Shanti Hardware & Plywood Centre Vs ITO (ITAT Bangalore)
Bangalore ITAT Quashes AY 2016-17 Reassessment: Post-Ashish Agarwal Approval by PCIT Invalid After Three-Year Period
The assessee’s original return for AY 2016-17 declared income of ₹8.82 lakh. A reassessment notice was initially issued under the old regime on 30 June 2021 and was later treated as a show-cause notice under Section 148A(b) pursuant to the Supreme Court’s ruling in Union of India v. Ashish Agarwal. Thereafter, the AO passed the Section 148A(d) order and issued a fresh Section 148 notice on 29 July 2022, based on approval granted by the PCIT, Hubballi.
The Bangalore ITAT held that, after considering the TOLA extension, the three-year period for AY 2016-17 expired on 30 June 2021. Therefore, any approval granted thereafter had to be obtained from the higher authority specified under Section 151(ii)—the PCCIT/PDGIT or, where applicable, the CCIT/DGIT. The PCIT was competent only under Section 151(i) and consequently lacked authority to grant approval in July 2022.
Relying on the Supreme Court’s decision in Union of India v. Rajeev Bansal and the Bombay High Court’s ruling in Ramesh Bachulal Mehta v. ITO, the Tribunal held that approval from the correct specified authority is a jurisdictional precondition, and non-compliance vitiates the entire reassessment.
The Revenue’s reliance on the proviso to Section 151 permitting exclusion of certain periods was rejected because that proviso was inserted by the Finance Act, 2023 with effect from 1 April 2023, whereas the impugned order and notice were issued in July 2022. Their validity had to be tested under the law prevailing on the date of issuance.
Accordingly, the Section 148A(d) order, Section 148 notice and consequential reassessment order were quashed. The remaining grounds became academic.
List of Cases Discussed / Relied Upon
- Union of India v. Ashish Agarwal [2022] 444 ITR 1 (SC)
- Union of India v. Rajeev Bansal [2024] 469 ITR 46 (SC)
- Ramesh Bachulal Mehta Vs. Income Tax Officer (2025) 177 Taxmann.com 606 (Bom)
- Assistant Commissioner of Income-tax v. Godrej Industries Ltd. [2024] 160 taxmann.com 13 (Bombay)
FULL TEXT OF THE ORDER OF ITAT BANGALORE
