ROMIL RASIK MEGHANI ,WALKESHWAR ROAD, MUMBAI V. ITO-19(3)(1), MUMBAI, PIRAMAL CHAMBER, LALBAUG, PAREL,

ITA 351/MUM/2026

AI Insights

The case involves Romil Rasik Meghani, the appellant, contesting the reassessment order for the Assessment Year 2016-2017 issued by the Income Tax Officer, Mumbai. The reassessment was based on information received and was challenged on several grounds including the lack of tangible material for reopening the assessment, improper sanction under Section 151 of the Income Tax Act, and violations of principles of natural justice. The Tribunal's decision was heavily influenced by the Supreme Court's judgment in the case of Union of India vs. Rajeev Bansal, which clarified the requirements for obtaining approval from the specified authority for reassessment under the new regime post-April 2021.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 840332 (ITAT-MUMBAI)
• Duration Of Justice: 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2026
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: J
• Assessment Year: 2016-2017
• Appeal Filed On: 15-01-2026
• Other Referred Cases: Ramesh Bachulal Mehta Vs. Income Tax Officer, Union of India vs. Rajeev Bansal, Ashish Agarwal vs. Union of India, High Court Bar Association v. State of U P
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: ASSESSEE; SERVING UPON THEM A SHOW CAUSE NOTICE
• Keywords: Set aside; Reassessment proceedings; Principle of natural justice; Tangible material
• Section: 147; 148; 69C

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “J (SMC)” BENCH, MUMBAI SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER ITA No.351/MUM/2026 (Assessment Year:2016-2017) Romil Rasik Meghani 3, 1st Floor, 64, Sital Bang, Malabar Hill, Walkeshwar Road, Mumbai – 400006. Maharashtra [PAN: ANPPM6455R] …………. Appellant Income Tax Officer 19(3)(1), Mumbai Piramal Chamber, Lalbaug, Parel, Mumbai – 400012. Maharashtra. Vs …………. Respondent Appearance For the Appellant/Assessee For the Respondent/Department : : Shri Ravindra Poojary Shri Aditya Rai Date Conclusion of hearing Pronouncement of order : : 26.02.2026 27.02.2026 O R D E R [ Per Rahul Chaudhary, Judicial Member: 1. The present appeal preferred by the Assessee is directed against the order, dated 20/11/2025, passed by the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘the CIT(A)’] whereby the Ld. CIT(A) had dismissed the appeal against the Assessment Order, dated 19/05/2023, passed under Section 147 read with Section 144B of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’], for the Assessment Year 2016-2017. 2. The Assessee has raised following grounds of appeal : “I. Reopening is bad in law; 1. On facts and circumstances of the case and in law, the Ld. NFAC/CIT(A) has erred in reopening the assessment merely on the basis of information received without considering the fact Printed from counselvise.com ITA No.351/Mum/2026 Assessment Year 2016-2017 2 that there was no tangible material on the basis of which the assessment could be reopened, further, the AO failed to apply his independent mind to such material before reopening the assessment, therefore the reopening is bad in law 2. On facts and circumstances of the case and in law, the Ld. NFAC/CIT(A) erred in not appreciating that reopening of the case is done without obtaining proper sanction from the prescribed authority provided u/s 151 of the Act and hence the reassessment order passed is against procedures laid down in the Act and thereby be quashed as invalid. 3. On facts and circumstances of the case and in law, the Ld. NFAC/CIT(A) erred in not appreciating that reassessment proceedings initiated suffers from infirmity as the year involved is beyond 3 years from the end of relevant assessment year and there is nothing to show that income represented in the form of asset exceeding Rs. 50 lacs have escaped assessment in this case. II. Erroneous Addition of LTCG as Unexplained Money u/s 69A 4. On facts and circumstances of the case and in law, the Ld. NFAC/CIT(A) has erred in confirm the A.O in treating Long Term Capital Gain of ₹2,81,050/- as unexplained money u/s 69A of the Act without appreciate that the Appellant's transactions were carried out through a recognized stock exchange, through a registered broker, supported by contract notes, demat statements, and banking channels. The burden cast upon the Appellant stands discharged, and the AO failed to bring any cogent evidence to rebut the same. 5. On facts and circumstances of the case and in law, the Ld. NFAC/CIT(A) erred in confirming the additions without bringing any material on record to show that the Appellant was a beneficiary of any accommodation entry or had any connection with alleged operators, brokers, or shell companies. III. Unjustified Addition of Alleged Commission u/s 69C 6. On facts and circumstances of the case and in law, the Ld. NFAC/CIT(A) erred in confirming the ad-hoc addition of ₹14,052/- u/s 69C on account of alleged commission, without any evidence of actual expenditure incurred by the Appellant. IV. Violation of Principles of Natural Justice 7. On facts and circumstances of the case and in law, the Ld. NFAC/CIT(A) failed to appreciate that the AO erred in completing the assessment in violation of principles of natural justice by not furnishing copies of material relied upon, including investigation Printed from counselvise.com ITA No.351/Mum/2026 Assessment Year 2016-2017 3 reports, statements, trade data, or SEBI orders allegedly forming the basis of adverse inference. 8. the Ld. NFAC/CIT(A) failed to appreciate that the Statements of third parties, if any, were neither supplied nor was any opportunity of cross-examination provided, rendering reliance on such statements legally untenable. Additional Ground of Appeal 1. On facts and circumstances of the case and in law, the Ld. NFAC /CIT(A) erred in not appreciating that reopening of the case is done without obtaining proper sanction from the prescribed authority provided u/s 151 of the Act and hence the reassessment order passed is against procedures laid down in the Act and thereby be quashed as invalid. 2. On facts and circumstances of the case and in law, the Ld. NFAC/CIT(A) erred in not appreciating that reassessment proceedings initiated suffers from infirmity as the year involved is beyond 3 years from the end of relevant assessment year and there is nothing to show that income represented in the form of asset exceeding Rs. Fifty lacs have escaped assessment in this case.” 3. When the appeal was taken up for hearing the Learned Authorized Representative for the Assessee, at the outset, challenged the validity of reassessment proceedings contending that the approval/sanction obtained under Section 151 of the Act was not valid. In this regard, primary contention advanced on behalf of the Assessee is that the appeal pertains to Assessment Year 2016-20178. In the present case, the order under Section 148A(d) of the Act was passed on 28/07/2022. Further, even notice under Section 148 of the Act was issued on 28/07/2022. 3 years from the end of the relevant assessment year had expired on 31/03/2020. Further, the extended period granted by Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (for short ‘TOLA’) expired on 30/06/2021. The case of the Assessee fell within the ambit of provisions of Section 151(ii) of the Act whereby the specified authority for grant of approval was ‘Principal Chief Commissioner of Income Tax’. Contrary to the aforesaid requirement, the approval in the present case has been obtained from the Principal Commissioner Printed from counselvise.com ITA No.351/Mum/2026 Assessment Year 2016-2017 4 of Income Tax-19, Mumbai. Accordingly, since proper sanction by the specified authority has not been obtained, the order passed under Section 148A(d) of the Act and the notice issued under Section 148 of the Act on 28/07/222 was bad in law. In this regard, reliance was placed by the Learned Authorized Representative for the Assessee on the judgment passed by the Hon’ble Bombay High Court in the case of Ramesh Bachulal Mehta Vs. Income Tax Officer in Writ Petition No.271 of 2023, dated August 11, 2025 [2025] 177 taxmann.com 606 (Bombay). 4. Per contra Learned Departmental Representative supported the order passed by the Assessing Officer and vehemently contended that proper approval/sanction was obtained under Section 151 of the Act. 5. We have heard both the sides and have perused the material on record in relation to this issue. We have also taken into consideration the judicial precedents cited during the course of hearing. 6. In the facts and circumstances of the present case the issue that arises for consideration is whether the Principal Commissioner of Income Tax [under Section 151(i) of the Act]; or the Principal Chief Commissioner of Income Tax [under Section 151(ii) of the Act]; was the Specified Authority for seeking approval for passing order under Section 148A(d) of the Act and issuance of notice under Section 148 of the Act (new regime) for the Assessment Year 2016-2017. 7. In this regard we deem it appropriate to refer to judgment of the Hon’ble Supreme Court in the case Union of India vs. Rajeev Bansal [2024] 469 ITR 46 (SC)[03/10/2024]. The Hon’ble Supreme Court had, while dealing with the issue of approval from specified authority in terms of Section 151 of the Act, made the following observations: “74. The above table indicates that the specified authority is directly Printed from counselvise.com ITA No.351/Mum/2026 Assessment Year 2016-2017 5 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 Printed from counselvise.com ITA No.351/Mum/2026 Assessment Year 2016-2017 6 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. 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 20 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 20 March 2020 and 31 March 2021, then the specified authority under section 151(i) has an extended time till 30 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 20 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 20 March 2020 and 31 March 2021, contemplated under section 3(1) of TOLA. Resultantly, the Printed from counselvise.com ITA No.351/Mum/2026 Assessment Year 2016-2017 7 authority specified under section 151(i) of the new regime can grant sanction till 30 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 Ashish Agarwal (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 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. Printed from counselvise.com ITA No.351/Mum/2026 Assessment Year 2016-2017 8 State of U P [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.” (Emphasis Supplied) 8. We note that following the above judgment, the Hon’ble Bombay High Court had, in the case of Ramesh Bachulal Mehta Vs. Income Tax Officer in Writ Petition No.271 of 2023, dated August 11, 2025 [2025] 177 taxmann.com 606 (Bombay), quashed the reassessment proceedings under Section 148 of the Act for the Assessment Year 2016-2017 [initiated after the expiry of 3 years from the end of relevant previous year and the extended period granted by TOLA]. The Hon’ble Bombay High Court held that for the Assessment Year 2016-2017, in respect of orders passed under Section 148A(d) of the Act and notice issued under Section 148 of the Act after 30/06/2021, the sanction/approval was mandatorily required from higher authority specified in Section 151(ii) of the Act [i.e. Principal Chief Commissioner of Income Tax/Chief Commissioner of Income Tax] and therefore, the approval/sanction granted by the Principal Printed from counselvise.com ITA No.351/Mum/2026 Assessment Year 2016-2017 9 Commission of Income Tax was bad in law. Grant of sanction by the appropriate authority is a precondition for the Assessing Officer to assume jurisdiction under Section 148 of the Act to issue a reassessment notice and in absence thereof, the reassessment proceedings are vitiated. The relevant extract for Jurisdictional High Court is set out herein below: “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 (supro) the Hon'ble Supreme Court waived off the requirement of obtaining prior approval under section 148A(d) 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 Printed from counselvise.com ITA No.351/Mum/2026 Assessment Year 2016-2017 10 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 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 31st March 2020. Since the expiry date fell during the time period of 20th March 2020 and 31st 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 Printed from counselvise.com ITA No.351/Mum/2026 Assessment Year 2016-2017 11 the authority specified under section 151(i) can accord sanction only upto 30.06.2021. This illustration makes it absolutely clear that when the 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 v. 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. We, accordingly, set aside the impugned order dated 13.07.2022 passed under section 148A(d), the Notice issued under Section 148 and all other proceedings/orders emanating there from and allow the writ Petition in terms of Prayer Clause (a) of the petition. 14. Rule is made absolute in the aforesaid terms and the Writ Petition is also disposed of in terms thereof. No order as to costs. 15. This order will be digitally signed by the Private Secretary/Personal Assistant of this Court. All concerned will act on production by fax or email of a digitally signed copy of this order.” (Emphasis Supplied) 9. Respectfully following the above judgments, we hold that Order, dated 28/07/2022, passed under Section 148A(d) of the Act and the consequential notice, dated 28/07/2022, issued under Section 148 of Printed from counselvise.com ITA No.351/Mum/2026 Assessment Year 2016-2017 12 the Act for the Assessment Year 2016-2017 [after the expiry of three years from the end of the assessment year 2016-2017 and extended period till 30th June 2021, granted by TOLA] suffers from jurisdictional defect as in the present case approval for issuing the said notice has been taken from the Principal Commissioner of Income Tax, Mumbai- 19 instead of Principal Chief Commissioner of Income Tax as mandated by Section 151(1)(ii) of the Act. Therefore, the Order passed under Section 148A(d) of the Act and the consequential notice issued under Section 148 of the Act, both dated 28/07/2022, are quashed. Accordingly, the re-assessment proceedings, and the Assessment Order, dated 19/05/2023, passed under Section 147 read with Section 144B of the Act is also quashed. Thus, Additional Ground No.1, and 2 raised by the Assessee are allowed while all the other Grounds raised by the Assessee are dismissed as having been infructuous. 10. In terms of paragraph 9 above, the present appeal preferred by the Assessee is partly allowed. Order pronounced on 27.02.2026. Sd/- Sd/- (Bijayananda Pruseth) Accountant Member (Rahul Chaudhary) Judicial Member मुंबई Mumbai; िदनांक Dated : 27.02.2026 Milan, LDC Printed from counselvise.com ITA No.351/Mum/2026 Assessment Year 2016-2017 13 आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : 1. अपीलाथŎ / The Appellant 2. ŮȑथŎ / The Respondent. 3. आयकर आयुƅ/ The CIT 4. Ůधान आयकर आयुƅ / Pr.CIT 5. िवभागीय Ůितिनिध ,आयकर अपीलीय अिधकरण ,मुंबई / DR, ITAT, Mumbai 6. गाडŊ फाईल / Guard file. आदेशानुसार/ BY ORDER, सȑािपत Ůित //True Copy// उप/सहायक पंजीकार /(Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, मुंबई / ITAT, Mumbai Printed from counselvise.com "