NILKAMAL CRATES AND CONTAINERS,MUMBAI V. ACIT, CIRCLE 24 1 MUMBAI, MUMBAI

CO 146/MUM/2025

AI Insights

The case involves an appeal by the revenue against the decision of the Commissioner of Income Tax (Appeals), which had deleted an addition made by the Assessing Officer regarding bogus donations claimed under section 35(1)(ii) of the Income Tax Act, 1961. The Tribunal examined whether the reassessment and subsequent proceedings were validly initiated. The primary legal contention was whether the approval for the reassessment was obtained from the correct authority as mandated by section 151 of the Act, particularly in the context of amendments made by the Finance Act, 2021. The Tribunal found that the approval was not obtained from the specified authority as required for cases where more than three years had elapsed from the end of the relevant assessment year, leading to the quashing of the reassessment order.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 833745 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 17 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 03-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2016-2017
• Appeal Filed On: 17-06-2025
• Other Referred Cases: Union of India vs. Rajeev Bansal, Union of India vs. Ashish Agarwal, Siemens Financial Services Pvt. Ltd. vs. DCIT, Aakruti Ketan Mehta Vs NFAC
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LEYAQAT ALI AAFAQUI
• Assessee Lawyers: PRASHANT GHUMARE
• Keywords: Set aside; Reassessment proceedings; Period of limitation; Reopening of assessment; Accommodation entries; Reason to believe; Validity of assessment; Bogus
• Section: 147; 148; 12; 10

Judgement Text

" आयकर अपीलीय अिधकरण Ɋाय पीठ मुंबई मŐ। IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, MUMBAI BEFORE HON’BLE JUSTICE (RETD.) C.V. BHADANG, PRESIDENT & SHRI ARUN KHODPIA, AM I.T.A. No. 3763/Mum/2025 (Assessment Year: 2016-17) ACIT, Circle-24(1), 601, 6th Floor, Piramal Chambers, Lalbaug, Parel, Mumbai-400012. Vs. Nilkamal Crates & Containers, 77/78, Nilkamal House, Road No. 13, MIDC, Andheri East, Mumbai-400093. PAN: AAAFN1389B Revenue -अपीलाथŎ / Appellant : Assessee - ŮȑथŎ / Respondent C.O. No. 146/Mum/2025 in I.T.A. No. 3763/Mum/2025 (Assessment Year: 2016-17) Nilkamal Crates & Containers, 77/78, Nilkamal House, Road No. 13, MIDC, Andheri East, Mumbai-400093. PAN: AAAFN1389B Vs. ACIT, Circle-24(1), 601, 6th Floor, Piramal Chambers, Lalbaug, Parel, Mumbai-400012. Assessee - अपीलाथŎ / Appellant : Revenue - ŮȑथŎ / Respondent Assessee by : Shri Prashant Ghumare, Adv. Revenue by : Shri Leyaqat Ali Aafaqui, Sr. DR Date of Hearing : 22.01.2026 Date of Pronouncement : 03.02.2026 Printed from counselvise.com ITA No.3763 & CO No. 146/Mum/2025 Nilkamal Crates & Containers 2 O R D E R Per Arun Khodpia, AM: The aforesaid appeal of revenue and the Cross Objection (CO) by the assessee are directed against the order of Commissioner of Income Tax (Appeals) / NFAC, Delhi (for short “The Ld. CIT(A)”), dated 31.03.2025, for the Assessment Year (AY) 2016-17, which in turn arises from the order under section 147 r.w.s. 144B of the Income Tax Act, 1961 (the Act) passed by Assessment Unit, Income Tax Department on 14.05.2023 ( for short “the ld. AO”). 2. The grounds of appeal raised by the Revenue and the assessee are as under: “1. \"Whether on the facts and circumstances of the case and in law, the Ld. CIT(A)/NFAC has erred in deleting the impugned addition of Rs 61,25,000/-, citing non-application of the independent mind and lack of any enquiry done by the assessing officer, without appreciating the crucial fact that the material information/finding related to the assessee was a result of extensive enquiry and investigation undertaken by the investigative wing of the department in the course of 132 proceedings in the case of Vivekananda Yoga Anusandhana Samsthana (VYASA). 2. \"Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was correct in ignoring the findings revealed during search action u/s. 132 in the case of Vivekananda Yoga Anusandhana Samsthana (VYASA) that it was engaged in organized scam of providing bogus entries to various parties to claim weighted deduction u/s. 35(1)(ii) of the Income Tax Act, 1961 and to evade the taxes? 3. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was correct in holding that the Assessing Officer did not bring any material to disapprove the evidence furnished by the assessee without appreciating the facts that the investigation clearly revealed that Vivekananda Yoga Anusandhana Samsthana (VYASA) was engaged in providing bogus entries to various parties through organized scam for claiming deduction u/s. 35(1)(ii) of the I. T. Act, 1961. Printed from counselvise.com ITA No.3763 & CO No. 146/Mum/2025 Nilkamal Crates & Containers 3 4. Whether on facts and circumstances of the case the Ld. CIT(A) was correct in holding that the assessee was entitled to deduction u/s. 35(1)(ii) without appreciating that assessee was in connivance with Vivekananda Yoga Anusandhana Samsthana (VYASA) and entered into organized scam to claim deduction u/s. 35(1)(i)of the 1. T. Act, 1961 and also the fact that the trust viz. Vivekananda Yoga Anusandhana Samsthana (VYASA) had admitted during search that they had provided accommodation entries of donation to the donors.” CO No. 146/Mum/2025 by assessee a) The learned CIT(A) erred in not adjudicating and thereby dismissing Ground Nos. 1 to 5 raised by the Appellant in the appeal filed before the First Appellate Authority. b) The Appellant submits that the assessment framed u/s 144B read with section 147 is illegal, void and without jurisdiction and therefore, required to be quashed. c) The Appellant submits that the notice u/s 148 and order u/s 148A(d) both dated 31.07.2022, are bad in law as the prior sanction of the appropriate authority as provided in section 151 had not been obtained. d) The Appellant further submits that the said notice u/s 148 and the said order u/s 148A(d) are bad in law as the said order notice/order were issued by the Income Tax Officer not having jurisdiction. e) The Appellant also submits that original notice u/s 148 dated 28.06.2021, on the facts and circumstances of the case, was invalid and therefore, the subsequent proceedings including issuance of the said notice u/s 148 and passing of the said order u/s 148A(d) were illegal and void. f) The Appellant finally submits that the said order u/s 148A(d) and issuance of the said notice u/s 148 are illegal, void and without jurisdiction as the mandatory conditions specified u/s 149(1)(b) had not been satisfied.” 3. The assessment in instant matter was completed U/s 147/143(3) on 14.05.2023, making additions on account of bogus donations claimed u/s 35(1)(ii). Issue was taken-up before the first appellate authority, who had deleted the entire addition giving reasoning of non-application of mind and lack of enquiry by the Ld. AO during the course of assessment proceedings. Printed from counselvise.com ITA No.3763 & CO No. 146/Mum/2025 Nilkamal Crates & Containers 4 Being aggrieved, the revenue instituted the present appeal to assail the finding of Ld. CIT(A) on merits. On the other hand, assessee preferred to file a cross objection (CO) before the tribunal. 4. At the outset, the ld. Counsel representing the assessee (ld. AR) submitted that legal contentions raised by the assessee before the ld. CIT(A) are dismissed without adjudication, as the appeal of assessee was decided on merits in favour of the assessee, stating that the grounds of appeal challenging the validity of assessment proceedings are dismissed for statistical purposes, since the assessee has already got the relief on quantum additions as per paragraph no. 5.2.5 of the impugned order. It is further submitted by the ld. AR that, a legal ground raised by the assessee before the ld. CIT(A) is again raised by the assessee in the C.O. challenging the validity of approval granted under section 151 of the Act. 5. Explaining the facts of the case, the ld. AR submitted that the present matter pertains to AY 2016-17, which was reopened u/s 147 and accordingly notice under section 148 was issued on 28.06.2021, thus clearly the initiation of re-opening proceeding was after three years from the end of relevant assessment (on 31.03.2017) and the approval has been granted by Pr. Commissioner of Income Tax instead of Specified Authority i.e. Pr. Chief Commissioner of Income Tax. Ld. AR relied on the observations of Hon’ble Supreme Court in the case of Union of India vs. Rajeev Bansal [2024] 167 Printed from counselvise.com ITA No.3763 & CO No. 146/Mum/2025 Nilkamal Crates & Containers 5 taxmann.com 70 (SC)/[2024] 301 Taxman 238 (SC)/[2024] 469 ITR 46 (SC) wherein the decision of Hon’ble Apex Court in the case of Union of India vs. Ashish Agarwal [2022] 444 ITR 1 (SC) was discussed and held that after 01.04.2021 the specified authority for the approval for passing of order under section 148A(d) would be the Pr. CCIT or Pr. Director General of Income Tax and not the Pr. CIT. 6. To substantiate the consequential effect of the aforesaid interpretation of law by Hon’ble Apex Court, Ld AR submitted that the notice under section 148 in the present matter was issued on 31.07.2022, copy of same placed at page no. 92 of assessee’s Paper Book, wherein it is mentioned that “the notice is being issued after obtaining the prior approval of Pr. CCIT, Mumbai accorded on 30.07.2022 vide Reference No. Pr.CIT-2/approval u/s 148A(d)/2022-23”. Further, the copy of approval placed before the bench vide assessee’s letter dated 14.01.2026, it is evident that the approval dated 30.07.2022 was granted by PCIT-2. Mumbai, as communicated by the ITO(HQ) Tech. to PCIT-2, Mumbai, reproduced hereunder: Printed from counselvise.com ITA No.3763 & CO No. 146/Mum/2025 Nilkamal Crates & Containers 6 7. It is clarified that the reopening proceedings are completed under the amended provisions of the Act u/s 148A. The approval in present case falls in the category, where reopening had been invoked after three years from the end of the relevant AY, thus, the approval was to be granted by specified authorities as per clause-(ii) of section 151 of the Act, whereas in the present case the approval was obtained from authority specified under clause-(i) of section 151 of the Act. Further, Ld. AR relied on the decision of ITAT, Printed from counselvise.com ITA No.3763 & CO No. 146/Mum/2025 Nilkamal Crates & Containers 7 Mumbai in the case of Aakruti Ketan Mehta Vs NFAC in ITA No. 3744/Mum/2024 for AY 2016-17 (26.08.2024), wherein a similar issue was came up and decided following the judgment of Hon’ble Apex Court in the case of Ashish Agarwal (supra) and Hon’ble Bombay High Court in the case of Siemens Financial Services Pvt. Ltd. vs. DCIT [2023] 457 ITR 647. It was the prayer that the notice issued under section 148A(d) and section 148 of the Act, after obtaining the approval of Pr.CIT who was not the specified authority to do so, whereas, in present case, the approval should have been granted by the Pr.CCIT or Pr. Director General or Chief Commissioner or Director General as per clause-(ii) of section 151 of the Act. Consequently, the proceedings initiated on the foundation of invalid approval are bad-in-law and liable to be quashed. 8. Per contra, the ld. Sr. DR representing the revenue submitted that the notice dated 30.07.2022 was issued with requisite sanction in accordance with the process directed in Ashish Agarwal (supra), further any minor defect is curable under section 292B. It was the submission that the Hon’ble Supreme Court has held that re-assessment would be valid if “reason to believe” exists, even during the pending proceedings. It was the submission that the approval may be treated from the specified authority being the minor mistake is a curable one. Printed from counselvise.com ITA No.3763 & CO No. 146/Mum/2025 Nilkamal Crates & Containers 8 9. We have considered the rival submissions perused the material available on record and the judicial pronouncement relied upon by the assessee in support of the legal contention raised. The identical issue has been dealt with and decided by the Co-ordinate Bench of ITAT, Mumbai, as relied upon by the Ld. AR of the assessee, in the case of Aakruti Ketan Mehta vs. NFAC in ITA No. 3477/Mum/2024 for AY 2016-17 dated 26.08.2024, wherein the pertinent observations of Tribunal following the decisions of Hon’ble Apex Court in the case of Ashish Agarwal (supra) as well as Hon’ble Bombay High Court in the case of Siemens Financial Services Pvt. Ltd. (supra) are extracted as under: “8. We heard the rival contentions and perused the record. Though the AO had initially issued notice u/s 148 under old provisions, yet, subsequently, the AO has regularized the same as per the decision rendered by Hon‟ble Supreme Court in the case of Ashish Agarwal (supra). Hence, the reassessment proceedings have been continued under new provisions only. Hence the AO has issued notice u/s 148A(b) and also passed order u/s. 148A(d) of the Act. The provisions of section 148A(d) of the Act would require the AO to pass order on the question, viz., whether or not it is a fit case to issue a notice u/s. 148 of the Act. In terms of that section, the order has to be passed with the prior approval of the “specified authority”. We also noticed that the specified authority is defined u/s. 151 of the Act. If the notice was issued after expiry of three years from the end of the relevant assessment year, the approval has to be obtained by the AO from “Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General.” 9. In the instant case, the assessment year involved is AY 2016-17 and the order u/s. 148A(d) of the Act has been passed on 30-06-2022, i.e., after expiry of three years after the end of the assessment year 2016-17. Hence, in terms of sec. 151 read with 148A(d) of the Act, the approval should have been obtained by the AO from Printed from counselvise.com ITA No.3763 & CO No. 146/Mum/2025 Nilkamal Crates & Containers 9 Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General. On the contrary, in the instant case, the AO has obtained approval from Principal Commissioner, which is contrary to the requirement of sec. 151 of the Act. 10. The question on the validity of notices issued/order passed without obtaining approval from appropriate authority has been examined by the Hon‟ble Bombay High Court in the case of Siemens Financial Services Pvt. Ltd., (supra), wherein it was held as under:- “20 Under section 151 \"specified authority\" for the purposes of section 148 and section 148A shall be, if three years or less than three years have elapsed from the end of the relevant assessment year, Principal Commissioner or Principal Director or Commissioner or Director. If more than three years have elapsed from the end of the relevant assessment year, then Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General. 21 Admittedly, in this case, the approval/sanction for order under section 148A(d) of the Act has been granted by the Principal Commissioner of Income- tax-8. The entire controversy is, therefore, (a) whether the Principal Commissioner was the specified authority, who could have granted the approval/sanction? (b) if not, the effect thereof? In our view, the approval is not valid. Hence, the impugned order passed under section 148A(d) read with notice issued under section 148 of the Act dated July 31, 2022 is not valid and has to be quashed and set aside. The first proviso to section 148 of the Act refers to the approval of the specified authority being obtained before a notice under section 148 of the Act can be issued. Explanation 3 to section 148 of the Act specifies that the meaning of the term \"specified authority\" as provided for in section 151 of the Act is to apply for the purpose of section 148. Section 148A(d) of the Act also requires the Assessing Officer to pass an order after considering the reply of the assessee as to whether or not it is a fit case to issue a notice under section 148 of the Act and such an order under section 148A(d) of the Act has to be passed with the prior approval of the specified authority. The Explanation to section 148A of the Act also incorporates the meaning of \"specified authority\" as provided for in section 151 of the Act. Printed from counselvise.com ITA No.3763 & CO No. 146/Mum/2025 Nilkamal Crates & Containers 10 As per section 151 of the Act, the \"specified authority\" who has to grant his sanction for the purposes of section 148 and section 148A is the Principal Chief Commissioner or Principal Director General or where there is no Principal Chief Commissioner or Principal Director General, the Chief Commissioner or Director General if more than three years have elapsed from the end of the relevant assessment year. The present petition relates to the assessment year 2016-17, and as the impugned order and impugned notice are issued beyond the period of three years which elapsed on March 31, 2020 the approval as contemplated in section 151(ii) of the Act would have to be obtained which has not been done by the Assessing Officer. The impugned notice mentions that the prior approval has been taken of the \"Principal Commissioner of Income-tax-8\" (\"PCIT-8\") which is bad in law as the approval should have been obtained in terms of section 151(ii) and not section 151(i) of the Act and the Principal Commissioner of Income- tax8 cannot be the specified authority as per section 151 of the Act. Further, even in the affidavit-in-reply, the Department has accepted that the approval obtained is of the \"Principal Commissioner of Incometax-8\" and, hence, such an approval would be bad in law. The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, enacted on September 29, 2020 and came into force on March 31, 2020 ([2020] 428 ITR (St.) 29). It, inter alia, provided for a relaxation of certain provisions of the Income-tax Act, 1961. Where any time limit for completion or compliance of an action such as completion of any proceedings or passing of any order or issuance of any notice fell between the period March 20, 2020 to December 31, 2020, the time limit forcompletion of such action stood extended to March 31, 2021. Thus, the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act only seeks to extend the period of limitation and does not affect the scope of section 151. 26 The Assessing Officer cannot rely on the provisions of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act and the notifications issued thereunder as section 151 has been amended by the Finance Act, 2021 and the provisions of the amended section would havde to be complied with by the Assessing Officer, with effect from April 1, 2021. Hence, the Assessing Officer cannot seek to take the shelter of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act as a subordinate legislation cannot override any statute enacted by Parliament. Further, the notification extending the dates from March 31, 2021 till June 30, 2021 cannot apply once the Finance Act, 2021 is in existence. 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 Printed from counselvise.com ITA No.3763 & CO No. 146/Mum/2025 Nilkamal Crates & Containers 11 order and impugned notice are bad in law and should be quashed and set aside.” 10. Since, the legal issue raised in the instant case is squarely covered by the decisions of Hon’ble Apex Court and Hon’ble Bombay High Court, which are followed by the ITAT, Mumbai in the case of Aakruti Ketan Mehta (supra), thus, as per the facts of the present matter, wherein undisputedly the reopening u/s 147 had been invoked after three years of the relevant assessment year and the approval was granted by ld. Pr. CIT, which could not be controvert by the revenue though any evidence, except clarifying that such defect is curable in terms of provisions of section 292B of the Act, being a minor defect, we find force in the argument of the Ld. AR. Further, while dealing with this specific issues by the Hon’ble Bombay High Court in the case of Siemens Financial Services Pvt. Ltd. (supra), wherein the order u/s 148A(d) was passed on 31.07.2022 for AY 2016-17 with prior approval of Pr. CIT i.e., after 3 years from the end of relevant assessment year, it had been categorically held that sanction of 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 but 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. Respectfully following the aforesaid analogy drawn by Hon’ble Bombay High Court, under akin facts and circumstances, we hold that the order passed under Printed from counselvise.com ITA No.3763 & CO No. 146/Mum/2025 Nilkamal Crates & Containers 12 section 148A(d), notice issued under section 148 and the consequential proceedings thereafter are bad-in-law, thus, are liable to be set-aside and quashed. 11. Our aforesaid view further strengthened, as analyzed and interpreted by Hon’ble Bombay High Court in the case of ITO vs. Srichand Mandhyan [SLP(C) No. 1435/2025 along with [W.P. No. 3846/2022 (Bombay)] 15.09.2023, SLP against by the revenue is dismissed by the Hon’ble Apex Court SLP(c) No. 1435 / 2025 on 08.12.2025 by denying to interfere with decision of Hon’ble High Court. The Hon’ble High Court in its order has held as under: “2. Counsels state that in all these Petitions the issue of improper sanction having been obtained has been raised among other grounds. Counsels state that the issue of improper sanction has been decided by this Court in the case of Siemens Financial Services Private Limited v. Deputy Commissioner of Income Tax and Others', wherein the Court has held that for Assessment Year 2016-2017, the sanction should have been given under Section 151 (ii) and not under Section 151(i) of the Income Tax Act, 1961 (\"the Act\") and consequently the sanction is invalid. The Court has stated that in view of the invalid sanction, the notice issued itself will be invalid and has to be quashed. We would also add, if the notice has to be quashed even where there is an assessment order passed subsequently, those assessment orders having been passed relying on an incorrect sanction, will also have to be quashed. Ordered accordingly. 3. In view of the above, all consequential notices/demands issued under Section 156 or 271 of the Act will also have to be quashed. Ordered accordingly. 4. All Petitions disposed. 5. Counsels further state that the findings in Siemens Financial Services Private Limited (supra) will squarely apply to the Assessment Year 2017-2018 as well. Therefore, all such notices issued for Assessment Year 2017-2018, the assessment orders and the consequential orders are also quashed and set aside.” Printed from counselvise.com ITA No.3763 & CO No. 146/Mum/2025 Nilkamal Crates & Containers 13 12. Further in the case of Ramesh B. Mehta vs. ITO, Mumbai [W.P. No. 271 of 2023 (Bombay), the Hon’ble Bombay High Court had referred to the decision of Hon’ble Apex Court in the case of Ashish Agarwal (supra) as well as Union of India Vs. Rajeev Bansal (supra) and have held as under: “4-Initially, Respondent No.1 had issued notice under section 148 (under the erstwhile law of re-assessment) on 19.05.2021 [placed at Exhibit B of the Petition] for Assessment Year 2016-17. Subsequently, in consequence of the judgment of the Hon'ble Supreme Court in the case of Union of India vs. Ashish Agarwal (2022) 444 ITR 1 (SC), the communication dated 23.05.2022 [placed at Exhibit C of the Petition], was sent to the Petitioner intimating that the aforesaid notice issued under Section 148 of the Act (under old regime) would be treated as a show-cause notice issued in terms of Section 148A(b) of the Act (under new regime introduced by the Finance Act, 2021 w.e.f. 01.04.2021). It is claimed by the Petitioner that when the said notice was issued, he was travelling and was unaware about the issuance thereof. Thereafter, Respondent No.1 passed an order under section 148A(d) on 13.07.2022 [placed at Exhibit E1 of the Petition] along with the notice dated 15.07.2022 issued under section 148 of the Act (Exhibit F of the Petition]. Undisputedly, the above referred order under section 148A(d) and notice under section 148 were passed/issued in pursuance of the provisions of the substituted law of re-assessment as amended by the Finance Act, 2021 and which came into force from 01.04.2021. 5. The Petitioner has contended that in the present case, the order under section 148A(d) dated 13.07.2022 was passed beyond three years from the end of the relevant Assessment Year 2016-17. Consequently, according to the provisions of section 151(ii), when more than three years have elapsed from the end of the relevant assessment year, the specified authority for obtaining the approval was either the Principal Chief Commissioner (PCCIT) or Principal Director General (PDGIT), or where there is no PCCIT or PDGIT, the Chief Commissioner (CCIT) or the Director General (DGIT). However, in paragraph 7 of the order dated Printed from counselvise.com ITA No.3763 & CO No. 146/Mum/2025 Nilkamal Crates & Containers 14 13.07.2022 passed under section 148A(d), Respondent No.1 has stated that before passing the said order, prior approval of Respondent No.2 i.e. the Principal Commissioner of Income Tax-27, Mumbai, was obtained and the said order was passed thereafter. This aspect remains uncontroverted by the Respondents. 6. In these facts, the limited point to be examined is whether the order dated 13.07.2022 passed under section 148A(d) for the Assessment Year 2016-17 after obtaining approval of Respondent No.2 [i.e. the PCIТ-27, Mumbai], was in accordance with the provisions of section 151. 7. The Petitioner has drawn our attention to the decision of the Hon'ble Supreme Court in the case of Union of India vs. Rajeev Bansal [2024] 167 taxmann.com 70 (SC)/[2024] 301 Taxman 238 (SC)/[2024] 469 ITR 46 (SC) and we deem it appropriate to refer to the said judgment where the Hon'ble Supreme Court has, while dealing with the issue of approval from the specified authority in terms of Section 151 of the Act, made the following observations: \"iii. Sanction of the specified authority 73. Section 151 imposes a check upon the power of the Revenue to reopen assessments. The provision imposes a responsibility on the Revenue to ensure that it obtains the sanction of the specified authority before issuing a notice under section 148. The purpose behind this procedural check is to save the assesses from harassment resulting from the mechanical reopening of assessments Sri krishna (P.) Ltd. v. ITO [1996] 87 Taxman 315/221 ITR 538 (SC) [1996] 9 SCC 534. A table representing the prescription under the old and new regime is set out below: Regime Time limits Specified authority Section 151 (2) of the old regime Before expiry of four years from the Joint Commissioner end of the relevant assessment year Joint Commissioner Section (1) of the old regime After expiry of four years from the end of the relevant assessment year Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner Section 151 (i) of the new regime Three years or less than three years from the end of the relevant assessment Principal Commissioner or Principal Director or Commissioner or Printed from counselvise.com ITA No.3763 & CO No. 146/Mum/2025 Nilkamal Crates & Containers 15 year Director Section 151 (ii) of the new regime More than three years have elapsed from the end of the relevant assessment year Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General 74. The above table indicates that the specified authority is directly co-related to the time when the notice is issued. This plays out as follows under the old regime: (i) If income escaping assessment was less than Rupees one lakh: (a) a reassessment notice could be issued under section 148 within four years after obtaining the approval of the Joint Commissioner, and (b) no notice could be issued after the expiry of four years; and (ii) If income escaping was more than Rupees one lakh: (a) a reassessment notice could be issued within four years after obtaining the approval of the Joint Commissioner; and (b) after four years but within six years after obtaining the approval of the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner. 75. After 1 April 2021, the new regime has specified different authorities for granting sanctions under section 151. The new regime is beneficial to the assessee because it specifies a higher level of authority for the grant of sanctions in comparison to the old regime. Therefore, in terms of Ashish Agarwal (supra), after 1 April 2021, the prior approval must be obtained from the appropriate authorities specified under section 151 of the new regime. The effect of Section 151 of the new regime is thus: (i) If income escaping assessment is less than Rupees fifty lakhs: (a) a reassessment notice could be issued within three years after obtaining the prior approval of the Principal Commissioner, or Principal Director or Commissioner or Director; and (b) no notice could be issued after the expiry of three years; and (ii) If income escaping assessment is more than Rupees fifty lakhs: (a) a reassessment notice could be issued within three years after obtaining the prior approval of the Principal Commissioner, or Principal Director or Commissioner or Director; and (b) after three years after obtaining the prior approval of the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General. 76. Grant of sanction by the appropriate authority is a precondition for the assessing officer to assume jurisdiction under section 148 to issue a reassessment notice. Section 151 of the new regime does not prescribe a time limit within which a specified authority has to grant sanction. Rather, it links up the time limits with the jurisdiction of the authority to grant sanction. Section 151(ii) of the new regime prescribes a higher level of authority if more than three years have elapsed from the end of the relevant assessment year. Printed from counselvise.com ITA No.3763 & CO No. 146/Mum/2025 Nilkamal Crates & Containers 16 Thus, non-compliance by the assessing officer with the strict time limits prescribed under section 151 affects their jurisdiction to issue a notice under section 148. 77. Parliament enacted TOLA to ensure that the interests of the Revenue are not defeated because the assessing officer could not comply with the pre conditions due to the difficulties that arose during the COVID-19 pandemic. Section 3(1) of TOLA relaxes the time limit for compliance with actions that fall for completion from 20th March 2020 to 31 March 2021. TOLA will accordingly extend the time limit for the grant of sanction by the authority specified under section 151. The test to determine whether TOLA will apply to Section 151 of the new regime is this: if the time limit of three years from the end of an assessment year falls between 20th March 2020 and 31 March 2021, then the specified authority under section 151(i) has an extended time till 30th June 2021 to grant approval. In the case of Section 151 of the old regime, the test is: if the time limit of four years from the end of an assessment year falls between 20th March 2020 and 31 March 2021, then the specified authority under section 151(2) has time till 31 March 2021 to grant approval. The time limit for Section 151 of the old regime expires on 31 March 2021 because the new regime comes into effect on 1™ April 2021. 78. For example, the three year time limit for assessment year 2017-2018 falls for completion on 31 March 2021. It falls during the time period of 20th March 2020 and 31 March 2021, contemplated under section 3(1) of TOLA. Resultantly, the authority specified under section 151(i) of the new regime can grant sanction till 30th June 2021. 79. Under Finance Act 2021, the assessing officer was required to obtain prior approval or sanction of the specified authorities at four stages: a. Section 148A(a)- to conduct any enquiry, if required, with respect to the information which suggests that the income chargeable to tax has escaped assessment; b. Section 148A(b) to provide an opportunity of hearing to the assessee by serving upon them a show cause notice as to why a notice under section 148 should not be issued based on the information that suggests that income chargeable to tax has escaped assessment. It must be noted that this requirement has been deleted by the Finance Act 2022; c. Section 148A(d)- to pass an order deciding whether or not it is a fit case for issuing a notice under section 148; and d. Section 148-to issue a reassessment notice. 80. In AshishAgarwal (supra), this Court directed that Section 148 notices which were challenged before various High Courts \"shall be deemed to have been issued under section 148-A of the Income-tax Act as substituted by the Finance Act, 2021 and construed or treated to be show-cause notices in terms of Section 148-A(b).\" Further, this Court dispensed with the requirement of conducting any enquiry with the prior approval of the specified authority Printed from counselvise.com ITA No.3763 & CO No. 146/Mum/2025 Nilkamal Crates & Containers 17 under section 148A(a). Under Section 148A(b), an assessing officer was required to obtain prior approval from the specified authority before issuing a show cause notice. When this Court deemed the Section 148 notices under the old regime as Section 148A(b) notices under the new regime, it impliedly waived the requirement of obtaining prior approval from the specified authorities under section 151 for Section 148A(b). It is well established that this Court while exercising its jurisdiction under Article 142, is not bound by the procedural requirements of law High Court Bar Association v. State of UP [2024] 160 taxmann.com 32/299 Taxman 21 (SC)/[2024] 6 SCC 267, 81. This Court in Ashish Agarwal (supra) directed the assessing officers to \"pass orders in terms of Section 148-A(d) in respect of each of the assesses concerned.\" Further, it directed the assessing officers to issue a notice under Section 148 of the new regime \"after following the procedure as required under section 148-A.\" Although this Court waived off the requirement of obtaining prior approval under section 148A(a) and Section 148A(b), it did not waive the requirement for Section 148A(d) and Section 148. Therefore, the assessing officer was required to obtain prior approval of the specified authority according to Section 151 of the new regime before passing an order under section 148A(d) or issuing a notice under section 148. These notices ought to have been issued following the time limits specified under section 151 of the new regime read with TOLA, where applicable.\" 8. On bare reading of the above extract of the judgment of Hon'ble Supreme Court in the case of Rajeev Bansal (supra), we find that the Hon'ble Supreme Court had clarified as under: 8.1 Under the substituted provisions of re-assessment as introduced by the Finance Act, 2021, the Assessing Officer is required to obtain prior approval or sanction of the 'Specified Authority' at four stages: (i) at first stage under Section 148A(a); (ii) at second stage under Section 148A(b); (iii) at third stage under Section 148A(d); and (iv) at fourth stage under Section 148. In the case of Ashish Agarwal (supra) the Hon'ble Supreme Court waived off the requirement of obtaining prior approval under section 148A(a) and Section 148A(b) of the Act only. Therefore, the Assessing Officer was required to obtain prior approval of the 'Specified Authority' according to Section 151 of the new regime before passing an order under Section 148A(d) or for issuing a notice under Section 148. 8.2 Under new regime, if income escaping assessment is more than Rupees 50 lakhs, a reassessment notice could be issued after the expiry of three years from the end of the relevant assessment year only after obtaining the prior approval of the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General. 8.3 Section 151(ii) of the substituted provisions prescribes a higher level of authority if more than three years have elapsed from the end of the relevant assessment year. Thus, non-compliance with the provisions of section 151 Printed from counselvise.com ITA No.3763 & CO No. 146/Mum/2025 Nilkamal Crates & Containers 18 vitiates the jurisdiction of the Assessing Officer to issue a notice under section 148. 8.4 Grant of sanction by the appropriate authority is a precondition for the assessing officer to assume jurisdiction under section 148 to issue a reassessment notice. 9. In the present case the period of three years from the end of the Assessment Year 2016-17 fell for completion on 31 March 2020. Since the expiry date fell during the time period of 20th March 2020 and 31 March 2021 contemplated under Section 3(1) of Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (for short \"TOLA\"), the authority specified under Section 151(i) of the new regime could have granted sanction till 30th June 2021. On perusal of the order, dated 13.07.2022, 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 after the expiry of three years from the end of the Assessment Year 2016-17, as per the substituted provisions of re-assessment, the authority specified under Section 151(ii) of the Act (i.e. 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(i) of the new regime instead of the authority specified under Section 151(ii) of the new regime. 10. The Hon'ble Supreme Court in the above case has drawn an illustration in paragraph 78 of it's order in the context of Assessment Year 2017-18, wherein it is categorically held that the authority specified under section 151(i) 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 was 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 (here AY 2016-17) expired on 30.06.2021, whereas the Respondent No.1, despite passing the order on 13.07.2022 in respect of Assessment Year 2016-17, has obtained approval of Respondent No.2 who is not the authority as prescribed under section 151(ii). Printed from counselvise.com ITA No.3763 & CO No. 146/Mum/2025 Nilkamal Crates & Containers 19 11. Non-compliance by Respondent No.1 with the provisions contained in Section 148A(d) read with Section 151(ii) vitiates the jurisdiction of the Respondent No. 1 to issue a notice under Section 148 of the Act. 12. We are clearly of the view that the present matter stands covered by the decision of Hon'ble Supreme Court in the case of UPI vs. Rajeev Bansal (supra). We accordingly hold that the order dated 13.07.2022 passed under Section 148A(d) of the Act and the consequential notice issued under section 148 dated 15.07.2022 are bad in law for being violative of the provisions of Section 151(ii) of the Act. Hence they are required to be quashed and set aside.” 13. In backdrop of the facts and circumstances of the present case, analyzed in light of the decisions of the Hon’ble Apex Court and Hon’ble Bombay High Court, we are of the considered view that the order passed under section 148A(d) dated 31.07.2022, the notice issued under section 148 with prior approval of the authority specified u/s 151(i) for a case covered by provisions of section 151(ii) and further consequential proceedings of re-opening of assessment are bad-in-law, therefore are held as set-aside and quashed. 14. Since, one of the legal issues raised way of the C.O. is decided in favour of the assessee, which led to quashing of the assessment, the other issues raised challenging validity of jurisdiction as well as on the merits of case are rendered as academic and need not be adjudicated separately. 15. In result, the C.O. of assessee stands allowed and appeal of revenue challenging the decision of ld. CIT(A) on merits become infructuous, therefore, treated as dismissed. Printed from counselvise.com ITA No.3763 & CO No. 146/Mum/2025 Nilkamal Crates & Containers 20 16. In combined result, appeal of revenue is dismissed and C.O. of assessee is allowed, in terms of our aforesaid observations. Order pronounced in the open court on 03-02-2026. Sd/- Sd/- (JUSTICE (RETD.) C.V. BHADANG) (ARUN KHODPIA) President Accountant Member Mumbai, Dated : 03-02-2026. *SK, Sr. PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. DR, ITAT, Mumbai 4. 5. Guard File CIT BY ORDER, (Dy./Asstt. Registrar) ITAT, Mumbai Printed from counselvise.com "