Dhanaji Abasaheb Dhage Vs ITO (ITAT Mumbai)
Summary: The Mumbai Bench of the Income Tax Appellate Tribunal examined the appeal of Dhanaji Abasaheb Dhage against the order of the National Faceless Appeal Centre dated 23 October 2025 for Assessment Year 2017-18. The principal dispute concerned the legality of reassessment proceedings initiated through a notice dated 11 July 2022 under Section 148 of the Income-tax Act, 1961. The assessee contended that the notice was issued beyond the limitation period available under Section 149 after accounting for the extensions granted by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA). The assessee also questioned the approval obtained under Section 151, arguing that the Principal Commissioner of Income Tax-17, Mumbai, was not the competent specified authority for reassessment proceedings initiated more than three years after the end of the relevant assessment year.
Before the Tribunal, the assessee sought admission of four additional grounds raising jurisdictional challenges to the reassessment. These included expiry of the surviving limitation period, approval by an incompetent authority under Section 151, issuance of notice by the jurisdictional Assessing Officer instead of through the mechanism contemplated by Section 151A and the e-Assessment of Income Escaping Assessment Scheme, 2022, and non-compliance with CBDT Circular No. 19/2019 relating to Document Identification Numbers. The assessee explained that the additional grounds arose from subsequent judicial pronouncements, particularly Union of India Vs Rajeev Bansal and Hexaware Technologies Limited Vs ACIT. The Tribunal admitted all four grounds, holding that they raised pure questions of law going to the jurisdiction of the reassessment proceedings. In doing so, it followed Ventura Textiles Ltd. Vs CIT and the Supreme Court’s ruling in National Thermal Power Corporation Vs CIT.
On the limitation issue, the assessee submitted a calculation chart identifying 26 June 2021 as the date of the deemed show-cause notice under Section 148A(b), 30 June 2021 as the last date for issuing the reassessment notice after considering TOLA, and five days as the balance period otherwise available to the Assessing Officer. The chart showed that two weeks allowed for filing the reply expired on 3 June 2022, resulting in a surviving deadline of 8 June 2022 after adding the available five days. However, the actual Section 148 notice was issued on 11 July 2022. The Tribunal accepted this calculation and relied upon Hitesh Ramniklal Shah Vs ACIT, in which the Bombay High Court had held that a reassessment notice issued after expiry of the surviving limitation period could not be sustained. Accordingly, the Tribunal quashed the notice dated 11 July 2022 as time-barred.
The Tribunal separately examined the assessee’s challenge to the sanction obtained under Section 151. It recorded that the order under Section 148A(d) and the notice under Section 148 were issued after three years from the end of the relevant assessment year, but approval had been obtained from PCIT-17, Mumbai. The Tribunal held that the competent authority was the authority prescribed under Section 151(ii) rather than the Principal Commissioner acting under Section 151(i). Applying Alag Property Construction Pvt. Ltd. Vs ACIT, the Tribunal concluded that non-compliance with the statutory approval requirement vitiated the Assessing Officer’s jurisdiction. Consequently, the order under Section 148A(d) and the reassessment notice were invalid on this independent ground as well.
Having allowed Additional Ground Nos. 1 and 2, the Tribunal quashed the reassessment notice dated 11 July 2022 and all consequential proceedings. It found no necessity to adjudicate the remaining grounds, including the contentions concerning Section 151A, the faceless reassessment scheme and CBDT Circular No. 19/2019. The assessee’s appeal was partly allowed by the order pronounced on 5 May 2026. The decision emphasises two independent jurisdictional safeguards in reassessment proceedings: compliance with the surviving limitation period under Section 149 read with TOLA and obtaining prior sanction from the correct specified authority under Section 151. Failure to satisfy either statutory requirement rendered the reassessment proceedings unsustainable in the circumstances of this case.
Cases Discussed
- Hitesh Ramniklal Shah Vs ACIT (Bombay High Court) – (2025) 180 taxmann.com 642. Relied upon for holding that a notice under Section 148 issued after expiry of the surviving period under Section 149 read with TOLA is barred by limitation.
- Alag Property Construction Pvt. Ltd. Vs ACIT (Bombay High Court) – (2025) 179 taxmann.com 578. Applied for holding that an order under Section 148A(d) and notice under Section 148 issued beyond three years require approval from the competent authority under Section 151(ii), not merely from the Principal Commissioner under Section 151(i).
- Union of India & Others Vs Rajeev Bansal (Supreme Court of India) – [2024] 167 taxmann.com 70; Judgment dated 03.10.2024. Relied upon by the assessee in challenging the validity and limitation of the reassessment notice and the applicability of the amended reassessment regime.
- Hexaware Technologies Ltd. Vs ACIT (Bombay High Court) – [2024] 162 taxmann.com 225; Judgment dated 03.05.2024. Relied upon by the assessee for the jurisdictional objection concerning notices issued by the jurisdictional Assessing Officer instead of under the faceless reassessment mechanism.
- Ventura Textiles Ltd. Vs CIT (Bombay High Court) – ITA No. 958 of 2017. Relied upon for admitting an additional jurisdictional question of law, even if not raised at an earlier stage.
- All Cargo Global Logistics Ltd. Vs DCIT (ITAT Mumbai Special Bench) – [2012] 21 taxmann.com 429. Relied upon in the assessee’s application for admitting additional legal grounds on the basis of existing assessment records.
- National Thermal Power Co. Ltd. Vs CIT (Supreme Court) – (1998) 229 ITR 383 (SC). Followed for the principle that the Tribunal may admit a new legal ground arising from facts already on record when necessary to determine the correct tax liability.
- Begum Noor Banu Alladin (Judicial precedent cited in the All Cargo decision) – Discussed in the quoted passage concerning the scope of the Tribunal’s jurisdiction to entertain additional grounds.
- Anand Prasad (Judicial precedent cited in the All Cargo decision) – Referred to in the quoted discussion of earlier decisions restricting the scope of additional grounds before the Tribunal.
- Karamchand Premchand (P.) Ltd. (Judicial precedent cited in the All Cargo decision) – Discussed as part of the authorities concerning admission of additional grounds and the Supreme Court’s later approach.
- Cellulose Products of India Ltd. (Judicial precedent cited in the All Cargo decision) – Discussed in the quoted reasoning concerning the Tribunal’s power to consider questions of law.
- Shaik Ibrahim (Judicial precedent cited in the All Cargo decision) – Referred to in connection with the assessee’s bona fide reasons for not raising a legal ground at an earlier stage.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal is filed by the Assessee against the order of Ld. NFAC dated 23-Oct-2025 for the Assessment Year 2017-18.
The Assessee has raised the following grounds of appeal:
The assessee submits the following grounds:
1. On the facts and circumstances of the case and in law, the CIT (A) ought to have considered the notice issued under Section 148 on 11-7-2022 as invalid and bad in law in view of the fact that it was issued after the expiry of the time period as extended by the provisions of Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 after excluding the period referred to in third proviso to Section 149 as explained by the Supreme Court in the case of UOI v. Rajeev Bansal [2024] 167 taxmann.com 70 (SC). As a result, the said notice as well as the entire assessment proceeding ought to have been declared as null and void.
2. On the facts and circumstances of the case and in law, the learned Assessing Officer has erred in issuing the order under Section 148A(d) and the notice under Section 148 after obtaining the approval of the approval of PCIT-17, Mumbai which was not the correct ‘specified authority’ as per Section 151 who should have approved it when three years have already elapsed from the end of the relevant assessment year.
3. On the facts and circumstances of the case and in law, the ITO, Ward 26(1)(1). Mumbai has erred in passing the order u/s. 148A(d) and also issuing the notice u/s. 148 without appreciating that he was not having the jurisdiction for the same in view of Section 151A and the notification issued thereunder notifying e-Assessment of Income Escaping Assessment Scheme, 2022 and, thereby, rendering the said order and the notice as well as the entire assessment proceeding as null and void.
2. An application for admitting additional grounds of appeal has been filed by the assessee, wherein the assessee has raised four additional grounds and the same is reproduced herein below:
The Hon’ble Members,
To, SMC’ Bench,
The Income Tax Appellate Tribunal, Mumbai.
Sub: Application for admitting additional Grounds of Appeal
Ref: Appeal of Dhanaji Abasaheb Dhage
Assessment Year: 2017-18
PAN: AJBPD1910C
Appeal No. ITA No. 7663/Mum/2025
Respected Sir,
With reference to the appeal filed before Your Honours, I am submitting this application with a sincere request to admit the additional grounds of appeal as enclosed herewith.
The four additional grounds raised hereunder before Your Honours are legal grounds and the same were not raised before the CIT(A)/NFAC.
It is submitted before Your Honours that Additional Grounds No. 1 and 2 have been raised pursuant to the decision of the Hon’ble Supreme Court in the case of Union of India vs. Rajeev Bansal [2024] 167 taxmann.com 70 (SC) dated 03-10-2024. The appeal in the case of the assessee was filed before the Ld. CIT(A)/NFAC on 09-08-2023 and at that point in the time the decision of Hon’ble Supreme Courts was not delivered then.
Additional Grounds No. 3 and 4 have been raised pursuant to the decision of the Hon’ble Bombay High Court in the case of Hexaware Technologies Ltd. vs. Asst. CIT [2024] 162 taxmann.com 225 (Bombay) dated 03-05-2024. Once again, the decision of the Hon’ble Bombay High Court was not delivered at the time when the appeal was filed by the assessee before the Ld. CIT(A)/NFAC.
During the course the First Appellate Proceeding, the assessee was not properly advised by the professional on these legal issues and therefore, the same were not raised then. However, when the assessee approached another professional to represent him before the Hon’ble Tribunal, it was at that point in time when he was advised that there are legal issues which were covered by the decisions of Hon’ble Supreme Court and Hon’ble Bombay High Court. Consequently, the same are being raised as additional grounds before Your Honours which are legal in nature.
Reliance is placed on the decision of the Hon’ble Bombay High Court in Ventura Textiles Ltd. vs. CIT ITA No. 958 of 2017 wherein the Hon’ble High Court has held that a jurisdictional issue, though not raised before the Tribunal can be raised before the High Court for the first time and adjudicated upon. (Copy of the said order is attached)
Reliance is also placed on the decision of All Cargo Global Logistics Ltd. vs. Dy. CIT [2012] 21 taxmann.com 429 (Mum.) (SB) wherein the Hon’ble Mumbai Tribunal relying on the decision of Hon’ble Supreme Court in the case of National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383 (SC) has held as under:
This brings us to the question whether this ground can be taken up as additional ground with the leave of the Tribunal. To our mind, the answer to the question is obvious in view of the decision in the case of National Thermal Power Co. Ltd. (supra) decided on 12.4.1996, after the decision was rendered in the case of Begum Noor Banu Alladin (supra) on 21.4.1993. The Hon’ble Supreme Court has held with the view that Tribunal is confined only to issues arising out of the appeal before the CIT(A) takes too narrow a view. This view was taken in the case of Anand Prasad, Karamchand Premchand (P.) Ltd’s. cases (supra) and Cellulose Products of India Ltd. This means that the ratio of these cases has not found favour with the apex court. The decision in the case of Begum Noor Banu Alladin (supra) heavily relies on the decision in the case of Karamchand Premchand (P.) Ltd. and Cellulose Products of India Ltd.’s cases (supra) If these cases have not been approved by the Apex Court, it follows that the decision based on these cases may not be followed by us. Further the Hon’ble Apex Court in very clear terms has held that the Tribunal will have discretion to allow or not to allow a new ground to be raised, but where the Tribunal is only required to consider a question of law arising from the facts which are on record in the assessment proceedings, it fails to see why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assessee the tax liability of an assessee. The position of the assessee in the case at hand is similar to the position of NTPC, as both of them are appellants. Therefore, on the basis of the decision, it abundantly clear that if the pure question of law arises for which facts are on record of the authorities below, such a question should be allowed to be raised, if it is necessary to do so to assess the correct tax liability.
Further, the Hon’ble Tribunal had also taken into consideration that the assessee in the said case was not advised properly before the lower authorities and accordingly, it held as under:
The Ld. Counsel has submitted that this ground could not be raised earlier as the assessee was not properly advised in the proceedings before the lower authorities, and it did not have the services of an advocate at his command. On perusal of record, this submission is found to be correct. The question is one of law and not one of fact. Therefore, it could be that a proper ground could not be raised in absence of services of an advocate although the denial of the deduction had been disputed. This constitutes a reasonable cause in the light of the decision in the case of Shaik Ibrahim (supra). Thus, we find that there are reasons to hold that the assessee could not take up this ground before lower authorities for bona-fide reasons.
In view of the stated position, stated by the Ld. Counsel, that all facts are on record, we admit ground No. 1 in the memorandum of appeal for decision as an additional ground. It also follows from the decision that no fresh fact will be entertained or examined while deciding the ground.
In light of the above, the assessee prays Your Honours to admit the four additional grounds which are legal in nature.
Thanking You,
Additional Grounds of Appeal
1. On the facts and circumstances of the case and in law, the CIT (A) ought to have considered the notice issued under Section 148 on 11-7-2022 as invalid and bad in law in view of the fact that it was issued after the expiry of the time period as extended by the provisions of Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 after excluding the period referred to in third proviso to Section 149 as explained by the Supreme Court in the case of UOI v. Rajeev Bansal [2024] 167 taxmann.com 70 (SC). As a result, the said notice as well as the entire assessment proceeding ought to have been declared as null and void.
2. On the facts and circumstances of the case and in law, the learned Assessing Officer has erred in issuing the order under Section 148A(d) and the notice under Section 148 after obtaining the approval of the approval of PCIT- 17, Mumbai which was not the correct ‘specified authority’ as per Section 151 who should have approved it when three years have already elapsed from the end of the relevant assessment year.
3. On the facts and circumstances of the case and in law, the ITO, Ward 26(1)(1), Mumbai has erred in passing the order u/s. 148A(d) and also issuing the notice u/s. 148 without appreciating that he was not having the jurisdiction for the same in view of Section 151A and the notification issued thereunder notifying e-Assessment of Income Escaping Assessment Scheme, 2022 and, thereby, rendering the said order and the notice as well as the entire assessment proceeding as null and void.
4. On the facts and circumstances of the case and in law, notice issued u/s 148 dated 11/07/2022 is required to be declared as null and void as it suffers from the jurisdictional defect of not complying with the requirements of Circular No. 19 of 2019 dated 14th August, 2019 issued by the CBDT.
3. In this regard, the ld. AR submitted that Additional Ground Nos. 1 and 2 have been raised pursuant to the decision of the Hon’ble Apex Court in the case of Union of India vs. Rajiv Bansal (2024) 167 taxmann.com 70, and Additional Ground Nos. 3 and 4 have been raised pursuant to the decision of the Hon’ble Bombay High Court in the case of Hexaware Technologies Ltd. vs. ACIT (2024) 162 taxmann.com 225 (Bom). It was submitted that both these decisions of the Hon’ble Supreme Court and the Hon’ble Bombay High Court were not delivered when the appeal of the assessee was adjudicated by the ld. CIT(A). Therefore, by raising these four additional grounds, the assessee has challenged the legality and validity of the notices/proceedings initiated against it.
3.1 On the other hand, the ld. DR contested the said application and requested dismissal of the same.
4. We have heard the counsel for both the parties on the application and, considering the facts of the present case, we find that all four additional grounds now being raised by the assessee are legal in nature. As per the decision of the Hon’ble Bombay High Court in Ventura Textile vs. CIT (ITA No. 958 of 2017), it has been held that a jurisdictional issue, though not raised before the Tribunal, can be raised before the High Court for the first time. Therefore, keeping in view the principle laid down by the Hon’ble High Court and also by the Hon’ble Apex Court in the case of National Thermal Power Corporation vs. CIT (1998) 229 ITR 383, we find that since the additional grounds raised are purely legal in nature and go to the root of the jurisdiction of the proceedings, thus the same are admitted. Accordingly, we allow the additional grounds to be heard on merits.
5. Additional Ground No. 1 relates to challenging the notice issued under Section 148 of the Act on 11.07.2022. As per the assessee, the same was invalid and bad in law as it was issued after the expiry of the limitation period as extended by the provisions of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, after excluding the period referred to in the 3rd proviso to Section 149 of the Act, as explained by the Hon’ble Supreme Court in the case of Union of India vs. Rajiv Bansal (2024) 167 taxmann.com 70.
5.1 On the other hand, the ld. DR submitted that the notice in question was timely issued and was not time-barred.
6. Having heard both the parties at length on this ground, we find that the assessee had filed a chart elucidating the dates of notices and timelines to establish that the notice issued under Section 148 of the Act dated 11.07.2022 was issued beyond the surviving period and the said chart is reproduced herein below:
Chart elucidating the dates and timelines to establish that the notice issued
under section 148 dated 11-07-2022 was issued beyond the surviving period
| Sr. No. | Particulars | Date / Days |
|---|---|---|
| 1 | Date of deemed show cause notice u/s. 148A(b) | 26-06-2021 |
| 2 | Last date for issuing notice u/s. 148 considering extension under TOLA | 30-06-2021 |
| 3 | No. of days which were otherwise available with the AO to issue notice u/s. 148 | 05 |
| 4 | Date on which two weeks expired for filing reply (as no reply was filed by the assessee) | 03-06-2022 |
| 5 | Surviving time period ends on – after adding the no. of days which were otherwise available to the AO (3) to the above date (4) | 08-06-2022 |
| 6 | Date on which the notice under Section 148 was issued by the Assessing Officer | 11-07-2022 |
6.1 Therefore, after considering the details as contained hereinabove, we find that the notice issued under Section 148 of the Act on 11.07.2022 was time-barred, as the same was issued much after the surviving period. In this regard, reliance is placed upon the decision in the case of Hitesh Ramniklal Shah vs. ACIT (2025) 180 taxmann.com 642, wherein it has been stated:
Section 149, read with section 148A, of the Income-tax Act, 1961 and section 3 of the Taxation and Other Laws (Relaxation and Amendments of Certain Provisions) Act, 2020 Income Escaping Assessment – Time limit for issuance of notice (Surviving period) – Assessment year 2014-15 Assessing Officer issued a notice under unamended section 148 on 29-6-2021-Thereafter, Assessing Officer issued a show cause notice under section 148A(b) on 25-5-2022-Pursuant to show cause notice, assessee filed replies on 3-6-2022, 17-6-2022 and 25-6-2022-Assessing Officer passed an order under section 148A(d) on 26-7-2022 and issued a fresh notice under section 148 on 27-7-2022 Revenue contended that a period of ten years was available to issue notice under section 148-It was noted that in case similar to assessee, High Court held that timeline under section 148A(d) was for Assessing Officer to comply with stipulations and section 148A(d) would not extend time limit under section 149(1) nor would have a bearing on time under section 149(1) – Whether a notice under section 148 could not be issued if period of six years from end of relevant assessment year had expired at time of issuance of notice relying on first proviso to section 149 Held, yes Whether thus, after considering exclusion period, remaining days for conclusion of procedure for passing of an order in terms of section 148A(d) and issuance of notice under section 148 would be two days -Held, yes Whether since period of two days would expire on 10-6-2022 or 27-6-2022 respectively, notice under section 148 issued on 27-7-2022 was time barred, inasmuch as it was issued much after surviving period – Held, yes [Paras 24 and 26] [In favour of assessee]
7. Therefore, considering the totality of facts and circumstances as discussed above, we quash the notice issued under Section 148 of the Act dated 11.07.2022 as being time-barred.
8. Additional Ground No. 2 raised by the assessee relates to challenging the order of the learned CIT(A) on the ground that the approval sought while issuing notice under Section 148 of the Act was not obtained from the “specified authority” as per Section 151 of the Act. In this regard, our attention was drawn to the notice dated 11.07.2022, which is at Paper Book Page Nos. 11–12, wherein it has been categorically mentioned that the said notice was issued after obtaining approval from PCIT-17, Mumbai.
9. Considering the fact that where the order under Section 148A(d) of the Act was passed beyond three years from the end of the assessment year, approval was required from the specified authority under the amended Section 151(ii) of the Act, whereas in the present case, approval was obtained from the PCIT instead of the specified authority. Such non-compliance with the statutory mandate and time limits vitiates the jurisdiction of the AO, rendering the order under Section 148A(d) of the Act and the notice issued under Section 148 of the Act liable to be quashed. In this regard, reliance is placed upon the decision in the case of Alag Property Construction Pvt. Ltd. vs. ACIT (2025) 179 taxmann.com 578. Accordingly, this ground raised by the assessee is also allowed wherein it has been stated:
Section 151, read with sections 148A and 148, of the Income-tax Act, 1961- Income escaping assessment Sanction for issue of notice (Specified authority) Assessment year 2017-18-Whether non-compliance by Assessing Officer with provisions contained in section 148A(d) read with section 151(ii) vitiates their jurisdiction to issue a notice under section 148 – Held, yes Whether in view of above, where order under section 148A(d) dated 18-08-2022 and consequential notice under section 148 dated 23-8-2022 were issued after three years from end of Assessment Year 2017-18, however, approval was obtained from Principal Commissioner under section 151(i) and not from specified authority as required under section 151(ii), said order under section 148A(d) and notice under section 148 were to be quashed – Held, yes [Paras 10, 12 and 13] [In favour of assessee]
10. Since we have allowed Additional Ground Nos. 1 and 2 raised by the assessee and quashed the notice issued under Section 148 of the Act, the consequential proceedings carried out and adjudicated on the basis of the said notice also stand quashed. Therefore, there is no need to adjudicate the other grounds raised by the assessee, as the same have become consequential in nature.
11. In the result, the appeal filed by the assessee is partly allowed.
Order pronounced in the open court on 05.05.2026.
