PCIT Vs Wudstay Travels Pvt. Ltd. (Delhi High Court)
The Delhi High Court considered an appeal against the ITAT order dated 28.10.2025 in ITA No. 2996/Del/2025, whereby the Tribunal had allowed the assessee’s appeal and held that approval granted by the Principal Commissioner of Income Tax (PCIT) for reassessment was incompetent. The Tribunal had consequently quashed the assessment order dated 20.04.2023.
The matter concerned Assessment Year 2017-18. The first notice under Section 148 had been issued on 30.06.2021 under the earlier reassessment regime. Following the introduction of the new reassessment regime from 01.04.2021 and the Supreme Court’s directions in Ashish Agarwal, notice under Section 148A(b) was issued on 01.06.2022, followed by an order under Section 148A(d) on 21.07.2022.
The assessee challenged the reassessment on the ground that the notice/order dated 21.07.2022 was issued more than three years after the end of the relevant assessment year. According to the assessee, under Section 151 of the Income Tax Act, the required approval therefore had to be granted by the Principal Chief Commissioner, Principal Director General, Chief Commissioner or Director General, as applicable, rather than by the Principal Commissioner of Income Tax.
The Tribunal accepted this contention. It relied upon the Delhi High Court’s judgment in Communist Party of India (Marxist) v. CIT (Ex), Civil Writ Petition No. 9031/2023, decided on 28.04.2025, as well as the decision of a coordinate bench in Dalpat Baraiya vs Income Tax officer Ward -3(3)(1). The Tribunal held that because more than three years had elapsed from the end of the relevant assessment year, the approval granted by the PCIT was not by the competent authority prescribed under Section 151. It therefore allowed the assessee’s appeal and quashed the assessment order.
Before the High Court, the Revenue relied upon the lower authorities’ orders and submitted that the reassessment proceedings had been initiated pursuant to the Supreme Court’s directions in Ashish Agarwal [2022] 444 ITR 1 (SC). The Tribunal, however, had noted that the 21.07.2022 notice/order for AY 2017-18 was issued on the basis of prior approval from the Principal Commissioner of Income Tax-07, Delhi, without approval from the authority specified under Section 151.
The Delhi High Court examined the Tribunal’s order and held that the Tribunal had correctly decided the issue while considering Section 151 and relying upon the Court’s judgment in Communist Party of India (Marxist) vs. CIT (Ex). The High Court found no illegality or error in the Tribunal’s order. Consequently, the Revenue’s appeal failed.
Cases Discussed
- Communist Party of India (Marxist) vs. CIT (Ex) (Delhi High Court), Civil Writ Petition No. 9031/2023
- Ashish Agarwal (Supreme Court), [2022] 444 ITR 1 SC
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
CM APPL. 42892/2026 (Exemption)
1. Allowed, subject to all just exceptions.
2. Application stands disposed of.
ITA 519/2026
3. The present appeal is directed against the order dated 28.10.2025 passed by the Income Tax Appellate Tribunal, Bench ‘C’ in ITA No. 2996/De1/2025 (hereinafter referred to as ‘the Tribunal’), whereby the appeal preferred by the assessee was allowed, inter-alia, holding the approval granted by the Principal Commissioner of Income Tax (PCIT) to be incompetent.
4. The reasons for holding the approval to be the non est was that though extended period of 3 years was invoked as per the provisions of Section 151 of the Income Tax Act (hereinafter referred to as the Act of 1961), the approval was granted by the PCIT, whereas it ought to have been granted by the Principal Chief Commissioner of Income Tax.
5. While allowing the appeal, the Tribunal has observed as under:-
“5. Ld. Counsel for the assessee has raised the legal ground no.4 and stated that first notice u/s 148 was issued on 30-06-2021 for the A.Y. 2017-18 under the old reassessment tax regime, however due to the introduction of new reassessment tax regime from 01-04-2021 and in the compliance of the Hon ‘ble Supreme Court Order in the case of Ashish Agarwal notice u/s 148A(b) of the Act was issued on 01-062022 and consequent order under section 148A(d) of the Act on 2107-2022. The case of the assessee relates to the A.Y. 2017-18 and the notice /order was issued on 21-07-2022 after a period of three years from the end of relevant assessment Year, the sanctioning authority should have been Principal Chief Commissioner or Principal Director General or Chief commissioner but in this case the approval has been obtained from the Pr. Commissioner of Income Tax, which is not the competent authority to grant the permission. This issue is squarely covered by the Judgement of Hon ‘ble Jurisdictional Delhi High Court in the case of Communist Party of India (Maxist) V. CIT (Ex) WP 9031/2023 dated 28-04-2025. In the case of Dalpat Baraiya vs Income Tax officer Ward -3(3)(1) the Co-ordinate bench held that where three years had expired from the end of the Assessment year 2018-19, sanctioning authority u/s 15100 of the Act should have been Principal Chief Commissioner and not Principal Commissioner, thus order under section 148A(d) and notice under section 148 issued on basis of approval granted by Principal Commissioner were to be quashed and set aside.
6. The Ld. Sr. DR has relied the order of the lower authorities and submitted that the notice/ order was issued as per the directions of the Hon ‘ble Supreme Court in the case of Ashish Agarwal [2022] 444 ITR 1 SC. In the present case the notice was issued on 21-07-2022 for the A.Y. 2017-18 from the prior approval of the Pr. Commissioner of Income Tax 07 Delhi, without, the approval of the authority specified u/s 151 of the Act. The notice was issued beyond the period of three years from the end of the relevant assessment year, thus in term of section 151 of the Act the sanction was required to be approved by the Principal Chief Commissioner or Principal Director General or where there is no such authority, by Chief Commissioner or Director General. Respectfully following the decision of the Hon ‘ble High Court and the Co-ordinate Bench we allowed the appeal of the assessee and quashed the assessment order dated 20.04.2023″.
6. On perusal of the impugned order of the Tribunal, we find that the Tribunal has correctly decided the issue, bearing in mind the provisions contained in Section 151 of the Act of 1961, while also relying upon the judgment of this Court rendered in the case of Communist Party of India (Marxist) vs. CIT (Ex) in Civil Writ Petition No. 9031/2023 decided on 28.04.2025.
7. We do not find that any illegality or error in the order impugned passed by the Tribunal.
8. The appeal, therefore, fails.
