Wrong Approval Quashes Reassessment, Penalty U/s 270A: Hyderabad ITAT

By CA Vijayakumar Shetty Income Tax Judiciary September 7, 2026

TaxGuru Citation: 2026 taxguru.in 12636
Case Name: Ahmed Altaf Sayeed Vs ITO (ITAT, Hyderabad Bench)
Appeal Number: Only available for paid members
Date of Judgement/Order: Only available for paid members
Related Assessment Year: 2018-19
Courts: All ITAT, ITAT Hyderabad

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Ahmed Altaf Sayeed Vs ITO (ITAT, Hyderabad Bench)

Wrong Sanction Sinks Reassessment, Penalty Goes Down With the Ship: Hyderabad ITAT Quashes Penalty u/s 270A Where Notice u/s 148 Lacked Approval of Specified Authority u/s 151

The controversy

The Hyderabad Bench of the ITAT dealt with an important question concerning whether an assessee, in an appeal against a penalty order u/s 270A, can challenge the legality of the underlying reassessment proceedings. The Tribunal held that where the reassessment order constitutes the very foundation of the penalty, its validity can be examined even in collateral penalty proceedings. Finding that the notice u/s 148 had been issued with the approval of an incompetent authority, the Tribunal quashed both the reassessment order & the consequential penalty.

The assessee, Shri Ahmed Altaf Sayeed, had filed the appeal against the order of the CIT(A) confirming a penalty of ₹2,13,664 u/s 270A for AY 2018-19.

Delay caused by professional lapse condoned

There was a delay of 110 days in filing the appeal before the Tribunal. The assessee explained that he had entrusted the matter to his Chartered Accountant before travelling to Saudi Arabia for pilgrimage. He genuinely believed that the appeal would be filed within the prescribed period. However, owing to pressure of audit work & return filing, the Chartered Accountant inadvertently lost sight of the limitation date.

After returning from Saudi Arabia, the assessee contacted the Chartered Accountant & the appeal was filed immediately. The assessee supported his explanation with an affidavit & a copy of his passport.

The Tribunal found the explanation reasonable & observed that the delay was neither deliberate nor attributable to any mala fide intention. Relying upon the Supreme Court’s decision in Vidya Shankar Jaiswal v. CIT, where a justice-oriented & liberal approach was adopted while condoning a delay of 166 days, the Tribunal condoned the delay of 110 days in the interest of substantial justice.

Background of penalty proceedings

The assessee’s assessment had been completed u/s 147 r.w.s. 144B by order dated 28 February 2024. The AO made an addition of ₹5,13,613 towards capital gains & assessed the total income at ₹9,52,723. The addition arose principally because the assessee was unable to substantiate the cost of improvement allegedly incurred in 2003.

The AO thereafter initiated proceedings u/s 270A & imposed a penalty of ₹2,13,664. The CIT(A) confirmed the penalty, resulting in the appeal before the Tribunal.

Apart from challenging the penalty on merits, the assessee raised an additional legal ground questioning the very validity of the reassessment. According to him, the notice u/s 148 dated 4 April 2022 had been issued beyond three years from the end of AY 2018-19. Therefore, approval was required from the authority specified in clause (ii) of section 151. Instead, approval had been obtained merely from the CIT (International Taxation & Transfer Pricing), Hyderabad.

Can quantum proceedings be challenged in a penalty appeal?

The Revenue objected to admission of the additional ground, contending that an appeal arising from penalty proceedings could not be converted into a challenge against the original reassessment order.

The Tribunal rejected this objection. It noted that the additional ground involved a pure question of law, all relevant facts were already available on record & no fresh factual investigation was necessary. Following National Thermal Power Co. Ltd. v. CIT, the Tribunal observed that it has jurisdiction to examine a legal question arising from facts already on record where such question has a bearing on the assessee’s tax liability.

The Tribunal also relied upon the Kolkata ITAT decision in Shri Valley Refractories Ltd. v. DCIT, which held that the legality of assessment proceedings can be challenged during penalty proceedings. Since the assessment order formed the very foundation of the penalty, the assessee could legitimately question its jurisdictional validity in the penalty appeal. The additional ground was accordingly admitted.

Approval by CIT held legally insufficient

On merits, the Tribunal found that the notice u/s 148 was issued on 4 April 2022, admittedly beyond three years from the end of AY 2018-19. In such circumstances, section 151(ii) required approval from the Principal Chief Commissioner or Principal Director General, or, where such authority did not exist, from the Chief Commissioner or Director General.

The notice, however, had been issued after obtaining approval only from the CIT. The prescribed statutory hierarchy could not be ignored or substituted merely because approval from some superior officer had otherwise been obtained.

Following its earlier decision in Kilaru Venkata Satish v. DCIT, which had considered the Telangana High Court ruling in Deloitte Consulting India Pvt. Ltd. v. Assessment Unit, Income Tax Department & the Supreme Court proceedings in ACIT v. LinkedIn Singapore Pte. Ltd., the Tribunal held that sanction from the authority specifically identified u/s 151(ii) was mandatory.

Consequently, approval from the CIT was not a valid statutory approval. The notice u/s 148 was therefore invalid in law, rendering the reassessment order passed u/s 147 r.w.s. 144B unsustainable.

When the foundation falls, penalty cannot remain standing

Once the reassessment order was quashed for want of valid jurisdiction, the penalty imposed u/s 270A lost its legal foundation. A consequential penalty cannot independently survive when the assessment from which it originates has itself been declared invalid.

The Tribunal accordingly quashed the reassessment order, cancelled the penalty of ₹2,13,664 u/s 270A, set aside the CIT(A)’s order & allowed the assessee’s appeal.

The ruling reinforces two significant principles: a jurisdictional defect in the foundational assessment can be raised in penalty proceedings, & statutory approval u/s 151 must come from the precisely designated authority—approval from the wrong officer is not a curable procedural irregularity.

Cases Discussed

Vidya Shankar Jaiswal v. CIT (Supreme Court)
National Thermal Power Co. Ltd. v. CIT (Supreme Court)
Shri Valley Refractories Ltd. v. DCIT (ITAT Kolkata)
Kilaru Venkata Satish v. DCIT (ITAT Hyderabad)
Deloitte Consulting India Pvt. Ltd. v. Assessment Unit, Income Tax Department (Telangana High Court)
Assistant Commissioner of Income Tax v. LinkedIn Singapore Pte. Ltd. (Supreme Court)
Union of India v. Ashish Agarwal (Supreme Court)

FULL TEXT OF THE JUDGMENT/ORDER OF ITAT HYDERABAD

1. This appeal is filed by Shri Ahmed Altaf Sayeed (“the assessee”), feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals)-10, Hyderabad, (“Ld. CIT(A)”) dated 08.08.2025 for the A.Y. 2018-19.

2. At the outset, it is noticed that there is a delay of 110 days in filing the present appeal before the Tribunal, for which the assessee has filed a condonation petition supported by an affidavit explaining the reasons for the delay. The Learned Authorized Representative (“Ld. AR”) submitted that the assessee had entrusted the work of filing the appeal to his Chartered Accountant and was under the bona fide belief that the Chartered Accountant would file the appeal within the prescribed time. Thereafter the assessee proceeded to Saudi Arabia for pilgrimage. However, upon returning from Saudi Arabia, when the assessee contacted the Chartered Accountant, he came to know that, due to heavy pressure of audit work and filing of returns, the Chartered Accountant had inadvertently lost sight of the matter and missed the due date for filing the appeal. As soon as the assessee reminded the Chartered Accountant about the appeal, the appeal was immediately filed before the Tribunal. It was thus submitted that, in the aforesaid circumstances, a delay of 110 days had occurred in filing the appeal. In support of the explanation, the assessee has placed on record a copy of his passport demonstrating his travel to Saudi Arabia during the relevant period. The Ld. AR submitted that the delay was neither deliberate nor intentional and, therefore, prayed that the delay of 110 days be condoned and the appeal be admitted for adjudication on merits.

3. Per contra, the Learned Departmental Representative (“Ld. DR”) opposed the condonation petition and submitted that the assessee has failed to demonstrate sufficient cause for the delay of 110 days in filing the appeal. Accordingly, the Ld. DR submitted that the delay should not be condoned and the appeal deserves to be dismissed as barred by limitation.

4. We have heard the rival submissions and perused the material available on record. We have also gone through the condonation petition, affidavit and supporting documents filed by the assessee. It is evident from the material placed before us that the assessee had travelled to Saudi Arabia during the relevant period and had entrusted the filing of the appeal to his Chartered Accountant before proceeding on such travel. The explanation of the assessee that he was under a bona fide belief that the appeal would be filed by the Chartered Accountant within the prescribed time appears to be reasonable. The delay subsequently occurred as the Chartered Accountant, due to pressure of professional work relating to audits and filing of returns, inadvertently failed to file the appeal within the prescribed period. We further find that, upon the assessee’s return and reminder to the Chartered Accountant, the appeal was filed without any further undue delay. Thus, considering the explanation furnished by the assessee along with the supporting material, we are satisfied that the delay was neither deliberate nor attributable to any mala fide intention on the part of the assessee. In this regard, we find support from the decision of the Hon’ble Supreme Court in the case of Vidya Shankar Jaiswal Vs. CIT (174 taxmann.com 21), wherein the Hon’ble Supreme Court, while dealing with a delay of 166 days in filing the appeal before the Tribunal, held that a justice-oriented and liberal approach ought to be adopted while considering the question of condonation of delay. The Hon’ble Supreme Court accordingly condoned the delay and directed the Tribunal to decide the appeal on merits. In view of the aforesaid facts and circumstances and respectfully following the principle laid down by the Hon’ble Supreme Court in the case of Vidya Shankar Jaiswal (supra), we are satisfied that the assessee was prevented by sufficient cause from filing the appeal within the prescribed period. Accordingly, in the interest of substantial justice, we condone the delay of 110 days in filing the present appeal and admit the appeal for adjudication on merits.

5. The assessee has raised the following grounds of appeal:

“1. On the facts and in the circumstances of the case, the order of the Id. CIT(A) is erroneous both on facts and in law.

2. The Id. CIT(A) erred in confirming the penalty levied by the AO‘ for Rs.2,13,664 U/S.270A of the Act.

3. The authorities below failed to appreciate that the disallowance of cost of improvement in the assessment proceedings does not automatically leads to under reporting of income in consequence to mis-reporting of income for levy of penalty.

4. The authorities below further failed to appreciate that the appellant had incurred cost of improvement in the year 2003 and that after a period of almost 20 years, he was not in a position to file evidence for the cost of improvement.

(Tax Effect: Rs.2,13,664)

5. Any other ground that may be urged at the time of hearing.”

6. The assessee has raised the following additional grounds:

“On the facts and in the circumstances of the case, the authorities below failed to appreciate that the assessment order passed for A.Y 2018-019 in the hands of the appellant is bad in law as the approval for issuance of notice under section 148 of the Act, dated 4.4.2022 beyond a period of 3 years from the end of the relevant A.Y was taken from CIT (IT&TP), Hyderabad, instead of DG/PCCIT, as required under section 151 of the Act.

2. On the facts and in the circumstances and in law, the Authorities below could not have levied/sustained penalty based on illegal order”.

7. The brief facts of the case are that the assessment of the assessee for the assessment year 2018-19 was completed by the Assessing Officer under section 147 read with section 144B of the Income-tax Act, 1961 (“the Act”) vide order dated 28.02.2024, making an addition of Rs. 5,13,613/- on account of capital gains and, accordingly, assessing the total income of the assessee at Rs. 9,52,723/-. Subsequently, the Assessing Officer initiated penalty proceedings under section 270A of the Act and ultimately levied a penalty of Rs. 2,13,664/- under section 270A of the Act vide order dated 30.08.2024.

8. Aggrieved by the penalty order, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A) confirmed the penalty levied by the Assessing Officer and, accordingly, dismissed the appeal of the assessee.

9. Aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before the Tribunal. At the outset, the Ld. AR submitted that the assessee has raised additional grounds and has also filed a petition for admission of the said additional grounds under Rule 11 of the Income Tax (Appellate Tribunal) Rules, 1963. The Ld. AR submitted that the additional grounds raised by the assessee are purely legal in nature and all the facts necessary for adjudication of the same are already available on record and, therefore, no fresh investigation into facts is required. In support of his contention, the Ld. AR relied upon the decision of the Hon’ble Supreme Court in the case of National Thermal Power Co. Ltd. Vs. CIT [1998] 229 ITR 383 (SC) and prayed that the additional ground be admitted for adjudication on merits.

10. Per contra, the Ld. DR objected to the admission of the additional grounds and submitted that the additional grounds raised by the assessee does not directly arise from the impugned penalty order but relates to the validity of the underlying quantum assessment order. According to the Ld. DR, the assessee cannot be permitted to challenge the validity of the original assessment proceedings in an appeal arising from the consequential penalty proceedings. Accordingly, the Ld. DR submitted that the additional grounds raised by the assessee should not be admitted.

11. The Ld. AR, in rejoinder, submitted that through the additional grounds, the assessee has challenged the validity of the notice issued under section 148 of the Act and, consequently, the validity of the quantum assessment order which forms the very foundation of the penalty proceedings under consideration. He submitted that an assessee is entitled to challenge the validity of the underlying assessment proceedings in collateral proceedings and, therefore, the validity of the assessment proceedings can also be challenged in an appeal arising out of the consequential penalty order. In support of his contention, the Ld. AR relied upon the decision of the Kolkata Bench of the Tribunal in the case of Shri Valley Refractories Ltd. Vs. DCIT, ITA No. 1102/Kol/2023, for the assessment year 2011-12, order dated 03.07.2026, wherein, according to the Ld. AR, the Tribunal has categorically held that an assessee can challenge the validity of the assessment proceedings during the penalty proceedings.

12. We have heard the rival submissions and perused the material available on record including the case law relied upon. In this regard, we find that the additional ground raised by the assessee involves a legal issue concerning the validity of the notice issued under section 148 of the Act and the consequential reassessment proceedings. The relevant facts necessary for adjudication of the said ground are already available on record and no fresh investigation into facts is required. The Hon’ble Supreme Court in the case of National Thermal Power Co. Ltd. Vs. CIT (Supra) has held that the Tribunal has jurisdiction to examine a question of law which arises from the facts as found by the authorities below and having a bearing on the tax liability of the assessee, even though such question was not raised before the lower authorities. However, the objection of the Ld. DR is that the additional ground pertains to the validity of the underlying assessment proceedings and cannot be raised in the present appeal arising out of the penalty proceedings. In this regard, we have gone through the order of the Kolkata Bench of the Tribunal in the case of Shri Valley Refractories Ltd. Vs. DCIT (supra), which is to the following effect:

In view of the decision of the Hon’ble Third Member, wherein the Hon’ble Third Member has held as follows:

“14. So far as this issue is concerned, after considering the orders passed by the Members of the Division Bench having dissenting view to each other, it appears from the record that there is no dispute about invalidity of the impugned assessment order. Therefore, undoubtedly the assessment order is invalid. It is an undisputed fact that the impugned assessment order is invalid in the eyes of law. Both the ld. Members are in agreement with the contention of the assessee that in absence of any valid notice under section 143(2) of the Act by AO/AC/DC having jurisdiction over the assessee, the impugned assessment is invalid. But the only difference of opinion expressed by the Judicial Member is that the assessee could not challenge the validity of assessment proceedings during the collateral proceedings/penalty proceedings since the assessment order attains finality.”

15. Now the only issue before me is that as to whether the assessee can raise the question of validity of assessment in an appeal against the levy of penalty. The ld. D.R. relied on the decision of the Hon’ble Jammu & Kashmir High Court in the case of CIT vs. Hotel Highland Park reported in [2000] 246 ITR 130 (J&K) wherein the Hon’ble Court has held that “penalty proceedings and assessment proceedings are two separate proceedings. The scope and ambit of the appeal is restricted to the order of penalty. The validity of an assessment order which has attained finality, cannot be challenged in such an appeal. The appellate authority cannot entertain any challenge to the validity of the assessment order in an appeal against the order of penalty”.

16. However, there are decisions on the same point in the case of Jai Dayal Pyare Lal -vs- CIT, reported in 1972 UPTC 596 (All.) wherein it was held that “it is open to the assessee to set up/raise question of validity of assessment in the appeal against levy of penalty. Since question of validity of assessment made in the matter was raised, which was a pure question of law and not involving any investigation into the facts as the same were on record”. Similarly, Hon’ble Rajasthan High Court in the case of Deep Chand Kothari vs. CIT [1988] 171 ITR 381 (Raj.) held that “an order passed by an authority without jurisdiction is a nullity, and that its invalidity could be set up whenever and wherever it is sought to be enforced or relied upon”. Further, the decision of the Hon’ble Supreme Court in the case of National Thermal Power Co. Limited -vs- CIT (1998) 229 ITR 383 (SC), wherein it was held that “it is open to the assessee to set up/raise the question of validity of assessment in the appeal against the levy of penalty. Since the question of validity of assessment made in the matter is raised, which is a pure question of law and not involving any investigation in to the facts as the same are on record”.

17. The recent judgment of the Hon’ble Supreme Court in the case of Kiran Singh vs. Chaman Paswan reported in AIR 1954 SC 340 at page 342, wherein it was categorically held as under:

“It is a fundamental principle well established that a decree passed by a court without jurisdiction is a nullity, and that its invalidly could be set up whenever and wherever it is sought to be enforced or relied upon, even at the stage of execution and even in collateral proceedings. A defect of jurisdiction whether it is pecuniary or territorial, or whether it is in respect of the subject matter of the action, strikes at the very authority of the court to pass any decree, and such a defect cannot be cured by consent of parties.”

18. In view of the above decisions, I am of the firm view that even in the penalty proceedings, the assessee can challenge the validity of the assessment proceedings, though the assessee has not challenged the validity of the assessment proceedings before the appellate authorities, but he is entitled to set up new defence even in the penalty proceedings as per the ratio laid down by various Hon’ble High Courts and Supreme Court as discussed above. Moreover, the decision, which was relied by the ld. Judicial Member is not in existence and there is no such decision rendered by the Hon’ble High Court of Allahabad. In my view, he has wrongly cited and relied on the decision of the Hon’ble Allahabad High Court in the case of Sumit Kr. Goel -vs- CIT. There is no such decision rendered by the Hon’ble Allahabad High Court and citation is also not available. Therefore, I am of the firm view that the assessee is entitled to challenge the validity of the assessment proceedings in collateral / penalty proceedings also. I concur with the view of the ld. Accountant Member treating the penalty proceedings emanated from the assessment order is invalid and non-est in the eyes of law and all the subsequent proceedings including the penalty order passed under section 271(1)(c) of the Act dated 19.09.2014 be invalid and non-est in the eyes of law. The decision of the Hon’ble Jammu and Kashmir High Court is in favour of the Revenue but subsequent judgments of the Hon’ble Allahabad and Rajasthan High Court, which are referred supra, are in favour of the assessee and also the Hon’ble Accountant Member also referred to the citations in favour of the assessee. Accordingly, the points of difference referred for my decision is decided in concurrence with the ld. Accountant Member. The appeal filed along with this order be placed before the Division Bench for passing an order of deciding the appeal in accordance with the majority view.”

In such circumstances, respectfully following the decision of the Hon’ble Third Member, the assessment order having been held to be quashed, the penalty order levied stands quashed.

In the result, the appeal of the assessee is allowed.

13. On perusal of the above, we find that under identical issue, the Tribunal has categorically held that an assessee can challenge the validity of the assessment proceedings during the penalty proceedings. Thus, the validity of the underlying assessment proceedings, which constitute the very foundation of the consequential penalty, can be examined in the penalty proceedings. Therefore, respectfully following the aforesaid decision of the Tribunal and considering the principle laid down by the Hon’ble Supreme Court in National Thermal Power Co. Ltd. v. CIT (supra), we reject the objection raised by the Ld. DR and admit the additional ground raised by the assessee for adjudication on merits.

14. Challenging the validity of the reassessment proceedings on merits, the Ld. AR invited our attention to the copy of the notice placed at page no. 3 of the paper book and submitted that the notice under section 148 of the Act was issued by the Assessing Officer on 04.04.2022, i.e., after the expiry of three years from the end of the relevant assessment year, being the assessment year 2018-19. He further submitted that the Assessing Officer had issued the said notice after obtaining approval of the CIT. Inviting our attention to the provisions of section 151 of the Act, the Ld. AR submitted that where a notice under section 148 is issued after the expiry of three years from the end of the relevant assessment year, approval of the authority specified under clause (ii) of section 151 of the Act is mandatory. Since, in the present case, the requisite approval was not obtained from the specified authority, the notice issued under section 148 of the Act is invalid in law and, consequently, the reassessment order as well as the penalty order founded thereon are liable to be quashed. In support of his contention, the Ld. AR relied upon the decision of the Tribunal in the case of Kilaru Venkata Satish Vs. DCIT, ITA No. 933/Hyd/2025, for the assessment year 2018-19, order dated 17.12.2025, wherein the Tribunal, relying upon the decision of the Hon’ble Telangana High Court in the case of Deloitte Consulting India Pvt. Ltd. Vs. Assessment Unit, Income Tax Department, W.P. No. 4061 of 2024, dated 25.09.2025, and the decision of the Hon’ble Supreme Court in the case of ACIT Vs. LinkedIn Singapore Pte. Ltd., wherein the SLP filed by the Revenue was dismissed, held that where a notice under section 148 of the Act is issued beyond a period of three years from the end of the relevant assessment year, approval is required to be obtained from the authority specified under clause (ii) of section 151 of the Act and, in the absence of such approval, the notice issued under section 148 of the Act and the consequential reassessment proceedings are invalid in law.

15. Per contra, the Ld. DR relied upon the orders of the lower authorities and submitted that the penalty levied by the Assessing Officer and confirmed by the Ld. CIT(A) does not call for any interference.

16. We have heard the rival submissions and perused the material available on record including the case laws relied upon. With regard to the validity of the reassessment proceedings, we have gone through the copy of the notice issued under section 148 of the Act placed at page no. 3 of the paper book, which is to the following effect:

GOVERNMENT OF INDIA
MINISTRY OF FINANCE
INCOME TAX DEPARTMENT
OFFICE OF THE INCOME TAX OFFICER
ITO (INT TAXN)-1, HYD

To,
AHMED ALTAF SAYEED
6-2-187, A.C GUARDS MASABTANK
SHANTINAGAR
HYDERABAD 500004, Andhra Pradesh
India

–

PAN: BQAPS2670B

A.Y.: 2018-19

Dated: 04/04/2022

DIN & Notice No.: ITBA/AST/S/148_1/2022-23/1042500945(1)

Notice under section 148 of the Income-tax Act, 1961

Sir/Madam/ M/s.,

1. I have the following information in your case or in the case of the person in respect of which you are assessable under the Income tax Act, 1961 (here in after referred to as “the Act”) for Assessment Year 2018-19

- information flagged by the risk management strategy formulated in this regard suggesting that income chargeable to tax has escaped assessment within the meaning of section 147 of the Act. Order under sub-section (c) of section 148A of the Act has been passed in such case vide DIN ITBA/AST/F/148A/2022-23/1042489377(1) dated 04/04/2022 and annexed herewith for reference.

2. I, therefore, propose to assess or reassess such income or recompute the loss or the depreciation allowance or any other allowance or deduction for the Assessment Year 2018-19 and I, hereby, require you to furnish, within 30 days from service of this notice, a return in the prescribed form of the Assessment Year 2018-19.

3. This notice is being issued after obtaining the prior approval of the CIT (IT & TP), HYDERABAD accorded on date 04/04/2022 vide Reference No. 47.

KRISHNA MOHAN M
ITO (INT TAXN)-1, HYD

17. On perusal thereof, we find that the notice under section 148 of the Act was issued on 04.04.2022, which is beyond a period of three years from the end of the relevant assessment year, i.e., assessment year 2018-19. We further find that the said notice was issued after obtaining approval of the CIT. We find that an identical issue has been considered by this Tribunal in para nos. 13 to 21 of the order in the case of Kilaru Venkata Satish Vs. DCIT (supra), wherein the Tribunal, has held as under:

13. As the Ld. AR has assailed the validity of the jurisdiction assumed by the A.O. for issuing notice u/s 148 dated 11.04.2022 without obtaining approval from any of the authorities specified u/s 151 of the Act (as was applicable at the relevant point of time), therefore, we shall first deal with the same.

14. Admittedly, it is a matter of fact discernible from the record that the notice u/s 148 of the Act, dated 11.04.2022, had been issued by the ITO, Ward-6(1), Hyderabad, after obtaining the prior approval of the Pr. Commissioner of Income-Tax-1, Hyderabad dated 08.04.2022 vide reference No.10000028941705. For the sake of clarity, we deem it fit to cull out the notice u/s 148 dated 11.04.2022.

15. At this stage, it would be relevant to point out that nothing has been placed on our record by the Ld. DR to rebut the aforesaid factual position as had been brought to our notice.

16. Apropos the challenge by the Ld. AR regarding the validity of the jurisdiction assumed by the A.O. for initiating proceedings u/s 147 of the Act, i.e., without obtaining the approval of the specified authority u/s. 151(ii) of the Act, we find substance in the same. Admittedly, the reassessment proceedings u/s. 147 of the Act had been revamped vide the Finance Act, 2021 w.e.f. 01.04.2021. The substituted Sections 147 to 159 and Section 151 of the Act, applicable w.e.f. 01.04.2021 are culled out as under:

“Income escaping assessment-

147. If any income chargeable to tax, in the case of any assessee, has escaped assessment for any assessment year, the Assessing Officer may, subject to the provisions of sections 148 to 153, assess or reassess such income or recompute the loss or the depreciation allowance or any other allowance or relief and such income or loss or allowance or relief shall, for the purposes of this section and in sections 148 to 153 referred to as the relevant assessment year.

Explanation 1.—For the purposes of this section and section 148A, the information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment means—

(i) any information flagged in the case of the assessee for the relevant assessment year in accordance with the risk management strategy formulated by the Board from time to time;

(ii) any final objection raised by the Comptroller and Auditor General of India to the effect that the assessment in the case of the assessee for the relevant assessment year has not been made in accordance with the provisions of this Act.

Explanation 2.—For the purposes of this section, where,—

(i) a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A, on or after the 1st day of April, 2021, in the case of the assessee; or

(ii) a survey is conducted under section 133A, other than under sub-section (2A) or sub-section (5) of that section, on or after the 1st day of April, 2021, in the case of the assessee; or

(iii) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner, that any money, bullion, jewellery or other valuable article or thing, seized or requisitioned under section 132 or under section 132A in case of any other person on or after the 1st day of April, 2021, belongs to the assessee; or

Explanation.—For the purposes of this section, specified authority means the specified authority referred to in section 151.

148. Before making the assessment, reassessment or recomputation under section 147, and subject to the provisions of section 148A, the Assessing Officer shall serve on the assessee a notice, along with a copy of the order passed, if required, under clause (d) of section 148A, requiring him to furnish within such period, as may be specified in such notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed:

Provided that no notice under this section shall be issued unless there is information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment and the Assessing Officer has obtained the prior approval of the specified authority to issue such notice.

Explanation 1.—For the purposes of this section and section 148A, the information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment means—

(i) any information flagged in the case of the assessee for the relevant assessment year in accordance with the risk management strategy formulated by the Board from time to time;

Explanation 2.—For the purposes of this section, where,—

(ii) a survey is conducted under section 133A, other than under sub-section (2A) or sub-section (5) of that section, on or after the 1st day of April, 2021, in the case of the assessee; or

(iv) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner, that any books of account or documents, seized or requisitioned under section 132 or under section 132A in case of any other person on or after the 1st day of April, 2021, pertains or pertain to, or any information contained therein, relate to, the assesse, Officer shall be deemed to have information which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the three assessment years immediately preceding the assessment year relevant to the previous year in which the search is initiated or books of account, other documents or any assets are requisitioned or survey is conducted in the case of the assessee or money, bullion, jewellery or other valuable article or thing or books of account or documents are seized or requisitioned in case of any other person. Explanation 3.—For the purposes of this section, specified authority means the specified authority referred to in section 151.”

Conducting inquiry, providing opportunity before issue of notice under section 148-

“148A. The Assessing Officer shall, before issuing any notice under section 148,—

(a) conduct any enquiry, if required, with the prior approval of specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment;

(b) provide an opportunity of being heard to the assessee, with the prior approval of specified authority, by serving upon him a notice to show cause within such time, as may be specified in the notice, being not less than seven days and but not exceeding thirty days from the date on which such notice is issued, or such time, as may be extended by him on the basis of an application in this behalf, as to why a notice under section 148 should not be issued on the basis of information which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year and results of enquiry conducted, if any, as per clause (a);

(d) decide, on the basis of material available on record including reply of the assessee, whether or not it is a fit case to issue a notice under section 148, by passing an order, with the prior approval of specified authority, within one month from the end of the month in which the reply referred to in clause (c) is received by him, or where no such reply is furnished, within one month from the end of the month in which time or extended time allowed to furnish a reply as per clause (b) expires:

Provided that the provisions of this section shall not apply in a case where,—

(a) a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A in the case of the assessee on or after the 1st day of April, 2021; or

(b) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any money, bullion, jewellery or other valuable article or thing, seized in a search under section 132 or requisitioned under section 132A, in the case of any other person on or after the 1st day of April, 2021, belongs to the assessee; or

(c) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any books of account or documents, seized in a search under section 132 or requisitioned under section 132A, in case of any other person on or after the 1st day of April, 2021, pertains or pertain to, or any information contained therein, relate to, the assessee.

Explanation.—For the purposes of this section, specified authority means the specified authority referred to in section 151.”

Time limit for notice-

149. (1) No notice under section 148 shall be issued for the relevant assessment year,—

(a) if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b);

(b) if three years, but not more than ten years, have elapsed from the end of the relevant assessment year, unless the Assessing Officer in his possession books of account or other documents or evidence which reveal that the income chargeable to tax, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more.

Provided that no notice under section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before 1st day of April, 2021, if such notice could not have been issued at any time on or before the expiry of time limit specified under the provisions of clause (b) of subsection (1) of this section as they stood immediately before the commencement of the Finance Act, 2021.

Provided further that the provisions of this subsection shall not apply in a case where the assessment, reassessment or recomputation is required to be made in consequence of, or to give effect to, any finding or direction contained in an order passed by any authority in any proceeding under this Act by way of appeal, reference or revision or by a court in any proceeding under any other law.

Provided also that for the purposes of computing the period of limitation for the purposes of this section, the time required for providing the opportunity of being heard to the assessee under clause (b) of section 148A or the time during which any proceeding under section 148A is stayed by an order or injunction of any court, shall be excluded.

Provided also that where, immediately after the exclusion of the period referred to in the immediately preceding proviso, the period of limitation available to the Assessing Officer for passing an order under clause (d) of section 148A is less than seven days, such remaining period shall be extended to seven days and the period of limitation under this subsection shall be deemed to be extended accordingly.

Explanation.—For the purposes of clause (b) of this subsection, “asset” shall include immovable property being land or building or both, shares and securities, loans and advances, deposits in bank account.

(2) The provisions of subsection (1) as to the issue of notice shall be read with section 151.

Sanction for issue of notice:-

“151. Specified authority for the purposes of section 148 and section 148A shall be,—

(i) Principal Commissioner or Principal Director or Commissioner or Director, if three years or less than three years have elapsed from the end of the relevant assessment year;

(ii) Principal Chief Commissioner or Principal Director General or where there is no Principal Chief Commissioner or Principal Director General, Chief Commissioner or Director General, if more than three years have elapsed from the end of the relevant assessment year.”

17. The Hon’ble Apex Court in the case of Union of India & Ors. Vs. Ashish Agrawal, Civil Appeal No.3005/2022, dated 04.05.2022, after deliberating at length on the aforesaid amended provisions had, inter alia, observed as under:

“5. We have heard Shri N Venkataraman, learned ASG appearing on behalf of the Revenue and Shri A. Chandrachud, learned counsel appearing for the assessee and other learned counsel appearing on behalf of the respective assessee.

6. It cannot be disputed that by substitution of sections 147 to 151 of the Income Tax Act (IT Act) by the Finance Act, 2021, radical and reformative changes are made governing the procedure for re-assessment/reopening proceedings. Amended sections 147 to 149 and section 151 of the IT Act prescribe the procedure governing initiation of reassessment proceedings. However, for several reasons, the same gave rise to numerous litigations and the reopening were challenged inter alia, on the grounds such as (1) no valid reason to believe, (2) no tangible/reliable material/information in the possession of the AO leading to formation of belief that income has escaped assessment, (3) no enquiry being conducted by the assessing officer prior to issuance of notice; and reopening is based on change of opinion of the assessing officer and (4) lastly the mandatory procedure laid down by this Court in the case of GKN Driveshafts (India) Ltd. Vs. ITO. [2003] 259 ITR 19 (SC) was not followed.

6.1 It is further pre Finance Act, 2021, the reopening was permissible for a maximum period up to six years and tax certainty was observed even in some cases. Therefore Parliament thought it fit to amend the Income Tax Act to simplify the tax administration and reduce compliance and reduce litigation. Therefore, with a view to achieve the said object, by the Finance Act, 2021, sections 147 to 149 and section 151 have been substituted.

6.2 Under the substituted provisions of the Income Tax Act, 2021, no notice under section 148 of the IT Act can be issued without two conditions. First, there must be information with the AO which suggests that the income chargeable to tax has escaped assessment and the AO has obtained prior approval of the specified authority to issue such notice. The second requirement is to serve the notice under section 148A of the IT Act in respect of such information which suggests that the income chargeable to tax has escaped assessment and after following the due procedure under section 148A of the IT Act.

6.3 But prior to pre Finance Act, 2021, while reopening an assessment, the procedure of giving the reasons for reopening and an opportunity to the assessee to show cause was given before reopening of the assessment, as per the judgment of this Court in the case of GKN Driveshafts (India) Ltd. (supra).

6.4 However, by way of section 148A, the procedure has now been streamlined and simplified. It provides that before issuing any notice under section 148, the assessing officer shall conduct any enquiry, if required, with the approval of specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment; (ii) provide an opportunity of being heard to the assessee, with the prior approval of specified authority, by serving upon him a notice to show cause within such time, as may be specified in such notice, being not less than seven days and not exceeding thirty days from the date on which such notice is issued, or such time as may be extended by him on such basis and on such conditions, as he may deem fit, but not under section 148A shall be issued on the basis of information which suggests that income chargeable to tax has escaped assessment unless the Assessing Officer has conducted an enquiry, if any, as per clause (a); (c) consider the reply of assessee furnished, if any, in response to the show cause notice referred to in clause (b); (d) decide, on the basis of material available on record including reply of the assessee, whether or not it is a fit case to issue a notice under section 148, by passing an order, with the prior approval of specified authority, within one month from the end of the month in which the time allowed to furnish a reply as per clause (b).

Provided that the provisions of this section shall not apply in a case where—

(a) a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A on or after the 1st day of April, 2021; or

(b) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any money, bullion, jewellery or other valuable article or thing, seized or requisitioned under section 132 or section 132A in case of any other person on or after the 1st day of April, 2021, belongs to the assessee; or

(c) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any books of account or documents, seized or requisitioned under section 132 or section 132A in case of any other person on or after the 1st day of April, 2021, pertains or pertain to, or any information contained therein, relate to, the assessee.

Explanation.—For the purposes of this section, specified authority means the specified authority referred to in section 151.

“Time limit for notice—

149. (1) No notice under section 148 shall be issued for the relevant assessment year,—

(a) if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b);

(2) The provisions of subsection (1) as to the issue of notice shall be read with section 151.

“151. Specified authority for the purposes of section 148 and section 148A shall be,—

(i) Principal Commissioner or Principal Director or Commissioner or Director, if three years or less than three years have elapsed from the end of the relevant assessment year;

6.5 Therefore, all safeguards are provided before notice under section 148 of the IT Act is issued. At every stage, the prior approval of the specified authority is required, even for conducting the enquiry as per section 148A(a). Only in a case where, the assessing officer is of the opinion that before any notice is issued under section 148A(b) and an opportunity is to be given to the assessee, there is a requirement of conducting any enquiry, the assessing officer may do so and conduct any enquiry. Thus if the assessing officer is of the opinion that any enquiry is required, the assessing officer can do so, however, with the prior approval of the specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment.

6.6 Substituted section 149 is the provision governing the time limit for issuance of notice under section 148 of the IT Act. The substituted section 149 of the IT Act has reduced the permissible time limit for issuance of such a notice to three years and only in exceptional cases ten years. It also provides further additional safeguards which were absent under the earlier regime preFinance Act, 2021.

7. Thus, the new provisions substituted by the Finance Act, 2021 being remedial and benevolent in nature and substituted with a specific aim and object to protect the rights and interest of the assessee as well as and the same being in public interest, the respective High Courts have rightly held that the benefit of new provisions shall be made available even in respect of the proceedings relating to past assessment years, provided section 148 notice has been issued on or after 1st April, 2021. We are in complete agreement with the view taken by the various High Courts in holding so.

8. However, at the same time, the judgments of the several High Courts would result in no reassessment proceedings at all, even if the same are permissible under the Finance Act, 2021 and as per substituted sections 147 to 151 of the IT Act. The Revenue cannot be made remediless and the object and purpose of reassessment proceedings cannot be frustrated. It is true that due to a bonafide mistake and in view of subsequent extension of time vide various notifications, the Revenue issued the impugned notices under section 148 after the amendment was enforced w.e.f. 01.04.2021, under the unamended section 148. In our view the same ought not to have been issued under the unamended Act and ought to have been issued under the substituted provisions of sections 147 to 151 of the IT Act as per the Finance Act, 2021. There appears to be genuine nonapplication of the amendments as the officers of the Revenue may have been under a bonafide belief that the amendments may not yet have been enforced. Therefore, we are of the opinion that some leeway must be shown in that regard which the High Courts could have done so. Therefore, instead of quashing and setting aside the reassessment notices issued under the unamended provision of IT Act, the High Courts ought to have passed an order construing the notices issued under unamended Act/unamended provision of the IT Act as those deemed to have been issued under section 148A of the IT Act as per the new provision section 148A and the Revenue ought to have been permitted to proceed further with the reassessment proceedings as per the substituted provisions of sections 147 to 151 of the IT Act as per the Finance Act, 2021, subject to compliance of all the procedural requirements and the defences, which may be available to the assessee under the substituted provisions of sections 147 to 151 of the IT Act and which may be available under the Finance Act, 2021 and in law. Therefore, we propose to modify the judgments and orders passed by the respective High Courts as under:

(i) The respective impugned section 148 notices issued to the respective assessees shall be deemed to have been issued under section 148A of the IT Act as substituted by the Finance Act, 2021 and treated to be showcause notices in terms of section 148A(b). The respective assessing officers shall within thirty days from today provide to the assessees the information and material relied upon by the Revenue so that the assessees can reply to the notices within two weeks thereafter;

(ii) The requirement of conducting any enquiry with the prior approval of the specified authority under section 148A(a) be dispensed with as a onetime measure vis-à-vis those notices which have been issued under Section 148 of the unamended Act from 01.04.2021 till date, including those which have been quashed by the High Courts;

(iii) The assessing officers shall thereafter pass an order in terms of section 148A(d) after following the due procedure as required under section 148A(b) in respect of each of the concerned assessees;

(iv) All the defences which may be available to the assessee under section 149 and/or which may be available under the Finance Act, 2021 and in law and whatever rights are available to the Assessing Officer under the Finance Act, 2021 are kept open and/or shall continue to be available and;

(v) The present order shall substitute/modify respective judgments and orders passed by the respective High Courts quashing the similar notices issued under unamended section 148 of the IT Act irrespective of whether they have been assailed before this Court or not.

9. There is a broad consensus on the aforesaid aspects amongst the learned ASG appearing on behalf of the Revenue and the learned Senior Advocates/learned counsel appearing on behalf of the respective assessees.

We are also of the opinion that if the aforesaid order is passed, it will strike a balance between the rights of the Revenue as well as the respective assessees as because of a bonafide belief of the officers of the Revenue in issuing approximately 90000 such notices, the Revenue may not suffer as ultimately it is the public exchequer which would suffer.

Therefore, we have proposed to pass the present order with a view avoiding filing of further appeals before this Court and burden this Court with approximately 9000 appeals against the similar judgments and orders passed by the various High Courts, the particulars of some of which are referred to hereinabove. We have also proposed to pass the aforesaid order in exercise of our powers under Article 142 of the Constitution of India by holding that the present order shall govern, not only the impugned judgments and orders passed by the High Court of Judicature at Allahabad, but shall also be made applicable in respect of the similar judgments and orders passed by various High Courts across the country and therefore the present order shall be applicable to PAN INDIA.

10. In view of the above and for the reasons stated above, the present Appeals are ALLOWED IN PART. The impugned common judgments and orders passed by the High Court of Judicature at Allahabad in W.T. No. 524/2021 and other allied tax appeals/petitions, is/are hereby modified and substituted as under:

(i) The impugned section 148 notices issued to the respective assessees which were issued under unamended section 148 of the IT Act, which were the subject matter of writ petitions before the various respective high Courts shall be deemed to have been issued under section 148A of the IT Act as substituted by the Finance Act, 2021 and construed or treated to be showcause notices in terms of section 148A(b). The assessing officer shall, within thirty days from today, provide to the the Revenue, so that the assessees can reply to the showcause notices within two weeks thereafter;

(ii) The requirement of conducting any enquiry, if required, with the prior approval of specified authority under section 148A(a) is hereby dispensed with as a onetime measure vis-à-vis those notices which have been issued under section 148 of the unamended Act from 01.04.2021 till date, including those which have been quashed by the High Courts. Even otherwise as observed hereinabove holding any enquiry with the prior approval of specified authority is not mandatory but it is for the concerned Assessing Officers to hold any enquiry, if required;

(iii) The assessing officers shall thereafter pass orders in terms of section 148A(d) in respect of each of the concerned assessees; Thereafter after following the procedure as required under section 148A may issue notice under section 148 (as substituted);

(iv) All defences which may be available to the assesses including those available under section 149 of the IT Act and all rights and contentions which may be available to the concerned assessees and Revenue under the Finance Act, 2021 and in law shall continue to be available.

11. The present order shall be applicable PAN INDIA and all judgments and orders passed by different High Courts on and after 01.04.2021 issued under section 148 of the Act are set aside and shall be governed by the present order and shall stand substituted to the aforesaid extent. The present order is passed in exercise of our powers under Article 142 of the Constitution of India so as to avoid any further appeals by the Revenue on the very issue by challenging similar judgments and orders passed by the High Courts. So as to obviate any further appeals by the Revenue and also pending writ petitions, pending before various High Courts in which similar notices under Section 148 of the Act issued after 01.04.2021 are under challenge.

12. The impugned common judgments and orders passed by the High Court of Allahabad and the similar judgments and orders passed by various High Courts, more particularly, the respective judgments and orders passed by the various High Courts and the respective orders passed by the various High Courts, shall stand modified/substituted to the aforesaid extent.

All these appeals are accordingly partly allowed.

In the facts of the case, there shall be no order as to costs.”

(emphasis supplied by us)

18. Apart from that, we find that the CBDT vide Instruction No.01/2022 while directing implementation of the judgment of the Hon’ble Supreme Court in the case of Union of India & Ors Vs. Ashish Agarwal, Civil Appeal No.3005/2022, dated 04.05.2022, had while laying down the procedure that is required to be followed by the jurisdictional Assessing Officers/Assessing Officer, inter alia, held that if it is a fit case to issue notice u/s. 148 of the Act, the Assessing Officer shall serve the assessee a notice u/s. 148 of the Act after obtaining approval of the specified authority u/s. 151 of the new law.

19. At this stage, we may herein observe that our aforesaid view that in a case where a period of more than three years have elapsed from the end of the relevant assessment year, then, approval for issuing the notice under section 148 of the Act has to be taken from the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General or issuing the notice under section 148 of the Act is supported by the recent judgment of the Hon’ble jurisdictional High Court of Telangana in Deloitte Consulting India Private Limited vs. The Assessment Unit, Income Tax Department, Civil Writ Petition No. 4061 of 2024, dated 25/09/2025. For the sake of clarity, we deem it apposite to cull out the observations of the Hon’ble jurisdictional High Court in the case of Deloitte Consulting India Private Limited vs. The Assessment Unit, Income Tax Department (supra), as under:

“48. The proviso to Section 151 has been introduced by the Finance Act, 2023 with effect from 01.04.2023. The relevant Section 151 with its proviso is applicable to the case of the petitioner is as under:—

151. Sanction for issue of notice:- Specified authority for the purposes of Section 148 and Section 148A shall be,—

(i) Principal Commissioner or Principal Director or Commissioner or Director, if three years or less than three years have elapsed from the end of the relevant assessment year;

(ii) Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General, if more than three years have elapsed from the end of the relevant assessment year:

Provided that the period of three years for the purposes of clause (i) shall be computed after taking into account the period of limitation as excluded by the third or fourth or fifth provisos or extended by the sixth proviso to sub-section (1) of section 149.

49. In the present case, the order under Section 148A(d) and notice under Section 148 have been issued on 07.04.2022, after more than three years from the end of the relevant assessment year. The approval before passing the order under Section 148A(d) of the Act and before issuance of the notice under Section 148 of the Act has been granted by the Principal Commissioner of Income Tax by the respondent No.1, which was otherwise prescribed under Section 151(1) of the Act for the assessment year. In the present case, the relevant three years lapsed on 31.03.2022. Therefore, the approval by the Principal Commissioner of Income Tax was impermissible. Chief Commissioner of Income Tax or the Director General was required to be obtained before passing of the order under Section 148A(d) or notice under Section 148 of the Act.

50. Learned counsel for the respondent has relied upon the proviso to Section 151 of the Act inserted by the Finance Act, 2023 with effect from 01.04.2023 quoted above to contend that the period of seven days furnished to the assessee to submit reply to the notice under Section 148A(b) issued on 23.03.2022 has to be excluded for counting the period of three years. It is submitted that the proviso is clarification in nature and as such, it would operate from the date when the amended Section 151 was brought into force i.e., 01.04.2021. However, such a contention is fit to be rejected since the proviso to Section 151 has been inserted by the Finance Act, 2023 only with effect from 01.04.2023. It, therefore, cannot be applied retrospectively to exclude the period of seven days in furnishing the reply to the notice under Section 148A(b) of the Act by the assessee.

The Assessing Officer could not have assumed exclusion of such a period while passing the order which was issued under Section 148A(d) of the Act or issuing notice under Section 148 of the Act on 07.04.2022 that such a proviso excluding the period could not be applied to the present case by relying to the brought into the statute by the Finance Act, 2023 with effect from 01.04.2023, by taking statutes intended cannot be assumed unless expressly or impliedly, there is provision in the statute legislatively, therefore, in the reopening of assessment without sanction/approval of the specified authority in accordance with Section 151 of the Act was bad in law.”

(emphasis supplied by us)

20. We find that the Hon’ble High Court in its aforesaid order had not only observed that in the case of the assessee before them, i.e., for AY 2018-19 the specified authority for granting approval under section 151 of the Act was the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General as a period of more than three years had lapsed from the end of the relevant Assessment Year, but had also rejected the claim of the revenue that the “proviso” to section 151 of the Act had been made available on the statute vide the Finance Act, 2023 w.e.f. 01/04/2023 was to be given a retrospective effect. Apart from that, we find that the Hon’ble Supreme Court in its recent order passed in the case of Assistant Commissioner of Income-tax, International Taxation vs. LinkedIn Singapore Pte. Ltd. (2025) 180 taxmann.com 158 (SC) had dismissed the Special Leave Petition (SLP) filed by the revenue against the order of the High Court, that had quashed the order passed by the AO under section 148A(d) and the impugned notice under section 148 of the Act for the reason that the approval for reassessment proceedings was granted by the Commissioner of Income Tax after expiry of 03 years from the end of the relevant assessment year, which approval should have been granted by the Principal Chief Commissioner of Income Tax.

21. We, thus, in terms of our aforesaid observation, concur with the Ld. AR that in the present case before us for AY 2018-19, wherein notice under Section 148 of the Act was issued on 11.04.2022, i.e., beyond a period of three years from the end of the relevant assessment year, the A.O. was statutorily obligated to have obtained the approval from either of the authorities specified u/s. 151(ii) (as was then available on the statute), viz. Principal Chief Commissioner or Principal Director General or, where there is no Principal Chief Commissioner or Principal Director General, Chief Commissioner or Director General. However, the A.O. had obtained the approval from the Pr. Commissioner of Income Tax, i.e., an authority who was not vested with any jurisdiction as per the mandate of Section 151 of the Act (as made available w.e.f 01.04.2021), therefore, the assessment so framed by him u/s. 147 r.w.s. 144B of the Act, dated 08/12/2023, being devoid and bereft of any valid assumption of jurisdiction, is liable to be quashed. Accordingly, we quash the assessment framed by the A.O. under Section 147 r.w.s. 144B of the Act, dated 08/12/2023, in terms of our aforesaid observations.

18. On perusal of the above, we find that the Tribunal after considering the decision of the Hon’ble Telangana High Court in Deloitte Consulting India Pvt. Ltd. Vs. Assessment Unit, Income Tax Department (supra) and the decision of the Hon’ble Supreme Court in Assistant Commissioner of Income Tax Vs. LinkedIn Singapore Pte. Ltd. (supra), held that where a notice under section 148 of the Act is issued beyond a period of three years from the end of the relevant assessment year, the approval contemplated under clause (ii) of section 151 of the Act is required to be obtained from the Principal Chief Commissioner or Principal Director General or, where there is no Principal Chief Commissioner or Principal Director General, from the Chief Commissioner or Director General. In the absence of approval from the authority prescribed under clause (ii) of section 151 of the Act, the notice issued under section 148 of the Act is invalid in law and the consequential assessment proceedings are liable to be quashed. In the present case, there is no dispute about the fact that the notice under section 148 of the Act was issued beyond a period of three years from the end of the relevant assessment year and that the same was issued after obtaining approval of the CIT and not the approval of the authority prescribed under clause (ii) of section 151 of the Act. Therefore, respectfully following the aforesaid decisions, we hold that the notice issued under section 148 of the Act is invalid in law. Consequently, the reassessment order passed under section 147 read with section 144B of the Act on the basis of such invalid notice cannot be sustained and is accordingly quashed. Once the very assessment order which constitutes the foundation of the penalty proceedings is held to be invalid and quashed, the consequential penalty levied under section 270A of the Act cannot survive independently. Accordingly, the penalty order dated 30.08.2024 passed under section 270A of the Act is also quashed. Consequently, the order of the Ld. CIT(A) confirming the said penalty is set aside and the appeal of the assessee is allowed.

19. In the result, the appeal of the assessee is allowed.

Order pronounced in the Open Court on 4th September, 2026.