SushilKumar Jain Vs DCIT (ITAT Mumbai)
Summary: The Mumbai ITAT allowed the appeal of SushilKumar Jain for AY 2017-18 by quashing the notice issued under section 148 and all consequential reassessment proceedings for want of approval from the competent authority prescribed under section 151(ii) of the Income-tax Act. The appeal arose from the NFAC/CIT(A) order dated 09.02.2026. The assessee’s grounds also challenged an addition of Rs.2,50,00,000 relating to unsecured loans from M/s Aneri Fincap Ltd., an alleged commission addition of Rs.1,35,000, interest under sections 234B and 234D and initiation of penalty proceedings under section 271AAC. The order’s factual narration separately records that the AO ultimately made an addition under section 69A of Rs.251,35,000 on account of unexplained cash deposit.
The reassessment had been initiated through a notice under section 148 dated 30.07.2022 after sanction was obtained from the Principal Commissioner of Income Tax-19, Mumbai. Before the Tribunal, the assessee challenged the very jurisdiction of the AO, contending that the notice had been issued without sanction from the competent authority contemplated by section 151(ii). The assessee relied upon Skypak Travels Private Limited vs ITO, [2026] 185 Taxmann.com 963 (Bom.) and sought quashing of both the notice and the consequential assessment order. The Revenue relied upon the orders of the lower authorities.
The Tribunal found that the section 148 notice dated 30.07.2022 for AY 2017-18 had been issued after approval dated 29.07.2022 from the Principal Commissioner of Income Tax-19, Mumbai, vide letter No. Pr. CIT-19/148/2022-23/711. It held that the sanction ought to have been obtained from the competent higher authority under section 151(ii), namely the Principal Chief Commissioner of Income Tax. Following the jurisdictional Bombay High Court judgment in Skypak Travels Private Limited, the Tribunal observed that for a notice issued beyond three years, approval must be obtained from the higher authority specified under section 151(ii). Approval granted by the PCIT, being an incompetent authority in such circumstances, was not a mere procedural irregularity but a jurisdictional defect vitiating the reassessment proceedings.
The Tribunal further referred to Union of India and others versus Rajiv Bansal, (2024) 469 ITR 46 (SC) for the principle that sanction by the appropriate authority is a precondition for the AO to assume jurisdiction under section 148 and that section 151 operates as a statutory safeguard against arbitrary reopening. It also recorded that the proviso to section 151 inserted with effect from 01.04.2023 could not be applied retrospectively to validate the approval. Consequently, the Tribunal held that the AO had violated section 151(ii) and quashed the notice dated 30.07.2022 as well as all consequential proceedings, including the assessment order under section 143(3)/147 dated 22.05.2023
Cases Discussed
- Skypak Travels Private Limited vs ITO, [2026] 185 Taxmann.com 963 (Bom.); WP No. 5456 of 2024; decided on 24.04.2026 – Bombay High Court judgment relied upon and followed for the proposition that where a section 148 notice is issued beyond three years, approval must be obtained from the higher authority specified under section 151(ii), and approval by an incompetent authority constitutes a jurisdictional defect.
- Union of India and others versus Rajiv Bansal, (2024) 469 ITR 46 (SC) – Supreme Court authority referred to for holding that sanction by the appropriate authority is a precondition for assumption of jurisdiction under section 148 and that compliance with section 151 is a statutory safeguard rather than an empty formality.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal has been preferred by the Assessee against the order dated 09.02.2026, impugned herein, passed by National Faceless Appeal Centre (NFAC)/ Ld. Commissioner of Income Tax (Appeals), [in short “Ld. Commissioner] u/s 250 of the Income Tax Act, 1961 [in short “the Act”] for the A.Y 2017-2018.
2. The Assessee raised the following grounds of appeal:
1.The Ld. CIT(A) has erred in law and in facts in passing the order u/s. 250 of the Act dated 09.02.2026 confirming the order passed by the Ld. AO u/s 143(3) r.w.s. 147 r.w.s 144B of the Act which is bad and invalid in the eyes of law.
2.The Ld. CIT(A) has erred in law and in facts in not appreciating that the reopening of assessment u/s 148 of the Act and passing the reassessment order u/s 147 of the Act is invalid and bad in the eyes of law.
3.The Ld. CIT(A) has erred in law and in facts in not appreciating that the order passed is in violation of principles of natural justice.
4.The Ld. CIT(A) has erred in law and in facts in confirming the action of the Ld. AO in making addition on account of unsecured loans taken from M/s. Aneri Fincap Ltd. of Rs. 2,50,00,000/- u/s. 68 of the Act.
5.The Ld. CIT(A) has erred in law and in facts in confirming the action of the Ld. AO in making addition on account of alleged commission paid on loans taken from M/s. Aneri Fincap Ltd. of Rs. 1,35,000/- u/s. 68 of the Act.
6.The Ld. CIT(A) has erred in law and in facts in confirming the action of Ld. AO in charging interest u/s. 234B and 234D of the Act which is bad and invalid in the eyes of law.
7.The Ld. CIT(A) has erred in law and in facts in confirming the action of Ld. AO in initiating penalty proceedings u/s. 271AAC of the Act which is invalid and bad in the eyes of law.
The appellant craves leave to add to, alter, amend and / or delete in all the foregoing grounds of appeal.
3. The brief facts of the case are that, the Assessing Officer has reopened the case of assessee u/s 147 of the Act by issuing notice under section 148 dated 30-07-2022, after obtaining sanction from Pr Commissioner of Income Tax-19, Mumbai and ultimately made an addition u/s 69A of Rs 251,35,000/- on account of unexplained cash deposit. Aggrieved by the assessment order, assessee preferred an appeal before first appellate authority. The National Faceless Appeal Centre has sustained the addition.
4. Before us, Ld. AR of the Assessee contended that notice u/s 148 of the Act was issued without obtaining requisite sanction of Competent Authority u/s 151(ii) of the Act. He relied upon judgment of Hon’ble Jurisdictional court in case of Skypak Travels Private Limited vs ITO, [2026] 185 Taxmann.com 963 (Bom.) and requested to quash the notice and assessment order.
5. Per Contra, Ld. DR relied upon the orders of Lower authorities.
6. We have heard the parties and perused the material available on record. In the instant case, the notice u/s 148 of the Act dated 30-07-2022 was issued by the assessing officer for the AY 2017-18, after obtaining the Sanction from Pr Commissioner of Income Tax -19, Mumbai on 29-07-2022 vide letter No Pr. CIT-19/148/2022-23/711, instead of competent authority u/s 151(ii) of the Act i.e. Prl. Chief Commissioner of Income Tax. We endorse that Hon’ble Jurisdictional High Court has recently in case of Skypak Travels Private Limited vs ITO, [2026] 185 Taxmann.com 963 (Bom.), WP No 5456 of 2024 decided on 24.04.2026, has also dealt with an identical issue of notice under section 148 of the Act issued beyond three years and held that, approval must be obtained from the higher authority as specified u/s 151(ii) of the Act. Approval granted by the PCIT, being an incompetent authority, is not a mere procedural irregularity but a jurisdictional defect, which vitiates the entire reassessment proceedings. Further, grant of sanction by the appropriate authority is a precondition for the assessing officer to assume jurisdiction under section 148. Section 151 is not an empty formality but it is a statutory safeguard and check against arbitrary reopening. Non-compliance with that requirement strikes at jurisdiction itself, as held by Hon’ble Apex Court in Union of India and others versus Rajiv Bansal, [(2024) 469 ITR 46(SC)]. Further, the proviso to section 151, inserted with effect from 01.04.2023, cannot be applied retrospectively to validate such approval.
7. Thus, considering the provisions of the law as applicable to the case in hand and respectfully following the aforesaid binding judgment, we hold that AO violated the provisions of section 151(ii) of the Act, therefore, impugned notice dated 30-07-2022 and all the consequential assessment proceedings including the assessment order u/s 143(3)/147 dated 22-05-2023, are liable to be quashed.
8. Order pronounced in the open court on 10.08.2026.
