ORDER
1 RULE. Rule is made returnable forthwith and with the consent of the learned Counsel for the parties, heard finally.
2 The above Writ Petition has been filed, inter alia, seeking to quash and set aside the Notice dated 28th March, 2021 issued under Section 148 of the Income Tax Act, 1961 (for short “the Act”) for Assessment Year 2015-16 as well as the Assessment Order dated 26th March, 2022 passed pursuant thereto under Section 147, read with Section 143 (3) of the Act.
3 In the above Petition, several grounds are raised to challenge the aforesaid notice. However, what was canvassed before us was that the impugned notice issued under Section 148 of the Act is without the approval / sanction of the Competent Authority as contemplated under Section 151 of the Act.
4 To put it in a nut shell, it was argued by the learned Senior Counsel for the Petitioner that in the facts of the present case, since the impugned notice was issued on 28th March, 2021, the unamended provisions of Section 151 would apply, and the authority for granting approval for issuance of notice under Section 148 of the Act would be of the Joint Commissioner of Income Tax. However, admittedly, in the facts of the present case, it is the Commissioner of Income Tax (Exemption), Pune that has granted the approval for issuance of notice under Section 148 of the Act. This is the short point on which the impugned notice is challenged.
5 At the outset, the learned Senior Counsel appearing on behalf of the Petitioner was fair enough to point out that no specific ground to this effect has been raised in the Petition, though, a ground is raised that the sanction is granted without any application of mind. He submitted that despite this, since from the facts of the case itself it can be ascertained that the authority granting the sanction was the wrong authority, and since the sanction is a pre-condition for issuance of a notice under Section 148 of the Act, and which goes to the root of the matter, this Court can proceed to decide the aforesaid issue.
6 To bring home the point that sanction has been given by the wrong authority, the learned Senior Advocate relied upon the decision of the Hon’ble Supreme Court in the case of Union of India v. Rajeev Bansal (SC) as well as the decision of this Court in the case of Chetan Gopaldas Cholera v. Asstt. CIT [Writ Petition No. 3474 of 2022, dated 6-10-2025].
7 The short point that was canvassed before us is that, in the present case, the impugned notice is dated 28th March, 2021. The same is issued within a period of four years from the end of the Assessment Year 2015-16 (the Assessment Year under consideration), after taking into account the provisions of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (for short “TOLA”). If the impugned notice is issued within a period of four years from the end of the Assessment Year 2015-16, then the authority whose sanction was required is the authority mentioned in Section 151 (2) of the Act, namely, the Joint Commissioner of Income Tax. Since the sanction to the impugned notice has been given by the Commissioner of Income Tax (Exemption), Pune, the notice itself is bad for want of proper sanction, is the argument of the learned Senior Counsel for the Petitioner.
8 On the other hand, Mr. Saxena, the learned Counsel appearing on behalf of the Revenue, submitted that in the facts of the present case, the sanction has been correctly obtained from the CIT (Exemption), Pune, because in the facts of the present case, the impugned notice was issued after a period of four years from the end of the Assessment Year 2015-16. He submitted that the four year period expired on 31st March, 2020 and the present notice has been issued on 28th March, 2021. It is, therefore, ex-facie clear that the impugned notice has been issued beyond the period of four years and, therefore, it is the authority under Section 151 (1) of the Act that would have to accord its sanction for issuance of the impugned notice under Section 148 of the Act.
9 Without prejudice to the aforesaid argument, it was submitted by Mr. Saxena that even assuming for the sake of argument that the issuance of the notice was within a period of four years from the end of the Assessment Year 2015-16, the Assessing Officer, before issuing the notice under Section 148 of the Act, has to satisfy himself that there is an escapement of income and has to prepare a satisfaction note in the form of a proposal and submit the same to the CIT/pCIT through the Joint/Additional CIT, for necessary approval under Section 151 of the Act. The Joint / Additional CIT, after going through the proposal, if satisfied, forwards the same to the CIT/ PCIT for the necessary approval. The CIT/pCIT, after going through the proposal and the forwarding remarks by the Joint / Additional CIT, if satisfied, approves the proposal for issuance of notice under Section 148 of the Act. Once this procedure is followed, then it cannot be said that there was no satisfaction of the Joint/ Additional CIT for sanction of issuing the notice under Section 148 of the Act. Hence, according to Mr. Saxena, looking at it from any angle, the notice issued under Section 148 of the Act cannot be impugned on the ground that it lacks the necessary sanction. Consequently, he submitted that the Writ Petition has no merit and the same be dismissed.
10 We have heard the learned Senior Advocate appearing on behalf of the Petitioner as well as the learned Counsel appearing on behalf of the Revenue.
11 At the outset, we are unable to agree with Mr. Saxena that in the facts of the present case, the notice issued under Section 148 of the Act was beyond the period of four years from the end of the Assessment Year 2015-16. As mentioned earlier, the impugned notice is dated 28th March, 2021. In normal circumstances, the period of four years would have expired on 31st March, 2020. However, due to the intervention of the Covid-19 pandemic, the legislature stepped in and enacted the Taxation and Other Laws (“Relaxation and Amendment of Certain Provisions”) Act, 2020 (for short “TOLA”). By virtue of the provisions of TOLA, all actions that were supposed to be completed on 20th March, 2020 were extended to 31st March, 2021. It is by virtue of this enactment that the period of four years did not expire before 31st March, 2021. This is also clear from what is set out by the Hon’ble Supreme Court in Rajeev Bansal (supra). Paragraph 77 in the case of Rajeev Bansal (supra) reads thus:-
“77:- Parliament enacted Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 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 the Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 relaxes the time limit for compliance with actions that fall for completion from March 20, 2020 to March 31, 2021. The Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 will accordingly extend the time limit for the grant of sanction by the authority specified under section 151. The test to determine whether Taxation and other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 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 March 20, 2020 and March 31, 2021, then the specified authority under section 151(i) has an extended time till June 30, 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 March 20, 2020 and March 31, 2021, then the specified authority under section 151(2) has time till March 31, 2021 to grant approval. The time limit for section 151 of the old regime expires on March 31, 2021 because the new regime comes into effect on April 1, 2021.”
(emphasis supplied)
12 As can be seen from the above reproduction, Section 3 (1) of TOLA relaxes the time limit for completion from 20th March, 2020 to 31st March, 2021. TOLA will accordingly extend the time limit for the grant of sanction by the authority specified under Section 151 of the Act. In the aforesaid paragraph, the Hon’ble Supreme Court has categorically stated that in the case of Section 151 of the old regime (i.e. prior to 1st April, 2021), the test is if the time limit of four years from the end of the Assessment Year falls between 20th March, 2020 and 31st March, 2021. If it does, then, the specified authority under Section 151 (2) has time till 31st March, 2021 to grant approval. In other words, if the time limit of four years from the end of Assessment Year 2015-16 falls between 20th March, 2020 and 31st March, 2021, the Joint Commissioner would be the authority that would have to give sanction for issuance of notice under Section 148 of the Act.
13 In the facts of the present case, the Assessment Year in question is A. Y. 2015-16. The notice under Section 148 of the Act has been issued on 28th March, 2021. Once these are the facts, the same would squarely fall within the ratio laid down by the Hon’ble Supreme Court in Rajeev Bansal (supra) and more particularly paragraph 77 thereof. In other words, the notice issued under Section 148 of the Act in the present case should have the sanction of the Joint Commissioner. Instead, the sanction obtained is that of the CIT (Exemption), Pune, who is admittedly not the authority who could have granted the sanction in the present case. On this ground alone, the above notice issued under Section 148 of the Act has to be quashed.
14 Before parting, it would be only be fair to deal with the argument of Mr. Saxena that in the facts of the present case, there is a satisfaction of the Joint Commissioner for issuance of the impugned notice, and the notice therefore is valid. We find this argument to be completely without merit. The impugned notice can be found at page 35 of the paper book. This notice categorically states that the impugned notice is being issued after obtaining the necessary satisfaction of the CIT (Exemption), Pune. Therefore, having expressly stated that the “necessary satisfaction” has been obtained from the CIT (Exemption), Pune, the Revenue now cannot resile from this position and argue to the contrary that the “necessary satisfaction” of the Joint Commissioner has been taken. Once the Act contemplates the satisfaction of a particular authority, it is that authority alone that would have to give its sanction, and not any other authority. This is squarely covered by the decision of this Court in the case of Ghanshyam K. Khabrani v. Asstt. CIT Circle-1 (Bombay).
15 This apart, we find that the facts of the present case are identical to the facts in the case of Prabhakar Nerulkar v. Pr. CIT (Bombay)/[Writ Petition No. 443 of 2024 – Goa Bench decided on 21st July, 2025] as well as the decision of this Court in Chetan Gopaldas Cholera (supra). In Chetan Gopaldas Cholera (supra) the exact same argument was canvassed by the Revenue and negated by this Court. Paragraph 9 and 10 of the decision in Chetan Gopaldas Cholera (supra) reads thus:-
9. As far as the Revenue’s contention that because the Jt. Commissioner has recorded that this is a fit case for reopening the assessment, the same would suffice with the mandatory requirements of Section 151, we find that the said issue is squarely covered by a decision of this Court in the case of CIT v. Aquatic Remedies (P.) Ltd. (2018) 406 ITR 545 (Bom.). In the facts of Aquatic Remedies (supra), the Court was considering whether the Tribunal was correct in quashing the order made under Section 143 (3) read with Section 147 holding that the same is without jurisdiction, failing to appreciate the fact that the sanction of the CIT, was based on the satisfaction/report of the Additional CIT, and as such, the requirement of Section 151 (2) was duly fulfilled. Answering this question, the Court in Aquatic Remedies (P.) Ltd. (supra) opined as under :
“6. Before considering the rival submissions, it is necessary to reproduce the relevant extracts from ‘FORM FOR RECORDING REASONS FOR INITIATING PROCEEDINGS U/S. 148 OF THE ACT, AND FOR OBTAINING APPROVAL OF THE COMMISSIONER OF INCOME TAX, CENTRAL – V, MUMBAI’ tendered across the Bar. The Form itself indicates that the Assessing Office had submitted the proposal to obtain approval of the Commissioner of Income Tax before issuing the notice dated 25th March, 2011. The remark by Additional Commissioner of Income Tax on the form, is as under:—
“12. Remark of the Addl. CIT: Yes. I am satisfied. It is a fit case to re-open the case u/s. 147 of the Act. The notice u/s. 148 may be issued subject to CIT approval.
Sd/-
(VIRENDRA OJHA)
Addl. Commissioner of Income Tax,
Central Range 10, Mumbai”
It, thereafter, was examined by the Commissioner of Income Tax who expressed his approval in the following form:
“13. Remark of the CIT
Yes, I am satisfied that in view of facts,. as indicated in the Annexure, it is a fit case for issue notice u/s. 148 of the I.T. Act.
Sd/-
(H.C.JAIN)
Commissioner of Income Tax,
Central IV, Mumbai.”
7. Further, the learned Counsel for the parties also produce before us a letter dated 24th March, 2011 addressed by the Additional Commissioner of Income Tax to the Commissioner of Income Tax and letter dated 25th March, 2011 from the office of the Commissioner of Income Tax to the Additional Commissioner of Income Tax. The letter dated 24th March, 2011 records the view of Additional Commissioner of Income Tax that he agrees with the reasons given by the Assessing Officer to issue the re-opening notice and seeks permission of the Commissioner of Income Tax to enable the Assessing Officer to issue the re-opening notice for Assessment Year 2004-05. While, letter dated 25th March, 2011 from the office of the Commissioner of Income Tax, addressed to the Additional Commissioner of Income Tax states that he has granted approval to the Assessing Officer to issue a notice under Section 148 of the Act. All the three communications, referred to herein above in paragraphs 6 and in this paragraph, are taken on record and marked A, B & C for identification.
8. Mr. Tejveer Singh, learned Counsel appearing for the Revenue submits that the Additional Commissioner of Income Tax is the jurisdictional Officer to grant sanction under Section 151 (2) of the Act. This, Officer he, submits has recorded his satisfaction with the reasons recorded by the Assessing Officer to issue the re-opening notice. Thus, the requirement of Section 151 (2) of the Act is satisfied inasmuch as the Additional Commissioner of Income Tax has found it to be a fit case for issuing of notice. It is further submitted that even though, the approval was obtained from the Commissioner of Income Tax for issuance of the notice, it does not take away the fact that the Additional Commissioner of Income Tax was satisfied with reasons recorded by the Assessing Officer. Therefore, it is submitted that the notice dated 25th March, 2011, cannot be said to be without jurisdiction.
9. It is undisputed position before us that in terms of Section 151(2) of the Act, the sanctioning/permission to issue notice under Section 148 of the Act has to be issued by the Additional Commissioner of Income Tax. We find that the Assessing Officer had not sought the approval of the Designated Officer but of the Commissioner of Income Tax. This is clear from the Form used to obtain the sanction. In any case, the approval/satisfaction recorded in the form submitted for sanction of the Commissioner of Income Tax by the Assessing Officer reproduced herein above, it is clear that the Additional Commissioner of Income Tax had not granted permission to initiate re-opening proceedings against the Respondent-Assessee. The view of the Additional Commissioner of Income Tax was subject to the approval of his superior – the Commissioner of Income Tax. Thus, there was no final sanction granted by the Additional Commissioner of Income Tax for issuing the notice dated 25th March, 2011 to re-open the Assessment. Further, it is the Commissioner of Income Tax who directed the issuance of the notice under Section 148 of the Act to the Assessing Officer. Thus, it is very clear that the final sanction/approval was that of the Commissioner of Income Tax as indicated in the Form and also in the two letters dated 24th March, 2011 and 25th March, 2011.”
(emphasis supplied)
10. In fact, the decision of Aquatic Remedies (supra) was challenged by the Revenue before the Hon’ble Supreme Court, and which SLP was also dismissed on 29.11.2019 (SC)].
16 Hence, we find no merit in the alternate submissions of Mr.Saxena.
17 In view of the foregoing discussion, the above Writ Petition succeeds and is allowed in terms of prayer clause (a) which reads thus:-
“(a):- that this Hon’ble Court may be pleased to issue a Writ of Certiorari or a Writ in the nature of Certiorari or any other appropriate Writ, order or direction, calling for the records of the Petitioner’s case and after going into the legality and propriety thereof, to quash and set aside the said (i) Notice dated 28th March,2021 u/s. 148 for A.Y. 2015-16 (Exh. A) and (ii) Assessment Order u/s. 147 r.w. 143 (3) dated 26th March, 2022 being (Exh.”B”) and after examining the legality and validity thereof to quash and set aside the same.”
18 Rule is made absolute in the above terms and the Writ Petition is also disposed of in terms thereof. However, there shall be no order as to costs.
19 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.