The Delhi Bench of the Income Tax Appellate Tribunal has held that reassessment proceedings initiated under Section 148 of the Income Tax Act are void if the notice is issued after three years without the mandatory approval of the Principal Chief Commissioner of Income Tax. This ruling reinforces procedural compliance as a jurisdictional requirement, not a mere formality.
Background & Facts
The Dispute
The appellant, Manju Jain, was subjected to reassessment proceedings for Assessment Year 2017-18 based on a notice issued under Section 148 of the Income Tax Act, 1961. The appellant challenged the validity of the notice, arguing that it was issued beyond the statutory time limit and without the requisite approval authority, rendering the entire reassessment void ab initio.
Key Facts
- The original assessment for AY 2017-18 was completed on or before 31.03.2018.
- The first notice under Section 148 was issued on 28.06.2021, under the pre-amended provisions of the Act.
- The notice dated 28.06.2021 was issued more than three years after the end of the relevant assessment year (i.e., beyond 31.03.2021), making it time-barred under the old regime.
- On 18.05.2022, a notice under Section 148A(b) was issued, alleging escapement of income of Rs. 25,70,000 and granting time until 02.06.2022 for response.
- The assessee did not respond to the notice under Section 148A(b), and no request for extension was recorded.
- An order under Section 148A(d) was passed on 26.07.2022, concluding that income had escaped assessment.
- On the same day, 26.07.2022, a second notice under Section 148 was issued.
- The approval for this second notice was obtained from the Principal Commissioner of Income Tax (PCIT), Dehradun, on 25.07.2022.
- The notice was issued after the expiry of the three-year period from the end of AY 2017-18, placing it within the extended window of three to ten years under Section 148.
Procedural History
- 28.06.2021: First notice under Section 148 issued (time-barred).
- 18.05.2022: Notice under Section 148A(b) issued.
- 02.06.2022: Deadline for response under Section 148A(b) expired.
- 26.07.2022: Order under Section 148A(d) passed; second notice under Section 148 issued.
- 25.07.2022: Approval obtained from PCIT (not PCCIT).
- 25.02.2026: CIT(A) upheld the reassessment.
- 05.06.2026: Appeal heard before ITAT Delhi.
- 12.06.2026: Order pronounced.
Relief Sought
The appellant sought quashing of the reassessment order dated 25.02.2026, on the grounds that the notice under Section 148 was issued without jurisdiction due to being time-barred and lacking mandatory approval from the Principal Chief Commissioner of Income Tax (PCCIT).
The Legal Issue
The central question was whether a notice under Section 148 of the Income Tax Act, issued after three years but before ten years from the end of the relevant assessment year, is valid if the approval for such notice is obtained from the Principal Commissioner of Income Tax (PCIT) instead of the Principal Chief Commissioner of Income Tax (PCCIT) as mandated by Section 151.
Arguments Presented
For the Appellant
Shri I.P. Bansal, counsel for the assessee, contended that the notice under Section 148 dated 26.07.2022 was invalid for two reasons: first, the initial notice dated 28.06.2021 was issued beyond the three-year limitation under the old law, and second, the subsequent notice was issued without the mandatory approval of the PCCIT. He relied on the decision in DCIT v. Prasad Shetty [2025] 178 taxmann.com 148, where the Mumbai Bench of the Tribunal held that approval from the PCIT is insufficient when the notice is issued after three years, and that such a defect renders the entire reassessment void. He argued that Section 151 is a mandatory condition precedent, and non-compliance deprives the Assessing Officer of jurisdiction.
For the Respondent
Shri Manoj Kumar, Senior DR for the Revenue, defended the reassessment proceedings, arguing that the notice under Section 148A(b) cured the defect of the initial time-barred notice, and that the approval obtained from the PCIT was sufficient. He submitted that the procedural lapse was technical and did not prejudice the assessee, and that the CIT(A) had correctly upheld the reassessment.
The Court's Analysis
The Tribunal examined the sequence of events and the statutory framework under Sections 148 and 151. It noted that the first notice under Section 148 dated 28.06.2021 was clearly time-barred under the pre-amendment law, as it was issued more than three years after the end of AY 2017-18. The subsequent notice under Section 148, issued on 26.07.2022, fell within the extended period of three to ten years, thereby requiring approval under Section 151(2) from the Principal Chief Commissioner of Income Tax (PCCIT).
"Undisputedly, in the instant case the AO before issuing notice u/s. 148 of the Act dated 26.07.2022 has taken approval from the PCIT. This makes the notice defective."
The Tribunal emphasized that Section 151 is not a directory provision but a mandatory condition precedent to the issuance of a notice under Section 148 beyond the three-year period. The Tribunal distinguished the Revenue’s reliance on Prasad Shetty as being directly on point: the Mumbai Bench had held that approval from PCIT instead of PCCIT renders the notice invalid. The Tribunal agreed that the jurisdictional defect cannot be cured by subsequent actions or by the absence of prejudice to the assessee.
The Tribunal further noted that the order under Section 148A(d) did not validate the defective notice under Section 148, as the latter remains the foundational document for reopening. The failure to obtain approval from the correct authority meant the Assessing Officer acted without jurisdiction.
The Verdict
The appeal was allowed. The Tribunal set aside the order of the CIT(A) dated 25.02.2026 and quashed the reassessment proceedings initiated under the notice dated 26.07.2022. The reassessment for AY 2017-18 is declared void and of no legal effect. The Revenue is directed to treat the assessment as closed as of the original completion date.
What This Means For Similar Cases
Approval Authority Is Jurisdictional, Not Technical
- Practitioners must verify the rank of the approving authority in every reassessment initiated after three years: only PCCIT approval is valid under Section 151(2); PCIT approval is insufficient.
- Any reassessment based on a notice approved by PCIT instead of PCCIT is void ab initio and can be challenged even if the assessee did not raise the objection earlier.
Time-Barred Notices Cannot Be Cured by Section 148A
- A defective or time-barred notice under Section 148 cannot be revived or cured by subsequent issuance of a notice under Section 148A(b) or an order under Section 148A(d).
- Section 148A is a procedural mechanism for inquiry, not a substitute for jurisdictional compliance under Section 151.
Precedent Binding Across Tribunals
- The decision in DCIT v. Prasad Shetty is now binding precedent for all benches of the ITAT when interpreting Section 151.
- Revenue authorities must update internal guidelines to ensure that only PCCITs, and not PCITs, grant approvals for notices issued between years 3 and 10.
