Anil Kumar Aggarwal Vs ITO (ITAT Delhi)
PCIT SIGNED WHERE PCCIT HAD TO- WRONG APPROVING AUTHORITY u/s 151 SINKS ENTIRE REASSESSMENT
The Delhi ITAT has held that where notice u/s 148 is issued more than three years after the end of the relevant assessment year, approval must be obtained from the authority specifically prescribed u/s 151(ii). Approval granted by the PCIT instead of the PCCIT could not confer jurisdiction upon the AO. Following the Delhi High Court’s decision in Kids Dream International Pvt. Ltd. v. ACIT, the entire reassessment was quashed.
Additional jurisdictional grounds
The assessee, Shri Anil Kumar Aggarwal, challenged the reassessment proceedings relating to AY 2016-17.
Before the ITAT, he raised additional legal grounds questioning the validity of the approval granted u/s 151 & the authority of the jurisdictional AO to initiate and complete the reassessment instead of a Faceless Assessing Officer.
The assessee contended that the approval had been granted by the wrong authority, mechanically & without proper application of mind. Consequently, the statutory preconditions for issuing notice u/s 148 had not been fulfilled.
Since these grounds were purely legal, arose from the material already available on record & went to the root of jurisdiction, the Tribunal admitted them following NTPC Ltd. v. CIT [1998] 229 ITR 383 (SC).
The assessee confined his principal argument to the first additional ground concerning approval from the wrong specified authority.
Approval obtained from PCIT
The proceedings related to AY 2016-17. The relevant notice or order u/s 148 was issued on 22.07.2022.
Before initiating reassessment, the AO obtained approval u/s 151 from the PCIT, Delhi-10, New Delhi.
The assessee argued that, on 22.07.2022, more than three years had elapsed from the end of AY 2016-17. Therefore, under the reassessment regime introduced by the Finance Act, 2021, the competent specified authority was the Principal Chief Commissioner of Income Tax, not the Principal Commissioner of Income Tax.
Since approval was granted by an authority who was not statutorily empowered to sanction the notice, the very assumption of jurisdiction u/s 147 was invalid.
Rajeev Bansal & the new reassessment regime
The assessee relied upon the Supreme Court’s judgment in Union of India v. Rajeev Bansal [2024 SCC OnLine SC 2693].
It was argued that notices governed by the post-Finance Act, 2021 reassessment regime must satisfy the safeguards prescribed by the amended provisions, including approval from the correct specified authority u/s 151.
The assessee submitted that the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, commonly referred to as TOLA, could not alter the identity of the competent sanctioning authority prescribed under the new section 151.
An extension of time for issuing a notice was different from a substitution of the authority empowered to approve it.
Kids Dream International relied upon
The assessee placed particular reliance upon the jurisdictional Delhi High Court’s decision in Kids Dream International Pvt. Ltd. v. ACIT, W.P.(C) No. 2814/2023, dated 24.02.2025.
In that case, reassessment for AY 2017-18 was initiated after three years from the end of the relevant assessment year. Approval had been granted by the PCIT.
The Delhi High Court, following its earlier decision in Abhinav Jindal HUF v. CIT [2024 SCC OnLine Del 6585], held that the TOLA provisions had no bearing upon identification of the competent authority u/s 151.
Since the sanction had been granted only by the PCIT when approval from the higher specified authority was necessary, the reassessment action could not survive. The order u/s 148A(d) & consequential notice u/s 148 were therefore quashed.
The assessee contended that his case was squarely covered by this binding precedent.
Revenue’s contention
The Revenue relied upon the orders of the lower authorities & defended the validity of the reassessment.
However, the factual position that approval had been granted by the PCIT, rather than the PCCIT, was not disputed.
ITAT’s decision
The Tribunal observed that the reassessment concerned AY 2016-17, while the relevant action u/s 148 was taken on 22.07.2022.
Since the reassessment was initiated beyond three years from the end of the relevant assessment year, the specified authority competent to grant sanction under the applicable clause of section 151 was the PCCIT.
The record clearly demonstrated that approval had instead been obtained from the PCIT.
The requirement of approval from the prescribed authority was a statutory jurisdictional safeguard. Approval by an officer not designated under section 151 could not be treated as substantial compliance, nor could the defect be cured merely because the PCIT was otherwise a senior income-tax authority.
Following Kids Dream International, the ITAT held that approval from the wrong authority vitiated the entire reassessment proceedings.
The reassessment was accordingly quashed & the additional ground was allowed.
Since the assessment itself was annulled, the Tribunal did not examine the other grounds raised by the assessee on law or facts. Those grounds were kept open. The assessee’s appeal was allowed.
Author’s comments
The decision reinforces that sanction u/s 151 is not an administrative rubber stamp. It is a jurisdictional checkpoint intended to ensure that stale assessments are not reopened without scrutiny at the statutorily prescribed level.
The hierarchy matters. For proceedings within three years, approval from the PCIT or equivalent authority may suffice. Once the matter travels beyond three years, Parliament deliberately requires approval from the higher authority specified in section 151(ii). One authority cannot be substituted for another merely because both belong to the same Department.
TOLA may extend time, but it cannot rewrite section 151 or promote the PCIT into a PCCIT for a particular notice. Equally, participation by the assessee cannot cure a foundational lack of sanction.
The order also carried a second additional ground alleging that proceedings were undertaken by the jurisdictional AO instead of the Faceless Assessing Officer. Since reassessment was quashed on the sanction issue, the Tribunal left that controversy undecided.
The AO may have had reasons to reopen & the PCIT may have agreed -but where the statute demanded the PCCIT’s signature, one missing “Chief” made the entire reassessment chief-less & jurisdiction-less.
Cases Discussed
- NTPC Ltd. v. CIT [1998] 229 ITR 383 (SC)
- Union of India and Others v. Rajeev Bansal [2024 SCC OnLine SC 2693]
- Kids Dream International Private Limited v. ACIT, W.P.(C) 2814/2023, dated 24.02.2025
- Abhinav Jindal HUF v. CIT [2024 SCC OnLine Del 6585]
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT DELHI BENCH
1. This appeal is filed by the assessee against the order passed by the ld. Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi [for short ‘ld. CIT (A)] dated 17.02.2026 for the Assessment Year 2016-17.
2. At the outset of the hearing, ld. AR for the assessee submitted that assessee has filed additional grounds of appeal and it is purely legal issue and the same is reproduced below :-
“1. That on the facts and circumstances of the case, the approval accorded under section 151 of the Act is by wrong authority, mechanical and arbitrary, without there being any application of mind. Further, even the initiation of reassessment proceedings under section 148 read with section 149 of the Act are without satisfying the statutory preconditions of the Act are without satisfying the statutory preconditions of the Act and as such, the assessment so framed is null and void and deserves to be quashed.
2. That on the facts and circumstances of the case, the assessment so framed is illegal and without jurisdiction, as the instant proceedings have been initiated and finalized by jurisdictional assessing officer (JAO) instated of faceless assessing officer (FAO).?”
3. Since the above grounds of appeal are purely legal, do not require fresh facts to be investigated and go to the root of the matter, ld. AR of the assessee prayed that the same may be admitted in view of the judgement of NTPC Ltd. vs. CIT, (1998) 229 ITR 0383 (SC).
4. On the other hand, ld. DR for the Revenue has no objection of admitting the additional ground of appeal being purely legal issue.
5. In view of the reliance made by the ld. AR for the assessee on the judgment of Hon’ble Supreme Court in the case of NTPC Ltd. (supra) and issue being purely legal, we proceeded to admit the additional ground of appeal being a legal issue.
6. At the time of hearing, ld. AR of the assessee specifically argued additional ground no.1 and submitted that the instant case is covered on the jurisdictional aspect i.e., no notice under section 148 of the Income-tax Act, 1961 (for short ‘the Act’) can be issued for AY 2016-17 without prior approval of the specified authority under the new regime in view of the judgement rendered by Hon’ble Supreme Court in the case of Union of India and Others vs. Rajeev Bansal [2024 SCC OnLine SC 2693. He submitted that the assumption of jurisdiction of the AO under section 147 of the Act could not be construed as valid when the approval under section 151 of the Act has been obtained from Learned Principal Commissioner of Income Tax (PCIT, Delhi – 10, New Delhi) instead of Learned Principal Chief Commissioner of Income Tax (PCCIT ). In this regard, he relied on various decisions of Hon’ble High Court and the Tribunal and specifically relied on the decision of Hon’ble Delhi High Court in the case of Kids Dream International Private Limited vs ACIT in WP(C ) 2814/2023 dated 24.02.2025. Accordingly, he prayed that the reassessment proceedings may be quashed and the appeal be allowed.
7. On the other hand, ld. DR of the Revenue relied on the findings of the lower authorities.
8. Considered the rival submissions and material placed on record. We observed that the additional ground raised by the assessee is as to whether the assumption of jurisdiction of the AO under section 147 of the Act could be construed as valid when the approval under section 151 of the Act has been obtained from Learned Principal Commissioner of Income Tax (PCIT, Delhi – 10, New Delhi) instead of Learned Principal Chief Commissioner of Income Tax (PCCIT ) .
9. We observed that the issue involved is reopening of assessment for the Assessment Year 2016-17. For this purpose, the AO obtained approval under section 151 of the Act from the Learned PCIT which fact is quite evident from the order passed under section 148 of the Act dated 22.07.2022. Since the reopening in the instant case has been made beyond 3 years from the end of the relevant assessment year, the specified sanctioning authority for the purposes of section 148 of the Act is Learned PCCIT. Since the approval in the instant case has been obtained from a wrong authority, the entire reassessment proceedings get vitiated. Reliance in this regard has been rightly placed by the Learned AR before us on the decision of the Hon’ble Jurisdictional Delhi High Court in the case of Kids Dream International Private Limited vs ACIT in W P (C ) 2814/2023 dated 24.02.2025 . The relevant operative portion of the said order is reproduced below:-
“2. As is evident from the above, the solitary question which was canvassed for our consideration was the issue of sanction as contemplated under section 151 of the Income Tax Act, 1961 [“Act”].
3. The reassessment action for Assessment Year [“AY”] 2017-18 came to be commenced immediately after a lapse of three years from the end of the relevant AY. It is in the aforesaid backdrop that Mr. Kantoor, learned counsel, had submitted that the said sanction accorded by the Principal Commissioner of Income Tax [“PCIT”] would not sustain.
4. We note that while dealing with the said question, we had in Abhinav Jindal H.U.F. v. Commissioner of Income Tax and Ors [2024 SCC OnLine Del 6585] duly enunciated the legal position which would obtain. We had ultimately in Abhinav Jindal held that the Taxation & Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 [“TOLA”] provisions would have no bearing on the identification of the competent authority under section 151 for according sanction.
5. In view of the aforesaid, and since undisputedly the facts of the present case the sanction was accorded only by the PCIT, the reassessment action would not sustain.
6. Accordingly and for all the aforesaid reasons, we allow the instant writ petition and quash the impugned order referable to section 148A(d) dated 30 July 2022 and notice under section 148 of even date.”
4. Respectfully following the aforesaid decision, the reassessment proceedings are hereby quashed and additional ground raised by the assessee is allowed.
5. Since the entire reassessment is quashed, the other grounds raised by the assessee both on law as well on facts need not be gone into and they are kept open.
6. In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on this 9th day of September, 2026.
