Swift Developers Vs ITO (ITAT Mumbai)
Mumbai ITAT Quashes Reassessment for Wrong Approval U/s 151(ii); Penalties U/s 270A & 271AAC Also Deleted
The ITAT Mumbai allowed the assessee’s appeals by admitting an additional legal ground challenging the validity of the reassessment for Assessment Year 2017-18. The Tribunal found that the notice under Section 148 was issued beyond three years from the end of the relevant assessment year and that the order under Section 148A(d) and the notice under Section 148 had been approved by the Principal Commissioner of Income Tax instead of the Principal Chief Commissioner of Income Tax as required under Section 151(ii). Relying on the Bombay High Court decision in Alag Property Construction (P.) Ltd. v. ACIT and the Supreme Court decision in Union of India v. Rajeev Bansal, the Tribunal held that obtaining approval from the prescribed authority is a jurisdictional requirement and that approval by the wrong authority rendered the notice under Section 148 and the order under Section 148A(d) invalid. Consequently, the reassessment framed under Sections 147 read with 144 was quashed as void ab initio. As the reassessment itself was quashed, the penalties levied under Sections 270A and 271AAC(1) were also deleted. All three appeals filed by the assessee were allowed.
The Mumbai ITAT quashed the reassessment proceedings for AY 2017-18 after holding that the mandatory approval for issuing notice u/s 148 and passing the order u/s 148A(d) had been obtained from the Principal Commissioner of Income Tax (PCIT) instead of the Principal Chief Commissioner of Income Tax (PCCIT), as required under section 151(ii) where more than three years had elapsed from the end of the relevant assessment year. The Tribunal admitted the additional legal ground challenging the validity of the reassessment, relying on the Supreme Court’s decision in NTPC Ltd. and held that no fresh investigation of facts was required.
Following the Bombay High Court’s decision in Alag Property Construction (P.) Ltd. and the Supreme Court’s ruling in Union of India v. Rajeev Bansal, the Tribunal observed that sanction by the prescribed authority is a jurisdictional pre-condition for reopening an assessment. Since the reassessment proceedings for AY 2017-18 were initiated after the prescribed three-year period, approval from the PCCIT was mandatory. Approval granted by the PCIT was held to be contrary to section 151(ii), rendering the notice u/s 148 and the order u/s 148A(d) invalid. Consequently, the reassessment framed u/s 147 r.w.s. 144 was declared void ab initio and quashed.
As the reassessment itself was set aside, the Tribunal further held that the penalties levied u/s 270A and 271AAC(1) could not survive and accordingly deleted both penalties. The assessee’s appeals against the assessment as well as the penalty orders were allowed.
Recent Cases Discussed:
- Alag Property Construction (P.) Ltd. v. ACIT, (2025) 179 taxmann.com 578 (Bom.)
- Narendra Khimji Savla v. ITO, ITA No. 8720/Mum/2025 dated 09.03.2026
- ITO v. Himanshu Sarda, ITA No. 5862/Mum/2025 and CO No. 410/Mum/2025 dated 05.02.2026
- Union of India v. Rajeev Bansal, [2024] 167 taxmann.com 70 (SC) / [2024] 301 Taxman 238 (SC) / [2024] 469 ITR 46 (SC)
- Union of India v. Ashish Agarwal, [2022] 138 taxmann.com 64 (SC) / [2022] 286 Taxman 183 (SC) / [2022] 444 ITR 1 (SC); (2023) 1 SCC 617
- High Court Bar Association, Allahabad v. State of Uttar Pradesh, (2024) 6 SC 267
FULL TEXT OF THE ORDER OF ITAT MUMBAI
