The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has quashed a reassessment for Assessment Year (AY) 2018-19 after holding that the approval obtained for reopening the assessment was granted by the Principal Commissioner of Income Tax (PCIT), instead of the higher “specified authority” mandated under Section 151(ii) of the Income-tax Act, 1961, where more than three years had elapsed from the end of the relevant assessment year.
The bench of Challa Nagendra Prasad (Judicial Member) and Makarand Vasant Mahadeokar (Accountant Member) has observed that the statutory approval requirement under Section 151 is a jurisdictional precondition for issuing a reassessment notice under Section 148. Since the required approval was not obtained from the authority prescribed under Section 151(ii), the notice under Section 148 was held to be invalid and the consequential reassessment was declared void ab initio.
Buy Now: Recovery Of Tax Dues And Penalty Against Legal Heirs Of A Deceased Assessee : Case Compilation
The original reassessment had been framed under Section 147 read with Section 144B of the Income-tax Act on March 18, 2024. Before the Tribunal, the assessee challenged, among other issues, the validity of the reopening proceedings, the reassessment order, an interest disallowance of ₹25,02,158 under Section 69C, an alleged double addition of the same amount, penalty proceedings under Section 270A and levy of interest under Sections 234A, 234B and 234C.
The principal issue ultimately decided by the Tribunal was the validity of the reopening itself, particularly whether the approval for issuing the Section 148 notice had been granted by the authority prescribed under Section 151.
Before considering the substantive challenge, the Tribunal dealt with a delay of 33 days in filing the appeal.
The assessee explained that the CIT(A)’s order dated December 22, 2025, was uploaded on the Income Tax portal and that the statutory deadline for filing the appeal before the Tribunal expired on February 28, 2026. The appeal was ultimately filed on April 2, 2026.
The assessee attributed the delay to circumstances concerning its accountant, who was responsible for monitoring the company’s tax proceedings and coordinating appellate compliances. According to the explanation placed before the Tribunal, the accountant had to travel to Rajasthan because of a medical emergency involving his mother and remained away from office for a substantial period. The appeal was filed shortly after he discovered that it had not been lodged within the prescribed period.
The Tribunal accepted the explanation and found that the assessee had been prevented by a reasonable and sufficient cause from filing the appeal within time. It therefore condoned the 33-day delay and admitted the appeal for adjudication.
On merits, the assessee challenged the reassessment on the ground that the notice under Section 148 had been issued after the expiry of three years from the end of the relevant assessment year without obtaining approval from the authority specified under Section 151(ii).
The assessee pointed out that the reopening notice was issued for AY 2018-19 after the three-year period had expired. According to its submission, Section 151(ii) required approval from the Principal Chief Commissioner of Income Tax (PCCIT) or other higher authorities specified in that provision.
However, the approval in the case had been granted by the Principal Commissioner of Income Tax (PCIT). The assessee therefore argued that the statutory jurisdictional requirement had not been satisfied and that the resulting Section 148 notice and reassessment were invalid.
The Tribunal examined the Supreme Court’s ruling in Union of India v. Rajeev Bansal, which had explained the significance of Section 151 under the reassessment regime introduced by the Finance Act, 2021.
The Supreme Court had clarified that Section 151 creates a procedural safeguard against arbitrary or mechanical reopening of assessments. The level of authority required to grant sanction depends upon the period elapsed from the end of the relevant assessment year.
Under the new regime, where three years or less have elapsed, approval may be granted by authorities specified under Section 151(i). However, where more than three years have elapsed, Section 151(ii) requires approval from a higher level of authority, including the Principal Chief Commissioner or the other authorities expressly identified in that provision.
The Supreme Court further held that obtaining sanction from the appropriate specified authority is a precondition for the Assessing Officer to assume jurisdiction under Section 148. Failure to comply with the statutory requirement affects the Assessing Officer’s jurisdiction to issue the reassessment notice.
The Mumbai ITAT particularly relied upon the principle that the authority empowered to grant sanction under Section 151 is directly linked to the time when the reassessment notice is issued.
The Tribunal noted that the Supreme Court had made it clear that, under the new reassessment regime, where more than three years have elapsed from the end of the relevant assessment year, approval must be obtained from the higher authority prescribed under Section 151(ii).
The Tribunal also noted the Supreme Court’s clarification that although certain approval requirements connected with Section 148A(a) and 148A(b) had been dispensed with in the context of the transition to the new reassessment regime, the requirement of approval before passing an order under Section 148A(d) or issuing a notice under Section 148 continued to apply.
The Tribunal also referred to the decision of the Bombay High Court in Alag Property Construction (P.) Ltd. v. ACIT, which dealt with a similar issue concerning approval by an authority under Section 151(i) instead of the higher authority prescribed under Section 151(ii).
In that case, the Bombay High Court, following the Supreme Court’s ruling in Rajeev Bansal, held that where the reopening proceedings were initiated after the expiry of three years, approval from the authority specified under Section 151(ii) was mandatory. Approval from the PCIT, which fell within the lower category under Section 151(i), was insufficient.
The High Court consequently held that non-compliance with Section 148A(d) read with Section 151(ii) vitiated the jurisdiction to issue the Section 148 notice and set aside the reassessment proceedings.
Applying these principles to the case before it, the Mumbai ITAT observed that the reassessment for AY 2018-19 had been reopened beyond three years from the end of the relevant assessment year.
The approval for reopening, however, had been granted by the Principal Commissioner of Income Tax, rather than the Principal Chief Commissioner of Income Tax required under Section 151(ii).
The Tribunal held that this was not merely a procedural irregularity. Since the prescribed approval was a condition precedent for assuming jurisdiction under Section 148, failure to obtain sanction from the correct specified authority rendered the reopening legally unsustainable.
The Tribunal concluded that the Section 148 notice was bad in law because the statutory approval had not been obtained from the authority mandated by Section 151(ii).
Consequently, the reassessment framed under Section 147 read with Section 144B for AY 2018-19 was held to be void ab initio.
The Tribunal did not need to adjudicate the assessee’s other substantive grounds concerning the ₹25.02 lakh disallowance, alleged double addition, penalty initiation and consequential interest. The reassessment proceedings were quashed and the appeal was allowed.
Membership Required to Access Case Details & Order Copy
To view the complete Case Details and Download Order Copy, you must have an active membership. Please subscribe to continue.
