SRI NIKHIL MAHESWARI,KOLKATA V. I.T.O., WARD - 50(1), KOLKATA

ITA 1786/KOL/2025

AI Insights

This case involves an appeal by Sri Nikhil Maheswari against the order of the National Faceless Appeal Centre, Delhi, concerning the assessment year 2017-18. The primary contention was the legality of the reopening of the assessment and the subsequent assessment order, which was challenged on the grounds that the necessary approval under section 151 of the Income Tax Act was not obtained from the appropriate authority. The tribunal referenced several decisions from the Hon'ble Bombay High Court, which supported the assessee's position that the sanctioning authority for reopening the assessment must be the Principal Chief Commissioner of Income Tax (PCCIT) and not the Principal Commissioner of Income Tax (PCIT), as was done in this case.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 837922 (ITAT-KOLKATA)
• Duration Of Justice: 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 08-08-2025
• Other Referred Cases: Agnello Oswin Dias Vs. ACIT, Vodafone Idea Ltd. Vs. DCIT, Haresh Kumar Dungarmal Jain Vs. DCIT, Davos International Fund Vs. DCIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PAMPA RAY
• Assessee Lawyers: ABHISHEK BANSAL
• Keywords: Set aside; Unexplained expenditure; Bogus purchase; Reopening of assessment; Competent authority; Bogus
• Section: 148; 142(1)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM ITA No. 1786/KOL/2025 (Assessment Year: 2010-11) Sri Nikhil Maheswari BF-250, 2nd floor, Sector-1, Central Circle-Block, Baisakhi Island Sali, Salt Lake, Bidhannagar, Kolkata-700064, West Bengal Vs. ITO Ward 50(1) Uttrapan Complex, Manicktalla Civil Centre, Ultadanga, Kolkata- 700054, West Bengal (Appellant) (Respondent) PAN No. BBZPM1050R Assessee by : Shri Abhishek Bansal, AR Revenue by : Shri Pampa Ray, DR Date of hearing: 29.01.2026 Date of pronouncement: 17.02.2026 O R D E R Per Rajesh Kumar, AM: This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 23.08.2024 for the AY 2017-18. 2. At the outset, we note that the appeal of the assessee is barred by limitation by 281 days. At the time of hearing the counsel of the assessee explained the reasons for delay in filing the appeal. The Ld. D.R did raise objections to the condonation of dealy. After hearing the rival contentions and perusing the materials available on record, we find that the delay is for bonafide and genuine reasons and hence, we condone the delay and adjudicate the appeal in the following paras. Printed from counselvise.com Page | 2 ITA No. 1786/KOL/2025 Sri Nikhil Maheswari; A.Y. 2010-11 3. The facts in brief are that the assessee filed the return of income, declaring total income of ₹19,00,140/-, which was processed u/s 143(1) of the Act. Thereafter, specific information as flagged as per insight portal that the assessee had made bogus purchases to the tune of ₹1,00,00,338/-. The case of the assessee was reopened for scrutiny by passing order u/s 148A(d) of the Act on 28.07.2022 after issuing show cause notice u/s 148A(b) of the Act. Notice was finally issued u/s 148 of the Act on 30.07.2022 to the assessee after obtaining the approval from the competent authority i.e. PCIT-5, Kolkata as mentioned in Para no.3 of the notice u/s 148 of the Act, copy of which is available in the appellate folder. Thereafter, the notice u/s 142(1) of the Act along with questionnaire was issued and duly served upon the assessee. Finally, the assessment was framed by the ld. AO by making an addition of ₹25,00,085/- on account of unexplained expenditure. 4. In the appellate proceedings, the ld. CIT (A) confirmed the order of the ld. AO. 5. The ld. Counsel for the assessee submitted that the reopening of the assessment is not sustainable as the approval accorded u/s.151 of the Act was not in accordance with law. 6. On the other hand, ld. DR supported the orders of the ld. lower authorities. 7. After hearing the rival contentions and perusing the materials available on record, we find that the assessment was reopened after a period of three years from the end of the relevant assessment year as the notice u/s 148 of the Act was issued on 28.07.2022, whereas the assessment year involved is 2017-18 and thus is apparently beyond three years from the end of the relevant assessment year. Printed from counselvise.com Page | 3 ITA No. 1786/KOL/2025 Sri Nikhil Maheswari; A.Y. 2010-11 Therefore, in term of section 151 of the Act, the approval was required to be taken from the ld. PCCIT, whereas the AO has taken approval from ld. PCIT-5, Kolkata. In our opinion, the approval has not been granted by the competent authority as prescribed under section 151 of the Act. Therefore, the notice issued u/s 148 of the Act and consequent assessment are nullity and bad in law. The issue is covered by the decision of Hon'ble Bombay High Court in Writ Petition No.3249 of 2022 in case of Agnello Oswin Dias Vs. ACIT dated 22.02.2024, wherein it has held as under:- “4. The impugned order and the impugned notice both dated 22 April 2022 state that the Authority that has accorded the sanction is the PCIT, Mumbai-5. The matter pertains to Assessment Year (\"AY\") 2018-2019 and since the impugned order as well as the notice are issued on 22 April 2022, both have been issued beyond a period of three years. Therefore, the sanctioning authority has to be the PCCIT as provided under Section 151 (ii) of the Act. The proviso to Section 151 of the Act has been inserted only with effect from 1\" April 2023 and, therefore, shall not be applicable to the matter at hand. 5. In the circumstances, as held by this Court in Siemens Financial Services Private Limited Vs. Deputy Commissioner of Income Tax & Ors., the sanction is invalid and consequently, the impugned order and impugned notice both dated 22nd April 2022 under Sections 148A(d) and 148 of the Act are hereby quashed and set aside.” 7.1. Similarly, decision of Hon'ble Bombay High Court in case of Vodafone Idea Ltd. Vs. DCIT vide WP No. 2768 of 2022 dated 06.02.2024, wherein it has followed the decision of Agnello Oswin Dias (supra), as under:- “1. Petitioner is impugning a notice dated 19 March 2022 issued under Section 148A(b) of the Income Tax Act, 1961 (\"the Act\"), the order passed under Section 148A(d) of the Act and the notice both dated 7th April 2022 issued under Section 148 of the Act. One of the grounds raised is that the sanction to pass the order under Section 148A(d) of the Act and issuance of notice under Section 148 of the Act is invalid inasmuch as the sanction has been admittedly issued by the Principal Commissioner of Income Tax (\"PCIT\") and not by the Principal Chief Commissioner of Income Tax (PCCIT\"). 2. Petitioner's request for a copy of the sanction has also been denied. Even in the affidavit in reply, the Department is refusing to give the sanction which makes us wonder what is the national secret involved in that, that Assessee is being refused what he is rightfully entitled to receive from the Department. In the affidavit in reply, Printed from counselvise.com Page | 4 ITA No. 1786/KOL/2025 Sri Nikhil Maheswari; A.Y. 2010-11 the stand taken by the Revenue is it will be made available during the re-assessment proceeding. 3. The impugned order and the impugned notice both dated 7th April 2022 state that the Authority that has accorded the sanction is the PCIT, Mumbai 5. The matter pertains to Assessment Year (\"AY\") 2018-19 and since the impugned order as well as the notice are issued on 7th April 2022, both have been issued beyond a period of three years. Therefore, the sanctioning authority has to be the PCCIT as provided under Section 151 (ii) of the Act. The provisio to Section 151 has been inserted only with effect from 1 April 2023 and, therefore, shall not be applicable to the matter at hand. 4. In these circumstances, as held by this Court in Siemens Financial Services Private Limited Vs. Deputy Commissioner of Income Tax & Ors., the sanction is invalid and consequently, the impugned order and impugned notice both dated 7th April 2022 under section 148A(d) and 148 of the Act are hereby quashed and set aside. 5. Petition disposed. No order as to costs. All rights and contentions are kept open. 6. For completion of record, Respondents are directed to make available to Petitioner copy of the approval form as well as the approval accorded for issuance of order under Section 148A(d) and Section 148 of the Act within one week from this order being uploaded.” 7.2. Similarly, in the case of Haresh kumar Dungarmal Jain Vs. DCIT vide ITA No. 1933/PUNE/2024 vide order dated 24.02.2025 & Davos International Fund Vide ITA No. 1190/MUM/2024, dated 13.01.2025 the issue is decided on the same lines. 8. Considering the facts and circumstances of the case and also the above decisions, we are inclined to quash the reopening of assessment as well as the assessment order passed the ld. AO. 9. In the result, the appeal of the assessee is allowed. Order pronounced on 17.02.2026. Sd/- (RAJESH KUMAR) (ACCOUNTANT MEMBER) Kolkata, Dated: 17.02.2026 Sudip Sarkar, Sr.PS Printed from counselvise.com Page | 5 ITA No. 1786/KOL/2025 Sri Nikhil Maheswari; A.Y. 2010-11 Copy of the Order forwarded to: BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, 5. Guard file. Printed from counselvise.com "