MOHOL NAGARI SAHAKARI PATPURVATHA SANSTHA, MARYADIT.,SOLAPUR V. ITO, WARD-2, PANDHARPUT, PANDHARPUR

ITA 260/PUN/2025

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The case involves Mohol Nagari Sahakari Patpurvatha Sanstha Maryadit, a credit co-operative society, which appealed against the reassessment order passed by the Income Tax Officer, Ward-2, Pandharpur. The reassessment was based on the society's deposits of unexplained cash credits. The primary legal contention was the validity of the notice issued under section 148 of the IT Act, which was challenged on the grounds that the necessary approval for issuing the notice was not obtained from the correct authority as mandated by section 151 of the IT Act. The Tribunal, referencing several precedents, including decisions from the Bombay High Court and other benches, found in favor of the assessee, leading to the quashing of the reassessment order.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 840412 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2016-2017
• Appeal Filed On: 30-01-2025
• Other Referred Cases: Karia Builders v. ITO, Bhagwan Sahai Sharma vs. DCIT, Cipla Pharma and Life Sciences Ltd. vs. DCIT, Siemens Financial Services Pvt. Ltd. vs. DCIT, Gigantic Mercantile (P.) Ltd. vs. ACIT, Rajaram Ramswarup Jaju vs. ITO, Union of India vs. Rajeev Bansal
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHARAT ANDHALE VIRTUAL
• Assessee Lawyers: S.N. PURANIK
• Keywords: Set aside; Opportunity of being heard; Additional evidence; Unexplained cash credit; Reopening of assessment; Competent authority
• Section: 147; 148; 144; 68

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI MANISH BORAD, ACCOUNTANT MEMBER AND SHRI VINAY BHAMORE, JUDICIAL MEMBER आयकर अपील सं. / ITA No.260/PUN/2025 िनधाᭅरण वषᭅ / Assessment Year : 2016-17 Mohol Nagari Sahakari Patpurvatha Sanstha Maryadit, Market Yard Mohol, Tal. Mohol, Dist. Solapur- 413213. PAN : AAAAM1185F Vs. ITO, Ward-2, Pandharpur. Appellant Respondent आदेश / ORDER PER VINAY BHAMORE, JM: This appeal filed by the assessee is directed against the order dated 29.11.2024 passed by Ld. CIT(A)/NFAC for the assessment year 2016-17. 2. The appellant has raised the following grounds of appeal :- “1. CIT(A) has erred in not adjudicating the Jurisdictional issue as to validity of Notice u/s 148 and Order u/s 147. Appellant prays to for adjudication and cancellation of the Order. Assessee by : Shri S. N. Puranik Revenue by : Shri Bharat Andhale (Virtual) Date of hearing : 03.12.2025 Date of pronouncement : 23.02.2026 Printed from counselvise.com ITA No.260/PUN/2025 2 2. CIT(A) has erred in not adjudicating the issue of validity of Order u/s 147 r.w.s. 144B, as to passing Order without issue of Notice u/s 143(2). Appellant prays for cancellation of Assessing Officer's Order. 3. CIT(A) has erred in stating that evidence as to Jurisdictional issues were not available with Assessing Officer. Appellant prays that Jurisdictional issue is arising out of non- consideration and non-action, non application of mind by Assessing Officer, and concerned authorities. Appellant prays the Honourable Bench to adjudicate on these Grounds and cancel the Order. 4. CIT(A) has erred in not allowing Appellant claim of Rs.1,57,41,059/- as Co-operative Society has received Deposits in cash from its members and credited to their respective members Account. 5. CIT(A) has not acted in just and fair manner, by not calling Remand Report, where necessary and not adjudicating Jurisdictional issue. 6. Appellant prays to add, alter, amend, take additional grounds, submit additional evidence.” 3. Facts of the case, in brief, are that the assessee is a credit co-operative society engaged in the activity of providing credit facilities to its members and also accepting deposits from them. The return of income for the year under consideration was furnished by declaring Rs.Nil income after claiming deduction u/s 80P of the IT Act. Notice u/s 148 was issued on 29-07-2022 on the basis of information that the assessee credit co-operative society has deposited cash of Rs.1,64,08,994/- and Rs.2,79,12,058/- in its bank account wherein the PAN of the persons from whom the amount was claimed to have been collected was not disclosed. Printed from counselvise.com ITA No.260/PUN/2025 3 Subsequently, the statutory notices u/s 142(1), show cause notice and letter respectively were issued to the assessee. The assessee in response furnished only part information. After considering the submission of the assessee, the Assessing Officer completed the assessment u/s 147 r.w.s. 144 r.w.s. 144B of the IT Act and vide order dated 30.05.2023 determined taxable income of Rs.1,57,41,059/- as against Nil income returned by the assessee. The above assessed income includes addition of Rs.1,57,41,059/- towards unexplained cash credits u/s 68 of the IT Act. 4. Being aggrieved with the above assessment order, assessee preferred an appeal before Ld. CIT(A)/NFAC. Since the assessment order was passed u/s 144 of the IT Act, Ld. CIT(A)/NFAC without going into merits of the case & by exercising the powers u/s 251 of the IT Act remanded the matter back to the Assessing Officer for making a fresh assessment. 5. Again being aggrieved with the above order passed by Ld. CIT(A)/NFAC, the assessee is in appeal before this Tribunal. 6. We have heard Ld. counsels from both the sides and perused the material available on record including the paper books and copy of case laws furnished by the assessee. In this regard, we find that in the memo of appeal assessee has raised as many as 6 grounds of Printed from counselvise.com ITA No.260/PUN/2025 4 appeal and also furnished an application for admission of following additional ground which is legal in nature :- “Authorization u/s. 151 by Pr. CIT-4 Pune instead of Pr. CCIT, Pune, which is after three years from the end of assessment year has resulted proceedings u/s. 148 and assessment order as “Invalid”, “Without jurisdiction” and “Bad in law”.” 7. With regard to above legal ground, we find that similar ground was also raised before Ld. CIT(A)/NFAC as ground no.2, however it was not adjudicated by him. Accordingly, we admit the additional ground raised by the assessee and proceed to adjudicate the same. 8. With regard to additional ground, it was the contention of Ld. counsel of the assessee that the approval u/s 151 of the IT Act which was required prior to issue of notice u/s 148 of the IT Act in this case was obtained from Pr. CIT-4, Pune whereas it was required to be obtained from Pr. CCIT, Pune, therefore, the proceedings u/s 148 of the IT Act and the consequent assessment order are invalid without jurisdiction and bad in law. With regard to above contentions, we find that the notice dated 29-07-2022 issued by the Assessing Officer u/s 148 of the IT Act is annexed on page no.11 of the paper book and a perusal of para 3 of the same makes it clear that it was issued after obtaining the prior approval of the Pr. Printed from counselvise.com ITA No.260/PUN/2025 5 Commissioner of Income Tax, Pune, whereas as per section 151(ii) of the IT Act the same was required to be obtained from Pr. Chief Commissioner of Income Tax, Pune. 9. In support of this contention, Ld. counsel of the assessee relied on coordinate bench decisions passed in following cases :- (i) Karia Builders v. ITO in ITA No.2401/PUN/2024 order dated 23.07.2025, wherein the Tribunal while allowing the appeal filed by the assessee observed as under :- “24. Since the notice has been issued beyond the period of three years from the end of the relevant assessment year, therefore, in view of the provisions of section 151, the competent authority for granting the approval for issue of notice u/s 148 of the Act is the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General. Since the approval in the instant case has been granted by the PCIT instead of any of the above authorities, therefore, such approval being not in accordance with law, the re-assessment proceedings are invalid. For the above proposition, we rely on the decision of the Hon’ble Delhi High Court in the case of Bhagwan Sahai Sharma vs. DCIT (supra) where it has been held that section 151 mandates that where more than three years have elapsed from end of relevant assessment year, notice under section 148 requires prior approval of the Principal Chief Commissioner or Principal Director General or where there is no Principal Chief Commissioner or Principal Director General, Chief Commissioner or Director General. The Hon’ble High Court further held that TOLA would have no relevance for determining the specified authority whose approval was mandatory under section 151 for issuance of a notice under section148 and the bifurcation of those powers would continue unaltered and unaffected by TOLA. 25. We find the Hon’ble Bombay High Court in the case of Cipla Pharma and Life Sciences Ltd. vs. DCIT (supra) has held as under :- “8. On a plain reading of Section 148A it is clear that the Assessing officer before issuing any notice under section 148 is required to follow the procedure as set out in clauses (a) to (d) of Section 148A. One of the pre- Printed from counselvise.com ITA No.260/PUN/2025 6 conditions as ordained by clause (d) of Section 148A is that an order under such provision can be passed by the Assessing Officer only with the approval of \"Specified Authority\". Thus, necessarily when clause (d) of Section 148A provides for prior approval of specified authority, it relates to the provisions of Section 151 of the Act providing for 'Specified authority for the purposes of Section 148 and Section 148A of the Act'. In the present case, Section 151 as amended by the Finance Act, 2021 and Section 148A as also introduced by Finance Act, 2021 have become applicable, as although the assessment year in question is 2016-17 in respect of which the assessment is sought to be reopened by issuance of notice under section 148, which is dated 30 July, 2022. Such amended provision would squarely become applicable the date of notice under section 148 itself being 30 July, 2022. 9. The record clearly indicates that the sanction in the present case was issued by the Principal Commissioner which can only be in respect of cases if three years or less than three years have elapsed from the end of the relevant assessment year, as would fall under the provisions of clause (i) of Section 151 of the Act. As in the present case the assessment year in question is 2016-17 and the impugned notice itself has been issued on 30 July, 2022, it is issued after a period more than 3 years having elapsed from the end of the said assessment year, hence, clause (ii) of Section 151 of the Act was applicable, which required the sanction to be issued by either Principal Chief Commissioner or Principal Director General or where there is no Principal Chief Commissioner or Principal Director General, Chief Commissioner or Director General for issuance of notice under Section 148 of the Act. 10. As rightly pointed out at the bar, such issue fell for consideration of the Division Bench of this Court in Siemens Financial Services Pvt. Ltd. (supra), wherein the Division Bench considered the provisions of Section 151 of the Act read with the provisions of Section 148A(b), the latter provision clearly providing that prior to issuance of any notice under Section 148 of the Act, the assessing officer shall provide an opportunity of being heard to the assesse only after considering the cumulative effect of Section 148A(b) read with Section 151 of the Act and as provided under sub-clause (d), 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 Printed from counselvise.com ITA No.260/PUN/2025 7 case to issue a notice under Section 148 by passing an order, with theprior approval of specified authority within one month from the end of the month in which the reply is received. It is held that the sanction of the specified authority has to be obtained in accordance with the law existing when the sanction is obtained and, therefore, the sanction is required to be obtained by applying the amended section 151(ii) of the Act and since the sanction has been obtained in terms of section 151(i) of the Act, the impugned order and impugned notice are bad in law and should be quashed and set aside. 11. Insofar as the respondent's case based on the notification dated 31 March, 2020 issued under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (for short, 'TOLA') was concerned, the Court held that such notification was a subordinate legislation and it could not override the statute enacted by the Parliament and in that regard, the position in law was discussed by the Division Bench in paragraph 27 of the said decision. 12. In the present case, it is not in dispute that an appropriate sanction of the specified authority as per the provisions of Section 151(ii) of the Act was not obtained and for such reason, certainly, as held by this Court in Siemens Financial Services Pvt. Ltd. (supra), the impugned notices would be rendered bad and illegal. The petition accordingly needs to succeed on such ground of the Court requiring to delve on such issues of challenge as raised by the petitioner as also prior procedure adopted in that regard. 13. In the light of the above discussion, the petition needs to succeed. It is accordingly allowed by the following order:- Order i. The impugned notice dt. 30th July, 2022 issued under s. 148 of the Act is quashed and set aside, as also the impugned order dt. 30th July, 2022 passed by the AC under s. 148A(d) of the Act is quashed and set aside. ii. Rule is made absolute in the aforesaid terms. iii. Since we have disposed of the petition on the limited ground, we have not considered the other grounds. iv. Disposed of. No costs.” Printed from counselvise.com ITA No.260/PUN/2025 8 26. The various other decisions relied on by the Ld. Counsel for the assessee also supports his case to the proposition that the improper approval obtained u/s 151 of the Act vitiates the entire reopening proceedings. We, therefore, hold that the re- assessment proceedings being not in accordance with law, have to be quashed.” 10. In the other case relied on by the assessee i.e. ITO vs. Rajaram Ramswarup Jaju in ITA No.1882/PUN/2024 order dated 07-03-2025, the tribunal while deciding an identical issue as is being raised by the assessee observed as under :- 10. From perusal of the above section, it is crystal clear that if the case is reopened within 3 years from the end of the relevant assessment year, the approval u/s 151(i) is to be obtained from the Pr. Commissioner of Income Tax and if the case is being reopened after 3 years from the end of the relevant assessment year, the approval u/s 151(ii) is required to be obtained from Pr. Chief Commissioner of Income Tax. In the instant case in hand, we find that the period involved is assessment year 2016-17 and the notice u/s 148 was issued on 17.06.2021 i.e. after three years from the end of relevant Assessment Year. Therefore, it is apparent that the case is reopened after 3 years and accordingly the approval was required to be obtained as per section 151(ii) from Pr. Chief Commissioner of Income Tax. In this regard, we find that the approval in the instant case was obtained from Pr. Commissioner of Income Tax. It was obviously not correct since the case was reopened after 3 years from the end of the relevant assessment year, the approval as per section 151(ii) was required to be obtained from Pr. Chief Commissioner of Income Tax. In support of this contention, Ld.AR has produced copy of notice issued u/s 148 of the Act on page no.28 of the paper book, wherein it has been specifically mentioned at Sr. No.3 that this notice is being issued after obtaining the prior approval of the Pr.CIT-1, Nashik accorded on 20.07.2022 vide Reference No.NSK/Pr.CIT-1/Appr. u/s148/Range-1, Abd./2022-23/1476. Accordingly, we find force in the arguments of Ld. Counsel of the assessee that the approval to issue notice u/s 148 was not obtained from appropriate authority and therefore, the consequential reassessment order is illegal and void ab initio since the approval was not obtained from appropriate authority. In this regard, Ld. Counsel of the assessee further relied on the order passed by Hon’ble Supreme Court in the case of Union of India vs. Rajeev Bansal Printed from counselvise.com ITA No.260/PUN/2025 9 (Civil Appeal No.8629/2024) wherein Hon’ble Supreme Court has continuously emphasized the necessity for obtaining approval from the specified authority as mandated under the amended provisions of the IT Act. Ld. Counsel of the assessee further relied on the judgement passed in the case of Siemens Financial Services Pvt. Ltd. vs. DCIT, Circle- 8(2)(1), Mumbai (WPNo.4888 of 2022) dated 25.08.2023 wherein Hon’ble Bombay High Court has held as under :- “As held by this court in J. M. Financials (Supra), Sidhmicro Equities (P) Ltd. (Supra) and confirmed by the Apex Court that any notice issued without the sanction of the correct sanctioning authority will be invalid. This court in Godrej Industries Limited v. DCIT 16 has held that an assessment can be reopened under section 147 and 148 of the Act only on the jurisdictional preconditions being satisfied strictly. This Court held that sanction of a superior officer to the reasons recorded in terms of section 151 should be obtained before issuing the notice under section 148 of the Act and all jurisdictional requirements are required to be satisfied cumulatively and even if one of the numerous jurisdictional requirements necessary for issuing the notice under section 148 of the Act are not satisfied, the reopening of an assessment would fail. Hence, in the present facts also since the approval of the specified authority in terms of section 151(ii) of the Act is a jurisdictional requirement and in the absence of complying with this requirement, the reopening of assessment would fail.” 11. Respectfully following the above decision passed by Hon’ble Bombay High Court (supra), which was also followed in subsequent judgement passed by Hon’ble Bombay High Court in the case of Gigantic Mercantile (P.) Ltd. vs. ACIT, 165 taxmann.com 646(Bombay), we allow the ground no.1 raised in the cross objection.” 11. Respectfully following both the above decisions passed by Jurisdictional Pune Tribunal wherein identical issue has been decided in favour of the assessee, we deem it appropriate to set-aside the order passed by Ld. CIT(A)/NFAC and quash the reassessment order dated 30-05-2023 passed u/s 147 r.w.s. 144 r.w.s. 144B of the IT Act since the approval u/s 151 of the IT Act prior to issue of notice u/s 148 was not obtained from appropriate Printed from counselvise.com ITA No.260/PUN/2025 10 authority. Thus, the additional ground raised by the assessee is allowed. Since we have allowed the appeal of the assessee by adjudicating & deciding the additional ground, the other grounds becomes infructuous hence not adjudicated. 12. In the result, the appeal filed by the assessee is allowed. Order pronounced on this 23rd day of February, 2026. Sd/- Sd/- (MANISH BORAD) (VINAY BHAMORE) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे / Pune; ᳰदनांक / Dated : 23rd February, 2026. Sujeet आदेश कᳱ ᮧितिलिप अᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The Pr.CIT concerned. 4. िवभागीय ᮧितिनिध, आयकर अपीलीय अिधकरण, “A” बᱶच, पुणे / DR, ITAT, “A” Bench, Pune. 5. गाडᭅ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Assistant Registrar आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune. Printed from counselvise.com "