Earth Star Cranes Vs ITO (ITAT Pune)
Wrong Sanctioning Authority Invalidates Reassessment; Pune ITAT Quashes AY 2017-18 Proceedings
In Earth Star Cranes v. ITO, the Pune ITAT decided the assessee’s appeals for AYs 2017-18 and 2019-20 arising from additions under section 68 concerning alleged accommodation-entry loans from Aneri Fincap Ltd.
For AY 2017-18, notice under section 148 was issued on 26 July 2022, i.e., more than three years after the end of the relevant assessment year. However, approval was obtained from the Principal CIT-1, Thane.
The Tribunal held that under section 151(ii), where more than three years have elapsed, approval must be obtained from the Principal Chief Commissioner, Principal Director General, Chief Commissioner or Director General. Since approval was granted by the Principal CIT, who was not the prescribed authority, the sanction was invalid.
Following the Bombay High Court rulings and its earlier decision in Hareshkumar Dungarmal Jain, the Tribunal quashed the entire reassessment for AY 2017-18. Consequently, additions of ₹75 lakh relating to the alleged bogus loan and ₹3.92 crore representing partners’ capital contributions were not examined on merits.
For AY 2019-20, the assessee restricted its arguments to the ₹3 lakh loan addition. Since the assessee had produced the lender’s confirmation and relevant bank statements, the Tribunal restored the matter to the Assessing Officer for fresh verification, after providing a reasonable opportunity of hearing.
Certainly. Based only on the supplied case analysis, the List of Cases Discussed / Relied Upon can be presented with Party Name + Case Citation as follows:
List of Cases Discussed / Relied Upon
Hareshkumar Dungarmal Jain Vs. DCIT & Anr. — ITA Nos. 1933/PUN/2024 & 1934/PUN/2024, order dated 24.02.2025 (ITAT Pune).
Union of India Vs. Ashish Agarwal — [2022] 444 ITR 1 (SC); Civil Appeal No. 3005/2022, order dated 04.05.2022.
Union of India Vs. Rajeev Bansal — [2024] 466 ITR 46 (SC).
Dhanraj Govindram Kella Vs. ITO — [2025] 177 taxmann.com 194 (Gujarat).
Siemens Financial Services (P) Ltd. Vs. DCIT — [2023] 154 taxmann.com 159 (Bombay).
Vodafone Idea Ltd. Vs. DCIT — Writ Petition No. 2768 of 2022, order dated 06.02.2024 (Bombay High Court).
Deepak Kumar Yadav Vs. PCIT — [2023] 151 taxmann.com 376 (Allahabad).
Chaturbhuj Gattani Vs. ITO — [2024] 169 taxmann.com 205 (Rajasthan).
Davos International Fund Vs. ACIT — ITAT Mumbai; the supplied material identifies the case but does not provide its complete citation.
FULL TEXT OF THE ORDER OF ITAT PUNE
The above two appeals filed by the assessee are directed against the separate orders both dated 27.10.2025 of the Ld. Commissioner of Income Tax- Appeals, NFAC (“CIT(A) / NFAC”), Delhi relating to assessment years 2017-18 and 2019-20 respectively. For the sake of convenience, both these appeals were heard together and are being disposed of by this common order.
ITA No.3143/PUN/2025 (A.Y. 2017-18)
2. Briefly stated, the facts of the case are that the assessee is a partnership firm and engaged in the business of renting of immovable property. For assessment year 2017-18, it filed its return of income declaring loss of Rs.2,74,223/-. The case of the assessee was reopened under section 147 of the Income Tax Act, 1961 (the “Act”) vide order passed under section 148A(d) on 25.06.2026 and issue of notice u/s148 for A.Y. 2017-18 on 26.07.2022 with prior approval of Pr.CIT-1, Thane, alleging that the assessee is a beneficiary of alleged bogus accommodation entry from M/s. Aneri Fincap Ltd. The Ld. Assessing Officer (“AO”) in the order passed u/s 147 r.w.s 144B on 02.05.2023 determined the total income of the assessee at Rs.4,64,75,777/- by making addition of Rs.75,00,000/- in respect of bogus loan and Rs.3,92,50,000/- as cash credit u/s 68 of the Act.
3. Before the Ld. CIT(A) / NFAC, the assessee apart from challenging the addition on merit, challenged the validity of the re-assessment proceedings as well. However, the Ld. CIT(A) / NFAC dismissed the appeal of the assessee both the legal ground as well on merits. So far as the validity of the re-assessment proceedings, he dismissed the same by observing as under:
5.2.7 As CIT(A) undersigned is not required to go into the correctness of order u/s 148A(d) of the I.T. Act, which is an independent order which is not appealable and thus the content of that order cannot be challenged during the appellate proceedings which are basically for the assessment order passed in pursuant to reopening u/s 148 of the I.T. Act. It is also important to mention here that 148A(d) order of the I.T. Act is passed with prior approval of Pr. CIT, which is a senior authority than the CIT(A) itself, thus, the content of the said order cannot be challenged in appeal, if the appellant is having any grievance against the 148A(d) order, the appellant should have challenged the same in writ petition before the Hon’ble High Court. As far as these appeal proceedings are concerned, if a 148 notice is accompanied with 148A(d) order from the due Authority, order passed in pursuant to notice u/s 148 remain valid.
5.2.8 Even otherwise, the Hon’ble High Court of Allahabad in the case of Deepak Kumar Yadav vs. PCIT reported in [2023] 151 taxmann.com 376 (All.) after taking note of change in the provisions of section 148 from 01.04.2021, after the introduction of section 148A has clearly held that scope of enquiry and proceedings u/s 148A is only to the extent of availability of information suggesting that the income has escaped assessment. The Hon’ble Court has clearly held that correctness or otherwise of information is an aspect to be gone into later by Assessing Authority at the stage of proceedings u/s 148 of the I.T. Act for reassessment. The Para 14 of the said judgement is as under:
“14. It is only to the extent of availability or otherwise of information suggesting that income has escaped assessment that the scope of enquiry rests under section 148A(d). The correctness or otherwise of information is an aspect to be gone into later by the assessing authority at the stage of proceedings under section 148 of the Act for reassessment. Any other interpretation, in our view, is not countenanced in the scheme of the Act of 1961.“
5.2.9 The similar view has been taken by the Hon’ble Rajasthan High Court in case of Chaturbhuj Gattani vs. ITO [2024] 169 taxmann.com 205 (Raj.). The important paras of the said order are as under:
“20. As per unamended Section 147 of the /T Act, the Assessing Officer could initiate assessment/reassessment proceedings only if he has “reason to believe” that the income chargeable to tax of an assessee has escaped assessment, however, with the amendment in Sections 147, 148 and insertion of Section 148A vide Finance Act 2021 w.e.f 1.4.2021, the assessment/reassessment proceedings can be initiated by the Assessing Officer on receiving information only. In other words, the requirement of Assessing Officer of having “reason to believe” is no more there for initiating assessment/reassessment proceedings in a case of escaped assessment in respect of income chargeable to tax.
21. Section 148A of the IT Act provides procedure required to be followed by the Assessing Officer before issuance of notice under Section 148 of the IT Act to any assessee. Section 148A(a) of the IT Act empowers the Assessing Officer to conduct any enquiry, if required, with the prior approval of specified authority in relation to any information regarding chargeable income to tax which escaped assessment. Section 148A(b) of the IT Act mandates that the Assessing Officer shall provide an opportunity of hearing to the concerned assessee by issuing a show cause notice within thirty days, not less than seven days or within the extended time that why notice under Section 148 of the IT Act be not issued on the basis of information available in relation to the income chargeable to tax which escaped assessment. As per Section 148A(c) of the IT Act, if any reply is filed by the assessee, the Assessing Officer shall consider the same. Section 148A(d) mandates that the Assessing Officer shall decide, on the basis of material available on record including reply of the assessee, whether or not it is a fit case to issue notice to the assessee under Section 148 of the IT Act bypassing an order within specified time as prescribed with prior approval of the authority. Proviso to Section148A of the IT Act speaks about exceptions where proceedings cannot be initiated under Section 148A,however in the facts of the present case, the same are not relevant, therefore, we are not offering any comments on it.
22. As per the above scheme, if an Assessing Officer is in receipt of any information, which suggests that any income chargeable to tax has escaped assessment, he may conduct any enquiry, if required, with prior approval of specified authority and after providing opportunity of hearing to the assessee, the concerned authority can pass order whether or not it is a fit case to issue notice under Section 148 of the IT Act.
23. The “information”, on the basis of which, the Assessing Officer can proceed under Section 148A of the IT Act is explained in Explanation 1 and 2 of Section 148 of the IT Act.
24. We are of the view that Section 148A(b) mandates only to supply information to the assessee and not the material, on the basis of which, the Assessing Officer has formed prima facie opinion that any chargeable income to tax has escaped assessment.”
5.2.10 Similar view has also been echoed by the Hon’ble Madhya Pradesh High Court in case of Amrit Homes Pvt. Ltd. [2023] 154 taxmann.com 289 (Madhya Pradesh). The important paras of the said order are as under:
“6. Section 148A on becoming a part of the Statute Book provided an additional opportunity to the assessee of being heard to the assessee before reopening case of escaped assessment.
6.1 From bare perusal of newly inserted section 148A, it is obvious that it statutorily provides for the following prerequisite before issuance of notice in cases of escaped assessment.
A. Conduction of inquiry with prior approval of specified authority in regard to information which suggests that certain income chargeable to tax has escaped the assessment.
B. For conducting the aforesaid inquiry, a notice to show-cause is required to be served on the assessee within the prescribed time, requiring assessee to explain as to why notice u/S 148 should not be issued on the basis of information which suggests that income chargeable to tax has escaped assessment.
C. The Assessing Officer is required to consider the reply of the assessee to the show-cause notice.
D. The nature of inquiry contemplated by Section 148A is not a detailed one. The purpose of this inquiry is to communicate to assessee that Assessing Officer is in possession of information suggesting that certain income of assessee which is chargeable to tax has escaped assessment. This communication is made by issuance of show-cause notice which should contain enough information and reasons to reveal the said intention of the Assessing Officer. Thereafter, the assessee on receiving the show-cause notice is required to file reply.
6.2 The show-cause notice thus should be reasoned enough to enable the assessee to know the mind of the Assessing Officer as regards factum of certain income having escaped assessment and his intention to re-open assessment of such income. This is possible only when the show-cause notice contains enough information to disclose the intention of the Assessing Officer so as to afford reasonable opportunity to assessee to respond. The contents of the show-cause notice thus should be precise and concise satisfying the concept of reasonable opportunity.
6.3 This Court hastens to add at this juncture that this inquiry as explained above cannot be a detailed one where assessee is given opportunity of adducing evidence in support of his defence/response. However, this inquiry includes within its ambit, the obligation of the Assessing Officer to supply reasons which are suggestive of a prima facie case revealing income chargeable to tax having escaped assessment.
6.4 Pertinently, the statute [See 148A(b)] does not oblige the Assessing Officer to supply the relevant material/evidence which are the foundation for the Assessing Officer to come to the prima facie view that income chargeable to tax has escaped assessment. This is because neither in the judgment of the Apex Courtin the case of GKN Driveshafts (India) Ltd. (supra) nor in section 148A any such indication can be gathered.
6.5 The only duty cast upon the Assessing Officer is to supply information by mentioning the same in the show-cause notice issued u/S 148A(b) of IT Act.
5.2.11 Based on the above judicial pronouncements, it is clear that in the new scheme of section 148A, it was not obligatory and even not desirable for the Assessing Officer to reach at the conclusion regarding the correctness of the information. It was only require for the AO to have the information suggesting escapement of income which should have been duly confronted to the assessee u/s 148A(b) of the I.T. Act and final order was to be passed after considering the reply of the assessee if any. In the instant case, the AO was having the information suggesting escapement of income of Rs. 75 lakhs, the AO has given the due opportunity to the appellant vide its notice u/s 148A(b) of the I.T. Act and as assessee has failed to respond, the AO was bound to presume that information pertains to assessee and the order u/s 148A(d) has been passed for information of more than Rs. 50 lakhs after taking due approval from the prescribed authority, therefore, the legal ground of the assessee is liable to be dismissed. 7/
4. So far as the additions on merit are concerned, he dismissed the same by observing as under:
5.2.12 Based on the above facts, it is clear that assessee has failed to discharge its onus regarding identity (as summons to directors, and 133(6) to company remain uncomplied), the genuineness of the transaction (as the statement of Rajesh G Mehta says that Aneri Fincap ltd is providing accommodation entry and assessee failed to disprove this position by producing the directors of company or producing the books of account of said company) and creditworthiness of the transactions (as how the company receive such huge credits of 350 crores). Despite being asked, the assessee has failed to discharge its onus when casted by the AO by facilitating the appearance of directors of M/s Aneri Fincap Ltd. before the AO and only relied on confirmation from Aneri Fincap Ltd. that too issued in 2019. Therefore, assessee failed to prove the identity, genuineness and creditworthiness of these transactions and the act of the AO of treating the amount as unexplained is correct and justifiable and being upheld. All the grounds of appeal on this issue are being decided against the appellant.
5.4 The ground of appeal No. 5 and 6 are related to addition of Rs_ 3,92,50,000/-made by the AO on account of unexplained credit.
5.4.1 During the reassessment proceedings, the AO has found that in the year under consideration, the assessee has shown capital introduced of Rs. 3,92,50,000/- from various partners. The AO has asked copy of ITR, profit and loss accounts, balance sheet etc. in respect of these partner to establish the identity, genuineness and creditworthiness of these transactions. The appellant has failed to submit these details and the AO has treated these amounts as unexplained.
5.4.3 It has been noted that the appellant neither before the AO nor during these proceedings has submitted following details as asked by the AO and as considered by the AO important to justify the identity, creditworthiness, genuineness of the transactions:-
-
- No address of the partners were submitted.
- No PAN numbers of partners were submitted
- No copy of ITRs
- No profit and loss account, No Balance sheet of partners
- The bank accounts submitted were having immediate credit from other parties for which no explanation has been offered.
- It is important that the appellant has failed to submit these documents before the AO as well as during these appellate proceedings.
5.4.4 Based on the factual findings given in para 5.4.3 and the legal position as enumerated in para 5.2 based on various judgements and positions of law, it is clear that the appellant in instant case has failed to provide the identity (as no address and PAN number were submitted), creditworthiness (no copy of ITR, profit & loss account, balance sheet were submitted, no details about the source of money received in the bank accounts of the partners from whom money has been received by the appellant was provided), and genuineness of the transactions was proved. Further, when asked by the AO and when additions were made by the AO during the appellate proceedings, the appellant has failed to discharge its onus regarding the identity, creditworthiness, and genuineness of the transactions.
5.4.5 Based on these findings, the act of the AO considering these transactions as unexplained is justified and liable to be upheld. Accordingly, these grounds of appeal related to this issue are dismissed.
5. Aggrieved with such order of the Ld. CIT(A) / NFAC, the assessee is in appeal before the Tribunal by raising the following revised grounds:
1. On the facts and circumstances of the case and in law the reopening of the assessment being bad in law on various counts, the order passed in consequence to such reopening itself is being bad in law the assessment should be annulled.
2. On the facts and circumstances of the case and in law the notice issued under section 148 and reopening as a consequence being bad in law the order passed in consequence thereto should be annulled.
3. On the facts and circumstances of the case and in law the order passed by the AO in violation of natural justice as also in disregards to principles of jurisprudence should be annulled.
4. On the facts and in the circumstances of the case and in law, the Learned CIT Appeal has erred in confirming the addition of a sum Rs.75,00,000, being loan taken from Aneri Fincap Ltd., a registered NBFC by treating the same as an accommodation entry without appreciating the documents and material produced before him.
5. On the facts and in the circumstances of the case and in law, the Learned CIT Appeal has erred in contravening the principles of natural justice by confirming the addition, without affording an opportunity to the appellant to cross-examine the alleged evidences collated by the Department, and relied upon in the assessment.
6. On the facts and in the circumstances of the case and in law, the Learned CIT(A) has erred in confirming the addition of a sum of Rs.3,92,50,000, under section 68 of the Act made by the AO, being Capital introduced by partners during the year under consideration, without appreciating the fact that this issue was already basis for making an assessment u/s 143(3) of the Act earlier and the issue has attained finality.
7. The appellant craves right to add, amend, alter, modify OR substitute any OR all the grounds of appeal at the time of hearing.
6. The assessee has also raised additional ground which reads as under:
“On facts and in law,
Without prejudice to original grounds of appeal, –
The assessee submits that the notice u/s 148 for A.Y. 2017-18 was issued on 26.07.2022 by obtaining approval u/s 151 from Pr. CIT-1, Thane vide Reference No. THN/Pr.CIT-1/148/2022-23/1484 who is not the Authority prescribed for obtaining sanction u/s 151 for issuing the notice u/s 148 after lapse of three years from end of A.Y. 2017-18 and therefore, the notice u/s 148 and the corresponding asst. order u/s 147 may be declared as null and void in law.”
7. The Ld. Counsel for the assessee referring to the above additional ground submitted that the additional ground raised is purely legal in nature which goes to the root of the matter and all the necessary facts are already available on record. Referring to the decision of Hon’ble Supreme Court in the case of National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383 (SC) and in the case of Jute Corporation of India Ltd vs Commissioner Of Income Tax And Anr (1991) 187 ITR 688 (SC) submitted that the additional ground raised by the assessee should be admitted.
8. The Ld. DR, on the other hand, strongly objected to the admission of the additional ground raised by the assessee.
9. After hearing both the sides and considering the fact that the additional ground raised by the assessee is purely legal in nature and all material facts necessary for adjudication of the issue are already available on record and no new facts are required to be investigated, therefore, in view of the decision of Hon’ble Supreme Court in the case of National Thermal Power Co. Ltd. v. CIT (supra) and in the case of Jute Corporation Of India Ltd vs Commissioner Of Income Tax And Anr (supra), the additional ground raised by the assessee is admitted for adjudication.
10. The Ld. Counsel for the assessee relying on the decision of the Hon’ble Supreme Court in the case of Rajeev Bansal reported in 469 ITR 46 submitted that the notice issued u/s 148 is bad in law being barred by limitation. He further submitted that the approval for issue of the said notice was not in accordance with law and the same was granted by Pr.CIT-1, Thane but it should have been obtained from Pr. CCIT since the assessment in the instant case has been reopened u/s 148 after three years from the end of the assessment year i.e. assessment year 2017-18.
He submitted that both these issues are covered by the judgement of apex court in case of Rajeev Bansal (supra) and hence prayed that assessment should be quashed.
11. So far as merit is concerned, the Ld. Counsel for the assessee submitted that allegation of the Revenue that the assessee is a beneficiary of bogus accommodation entry from Aneri Fincap Ltd. is not correct. He submitted that the loans obtained from the said NBFC viz. Aneri Fincap Limited were repaid and all the transactions were done through the applicable banking channels. He further submitted that the assessee had during the course of assessment proceedings as well as first appellate proceedings submitted confirmation of the Aneri Fincap Limited which are duly recorded by both the parties in their respective books of accounts. There is no incriminating material brought on record by the Revenue to corroborate the addition so made. He submitted that the assessee had also submitted balance sheet of M/s Aneri Fincap, return of incomes filed by them where total income declared by the said Aneri Fincap is Rs.40,63,848/-, loan confirmation letter, bank statement of the assessee showing transactions have been carried out through banking channel and the Ld. AO did not find any fault with the above details / documents submitted nor he has brought on record any incriminating material. He accordingly submitted that the order of the Ld. CIT(A) / NFAC be set aside and the grounds raised by the assessee be allowed.
12. The Ld. DR, on the other hand, filed detailed written submissions on the legal issue raised by the assessee by way of an additional ground opposing the submissions of the Ld. AR, which reads as under:
Contention of the Revenue
3. At the outset, it is pertinent to mention here that the Ld. AR has completely misinterpreted the decision of Hon. Supreme Court in Rajeev Bansal case (supra). Ld. AR had completely failed to understand the factual and legal matrix of Supreme Court decision in Union of India v. Ashish Agarwal |2022|444 ITR 1 (SC)and Union of India vs Rajeev Bansal |2024| 466 ITR 46. On the conjoint reading of the above decisions of Hon. Supreme Court it is evident that all notices issued u/s 148 between July 2022 and September, 2022 are nothing but substitution of the notices which were issued under TOLA between 1st April, 2021 and 30th June, 2021. Therefore, these notices deemed to have been issued before 30th June, 2021, within the extended and excluded time. Hence the sanctioning authority as prescribed u/s 151 of the Act is determined as if the approval is being sought before 30th June. This is apparent from the discussion in paras 73 to para 81 of the Rajeev Bansal case. Particularly, the example given in para 78 makes it clear that as far as notices u/s 148 for AY 2016-17 & AY 2017-18 issued in pursuance of the Ashish Agarwal case (supra) are considered, since their completion falls for completion during the period 20th March, 2020 to 30th June, 2021, the authority specified u/s 151 is the Commissioner of Income Tax. This view that for notices u/s 148 issued for AY 2016-17 & AY 2017-18 in pursuance of Ashish Agarwal case, the specified authority is the authority as per section 151(1) i.e. PCIT/CIT/DIT has been upheld by the Gujarat High Court in Dhanraj Govindram Kella vs ITO [2025] 177 taxmann.com 194 (Gujarat). Relying on Ashish Agarwal and Rajeev Bansal (supra), the Court held that all notices issued u/s 148 between July,2022 and September, 2022 is nothing but substitution of the notices which were issued under TOLA between 1st Apri1,2021 and 30th June, 2021. High Court further supported its view by relying on the directions in the case of Rajeev Bansal to exclude the period from 30th June, 2021 till 4th May, 2022 i.e. the date of decision in case of Ashish Agarwal and further exclusions of the time to provide relevant information and time taken to file responses. Based on this observations, Hon’ble High Court held that notices are nothing but substitution of original notices and therefore, deemed to have been issued before 30th June, 2021, within the extended and excluded time. Hence the sanctioning authority as prescribed u/s 151(i) of the Act is the correct authority to accord sanction for AY 2016-17 and AY 2017-18.
Detailed analysis of the Rajeev Bansal case with reference to the issue of sanctioning authority U/s 151
4. For understanding the decision of Rajeev Bansal case, it is imperative to understand the interplay of TOLA, changes brought in the reassessment provisions by Finance Act, 2021 and the decision of Hon. Supreme Court in Union of India v. Ashish Agarwal 1202214441TR 1(SC) (Annexure-5).
Back ground of the Rajeev Bansal case
COVID and TOLA
4.1 In order to tide over the crisis created by COVID-19 Pandemic, the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (TOLA), was promulgated by the President of India on 31 March 2020. The ordinance was introduced to extend time limits for various statutory and regulatory compliances under specified Acts, such as the Income Tax Act, which were due between 20 March 2020 and 29 June 2020. Initially, the time limit was extended until 30 June 2020. On 24 June 2020, the Central Government issued a notification under Section 3(1) of the TOLA Ordinance, further extending the deadline for compliance under the specified Acts to 31 March 2021. Later, on 29 September 2020, Parliament enacted TOLA, giving it retrospective effect from 31 March 2020. Section 3(1) of TOLA empowered the Central Government to extend these deadlines further, allowing compliance or completion of actions beyond 31 March 2021 by issuing subsequent notifications.
4.2 In pursuance of this, several notifications were issued to extend the deadlines. For instance, Notification No. 93 of 2020 extended the deadline to 30 March 2021. while Notification No. 20 of 2021 further extended it to 30 April 2021. Lastly, Notification No. 38 of 2021 extended the deadline until 30 June 2021. These extensions provided relief to taxpayers and authorities by extending the time limit for completing statutory actions such as passing orders, issuing notices, and obtaining sanctions under the Income Tax Act, covering the period from 20 March 2020 to 30 June 2021. Simply put the time limit for actions which were getting time barred during the period 20-03-2020 to 30-06-21 was extended to 30-06-21 by TOLA.
New Reassessment Regime
4.3 During the same period, the Finance Act 2021 introduced significant changes to the reassessment procedure under Sections 147 to 151 of the Income Tax Act, effective from 1 April, 2021 ( The changes brought are hereinafter referred to “New Regime” and unamdended provisions are referred to as “Old Regime”). These changes revamped the entire scheme of reassessment, aiming to make the process more structured and transparent. The key highlights of the new regime were
Opportunity before issue of notice u/s 148 :
a. Introduction of new Section 148A mandating that the assessing officer conduct an inquiry (if needed) and provide the assessee with an opportunity to be heard before issuing a reassessment notice.
Change in time Limit for Reassessments (Section 149):
b. The time limit for reopening assessments has been reduced from four years to three years. However, in cases where income that escaped assessment amounts to Rs.50 lakhs or more, assessments can be reopened within ten years. The new regime prohibits reopening of assessments that were time-barred under the old regime.
Change in specified authority
c. For cases within three years, approval is required from the Principal Commissioner or Commissioner, while for cases beyond three years, higher authorities such as the Principal Chief Commissioner or Director General must provide approval
Notice u/s 148 issued between 01.04.2021 and June 30,2021 under old regime
4.4 The notification issued by the Central Government under section 3(1) of TOLA contained an explanation that provisions of section 147 to 151 of the Act prior to April 1, 2021 (herein after referred to as “old regime”) shall be applied to reassessment proceedings initiated under them between April 1,2021 and June 30,2021. Accordingly, Notification No.20 of 2021 dated March 31, 2021 [(2021) 432 ITR (St.) 141] and Notification No.38 of 2021 dated April 27,2021 [(2021) 434 ITR (St.)11] directed and permitted the Assessing Officers to apply the provisions of the old regime for reassessment notices to be issued after coming into force of the Finance Act, 2021 with amendment with effect from April 1, 2021. Hence, the reassessment notices were issued between April 1, 2021, and 30th June 2021 under the provisions of section 148 of the old regime for A.Y.2013-14 to A.Y. 2017-18.
4.5 The assessee challenged such notices issued after 1st April, 2021 for reassessment on the ground that such notices could not have been issued under the old regime in view of coming into force of amendment brought by the Finance Act, 2021. Various High Courts allowed the writ petitions field by the assessee and quashed all the reassessment notices issued between April 1, 2021 and June 30, 2021 under section 148 of the Act under the old regime on the ground that no such notices could have been issued under the provisions of section 147 to 151 of the Act which are not in existence after April 1, 2021- and there was no saving clause which could have been resorted to by the Revenue and the reassessment proceedings could have been initiated as per the amended provisions of sections 147 to 151 of the Act after April 1, 2021 (herein after referred to as “new regime”) since they were remedial, beneficial and meant •to protect the rights and interests of the assesses. Being aggrieved by the decisions of various High Courts, the Income tax Department challenged the same before the Apex Court.
Decision in case of Ashish Agarwal
5.1 The Hon’ble Apex Court in case of Ashish Agarwal(supra) vide order dated 04.05.2022 held that it was in complete agreement with the view taken by various High Courts. However, the Hon’ble Apex Court considering the stand of the Revenue that the reassessment notices were issued under bona fide belief that amendment may not yet have been enforced in view of TOLA, exercised the discretionary jurisdiction under Article 142 to strike a balance between the interest of Revenue and the assessee and directed that such notices issued between April 1, 2021 and June 30, 2021 under the old regime be deemed to be notices under the new regime as provided under section 148A(b) of the Act.
Notice u/s 148 issued between July & Sept.,2022 in pursuance of Ashish Agarwal
5.2 In compliance of the aforesaid directions issued by the Apex Court, the Central Board of Direct Taxes issued an Instruction on May 11, 2022, [(2022) 444 I.T.R. (St.) 43] ( see Annexure-1 of Legal Paper Book) which reads as under:
“6.1 With respect of operation of new section 149 of the Act, the following may be seen: Hon’ble Supreme Court has held that the new law shall operate and all the defences available to assessees under section 149 of the new law and whatever rights are available to the Assessing Officer under the new law shall continue to be available. Sub-section (1) of new section 149 of the Act as amended by the Finance Act,2021 (before its amendment by the Finance Act, 2022) reads as under:-
149. (1) No notice under section 148 shall be issued for the relevant assessment year, – (a) if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b): (b) if three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income chargeable to tax, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more for that year:
Provided that no notice under section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before 1st day of April, if such notice could not have been issued at that time on account of being beyond the time limit specified under the provisions of clause (b) of sub-section (1) of this section, as they stood immediately before the commencement of the Finance Act, 2021:
6.2 Hon’ble Supreme Court has upheld the views of High Courts that the benefit of new law shall be made available even in respect of proceedings relating to past assessment years. Decision of Hon’ble Supreme Court read with the time extension provided by TOLA will allow extended reassessment notices to travel back in time to their orijinal date when such notices were to be issued and then new section 149 of the Act is to be applied at that point.
Based on above, the extended reassessment notices are to be dealt with as under:
(i) AY 2013-14, AY 2014-15 and AY 2015- 16: Fresh notice under section 148 of the Act can be issued in these cases, with the approval of the specified authority, only if the case falls under clause (b) of sub-section (1) of section 149 as amended by the Finance Act, 2021 and reproduced in paragraph 6.1 above. Specified authority under section 151 of the new law in this case shall be the authority prescribed under clause (ii) of that section.
(ii) AY 16-17, AY 17-18: Fresh notice under section 1-18 can he issued in these cases. with the approval of. the specified authority under clause (a) of sub-section (1) of new section 149 of the Act. since they are within the period of three years .from the end of the relevant assessment year. Specified authority under section 151 of the new law in this case shall be the authority prescribed under clause (i) of that section.-
5.3 The assessing officers accordingly considered the replies furnished by the assessees and passed orders under section 148A(d). Subsequently, notices under section 148 of the new regime were issued to the assessees by the assessing officers between July and September 2022 for the assessment years 2013-2014, 2014-2015, 2015-2016, 2016-2017, and 2017-2018.
Challenge to the notices issued in pursuance of Ashish Agarwal (supra)
6.1 These notices, issued in pursuance of Ashish Agarwal between July to September, 2022, ( hereinafter referred to as Ashish Aarwal notice/s u/s 148 in this submission) were challenged before several High Courts. The High Courts declared the notices to be invalid on the ground that they were: (i) time-barred; and (ii) issued without the appropriate sanction of the specified authority. Since, the main issue in the case of the assessee in this case for AY 2016-17 is of appropriate sanctioning authority , we will focus on controversy surrounding the issue of appropriate sanctioning authority will the example of decision of Bombay High Court in the case of Siemens Financial Services (P) Ltd. Vs. DCIT 120231 154 taxmann.com 159 (Bombay). In this case, the Bombay high court declared an Ashish Agarwal notice u/s 148 for AY 2016-17 issued with the prior approval of PCIT.
Analysis of Siemens Financial Services (P) Ltd. Vs. DCIT (supra)
Facts of Siemens Financial case
6.2 In this case, original notice u/s 148 for AY 2016-17 ‘‘, as issued of 25.06.2021. Thereafter, in pursuance of Ashish Agarwal decision (supra), vide notice/letter dated 31-05-2022, the notice u/s 148 dated 25-06-2021 was converted to notice u/s 148A(b) and material and information relied upon by the AO for issue of deemed notice u/s148A(b) was supplied to the assessee. Subsequently, order u/s 148A(d) was passed and notice u/s 148 was issued on 31-07-2022 after seeking approval from PCIT u/s 151(i).
6.3 The notice u/s 148 was challenged in writ before the Hon. Bombay High Court , inter alia, on ground that the approval was granted by wrong specified authority u/s 151.The contention of the assessee which is reproduced in para 11 (c), 11(d), 11( e) and 11(f) of the order. The contention can be summarized as under
(i) As per section 151 of the Act, the specified authority who has to grant his sanction for the purposes of section 148 and section 148A is the Principal Chief Commissioner or Principal Director General/Principal Chief Commissioner /Principal Director General/ the Chief Commissioner / Director General if more than three years have elapsed from the end of the relevant assessment year.
(ii) For A.Y.-2016-2017, three years elapsed on 31st March 2020 and hence for passing order u/s 148A(d) and issue of notice u/s 148, the provisions of section 151(ii) of the Act would have to be fulfilled, which have not been complied with.
(iv) In this case, for passing order u/s 148A(d) and issue of notice u/s 148 prior approval of PCIT has been taken from PCIT under section 151 (i) of the Act. Such sanction would be bad in law as the AO should have complied with section 15 1 (ii) and not section 151(i) of the Act. Hence, PCIT cannot be a specified authority as per section 151 of the Act.
(v) The AO cannot rely on the provisions of the Taxation and other laws (Relaxation and Amendment of certain provisions) Act, 2020 (TOLA) and the notification issued thereunder as section 151 of the Act has been amended by Finance Act 2021 and the provisions of amended section would have to be complied with by respondent no. 1, w.e.f. 1st April 2021. Hence, as the sanction of the specified authority has not been obtained, the impugned order and impugned notice both dated 31st July 2022 are bad-in-law and should be quashed and set aside.
6.4 The revenue relied on the CBDT Instruction dated 01/2022 (see Annexure-1 of Legal Paper Book) wherein it has stated in para 6.1 that decision of Hon’ble Supreme Court in Ashish Agarwal case (supra) read with the time extension provided by TOLA will allow extended reassessment notices to travel back in time to their original date when such notices were to be issued and then new section 149 of the Act is to be applied at that point. The CBDT instruction , further in para 6.2, states that for AY 16-17 and AY 17-18 fresh notices under section 148, with the approval of the specified authority, under clause (a) of sub-section (1) of new section 149 of the Act, since they are within the period of three years from the end of the relevant assessment year. Specified authority under section 151 of the new law in this case shall be the authority prescribed under clause (i) of that section.”
6.4.1 The thrust of the argument of the revenue was that the notices u/s 148 issued in pursuance of Ashish Agarwal case (supra) , though issued in the period from July to September , 2022, due to legal fiction created by the Hon. Supreme Court have to be considered as nothing but substitution of the notices which were issued under TOLA by the Income tax department between 01.04.2021 to 30.06.2021. Hence, it would not be correct to consider that the notice as if it is issued in July, 2022 and then calculate the period for determining sanctioning authority. In case of the assessee, the period that has elapsed is three years or less than three years because the assessment year is AY-2016-2017, as provided under section 3 of TOLA and extended by Notification dated 31st March 2020 and subsequently until 31st March 2021, the three years would have expired on 31st March 2020 and has got extended till 30th June 2021. The provisions of TOLA read with judgment of the Apex Court in Ashish Agarwal case (supra), the sanction has been rightly granted by the Principal Commissioner and there is no violation of Section 151 of the Act as alleged or at all.
6.5 Hon. High Court rejected the contention of the revenue. It rejected the interpretation of CBDT circular No.01/2022 that extended reassessment notices will travel back in time. Hon High Court held that interpretation placed by the CBDT in paragraph 6.1 of Instruction No. 1/2022 dated 1 1 th May 2022 cannot be countenanced as it is not open to them to clarify that the law laid down by the Apex Court means that the extended reassessment notices will travel back in time to their original date when such notices were to be issued… (para 28). It further held that the CBDT in Instruction no. 1/2022 at paragraph 6.2(11) has wrongly stated that the notices issued under section 148 of the Act for AY 2016-17 are to be considered as having been issued within a period of three years from the end of the relevant assessment year and, on that basis, has wrongly mentioned that the approval of the specified authority under section 151(i) should be taken. This conclusion is premised on the basis that these notices travel back to 31 March 2020 which premise is completely erroneous as explained herein before. The notice under section 148 of the Act is issued on 31 July 2022 and, hence, is issued beyond period of three years from the end of the relevant assessment year and, accordingly, the approval of the specified authority under section 151(11) of the Act should be taken. (para 29). In view of the above, the High Court quashed the notices.
Analysis of the decision in Rajeev Bansal case with regard to the issue of sanctioning authority
7. In many case, notices for AY 2016-17 and AY 2017-18 were quashed following the ratio of the Siemens (supra) on the issue of wrong sanctioning authority u/s 151. The Revenue moved the Apex Court aggrieved by the decisions of High Courts on various issuing related to these Ashish Agarwal notices , including on the issue of wrong sanctioning authority. The Hon. Supreme Court bunched all these cases and decided them in Union of India vs Rajeev Bansal [2024] 469 ITR 46 (Annexure-3 of the Legal Paper Book). The decision of Bombay High Court in Siemens (supra) was one of the cases which were reviewed by the Supreme Court in Rajeev Bansal. The Hon’ble Apex Court crystalised following two issues in the present appeal. ( para 18 of the SC order)
a) Whether TOLA and notifications issued under it will also apply to reassessment notices issued after 1 April 2021; and
b) Whether the reassessment notices issued under section 148 of the new regime between July and September 2022 are valid.
7.1. The Supreme Court decided the issue of sanctioning authority in paras 73 to para 81 in the favour of revenue. The Hon. Supreme Court reviewed the decision of Hon. Bombay High Court in Siemens (supra) and set it aside (see para 115 of the Supreme Court order). The Hon. Supreme Court held that 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 theCOVID-19 pandemic. Section 3(1) of TOLA relaxes the time limit for compliance with actions that fall for completion from 20 March 2020 to 31 March 2021. TOLA will accordingly extend the time limit for the grant of sanction by the authority specified under section 151. Hon. Supreme Court , further, held that the test to determine whether TOLA will apply to Section 151 of the new regime is that: if the time limit of three years from the end of an assessment year falls between 20 March 2020 and 31 March 2021, then the specified authority under section 151(i) has an extended time till 30 June 2021 to grant approval. (para 77).
7.2 To further clarify the position, Hon. Supreme Court in para 78 has given an example, the relevant portion is reproduced here
“78. For example, the three year time limit for assessment year 2017-2018 falls for completion on 31 March2021. It falls during the time period of 20 March 2020 and 31 March 2021, contemplated under section 3(1) of TOLA. Resultantly, the authority specified under section 151(i) of the new regime can grant sanction till 30June 2021.”
7.3 Hon. Supreme Court also upheld the legal fiction created by Ashish Agarwal (supra) and the concept of travelling back in time espoused by the CBDT Instruction 01/2022 (This concept was repudiated by the Hon. Bombay High Court in Siemens Financial Services (P) Ltd. Vs. DCIT (supra)). The relevant paras are reproduced here
110. The effect of the creation of the legal fiction in Ash ish Agarwal (supra) was that it stopped the clock of limitation with effect from the date of issuance of Section 148 notices under the old regime (which is also the date of issuance of the deemed notices].As discussed in the preceding segments of this judgment, the period from the date of the issuance of the deemed notices till the supply of relevant information and material by the assessing officers to the assesses in terms of the directions issued by this Court in Ashish Agarwal (supra) has to be excluded from the computation of the period of limitation. Moreover, the period of two weeks granted to the assesses to reply to the show cause notices must also be excluded in terms of the third proviso to Section149.
111. The clock started ticking for the Revenue only after it received the response of the assesses to the show causes notices. After the receipt of the reply, the assessing officer had to perform the following responsibilities: (i) consider the reply of the assessee under section 149A(c); (ii) take a decision under section149A(d) based on the available material and the reply of the assessee; and (iii) issue a notice under section148 if it was a fit case for reassessment. Once the clock started ticking, the assessing officer was required to complete these procedures within the surviving time limit. The surviving time limit, as prescribed under the Income-tax Act read with TOLA, was available to the assessing officers to issue the reassessment notices under section 148 of the new regime.
112. Let us take the instance of a notice issued on 1 May 2021 under the old regime for a relevant assessment year. Because of the legal fiction, the deemed show cause notices will also come into effect from 1 May 2021.4fter accounting for all the exclusions, the assessing officer will have sixty-one days [days between 1 May2021 and 30 June 2021] to issue a notice under section 148 of the new regime. This time starts ticking for the assessing officer after receiving the response of the assessee. In this instance, if the assessee submits the response on 18 June 2022, the assessing officer will have sixty-one days from 18 June 2022 to issue a reassessment notice under section 148 of the new regime. Thus, in this illustration, the time limit for issuance of a notice under section 148 of the new regime will end on 18 August 2022.”
7.4 The example given in para 112 of the order clearly upholds the stand of the revenue that Ashish Agarwal notices issued between July to September, 2022 have to be considered as issued between 01.04.2021 to 30.06.2021. Thus, the sanctioning authority is also to be determined as if notices were issued under the TOLA period. Thus, sanctioning authority for AY 2016-17 & AY 17-18 would be PCIT as per section 151 (i).
Decision of Gujarat High Court in Dhanraj Govindram Kella vs ITO [2025] 177 taxmann.com 194 (Gujarat)
7.5 Even after the decision of Supreme Court in Rajeev Bansal (supra), the issue of wrong sanctioning authority based on logic of Siemens (supra) was raised in some cases. One such as heard by Gujarat High Court in Dhanraj Govindram Kella vs ITO [2025] 177 taxmann.com 194 (Gujarat) (Annexure-1 of this Paperbook). Here the Hon.High Court undertook a detailed survey of the legislative background, including TOLA, the Finance Act 2021, and CBDT notifications. It observed that while TOLA extended timelines, it could not authorise use of the old sanction regime after 1 April 2021. Relying on Ashish Agarwal and Rajeev Bansal (supra), the Court held that all notices issued u/s 148 between July,2022 and September, 2022 is nothing but substitution of the notices which were issued under TOLA between 1st Apri1,2021 and 30th June, 2021. High Court further supported its view by relying on the directions in the case of Rajeev Bansal to exclude the period from 30th June, 2021 till 4th May, 2022 i.e. the date of the decision in case of Ashish Agarwal and further exclusions of the time to provide relevant information and time taken to file responses. Based on this observations, Hon’ble High Court held that notices are nothing but substitution of original notices and therefore, deemed to have been issued before 30th June, 2021, within the extended and excluded time. Hence the sanctioning authority as prescribed u/s 151(1) of the Act is the correct authority to accord sanction. (paras 39 to 64 of the order).
Conclusion:
8. In view of the above discussion, the appropriate specified authority for sanctioning notice u/s 148 for AY 2016-17, in special Ashish Agarwal notices u/s 148, as per section 151(i) is PCIT. This view is fortified by the decision of Supreme Court in Rajeev Bansal (supra) and Dhanraj Govindram Kella (supra). Hence, it is prayed that the ground raised by the assessee may kindly be dismissed and reassessment proceedings may kindly be upheld.
Submitted for kind consideration.
13. We have heard the rival arguments made by both the sides, perused the material available on record and the paper book filed by the Ld. AR on behalf of the assessee. We have also considered the various decisions cited before us. It is an admitted fact that the Ld. AO while reopening the assessment has issued notice u/s 148 of the Act on 26.07.2022 by taking prior approval of the Pr.CIT-1, Thane which is as under:
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
INCOME TAX DEPARTMENT
OFFICE OF THE INCOME TAX OFFICER
WARD 4, PANVEL
2nd FLOOR, AAYKAR BHAWAN,
Plot no 2 & 2A Sector 17, OPP KHANDA
COLONY, NEW PANVEL, PANVEL,
MAHARASHTRA, 410206
Email: [email protected]
| To,
EARTH STAR CRANES |
–
| PAN | AY | Dated | CIN & Notice No. |
|---|---|---|---|
| AAFFE6059Q | 2017-18 | 26/07/2022 |
Notice Under Section 148 of The Income-tax Act, 1961
Sir/Madam,
(A) I have the following information in your case or in the case of the person in respect of which you are assessable under the Income Tax Act, 1961 (hereinafter referred to as “the Act”) as assessment Year 2017-18:-
-
- Information flagged by the risk management strategy formulated in this regard;
- final objection has been raised by the Comptroller and Auditor General of India to the effect that the assessment has not been made in accordance with the provisions of Act;
- A survey was conducted under section 133A of the Act, other than under section 133A(2) or section 133A(6) of the Act;
- Information which requires action in consequence of the judgement of the Hon’ble Supreme Court in the case Union of India Vs. Ashish Agarwal, Civil Appeal 3005/2022, dated 4th May, 2022.
Suggesting that income chargeable to tax has escaped assessment within the meaning of section 147 of the Act. Order under sub-section (d) of section 148A of the Act has been passed in such case vide DIN ITBA/COM/F/9/2022-23/1044057993(1) dated 25/07/2022 and annexed herewith for reference.
(B) I have information that a search was initiated under section 132 of the Act in your case or in the case of the person in respect of which you are assessable under the Act on the date __________.
(C) I have information that books of accounts, other documents or any assets have been requisitioned under section 132A of the Act in your case or in the case of the person in respect of which you are assessable under the Act.
(D) I am satisfied, with the approval of Principal Commissioner or Commissioner, that money, bullion, jewellery or other valuable article or thing, seized or requisitioned under section 132 or section 132A of the Act in case of or in relation to you or the person in respect of which you are assessable under the Act.
(E) I am satisfied, with the approval of Principal Commissioner or Commissioner, that books of accounts or documents, seized or requisitioned under section 132 or section 132A of the Act in case of or pertaining to you, or any information contained therein, relate to you or the person in respect of which you are assessable under the Act.
2. I, therefore, propose to assess or reassess such income or recompute the loss or the depreciation allowance or any other allowance or deduction for the Assessment Year 2017-18 and I hereby require you to furnish, within 30 days from the service of this notice, a return in the prescribed form for the Assessment Year.
3. This notice is being issued after obtaining the prior approval of Pr. CIT-1, Thane accorded on date 22/07/2022 vide Reference Number No.TH/Pr. CIT-1/148/2022-23/1484.
14. We find that in the instant case, the assessment year involved is assessment year 2017-18 and the notice u/s 148 has been issued on 26.07.2022. We find the provisions of section 151 of the Act read as under:
“151. Specified authority for the purposes of section 148 and section 148A shall be,—
(i) Principal Commissioner or Principal Director or Commissioner or Director, if three years or less than three years have elapsed from the end of the relevant assessment year;
(ii) Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General, if more than three years have elapsed from the end of the relevant assessment year:
Provided……”
15. A perusal of the above provisions clearly shows that w.e.f. 01.04.2021 the Principal Chief Commissioner or the Principal Director General is the competent authority for giving sanction for reopening if more than 3 years have elapsed from the end of the relevant assessment year.
16. We have also considered the submissions of the Ld. DR, however, we find that the impugned issue is covered in favour of the assessee by the Hon’ble Jurisdictional High Court and the Revenue has not brought on record any other decision of the Hon’ble Bombay High Court in favour of the Revenue. We find an identical issue had come up before the Pune Bench of the Tribunal in the case of Hareshkumar Dungarmal Jain vs. DCIT & Anr vide ITA Nos.1933/PUN/2024 and 1934/PUN/2024 order dated 24.02.2025 for assessment year 2018-19. We find the Tribunal after considering various decisions including the decision of the Hon’ble Bombay High Court in the case of Vodafone Idea Limited vs. DCIT in WP No.2768 of 2022, order dated 06.02.2024 has observed as under:
“11. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find clauses 1, 2, 6 and 7 of the order dated 13.04.2022 passed under clause (d) of section 148A of the Income Tax Act, 1961 read as under:
“GOVERNMENT OF INDIA
MINISTRY OF FINANCE
INCOME TAX DEPARTMENT
OFFICE OF THE ASSISTANT COMMISSIONER OF INCOME TAX
CIRCLE 1, KOLHAPUR.
| To
HARESHKUMAR DUNGARMAL JAIN Maharashtra India |
–
| PAN: AAHPH2287D | AY 2018-19 | Dated 13/04/2022 | DIN & Notice No: TBA/AST/F/148A/2022 23/1042737900(1) |
–
| Name of the assessee | HARESHKUMAR DUNGARMAL JAIN |
| Address of the assessee | 39 SHIVAJI PARK, E WARD NEAR CBS KOLHAPUR 416003, Maharashtra India |
| Resident Not Ordinarily Resident Non-Resident | |
| Date of order | 13/04/2022 |
| Specified authority approval | Name PCIT, Pune-1 Reference No. 100000029101926 Date |
Order under clause (d) of section 148A of the Income-tax Act.1961
1. Brief Details of the Assessee:
The assessee Harishkumar Dungarmal Jain has filed return of income for the A Y 2018-19 in ITR-3 on 26/09/2018 declaring total income at Rs.30,63,633/-. The assessee is a beneficiary of LTC gain/loss or STC Gain/loss and has received Rs.23,39,899/- during the A.Y 2018-19.
2. Brief details of information collected/received by the AO:
In this case the information is received through Insight portal, in accordance with the risk management strategy formulated by the CBDT (Board). The Information of transaction done by the assessee during AY 2018-19 is as under-
The assessee is a beneficiary of LTC gain/loss or STC Gain/loss and has received Rs.28,39,899/- during the A.Y 2018-19.
3………
3.1……
04………
05……
6. It is evident that income of Rs.23,39,899/- or more has escaped assessment for year under consideration within the meaning of sec. 147 read with provision & explanation to the said section and it is evident that this is a fit case made out for issue of notice u/s 148 r.w.s 151 of the IT Act, 1961 for the AY 2018-19 to assess income in the case.
7. As this case is within 3 years, from the end of the assessment under consideration the approval is sought from specified authority u/s 151 i.e. Pr.CIT-1, Pune. Therefore, an approval of the PCIT, Pune-1 to re-open the assessment u/s 147 of the Act, is sought u/s 148A(d) and subsequent issue of notice u/s 148 for AY 2018-19 in the present case, if approved.
JAGDISH SHANKAR JAGTAP
CIRCLE 1, KOLHAPUR”
12. A perusal of the above shows that the order under clause (d) of section 148A of the Act was passed on 13.04.2022 after obtaining the approval of the PCIT, Pune. Since the assessment year involved is assessment year 2018-19 and the notice u/s 148 was issued on 13.04.2022 it has to be seen as to who is the competent authority from whom the approval has to be obtained.
13. We find the provisions of section 151 of the Act read as under:
“151. Specified authority for the purposes of section 148 and section 148A shall be,—
(i) Principal Commissioner or Principal Director or Commissioner or Director, if three years or less than three years have elapsed from the end of the relevant assessment year;
(ii) Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General, if more than three years have elapsed from the end of the relevant assessment year:
Provided……”
14. A perusal of the above provisions clearly shows that w.e.f. 01.04.2021 the Principal Chief Commissioner or the Principal Director General is the competent authority for giving sanction if more than 3 years have elapsed from the end of the relevant assessment year.
15. We find an identical issue had come up before the Mumbai Bench of the Tribunal in the case of Davos International Fund vs. ACIT (supra). We find the Tribunal after considering various decisions including the decision of the Hon’ble jurisdictional High Court has observed as under:
“7. We heard the parties and perused the material on record. In assessee’s case the 148A notice for AY 2017-18 was issued on 12.03.2022 and the order disposing the objections of the assessee was passed on 04.04.2022 under section 148A(d) of the Act. The AO issued notice under section 148 dated 04.04.2022. On perusal of the order under section 148A(d) of the Act and 148 (page 42 to 46 and 47 of PB) we notice that the impugned notices are issued after obtaining the prior approval of CIT (IT), Mumbai-2. The case of the revenue is that the notice dated 04.04.2022 is issued within three years since as per the 5th proviso to section 149, the AO has got additional 9 days for issue of notice under section 148 i.e. upto 09.04.2022. since the extended time of 9 days i.e. from 22.03.2022 to 31.03.2022 was given to the assessee. Therefore, it is argued by the revenue that notice issued on 04.04.2022 is within period of three years and the approval has been correctly obtained by the authority as specified in section 151(i) of the Act. The assessee is contending that the 5th proviso to section 149 under which the revenue is taking cover is inserted w.e.f. 01.04.2023 and therefore not applicable to assessee’s case. In this regard, we notice that the Hon’ble Bombay High Court iIn the case of Vodafone Idea Ltd (supra) has held that –
“1. Petitioner is impugning a notice dated 19th March 2022 issued under Section 148A(b) of the Income Tax Act, 1961 (“the Act”), the order passed under Section 148A(d) of the Act and the notice both dated 7th April 2022 issued under Section 148 of the Act. One of the grounds raised is that the sanction to pass the order under Section 148A(d) of the Act and issuance of notice under Section 148 of the Act is invalid inasmuch as the sanction has been admittedly issued by the Principal Commissioner of Income Tax (“PCIT”) and not by the Principal Chief Commissioner of Income Tax (PCCIT”).
2. Petitioner’s request for a copy of the sanction has also been denied. Even in the affidavit in reply, the Department is refusing to give the sanction which makes us wonder what is the national secret involved in that, that Assessee is being refused what he is rightfully entitled to receive from the Department. In the affidavit in reply, the stand taken by the Revenue is it will be made available during the re- assessment proceeding.
3. The impugned order and the impugned notice both dated 7th April 2022 state that the Authority that has accorded the sanction is the PCIT, Mumbai 5. The matter pertains to Assessment Year (“AY”) 2018-19 and since the impugned order as well as the notice are issued on 7th April 2022, both have been issued beyond a period of three years. Therefore, the sanctioning authority has to be the PCCIT as provided under Section 151 (ii) of the Act. The proviso to Section 151 has been inserted only with effect from 1″ April 2023 and, therefore, shall not be applicable to the matter at hand.
4. In this circumstances, as held by this Court in Siemens Financial Services Private Limited Vs. Deputy Commissioner of Income Tax & Ors., the sanction is invalid and consequently, the impugned order and impugned notice both dated 7th April 2022 under section 148A(d) and 148 of the Act are hereby quashed and set aside.”
8. Similar view is held by the jurisdictional High Court also in other cases as listed herein above. In the decision of the Vodafone Idea (supra), the Hon’ble High Court has given a specific finding that the proviso to section 151 extending the time limit as per the third, fourth or fifth proviso to section 149 is not applicable for AY 2018-19 as the same is inserted only w.e.f. 01.04.2023. When we apply the said ratio to assessee’s case, in our considered view, the claim of the revenue that the period of 3 years expires only on 09.04.2022 is not correct and that revenue cannot take shelter under the proviso to section 151 which came into effect only from 01.04.2023. Accordingly the notice issued on 04.04.2022 by the AO is issued beyond three years and therefore the approval should have been obtained by the authorities as specified under section 151(ii) Principle Chief Commission. As already stated the approval in assessee’s case is obtained from CIT(IT) and therefore we are inclined to agree with the contention of the assessee that the notice under section 148 has been issued without obtaining the approval from the correct authority as specified under section 151. Respectfully following the above decisions of the Hon’ble Bombay High Court we hold that the notice issued by the AO under section 148 without obtaining approval from correct appropriate authority is invalid and the assessment done under section 147 r.w.s. 144(13) of the Act is liable to be quashed.
9. Since we have adjudicated the legal contentions raised through additional ground in favour of the assessee, the grounds raised
16. Since in the instant case the notice u/s 148 of the Act has been issued on 13.04.2022 which is beyond the period of three years from the end of the relevant assessment year, therefore, the competent authority who should have given sanction for reopening proceedings is the Principal Chief Commissioner / Principal Director General. However, in the instant case, the same has been approved by the PCIT-1, Pune. Therefore, such approval being not in accordance with law, is invalid and consequently, the entire re-assessment proceedings are vitiated. We, therefore, quash the re-assessment proceedings.
17. Since the assessee succeeds on this preliminary issue, the other grounds challenging the validity of re-assessment proceedings and the grounds challenging the addition on merit are not being adjudicated being academic in nature.”
17. Since in the instant case also the approval has been granted by the Pr.CIT and not the Principal Chief Commissioner (Pr. CCIT) or Principal Director General or Chief Commissioner or Director General, therefore, such approval being not in accordance with law, the re-assessment proceedings are vitiated and are liable to be quashed. We, therefore, quash the re-assessment proceedings. Since the assessee succeeds on this legal ground, therefore, the grounds challenging the addition on merit are not adjudicated being rendered academic in nature. The effective grounds raised by the assessee are accordingly allowed.
18. In the result, the appeal filed by the assessee is partly allowed.
ITA No.3144/PUN/2025 (A.Y. 2019-20)
19. Both the parties have unanimously consented and submitted that the facts of the case are same as narrated in the above ITA No. 3143/PUN/2025 for assessment year 2017-18. In this the case also, the assessee has challenged the addition of Rs.3,00,000/- u/s 68 made by the Ld. AO in his order passed u/s 147 r.w.s. 144B of the Act on 18.03.2024.
20. On appeal, the Ld. CIT(A)/ NFAC dismissed the assessee’s appeal relying on his decision rendered on the impugned issue against the assessee for AY 2017-18 by observing as under:
“5. Analysis and Decision:
5.1 I have duly considered the statement of facts, grounds of appeal, assessment order, written submission of the appellant and the material placed on record.
5.2 The only issue is regarding the validity of reopening and addition of Rs. 3 lakhs for loan received from M/s Anen Fincap Ltd. The similar issue has been dealt while deciding the appeal of the assessee for Assessment Year 2017-18 in detail and the matter has been decided against the appellant. The order was passed vide DIN & Order No.ITBA/NFAC/S/250/2025-26/1082019321(1) dated 27.10.2025. Thus, relying on the same, all the issues and grounds of appeal are being decided against the appellant.
6. In the result, the appeal of the appellant dismissed.”
21. Aggrieved with such order of the Ld. CIT(A) / NFAC, the assessee is in appeal before the Tribunal by raising the following grounds:
1. On the facts and circumstances of the case and in law the reopening of the assessment being bad in law on various counts, the order passed in consequence to such reopening itself is being bad in law the assessment should be annulled.
2. On the facts and circumstances of the case and in law the notice issued under section 148 and reopening as a consequence being bad in law the order passed in consequence thereto should be annulled.
3. On the facts and circumstances of the case and in law the order passed by the AO in violation of natural justice as also in disregards to principles of jurisprudence should be annulled.
4. On the facts and in the circumstances of the case and in law, the Learned CIT Appeal has erred in confirming the addition of a sum Rs.3,00,000, being loan taken from Aneri Fincap Ltd., a registered NBFC by treating the same as an accommodation entry without appreciating the documents and material produced before him.
5. On the facts and in the circumstances of the case and in law, the Learned CIT Appeal has erred in contravening the principles of natural justice by confirming the addition, without affording an opportunity to the appellant to cross-examine the alleged evidences collated by the Department, and relied upon in the assessment.
6. The appellant craves right to add, amend, alter, modify OR substitute any OR all the grounds of appeal at the time of hearing.
22. The Ld. Counsel for the assessee did not argue the technical / legal grounds raised before the Tribunal (Ground No. 1, 2, 3 & 5) and confined his arguments only to the merits of the case relating to addition of Rs. 3,00,000/- made by the Ld. AO and confirmed by the Ld. CIT(A)/ NFAC due to smallness of the amount of addition in dispute. On merits, he reiterated the submissions made for AY 2017-18 stated above. He submitted that the assessee had submitted loan confirmation of M/s. Aneri Fincap Ltd. (pages 156 – 157 of the Paper Book refers) before the lower authorities. He also filed bank statement of HDFC Bank for the period 01.04.2020 to 31-03-2021 and 01.04.2021 to 31.03.2022 (Pages 158-161 of the Paper book refers) in support of its claim.
23. The Ld. DR on the other hand heavily relied on the orders of the Ld. AO and the Ld. CIT(A) / NFAC.
24. We have heard the Ld. Representatives of the parties, perused material available on record and the paper book filed by the Ld. AR on behalf of the assessee. The facts of the case are not in dispute. We find that the Ld. AO in the instant case in the order passed u/s 147 r.w.s. 144B of the Act made addition of Rs.3,00,000/- u/s 68 of the Act as unexplained cash credit on account of bogus loan from M/s. Aneri Fincap Ltd. for the reason that the assessee failed to prove the genuineness of the said loan. The Ld. CIT(A) / NFAC confirmed the addition made by the Ld. AO, the reasons of which have already been reproduced in the preceding paragraphs. We find that the Ld. CIT(A)/NFAC relied on his decision for AY 2017-18 where the appeal was dismissed for the reason that the assessee could not discharge its onus regarding the identity, credit-worthiness and genuineness of the transactions by filing the documentary evidence / details either before the AO or before him in support of its claim. From the paper book filed by the Ld. AR, we find that the assessee had filed certain documents such as loan confirmation of M/s. Aneri Fincap Ltd. and now the bank statement for the relevant period is also placed on record. Thus, under these circumstances, we deem it fit, in the interest of justice, to set aside the order of the Ld. CIT(A)/ NFAC and remit the issue back to the file of the Ld. AO to decide the same afresh on merits and as per fact and law after due verification of the assessee’s claim and modify the assessment, if needed, as a result of such verification thereof. Needless to say the assessee shall be provided with a reasonable opportunity of being heard by the Ld. AO. The technical / legal grounds raised before us (Ground No. 1, 2, 3 & 5) are not argued by the Ld. AR and hence these grounds are dismissed as “not pressed”. Ground No. 4 is accordingly allowed for statistical purposes.
25. In the result, appeal of the assessee is partly allowed for statistical purposes.
26. To sum up, appeal in ITA No.3143/PUN/2025 for assessment year 2017-18 is partly allowed and appeal in ITA No.3144/PUN/2025 for AY 2019-20 is treated as partly allowed for statistical purposes
Order pronounced in the open Court on 18th August, 2026.
