Mumbai ITAT Quashes Reassessment for Want of Approval from Competent Authority under Section 151

ITO Vs Karan Raju Jumani (ITAT Mumbai)

Mumbai ITAT Quashes Reassessment for Want of Approval from Competent Authority under Section 151

The Mumbai ITAT quashed the reassessment proceedings, holding that prior approval from the competent authority prescribed under section 151 is a jurisdictional pre-condition for issuing a notice under section 148. In the present case, the reassessment notice issued on 28.07.2022 (after expiry of three years from the end of the relevant assessment year) was approved by the Principal Commissioner of Income Tax (PCIT), whereas, under section 151(ii), the approval ought to have been obtained from the Principal Chief Commissioner/Chief Commissioner or equivalent specified authority.

Relying on the Supreme Court’s decision in Union of India v. Rajeev Bansal (469 ITR 46), the Tribunal held that obtaining approval from the correct specified authority is not a procedural formality but a condition precedent for assumption of jurisdiction. Since the Revenue failed to establish that approval had been obtained from the competent authority, the notice issued under section 148, the order passed under section 148A(d), and the consequential reassessment proceedings were held to be void ab initio and were quashed. As a result, the Revenue’s appeal on merits became infructuous and was dismissed.

Cases Discussed

• Union of India vs. Rajeev Bansal (SC), (2024) 469 ITR 46 (SC)
• High Court Bar Association v. State of UP (SC), [2024] 160 taxmann.com 32/299 Taxman 21 (SC)/[2024] 6 SCC 267
• Union of India vs. Ashish Agarwal (SC), [(2022) 444 ITR 1 (SC)]
• Sri Krishna (P.) Ltd. v. ITO (SC), [1996] 87 Taxman 315/221 ITR 538 (SC)/[1996] 9 SCC 534

FULL TEXT OF THE ORDER OF ITAT MUMBAI

The present appeal has been filed by the Revenue and the Cross Objection has been filed by the assessee against the order dated 11/12/2025 passed by the National Faceless Appeal Centre (NFAC), Delhi [hereinafter “Ld.CIT(A)”] for A.Y. 2016-17.

2. Though the Revenue has raised as many as nine grounds of appeal, the Cross Objection filed by the assessee raises a preliminary legal issue challenging the validity of the assumption of jurisdiction by the Ld. AO for initiating the reassessment proceedings. The assessee has contended that the mandatory sanction for issuance of notice u/s 148 of the Act was obtained from the PCIT-20, Mumbai instead of the competent authority, e., the PCCIT, Mumbai, thereby rendering the reassessment proceedings void ab initio. Since the issue raised goes to the very root of the jurisdiction assumed by the Ld. AO, we deem it appropriate to adjudicate the Cross Objection first.

3. The Ld. AR submitted that the grounds raised in the Cross Objection challenge the validity of the notice issued u/s 148 of the Act on the ground that the same was issued without obtaining the requisite sanction from the competent  It was contended that the notice issued u/s 148 of the Act is without jurisdiction since the approval was accorded by the Pr. Commissioner of Income Tax-20, Mumbai, whereas the competent authority, in the facts of the present case, was the Pr. Chief Commissioner of Income Tax.

3.1 The Ld.AR submitted that the assessee had originally filed its return of income for A.Y. 2016-7 on 29/10/2016. The assessment was reopened by issuance of notice u/s 148 dated 16/04/2021 under the erstwhile provisions of the Act. Pursuant to the judgment of the Hon’ble Supreme Court in the case of Union of India vs. Ashish Agarwal reported in [(2022) 444 ITR 1 (SC)], the said notice came to be treated as a notice issued u/s 148A(b), whereafter an order u/s 148A(d) was passed and a fresh notice u/s 148 dated 28/07/2022 was issued.

3.2 The Ld. AR invited our attention to the order passed u/s 148A(d) and submitted that the said order itself records that the prior approval had been obtained from the Pr. Commissioner of Income Tax-20, Mumbai. It was submitted that, in view of the provisions of section 151 of the Act, the approval ought to have been obtained from the  Chief Commissioner of Income Tax and not from the Pr. Commissioner of Income Tax. According to the Ld. AR, the assumption of jurisdiction by the Ld. AO being founded on an approval granted by an authority not competent under the Act, the notice issued u/s 148 and the consequential reassessment proceedings are liable to be quashed as being void ab initio.

3.4. The Ld.DR, on the other hand, vehemently argued supporting the orders of lower authorities.

We have perused rival submissions in light of the record placed before us.

4. The sole issue arising for our consideration in the present Cross Objection is whether the notice issued u/s 148 of the Act pursuant to the order passed u/s 148A(d) is valid in law when the approval contemplated u/s 151 of the Act was accorded by the Pr. Commissioner of Income Tax-20, Mumbai instead of the specified authority prescribed under the

4.1. It is an undisputed fact borne out from the order passed u/s 148A(d) that the prior approval for passing the said order and issuance of notice u/s 148 of the Act was obtained from the Pr. Commissioner of Income Tax-20, Mumbai. It is also not in dispute that the notice u/s 148 under the new regime was issued on 28/07/2022,e., after expiry of three years from the end of the relevant assessment year 2016-17. Further, the information forming the basis of reopening alleged escapement of income exceeding Rs.50,00,000/-.

4.2. The Hon’ble Supreme Court in Union of India vs. Rajeev Bansal reported in (2024) 469 ITR 46 (SC) has elaborately explained the scheme of sections 148, 148A, 149 and 151 introduced by the Finance Act, 2021. The Hon’ble Apex Court has categorically held that grant of sanction by the specified authority is a condition precedent for assumption of jurisdiction by the Assessing Officer to issue notice u/s 148 of the Act and that the authority competent to grant such approval is dependent upon the period of limitation prescribed under the  It has further been held that where more than three years have elapsed from the end of the relevant assessment year and the alleged escaped income exceeds Rs.50,00,000/-, the prior approval is required to be obtained from the Principal Chief Commissioner or the Principal Director General or the Chief Commissioner or the Director General, as specified u/s 151(ii) of the Act. The relevant findings of the Hon’ble Supreme Court are extracted as under:-

“iii. Sanction of the specified authority

73. Section151 imposes a check upon the power of the Revenue to reopen assessments. The provision imposes a responsibility on the Revenue to ensure that it obtains the sanction of the specified authority before issuing a notice under section 148. The purpose behind this procedural check is to save the assessees from harassment resulting from the mechanical reopening of assessments Sri krishna (P.) Ltd. v. ITO [1996] 87 Taxman 315/221 ITR 538 (SC)/[1996] 9 SCC 534. A table representing the prescription under the old and new regime is set out below:

74. The above table indicates that the specified authority is directly co-related to the time when the notice is issued. This plays out as follows under the old regime:

(i) If income escaping assessment was less than Rupees one lakh:

(a) a reassessment notice could be issued under section 148 within four years after obtaining the approval of the Joint Commissioner; and

(b) non notice could be issued after the expiry of four years; and

(ii) If income escaping was more than Rupees one lakh:

(a) a reassessment notice could be issued within four years after obtaining the approval of the Joint Commissioner; and

(b) after four years but within six years after obtaining the approval of the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner.

75. After 1 April 2021, the new regime has specified different authorities for granting sanctions under section  The new regime is beneficial to the assessee because it specifies a higher level of authority for the grant of sanctions in comparison to the old regime. Therefore, in terms of Ashish Agarwal (supra), after 1 April 2021, the prior approval must be obtained from the appropriate authorities specified under section 151 of the new regime. The effect of Section 151 of the new regime is thus: 

(i) If income escaping assessment is less than Rupees fifty lakhs:

(a) a reassessment notice could be issued within three years after obtaining the prior approval of the Principal Commissioner, or Principal Director or Commissioner or Director; and 

(b) non notice could be issued after the expiry of three years; and

(ii) If income escaping assessment is more than Rupees fifty lakhs:

(a) a reassessment notice could be issued within three years after obtaining the prior approval of the Principal Commissioner, or Principal Director or Commissioner or Director; and

(b) after three years after obtaining the prior approval of the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General.

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.

77. Parliament enacted TOLA to ensure that the interests of the Revenue are not defeated because the assessing officer could not comply with the pre conditions due to the difficulties that arose during the COVID-19 pandemic. Section 3(1) of TOLA relaxes the time limit for compliance with actions that fall for completion from 20th March 2020 to 31st March  TOLA will accordingly extend the time limit for the grant of sanction by the authority specified under section 151. The test to determine whether TOLA will apply to Section 151 of the new regime is this: if the time limit of three years from the end of an assessment year falls between 20th March 2020 and 31st March 2021, then the specified authority under section 151(i) has an extended time till 30th June 2021 to grant approval. In the case of Section 151 of the old regime, the test is: if the time limit of four years from the end of an assessment year falls between 20th March 2020 and 31st March 2021, then the specified authority under section 151(2) has time till 31st March 2021 to grant approval.

The time limit for Section 151 of the old regime expires on 31st March 2021 because the new regime comes into effect on 1st April 2021.

78. For example, the three year time limit for assessment year 2017-2018 falls for completion on 31st March 2021. It falls during the time period of 20th March 2020 and 31st March 2021, contemplated under section 3(1) of  Resultantly, the authority specified under section 151(i) of the new regime can grant sanction till 30th June 2021.

79. Under Finance Act 2021, the assessing officer was required to obtain prior approval or sanction of the specified authorities at four stages:

a. Section 148A(a) – to conduct any enquiry, if required, with respect to the information which suggests that the income chargeable to tax has escaped assessment;

b. Section 148A(b) – to provide an opportunity of hearing to the assessee by serving upon them a show cause notice as to why a notice under section 148 should not be issued based on the information that suggests that income chargeable to tax has escaped assessment. It must be noted that this requirement has been deleted by the Finance Act 2022;

c. Section 148A(d) – to pass an order deciding whether or not it is a fit case for issuing a notice under section 148; and

d. Section 148 – to issue a reassessment 

80. In Ashish Agarwal (supra), this Court directed that Section 148 notices which were challenged before various High Courts shall be deemed to have been issued under section 148-A of the Income-tax Act as substituted by the Finance Act, 2021 and construed or treated to be show-cause notices in terms of Section 148-A(b). Further, this Court dispensed with the requirement of conducting any enquiry with the prior approval of the specified authority under section 148A(a). Under Section 148A(b), an assessing officer was required to obtain prior approval from the specified authority before issuing a show cause  When this Court deemed the Section 148 notices under the old regime as Section 148A(b) notices under the new regime, it impliedly waived the requirement of obtaining prior approval from the specified authorities under section 151 for Section 148A(b). It is well established that this Court while exercising its jurisdiction under Article 142, is not bound by the procedural requirements of law High Court Bar Association v. State of UP [2024] 160 taxmann.com 32/299 Taxman 21 (SC)/[2024] 6 SCC 267.

81. This Court in Ashish Agarwal (supra) directed the assessing officers to “pass orders in terms of Section 148-A(d) in respect of each of the assesses concerned.” Further, it directed the assessing officers to issue a notice under Section 148 of the new regime “after following the procedure as required under section 148-A.” Although this Court waived off the requirement of obtaining prior approval under section 148A(a) and Section 148A(b), it did not waive the requirement for Section 148A(d) and Section 148. Therefore, the assessing officer was required to obtain prior approval of the specified authority according to Section 151 of the new regime before passing an order under section 148A(d) or issuing a notice under section 148. These notices ought to have been issued following the time limits specified under section 151 of the new regime read with TOLA, where applicable.”

4.3. In the present case, admittedly, the approval was obtained from the Pr. Commissioner of Income Tax-20, Mumbai. The Revenue has not brought on record any material to establish that the approval mandated u/s 151(ii) of the Act had been obtained from the competent specified authority before passing the order u/s 148A(d) or before issuance of notice u/s 148 of the Act.

4.4. Respectfully following the ratio laid down by the Hon’ble Supreme Court in Union of India vs. Rajeev Bansal (supra), we hold that obtaining prior approval from the specified authority prescribed u/s 151 of the Act is a jurisdictional pre-condition for assumption of jurisdiction under section 148 of the Act. Non-compliance with the mandatory requirement of section 151 strikes at the very root of the jurisdiction assumed by the Assessing Officer and renders the notice issued u/s 148 of the Act invalid in law.

4.5. We, therefore, hold that the notice issued u/s 148 of the Act dated28/07/2022, having been issued without obtaining approval from the competent authority prescribed u/s 151(ii) of the Act, is liable to be quashed. Consequently, the order passed u/s 148A(d) as well as the reassessment proceedings initiated pursuant thereto are held to be invalid and are accordingly quashed.

Accordingly, the Cross Objection filed by the assessee is allowed.

5. Since we have quashed the reassessment proceedings on the preliminary jurisdictional issue raised in the Cross Objection, the grounds raised by the Revenue on the merits of the additions do not survive for adjudication and are rendered infructuous.

In the result, appeal filed by revenue stands dismissed and cross-objection filed by assessee is allowed.

Order pronounced in the open court on 31/07/2026.