Geecee Ventures Limited Vs ACIT (ITAT Mumbai)
₹13.40 Crore Addition Falls: Reopening Approved by the Wrong Authority
The Controversy
The Mumbai Tribunal quashed a reassessment involving an addition of ₹13,39,79,699, holding that the reopening notice had been issued with the approval of an authority who was not competent to grant sanction under the applicable section 151. Since more than three years had elapsed from the end of the relevant assessment year, approval from the Principal Commissioner was insufficient. The notice and the consequential reassessment were held void ab initio.
The decision illustrates how a defect in the statutory approval can invalidate an entire reassessment, even where the proposed addition is substantial and originates from an investigation.
Original Assessment and Subsequent Reopening
The assessee, a listed company engaged in real estate development, power generation, financing and investment activities, filed its return declaring total income of ₹14,49,36,000.
The return was selected for scrutiny under CASS. The original assessment under section 143(3) determined total income at ₹14,97,64,210, after making a disallowance of ₹48,28,215 under section 14A. The assessment also involved an adjustment to book profit, which was assessed at ₹15,25,43,515 under section 115JB.
Subsequently, the Assessing Officer received information from the Investigation Wing arising from a survey under section 133A conducted on JM Financial Asset Management Limited on 15 February 2021.
Based on the survey findings, the assessment was reopened. The Assessing Officer denied the assessee’s claim of exemption under section 10(35) in respect of dividend income of ₹13,39,79,699 and added that amount under section 68. The CIT(A)/NFAC upheld the addition.
The Approval That Proved Fatal
Before the Tribunal, the assessee raised a preliminary jurisdictional objection: the reopening lacked approval from the authority prescribed by law.
The original notice under section 148 was issued on 30 June 2021, with the approval of the Joint Commissioner obtained on the same date. Subsequently, a notice under section 148A(b) was issued on 26 May 2022.
An order under section 148A(d) was passed on 29 July 2022, followed by a fresh section 148 notice on that date. For these proceedings, approval had been obtained from Principal Commissioner of Income-tax-2, Mumbai, on 28 July 2022.
The assessee contended that, since more than three years had elapsed from the end of AY 2017-18, approval from the Principal Commissioner did not satisfy the applicable statutory requirement. Consequently, the notice and the assessment founded upon it were invalid.
The Revenue relied on the orders of the lower authorities and also objected that this ground had not been raised before them. Nevertheless, the Tribunal examined and decided the jurisdictional challenge.
Section 151 Required a Different Authority
The Tribunal observed that, once a section 148 notice was sought to be issued after 31 March 2021, the amended reopening provisions, including those governing the specified authority for approval, applied.
Under section 151, as applicable to the proceedings, where three years or less had elapsed from the end of the relevant assessment year, the specified authority was the Principal Commissioner, Principal Director, Commissioner or Director.
Where more than three years had elapsed, the specified authority was the Principal Chief Commissioner or Principal Director General, or, where there was no such authority, the Chief Commissioner or Director General.
Therefore, the distinction was decisive. For AY 2017-18, more than three years had elapsed when the impugned proceedings were undertaken. Approval from the Principal Commissioner could not fulfil the requirement applicable to that elapsed period.
Decisions Followed and Relief Granted
The Tribunal relied on the Supreme Court’s decision in Union of India v. Rajeev Bansal, 469 ITR 46, and the jurisdictional Bombay High Court decision in Alagh Property Construction P. Ltd., 179 taxmann.com 578.
It also referred to coordinate Bench decisions involving the same approval issue: Sudhir Mortiram Patil, Gamnaram O. Prajapati, Jayshree Gada and Iqbal Issa Patel.
Following these decisions and the express statutory provisions, the Tribunal quashed the section 148 notice and the consequential reassessment order as invalid and void ab initio.
The assessee’s jurisdictional grounds were allowed. Since the reassessment itself had been quashed, the ground concerning the dividend exemption and section 68 addition became academic and was not adjudicated. The appeal was allowed.
Author’s Comments
Obtaining approval is only part of the requirement; obtaining it from the legally competent authority is essential. An approval from an officer holding a senior position cannot substitute for approval from the particular authority designated by Parliament.
This case also demonstrates why the approval record deserves close examination before entering into the merits of a reassessment. The relevant assessment year, the dates of the proceedings and the designation of the sanctioning authority may determine whether the assessment can stand at all.
The ruling must, however, be understood within its proper limits. The Tribunal did not uphold the dividend exemption on merits or reject the section 68 addition on substantive grounds. Relief followed because the reassessment lacked valid statutory sanction. Further, the approval hierarchy discussed is the one applicable to these proceedings, and should not be mechanically applied to notices governed by subsequent amendments.
The Department secured a signature, but the statute required the signature of the right authority.
Cases Discussed
1. Alagh Property Construction (P.) Ltd. — Bombay High Court, (2025) 179 taxmann.com 578. Followed as a jurisdictional precedent on the invalidity of reassessment proceedings where approval under Section 151 was obtained from an authority not competent to grant sanction after expiry of the relevant three-year period.
2. Union of India v. Rajeev Bansal — Supreme Court, (2024) 469 ITR 46. Relied upon for the application of the amended reassessment regime and the requirement to obtain sanction from the specified authority under Section 151.
3. Sudhir Mortiram Patil — ITAT Mumbai, ITA No. 6190/Mum/2025. Referred to as a coordinate Bench decision involving the issue of reassessment sanction after expiry of three years.
4. Gamnaram O. Prajapati — ITAT Mumbai, ITA No. 6791/Mum/2025. Referred to among coordinate Bench decisions considering the competent sanctioning authority under Section 151.
5. Jayshree Gada — ITAT Mumbai, ITA No. 5512/Mum/2025. Referred to as a coordinate Bench decision supporting the challenge to reassessment approved by an inappropriate authority.
6. Iqbal Issa Patel — ITAT Mumbai, ITA No. 3400/Mum/2025. Referred to as another coordinate Bench decision on reopening beyond three years and the applicable Section 151 sanction.
FULL TEXT OF THE ORIGINAL ORDER OF ITAT MUMBAI
The instant appeal emanating from the appellate order dated 27.04.2026 is preferred by the Assessee against the order passed by the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] pertaining to assessment order passed u/s. 147 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] dated 30.05.2023 for the Assessment Year [A.Y.] 2017-18.
2. The grounds of appeal are as under:-
1. The CIT(A) has erred in not holding that the notice issued by the Assessing Officer u/s 148 of the Act is illegal and bad in law as the same is without obtaining the approval of the competent authority as prescribed u/s. 151 of the Act.
2. The CIT(A) has erred in not holding that a notice under section 148 of the Act which is illegal and bad in law thereby rendering the consequential proceedings as non-est.
3. The CIT(A) has erred in upholding the assessment order passed by the Assessing Officer u/s. 147 of the Act which is illegal and bad in law.
4. The CIT(A) has erred in upholding the rejection of claim of exemption in respect of dividend income of Rs. 13,39,79,699/- u/s. 10(35) of the Act. The CIT(A) has also erred in not holding that invocation of s. 68 of the Act is bad in law.
3. Brief facts of the case are the assessee a listed company engaged in Business of Real Estate Development, Power Generation, Financing & Investing Business etc. filed its return of income declaring total income as Rs.14,49,36,000/-. The case was selected for scrutiny under CASS and the assessment was originally completed under Section 143(3) determining the total income of Rs. 14,97,64,210/- whereby an addition was made in respect to disallowance u/s 14A of the Act amounting to Rs. 48,28,215/- under normal provisions of the Act as well as book profit which had been assessed at Rs. 15,25,43,515/- under provisions of section 115JB of the Act. Subsequently, the case was reopened u/s 147 of the Act based on the receipt of information from the Investigation Wing which revealed that a survey action u/s.133A of the Act was conducted in the case of M/s. JM Financial Asset Management Limited on 15.02.2021 and on the basis of the survey findings, the AO disallowed the exemption on Dividend income u/s 10(35) of the Act amounting to Rs. 13,39,79,699/- and added back to the total income, u/s 68 of the Act. The ld.CIT(A) upheld the addition.
4. The ld.AR before us, has raised the preliminary ground nos. 1 to 3 claiming that the notice issued u/s 148 of the Act was invalid as also the consequential assessment order inasmuch as the AO failed to take approval of the appropriate authority before issuing notice for reopening of the case. It was submitted that in this case original notice u/s 148 of the Act was issued on 30.06.2021 and approval of JCIT was taken on the same date. Subsequently, notice u/ 148A(b) was issued on 26.05.2022 an order u/s 148A(d) was passed on 29.07.2022 followed by notice u/s 148 dated 29.07.2022 with the approval of Pr.CIT-2, Mumbai dated 28.7.2022.The notice having been issued after three years from the end of theassessment year,the specified authority for obtaining the approval was Pr.CCIT, CCIT or DGIT while in this case approvalof Pr.CIT was taken and the assessment order was passed after issuing notice u/s 148 of the Act both of which are non est and invalid. Reliance has been placed on a catena of decisions of various courts including the jurisdictional High Court and coordinate bench decision of ITAT where on similar facts, the notices and the consequential assessment orders have been held to be void ab intio.
5. On the other hand, ld. DR has strongly relied on the orders of lower authorities and also contended that this ground was not taken by the assessee before the lower authorities.
6. We have heard the rival submissions and carefully considered the materials placed before us. We are of the considered view that once a notice u/s. 148 of the Act is sought to be issued after 31.03.2021, the provisions regarding reopening, including those relating to the ‘specified authority’ for approval come into force. Since first notice in this case was issued on 30.06.2021 and the order u/s. 148A(d) was passed on 29.07.2022, the limited issue for consideration is that since more than 3 years have elapsed from the end of the relevant assessment year i.e A.Y. 2017-18, whether the specified authority to grant sanction for issue of notice in this case is Pr. CIT or Pr.CCIT/CCIT? In this regard, the relevant provisions of section 151 are as under:
“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 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.]”
6.1 The issue in hand has been a matter of consideration by the Courts. In view of the ratio laid down by the hon’ble Apex Court in the case of Rajeev Bansal 469 ITR 46(SC)and followed by the jurisdiction High Court decision in the case of Alagh Property Construction P.Ltd 179 taxmann.com 578(Bom), the entire proceedings are liable to be invalid. Reliance could also be placed on several coordinate bench orders involving identical issue where reopening was beyond three years i.e. Sudhir Mortiram Patil in ITA No.6190/Mum/2025, Gamnaram O. Prajapati in ITA No.6791/Mum/2025, Jayshree Gada in ITA No. 5512/Mum/2025 and Iqbal Issa Patel in ITA No. 3400/Mum/2025.
6.2 Respectfully following the decisions referred above and in the light of specific provisions of the Act in this regard, we quash the notice issued u/s 148 of the Act as also the consequential assessment order invalid and ab initio void. Thus, the ground no.1 to 3 of the assessee’s appeal are allowed.
7. Since we have quashed the reassessment notice, other ground on merit is rendered academic and hence, it is not being adjudicated upon.
8. In the result, appeal of the assessee is allowed.
Order pronounced in the open court on 01/10/2026.
