Reopening Notice Issued Beyond 3 Years Quashed Due to Invalid Sanction (Pr. CIT instead of Pr. CCIT)

Issue

Whether a notice issued under Section 148 for reopening an assessment after three years from the end of the relevant assessment year is valid if the sanction (approval) was obtained from the Principal Commissioner of Income Tax (Pr. CIT), instead of the Principal Chief Commissioner of Income Tax (Pr. CCIT) as mandated by Section 151(ii).

Facts

Assessment Year: 2018-19.
The Action: The Income Tax Department issued a notice under Section 148 to reopen the assessment.
Timing: The notice was issued beyond the three-year period from the end of AY 2018-19.
The Error: The Assessing Officer obtained sanction for issuing the notice from the Principal Commissioner (Pr. CIT).
Legal Requirement: Under the amended Section 151(ii) (effective from April 1, 2021), if more than three years have elapsed from the end of the relevant assessment year, the sanction must be obtained from a higher authority—specifically the Principal Chief Commissioner or Principal Director General (or Chief Commissioner/Director General where there is no Pr. CCIT/Pr. DGIT).

Decision

Jurisdictional Defect: The Tribunal/Court held that the Principal Commissioner is not the competent authority to grant sanction for cases reopened after three years. The statute strictly defines the hierarchy of approval to safeguard taxpayers against arbitrary reopening of old cases.
Void Ab Initio: Obtaining approval from a lower authority (Pr. CIT) constitutes a fatal jurisdictional defect. It renders the notice and all subsequent proceedings (including the assessment order passed under Section 147 r.w.s 144B) void ab initio (invalid from the start).
Ruling: The notice and the assessment order were quashed in favor of the assessee.

Key Takeaways

Verify the Signature: For any Section 148 notice received after the 3-year mark, check the “Sanction Order” or the approval sheet attached (often provided upon request). If it is signed by a Pr. CIT or CIT, the notice is likely invalid. It must be signed by the top-tier authority (Pr. CCIT).

Statutory Safeguard: Courts view Section 151 not as a procedural formality but as a substantive safeguard. The legislature intended that higher-ranking officers apply their mind before reopening older cases.

IN THE ITAT MUMBAI BENCH ‘SMC’

Paresh Hiralal Shah

Income-tax Officer

NARENDER KUMAR CHOUDHRY, Judicial Member

IT Appeal No. 4775 (Mum.) of 2025
[Assessment year 2018-19]

NOVEMBER 10, 2025

Shashi Bekal, Ld. A.R. for the Appellant. Vikas Chandra, Ld. Sr. D.R. for the Respondent.

ORDER

Narender Kumar Choudhry, Judicial Member.- This appeal has been preferred by the Assessee against the order dated 20.06.2025, impugned herein, passed by the National Faceless Appeal Center (NFAC)/ Ld. Commissioner of Income Tax (Appeals) (in short Ld. Commissioner) u/s 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2018-19.

2. In the instant case, though the notice u/s 148A(d) of the Act was issued within 3 years from the end of the relevant assessment year, however, it is admitted that the notice u/s 148 of the Act was issued beyond 3 years and/or after the elapsing of 3 years from the end of the relevant assessment year, thus, there is a violation of the provisions of section 151(ii) of the Act with regard to sanction taken from the Ld. PCIT but not from the Ld. PCCIT, who is the Competent Authority as designated under the law, and therefore this Court is inclined to quash notice u/s 148 of the Act along with the assessment order dated 20.02.2024 as involved, by respectively following the judgment of the Coordinate Bench of the Tribunal in the case of PCIT v. Ms. Asha P. Kedia (2025) (Mumbai – Tribunal), wherein the Hon’ble Coordinate Bench of the Tribunal, respectfully following the judgment of the jurisdictional High Court in the case of (Vodafone Idea Ltd. v. Deputy CIT [Writ Petition No. 276 of 2022, dated 6-2-2024] decided on 06.02.2024) on the identical issue, ultimately quashed the assessment order itself, having been issued on the basis of identical sanction as involved in this case, by observing and holding as under:

“7. We have given thoughtful considerations to the peculiar facts and circumstances of the case. Admittedly, the Hon’ble Jurisdictional High Court has dealt with such provisos, as involved in the instant case, in the case of Vodafone India Idea Ltd. v. DCIT (write petition 2768 of 2022 decided on 06.02.2024), wherein it has been held as under:

“3. The impugned order and the impugned notice both dated 7th April 2022 state that the Authority that has accorded the sanction Ms. Asha P Kedia 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 proviso to Section 151 has been inserted only with effect from 1st April 2023 and, therefore, shall not be applicable to the matter at hand.”

8. In the instant case, admittedly the notice u/s 148 of the Act was issued for reopening of the case on dated 27.07.2022 i.e. after elapsing of three years from the end of the relevant assessment year and therefore as per sub clause (ii) of section 151 of the Act, the specified authority for granting the approval for issuing the notice u/s 148 of the Act, would have been, either Principal Chief Commissioner or Principal Director or where there is no such post then the Chief Commissioner or Director General, for granting the sanction for issuing of notice u/s 148 of the Act, but not the Ld. PCIT-2, Mumbai who has granted the approval in this case and/or authority specified under sub clause (i) of section 151 of the Act.

Relevant provisions of law, which are very much clear and the Hon’ble Jurisdictional High Court in the case of Vodafone India Idea Ltd. has also clearly held that proviso to section 151 of the Act has been inserted w.ef 01.4.2023 and therefore shall not be applicable to the A.Y. 2018-19. In effect, the Hon’ble High Court has clarified that provisos to section 151 of the Act would be effective from 01.04.2023 onwards and would not be applicable to the prior period.

Thus, the impugned notice dated 27.07.2022 u/s 148 of the Act, as issued by the AO in the instant case by taking approval from the Ld. Pr. CIT-2, Mumbai but not from the Ld. Pr. CCIT and in pursuance to that the assessment order dated 23.01.2023 u/s 147 r.w.s. 144 & 144B of the Act, is liable to be quashed being void, ab- initio and thus, the same is quashed accordingly. Thus, the CO is allowed.

9. As we have quashed the reopening and therefore the appeal of the Revenue has become infructuous and thus the same is liable to be dismissed.

10. In the result, the CO filed by the Assessee is allowed, whereas the appeal filed by the Revenue stands dismissed.”

3. Thus, considering the peculiar facts and circumstances as stated above, the notice issued u/s 148 of the Act based on the sanction given by the Principal CIT, but not by the designated authority, as prescribed in section 151(ii) of the Act, would entail quashing of the notice u/s 148 of the Act along with the assessment order dated 20.02.2024 u/s 147 read with section 144B of the Act, being passed in pursuance to such notice u/s 148 of the Act.

4. Thus, the Notice u/s 148 of the Act along with Assessment order involved is quashed being void-ab-initio.

5. As the Assessment order is quashed on the legal aspect itself, thus this this Court is inclined not to delve into the merits of the case, as adjudication of the same would prove to be futile exercise.

6. In the result, the Assessee’s appeal is allowed on legal aspect.