SHANTILAL NAROTTAMDAS PANCHAL,MALAD EAST V. ITO-41(3)(4), MUMBAI, BANDRA KURLA COMPLEX

ITA 3570/MUM/2025

AI Insights

The case involves Shantilal Narottamdas Panchal, the appellant, contesting the reassessment order for the Assessment Year 2017-2018. The reassessment was initiated by the Income Tax Officer under Section 147 read with Section 144B of the Income Tax Act, 1961, following a notice under Section 148. The appellant challenged the validity of the reassessment, arguing that the notice was issued without proper jurisdiction and the necessary approval was not obtained from the correct specified authority as required under Section 151 of the Act. The Tribunal examined the procedural compliance with Section 151 and the implications of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA), which extended the time limits for certain actions due to the COVID-19 pandemic.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 822695 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: K
• Assessment Year: 2017-2018
• Appeal Filed On: 21-05-2025
• Other Referred Cases: Collector of Land Acquisition Vs. Mst. Katiji & others, Union of India & Ors. Vs. Rajeev Bansal, Union of India vs Ashish Agarwal, Ramesh Bachulal Mehta Vs. Income Tax Officer, Prakash Pandurang Patil Vs. Income Tax Officer
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ASSESSEE; SERVING UPON THEM A SHOW CAUSE NOTICE
• Keywords: Condonation of delay; Set aside; Reassessment proceedings; Sale consideration of property below Jantri Value; Period of limitation; Time period of passing order; Tangible material
• Section: 147; 148; 56(2)(vii)(b)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “K (SMC)” BENCH, MUMBAI SHRI OM PRAKASH KANT, ACCOUNTANT MEMBER SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER ITA No.3570/MUM/2025 (Assessment Year:2017-2018) Shantilal Narottamdas Panchal B-16, Rajhans Coop. HSG Society Ltd. Jitendra Road, Malad East, Mumbai - 400097 . Maharashtra [PAN: AATPP9539N] …………. Appellant Income Tax Officer 41(3)(4), Mumbai Kautilya Bhavan, Bandra Kurla Complex, Mumbai – 400051. Maharashtra. Vs …………. Respondent Appearance For the Appellant/Assessee For the Respondent/Department : : Shri Ravindra Poojary Shri Bhagirath Ramawat Date Conclusion of hearing Pronouncement of order : : 12.11.2025 23.12.2025 O R D E R [ Per Rahul Chaudhary, Judicial Member: 1. The present appeal preferred by the Assessee is directed against the order, dated 12/02/2025, passed by the National Faceless Appeal Centre (NFAC), [hereinafter referred to as ‘the CIT(A)’] whereby the Ld. CIT(A) had set aside to the file of the Assessing Officer the appeal against the Assessment Order, dated 25/05/2023, passed under Section 147 read with Section 144B of the Income Tax Act, 1961 for the Assessment Year 2017-2018. Delay of 37 days in filing the present appeal is condoned for the reasons stated in the application seeking condonation of delay accompanied by supporting affidavit in view of the judgment of the Hon’ble Supreme Court in the case of Collector of Land Acquisition Vs. Mst. Katiji & others AIR 1987 1353 Printed from counselvise.com ITA No.3570/Mum/2025 Assessment Year 2017-2018 2 (SC). 2. The Assessee has raised following grounds of appeal : “I. The assessment order has been set-aside in total, to be made afresh by the AO: 1. That on the facts and the circumstances of the case, the Ld. NFAC/CIT(A) Appeals had erred in set-aside the reassessment order without disposing the ground on Reopening and Jurisdiction specifically taken in the Ground of appeal filed before him. II. Reopening is bad in law: 2. On facts and circumstances of the case and in law, the Ld. NFAC/CIT(A) has erred reopening the assessment by issuing the reopening Notice u/s.148 of the act on 21.07.2022 and pass the order u/s.148A(d) of the act on 21.07.2022 after obtaining sanction from the Principal Commissioner of Income Tax-2, whereas the specified authority for approval u/s.151 of the act in this case should have been the Principal Chief CIT, as three years had elapsed from the end of the relevant A.Y.2017-18. Thus, impugned notices deserved to be quashed. 3. On facts and circumstances of the case and in law, the Ld. NFAC/CIT(A) has erred in reopening the assessment by issuing the reopening notice u/s.148 of the act on 21.07.2022 is invalid since issued after 3 years from the end of AY 2017-18 and where the income escaping assessment is less than Rs.50 lakhs. Therefore, the reassessment initiated in the present case deserves to be quashed. 4. 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 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. III. Addition of Rs.16,16,116/- u/s. 56(2)(vii)(b) of the act: Printed from counselvise.com ITA No.3570/Mum/2025 Assessment Year 2017-2018 3 5. On facts and circumstances of the case and in law, the Ld. NFAC/CIT(A) has erred in set-aside the reassessment order by making an addition u/s.56(2)(vii)(b) of the act of Rs.16,16,116/- as the difference between stamp duty value and purchase value of the property without appreciating that under the redevelopment Agreement the assessee and his wife jointly received new property area 495.3 sft against their old property alongwith this they purchased an extra area of 144 sft from the builder for Rs.18,30,100/-. Accordingly, the total area of the property received is 640 sft and the stamp duty value on this is Rs.34,46,216/-. However, the A.O. incorrectly made the addition by taking the difference between the stamp duty value on this is Rs.34,46,216/-. However, the A.O. incorrectly made the addition by taking the difference between the stamp duty value of the total area of the property of Rs.34,46,216/- and the extra area of the property purchased of Rs.18,30,100/-. Therefore, addition is bad in law and ought to be deleted.” 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 in the present case for Assessment Year 2017-2018, the notice under Section 148 and order under Section 148A(d) have been issued on 21/07/2022, which is beyond the period of three years from the end of the relevant Assessment Year. The case of the Assessee falls within the ambit of provisions of Section 151(ii) of the Act whereby the specified authority for grant of approval has been specified as Principal Chief Commissioner of Principal Director General or Chief Commissioner of Director General. Contrary to the aforesaid requirement, the approval in the present case has been obtained from the Principal Commissioner of Income Tax-2, Mumbai [vide Reference No.Pr.CIT-2/Approval/u/s148A(d)/2022-23, dated 19/07/2022]. Accordingly, since proper sanction by the specified authority has not been obtained for issue of notice under Section 148 of the Act, such notice is invalid and bad in law. In this regard, reliance was placed by Printed from counselvise.com ITA No.3570/Mum/2025 Assessment Year 2017-2018 4 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) and in the case of Prakash Pandurang Patil Vs. Income Tax Officer in Writ Petition No.10749 of 2024, dated August 12, 2024 [ 2025] 177 taxmann.com 552 (Bombay). 4. Per contra Learned Departmental Representative supported the order passed by the Assessing Officer and vehemently contended that approval/sanction under Section 151 of the Act is valid. In support the Learned Departmental Representative filed written submission dated 29/07/2025. The relevant extract of which reproduced herein below: “4. In this respect, the attention of Hon'ble Bench is invited to the judgment of Hon'ble Supreme Court in case of Union of India & Ors. Vs. Rajeev Bansal in Civil Appeal 8629 of 2024. In this case, the first notice under section 148 of the Act was issued on 3-05-2021 and subsequently following the directions contained in the judgment of Hon'ble Supreme Court in case of Union of India vs Ashish Agarwal (2023) 1 SCC 617, the said notice was deemed to be a show-cause notice under section 148A(b) of the new regime as amended by Finance Act of 2021. Subsequently, following the due procedure as clarified by Hon'ble Supreme Court in Ashish Agarwal case (supra) a notice under section 148 was issued on 21-07-2022, after passing an order u/s 148A(d) of the Ac, following the due procedure as laid down in the Act and clarified by Hon'ble Supreme Court. 5. In this respect it is humbly submitted before Hon'ble Bench, that in light of the 3rd proviso to section 149 and in light of the judgment of Hon'ble Supreme Court in Rajeev Bansal Case (supra), the notice under section 148 in this case has been issued within the time limit of three years only, as calculated after excluding the period that should be excluded as per proviso 3 to section 149 and as has been brought out by Hon'ble Supreme Court in Rajeev Bansal case. Other than above additional arguments were made on behalf of the assessee during the hearing that TOLA will not be applicable in this case, that Rajeev Bansal is not applicable in respect of the sanction by specified Authority, Ashish Agarwal judgment was Printed from counselvise.com ITA No.3570/Mum/2025 Assessment Year 2017-2018 5 only applicable to the cases wherein the notices wee challenged. A rebuttal of all the arguments made on behalf of the assessee and calculation of the limitation period in light of the judgment of Hon'ble Supreme Court in Rajeev Bansal case is as below 6. In Rajeev Bansal case, Hon'ble Supreme Court discussed the interaction of new provisions of the Income Tax Act in respect of the re-opening under section 147 of the Act, as effected by Finance Act of 2021, w.e.f. 01-04-2021 with Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance 2020 (henceforth TOLA) in Union of India vs. Ashish Agarwal (henceforth Ashish Agarwal case) in (2023) 1 SCC 617. Further in Union of India vs. Rajeev Bansal in Civil Appeal Number 8629 of 2024, Hon'ble Court further elaborated on the interaction and clarified the calculations already laid down in Ashish Agarwal case. The arguments of department in light of the judgment and against the arguments made on behalf of the assessee are as below- 6.1. TOLA is applicable to new provisions as amended by Finance Act 2021-In respect of the applicability of TOLA on above provisions, Hon'ble Court observed as follows in para 63. “63. TOLA extended the time limits for completion or compliance of certain actions under the specified Act, which fell for completion during the COVID-19 outbreak. The use of the expression \"any\" in Section 3(1) indicates that the relaxation applies to \"all\" or \"every\" action whose time limit falls for completion from 20 March 2020 to 31 March 2021. Section 3(1) is only concerned with the performance of actions contemplated under the provisions of the specified Acts. Consequently, the amendment or substitution of a provision under the specified Acts will not affect the application of TOLA, so long as the action contemplated under the provision falls for completion during the period specified by TOLA, that is, 20 March 2020 to 31 March 2021. 6.1.1. In respect of applicability of TOLA on new provisions, Hon'ble Court observed the following in para 67- \"Section 2(1)(b)(ii) of TOLA defines 'specified Act' to include the Income Tax Act. After 1 April 2021, Section 2(1)(b)(ii) must be read to mean the Income Tax Act as amended by the Finance Act 2021. The substitution of Sections147 to 151 will not affect the purpose of TOLA, which is, to provide relaxation of the time limit for completion or compliance of any actions falling for Printed from counselvise.com ITA No.3570/Mum/2025 Assessment Year 2017-2018 6 completion between 20 March 2020 and 31 March 2021. TOLA will continue to apply to the Income Tax Act after 1 April 2021 if any action or proceeding specified under the substituted provisions of the Income Tax Act falls for completion between 20 March 2020 and 31 March 2021.\" 6.1.2. In para 68 Hon'ble Court observed that the Revenue cannot extend the operation of the old law under TOLA, but it can certainly benefit from the extended time limit for completion of actions falling for completion between 20 March 2020 and 31 March 2021. In para 69 Hon'ble Court again noted that the new provision time limit of 31 March stood extended to 30th June and the same is reproduced below- \"For instance, Section 149(1)(a) of the new regime specified the time limit of three years from the end of the relevant assessment year for reopening of the assessment. For assessment year 2017-2018, the three year period expired on 31 March 2021. The expiry of time fell within the time period contemplated by Section 3 of TOLA read with its notifications. Resultantly, the Revenue had time until 30 June 2021 to issue a reassessment notice for assessment year 2017-2018 under Section 149(1)(a). This harmonious reading gives effect to the legislative intention of both the Income Tax Act and TOLA. Moreover, Sections 147 to 151 are machinery provisions. Therefore, they must be given an interpretation that is consistent with the object and purpose of the Income Tax Act\" 6.1.3. In para 71 Hon'ble Court noted that the full benefit of the relaxation should be provided to both the assesses and the Revenue to tide over the difficulties caused by the COVID-19 pandemic. In para 72 Hon'ble Court again pointed out that the non-obstante clause in section 3(1) of TOLA will override the provisions of the Income Tax Act in case of any direct conflict or inconsistency Hon'ble Court further observed in the same para that Section 3(1) overrides Section 149 only to the extent of relaxing the time limit for issuance of reassessment notice under Section 148 Again in the same para it was held that the time limit for issuance of a reassessment notices, which fall for completion between 20 March 2020 and 31 March 2021, has been extended till 30 June 2021 6.1.4. Thus, it is apparent that as long as the original notice under section 148 was issued before 30-06-2021, it will be valid and was later held to be a show-cause under section 148A(b) of the Act. In this case the original 148 notice was issued on 3-5- Printed from counselvise.com ITA No.3570/Mum/2025 Assessment Year 2017-2018 7 2021, 62. TOLA will also apply in respect of sanction of Specified Authority-In the last part of para 72 the following was observed- \"The non obstante clause ensures that the Revenue has additional time beyond the statutory stipulated time limit to complete or comply with the formalities given the administrative difficulties that arose due to the COVID-19 pandemic.\" 6.2.1 Thus, the additional time allowed under TOLA was available for completion of all formalities and not just issuance of notice. Further that the relaxation allowed by TOLA is applicable to sanction of Specified Authority also has been held in para 77 of the order and the same is reproduced below- \"Parliament enacted TOLA to ensure that the interests of the Revenue are not defeated because the assessing officer could not comply with the preconditions 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 March2021, 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.\" 6.2.2 Hon'ble Court has clearly brought out that the Specified Authority under section 151(1), le the Pr. Commissioner has time till 30-06-2021. In para 78 Hon'ble Court has again repeated that the specified authority under section 151(i) i.e. Pr. CIT has time till 30-06-2021 6.2.3. In para 80 Hon'ble Court referred to judgment in Ashish Agarwal case to point out that that the permissions required under sections 148A(a) and 148A(b) were waived-off in that judgment and the AO was directed to pass an order under Printed from counselvise.com ITA No.3570/Mum/2025 Assessment Year 2017-2018 8 section 148A(d) straightaway. However, the court did not waive-off the requirement of sanction under section 148A(d). The relevant part of para 80 is as below- \"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 noticesought to have been issued following the time limits specified under Section 151 of the new regime read with TOLA, where applicable.\" 6.2.4. Thus, Hon'ble Court again reiterated that TOLA is applicable on new provision and applicable even in respect of sanction of specified Authority. In other words. the extended date benefits would be available not just in respect of issuance of notice but also in respect of sanction by Specified Authority 6.3. PAN India application of judgment in case of Ashish Agarwal- Further in para 89 Hon'ble Court held that the directions contained in Ashish Agarwal judgment will apply to all notices issued under section 148 after 1 April 2021. Hon'ble Court deemed these notices to be show-causes notices issued under section 148A(b) of the New Regime. In para 90 Hon'ble Court held that these directions would be applicable to all notices issued after 1-4-2021 issued under section 148. In respect of this last part of para 90 is reproduced below- \"The purpose of this Court in deeming the reassessment notices issued under the old regime as show cause notices under the new regime was two-fold: (i)to strike a balance between the rights of the assesses and the Revenue which issued approximately ninety thousand reassessment notices after 1 April 2021 under the old regime; and (ii) to avoid any further appeals before this Court by the Revenue on the same issue by challenging similar judgments and orders of the High Courts (arising from approximately nine thousand writ petitions).\" 6.3.1. Thus, Hon'ble court included both the 9000 Writs and 90,000 notices, Le whether challenged or not. In other words, the judgment in Ashish Agarwal was applicable to all specified notices, irrespective of whether the same were challenged or not. Printed from counselvise.com ITA No.3570/Mum/2025 Assessment Year 2017-2018 9 6.4. Calculation of limitation date as per new provisions of the Income Tax Act read with TOLA read with direction contained in Ashish Agarwal case- In respect of the calculation of the dates on which the time limits provided under new regime would expire Hon'ble Court referred to 3 time periods in para 94- I. The period up to 30 June 2021 this period is covered by the provisions of the Income Tax Act read with TOLA; II. The period from 1 July 2021 to 3 May 2022 the period before the decision of this Court in Ashish Agarwal (supra); and III. The period after 4 May 2022 the period after the decision of this Court in Ashish Agarwal (supra). This period is covered by the directions issued by this Court in Ashish Agarwal (supra) and the provisions of the Income Tax Act read with TOLA 6.4.1. Hon'ble Court referred to the third proviso to section 149 and held as below in para 95 and 96 of the order \"The third proviso excludes the following periods to calculate the period of limitation: (i) the time allowed to the assessee under Section 148A(b); and (ii)the period during which the proceedings under Section 148A are \"stayed by an order or injunction of any court.\" 6.4.2. In para 99 Hon'ble Court noted that in Ashish Agarwal case Hon'ble court created a legal fiction and accordingly, all there assessment notices issued under the old regime were deemed to always have been show cause notices issued under Section 148A(b) of the new regime. Hon'ble court held in the same para that the fiction replaced Section 148 notices with Section 148A(b) notices with effect from the date when the notices under Section 148 of the old regime were issued between 1 April 2021 and 30 June 2021, as the case may be 6.4.3. In para 105 Hon'ble Court made the important observation in respect of the calculation of the limitation date- \"A direction issued by this Court in the exercise of its jurisdiction under Article142 is an order of a court. The third proviso to Section 149 of the new regimeprovides that the period during which the proceedings under Section 148A are stayed by an order or injunction of any Printed from counselvise.com ITA No.3570/Mum/2025 Assessment Year 2017-2018 10 court shall be excluded for computation of limitation. During the period from the date of issuance of the deemed notice under Section 148A(b) and the date of the decision of this Court in Ashish Agarwal (supra), the assessing officers. were deemed to have been prohibited from passing a reassessment order. Resultantly, the show cause notices were deemed to have been stayed by order of this Court from the date of their issuance (somewhere from 1 April 2021 till 30 June 2021) till the date of decision in Ashish Agarwal (supra), that is, 4 May 2022.\" 6.4.4. In last part of para 106- \"To summarize, the combined effect of the legal fiction and the directions issued by this Court in Ashish Agarwal (supra) is that the show cause notices that were deemed to have been issued during the period between 1 April 2021 and 30 June 2021 were stayed till the date of supply of the relevant information and material by the assessing officer to the assessee. After the supply of the relevant material and information to the assessee, time begins to run for the assesses to respond to the show cause notices.\" 6.4.5. In para 107, Hon'ble Court referred to 3d proviso and pointed out that the same also excludes the time allowed to the assessee to respond. Hon'ble Court noted that the assessee was provided two weeks to respond in Ashish Agarwal judgment and the same is to be excluded from the period of limitation. Accordingly in last part of para 107 Hon'ble Court brought out the total period that is to be excluded while deciding the date of limitation- \"Hence, the total time that is excluded for computation of limitation for the deemed notices is: (i) the time during which the show cause notices were effectively stayed, that is, from the date of issuance of the deemed notice between 1 April 2021 and 30 June2021 till the supply of relevant information or material by the assessing officers to the assesses in terms of the directions in Ashish Agarwal (supra); and (ii) two weeks allowed to the assesses to respond to the show cause notices.\" 6.4.6. In para 108 Hon'ble Court held that the time surviving under the Income Tax Act read with TOLA will be available to revenue to complete the remaining formalities in last part of the para, Hon'ble Court stated the following- \"Therefore, the logical effect of the creation of the legal fiction by Ashish Agarwal (supra) is that the time surviving Printed from counselvise.com ITA No.3570/Mum/2025 Assessment Year 2017-2018 11 under the Income Tax Act read with TOLA will be available to the Revenue to complete the remaining proceedings in furtherance of the deemed notices, including issuance of reassessment notices under Section 148 of the new regime. The surviving or balance time limit can be calculated by computing the number of days between the date of issuance of the deemed notice and 30 June 2021.\" 6.4.7. Further in para 110- \"The effect of the creation of the legal fiction in Ashish Agarwal (supra) was that it stopped the clock of limitation with effect from the date of issuance of Section 148 notices under the old regime (which is also the date of issuance of the deemed notices). As discussed in the preceding segments of this judgment, the period from the date of the issuance of the deemed notices till the supply of relevant information and material by the assessing officers to the assesses in terms of the directions issued by this Court in AshishAgarwal (supra) has to be excluded from the computation of the period of limitation. Moreover, the period of two weeks granted to the assesses to reply to the show cause notices must also be excluded in terms of the third proviso to Section 149.\" 6.4.8. Hence, it is obvious from a perusal of the above excerpts that the time from date of issuance of notice under section 148 under old regime till the submission of response by the assessee in response to AO providing information as per directions contained in Ashish Agarwal judgment is to be excluded from calculation of the limitation period. Hon'ble Court clearly brought out that the clock will start ticking again for revenue only after the reply to deemed show-cause has been received or time allowed of two weeks has expired From this the count for surviving time will start and from this date the notice under section 148 is to be passed within the surviving time. 6.4.9 In para 114 Hon'ble Court summarized the judgment clearly pointing out that it is applicable to both 149 (issuance of notice) and 151 (sanction) off Specified Authority. Thus it is apparent that the time limit for both issuance of notice and sanction of specified Authority is to be calculated after excluding the time period under 3 proviso to section 149 as pointed out by Hon'ble Apex Court 7. Calculation of period of limitation in the present case- In para 112 Hon'ble Court explained the judgment with an Printed from counselvise.com ITA No.3570/Mum/2025 Assessment Year 2017-2018 12 example and using the same the period of limitation has been calculated in this case- Description Date Calculation of the surviving period The notice u/s 148 of old regime issued (1) 03/05/2021 Date of limitation as per New Regime read with TOLA (2) 30/06/2021 Surviving period being the number of days between 1 and 2 above 59 days Calculation of the excluded period The date of judgment of Ashish Agarwal 04/05/2022 Date on which information was supplied by AO to the assessee following Ashish Agarwal judgment 28/05/2022 The time limit of two weeks as provided in notice expired on 12/06/2022 Calculation of the limitation date The date from which the count for consuming the surviving period will start or the last date of excluded period 12/06/2022 Surviving period 59 days Date on which the limitation period will end (add surviving period on last date of exclusion period) 10/08/2022 Date of sanction by Pr. CIT 19/07/2022 Date of issuance of notice under section 148 21/07/2022 7.1. Thus, AO was supposed to take sanction under section 152(i) (i.e. that of Pr. CIT) and issue a notice under section 148 on or before 10-08-2022. In this case these both the formalities were completed on 21-07-2022 i.e. within the extended beneficial time limit provided under new provisions of Income Tax Act read with TOLA read with directions of Hon'ble Supreme Court in Ashish Agarwal case Accordingly, the claims of the assessee that the notice was issued beyond the period of three years is completely incurred and may be rejected.” 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 in terms of Section 151 of the Act the Principal Commissioner of Income Tax; or the Principal Chief Commissioner of Income Tax was the Specified Authority for seeking approval for passing order under Section 148A(d) of the Act and Printed from counselvise.com ITA No.3570/Mum/2025 Assessment Year 2017-2018 13 issuance of notice under Section 148 of the Act (new regime) for the Assessment Year 2017-2018. 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 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.3570/Mum/2025 Assessment Year 2017-2018 14 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 Printed from counselvise.com ITA No.3570/Mum/2025 Assessment Year 2017-2018 15 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. 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. 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: (a) Under new regime introduced by the Finance Act, 2021 Printed from counselvise.com ITA No.3570/Mum/2025 Assessment Year 2017-2018 16 Assessing Officer was required to obtain prior approval or sanction of the ‘Specified Authority’ at four stages – at first stage under Section 148A(a), at second stage under Section 148A(b), at third stage under Section 148A(d), and 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 issuing a notice under Section 148. (b) Under new regime if income escaping assessment is more than Rupees 50 lakhs a reassessment notice could be issued after expiry of three years from the end of the relevant previous year only after obtaining the prior approval of the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General. (c) 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 31st March 2021, then the ‘Specified Authority’ under Section 151(i) has an extended time till 30th June 2021 to grant approval. (d) 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. Printed from counselvise.com ITA No.3570/Mum/2025 Assessment Year 2017-2018 17 (e) 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 3 years from the end of the Assessment Year 2017-2018 fell for completion on 31/03/2021. The expiry date fell with the period of 20th March 2020 to 31st March 2021 contemplated under Section 3(1) of Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 [for short ‘TOLA’]. Resultantly, the authority specified under Section 151(i) of the new regime could have granted sanction till 30th June 2021. It is admitted position that in the present case order under Section 148A(d) and the notice under Section 148 of the Act were issued after 30th June 2021. However, the necessary approval/sanction has been taken from the Principal Commissioner of Income Tax. As per the judgment of Hon’ble Supreme Court in the case of Rajeev Bansal (supra) the necessary approval/sanction should have the authority specified under Section 151(ii) of the Act (i.e. Principal Chief Commissioner or Chief Commissioner). 10. We note that in 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), after taking into consideration the above judgment of the Hon’ble Supreme Court, the jurisdictional Bombay High Court has 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). The Hon’ble Bombay High Court held that that as per Section 151(ii) of the Act sanction/approval was mandatorily required from higher authority i.e. Principal Chief Commissioner of Income Tax /Chief Commissioner of Income Tax, and Printed from counselvise.com ITA No.3570/Mum/2025 Assessment Year 2017-2018 18 therefore, the approval/sanction granted by the Principal Commission of Income Tax was held to be invalid. 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 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 Printed from counselvise.com ITA No.3570/Mum/2025 Assessment Year 2017-2018 19 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 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. Printed from counselvise.com ITA No.3570/Mum/2025 Assessment Year 2017-2018 20 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.” 11. We note that in the case of ACIT CC 7(3) Vs. Lotus Logistics and Developers Private Limited [ITA No.627/Mum/2025 & C.O. No.49/Mum/2025], vide order dated 09/05/2025, the Mumbai Bench of the Tribunal had quashed the reassessment proceedings for the Assessment Year 2017-2018 since the notice, dated 29/07/2022, was issued under Section 148 of the Act after taking approval from the Principal Commissioner of Income Tax instead of Principal Chief Commissioner of Income Tax as mandated by Section 151 of the Act. 12. Respectfully following the above judicial precedents, we hold that notice, dated 21/07/2022, issued under Section 148 of the Act after 30th June 2021 [extended time granted under TOAL] suffers from jurisdictional effect as in the present case approval for issuing the said notice has been taken from the Principal Commissioner of Income Tax, Mumbai-2 instead of Principal Chief Commissioner of Income Tax as mandated by Section 151(1)(ii) of the Act. Therefore, the notice, dated 21/07/2022, issued under Section 148 of the Act is quashed. Accordingly, the re-assessment proceedings, and the Assessment Order, dated 25/05/2023, passed under Section 147 read with Section 144 & 144B of the Act is also quashed. 13. Before parting we would like to observe that the Learned Departmental Representative had placed reliance upon Paragraph 94 onwards of the judgment of Hon’ble Supreme Court in the case of Rajeev Bansal (supra) which pertain to provisions contained in Section 149 of the Act and are relevant for computation of surviving period for Printed from counselvise.com ITA No.3570/Mum/2025 Assessment Year 2017-2018 21 completion of the re-assessment proceedings. In our view, the same have no application for the purpose of determining Specified Authority under Section 151 of the Act as applicable at the relevant time and therefore, does not advance the case of Revenue in the facts and circumstances of the present case. Accordingly, Ground No.1, 2 and 3 raised by the Assessee are allowed while all the other Grounds raised by the Assessee are dismissed as having been infructuous. 14. In terms of paragraph 13 above, the present appeal is allowed. Order pronounced on 23.12.2025. Sd/- Sd/- (Om Prakash Kant) Accountant Member (Rahul Chaudhary) Judicial Member म ुंबई Mumbai; दिन ुंक Dated :23.12.2025 Milan, LDC Printed from counselvise.com ITA No.3570/Mum/2025 Assessment Year 2017-2018 22 आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपील र्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आय क्त/ The CIT 4. प्रध न आयकर आय क्त / Pr.CIT 5. दिभ गीय प्रदिदनदध ,आयकर अपीलीय अदधकरण ,म ुंबई / DR, ITAT, Mumbai 6. ग र्ड फ ईल / Guard file. आिेश न स र/ BY ORDER, सत्य दपि प्रदि //True Copy// उप/सह यक पुंजीक र /(Dy./Asstt. Registrar) आयकर अपीलीय अदधकरण, म ुंबई / ITAT, Mumbai Printed from counselvise.com "