MADHAV PANDURANG BHANAGE,NASHIK V. INCOME TAX OFFICER, WARD 1(1), NASHIK

ITA 2553/PUN/2025

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The case involves Madhav Pandurang Bhanage, the appellant, who contested the validity of a notice issued under section 148 of the Income Tax Act, 1961, by the Income Tax Officer (ITO), Ward - 1(1), Nashik. The notice was issued for the assessment year 2017-18, alleging that income had escaped assessment. The appellant argued that the notice was barred by limitation as the income in question was below the threshold of Rs. 50 lakhs and that the proper procedural requirements for issuing the notice were not followed, including the lack of proper approval from the correct authority as mandated by section 151 of the Act. The Tribunal, referencing a similar case and the decision of the Hon'ble Supreme Court, found in favor of the appellant, leading to the quashing of the notice and the assessment proceedings.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 834346 (ITAT-PUNE)
• Duration Of Justice: 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Appeal Filed On: 31-10-2025
• Other Referred Cases: Tia Enterprises (P) Ltd. Vs. ITO, Alag Property Construction Pvt. Ltd. Vs. ACIT, UOL vs. Rajeev Bansal
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VISHWAJIT SHINDE
• Assessee Lawyers: CHINMAY PATHAK
• Keywords: Set aside; Sale consideration of property below Jantri Value; Fair market value; Cost of acquisition; Reason to believe
• Section: 148; 143(3); 50C

Judgement Text

" आयकर अपीलीय अधिकरण \" एस एम सी \"न्यायपीठ पुणे में । IN THE INCOME TAX APPELLATE TRIBUNAL \"SMC\" BENCH, PUNE BEFORE Dr. MANISH BORAD, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.2553/PUN/2025 धििाारण वर्ा / Assessment Year: 2017-18 Madhav Pandurang Bhanage, Mangalmurti Swami Co-op Society, Lamkhede Mala, Meri Colony S.O., Nashik- 422004 Maharashtra PAN-ABLPB0449A Vs ITO, Ward - 1(1), Nashik Appellant Respondent Assessee by : Shri Chinmay Pathak (Through Virtual) Revenue by : Shri Vishwajit Shinde, JCIT Date of hearing : 21.01.2026 Date of pronouncement : 03.02.2026 आदेश/ORDER PER DR. MANISH BORAD, ACCOUNTANT MEMBER :- This appeal at the instance of the assessee is directed against the order of Ld. CIT(A) NFAC, Delhi dated 26.08.2025 framed u/s 250 of the Income Tax Act, 1961 for A.Y. 2017-18 which is arising out of order passed u/s 143(3) r.w.s. 147 of the Act dated 31.03.2023 2. Assessee has raised following grounds of appeal:- 1] The assessee submits that the notice u/s 148 dated 27.07.2022 issued by the A.O. to the legal heir of the appellant beyond three years from the end of the relevant A.Y. i.e. 2017 18 is barred by limitation since, the income alleged to have escaped asst. is much below the threshold of Rs. 50 lakhs as contemplated u/s 149 and the same is evident from the asst. order passed u/s 147. 2] Without prejudice to the above ground, the appellant submits that the A.O. issued notices u/s 148A and 148 to the deceased appellant after his death Printed from counselvise.com 2 ITA No.2553/PUN/2025 and the same was informed to him consequent to which the A.O. without following the mandatory procedure as contemplated u/s 148A issued notice u/s 148 to the legal heir of the appellant in continuation to the erstwhile illegal proceedings initiated against the deceased appellant and therefore, the notice issued u/s 148 is nonest in the eyes of law. 3] Without prejudice to the above grounds, the appellant submits that the approval obtained by the A.O. for issuing notice u/s 148 beyond the period of three years from the end of the relevant A.Y. i.e. 2017-18 is of Pr. CIT as against the approval of Pr. CCIT as contemplated u/s 151 and therefore, the notice issued u/s 148 is bad in law being without proper approval. 4] Without prejudice to the above grounds, the appellant submits that in the case other assessees with similar facts, the dept. has accepted the explanation furnished by the similarly placed assessees as evident from the asst. orders passed u/s 147/143(3) and therefore, the A.O. cannot take contrary view on identical facts in the instant case. 5] Without prejudice to the above grounds, the appellant submits that the application sent by the A.O. to the higher authority for obtaining approval u/s 151 and the approval u/s 151 obtained from the Higher Authority u/s 151 has not been confronted to the appellant along with the Notice u/s 148 and hence, the notice u/s 148 may be declared as null and void in view of CBDT instructions F.No.299/10/2022-Dir(Inv.III)/611 Dated: 01.08.2022 as well as the law laid down by Hon'ble Delhi High Court in Tia Enterprises (P) Ltd. Vs. ITO [(2024) 468 ITR 5], with the SLP in this case being dismissed by the Hon'ble Supreme Court. 6] Without prejudice to the above grounds, the assessee submits that the notice u/s 148 issued on 27.07.2022 by the Jurisdictional A.O. is contrary to the CBDT Mandate issued vide notification dated 29.03.2022 read with section 151A of the Act, directing that all notices u/s 148 after 29.03.2022 shall be issued under the Faceless Scheme and not by Jurisdictional A.O.s and therefore, the said notice u/s 148 is bad in law. 7] Without prejudice to the above grounds, the learned CIT(A) has failed to appreciate that the addition made by the A.O. of Rs.12,15,750 u/s 50C towards share of the appellant in differential amount between Stamp Duty Value and Actual sale consideration is computed without considering the indexed cost of acquisition/FMV as on 01.04.1981 and therefore, the said addition is not justified in law and on facts. 8] The appellant craves leave to add/ alter/ amend any of the grounds of appeal. 3. At the outset Ld. Counsel for the assessee referring to ground No. 3 submitted that the notice issued u/s 148 of the Act deserves to be quashed as Ld. Assessing Officer (AO) has not taken proper approval provided u/s 151 of the Act because for the notice issued beyond 3 years from the end of assessment year Ld. AO erred in taking approval from Principle CIT as against the requirement of taking said approval from Principle CCIT. He submitted that the issue stands squarely covered by the decision of this Hon’ble Tribunal in the case of ITO, Dhule Vs. Santosh Jaynarayan Printed from counselvise.com 3 ITA No.2553/PUN/2025 Sharma ITA No. 2324/PUN/2025 and CO No. 51/PUN/2025 dated 06.01.2026. 4. On the other hand Ld. Departmental Representative (DR) supported the orders of Ld. CIT(A). 5. I have heard rival contentions and perused the record placed before me. The assessee is an individual and did not file the regular return of income for A.Y. 2017-18. Based on the information about the transaction of the assessee in immovable property Ld. Assessing Officer (AO) had reason to believe that income of Rs. 75,83,000/- has escaped assessment for A.Y. 2017-18. Ld. AO issued notice u/s 148A(b) on 27.07.2022 after taking the approval from PCIT. The validity of this notice u/s 148 of the Act has been challenged by the assessee in ground No. 3 stating that Ld. AO for the purpose of re-opening the case of the assessee beyond 3 years from the end of A.Y. 2017-18 was required to take prior approval from PCCIT however the notice u/s 148 of the Act in the instant case has been issued after taking approval from PCIT, Nashik. Now the validity of the notice u/s 148 of the Act has been challenged on the ground that due to lack of proper approval u/s 151 of the Act the notice u/s 148 deserves to be held as bad in law and liable to be quashed. Now under the similar issue under identical set of facts has been dealt with by this Tribunal in the case of another assessee namely Santosh Jaynarayan Sharma in ITA No. 2324/PUN/2025 and the finding of the Tribunal reads as under:- 5. We have heard the rival contentions and perused the record placed before us. We observe that the assessee is an individual and the return of income for A.Y. 2017-18 filed on 17.03.2018 declaring income of 220,31,900. Ld. Assessing Officer based on the information about explained cash credit/investment amounting to Rs. 45,76,025/- had reason to believe that income to this extent has Printed from counselvise.com 4 ITA No.2553/PUN/2025 escaped assessment and has issued notice u/s.148 of the Act on 26.07.2022 after taking approval from the Principal Commissioner, Nashik. Now the issue raised by the assessee in Ground No.1 of the Cross Objection that since the escapement of income is less than 250.00 lakh and notice has been issued after three years, Id. Assessing Officer ought to have taken approval from Principal Chief Commissioner of Income Tax in place of Principal Commissioner of Income Tax. We observe that similar issue came for adjudication before the Hon'ble Jurisdictional High Court in the case of Alag Property Construction Pvt. Ltd. Vs. ACIT wherein also for A.Y. 2017- 18 notice u/s.148A(d) and section 148 of the Act were issued on 18.08.2022 and 23.08.2022 and Hon'ble Court has dealt with the issue of grant of approval u/s.151 of the Act for issuing notice u/s.148 of the Act beyond three years observing as follows: 10. On perusal of the order dated 18.08.2022, passed under Section 148A(d) of the Act we find that the aforesaid order was passed after taking approval from Principal Commissioner of Income Tax (Respondent No.2). Since the aforesaid order was passed, as well as the notice under section 148 was issued, after the expiry of three years from the end of A.Y. 2017-18, as per the substituted provisions of re-assessment, the authority specified under Section 151(ii) of the Act (ie. Principal Chief Commissioner or Chief Commissioner) was required to grant approval. Accordingly, we conclude that in the present case, the approval has been obtained from the authority specified under Section 151(1) of the new regime instead of the authority specified under Section 151f of the new regime 11. The Hon'ble Supreme Court in the above case has drawn an illustration in para 78 of its order in the context of A.Y. 2017-18 (which is also the relevant Assessment year in the present Writ Petition) wherein it is categorically held that the authority specified under section 151(1) can accord sanction only upto 30.06.2021. This illustration makes it absolutely clear that when the period of three years from end of relevant Assessment Year expired between 20.03.2020 and 31.03.2021, the extension by virtue of TOLA upto 30.06.2021 and not beyond. Thus, it can be said that the period of three years from the end of the relevant Assessment Year (in the present case A.Y. 2017-18) expired on 30.06.2021, whereas Respondent No. 1, despite passing order under section 148Ajd) on 18.08.2022, and issuing notice under section 148 on 23.08.2022 respect of Assessment Year 2017-18), has obtained approval of Respondent No.2 who is not the authority as prescribed under section 151() 12. Non-compliance by Respondent No.1 with the provisions contained in Section 148A(d) read with Section 151 vitiates the jurisdiction of Respondent No.1 to issue a notice under Section 148 of the Act. Printed from counselvise.com 5 ITA No.2553/PUN/2025 13. We are clearly of the view that the present matter stands covered by the decision of Hon'ble Supreme Court in the case of UOL vs. Rajeev Bansal (supra) and we are bound by it. Accordingly, we hold that the order dated 18.08.2022 passed under Section 148Ad of the Act and the consequential notice issued under section 148 dated and 23.08.2022 are bad in laus, and hence, are required to be quashed and set aside. 14. We accordingly set aside the impugned order dated 18.08.2022 passed under Section 148A(d) of the Act and the consequential notice issued under section 148 dated 23.08.2022, and all other proceedings/orders emanating therefrom.” 6. On examining the facts of the instant case in light of the above judgment, we find that in the assessee's case also notice u/s.148 of the Act has been issued after three years and the proper course of action for issuing valid notice u/s.148 of the Act was to get approval from the Principal Chief Commissioner of Income Tax. However, in the instant case, the approval has been taken from the Principal Commissioner of Income Tax. Respectfully following the above judicial binding precedent, we are inclined to hold that proper approval u/s.151 of the Act has not been taken and therefore the notice u/s.148 of the Act is invalid and liable to be quashed. Accordingly, Ground No.1 raised by the assessee in the Cross Objection is allowed. 6. On careful examination of the facts of the instant case in the light of the above decisions of this Tribunal, I find that the same is squarely applicable on the legal issues raised in ground No. 3 in the instant appeal and I therefore hold that Ld. AO failed to take proper approval as mandatory u/s 151 of the Act and erred in issuing the notice u/s 148 of the Act beyond 3 years by taking approval from PCIT in place of PCCIT. I therefore hold the notice u/s 148 of the Act issued in the instant case is bad in law and the same deserves to be quashed. Accordingly in absence of assuming proper jurisdiction the assessment proceedings also stands quashed. Ground No. 3 raised by the assessee is allowed. Printed from counselvise.com 6 ITA No.2553/PUN/2025 7. Dealing with the remaining grounds raising legal and issues on merits are merely academic in nature as I have already quashed the notice issued u/s 148 of the Act. Therefore remaining grounds are dismissed as infructuous. 8. In the result appeal of the assessee is allowed as per terms indicated herein above. Order pronounced on this 03rd day of February, 2026. Sd/- (MANISH BORAD) ACCOUNTANT MEMBER पुणे/ Pune; दििांक / Dated: 03rd February, 2026. Neeta आिेश की प्रधिधलधप अग्रेधर्ि / Copy of the Order forwarded to: 1. अपीलार्थी / The Appellant. 2. प्रत्यर्थी / The Respondent. 3. The Pr. CIT concerned. 4. धवभागीय प्रधिधिधि, आयकर अपीलीय अधिकरण, \"SMC\" बेंच, पुणे / DR, ITAT, \"SMC\" Bench, Pune. 5. गार्ा फाइल / Guard File. आिेशािुसार / BY ORDER, Assistant Registrar आयकर अपीलीय अधिकरण, पुणे / ITAT, Pune Printed from counselvise.com "