Case Law Details
Somnath Kannure Vs ITO (ITAT Pune)
The decision of the Income Tax Appellate Tribunal, Pune Bench, concerns the validity of reassessment proceedings initiated under Sections 148 and 148A(d) of the Income Tax Act for Assessment Year 2017–18. The assessee, a proprietor engaged in a grocery business for over twenty years, had originally filed the return of income on 07/11/2017. Subsequently, reassessment proceedings were initiated through notice under Section 148 dated 28/07/2022, along with an order under Section 148A(d) of the same date, approved by the Principal Commissioner of Income Tax, Pune.
The primary legal issue before the Tribunal was whether such approval was valid when the notice was issued after the expiry of three years from the end of the relevant assessment year. The Tribunal examined Section 151 of the Act, which prescribes that where more than three years have elapsed, approval must be obtained from a higher authority, namely the Principal Chief Commissioner or Chief Commissioner of Income Tax, as per Section 151(ii). In the present case, approval had been granted by the Principal Commissioner, which falls under Section 151(i), applicable only within three years.
The Tribunal relied on multiple judicial precedents, including decisions of the Bombay High Court, Madras High Court, ITAT Mumbai, and earlier rulings of ITAT Pune. These decisions consistently held that obtaining approval from an incorrect authority renders the reassessment proceedings invalid, as such approval is a jurisdictional precondition. The Tribunal noted that non-compliance with Section 151(ii) directly affects the Assessing Officer’s jurisdiction to issue a notice under Section 148.
Applying these principles, the Tribunal concluded that the approval obtained in the present case was not in accordance with the statutory requirement. Since the notice and order were issued after three years but approved by an authority not competent under Section 151(ii), the entire reassessment proceedings were held to be without jurisdiction. Consequently, the notice under Section 148, the order under Section 148A(d), and all subsequent proceedings, including the assessment order, were declared invalid and quashed.
Apart from the jurisdictional issue, the Tribunal also examined the merits of the addition made by the Assessing Officer. The addition related to cash deposits of ₹10,09,700 in the assessee’s bank account. The assessee explained that the deposits were part of business receipts from his grocery store and were duly reflected in the turnover of ₹93,71,000 reported in the return of income. The Tribunal observed that the Assessing Officer had accepted that the assessee was running a kirana shop and had not disturbed the declared business results.
Considering the nature of the grocery business, particularly in rural areas where cash transactions are common, the Tribunal found the explanation of the assessee to be reasonable. It held that there was no valid basis for rejecting the claim that the deposits formed part of business income. Accordingly, even on merits, the Tribunal directed deletion of the addition.
In conclusion, the Tribunal allowed the appeal of the assessee on both legal and factual grounds. It held that the reassessment proceedings were invalid due to lack of proper approval under Section 151(ii), and further observed that the addition made by the Assessing Officer was not justified on facts. The order was pronounced on 21 April 2026.
FULL TEXT OF THE ORDER OF ITAT PUNE
This is an appeal filed by the assessee against the order of Commissioner of Income Tax (Appeals) passed u/s 250 of the Income Tax Act 1961, for AY 2017-18 dated 27/10/2025, emanating from Assessment Order u/s 147 of the Income Tax Act dated 17/03/2023.
2. We have heard both the parties and perused the records.
In this case Assessee had filed return of income for AY 201718 on 07/11/2017. Assessee is a proprietor of Veerbhadreshwar Kirana Stores. Assessee is carrying on business of general grocery for last twenty years.
3. Ld. AR submitted that notice u/s 148 dated 28/07/2022 and order u/s 148A(d) dated 28/07/2022 have been approved by Principal Commissioner of Income Tax-4 Pune for AY 2017-18, therefore it is bad in law. Ld. AR relied on the case laws filed in the paperbook.
4. Ld.DR relied on the order of the Assessing Officer (AO) and CIT (Appeal). Ld.DR has not brought on record any contrary decision.
5. We have perused the notice u/s 148 and order u/s 148A (d) for AY 2017-18 which was passed on 28/07/2022 with the approval of Principal Commissioner of Income Tax. Thus in this case the Approval was granted by Pr. Commissioner of Income Tax -4, Pune for AY 2017-18 after a lapse of three years from the end of the assessment year. Whereas, as per Section 151(ii) Approval of Pr. Chief Commissioner of Income Tax or Chief Commissioner of Income Tax is required after a lapse of three years from the end of the Assessment Year.
We are discussing various decisions on this issue here onwards.
6. Hon’ble Bombay High Court in the case of Ramesh Bachulal Mehta vs ITO 177 taxmann.com 606 Writ Petition no.271 of 2023, for AY 2016-17, vide order dated 11 August 2025 held as under :
Quote, “ 11. Non-compliance by Respondent No.1 with the provisions contained in Section 148A(d) read with Section 151(ii) vitiates the jurisdiction of the Respondent No. 1 to issue a notice under Section 148 of the Act.
12. We are cle,arly of the view that the present matter stands covered by the decision of Hon’ble Supreme Court in the case of UPI v. Rajeev Bansal (supra). We accordingly hold that the order dated 13.07.2022 passed under Section 148A(d) of the Act and the consequential notice issued under section 148 dated 15.07.2022 are bad in law for being violative of the provisions of Section 151(ii) of the Act. Hence they are required to be quashed and set aside.
13. We, accordingly, set aside the impugned order dated 13.07.2022 passed under section 148A(d), the Notice issued under Section 148 and all other proceedings/orders emanating therefrom and allow the writ Petition in terms of Prayer Clause (a) of the petition.
14. Rule is made absolute in the aforesaid terms and the Writ Petition is also disposed of in terms thereof. No order as to costs” Unquote.
7. Hon’ble Madras High Court in the case of Core Logistic Co vs ACIT [2025] 175 taxmann.com 453 (Madras)[05-06-2025 held as under for AY 2016-17 :
Quote, “8. At this juncture, it would be relevant to extract the provision of Section 151, which is as follows: “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.”
9. A perusal of Section 151(i) would show that, the specified authority for the purpose of issuing notice under Section 148 within a period of three years from the end of the relevant assessment year is, the Principal Commissioner or Principal Director or Commissioner or Director. Further, in terms of provision of Section 149, three year time period is fixed for issuance of 148 notice, in the event of the amount is below 50 lakhs. In the present case, the amount involved is Rs.3,65,09,748/-, which is more than 50 lakhs. 148 notice was issued on 25.07.2022, which is beyond the period of three years. So admittedly, the approval has to be obtained from the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General as defined under Section 151(ii). But, in the present case, the approval was obtained from the Principal Commissioner in terms of Section 151(i) and no approval was obtained before issuance of 148 notice in terms of provision of Section 151(ii), which is mandatory. Therefore, the notice under Section 148 was issued in the present case in violation of provision of Section 151(ii) of the Income Tax Act. In view thereof, the initiation of proceedings itself is without any jurisdiction. Hence, the same is liable to be quashed.
10. Accordingly, the impugned proceedings of the 3rd respondent dated 30.05.2023 is hereby quashed” Unquote.
8. Hon’ble Bombay High Court in the case of Alag Property Construction Pvt Ltd [2025] 179 taxmann.com 578 (Bombay)[08-09-2025] has held as under :
Quote, “9. In the present case, the period of three years from the end of the A.Y. 2017-18 fell for completion on 31st March 2021. As the expiry date fell during the time period of 20th March 2020 and 31st March 2021, under Section 3(1) of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (for short “TOLA”), the authority specified under Section 151(i) of the new regime could have granted sanction only till 30th June 2021.
10. On perusal of the order dated 18.08.2022, passed under Section 148A(d) of the Act we find that the aforesaid order was passed after taking approval from Principal Commissioner of Income Tax (Respondent No.2). Since the aforesaid order was passed, as well as the notice under section 148 was issued, after the expiry of three years from the end of A.Y. 2017-18, as per the substituted provisions of reassessment, the authority specified under Section 151(ii) of the Act (i.e. Principal Chief Commissioner or Chief Commissioner) was required to grant approval. Accordingly, we conclude that in the present case, the approval has been obtained from the authority specified under Section 151(i) of the new regime instead of the authority specified under Section 151(ii) of the new regime.
11. The Hon’ble Supreme Court in the above case has drawn an illustration in para 78 of its order in the context of A.Y. 201718 (which is also the relevant Assessment year in the present Writ Petition) wherein it is categorically held that the authority specified under section 151(i) can accord sanction only upto 30.06.2021. This illustration makes it absolutely clear that when the period of three years from end of relevant Assessment Year expired between 20.03.2020 and 31.03.2021, the extension by virtue of TOLA was upto 30.06.2021 and not beyond. Thus, it can be said that the period of three years from the end of the relevant Assessment Year (in the present case A.Y. 2017-18) expired on 30.06.2021, whereas Respondent No.1, despite passing order under section 148A(d) on 18.08.2022, and issuing notice under section 148 on 23.08.2022 [in respect of Assessment Year 2017-18], has obtained approval of Respondent No.2 who is not the authority as prescribed under section 151(ii).
12. Non-compliance by Respondent No.1 with the provisions contained in Section 148A(d) read with Section 151(ii) vitiates the jurisdiction of Respondent No.1 to issue a notice under Section 148 of the Act.
13. We are clearly of the view that the present matter stands covered by the decision of Hon’ble Supreme Court in the case of Rajeev Bansal (supra) and we are bound by it. Accordingly, we hold that the order dated 18.08.2022 passed under Section 148A(d) of the Act and the consequential notice issued under section 148 dated and 23.08.2022 are bad in law, and hence, are required to be quashed and set aside.
14. We accordingly set aside the impugned order dated 18.08.2022 passed under Section 148A(d) of the Act and the consequential notice issued under section 148 dated 23.08.2022, and all other proceedings/orders emanating therefrom.
15. Rule is made absolute in the aforesaid terms and the Writ Petition is also disposed of in terms thereof. No order as to costs. ” Unquote
9. ITAT Mumbai in the case of Arvindbhai Khatri Sons Designs (P.) Ltd vs ACIT [2026] 183 taxmann.com 118 (Mumbai – Trib.) has held as under :
Quote “ 6. We have heard the rival submissions and carefully considered the materials placed before us. We are of the considered view that once a notice u/s. 148 is sought to be issued after 31.03.2021, the provisions regarding reopening, including those relating to the ‘specified authority’ for approval come into force. Since first notice in this case was issued on 29.06.2021 and the order u/s. 148A(d) was passed on 29.07.2022, the limited issue for consideration is that since more than 3 years have elapsed from the end of the relevant assessment year i.e A.Y. 2017-18, whether the specified authority to grant sanction for issue of notice in this case is Pr. CIT or PCCIT/CCIT.
In this regard, the relevant provisions of section 151 are as under:
“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 where there is no Principal Chief Commissioner or Principal Director
General, Chief Commissioner or Director General, if more than three years have elapsed from the end of the relevant assessment year.]”
6.1 Thus, in view of the legal provisions, clearly the sanctioning authority in this case is the Pr. CCIT/CCIT and not the Pr. CIT as more than three years have elapsed from the end of the assessment year. Thus we hold that the notice u/s. 148 in this case was issued without the approval of the prescribed specified authority and hence deserves to be quashed on this ground alone.
6.2 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, noncompliance by the AO with the strict time limits prescribed under Section 151 affects their jurisdiction to issue a notice under section 148. Thus, the order dated 29.07.2022 passed u/s. 148A(d) and consequential notice u/s. 148 were violative of the provisions of section 151(ii) of the Act as sanction could only be accorded by the higher specified authority for notices issued beyond three years from the end of the relevant assessment year. Accordingly, we quash the notice issued u/s 148 of the Act as invalid and ab initio void. Thus, the ground no.1 of the assessee’s appeal is allowed.
7. Since we have quashed the reassessment notice, other grounds on merit are rendered academic and hence are not being adjudicated upon.
8. In the result, appeal of the assessee is allowed” Unquote
10. ITAT Pune in the case of Manish Bhuta vs ITO ITA 1503/PUN/2025 has held as under :
Quote, “ 6. Now examining the facts of the instant case, in the light of the above judgement I notice that the notices u/s 148 of the Act for carrying out the reassessment proceedings for A.Y. 2017-18 has been issued on 20.07.2022. Also the first notice u/s 148A(b) has been issued on 26.05.2022. Therefore the notices u/s 148 of the Act has been issued after three years from the end of the Assessment Year. Now since the notice has been issued after three years from the end of A.Y. 2017-18, Ld. AO is required to take approval u/s 151 of the Act from Principal Chief Commissioner, Income Tax and other Officers mentioned in section 151(ii). However Ld. AO in the instant case has taken the approval from the authorities mentioned in section 151(i) of the Act i.e. from Principal Commissioner of Income Tax and such approval is valid only if the notice u/s 148 of the Act has been issued in less than three years from the end of relevant A.Y. I therefore find that Ld. AO has not taken a valid approval as provided in section 151 of the Act and in absence of such valid approval the notice issued u/s 148 of the Act is without jurisdiction, bad in law and is in violation in provisions of section 151(ii) of the Act.Therefore the initiation of the reassessment proceedings in the instant case is without any jurisdiction and therefore such proceedings are quashed. The legal issue raised in ground No. 1 in assessee’s appeal is allowed. Dealing with the remaining grounds would be nearly academic in nature as the reassessment proceedings have already been quashed and impugned additions deleted. Grounds of appeal raised by the assessee are allowed as per terms indicated above. Unqote.
11. Similarly ITAT Pune in ITA 1882/PUN/2024 has allowed the Cross Appeal 35/PUN/2024 of the assessee on the issue of approval by PCIT for AY 2016-17.
12. In the case of the Assessee Order u/s 148A(d) and Notice u/s 148 for AY AY 2017-18 were issued on 28/07/2022, i.e. after a lapse of three years from the end of the assessment year, hence as per section 151(ii) of the Income Tax Act approval of Pr.Chief Commissioner of Income Tax or Chief Commissioner of Income Tax or equivalent was required, but in the case of the Assessee, it has been approved by Pr.Commissioner of Income Tax -Pune. Hence, the Notice u/s 148 and Order u/s 148A(d) has not been approved by the competent authority mentioned in the section 151(ii) of Income tax Act 1961, which goes to the root of the approval.
13. Therefore, respectfully following Hon’ble Jurisdictional High Court (supra), Hon’ble Madras High Court, ITAT Mumbai, ITAT Pune, we hold that the impugned Notice u/s 148 for AY 2017-18 and Order u/s 148A(d) are bad in law and accordingly quashed. Therefore, the consequential assessment order for AY 2017-18 is bad in law.
14. In this case the Assessee had filed reply dated 08/06/2022 in response to notice u/s 148A (b) of the Act. Assessee submitted that the alleged cash deposits of Rs.10,09,700/- deposited in the bank account pertains to the business of the assessee which is a Kirana Store. Assessee also informed that the turnover during the year was Rs.93,71,000/-. Assessee submitted during the Assessment Proceedings and before CIT(A) that the cash deposits pertains to his Kirana Business and it is reflected in the total turnover shown in the return of Income. The AO has not accepted the submission of the assessee. In this case the AO has accepted that Assessee is running Kirana Shop. We accept the contention of the ld.AR that in the line of Grocery Sale, there are cash receipts in Rural areas where assessee is running Kirana Shop. The AO has not disturbed the result shown in the Return of Income. In these facts and circumstances of the case, we are of the opinion that there was no valid reason before the AO to reject the claim of the assessee that cash of Rs.10,09,700/- belongs to the business of the assessee. Hence even on merit, we direct the AO to delete the impugned addition.
15. In the Result, the Appeal filed by the Assessee is allowed.
Order pronounced in the open Court on 21st April, 2026.
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