ITO Vs Dantaleshwar Gramin Bigarsheti Sahkari Patsanstha (ITAT Pune)
Pune ITAT Quashes AY 2016-17 Reassessment: Beyond 3 Years, Section 151 Approval Must Be From PCCIT/CCIT – PCIT’s Sanction Is Jurisdictionally Invalid
The Pune ITAT dismissed the Revenue’s appeals relating to both quantum assessment and penalty u/s 271(1)(c), holding that the reassessment itself was void ab initio because the Section 148 notice was issued with approval of an incompetent authority. The appeals arose from reassessment under Sections 147/144/144B and consequential penalty proceedings.
The CIT(A) had already deleted an addition of ₹1.90 crore, which represented the entire cash deposits in the bank account of the assessee credit co-operative society treated by the AO as unexplained money under Section 69A. The consequential penalty had also been deleted. Since the assessee had succeeded before CIT(A), it invoked Rule 27 of the ITAT Rules before the Tribunal to support the favourable order on the additional jurisdictional ground that the reassessment itself was invalid.
The crucial fact was that the Section 148 notice dated 20 July 2022 for AY 2016-17 had been approved by the Principal Commissioner of Income Tax-1, Nashik. Since the notice was issued more than three years after the end of AY 2016-17, the Tribunal held that under Section 151(ii) the specified authority competent to grant sanction was the Principal Chief Commissioner/Chief Commissioner or the corresponding Director General authority, and not the PCIT.
The ITAT permitted the assessee to raise this jurisdictional objection for the first time under Rule 27, relying on the Bombay High Court decision in Peter Vaz v. CIT. An assessee who has succeeded before the CIT(A) can support that order before the Tribunal on a fresh legal/jurisdictional ground, even without filing a separate appeal or cross-objection.
The Revenue argued, relying upon Ashish Agarwal and Rajeev Bansal, that the 2022 notice should effectively be regarded as a continuation/substitution of notices issued during the TOLA period and, therefore, sanction by PCIT was sufficient.
The Tribunal rejected this contention by following the binding Bombay High Court judgment in Alag Property Construction (P.) Ltd. v. ACIT. That judgment, after considering Rajeev Bansal, held that where the three-year period had expired and the reassessment notice was issued in 2022, approval under Section 151(ii) was mandatory; approval by PCIT under Section 151(i) could not confer jurisdiction.
Importantly, the ITAT emphasised the doctrine of judicial discipline. Once the jurisdictional Bombay High Court had considered Rajeev Bansal and decided the very issue, the Tribunal was bound to follow that decision where the facts were identical, notwithstanding the Revenue’s alternative interpretation of the Supreme Court judgment.
Accordingly, the ITAT held that the Section 148 notice dated 20.07.2022, having been approved only by the PCIT, was bad in law, and the consequential reassessment was void ab initio. The Revenue’s grounds concerning the merits of the ₹1.90-crore addition therefore became academic and were left unadjudicated.
Since the assessment itself was void ab initio, the Tribunal further held that the Section 271(1)(c) penalty had “no legs to stand”. Both Revenue appeals were consequently dismissed.
Key takeaway: For a Section 148 notice issued beyond three years, sanction must come from the authority specifically prescribed under Section 151(ii). Approval by the PCIT instead of the PCCIT/CCIT is not a mere procedural irregularity—it goes to jurisdiction and renders the reassessment void ab initio. Further, Rajeev Bansal does not rescue such defective approval where the jurisdictional High Court has already ruled otherwise.
Cases Discussed:
- Alag Property Construction (P.) Ltd. (Bombay HC), (2025) 179 taxmann.com 578 (Bombay)
- Bhagwan Sahai Sharma (Delhi HC), (2025) 91VYPCTR 725 (Delhi HC)
- Dhanraj Govindram Kella vs ITO (Gujarat HC), [2025] 177 taxmann.com 194 (Gujarat)
- Mahesh Gokuldas Fulwani Vs. ITO (ITAT Pune), ITA No. 873/PUN/2025
- Chandrakant Viththal Bhopi Vs. ITO (ITAT Pune), ITA No. 2405/PUN/2024
- Saif Ali Mansoor Ali Khan Pataudi v. CIT (ITAT Mumbai), [(2025) 39 1VYPTTJ 1176 (Mumbai)]
- Union of India Vs. Rajeev Bansal (SC), (2024) 469 ITR 46 (SC)
- DCIT(E) v. Mahindra International School Academy (ITAT Pune), [(2024) 38 1VYPTTJ 1690 (Pune)]
- Cipla Pharma & Life Sciences Ltd. v. DCIT (Bombay HC), [(2024) 8 1VYPCTR 867 (Bombay HC)]
- Union of India v. Ashish Agarwal (SC), [2022]444 ITR 1 (SC)
- Peter Vaz v. CIT (Bombay HC), [(2021) 51VYPCTR 548 (Bombay HC)]
- B. R. Bamasi v. CIT (Bombay HC), [(1972) 83 ITR 223 (Bombay HC)]
- Smt. Godavari Saraf Vs. CIT (Bombay HC), 113 ITR 589
- Union of India And Others Vs. Kamlakshi Finance Corporation (SC), AIR 1992 SC 711, dated 24.09.1991
FULL TEXT OF THE ORDER OF ITAT PUNE
In ITA No. 662 the Revenue has filed appeal against the order of the Learned Commissioner of Income Tax (Appeals), NFAC, Delhi [Ld.CIT(A)], passed u/s. 250 of the Income Tax Act, 1961 (the Act’) for AY 2016-17 on 08.01.2025, emanating from the Assessment Order u/s 147 r.w.s. 144 r.w.s. 144B of the Act, dated 04.05.2023. Similarly, in ITA No. 661/PUN/2025 the Revenue has filed appeal against the order of the Learned Commissioner of Income Tax (Appeals), NFAC, Delhi [Ld.CIT(A)], passed u/s. 250 of the Income Tax Act, 1961 (the Act’) for AY 2016-17 on 10.01.2025, emanating from the Penalty Order u/s 271(1)(c) of the Act dated 19.03.2024.
