SHANTILAL CHIMANLAL SHETH,MUMBAI V. ACIT, CENTRAL CIRCLE 6(4), MUMBAI, MUMBAI

CO 21/MUM/2025

AI Insights

The case involves appeals by the Assistant Commissioner of Income Tax against Shantilal Chimanlal Sheth concerning the assessment years 2015-16 and 2016-17. The primary legal contention revolved around the validity of the reassessment notices issued under section 148 of the Income Tax Act, which were challenged based on procedural lapses in obtaining the necessary approvals as mandated by section 151 of the Act. The Tribunal referenced several decisions by the Supreme Court, particularly focusing on the requirements for issuing notices under the new regime established by the Finance Act 2021. The Tribunal found that the notices were issued without the proper approval from the designated higher authority, leading to their invalidation.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 712324 (ITAT-MUMBAI)
• Appeal Type: Cross Objection
• Pronouncement Date: 31-07-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Assessment Year: 2015-2016
• Other Referred Cases: Union of India and Ors. Vs. Rajeev Bansal, Deepak Steel and Power Limited vs. CBDT, ACIT vs. Nehal Ashit Shah
• Laws Referred To: Income Tax Act, Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIVEK PERAMPURNA; DR
• Assessee Lawyers: VIJAY MEHTA; JEET KAMDAR; ARS
• Keywords: Period of limitation; Reopening of assessment
• Section: 148; 10

Judgement Text

" | आयकर अपीलीय अिधकरण ा यपीठ, मुंबई | IN THE INCOME TAX APPELLATE TRIBUNAL “F” BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, HON’BLE VICE PRESIDENT & SHRI NARENDRA KUMAR BILLAIYA, HON’BLE ACCOUNTANT MEMBER I.T.A. No. 6867 & 6866/Mum/2024 Assessment Year: 2015-16 & 2016-17 Assistant Commissioner of Income Tax – Central Circle 6(4), Mumbai Vs Shantilal Chimanlal Sheth Office No. 9, 3rd Floor Chemox House Barrack Road Bombay Hospital Lane Mumbai - 400001 [PAN: AAOPS0258E] अपीला थ\u0016/ (Appellant) \u0017\u0018 यथ\u0016/ (Respondent) C.O. No. 21 & 22/Mum/2025 Assessment Year: 2015-16 & 2016-17 Shantilal Chimanlal Sheth Office No. 9, 3rd Floor Chemox House Barrack Road Bombay Hospital Lane Mumbai - 400001 [PAN: AAOPS0258E] Vs Assistant Commissioner of Income Tax – Central Circle 6(4), Mumbai अपीला थ\u0016/ (Appellant) \u0017\u0018 यथ\u0016/ (Respondent) Assessee by : Shri Vijay Mehta & Shri Jeet Kamdar, A/Rs Revenue by : Shri Vivek Perampurna, CIT D/R सुनवाई की तारीख/Date of Hearing : 29/07/2025 घोषणा की तारीख /Date of Pronouncement: 31/07/2025 आदेश/O R D E R PER NARENDRA KUMAR BILLAIYA, AM: Printed from counselvise.com I.T.A. No. 6867 & 6866/Mum/2024 C.O. No. 21 & 22/Mum/2025 2 I.T.A. No. 6867 & 6866/Mum/2024 are two separate appeals by the revenue preferred against two separate orders of the ld. CIT(A) – 54, Mumbai [hereinafter “the ld. CIT(A)”] dated 25/10/2024 pertaining to AY 2015-16 & 2016-17 and C.O. No. 21 & 22/Mum/2025, are cross- objections by the assessee preferred against the very same orders of the ld. CIT(A). 2. The appeals and cross-objections were heard together and are disposed off by this common order for the sake of convenience and brevity. 3. Since the cross-objections go to the root of the matter, we adjudicate them first. 4. The cross-objection for AY 2015-16 in C.O. No. 21/Mum/2025, challenges the validity of the assessment order claiming that the reopening proceedings are bad in law and in contradiction to the decision of the Hon’ble Supreme Court in the case of Union of India and Ors. Vs. Rajeev Bansal [2024] 167 taxmann.com 70 (SC). 5. The notice u/s 148 of the Act is dated 30/04/2022. The entire quarrel revolves around this notice. At the outset, we find that this issue has been settled in the case of Union of India v. Rajeev Bansal [2024] 167 taxmann.com 70 (SC) wherein reference is made to the submissions made on behalf of the Revenue vide para 19 which is relevant and the same is reproduced hereunder:- \"19. Mr N Venkataraman, learned Additional Solicitor General of India, made the following submissions on behalf of the Revenue: a. Parliament enacted TOLA as a free-standing legislation to provide relief and relaxation to both the assessees and the Revenue during the time of COVID- 19. Printed from counselvise.com I.T.A. No. 6867 & 6866/Mum/2024 C.O. No. 21 & 22/Mum/2025 3 TOLA seeks to relax actions and proceedings that could not be completed or complied with within the original time limits specified under the Income Tax Act, b. Section 149 of the new regime provides three crucial benefits to the assesses: (i) the four-year time limit for all situations has been reduced to three years, (ii) the first proviso to Section 149 ensures that re-assessment for previous assessment years cannot be undertaken beyond six years, and (iii) the monetary threshold of Rupees fifty lakhs will apply to the re- assessment for previous assessment years, c. The relaxations provided under Section 3(1) of TOLA apply \"notwithstanding anything contained in the specified Act.\" Section 3(1), therefore, overrides the time limits for issuing a notice under Section 148 read with Section 149 of the Income Tax Act; d. TOLA does not extend the life of the old regime. It merely provides a relaxation for the completion or compliance of actions following the procedure laid down under the new regime; e. The Finance Act 2021 substituted the old regime for re-assessment with a new regime. The first proviso to Section 149 does not expressly bar the application of TOLA. Section 3 of TOLA applies to the entire Income Tax Act including Sections 149 and 151 of the new regime. Once the first proviso to Section 149(1)(b) is read with TOLA, then all the notices issued between 1 April 2021 and 30 June 2021 pertaining to assessment years 2013-2014, 2014-2015, 2015-2016, 2016-2017 and 2017-2018 will be within the period of limitation as explained in the tabulation below: Assessment Year (1) Within 3 Years (2) Expiry of Limitation read Within six Years (4) Expiry of Limitation read with TOLA for (4) (5) 2013- 2014 31.03.2017 TOLA not 31.03.2020 30.06.2021 2014-2015 31.03.2018 TOLA not 31.03.2021 30.06.2021 2015-2016 3103.2019 TOLA not 31.03.2022 TOLA not 2016-2017 31.03.2020 30.06.2021 31.03.2023 TOLA not 2017-2018 31.03.2021 30.06.2021 31.03.2024 TOLA not Printed from counselvise.com I.T.A. No. 6867 & 6866/Mum/2024 C.O. No. 21 & 22/Mum/2025 4 f. The Revenue concedes that for the assessment year 2015-16, all notices issued on or after 1 April 2021 will have to be dropped as they will not fall for completion during the period prescribed under TOLA; g. Section 2 of TOLA defines \"specified Act\" to mean and include the Income Tax Act. The new regime, which came into effect on 1 April 2021, is now part of the Income Tax Act. Therefore, TOLA continues to apply to the Income Tax Act even after 1 April 2021; and h. Ashish Agarwal (supra) treated Section 148 notices issued by the Revenue between 1 April 2021 and 30 June 2021 as show-cause notices in terms of Section 148A(b). Thereafter, the Revenue issued notices under Section 148 of the new regime between July and August 2022. Invalidation of the Section 148 notices issued under the new regime on the ground that they were issued beyond the time limit specified under the Income Tax Act read with TOLA will completely frustrate the judicial exercise undertaken by this Court in Ashish Agarwal (supra).” 5.1. Thus, it can be seen that Revenue conceded before the Hon'ble Supreme Court in para 19(f) for dropping all the notices issued on or after 01/04/2021 for A.Y. 2015-16 as they will not fall for completion during the period prescribed under TOLA. 6. Again the Hon’ble Supreme Court in the case of Deepak Steel and Power Limited vs. CBDT in Civil Appeal Nos. 5177 of 2025, 5178 of 2025 & 5179 of 2025, had the occasion to consider an identical grievance and held as under:- “The learned counsel appearing for the revenue with his usual fairness invited the attention of this Court to a three judge bench decision of this Court in Union of India and Ors. v. Rajeev Bansal, reported in 2024 SCC OnLine SC 2693, more particularly, paragraph 19(f) which reads thus: - \"19. (f) The Revenue concedes that for the assessment year 2015- 2016, all notices issued on or after April 1, 2021 will have to be dropped as they will not fall for completion during the period prescribed under the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020.\" 5. As the revenue made a concession in the aforesaid decision that is for the assessment year 2015-2016, all notices issued on or after 1st April, 2021 will have to be dropped as they would not fall for completion during the period prescribed under the taxation and other laws (Relaxation and Amendment of certain Provisions Act, 2020). Nothing further is required to be adjudicated in this matter as the notices so far as the present litigation is concerned is dated 25.6.2021. Printed from counselvise.com I.T.A. No. 6867 & 6866/Mum/2024 C.O. No. 21 & 22/Mum/2025 5 6. In view of the aforesaid, in such circumstances referred to above the original writ petition nos.2446 of 2023, 2543 of 2023 and 2544 of 2023 respectively filed before the High Court of Orissa at cuttack stands allowed.” 7. Once again, the Hon’ble Supreme Court had the occasion to decide a similar issue in the case of ACIT vs. Nehal Ashit Shah in IA No. 66386/2025 & IA No. 66387/2025 by order dated 04/04/2025. The relevant findings read as under :- “It has been submitted at the bar that this Special Leave Petition could be disposed of by following the order dated 17.01.2025 passed in the case of the Income Tax officer Ward 1(2) Jaipur vs. R.K.Build Creations Private Limited (Special Leave Petition (Civil) Diary No(s) .59625 of 2024). For ease of reference the aforesaid order reads as under: \"Delay condoned. Having regard to the concession made by the petitioner-Department in the case of Union of India vs. Rajeev Bansal, Civil Appeal No. 8629 of 2024 on 03.10.2024 (2024 SCC ONLINE 754), this Special Leave Petition would not survive for further consideration. Hence, the Special Leave Petition is dismissed. Pending applications), if any, shall stand disposed of.\" 4. Consequently, following the aforesaid order, this Special Leave Petition is dismissed as it does not survive for further consideration. 5. In this regard, reference could also be made to paragraph 19(e) and (f) in the case of Union of India vs. Rajeev Bansal, Civil Appeal No.8629 of 2024 on 03.10.2024 under which the learned Additional Solicitor General for India has made a concession insofar as the assessment year 2015-16 is concerned. Pending application(s), if any, shall stand disposed of.” 8. In light of the aforementioned decisions of the Hon’ble Supreme Court, the impugned notice mentioned hereinabove is set-aside and the resultant order is quashed. Since we have quashed the assessment order on this preliminary issue, other issues raised by the revenue in its appeal and by the assessee in its cross-objection are left open. Accordingly, C.O. No. 21/Mum/2025 for AY 2015-16 is allowed. Printed from counselvise.com I.T.A. No. 6867 & 6866/Mum/2024 C.O. No. 21 & 22/Mum/2025 6 9. In C.O. No. 22/Mum/2025, the assessee has raised as much as 11.7 grounds. However, the specific ground argued before us reads as under:- “11.3. The Ld. CIT(A) erred in not considering that notice u/s 148A(b) of the Act, order u/s 148A(d) of the Act and notice u/s 148 of the Act were passed without prior approval of appropriate authority specified u/s 151(ii) of the Act, which is bad in law.” 10. The notice u/s 148 of the Act dated 29/07/2022 which is in dispute, is as under:- Printed from counselvise.com I.T.A. No. 6867 & 6866/Mum/2024 C.O. No. 21 & 22/Mum/2025 7 11. It can be seen from paragraph 3 of the aforementioned notice that, the approval was given by the PCIT, Central – 3 on 28/07/2022. The challenge of the assessee is the invalid approval of the notice u/s 148 of the Act. We find that a similar quarrel was decided by the Hon’ble Supreme Court in the case of Union of India v. Rajeev Bansal [2024] 167 taxmann.com 70 (SC)/ 469 ITR 46 (SC), as the Hon’ble Supreme Court has considered the issue of getting approval from the appropriate authority u/s 151 of the Act before issuing notice u/s 148 of the Act to cases where the revenue has invoked the provisions of the Section 148A of the Act as per the directions of the Hon’ble Supreme Court in the case of Union of India vs Ashish Agarwal (2022 SCC Online SC 543). The relevant observations of the Hon’ble Supreme Court are as under:- “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 end of the relevant assessment year Joint Commissioner Section 151(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 year Principal Commissioner or Principal Director or Commissioner or Director Printed from counselvise.com I.T.A. No. 6867 & 6866/Mum/2024 C.O. No. 21 & 22/Mum/2025 8 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. Printed from counselvise.com I.T.A. No. 6867 & 6866/Mum/2024 C.O. No. 21 & 22/Mum/2025 9 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. 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 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;33 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 Printed from counselvise.com I.T.A. No. 6867 & 6866/Mum/2024 C.O. No. 21 & 22/Mum/2025 10 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. 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.” 12. In light of the aforementioned observations of the Hon’ble Supreme Court, we find that the AO passed an order u/s 148A(d) of the Act on 29/07/2022 and issued notice u/s 148 of the Act on 29/07/2022. As per the provisions of section 151 of the Act for the issue of notice, under the relevant Section of the Act on or after 01/04/2021, the prior approval should be obtained from the appropriate authorities specified u/s 151 of the Act in the new regime. The provisions of Section 151 of the Act under the new regime reads as under:- “Sanction for issue of notice. 151. Specified authority for the purposes of section 148 and section 148A shall be, - Printed from counselvise.com I.T.A. No. 6867 & 6866/Mum/2024 C.O. No. 21 & 22/Mum/2025 11 (i) Principal Commissioner or Principal Director or Commissioner or Director, if three years or less than three years have elapsed from the end of the relevant assessment year; (ii)Principal Chief Commissioner or Principal Director General or where there is no Principal Chief Commissioner or Principal Director General, Chief Commissioner or Director General, if more than three years have elapsed from the end of the relevant assessment year.” 13. In assessee’s case, from the perusal of paragraph 3 of the notice, exhibited elsewhere, we notice that the same is issued with the approval of the PCIT, Central – 3 on 28/07/2022 and this fact is not contravened by the ld. D/R. 14. In the considered opinion of the Bench, as per the decision of the Hon’ble Supreme Court (supra), the approval should have been obtained as per the amended provisions of Section 151 of the Act mentioned hereinabove i.e., the approval should have been obtained from PCCIT whereas the approval has been obtained from PCIT. Therefore, we hold that the notice u/s 148 of the Act is invalid and the consequent assessment order is liable to be quashed. Since we have quashed the assessment order, the other issues raised in the appeal by the revenue and in the cross-objection by the assessee are left open. 15. In the result, the appeals by the revenue are dismissed and the cross-objections by the assessee are partly allowed. Order pronounced in the Court on 30th July, 2025 at Mumbai. Sd/- Sd/- (SAKTIJIT DEY) (NARENDRA KUMAR BILLAIYA) VICE PRESIDENT ACCOUNTANT MEMBER Mumbai, Dated 30/07/2025 *SC SrPs *SC SrPs *SC SrPs *SC SrPs Printed from counselvise.com I.T.A. No. 6867 & 6866/Mum/2024 C.O. No. 21 & 22/Mum/2025 12 आदेश की \u0014ितिलिप अ\u0019ेिषत/Copy of the Order forwarded to : 1. अपीलाथ\u001b / The Appellant 2. \u0014 थ\u001b / The Respondent 3. संबंिधत आयकर आयु! / Concerned Pr. CIT 4. आयकर आयु! ) अपील ( / The CIT(A)- 5. िवभागीय \u0014ितिनिध ,आयकर अपीलीय अिधकरण, मुंबई /DR,ITAT, Mumbai, 6. गाड% फाई/ Guard file. आदेशानुसार/ BY ORDER TRUE COPY Assistant Registrar आयकर अपीलीय अिधकरण ITAT, Mumbai Printed from counselvise.com "