Venkata Durga Agencies Vs ITO (ITAT Visakhapatnam)
Section 151: ITAT Quashes ₹7.46 Crore Reassessment for Approval from Wrong Authority Beyond Three Years
PCIT Approval Held Insufficient for April 2022 Reopening
The Visakhapatnam Bench of the Income Tax Appellate Tribunal (ITAT) has quashed a reassessment involving ₹7.46 crore in cash deposits, holding that the notice under Section 148 was issued with approval from an authority lacking jurisdiction under the applicable provisions of Section 151.
The notice was issued more than three years after the end of the relevant assessment year. Consequently, approval from the Principal Commissioner of Income Tax (PCIT) was insufficient under the law governing the proceedings.
The Tribunal also rejected the Revenue’s position that an earlier notice under Section 148A(b), issued within the three-year period, validated the subsequent reopening with PCIT approval.
Case Details
The ruling was delivered in Venkata Durga Agencies v. ITO, Ward-1, Kakinada, ITA No. 692/VIZ/2025, concerning Assessment Year 2018-19.
The order was pronounced on 16 October 2026 by Accountant Member Manjunatha G and Judicial Member Ravish Sood.
The assessee challenged the order of the CIT(A), National Faceless Appeal Centre, Delhi, dated 7 August 2025, which had dismissed its appeal against the reassessment.
Before examining the jurisdictional dispute, the Tribunal addressed the delay in filing the appeal.
Delay Condoned on Medical Grounds
The assessee filed a condonation petition supported by a medical certificate, explaining why the appeal could not be filed within the prescribed time.
The Departmental Representative did not object to condonation.
After considering the explanation and medical evidence, the Tribunal found that the reasons constituted reasonable cause. It therefore condoned the delay and admitted the appeal for adjudication.
This enabled examination of the assessee’s additional grounds challenging the validity of the reopening.
Cash Deposits Lead to Reassessment
The assessee had not filed its return under Section 139(1) for Assessment Year 2018-19.
Based on information concerning cash deposits of ₹7,46,24,920 in an Andhra Bank account, the Assessing Officer issued a notice under Section 148A(b) on 22 March 2022.
The assessee neither responded nor explained the transactions. The Assessing Officer subsequently passed an order under Section 148A(d) on 4 April 2022 and issued a notice under Section 148 on the same date, with approval from the PCIT-1, Visakhapatnam.
No return was filed in response. The reassessment was completed under Section 147 read with Section 144 on 14 February 2024, determining total income of ₹7,46,24,920 by adding the cash deposits.
Assessee Challenges Competence of Sanctioning Authority
Before the Tribunal, the assessee argued that the 4 April 2022 notice fell beyond three years from the end of Assessment Year 2018-19.
It contended that approval was therefore required from the higher authority specified under Section 151(ii), rather than the PCIT.
The assessee relied on the Visakhapatnam Tribunal’s decision in Pothina Satyanarayana v. ITO, ITA No. 568/Viz/2025, dated 26 November 2025, involving an identical jurisdictional issue.
The challenge concerned the validity of the Assessing Officer’s assumption of jurisdiction, rather than the substantive explanation for the deposits.
Revenue Relies on Earlier Section 148A(b) Notice
The Revenue maintained that proceedings had commenced with the 22 March 2022 notice under Section 148A(b), before expiry of the three-year period.
It argued that the subsequent order and Section 148 notice were a continuation of those proceedings. On that basis, it defended the approval obtained from the PCIT.
The Tribunal did not accept this reasoning. It found that the issue was covered by the coordinate Bench’s decision in Pothina Satyanarayana.
Earlier Precedent Governs Approval Requirement
The Tribunal noted that Pothina Satyanarayana had followed the Telangana High Court’s judgment in Deloitte Consulting India Pvt. Ltd. v. Assessment Unit, Income Tax Department, dated 25 September 2025.
That judgment addressed reopening for Assessment Year 2018-19 after the relevant three-year period expired on 31 March 2022.
The cited reasoning required approval from the higher authority prescribed under Section 151(ii) when the subsequent reopening occurred beyond that period.
It also rejected retrospective application of the proviso to Section 151 introduced by the Finance Act, 2023, effective from 1 April 2023. The later amendment could not be used to exclude the reply period under Section 148A(b) when determining the competent sanctioning authority for the April 2022 proceedings.
Notice and Consequential Assessment Quashed
Following the coordinate Bench’s decision, the Tribunal quashed the Section 148 notice dated 4 April 2022 and the consequential reassessment order dated 14 February 2024.
The assessee’s appeal was allowed.
The decision establishes the importance of obtaining approval from the statutorily competent authority under the law applicable to the reopening. The assessment failed on jurisdictional grounds; the Tribunal did not adjudicate whether the ₹7.46 crore cash deposits were otherwise satisfactorily explained.
Cases Discussed
- Pothina Satyanarayana v. ITO, ITA No. 568/Viz/2025 (ITAT Visakhapatnam, 26.11.2025) — TaxGuru discussion referring to this precedent; standalone TaxGuru case page not verified.
- Deloitte Consulting India Pvt. Ltd. v. Assessment Unit, Income Tax Department, CWP No. 4061/2024 (Telangana HC, 25.09.2025) — TaxGuru discussion quoting the judgment; standalone TaxGuru case page not verified.
FULL TEXT OF THE ORDER OF ITAT VISAKHAPATNAM
This appeal filed by the assessee is directed against the order of the Learned Commissioner of Income Tax (Appeals) [in short, “the Ld.CIT(A)”], National Faceless Appeal Centre (NFAC), Delhi, dated 07.08.2025, for assessment year 2018-19.
2. At the outset, we find that appeal filed by assessee is barred by limitation, for which, necessary petition for condonation of delay along with Medical Certificate explaining the reasons for the delay has been filed. The learned counsel submitted that assessee could not file appeal within the time allowed under the Act, therefore delay may be condoned. 2.1 The Ld.DR has not raised any objection for condonation of delay. 2.2 Having heard both sides and considered the petition along with Medical Certificate filed by the assessee for condonation of delay, we are of the considered view that reasons given by assessee for not filing the appeal within the time allowed under the Act comes under ‘reasonable cause’ as provided under the Act for condonation of delay and hence, delay in filing of above appeal is condoned and appeal filed by the assessee is admitted for adjudication.
3. The brief facts of the case are that the assessee, M/s.Venkata Durga Agencies, not filed its Return of Income u/s.139(1) of the Income Tax Act, 1961 [in short “the Act”] for AY 2018-19. As per specific information available with the department, it is seen that the assessee has made cash deposits of Rs.7,46,24,920/- in Andhra Bank account. Therefore, notice u/s.148A(b) of the Act was issued on 22.03.2022 and served on the assessee. The assessee neither replied to the notice nor explained the case. Therefore, order u/s.148A(d) of the Act was passed on 04.04.2022 and notice u/s.148 of the Act dated 04.04.2022 was issued and served on the assessee with the approval of the PCIT-1, Visakhapatnam. The assessee has not filed Return of Income, in response to notice issued u/s.148 of the Act. The case was selected for scrutiny and the assessment has been completed u/s.147 r.w.s.144 of the Act on 14.02.2024 and determined total income of Rs.7,46,24,920/- by making additions towards cash deposits of Rs.7,46,24,920/- into bank account maintained with Andhra Bank.
4. On appeal before the Ld.CIT(A), the Ld.CIT(A) for the reasons stated in the appellate order dated 07.08.2025, rejected the explanation of the assessee and dismissed the appeal filed by the assessee.
5. Aggrieved by the order of the Ld.CIT(A), the assessee is now in appeal before this Tribunal.
6. The Ld. Counsel for the assessee, Mrs. A. Aruna, Advocate, referring to the additional grounds of appeal filed by the assessee submitted that the assessment has been reopened by issuing notice u/s.148 of the Act on 04.04.2022 with the approval of the Ld.PCIT-1, Visakhapatnam, whereas as per provisions of Sec.151(ii) of the Act when assessment is reopened beyond three years from the end of the relevant assessment year, then the competent authority for according approval is PCCIT, but not PCIT and therefore, notice issued u/s.148 of the Act dated 04.04.2022 with the approval of PCIT is invalid and consequently, assessment order passed by the AO u/s.147 r.w.s.144 of the Act on 14.02.2024 is liable to be quashed.
In this regard, she relied upon the decision of the ITAT Visakhapatnam Bench in the case of Pothina Satyanarayana v. ITO in ITA No.568/Viz/2025 for AY 2018-19 order dated 26.11.2025.
7. The Ld.Sr.AR for the Revenue, on the other hand, submitted that there is no merit in additional grounds filed by the assessee, because, the assessment proceedings for the assessment year under consideration has been initiated by issuing notice u/s.148A(b) of the Act on 22.03.2022 providing time till 29.02.2023 to the assessee for furnishing reply / information by allowing ‘7’ days’ time and therefore, the order passed by the AO u/s.148A(d) of the Act and notice issued u/s.148 of the Act on 04.04.2022 is continuation of proceedings initiated u/s.148 of the Act on 22.03.2022 and as per Section 151(ii) of the Act, the assessment proceedings has been initiated within three years from the end of the relevant assessment year, and that. the competent authority for according approval is PCIT and in this case, the AO has obtained approval from PCIT which is evident from a relevant notice issued u/s.148 of the Act on 04.04.2022. Therefore, he submitted that the grounds of appeal filed by the assessee should be dismissed.
8. We have heard both the parties, perused the materials available on record and had gone through orders of the authorities below. The only issue involved in this appeal filed by the assessee is validity of reassessment order passed by the AO in light of notice issued u/s.148 of the Act dated 04.04.2022 by obtaining approval from PCIT and the Counsel for the assessee claims that notice issued u/s.148 of the Act is invalid, because, the AO has obtained approval from PCIT, Visakhapatnam, whereas the competent authority as per provisions of Sec.151(ii) of the Act is PCCIT and therefore, the notice issued u/s.148 of the Act is invalid and consequent assessment order is void ab initio and liable to be quashed.
9. We find that, this issue is no longer res integra. The coordinate Bench of ITAT, Visakhapatnam, in the case of Pothina Satyanarayana (supra) had considered an identical issue and by following certain judicial precedents including the decision of the Hon’ble High Court of Telangana in the case of Deloitte Consulting India Pvt. Ltd. v. the Assessment Unit, ITD in Civil Writ Petition No.4061 of 2024 dated 25.09.2025, quashed notice issued u/s.148 of the Act and the relevant observations of the Bench are as under:
20. 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 for issuing the notice under section 148 of the Act is supported by the recent judgment of the Hon’ble 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 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 quoted hereunder:
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 relatable to the relevant Assessment Year 2018- 19 i.e., 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 issuing of notice under Section 148 of the Act has been taken from the Principal Commissioner of Income Tax by the respondent No.1, which is permissible only if three years or less than three years have lapsed from the end of the relevant assessment year. In the present case, the relevant three years lapsed on 31.03.2022. Therefore, the prior approval of the Principal Chief Commissioner or Principal Director General or the Chief Commissioner or the Director General was required to be obtained before passing of the order under Section 148A(d) or before issuance of the 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 clarificatory 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 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 consumed in furnishing the reply is going to be brought into the statute book by amendment by the Finance Act, 2023 with effect from 01.04.2023. In taxing statutes, intendment cannot be assumed unless specifically expressed in the provision enacted by the legislature. Therefore, the reopening of assessment without sanction/approval of the specified authority in accordance with Section 151 of the Act was bad in law. Consequently, reassessment order dated 16.01.2024 also is bad in law.”
(emphasis supplied by us)
21. 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 ie., 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 as 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.
22. We, thus, in terms of our aforesaid observation, concur with the Ld. AR that in the present case before us for A.Y. 2018-19, wherein notice under Section 148 of the Act was issued on 04.04.2022, i.e., beyond a period of three years from the end of the assessment year, the A.O. was statutorily obligated to have obtained the approval from either of the authorities specified u/s. 151(ii) of the extant law, 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, as the A.O. had obtained the approval from the Pr. Commissioner of Income Tax, Vishakapatnam1, i.e., an authority who was not vested with any jurisdiction as per the mandate of Section 151 of the Act (as made available on the statute w.e.f 01.04.2021), therefore, the assessment so framed by him u/s.147 r.w.s 144 r.w.s. 144B of the Act, dated 12.02.2024, 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 144 r.w.s 144B of the Act, dated 12.02.2024, in terms of our aforesaid observations.
10. In this view of the mater and by following the decision of coordinate Bench of ITAT, Visakhapatnam, in the case of Pothina Satyanarayana (supra), we quashed the notice issued u/s.148 of the Act dated 04.04.2022 and consequent assessment order passed by the AO u/s.147 r.w.s.144 of the Act on 14.02.2024.
11. In the result, appeal filed by the assessee is allowed.
Order pronounced on the 16th day of October, 2026, in Visakhapatnam.
