ITO Vs Jindath Babulal Jain (ITAT Mumbai)
Summary: The Income Tax Appellate Tribunal, Mumbai “F” Bench, examined the Revenue’s appeal and the assessee’s cross-objection concerning Assessment Year 2016-17 in the case of Jindath Babulal Jain. The dispute arose from reassessment proceedings initiated under Sections 147 and 148 of the Income-tax Act, 1961. The assessee had originally filed a return on 30.07.2016 declaring income of Rs. 2,50,440. Subsequently, the Assessing Officer issued a notice under Section 148 on 30.07.2022 and completed reassessment on 25.05.2023, making an addition of Rs. 33,36,68,315 under Section 69A read with Section 115BBE, treating credits appearing in the assessee’s bank accounts as unexplained money. The Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, deleted the addition on merits and also accepted the assessee’s jurisdictional challenge to the reassessment notice.
The Revenue challenged the appellate order, contending that the reassessment notice was validly issued through the faceless system under Section 151A read with CBDT Notification No. 18/2022 dated 29.03.2022 and carried a valid Document Identification Number. It further argued that the bank credits of Rs. 33.36 crore were not satisfactorily explained merely through documents generated by the assessee and that independent corroboration was necessary to establish the identity of buyers, genuineness of sales and movement of goods. The Department relied upon the Supreme Court decisions in CIT Vs P. Mohanakala, Sumati Dayal Vs CIT and CIT Vs Durga Prasad More to support the application of the test of human probabilities. The assessee, through a cross-objection, challenged the jurisdiction of the Assessing Officer, including the validity of the approval obtained under Section 151 and the notice issued under Section 148.
The assessee submitted that the order under Section 148A(d) and the reassessment notice were both issued on 30.07.2022 after obtaining approval from the Principal Commissioner of Income Tax-19, Mumbai, on 29.07.2022. However, more than three years had elapsed from the end of the relevant assessment year, and even the extended limitation period under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 had expired on 30.06.2021. Consequently, the assessee argued that approval was required from the higher specified authority under Section 151(ii), namely the Principal Chief Commissioner of Income Tax, rather than the Principal Commissioner under Section 151(i). The assessee relied upon Union of India Vs Rajeev Bansal, Ramesh Bachulal Mehta Vs ITO, Alag Property Construction Pvt. Ltd. Vs ACIT and ITO Vs Soni Ajay Jain.
Before deciding the jurisdictional issue, the Tribunal considered the Revenue’s objection that the assessee’s cross-objection had been filed 95 days late. Referring to Collector Land Acquisition, Anantnag Vs Mst. Katiji & Ors., the Tribunal held that substantial justice should prevail over technical objections where the delay was not deliberate. It therefore condoned the delay. The Tribunal also referred to National Thermal Power Co. Ltd. Vs CIT and held that a purely legal ground arising from facts already available on record could be entertained even when raised for the first time before the Tribunal. On the substantive jurisdictional question, the Tribunal applied the Supreme Court’s ruling in Union of India Vs Rajeev Bansal, which clarified the competent sanctioning authorities under the reassessment provisions and the applicable limitation extensions.
The Tribunal held that the Principal Commissioner could grant sanction under Section 151(i) only within the applicable period, which, after considering the statutory relaxation, extended up to 30.06.2021. Since the order under Section 148A(d) and notice under Section 148 were issued on 30.07.2022, approval was required from the authority specified under Section 151(ii). The approval obtained from the Principal Commissioner was therefore insufficient to confer jurisdiction on the Assessing Officer. Accordingly, the Tribunal quashed the order under Section 148A(d), the notice under Section 148 and the consequential reassessment order dated 25.05.2023. The assessee’s cross-objection was allowed, and the Revenue’s appeal concerning the addition of Rs. 33,36,68,315 became infructuous and was dismissed without further adjudication on merits. The decision reinforces the jurisdictional requirement that reassessment proceedings must have approval from the statutorily competent specified authority.
Cases Discussed
- ITO Vs Soni Ajay Jain (ITAT Mumbai) – ITA No. 3841/Mum/2025; Order dated 08.10.2025. Relied upon by the assessee in challenging the validity of reassessment proceedings initiated without approval from the competent specified authority under Section 151.
- Alag Property Construction Private Limited Vs ACIT (Bombay High Court) – W.P. No. 3938 of 2022; Judgment dated 08.09.2025. Relied upon by the assessee in support of the requirement to obtain approval from the authority specified under Section 151(ii) where reassessment proceedings are initiated beyond three years.
- Ramesh Bachulal Mehta Vs ITO (Bombay High Court) – [2025] 177 taxmann.com 606; Judgment dated 11.08.2025. Relied upon for holding that reassessment notices issued without the sanction required under Section 151(ii) are invalid.
- Union of India Vs Rajeev Bansal (Supreme Court) – [2024] 167 taxmann.com 70; Judgment dated 03.10.2024. Applied by the Tribunal for determining the competent specified authority under Section 151 and the effect of the time extensions under TOLA. The decision and approval framework are discussed in TaxGuru’s analysis of Rajeev Bansal and reassessment approval.
- National Thermal Power Co. Ltd. Vs CIT (Supreme Court) – (1998) 229 ITR 383 (SC). Followed for the principle that the Tribunal has wide powers under Section 254 to entertain a fresh question of law arising from facts already on record when necessary to determine the correct tax liability.
- Collector Land Acquisition, Anantnag Vs Mst. Katiji & Ors. (Supreme Court) – (1987) 167 ITR 471 (SC). Followed for the principle that substantial justice deserves preference over technical considerations while deciding whether to condone an unintentional filing delay.
- CIT Vs P. Mohanakala (Supreme Court) – (2007) 291 ITR 278 (SC). Cited by the Revenue in support of examining the genuineness of financial transactions and the evidentiary burden on an assessee.
- Sumati Dayal Vs CIT (Supreme Court) – (1995) 214 ITR 801 (SC). Cited by the Revenue for applying the test of human probabilities when considering the genuineness of transactions.
- CIT Vs Durga Prasad More (Supreme Court) – (1971) 82 ITR 540 (SC). Cited by the Revenue for the principle that tax authorities may examine the surrounding circumstances and real nature of transactions rather than accepting documents at face value.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The appeal filed by revenue and the cross objection filed by the assessee emanate from the order passed under section 250 of the Income-tax Act, 1961 (in short, ‘Act’) by the learned Commissioner of Income-Tax, National Faceless Appeal Centre [in short, ‘CIT(A)’], Delhi, dated 16.09.2025 for the assessment year (AY) 2016-17.
2. The grounds of appeal raised by the revenue in ITA No.8242/Mum/2025 are as under:
“1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding that the reassessment notice issued under section 148 dated 30.07.2022 was invalid, without appreciating that the said notice was duly issued through the faceless system in accordance with section 151A read with CBDT Notification No. 18/2022 dated 29.03.2022, and bearing a valid DIN No. ITBA/AST/M/1481/2022-23/1044365571(1)?
2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in ignoring the ITBA/NPAC records, which conclusively establish that the statutory notice under section 148 was generated and issued electronically, accompanied by an intimation letter bearing DINNO. ITBA/AST/S/91/2022-23/1044365601(1) dated 31.07.2022, and therefore, the finding that the notice was ‘manually issued is factually incorrect?
3. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 33,36,68,315/ made under section 69A, by accepting the assessee’s claim that the impugned bank credits represented genuine sales, solely based on self-generated documents without any independent, third-party corroboration?
4. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) failed to appreciate that the assessee did not discharge the onus cast under sections 68 and 69A to establish the identity of buyers, genuineness of transactions, movement of goods, transport or delivery evidence, and commercial infrastructure, and that the Assessing Officer rightly invoked the test of human probabilities as laid down by the Hon’ble Supreme Court in CIT. P. Mohanakala (291 ITR 278), Sumati Dayal v. CIT (214 ITR 801) and CIT u. Durga Prasad More (82) ITR 540)?
5. Whether on the facts and in the circumstances of the case and in law, the order of the Ld. CIT(A) is contrary to the evidence on record and to well-settled judicial principles, and the assessment order passed under section 143(3)/147 deserves to be restored.
6. The appellant craves leave to add, amend, modify or withdraw any ground of appeal at the time of hearing.”
3. The grounds of appeal raised by the assessee in CO No.136/Mum/2026 arising out of ITA No.8242/Mum/2025 are as under:
“1. 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.
2. The Ld. CIT(A) has erred in law and in facts in not appreciating that the approval taken u/s. 151 of the Act for the purpose of passing the order u/s 148A(d) 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 notice issued u/s. 148 of the Act dated 30.07.2022 is issued without quoting mandatory Document Identification Number and hence the said notice is invalid and bad in the eyes of law.
4. The Ld. CIT(A) has erred in law and in facts in not appreciating that the assessment order is passed in violation of principles of natural justice and hence the same is invalid and bad in the eyes of law.”
4. Fact of the case, in brief, are that the assessee filed the return of income for AY 2016-17 on 30.07.2016 declaring total income at Rs.2,50,440/-. The case was reopened u/s 147 by issue of notice u/s 148 of the Act dated 30.07.2022. The order u/s 148A(d) of the Act was passed on 30.07.2022. In response to notice u/s 148, the assessee filed return declaring the same income of Rs.2,50,440/-. The AO added the total credit transactions amounting to Rs.33,36,68,315/- in the bank accounts of the assessee u/s 69A r.w.s. 115BBE of the Act in the order passed u/s 143(3) r.w.s. 147 r.w.s. 144B of the Act dated 25.05.2023.
5. Aggrieved by the order of AO, assessee preferred appeal before the CIT(A). The assessee had raised grounds on the validity of reopening u/s 147 and issue of notice u/s 148 of the Act as well as merits of the addition. In the additional grounds, the appellant raised jurisdictional issue that the AO failed to obtain approval u/s 151(ii) of the Act before issue of notice u/s 148 of the Act. After detailed discussion on the facts of the case and relevant precedents on the subject issue, the CIT(A) allowed the appeal of the assessee both on merit as well as on jurisdictional ground relating to issuance of notice u/s 148 of the Act dated 30.07.2022.
6. Aggrieved by the order of CIT(A), the revenue has filed the appeal and the appellant has filed cross objection. The Ld. AR of the assessee submitted that the order u/s 148A(d) of the Act (new regime) was passed on 30.07.2022 after obtaining approval of the Pr. CIT-19 Mumbai on 29.07.2022. The notice u/s 148 of the Act (new regime) was also issued on the same date i.e. 30.07.2022. He submitted that when this order and the notice were issued, the period of 3 years had already expired on 31.03.2020. Even the extended period granted by Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) till 30.06.2021 had also expired. Therefore, the AO was required to obtain approval of the higher authority i.e., the Pr. CCIT u/s 151(ii) of the Act before passing order u/s 148A(d) and issuing notice u/s 148 of the Act. Hence, the notice issued u/s 148 of the Act is invalid and as a result, the order passed u/s 147 of the Act is also not valid and is liable to be set aside. The Ld. AR has replied on the following decisions: (i) UOI v. Rajeev Bansal [167 taxmann.com 70] dated 03.10.2024; (ii) Ramesh Bachulal Mehta v. ITO [177 taxmann.com 606] dated 11.08.2025; (iii) Alag Property Construction Pvt. Ltd. v. ACIT [WP No. 3938 of 2022] dated 08.09.2025 and (iv) ITO v. Soni Ajay Jain [ITA No. 3841/Mum/2025] dated 08.10.2025.
7. On the other hand, the Ld. CIT-DR of the revenue submitted that the CO was filed late and should not be admitted. On merit, she supported the order of the AO.
8. We have both parties and perused the materials on record. We shall first decide the jurisdictional grounds raised by both sides. The Ld. CIT DR has objected to the late filing of the cross objection by the appellant. The objection has two aspects, i.e. (i) whether grounds in the cross objection are liable to be entertained and (ii) whether the delay could be condoned. The cross objection was filed on 07.04.2026 in response to the appeal No. ITA No.8242/Mum/ 2025 dated 29.11.2025. As per the sub-section (4) of section 253 of the Act, the cross objection may be filed within 30 days of the receipt of the notice of the appeal. Thus, the CO was admittedly filed late by 95 days. Sub-section (5) of section 253 of the Act permits the ITAT to admit an appeal or permit filing of cross objection after relevant period if it is satisfied that there was “sufficient cause” for presenting the appeal. We find that the appellant himself had raised an additional ground before CIT(A) regarding validity of the notice u/s 148 of the Act dated 30.07.2022. Though the CIT(A) decided the issue in favour of the appellant, he has not specifically dealt with the ground raised in the cross objection. In view of these facts, we are of the view that the delay was not intentional. The Hon’ble Supreme Court in case of Collector Land Acquisition Anantnag vs. Mst. Katiji & Ors. (1987) 167 ITR 471 (SC) held that when substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay. Hence, the delay in filing cross objection is condoned.
8.1 The other aspect is as to whether the cross objection raised for the first time could be admitted. The scope of powers of ITAT in dealing with appeals is stated in section 254 of the Act. The Hon’ble Supreme Court, in case of National Thermal Power Co. Ltd. vs. CIT, 229 ITR 383 (SC) has held that the power of the Appellate Tribunal under s. 254 in dealing with appeals is expressed in the widest possible terms. The purpose of the assessment proceedings before the taxing authorities is to assess correctly the liability of the assessee in accordance with law. If, for example, as a result of a judicial proceeding given while the appeal is pending before the Tribunal, it is found that a non-taxable item is taxed or a permissible deduction is denied, there is no reason why the assessee should be prevented from raising that question before the Tribunal for the first time, so long as the relevant facts are on record in respect of that item. There is no reason to restrict the power of the Tribunal under s. 254 only to decide the grounds which arise from the order of the CIT (Appeals). Both the assessee as well as the Department have a right to file an appeal/cross objection before the Tribunal. There is no reason why the Tribunal should be prevented from considering a question of law arising in the assessment proceedings although not raised earlier. Undoubtedly, the Tribunal will have the discretion to allow or not to allow a new ground to be raised. But where the Tribunal is only required to consider the question of law arising from the facts which are on record in the assessment proceedings, there is no reason why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of the assessee.
8.2 There is no reason as to why the ratio of the above decision would not be applicable to the instant appeal. The ground raised by the appellant is purely legal in nature and is based on the facts available on record. Therefore, following the decision of Hon’ble Supreme Court cited supra, the cross objection is admitted.
9. Having admitted the cross objection of the assessee, let us discuss the jurisdictional issue raised by the appellant in the cross objection. The issue that arises for consideration in the present appeal is that in case where order u/s 148A(d) of the Act (new regime) has been passed and/or notice u/s 148 of the Act (new regime) has been issued for the AY 2016-2017 after 30.06.2021, whether the Pr. CIT u/s 151(i) of the Act or the Pr. CCIT u/s 151(ii) of the Act is the “specified authority” for granting necessary approval. In our view, the above issue is no longer res integra and stands settled by the judgment of the Hon’ble Supreme Court in the case Union of India vs. Rajeev Bansal (supra). In the aforesaid case, the Hon’ble Supreme Court had, while dealing with the issue of approval from specified authority in terms of Section 151 of the Act, made it clear that the specified authority u/s 151(i) of the Act (new regime) could grant sanction till 30.06.2021 and not thereafter. In the present case, order u/s 148A(d) and notice u/s 148 of the Act (new regime) were issued on 30.07.2022 i.e. after 30.06.2021 with approval/sanction of the PCIT-19 Mumbai. As per the judgement of the Hon’ble Supreme Court in case of Rajeev Bansal (supra), the authority specified u/s 151(ii) was the Pr. CCIT and not Pr. CIT. Therefore, we hold that in absence of the approval from the specified authority u/s 151(ii) of the Act, the AO lacked jurisdiction to pass order u/s 148A(d) and issued notice u/s 148 of the Act (new regime) for AY 2017-18. Therefore, the impugned order u/s 148A(d) and notice u/s 148 of the Act, both dated 30.07.2022 are quashed and set aside as being bad in law. Resultantly, the order passed u/s 143(3) r.w.s. 147 dated 25.05.2023 is also quashed. The cross objection of the assessee is, accordingly, allowed.
ITA No.8242/Mum/2025 (AY: 2016-17)
10. Since we have quashed and set aside the order u/s 143(3) r.w.s. 147 dated 25.05.2023, the grounds raised by the revenue have become infructuous and accordingly dismissed.
11. In the result, the appeal of the revenue is dismissed.
Order is pronounced on 16.04.2025
