Ramdeo Dhanraj Bharadia Vs ITO (ITAT Mumbai)
Summary: The Mumbai ITAT allowed the assessee’s appeal for AY 2016-17 and quashed the reassessment proceedings on the ground that the mandatory approval under section 151 had not been obtained from the competent specified authority. The assessee had originally declared income of Rs.13,98,120/-. Based on transactions aggregating to Rs.6,76,76,150/- with M/s Monarch Trading and M/s Monalisa Trading Co., which were alleged to be accommodation-entry providers, proceedings were reopened and the Assessing Officer ultimately made an addition of Rs.6,76,76,150/- under section 69A read with section 115BBE. The CIT(A) rejected the assessee’s challenge both to the validity of reopening and to the addition on merits.
Before the Tribunal, the assessee contended that the order under section 148A(d) and notice under section 148 for AY 2016-17 were issued after more than three years had elapsed from the end of the relevant assessment year. Since the alleged escaped income exceeded Rs.50 lakh, the assessee argued that approval was required from the authority specified in section 151(ii), namely the Principal Chief Commissioner of Income-tax, whereas approval had been granted by the Principal Commissioner of Income-tax. The assessee relied, inter alia, upon Union of India v. Rajeev Bansal, Ramesh Bachulal Mehta v. ITO, Alag Property Construction Pvt. Ltd. v. ACIT, Amaan Naeem Akhtar Ansari v. ITO and Jindath Babulal Jain v. ITO.
The Tribunal held that the issue was no longer res integra in view of the Supreme Court’s decision in Union of India v. Rajeev Bansal. It observed that the authority under section 151(i) could grant sanction only till 30.06.2021, whereas in the present case the section 148A(d) order and section 148 notice were issued on 31.07.2022 with the approval of PCIT-19, Mumbai. The competent specified authority at that stage was the Principal Chief Commissioner under section 151(ii). In the absence of approval from that authority, the Assessing Officer lacked jurisdiction to pass the section 148A(d) order and issue the section 148 notice. The Tribunal therefore quashed both as bad in law and consequently quashed the reassessment order. The assessee’s appeal was allowed without adjudicating the addition on merits.
Cases Discussed
- Union of India vs. Rajeev Bansal [2024] 167 taxmann.com 70 (SC) – followed by the Tribunal for holding that the specified authority under section 151(i) could grant sanction only till 30.06.2021 and that thereafter the authority specified under section 151(ii) was required.
- Ramesh Bachulal Mehta v. ITO [2025] 177 taxmann.com 606 (Bombay High Court) – relied upon by the assessee on the requirement of approval from the competent specified authority under section 151.
- Alag Property Construction Pvt. Ltd. v. ACIT, W.P. No. 3938 of 2022, dated 08.09.2025 (Bombay High Court) – relied upon by the assessee in support of the challenge to the validity of reassessment approval.
- Amaan Naeem Akhtar Ansari v. ITO [2025] 178 taxmann.com 689 (ITAT Mumbai) – relied upon by the assessee on invalidity of reassessment where approval was obtained from PCIT instead of the authority prescribed under section 151(ii).
- Jindath Babulal Jain v. ITO, CO No. 136/Mum/2026, dated 16.04.2026 (ITAT Mumbai) – relied upon by the assessee on the jurisdictional issue concerning approval for reassessment.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal filed by the assessee emanates from the order passed under section 250 of the Income-tax Act, 1961 (in short, ‘Act’) by the National Faceless Appeal Centre [in short, ‘CIT(A)’], dated 20.11.2025 for the assessment year (AY) 2016-17.
2. The grounds of appeal raised by the assessee are as under:
“1. The Ld. CIT(A) has erred in law and in facts in passing the order u/s. 250 of the Act dated 20.11.2025 confirming the order passed by the Ld. AO u/s 147 r.w.s 144B of the Act which is bad and invalid in the eyes of law.
2. The Ld. CIT(A) has erred in law and in facts in not appreciating that the reopening of assessment u/s 148 of the Act and passing the reassessment order u/s 147 of the Act is invalid and bad in the eyes of law.
3. The Ld. AO has erred in law and in facts not appreciating that the notice u/s 148 of the Act was issued without quoting mandatory Document Identification Number on the body of the notice and hence invalid.
4. The Ld. CIT(A) has erred in law and in facts in not appreciating that the Ld. AO has passed the impugned order u/s. 147 r.ws. 144B of the Act in violation of principles of natural justice.
5. The Ld. CIT(A) has erred in law and in facts in passing the order in violation of principles of natural justice.
6. The Ld. CIT(A) has erred in law and in facts in observing that the appeal filed by the appellant is defective which is invalid and bad in the eyes of law
7. The Ld. CIT(A) has erred in law and in facts in not admitting additional evidences filed by the appellant.
8 The Ld. AO erred in law and in facts in not adjudicating the issue of alleged bogus purchases before him and instead adjudicating issue of cash deposits which was never subject matter of addition by the Ld. AO in the assessment order
9 The Ld. CIT(A) has erred in law and in facts in confirming the action of the Ld. AO in making addition u/s 69A of the Act of Rs. 6,76,76,150/-being the amount of purchases from (i) M/s Monarch Trading Co and (ii) M/s Monalisha Trading Co which is bad and invalid in the eyes of law
10. The Ld. CIT(A) has erred in law and in facts in confirming the action of Ld. AO in charging interest u/s. 234B, 234C and 234D of the Act which is bad and invalid in the eyes of law.
11. The Ld. CIT(A) has erred in law and in facts in confirming the action of Ld. AO in initiating penalty proceedings u/s. 271(1)(c) of the Act which is invalid and bad in the eyes of law.”
3. Facts of the case, in brief, the assessee filed return of income for AY 21016-17 declaring income of Rs.13,98,120/-. As per the bank statement, the assessee had made transactions of Rs.6,76,76,150/- with M/s Monarch Trading, Prop. Pravin Dayallal Shah and M/s Monalisa Trading Co., Prop. Jagdish Naik. These concerns were not engaged in genuine business and provided accommodation entries. Hence, notice u/s 148 was issued on 31.07.2022. The assessee filed return within the time allowed. Thereafter, AO issued notices u/s 143(2) and 142(1) and made addition of Rs.6,76,76,150/- u/s 69A r.w.s. 115BBE.
4. Aggrieved by the order of AO, the assessee filed appeal before the CIT(A). The assessee had raised grounds both on validity of jurisdiction u/s 147 of the Act as well as merits of the case. In the written submission, the assessee had referred to the decision of Hon’ble Supreme Court in case of UOI vs. Ashish Agarwal, 138 taxmann.com 64 (SC), Semens Financial Services Ltd. vs. DCIT 457 ITR 674 and submitted that the approval was incorrectly obtained from the Pr. CIT instead of the Pr. CCIT as per provisions of section 151 of the Act. In this case the “specified authority” was the Pr. CCIT and not the Pr. CIT since, 3 years had elapsed from the end of the relevant AY 2016-17. The CIT(A) has, however, dismissed the ground challenging reopening of the assessment. He has also dismissed the ground on merits of the addition. In the result, the appeal was dismissed.
5. Aggrieved by the order of CIT(A), the assessee filed appeal before the Tribunal. The ld. AR has filed a paper book and submitted that the order u/s 148A(d) and notice u/s 148 of the Act for AY 2016-17 was issued on 31.07.2016 were after 3 years from the end of the relevant AY 2016-17. Further, the amount of income escaping assessment was only Rs.6,76,76,150/-, which was more than Rs.50,00,000/- as required under the relevant provisions of the Act. The approval for issue of notice u/s 148 was given by the Pr. CIT instead of the Pr. CCIT. Hence, the notice was bad in law and invalid. Accordingly, the order passed u/s 147 r.w.s. 144B dated 07.01.2025 is also invalid. The ld. AR submitted that the CIT(A) has not decided the issue though specific ground and submission was made in this regard. The Ld. AR relied on various decisions, namely (i) UOI v. Rajeev Bansal [167 taxmann.com 70], (ii) Ramesh Bachulal Mehta v. ITO [177 taxmann.com 606], (iii) Alag Property Construction Pvt. Ltd. v. ACIT [WP No. 3938 of 2022, dated 08.09.2025], (iv) Amaan Naeem Akhtar Ansari v. ITO [178 taxmann.com 689] and (v) Jindath Babulal Jain v. ITO [CO No. 136/Mum/2026, dated 16.04.2026].
6. On the other hand, the Ld. Sr. DR relied on order of lower authorities.
7. We have heard both parties and perused the materials on record. We have also deliberated on the decisions relied upon by the Ld. AR. The issue that arises for consideration in the present appeal is that in case where order u/s 148A(d) of the Act (new regime) has been passed and notice u/s 148 of the Act (new regime) has been issued for the AY 2016-2017 after 30.06.2021, whether the Pr. CIT u/s 151(i) of the Act or the Pr. CCIT u/s 151(ii) of the Act is the “specified authority” for granting necessary approval. In our view, the above issue is no longer res integra and stands settled by the judgment of the Hon’ble Supreme Court in the case Union of India vs. Rajeev Bansal (supra). In the aforesaid case, the Hon’ble Supreme Court had, while dealing with the issue of approval from “specified authority” in terms of section 151 of the Act, made it clear that the specified authority u/s 151(i) of the Act (new regime) could grant sanction till 30.06.2021 and not thereafter. In the present case, order u/s 148A(d) and notice u/s 148 of the Act (new regime) were issued on 31.07.2022, i.e. after 30.06.2021, with approval of the PCIT-19 Mumbai. As per the judgement of the Hon’ble Supreme Court in case of Rajeev Bansal (supra), the authority specified u/s 151(ii) was the Pr. CCIT and not Pr. CIT. Therefore, we hold that in absence of the approval from the “specified authority” u/s 151(ii) of the Act, the AO lacked jurisdiction to pass order u/s 148A(d) and issue notice u/s 148 of the Act (new regime) for AY 2016-17. Therefore, the impugned order u/s 148A(d) and notice u/s 148 of the Act, both dated 31.07.2022, are quashed and set aside as being bad in law. Resultantly, the order passed u/s 147 r.w.s. 144B dated 29.05.2023 is also quashed. The ground of the assessee is, accordingly, allowed.
8. In the result, the appeal of the assessee is allowed.
Order is pronounced on 15.06.2026.
