Sudheer Kumar Katta Vs ITO (ITAT Hyderabad)
Wrong Authority, Failed Reopening: ₹73 Lakh Addition Falls
Approval Must Come from the Right Authority
The Hyderabad Tribunal has quashed a reassessment involving an addition of ₹73.01 lakh, holding that the Assessing Officer had obtained approval from an authority who was not competent under Section 151. Since the notice under Section 148 was issued after more than three years from the end of the relevant assessment year, approval from the Principal Commissioner of Income-tax was insufficient under the provision applicable at that time.
The decision emphasises that obtaining approval is only part of the statutory requirement. The approval must come from the authority prescribed for the relevant period. Sanction from the wrong authority cannot provide a valid foundation for reassessment.
Bank Transactions Triggered the Proceedings
The assessee had not originally filed his return for AY 2018-19. Information available with the Assessing Officer indicated substantial cash withdrawals, including withdrawals through bearer cheques, aggregating to ₹1,55,70,000 from a current account maintained with HDFC Bank.
A notice under Section 148A(b) was issued on 25 March 2022, requiring a response by 31 March 2022. As no reply was furnished within the prescribed time, the Assessing Officer passed an order under Section 148A(d) on 8 April 2022, after obtaining approval from the Principal Commissioner, Vijayawada. The notice under Section 148 followed on 9 April 2022.
During reassessment, the Assessing Officer noticed that the assessee had disclosed gross receipts of ₹1.60 crore, whereas total credits in his bank accounts amounted to ₹4,29,05,840.
Treating the bank credits as business transactions, the Assessing Officer applied a 20% gross profit rate, arriving at income of ₹85,81,168. After reducing the business income of ₹12.80 lakh already disclosed, he made an addition of ₹73,01,168. The CIT(A) upheld the assessment.
A Legal Ground Raised Before the Tribunal
Before the Tribunal, the assessee raised an additional ground challenging the competence of the sanctioning authority.
The Tribunal admitted this ground because it involved a legal question concerning jurisdiction and could be decided from facts already available on record. It relied upon National Thermal Power Company Ltd. v. CIT, 229 ITR 383 (SC).
The assessee pointed out that three years from the end of AY 2018-19 expired on 31 March 2022. Therefore, when the Section 148 notice was issued on 9 April 2022, the case had crossed the three-year boundary.
Under Section 151(ii), as applicable then, sanction had to be obtained from the prescribed higher authority—Principal Chief Commissioner or Principal Director General, or, where neither existed, the Chief Commissioner or Director General. Approval from the Principal Commissioner could not meet this requirement.
The Date of the Final Notice Was Crucial
The Tribunal accepted the objection. The record established that both the Section 148A(d) order and the subsequent Section 148 notice rested on approval from the Principal Commissioner. The Department did not produce material rebutting this factual position.
The earlier issuance of the Section 148A(b) notice in March did not resolve the defect. The consequential proceedings occurred in April, after the relevant three-year period had expired.
Accordingly, the Assessing Officer was required to obtain sanction from the authority specified under Section 151(ii). Having obtained sanction from an authority lacking competence under that provision, he had not validly assumed jurisdiction.
The 2023 Amendment Could Not Rescue the Proceedings
The Tribunal relied upon the Telangana High Court’s decision in Deloitte Consulting India Private Limited v. Assessment Unit, W.P. No. 4061 of 2024, dated 25 September 2025.
That decision addressed a similar issue for AY 2018-19. The High Court rejected the Revenue’s attempt to retrospectively apply the proviso inserted in Section 151 by the Finance Act, 2023, effective from 1 April 2023, concerning computation of the three-year period.
The Tribunal also noted the Supreme Court’s dismissal of the Revenue’s SLP in ACIT, International Taxation v. LinkedIn Singapore Pte. Ltd., (2025) 180 taxmann.com 158 (SC), involving sanction from an incorrect authority after expiry of three years.
Assessment Quashed; Merits Left Open
The Tribunal quashed the reassessment order dated 1 March 2024 and allowed the appeal. Having decided the jurisdictional issue, it left the other grounds open.
Thus, the decision does not adjudicate the correctness of the 20% profit estimate, the treatment under Sections 69A/115BBE, or the other objections raised by the assessee.
Author’s Comments
In reassessment litigation, the approval document deserves as much attention as the notice itself. The assessment year, date of notice, applicable statutory version and designation of the approving authority must be checked together.
Here, the movement from March to April changed the competent sanctioning authority. The resulting defect went to the root of jurisdiction, bringing down the entire reassessment without examination of the addition on merits.
A substantial bank transaction may justify scrutiny; it cannot substitute for legally valid sanction.
Cases Discussed
- National Thermal Power Company Limited Vs. CIT (1998) 229 ITR 383 (SC) — relied upon for admitting the additional legal ground concerning jurisdiction, as its adjudication required no investigation beyond facts already available on record.
- Union of India & Ors. Vs. Ashish Agrawal, Civil Appeal No. 3005/2022, dated 04.05.2022 (SC) — considered regarding the substituted reassessment regime introduced by the Finance Act, 2021 and the safeguards governing Sections 147 to 151.
- GKN Driveshafts (India) Ltd. Vs. Income Tax Officer and Ors. (2003) 1 SCC 72 (SC) — referred to in the Supreme Court extract concerning the mandatory procedure governing reassessment proceedings.
- Deloitte Consulting India Private Limited Vs. Assessment Unit, Income Tax Department, Civil Writ Petition No. 4061 of 2024, dated 25.09.2025 (Telangana High Court) — followed for holding that, after expiry of three years from AY 2018-19, approval had to be obtained from the authority specified in Section 151(ii), and the Finance Act, 2023 proviso could not be retrospectively applied.
- Assistant Commissioner of Income-tax, International Taxation Vs. LinkedIn Singapore Pte. Ltd. (2025) 180 taxmann.com 158 (SC) — Revenue’s SLP was dismissed against the ruling quashing reassessment where approval after expiry of three years had been granted by an authority other than the competent higher authority.
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
The present appeal, filed by the assessee, is directed against the order passed by the CIT(A), NFAC, Delhi, dated 08.10.2025, which in turn arises from the order passed by the AO under Section 147 r.w Section 144B of the Income-tax Act, 1961 (for short, “the Act”), dated 01.03.2024 for the assessment year 2018-19.
2. The assessee has assailed the impugned order on the following grounds of appeal before us:
“1. That under the facts and circumstances of the case the order passed u/s. 147 r.w.s. 144B of the Income Tax Act dated 01.03.2024 passed by Assessing Officer NFAC and upheld by Id. Commissioner of Income Tax (Appeals) NFAC vide order dated 08.10.2025 u/s. 250 is contrary to the facts of the case and provisions of law.
2. The Assessing Officer as well as the Learned Commissioner of Income Tax (Appeals) erred in not considering the submissions filed by the Appellant during the course of the proceedings in proper perspective.
3. The Assessing Officer, National Faceless Assessment Centre, has erred both in law and on facts in passing order dated 01.03.2024 u/s.147 rws 144B by making addition of Rs. 73,01,168/- u/s.69A rws 115BBE which was later upheld by Ld. Commissioner of Income Tax (Appeals) based on invalid order u/s.148A(d) dated 08.04.2022 and invalid notice u/s.148 dated 08.04.2022 which were issued by Jurisdictional Assessing Officer after 29.03.2022, contrary to notification no.18/2022 issued by Central Board of Direct Taxes (CBDT), thereby making the assessment invalid and void ab initio.
4. The Id. Commissioner of Income Tax (Appeals) has erred in upholding the addition of Rs.73,01,168/- made u/s.69A rws 115BBE vide Assessment order dated 01.03.2024 passed by Assessing Officer NFAC by travelling beyond the notice issued u/s.148A(b) dated 25.03.2022 which is against the principles of reassessment.
5. The Ld. Commissioner of Income Tax (Appeals) has erred in upholding the order of Assessing Officer u/s.147 rws 1448 dated 01.03.2024 where in the addition was made u/a.69A rws 115BBE by estimating 20% profit on deposits made into bank accounts during the previous year 2017-18 which is unreasonable and very high compared to profit rates in the similar trade.
6. Any other ground/grounds that may be pleased to be allowed by the Honorable Tribunal at the time of hearing.”
3. Also, the assessee has raised the following additional ground of appeal before us.
“1. The notice u/s 148 was issued without obtaining prior approval from the specified authority as required under section 151, rendering the proceedings invalid and unsustainable in law and hence the impugned order is liable to be quashed.”
As the assessee, by raising the aforesaid additional ground of appeal, has sought our indulgence only for adjudicating a legal issue, i.e., the validity of the jurisdiction assumed by the AO for framing the impugned assessment, which would not require looking any further beyond the facts available on record, we have no hesitation in admitting the same. Our aforesaid view is fortified by the judgment of the Hon’ble Supreme Court in the case of National Thermal Power Company Limited Vs. CIT (1998) 229 ITR 383 (SC).
4. Succinctly stated, the AO, based on information available from a credible source that the assessee, during the subject year, had carried out substantial cash withdrawals, including through bearer’s cheques, from his current account maintained with HDFC Bank Limited amounting to Rs. 1,55,70,000/-, but had not filed his return of income for the year under consideration, initiated proceedings under Section 147 of the Act.
5. The AO issued notice under Section 148A(b) of the Act dated 25.03.2022, wherein he called upon the assessee to explain on or before 31.03.2022 as to why a notice under Section 148 of the Act may not be issued in his case. As the assessee had failed to furnish his reply on or before the prescribed date, i.e., 31.03.2022, the AO passed an order under Section 148A(d) of the Act dated 08.04.2022, with the prior approval of the Principal Commissioner of Income-tax, Vijayawada. Notice under Section 148 of the Act dated 09.04.2022 was thereafter issued and served upon the assessee.
6. During the course of the assessment proceedings, the AO, on verification of the bank account of the assessee, observed substantial financial transactions. The AO observed that though the assessee had disclosed gross receipts of Rs. 1,60,00,000/- in his return of income, the total credit entries in his bank accounts aggregated to Rs. 4,29,05,840/-.
7. Based on the aforesaid facts, the AO held the view that the assessee, during the subject year, was involved in unexplained financial transactions/credit entries. As the assessee had failed to furnish any explanation regarding the aforesaid credit entries in his bank accounts, the AO treated the same as his business transactions. The AO, by adopting a gross profit rate of 20% on the total financial transactions of Rs. 4,29,05,840/-, determined the business income arising from such transactions at Rs. 85,81,168/-. As the assessee had already disclosed business income of Rs. 12,80,000/-, the AO treated the balance amount of Rs. 73,01,168/- as the undisclosed business income of the assessee and made an addition of the same.
8. Thereafter, the AO, vide his order passed under Section 147 r.w Section 144B of the Act dated 01.03.2024, after making the aforesaid addition towards unaccounted business income, determined the total income of the assessee at Rs. 85,81,168/-.
9. Aggrieved, the assessee carried the matter in appeal before the CIT(A), but without success.
10. The assessee, aggrieved by the order of the CIT(A), has carried the matter in appeal before us.
11. We have heard the Ld. Authorized Representatives of both parties, perused the orders of the authorities below and the material available on record, as well as considered the judicial pronouncements pressed into service by the Ld. Authorized Representatives of both the parties to drive home their respective contentions.
12. Sri C Subrahmanyam, CA, the Learned Authorized Representative (for short “Ld.AR”) for the assessee, at the threshold of hearing of the appeal, submitted that the A.O. had grossly erred in law and on facts of the case in assuming jurisdiction and framing the impugned assessment vide his order passed u/s 147 r.w.s 144B of the Act, dated 01/03/2024. Elaborating on his contention, the Ld. AR submitted that as notice u/s 148 of the Act, dated 09/04/2022 for the subject year i.e. A.Y. 2018-19 had been issued by the A.O. beyond a period of three years from the end of the relevant assessment year, i.e., on 09/04/2022, therefore, as per the mandate of Section 151 of the Act, as was made available on the statute vide the Finance Act, 2021 w.e.f. 01.04.2021, the said notice could have been issued only after obtaining the prior approval of the authorities contemplated in sub-section (ii) of Section 151 of the Act, viz. Principal Chief Commissioner/Principal Director General/Chief Commissioner /Director General. The Ld. AR submitted that the notice under Section 148 of the Act, dated 09/04/2022, had been issued in the present case after obtaining the prior approval of the Principal Commissioner of Income-tax, Vijayawada, on 09/04/2022. The Ld. AR to fortify his contention had drawn our attention to the notice u/s 148 of the Act, dated 09/04/2022, which revealed that the same was issued after obtaining the prior approval of Pr. CIT accorded on 08/04/2022 vide reference No.100000029675002.
13. Carrying his contention further, the Ld. AR submitted that as the impugned notice under Section 148 of the Act, dated 09/04/2022 had been issued by the A.O. without obtaining the approval of the prescribed authority, therefore the said notice and the consequential assessment framed by him vide his order passed under Section 147 r.w.s 144B of the Act, dated 01/03/2024 cannot be sustained and is liable to be quashed on the said count itself.
14. Per contra, Shri Krishna Moorthy K, Learned Senior Departmental Representative (for short “Ld. Sr. DR”), on being confronted with the aforesaid factual position as was canvassed before us, failed to rebut the same. However, the Ld. Sr. DR submitted that as the A.O., after validly assuming jurisdiction, had issued notice u/s 148 of the Act, dated 09/04/2022, therefore, no infirmity emerges from the assessment order passed by him.
15. We have heard the Ld. Authorized Representatives of both parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions.
16. As the Ld. AR has assailed the validity of the jurisdiction assumed by the A.O. for issuing notice u/s 148 dated 09/04/2022 without obtaining approval from any of the authorities specified u/s 151 of the Act (as was applicable at the relevant point of time), therefore, we shall first deal with the same.
17. Admittedly, it is a matter of fact discernible from the record that the AO had passed order under section 148A(d) of the Act, on 08/04/2022 after obtaining the approval of Pr. CIT, Vijayawada. Thereafter, the notice under section 148 of the Act, dated 09/04/2022 had been issued by the ITO, Ward-1, Ongole, after obtaining the prior approval of the Pr. Commissioner of Income-Tax, dated 08/04/2022.
18. At this stage, it would be relevant to point out that nothing has been placed on our record by the Ld. DR to rebut the aforesaid factual position as had been brought to our notice.
19. Apropos the challenge by the Ld. AR regarding the validity of the jurisdiction assumed by the A.O. for initiating proceedings u/s. 147 of the Act, i.e., without obtaining the approval of the specified authority u/s. 151(ii) of the Act, we find substance in the same. Admittedly, the reassessment proceedings u/s. 147 of the Act had been revamped vide the Finance Act, 2021 w.e.f. 01.04.2021. The substituted Sections 147 to 159 and Section 151 of the Act, applicable w.e.f. 01.04.2021 are culled out as under:
“Income escaping assessment-
147. If any income chargeable to tax, in the case of an assessee, has escaped assessment for any assessment year, the Assessing Officer may, subject to the provisions of sections 148 to 153, assess or reassess such income or recompute the loss or the depreciation allowance or any other allowance or deduction for such assessment year (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year).
Explanation.—For the purposes of assessment or reassessment or recomputation under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, irrespective of the fact that the provisions of section 148A have not been complied with.”.
Issue of notice where income has escaped assessment
148. Before making the assessment, reassessment or recomputation under section 147, and subject to the provisions of section 148A, the Assessing Officer shall serve on the assessee a notice, along with a copy of the order passed, if required, under clause (d) of section 148A, requiring him to furnish within such period, as may be specified in such notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139:
Provided that no notice under this section shall be issued unless there is information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the relevant assessment year and the Assessing Officer has obtained prior approval of the specified authority to issue such notice.
Explanation 1.—For the purposes of this section and section 148A, the information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment means,—
(i) any information flagged in the case of the assessee for the relevant assessment year in accordance with the risk management strategy formulated by the Board from time to time;
(ii) any final objection raised by the Comptroller and Auditor General of India to the effect that the assessment in the case of the assessee for the relevant assessment year has not been made in accordance with the provisions of this Act.
Explanation 2.—For the purposes of this section, where,—
(i) a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A, on or after the 1st day of April, 2021, in the case of the assessee; or
(ii) a survey is conducted under section 133A, other than under subsection (2A) or subsection (5) of that section, on or after the 1st day of April, 2021, in the case of the assessee; or
(iii) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner, that any money, bullion, jewellery or other valuable article or thing, seized or requisitioned under section 132 or under section 132A in case of any other person on or after the 1st day of April, 2021, belongs to the assessee; or
(iv) the Assessing Officer is satisfied, with the prior approval of Principal Commissioner or Commissioner, that any books of account or documents, seized or requisitioned under section 132 or section 132A in case of any other person on or after the 1st day of April, 2021, pertains or pertain to, or any information contained therein, relate to, the assessee, the Assessing Officer shall be deemed to have information which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the three assessment years immediately preceding the assessment year relevant to the previous year in which the search is initiated or books of account, other documents or any assets are requisitioned or survey is conducted in the case of the assessee or money, bullion, jewellery or other valuable article or thing or books of account or documents are seized or requisitioned in case of any other person. Explanation 3.—For the purposes of this section, specified authority means the specified authority referred to in section 151.”
Conducting inquiry, providing opportunity before issue of notice under section 148-
“148A. The Assessing Officer shall, before issuing any notice under section 148,—
(a) conduct any enquiry, if required, with the prior approval of specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment;
(b) provide an opportunity of being heard to the assessee, with the prior approval of specified authority, by serving upon him a notice to show cause within such time, as may be specified in the notice, being not less than seven days and but not exceeding thirty days from the date on which such notice is issued, or such time, as may be extended by him on the basis of an application in this behalf, as to why a notice under section 148 should not be issued on the basis of information which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year and results of enquiry conducted, if any, as per clause (a);
(c) consider the reply of assessee furnished, if any, in response to the showcause notice referred to in clause (b);
(d) decide, on the basis of material available on record including reply of the assessee, whether or not it is a fit case to issue a notice under section 148, by passing an order, with the prior approval of specified authority, within one month from the end of the month in which the reply referred to in clause (c) is received by him, or where no such reply is furnished, within one month from the end of the month in which time or extended time allowed to furnish a reply as per clause (b) expires:
Provided that the provisions of this section shall not apply in a case where,—
(a) a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A in the case of the assessee on or after the 1st day of April, 2021; or
(b) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any money, bullion, jewellery or other valuable article or thing, seized in a search under section 132 or requisitioned under section 132A, in the case of any other person on or after the 1st day of April, 2021, belongs to the assessee; or
(c) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any books of account or documents, seized in a search under section 132 or requisitioned under section 132A, in case of any other person on or after the 1st day of April, 2021, pertains or pertain to, or any information contained therein, relate to, the assessee.
Explanation.—For the purposes of this section, specified authority means the specified authority referred to in section 151.”
Time limit for notice-
“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, 2021, 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 subsection (1) of this section, as they stood immediately before the commencement of the Finance Act, 2021:
Provided further that the provisions of this subsection shall not apply in a case, where a notice under section 153A, or section 153C read with section 153A, is required to be issued in relation to a search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A, on or before the 31st day of March, 2021:
Provided also that for the purposes of computing the period of limitation as per this section, the time or extended time allowed to the assessee, as per show cause notice issued under clause (b) of section 148A or the period during which the proceeding under section 148A is stayed by an order or injunction of any court, shall be excluded:
Provided also that where immediately after the exclusion of the period referred to in the immediately preceding proviso, the period of limitation available to the Assessing Officer for passing an order under clause (d) of section 148A is less than seven days, such remaining period shall be extended to seven days and the period of limitation under this subsection shall be deemed to be extended accordingly.
Explanation.—For the purposes of clause (b) of this subsection, “asset” shall include immovable property, being land or building or both, shares and securities, loans and advances, deposits in bank account.
(2) The provisions of subsection (1) as to the issue of notice shall be subject to the provisions of section 151.’
Sanction for issue of notice-
“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 where there is no Principal Chief Commissioner or Principal Director General, Chief Commissioner or Director General, if more than three years have elapsed from the end of the relevant assessment year.”
20. The Hon’ble Apex Court in the case of Union of India & Ors. Vs. Ashish Agrawal, Civil Appeal No.3005/2022, dated 04.05.2022, after deliberating at length on the aforesaid amended provisions had, inter alia, observed as under:
21. Apart from that, we find that the CBDT vide Instruction No.01/2022 while directing implementation of the judgment of the Hon’ble Supreme Court in the case of Union of India & Ors Vs. Ashish Agrawal, Civil Appeal No.3005/2022, dated 04.05.2022, had, while laying down the procedure that is required to be followed by the jurisdictional Assessing Officers/Assessing Officer, inter alia, held that if it is a fit case to issue notice u/s. 148 of the Act, the Assessing Officer shall serve on the assessee a notice u/s 148 after obtaining approval of the specified authority u/s. 151 of the new law.
22. At this stage, we may herein observe that our aforesaid view that in a case where a period of more than three years have elapsed from the end of the relevant assessment year, then, approval for issuing the notice under section 148 of the Act has to be taken from the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General for issuing the notice under section 148 of the Act is supported by the recent judgment of the Hon’ble Jurisdictional High Court of Telangana in Deloitte Consulting India Private Limited vs. The Assessment Unit, Income Tax Department, Civil Writ Petition No. 4061 of 2024, dated 25/09/2025. For the sake of clarity, we deem it apposite to cull out the observations of the Hon’ble jurisdictional High Court in the case of Deloitte Consulting India Private Limited vs. The Assessment Unit, Income Tax Department (supra), as under:
“48. The proviso to Section 151 has been introduced by the Finance Act, 2023 with effect from 01.04.2023. The relevant Section 151 with its proviso is applicable to the case of the petitioner is quoted hereunder:
151. Sanction for issue of notice:- 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 that the period of three years for the purposes of clause (i) shall be computed after taking into account the period of limitation as excluded by the third or fourth or fifth provisos or extended by the sixth proviso to sub-section (1) of Section 149.
49. In the present case, the order under Section 148A(d) and notice under Section 148 have been issued on 07.04.2022 relatable to the relevant Assessment Year 2018- 19 i.e., after more than three years from the end of the relevant assessment year. The approval before passing the order under Section 148A(d) of the Act and before issuing of notice under Section 148 of the Act has been taken from the Principal Commissioner of Income Tax by the respondent No.1, which is permissible only if three years or less than three years have lapsed from the end of the relevant assessment year. In the present case, the relevant three years lapsed on 31.03.2022. Therefore, the prior approval of the Principal Chief Commissioner or Principal Director General or the Chief Commissioner or the Director General was required to be obtained before passing of the order under Section 148A(d) or before issuance of the notice under Section 148 of the Act.
50. Learned counsel for the respondent has relied upon the proviso to Section 151 of the Act inserted by the Finance Act, 2023 with effect from 01.04.2023 quoted above to contend that the period of seven days furnished to the assessee to submit reply to the notice under Section 148A(b) issued on 23.03.2022 has to be excluded for counting the period of three years. It is submitted that the proviso is clarificatory in nature and as such, it would operate from the date when the amended Section 151 was brought into force i.e., 01.04.2021. However, such a contention is fit to be rejected since the proviso to Section 151 has been inserted by the Finance Act, 2023 only with effect from 01.04.2023. It, therefore, cannot be applied retrospectively to exclude the period of seven days in furnishing the reply to the notice under Section 148A(b) of the Act by the assessee.
The Assessing Officer could not have assumed exclusion of such a period while passing the order under Section 148A(d) of the Act or issuing notice under Section 148 of the Act on 07.04.2022 that such a proviso excluding the period consumed in furnishing the reply is going to be brought into the statute book by amendment by the Finance Act, 2023 with effect from 01.04.2023. In taxing statutes, intendment cannot be assumed unless specifically expressed in the provision enacted by the legislature. Therefore, the reopening of assessment without sanction/approval of the specified authority in accordance with Section 151 of the Act was bad in law. Consequently, reassessment order dated 16.01.2024 also is bad in law.”
(emphasis supplied by us)
23. We find that the Hon’ble High Court in its aforesaid order had not only observed that in the case of the assessee before them, i.e., for AY 2018-19 the specified authority for granting approval under section 151 of the Act was the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General as a period of more than three years had lapsed from the end of the relevant Assessment Year, but had also rejected the claim of the revenue that the “proviso” to section 151 of the Act as had been made available on the statute vide the Finance Act, 2023 w.e.f. 01/04/2023 was to be given a retrospective effect. Apart from that, we find that the Hon’ble Supreme Court in its recent order passed in the case of Assistant Commissioner of Income-tax, International Taxation vs. LinkedIn Singapore Pte. Ltd (2025) 180 taxmann.com 158 (SC) had dismissed the Special Leave Petition (SLP) filed by the revenue against the order of the High Court, that had quashed the order passed by the AO under section 148A(d) and the impugned notice under section 148 of the Act for the reason that the approval for reassessment proceedings was granted by the Commissioner of Income Tax after expiry of 03 years from the end of the relevant assessment year, which approval should have been granted by the Principal Chief Commissioner of Income Tax.
24. We, thus, in terms of our aforesaid observation, concur with the Ld. AR that in the present case before us for A.Y. 2018-19, wherein notice under Section 148 of the Act was issued on 09/04/2022, i.e., beyond a period of three years from the end of the assessment year, the A.O. was statutorily obligated to have obtained the approval from either of the authorities specified u/s. 151(ii) (as was then available on the statute), viz. Principal Chief Commissioner or Principal Director General or, where there is no Principal Chief Commissioner or Principal Director General, Chief Commissioner or Director General. However, as the A.O. had obtained the approval from the Pr. Commissioner of Income Tax, i.e., an authority who was not vested with any jurisdiction as per the mandate of Section 151 of the Act (as made available on the statute w.e.f 01.04.2021), therefore, the assessment so framed by him u/s.147 r.w.s. 144B of the Act, dated 01/03/2024, being devoid and bereft of any valid assumption of jurisdiction, is liable to be quashed. Accordingly, we quash the assessment framed by the A.O. under Section 147 r.w.s. 144B of the Act, dated 01/03/2024, in terms of our aforesaid observations.
25. As we have quashed the assessment framed by the A.O. under Section 147 r.w.s. 144B of the Act, dated 01/03/2024, for want of a valid assumption of jurisdiction for issuing notice u/s. 148 of the Act, therefore, we refrain from adverting to and dealing with the other contentions based on which the assessment order has been challenged before us, which, thus, are left open.
26. In the result, the appeal filed by the assessee is allowed in terms of our aforesaid observations.
Order pronounced in the open court on 30th September, 2026.
