Heena Irfan Bepari Vs ITO (ITAT, Pune Bench)
Wrong Sanctioning Authority, Reassessment Falls: ITAT Quashes ₹95.31 Lakh Addition at the Jurisdictional Threshold
Summary:
Relevant Facts
The principal appeal concerned Heena Irfan Bepari, an individual engaged in purchasing non-breeding or non-milking buffaloes directly from weekly animal markets in different villages. She filed her return for AY 2017-18 on 31 October 2017, declaring total income of ₹7,73,490.
During reassessment, the AO noticed that the assessee’s profit & loss account reflected turnover of ₹11,02,17,911, while the returned income was only ₹7.73 lakh. Various notices were issued seeking an explanation regarding the income disclosed in relation to the substantial turnover.
According to the AO, the assessee failed to furnish an adequate explanation supported by valid documentary evidence. He therefore estimated business income at 8% of turnover & added the difference between the estimated profit & the income already disclosed. This resulted in an addition of ₹95,30,871.
The reassessment was completed u/s 147 read with section 144B on 23 May 2023, determining total income at ₹1,03,04,361. The CIT(A)/NFAC upheld the addition.
The assessee contended on merits that she maintained proper books of account, had them audited u/s 44AB & furnished the relevant details during assessment. She also pointed out that assessments for AYs 2018-19 & 2019-20, involving substantially similar business circumstances, had been completed by the faceless authority by accepting the book results without making comparable additions.
The second appeal, filed by Haidar Mubarak Bepari, involved the same assessment year, similar facts & an identical challenge to the validity of the reassessment proceedings. Both appeals were therefore heard together.
Issue Involved
The decisive issue was whether a notice u/s 148 issued after expiry of three years from the end of AY 2017-18 was valid when the approval had been granted by the Principal CIT, instead of the authority specifically prescribed u/s 151(1)(ii).
A preliminary procedural issue was whether the assessee could raise this jurisdictional objection for the first time before the Tribunal through an additional ground, particularly when all material facts required to decide the question were already available on record.
Assessees’ Submissions
The assessees sought admission of an additional legal ground challenging the competence of the sanctioning authority. They submitted that the order u/s 148A(d) was dated 21 July 2022, followed by notice u/s 148 dated 22 July 2022. Both actions occurred after more than three years from the end of AY 2017-18.
Therefore, approval was required from the Principal Chief CIT or Chief CIT, as contemplated u/s 151(1)(ii). Instead, sanction had admittedly been obtained from the Principal CIT. Since approval by the proper specified authority was a jurisdictional precondition, sanction from a lower authority could not confer jurisdiction upon the AO.
For admission of the additional ground, reliance was placed upon the Supreme Court decisions in National Thermal Power Co. Ltd. v. CIT & Jute Corporation of India Ltd. v. CIT. These decisions recognise that a pure question of law, arising from facts already on record & affecting correct tax liability or jurisdiction, may be raised at the appellate stage.
The assessees also relied upon Coordinate Bench decisions involving their family members, particularly Maimunbi Husen Bepari v. ITO, where reassessment for the same year had been quashed on an identical sanction defect.
Revenue’s Contentions
The Revenue strongly objected to admission of the additional ground. It supported the assessment orders & the CIT(A)’s findings, contending that the reassessment proceedings should not be invalidated at the appellate stage on a ground not properly pursued earlier.
On merits, the Revenue defended the approval granted by the Principal CIT & sought confirmation of the additions arising from the estimation of profit.
Admission of the Additional Ground
The Tribunal held that the additional ground was purely legal, went to the root of jurisdiction & could be decided entirely from material already available on record. No investigation of fresh facts was required.
Following NTPC Ltd. & Jute Corporation of India Ltd., the Tribunal admitted the ground. It recognised that appellate proceedings are intended to determine the correct legal liability, making it inappropriate to refuse consideration of a fundamental jurisdictional defect merely because it was raised later.
Tribunal’s Findings & Legal Reasoning
The Tribunal noted that the Coordinate Bench in Maimunbi Husen Bepari v. ITO had examined an identical notice for AY 2017-18. That decision, following Mahesh Gokuldas Fulwani, held that once notice u/s 148 was issued after three years, approval from the higher authority specified u/s 151 was compulsory.
In the present cases, it was undisputed that the AO obtained approval from the Principal CIT, whereas approval from the Principal Chief CIT or Chief CIT was required. The sanction was therefore not in accordance with law.
The Tribunal treated proper statutory approval as a jurisdictional safeguard, not an administrative formality. An authority not designated by the statute could not validly grant sanction, irrespective of whether the case otherwise deserved reopening. Improper approval consequently vitiated the notice u/s 148 & every proceeding founded upon it.
The Tribunal quashed the reassessment notices & consequential assessment orders as bad in law & void ab initio. Since both assessees succeeded on the jurisdictional ground, the Tribunal did not adjudicate limitation, absence of DIN or merits of the estimated additions. Both appeals were allowed.
Practical Implications
The ruling highlights that reassessment files must be checked for the date of notice, elapsed period & identity of the sanctioning authority. Participation by the assessee or strength of the alleged escapement cannot cure approval granted by an incompetent authority. As the defect is jurisdictional, it may also be raised as an additional legal ground before the Tribunal where the necessary facts are already on record.
Cases Discussed
- National Thermal Power Co. Ltd. v. CIT, [1998] 229 ITR 383 (SC)
- Jute Corporation of India Ltd. v. CIT, [1991] 187 ITR 688 (SC)
- Maimunbi Husen Bepari v. ITO, ITA No.2986/PUN/2025, order dated 27.03.2026, AY 2017-18
- Mahesh Gokuldas Fulwani v. ITO, ITA No.873/PUN/2025, AY 2017-18
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT, PUNE BENCH
The above two appeals filed by the respective assessee(s) are directed against the separate orders dated 24.03.2025 and 21.11.2025 respectively of the Ld. Commissioner of Income Tax-Appeals, NFAC (“CIT(A) / NFAC”), Delhi relating to assessment year 2017-18. For the sake of convenience, both these appeals were heard together and are being disposed of by this common order.
2. Briefly stated, the facts of the case are that the assessee is an individual and engaged in the business of purchasing non breeding / non milking buffalos from directly weekly animal market from various villages. She filed her return of income for the assessment year 2017-18 on 31.10.2017 declaring total income of Rs.7,73,490/-. During the course of assessment proceedings, the Assessing Officer noted that the income offered by the assessee in her return of income is only Rs.7,73,490/- whereas the Profit and Loss Account shows the turnover of Rs.11,02,17,911/-. The Assessing Officer issued various notices to the assessee to explain the same. The Assessing Officer, in absence of any proper explanation and valid documentary evidences submitted by the assessee, made addition of Rs.95,30,871/-. He accordingly determined the total income of the assessee at Rs.1,03,04,361/- vide his order passed u/s 147 r.w.s. 144B of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) on 23.05.2023.
3. On appeal, the Ld. CIT(A) / NFAC upheld the addition made by the Assessing Officer.
4. Aggrieved with such order of the Ld. CIT(A) / NFAC the assessee is in appeal before the Tribunal by raising the following grounds:
1. On the fact and circumstances of the case and in law, the assessment order passed by the AO being barred by limitation, the same is invalid and hence needs to be quashed.
2. On the facts and circumstances of the case and in law, the notice under section 148 being without DIN, the same is invalid and hence the consequent assessment order passed by the AO is also invalid.
3. On the facts and circumstances of the case and in law, the order u/s 148A dated 21.07.2022 and consequent notice u/s 148 dated 22.07.2022 being issued with the approval of Pr. CIT, as against the required approval of Pr.CCIT, [the notice having been issued after the end of three years from the end of the assessment year), such notice u/s 148 and consequence assessment order is bad in law and hence needs to be quashed.
4. On the fact, circumstances of the case and in law, the CIT(A) erred in confirming the addition made by the AO, representing the difference between AO’s estimation of income at 8% of the turnover and the income declared by the appellant in her return of income, in spite of the fact that:
a. The appellant has maintained proper books of account, got them audited u/s 44AB and had submitted all the details during the assessment proceeding, it was incorrect on the part of the AO to estimate income at 8%.
b. The assessment of the appellant for AY 2018-19 and A Y 2019-20 are completed, on the same set of facts, accepting the book results without any additions thereto by the same NaFAC.
The appellant craves leave to add to, amend, alter, modify, delete or add a new ground of appeal before or at the time of hearing.
5. The assessee has also raised additional ground which reads as under:
1. On the facts and circumstances of the case and in law, the order under section 148A dated 21.07.2022 and the consequent notice under section 148 dated 22.07.2022, having been issued with the approval of the Principal Commissioner of Income Tax, as against the required approval of the Principal Chief Commissioner of Income Tax the notice having been issued after the end of three years from the end of the relevant assessment year the said notice under section 148 and the consequent assessment order are bad in law, without jurisdiction, and hence need to be quashed.
The appellant prays that the reassessment proceedings be held to be invalid and the notice under section 148 and the consequent assessment order be quashed accordingly.
6. The Ld. Counsel for the assessee referring to the above additional ground submitted that the additional ground raised is purely legal in nature which goes to the root of the matter and all the necessary facts are already available on record. Referring to the decision of Hon’ble Supreme Court in the case of the National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383 (SC) and in the case of Jute Corporation of India Ltd vs Commissioner Of Income Tax And Anr (1991) 187 ITR 688 (SC) submitted that the additional ground raised by the assessee should be admitted.
7. The Ld. DR, on the other hand, strongly objected to the admission of the additional ground raised by the assessee.
8. After hearing both the sides and considering the fact that the additional ground raised by the assessee is purely legal in nature and all material facts necessary for adjudication of the issue are already available on record and no new facts are required to be investigated, therefore, in view of the decision of Hon’ble Supreme Court in the case of the National Thermal Power Co. Ltd. v. CIT (supra) and in the case of Jute Corporation Of India Ltd vs Commissioner Of Income Tax And Anr (supra), the additional ground raised by the assessee is admitted for adjudication.
9. The Ld. Counsel for the assessee drew the attention of the Bench to the additional ground raised by the assessee and submitted that the approval obtained by the Assessing Officer for reopening of the assessment is not valid as he obtained the approval from the Principal Commissioner of Income Tax instead of the Principal Chief Commissioner of Income Tax or the Chief Commissioner of Income Tax as the notice for reopening of the assessment u/s 148 was issued after the end of three years from the end of the relevant assessment year. He submitted that the Coordinate Bench of the Tribunal in the case of family members of the assessee on identical issue has quashed the re-assessment proceedings. He accordingly submitted that the assessment order passed being not in accordance with law, the same should be quashed.
10. The Ld. DR on the other hand supported the orders of the Assessing Officer and the Ld. CIT(A) / NFAC.
11. We have heard the rival arguments made by both the sides and perused the orders of the Assessing Officer and the Ld. CIT(A) / NFAC and the paper book filed by the Ld. AR on behalf of the assessee. We have also considered the various decisions cited before us. We find the Assessing Officer in the instant case completed the assessment u/s 147 r.w.s. 144B of the Act by making addition of Rs.95,30,871/-. The Ld. CIT(A) / NFAC upheld the addition made by the Assessing Officer.
12. We find the Coordinate Bench of the Tribunal in the case of Maimunbi Husen Bepari vs. ITO vide ITA No.2986/PUN/2025 order dated 27.03.2026 for assessment year 2017-18 has quashed the assessment proceedings initiated u/s 148 on the ground that approval for reopening of the assessment has been obtained from the Principal Commissioner of Income Tax instead of the Principal Chief Commissioner of Income Tax or the Chief Commissioner of Income Tax as required u/s 151(1)(ii) of the Act. The relevant observations of the Tribunal read as under:
“Findings and Analysis :
In this case Assessee had filed return of Income on 31/10/2027 declaring total income at Rs.1035950/- for AY 2017-18. It is mentioned in the Assessment order that Assessee is in the business of supplying animals to slaughter house. There was a search in the case of Allan Group. Assessee is one of the suppliers of Allan Group as mentioned in the Assessment Order.Based on the information the Assessing Officer (AO) issued Notice u/s 148A(b) of the Act .Then the AO passed an order u/s 148A(d) on 20/07/2022 and issued Notice u/s 148 dated 20/07/2022 for AY 2017-18. (copy of the Notice is at 7-8 of the paper book filed by AR).
At the outset ld.Authorised Representative of the Assessee invited our attention to the Notice u/s 148 and Order u/s 148A(d) which are at Page 7-17 of the paper book. Ld.AR submitted that the Order u/s 148A(d) and the Notice u/s 148 has been approved by the Pr.Commissioner of Income Tax-1 Pune. Ld.AR submitted that as per Section 151 after a lapse of three years from the end of the Assessment year, approval of the Pr.Chief Commissioner of Income Tax or equivalent Officer. Ld.AR relied on the decision of Hon’ble Bombay High Court and ITAT Pune filed in the paper book.
Ld.DR relied on the order of the AO and CIT(A).
In this case we have perused the Notice u/s 148 for AY 2017-18 dated 20/07/2022 which is at page 7-8 of the paper book. The said Notice has been approved by Pr.CIT-1 Pune on 04/07/2022 vide reference no. PN/Pr.CIT-1/148/2022-23/1130dated 04/07/2022. The Notice u/s 148 issued by ITO is scanned and reproduced here under:
ITAT Pune in the case of Mahesh Gokuldas Fulwani ITA 873/PUN/2025 AY 2017-18 vide order dated 30/072025 has held as under:
Quote, “ 11. Since admittedly in the instant case the approval has been granted by the PCIT instead of Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General, therefore, such approval being not in accordance with law is not a valid approval.
Therefore, such improper approval obtained u/s 151 of the Act vitiates the re-assessment proceedings. We, therefore, hold that the re-assessment proceedings being not in accordance with law, has to be quashed. We accordingly quash the re-assessment proceedings. Ground No.1 raised by the assessee challenging the re-assessment proceedings is accordingly allowed. ” Unquote.
In the case of the Assessee Notice u/s 148 has been issued for AY 2017-18 after a lapse of Three Years from the end of the assessment year hence as per Section 151(1)(ii) of the Income Tax Act approval of Pr.Chief Commissioner was required but in the case of the Assessee the Notice u/s 148 has been approved by Pr.Commissioner of Income Tax, hence it is not a valid approval as per Section 151 of the Act. Respectfully following the decision of ITAT Pune in Mahesh Fulwani(supra) we hold that the Notice u/s 148 is bad in law and accordingly the consequential Assessment Order is void ab initio.
In the result Ground Number 1 regarding Approval ,raised by the Assessee is allowed.”
13. Admittedly, the Assessing Officer in the instant case obtained the approval for reopening of the assessment from the Principal Commissioner of Income Tax instead of the Principal Chief Commissioner of Income Tax or the Chief Commissioner of Income Tax as required u/s 151(1)(ii) of the Act. Respectfully following the decision of the Coordinate Bench of the Tribunal cited (supra), we quash the notice issued u/s 148 and the consequent assessment order passed by the Assessing Officer as bad in law. Since the assessee succeeds on the legal issue, the other grounds are not being adjudicated. The additional ground raised by the assessee is accordingly allowed.
ITA No.2988/PUN/2025
14. Both the parties have unanimously consented and submitted that the facts of the case are same as narrated in the above ITA No.1186/PUN/2025. In this case also, the assessee has challenged the validity of re-assessment proceedings on the same ground. We have already decided the issue and allowed the additional ground raised by the assessee. Following similar reasonings, we allow the appeal filed by the assessee. The additional ground raised by the assessee is accordingly allowed.
15. In the result, both appeals of the respective assesse(s) are allowed.
Order pronounced in the open Court on 28th August, 2026.
