JUS Infratech Private Limited Vs ACIT (ITAT Delhi)
Delhi ITAT Quashes Reassessment of ₹1.44 Crore: Approval From PCIT Instead of Pr. CCIT Is Jurisdictionally Fatal Where Reopening Is Beyond 3 Years
The Delhi ITAT quashed reassessment proceedings for AY 2016-17 holding that where the notice u/s 148 was issued beyond three years from the end of the relevant assessment year, sanction was mandatorily required from the specified authority under section 151(ii), i.e. the Principal Chief Commissioner of Income Tax. Approval obtained merely from the PCIT rendered the assumption of jurisdiction invalid.
The reassessment arose from information obtained during a search on a third party, according to which the assessee had allegedly received an accommodation entry of ₹90 lakh from Pavaki Propbuild Pvt. Ltd. An original section 148 notice was issued on 28.06.2021 under the old reassessment regime, followed by another notice on 07.07.2022 under the new regime after obtaining approval from PCIT.
The reassessment resulted in two additions-₹90 lakh relating to Pavaki Propbuild Pvt. Ltd. and ₹54,00,685 relating to security deposits received from Savita Holdings Pvt. Ltd., aggregating to about ₹1.44 crore.
The ITAT relied particularly upon the Supreme Court decisions in Union of India v. Ashish Agarwal and Rajeev Bansal . It reproduced the Supreme Court’s proposition that sanction from the appropriate authority is a precondition for the AO to assume jurisdiction u/s 148, and that section 151(ii) requires sanction from a higher authority where more than three years have elapsed.
Since the alleged escaped income was ₹90 lakh-exceeding ₹50 lakh-and the proceedings for AY 2016-17 were initiated beyond three years, the ITAT held that approval had necessarily to be obtained from the Pr. CCIT and not the PCIT. The Tribunal also relied upon the Delhi High Court rulings in Vikram Kapahi and Kusum Healthcare (P) Ltd.
As the statutorily prescribed authority had not granted the sanction, the Tribunal held that the very assumption of jurisdiction was illegal. Consequently, the entire reassessment order-including the additions aggregating to approximately ₹1.44 crore-was quashed and the assessee’s appeal allowed.
Cases Discussed
- Rajeev Bansal (SC), 469 ITR 46 (SC) (2024)
- Vikram Kapahi (Delhi HC), 170 taxmann.com 592 (Del.) [2025]
- Kusum Healthcare (P) Ltd. (Delhi HC), 173 taxmann.com 58 (Del.) [2025]
- Union of India v. Ashish Agarwal (SC), 444 ITR 1 (SC)
FULL TEXT OF THE ORDER OF ITAT DELHI
1. This appeal arises from order dated 03.12.2025, passed u/s 250 of the Income Tax Act, 1961 (hereafter as “the Act”), by NFAC, Delhi.
1.1 In this case, the assessee company was originally incorporated under the name and style of M/s Maple Magix Developers Pvt. Ltd. and later on assumed the present name. In this case, there was some information available with the Ld. AO that during the course of a search action on one Mr. Himanshu Verma, the assessee was supposed to have taken an alleged accommodation entry of Rs.90,00,000/- from one Pavaki Propbuild Pvt. Limited. Thereafter, reassessment proceedings were initiated under the old tax regime governing re-assessment, by issuing a notice u/s 148 of the Act on 28.06.2021. Thereafter, another notice was issued under the new regime on 07.07.2022 after obtaining approval from PCIT-4, Delhi (placed for perusal at pages 46 to 48 of the Paper Book). The Ld. AO proceeded ahead with the reassessment by making an addition of Rs.90,00,000/- with respect to M/s Pavaki Propbuild and another addition of Rs.54,00,685/- on account of security deposits from one M/s Savita Holdings Pvt. Limited.
1.2 The aggrieved assessee approached the Ld. CIT(A) where he could not succeed and his appeal was dismissed.
1.3 Further aggrieved, the assessee has approached the ITAT with a number of grounds, including several additional grounds of appeal, which challenge the Ld. AO’s action on the ground that the assumption of jurisdiction was illegal.
2. Before us the Ld. AR argued that the notice u/s 148 dated 07.07.2022 was issued with the prior approval of Pr. CIT-IV, Delhi which was violative of Section 151 r.w.s. 148, since approval in this case had been obtained from an authority mentioned in Section 151(i) of the Act instead of from an authority, being Pr. CCIT, mentioned in the Section 151(ii) of the Act. It was argued by the Ld. AR that after the case of Ashish Aggarwal reported in 444 ITR 1 (SC) and the case of Rajeev Bansal reported in 469 ITR 46 (SC) (2024), certain directives were given. For the sake of reference, the directive given in the case of Rajeev Bansal (supra) with regard to the essentiality of an appropriate Officer approving the issuance of notice u/s 148 of the Act deserves to be extracted: –
“76. Grant of sanction by the appropriate authority is a precondition for the Assessing Officer to assume jurisdiction under section 148 to issue a reassessment notice. Section 151 of the new regime does not prescribe a time limit within which a specified authority has to grant sanction. Rather, it links up the time limits with the jurisdiction of the authority to grant sanction. Section 151(ii) of the new regime prescribes a higher level of authority if more than three years have elapsed from the end of the relevant assessment year. Thus, non-compliance by the Assessing Officer with the strict time limits prescribed under section 151 affects their jurisdiction to issue a notice under section 148.”
In this case, admittedly the income alleged to be escaping assessment was Rs.90,00,000/- which was more than Rs.50,00,000/- and hence the approval would need to be obtained from an Officer mentioned in 151(ii) of the Act and not an Officer mentioned in Section 151(i) of the Act. Thus, the approval had to be obtained from Pr. CCIT and not PCIT, as has been done in this case. In this regard, we may also refer to the cases of Vikram Kapahi reported in 170 taxmann.com 592 (Del.) [2025] and the case of Kusum Healthcare (P) Ltd. reported in 173 taxmann.com 58 (Del.) [2025] [in this case, para 5 is squarely on this issue]. Thus, since for AY 2016-17 the proceedings have been initiated beyond three years and involve more than Rs.50,00,000/-, hence, approval had to be obtained from Pr. CCIT. Since this has not been done, hence, the assumption of jurisdiction is illegal in this case. Since the assumption of jurisdiction is itself illegal the consequent assessment order deserves to be quashed.
3. In the result, appeal of the assessee is allowed.
Order pronounced in the open court on 07.08.2026
