAT MUMBAI

This appeal is filed by the assessee against the order dated 25.11.2025 passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi[hereinafter referred to as “CIT(A)”], under section 250 of the Income Tax Act, 1961[hereinafter referred to as “the Act”] for A.Y. 2017–18, arising out of the assessment order dated 23.05.2023 passed by the Assessing Officer under section 147 r.w.s. 143(3) r.w.s. 144B of the Act.

Facts of the Case

2. The assessee, an individual, filed her return of income on 31.03.2018 declaring total income at Rs. 3,82,190/-. Subsequently, the case was reopened on the basis of information that the assessee had purchased an immovable property for Rs. 23,33,000/-, whereas the stamp duty value of the property was higher, leading to invocation of provisions of section 56(2)(vii)(b) of the Act.

3. Notice under section 148 of the Act was issued on 30.07.2022 pursuant to proceedings under section 148A(d). In response, the assessee filed return declaring income of Rs. 12,25,550/-. The Assessing Officer completed the reassessment vide order dated 23.05.2023 passed under section 147 r.w.s. 143(3) r.w.s. 144B of the Act determining total income at Rs. 32,15,550/- after making addition of Rs. 19,90,000/- under section 56(2)(vii)(b) of the Act.

4. Aggrieved, the assessee preferred appeal before the Ld. CIT(A), who confirmed the action of the Assessing Officer and upheld the addition.

5. Aggrieved by the order of CIT(A), the assessee is in appeal before us raising following grounds of appeal:

1. a) The order passed u/s.148A(d) of the Act dated 30.07.2022 is invalid, non-est and bad in law.

b) The notice u/s. 148 of the Act dated 30.07.2022 of the Act is invalid, non-est and bad in law.

c) The notice u/s. 148 of the Act dated 30.07.2022 of the Act is invalid, non-est and bad in law as the same has been issued without proper sanction u/s 151 of the Act

d) The reassessment order dated 23.05.2023 passed u/s 147 r.w.s144B of the Act by the Ld. NFAC is invalid, non-est and bad in law

2. a) The Ld. National Faceless Appeal Centre, erred in law and facts in confirming the addition of Rs.19,90,000/- u/s 56(2)(vii)(b) of the Act, being the difference between the stamp duty value and actual consideration paid by the appellant, without appreciating the facts of the case and the submissions made by the appellant.

b) Without prejudice to above, the Ld. National Faceless Appeal Centre, erred in law and facts in confirming the addition of Rs. 19,90,000/- u/s. 56(2)(vii)(b) of the Act, without considering the report issued by the Departmental Valuation Officer (^„DVO‟) consequent to reference made by the Ld. NFAC.

3.All the above grounds are independent and without prejudice to each other.

4.The Appellant craves leave to add, amend, delete and modify the above grounds of appeal.

6. The Ld. Authorised Representative (AR) submitted that the reassessment proceedings are invalid in law on account of lack of proper sanction under section 151 of the Act. It was contended that the notice under section 148 dated 30.07.2022 has been issued after expiry of three years from the end of the relevant assessment year and, therefore, the approval ought to have been granted by the Principal Chief Commissioner of Income Tax (PCCIT). However, in the present case, the approval has been granted by the Principal Commissioner of Income Tax (PCIT), rendering the notice invalid.

7. The Ld. AR further submitted that the issue is squarely covered by the decision of the co-ordinate bench in the case of the mother of the assessee Sejal Milan Vora (ITA No. 4708/Mum/2025), wherein on identical facts, the reassessment proceedings were quashed on the ground of improper sanction under section 151 of the Act. In support, reliance was placed on the said order.

8. On merits, the Ld. AR submitted that the valuation of the property was referred to the DVO and the assessment was completed without waiting for the DVO’s report, which vitiates the addition made.

9. Per contra, the Ld. Departmental Representative relied upon the orders of the Assessing Officer and the CIT(A).

10. We have carefully considered the rival submissions and perused the material available on record. The primary issue raised by the assessee relates to the validity of notice issued under section 148 of the Act dated 30.07.2022 on the ground that the approval under section 151 of the Act has been granted by the PCIT instead of PCCIT.

11. It is an admitted position that the notice under section 148 has been issued after expiry of three years from the end of the relevant assessment year i.e., A.Y. 2017–18. In such a situation, as per the provisions of section 151 of the Act, the specified authority for granting approval is the Principal Chief Commissioner or Principal Director General or equivalent authority.

12. We find that identical issue has been considered by the co­ordinate bench in the case of Sejal Milan Vora in ITA No. 4708/Mum/2025, wherein under similar facts, the Tribunal has held as under:

“…the case of assessee was reopened by issuing notice u/s 148 of the Act, after elapsing more than 3 years from the end of relevant assessment year {A.Y. 2017-18} and taking approval from the Ld. Principal CIT-19, Mumbai and thus violated the provision of section 151(ii) of the Act, according to which, if more than 3 years has been elapsed from the relevant assessment year, then the specified authorities for the purpose of section 148 shall be Principal Chief Commissioner or Principal Director General…” (para 4)

“Thus, this court… is inclined to quash the notices u/s 148A(d) and 148… along with assessment order… Thus, the same are quashed…” (para 5)

13. Further, we also find that similar issue has been examined by another co-ordinate bench of the Tribunal in the case of Saif Ali Mansoor Ali Khan Pataudi (ITA No.2131/Mum/2025), wherein after considering the statutory provisions as well as judicial precedents including the decision of the jurisdictional High Court, it was held as under:

“…we find that said notice was issued prior approval of PCIT-8. However, as per amended provision of section 151… the assessing officer was required to obtain prior approval of Pr. CCIT, if more than three years elapsed from the end of relevant assessment year.” (para 4) “Considering the aforesaid factual position, we find that notice under section 148, which is issued with prior approval of Pr. CIT is not valid; therefore, consequent action initiated thereon has become void ab initio.” (para 5)

14. The co-ordinate bench, while arriving at the above conclusion, has also taken into consideration the decision of the jurisdictional High Court in the case of Siemens Financial Services (P) Ltd. vs DCIT (2023) 457 ITR 647 (Bom), wherein it has been held that the requirement of obtaining sanction from the correct specified authority under section 151 is mandatory and not a mere procedural formality, and any deviation therefrom vitiates the jurisdiction assumed under section 147 of the Act.

15. In the present case also, the approval for issuance of notice under section 148 dated 30.07.2022 has admittedly been granted by the PCIT-19, Mumbai and not by the PCCIT, despite the fact that the notice has been issued beyond the period of three years from the end of the relevant assessment year. Thus, the statutory mandate of section 151 has not been complied with.

16. Respectfully following the above binding precedents of the co-ordinate benches and the ratio laid down by the jurisdictional High Court, we hold that the notice issued under section 148 dated 30.07.2022 is invalid, non-est and bad in law. Consequently, the reassessment proceedings initiated pursuant to such invalid notice are liable to be quashed.

17. Since the notice itself has been quashed on legal grounds, the issues raised on merits do not survive for adjudication and are therefore not being adjudicated.

18. In the result, the appeal of the assessee is allowed on legal ground.

Order pronounced in the open court on 08.04.2026.