PCIT Vs Chokkalingam Thangavel (Madras High Court)
The Revenue filed a tax case appeal under Section 260A of the Income Tax Act, 1961, challenging the ITAT Chennai “A” Bench order dated 25.07.2025. The assessee, an individual and agent of Hinduja Leyland Finance Limited and Shriram Transport Finance Co. Ltd. for distribution of vehicle loans, had not filed a return for AY 2018-19 on the ground that his income was within the threshold limit. Based on information regarding substantial cash deposits and withdrawals in his bank account, the Assessing Officer issued a show cause notice under Section 148A(b) on 21.03.2022 after obtaining prior approval from the Principal Commissioner of Income Tax, Madurai-1. An order under Section 148A(d) was passed on 06.04.2022, followed by a Section 148 notice dated 07.04.2022. The assessee filed a return declaring total income of Rs.4,84,500/-. The AO subsequently completed assessment under Section 147 read with Section 144B and determined total income at Rs.1,44,90,260/-. The CIT(A) rejected the assessee’s appeal, whereas the ITAT allowed it, holding that the Section 148 notice was issued without obtaining approval from the appropriate authority under Section 151(ii).
Before the High Court, the Revenue contended that the period prescribed under Section 148A for responding to the notice and passing the order had not expired when the Section 148A(d) order was passed on 06.04.2022. It also contended that the appeal was maintainable under the exceptions in the relevant CBDT Circular despite the tax effect being below the prescribed limit. The High Court noted that the Section 148 notice related to AY 2018-19 and had been issued beyond three years. The ITAT had relied upon M/s. Core Logistic Company v. ACIT (W.P.No.18168 of 2023 decided on 05.06.2025), where proceedings were quashed because approval under Section 151(ii), rather than Section 151(i), was required for a notice issued beyond three years. The High Court observed that, in the present case also, the Section 148 notice was issued beyond three years without approval from the Principal Chief Commissioner or appropriate authority. It therefore found no reason to interfere with the ITAT’s decision that the notice was invalid. Holding that no substantial question of law arose for consideration, the Madras High Court dismissed the tax case appeal.
