AFTAB AHMAD SHAH,DELHI V. CIRCLE INTERNATIONAL TAX 3(1)(2), DELHI

ITA 1867/DEL/2024

AI Insights

The case involves two appeals by Aftab Ahmad Shah against the orders of the Assistant Commissioner of Income Tax (ACIT), Circle - 3(1)(2), International Taxation, Delhi, for the assessment years 2016-17 and 2017-18. The appeals were consolidated due to common issues involved. The primary contention was the validity of the notice issued under section 148 of the Income Tax Act, which the assessee argued was without proper sanction and based on a perverse order under section 148A(d). The Tribunal examined the procedural compliance with sections 148, 149, and 151 of the Income Tax Act, particularly focusing on the approval required for issuing notices beyond three years from the end of the relevant assessment year. The Tribunal concluded that the necessary approval was not obtained from the correct authority as stipulated by the amended section 151, leading to the quashing of the reassessment orders.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 669212 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2017-2018
• Other Referred Cases: Twilight Infrastructure Private Limited Vs Income Tax Officer Ward 25(3), Delhi
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANJULA JAIN
• Assessee Lawyers: NEERAJ JAIN
• Keywords: Set aside; Reassessment proceedings; Competent authority
• Section: 148; 142(1); 5(2)

Judgement Text

"ITA No. 1866/DEL/2024 [A.Y 2016-17] ITA No. 1867/DEL/2024 [A.Y 2017-18] Aftab Ahmad Shah Vs. The A.C.I.T Page 1 of 9 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI ‘D’ BENCH, NEW DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER AND SHRI NAVEEN CHANDRA, ACCOUNTANT MEMBER ITA No. 1866/DEL/2024 [A.Y 2016-17] ITA No. 1867/DEL/2024 [A.Y 2017-18] Aftab Ahmad Shah Vs. The A.C.I.T D-40, Ground Floor, Circle – 3(1)(2) Jangpura Extension International Taxation Delhi New Delhi PAN – BVAPS 5352 M (Applicant) (Respondent) Assessee By : Shri Neeraj Jain, CA Department By : Ms. Anjula Jain, CIT- DR Date of Hearing : 05.06.2025 Date of Pronouncement : 05.06.2025 ORDER PER NAVEEN CHANDRA, ACCOUNTANT MEMBER:- The above two appeals by the assessee are preferred against the order of the ld. A.C.I.T Circle – 3(1)(2) International Taxation, Delhi dated 29.02.2024 pertaining to A.Ys 2016-17 and 2017-18. ITA Nos. 1866 & 1867/DEL/2024 [A.Ys 2016-17 & 2017-18] Aftab Ahmad Shah Page 2 of 9 2. Since common issues are involved in both the appeals and pertain to same assessee, they were heard together and are disposed of by this common order for the sake of convenience and brevity. ITA No. 1866/DEL/2024 A.Y. 2016-17 3. Grounds raised by the assessee in the year under consideration reads as under: “1. That the notice under section 148 issued by the ld. AO is bad in law and without a proper sanction. 2 That the ld. AO has passed an order under section 148A(d) which is perverse, to issued notice under section 148, as no reasonable person could arrive at a decision drawn by him on the basis of material available on record and the reply of the assessee that it is a fit case to issue notice. 3. That in the fact and circumstances of the case the ld. AO has erred in treating the return filed by the assessee in response to notice under section 148 as invalid return. 4. That ld.AO has erred in considering the notice issued under section 142(1) through the ITBA system, as duly served on the assessee. 5. That the directions of the Id. DRP-01, New Delhi to the ld. AO are bad in law and contrary to the provisions of section 5(2) read with section 9 of the Act. 6. That the ld. AO has erred in making an addition of Rs. 2,31,14,033 pursuant to the directions of the Id. DRP-01, New ITA Nos. 1866 & 1867/DEL/2024 [A.Ys 2016-17 & 2017-18] Aftab Ahmad Shah Page 3 of 9 Delhi on account of foreign remittance in NRE account of a Non- Resident person as unexplained money under section 69A of the Act. 7. That the ld.AO has not complied with the directions of the ld. DRP-01, New Delhi to pass a speaking order after verifying from records if the requirement of approval of the competent authority in terms of section 151 of the Act has been duly complied with. 8. That the ld. AO has erred in initiating penalty proceedings under section 271AAC and section 271F of the Act. 9. That the above grounds of appeal are with prejudice to each another. 10. That the appellant craves leave to add, amend or alter above grounds of appeal.” 4. In addition to the above grounds, the assessee has raised an additional ground of appeal as under: “The notice issued u/s 148 is invalid as necessary approval in terms of section 151, as amended by the Finance Act 2021 has not been obtained.” 5. Briefly stated, the facts of the case are that information regarding high value transactions undertaken by Shri Aftab Ahmad Shah, the present assessee, was received by the DDIT/ADIT [Inv] Srinagar through Insight Portal. As per the information, the assessee has made inward ITA Nos. 1866 & 1867/DEL/2024 [A.Ys 2016-17 & 2017-18] Aftab Ahmad Shah Page 4 of 9 remittance of Rs. 2,27,31,635/- during the FY 2015-16, relevant to the assessment year 2016-17. 6. After due analysis of the relevant information and verification from the Department's database, the Assessing Officer observed that the income corresponding to Rs. 2,27,31,635/- has escaped assessment as the assessee has not filed the return of income for A.Y 2016-17. Thus, income from above transaction has not been offered for tax and due tax has not been paid. 7. Thereafter, in conformity with the Hon'ble Supreme Court Order dated 04.05.2022 following due procedure as provided by section 148A of the Act, order u/s 148A(d) of the Act was passed on 26.07.2022 with the prior approval of the Specified Authority. Subsequently, notice u/s 148 of the Act dated 28.07.2022 was issued and duly served on the assessee through ITBA System. In response to notice u/s 148, the assessee filed his return after due date on 22.05.2023 and did not verify the return. Hence, the Assessing Officer was of the opinion that the return filed by the assessee was invalid. 8. At this juncture we find it appropriate to deal with the additional ground taken by the assessee that approval in terms of section 151 of ITA Nos. 1866 & 1867/DEL/2024 [A.Ys 2016-17 & 2017-18] Aftab Ahmad Shah Page 5 of 9 the IT Act has not been obtained by the AO. Order under section 148A(d) was passed on 26/07/2022 and notice under section 148 was issued on 27/07/2022 after obtaining prior approval of the Commissioner of Income Tax-1, (International Taxation). The relevant portions of section 148, 149 and 151 as amended by Finance Act, 2021 which governs the issue of approval at hand, are reproduced hereunder: 1st Proviso to Section 148. \"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:\" Section 149 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, represent in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more that year.\" Section 151 reads as under: 151. Sanction for issue of notice:- Specified authority for the purposes of section 148 and section 148A shall be,- ITA Nos. 1866 & 1867/DEL/2024 [A.Ys 2016-17 & 2017-18] Aftab Ahmad Shah Page 6 of 9 (i) Principal Commissioner of 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 of Principal Director General, Chief Commissioner or Director General, if more than three years have elapsed from the end of the relevant assessment year. 9. In the instant case, notice under section 148 dated 27.02.2022 was issued for escapement of income of Rs. 2,27,31,635/- which is above Rs 50 lakh. The notice u/s 148 was issued for a period beyond three years from the relevant assessment year. In terms of provisions of Section 151, as amended by Finance Act, 2021, therefore, the specified authority for grant of approval becomes Principal Chief Commissioner or Principal Director General or where there is no Principal Chief Commissioner of Principal Director General, Chief Commissioner or Director General. We find that in the instant case, the approval u/s 151 has been obtained from the Principal Commissioner of Income Tax-1 (International Taxation). We are therefore, of the considered view that the impugned re-assessment is vitiated for want of proper, legal and valid approval u/s 151(ii). Accordingly, the reassessment made in the instant case can not be sustained and we hereby quash the said reassessment. The additional ground of appeal is hereby allowed. ITA Nos. 1866 & 1867/DEL/2024 [A.Ys 2016-17 & 2017-18] Aftab Ahmad Shah Page 7 of 9 10. We are fortified in our view by the decision of the Hon'ble Delhi High Court in the case of Twilight Infrastructure Private Limited Vs Income Tax Officer Ward 25(3), Delhi, which held as under: \"12.3 In these cases, there is no dispute that although three (3) years had elapsed from the end of the relevant AY, the approval was sought from authorities specified in clause (1), as against clause (ii) of Section 151. 12.4 Before us, the counsel for the revenue continue to hold this position. The only liberty that they seek is that if, based on the judgement in Ganesh Dass Khanna, the impugned orders and notices are set aside, liberty be given to the revenue to commence reassessment proceedings afresh. 13. Therefore, having regard to the aforesaid, the impugned notices and orders in each of the above-mentioned writ petitions are quashed on the ground that there is no approval of the specified authority, as indicated in Section 151(ii) of the Act. The direction is issued with the caveat that the revenue will have liberty to take steps, if deemed necessary, albeit as per law.\" 11. As the case has been decided on the basis of jurisdictional ground, no adjudication is made on the merits of the case. ITA No. 1867/DEL/2024 (AY 2017-18) 12. Facts and circumstances are identical to those discussed and decided by us hereinabove. The issue of proper sanction has been decided by us in ITA No. 1866/DEL/2024 [supra]. For our detailed ITA Nos. 1866 & 1867/DEL/2024 [A.Ys 2016-17 & 2017-18] Aftab Ahmad Shah Page 8 of 9 discussion and findings given therein, the additional ground for the instant year is allowed. As the case has been decided on the basis of jurisdictional ground, no adjudication is made on the merits of the case. 13. In the result, both the appeals of the assessee in ITA Nos. 1866 and 1867/DEL/2024 are allowed. The order is pronounced in the open court on 05.06.2025. Sd/- Sd/- [VIKAS AWASTHY] [NAVEEN CHANDRA] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 05th JUNE, 2025. VL/ Copy forwarded to: 1. Assessee 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi ITA Nos. 1866 & 1867/DEL/2024 [A.Ys 2016-17 & 2017-18] Aftab Ahmad Shah Page 9 of 9 Sl No. PARTICULARS DATES 1. Date of dictation of Tribunal Order . 2. Date on which the typed draft Tribunal Order is placed before the Dictation Member 3. Date on which the typed draft Tribunal Order is placed before the other Member 4. Date on which the approved draft Tribunal Order comes to the Sr. P.S./P.S. 5. Date on which the fair Tribunal Order is placed before the Dictating Member for pronouncement 6. Date on which the signed order comes back to the Sr. P.S./P.S 7. Date on which the final Tribunal Order is uploaded by the Sr. P.S./P.S. on official website 8. Date on which the file goes to the Bench Clerk alongwith Tribunal Order 9. Date of killing off the disposed of files on the judiSIS portal of ITAT by the Bench Clerks 10. Date on which the file goes to the Supervisor (Judicial) 11. The date on which the file goes for xerox 12. The date on which the file goes for endorsement 13. The date on which the file goes to the Superintendent for checking 14. The date on which the file goes to the Assistant Registrar for signature on the Tribunal order 15. Date on which the file goes to the dispatch section 16. Date of Dispatch of the Order "