Prabhakar Nerulkar, Aged 49 Years v. Principal Commissioner Of Incometax, Panaji, Having Office At Aaykarbhavan, Plot

IN THE HIGH COURT OF BOMBAY AT GOA WRIT PETITION NO. 443 OF 2024 Prabhakar Nerulkar, aged 49 years,residing at House No. 208, nearHanuman Temple, Verem, Bardez, Goa. … PETITIONER Versus 1. Principal Commissioner of IncomeTax, Panaji, having office at AaykarBhavan, Plot No. 5, EDC Complex, PattoPlaza, Panaji, Goa — 403 001. 2. National Faceless Assessment Centre,Delhi, having office at 2[nd] Floor, E-Ramp, Jawaharlal Nehru Stadium,Delhi — 110 003. 3. Income-tax Officer, Ward 2(1),Panaji, having office at Aaykar Bhavan,Plot No. 5, EDC Complex, Patto Plaza,Panaji, Goa — 403 001. 4. The Union of India, Through theSecretary, Ministry of Finance,Government of India, North Block, NewDelhi - 110 001. … RESPONDENTS *** Mr. Dhiren Gandhi with Ms. Shweta Parulekar, Advocates for thePetitioner. Ms. Susan Linhares, Standing Counsel with Ms. Swati KamatWagh, Advocate for Respondent Nos. 1, 2 and 3. JUDGMENT:(per BHARATI DANGRE, J.) 1.The Petitioner, a resident of Goa, assessed under the IncomeTax Act, 1961, is aggrieved by the notice issued under Section 148of the Income Tax Act by the Income Tax Department on31.03.2021 for the Assessment Year (AY) 2014-15 and 2016-17. Heis also aggrieved by the order dated 21.03.2022 passed by theIncome Tax Department under Section 147 read with Section 144and Section 144B of the Income Tax Act and consequential actiontaken, including an order passed under Section 264 of the Act on14.11.2023. A writ of mandamus is prayed for quashing and setting asidethe aforesaid orders and restraining the Respondents from takingany steps whatsoever, in implementation of the notice underSection 148 as well as the assessment order and also the orderpassed under Section 264 by the Income Tax Act. 2.We have heard Mr. Dhiren Gandhi for the Petitioner andAdvocate Ms. Susan Linhares for the Revenue. While issuing notice on 10.06.2024, this Court had directedthat till the next date, no cohesive steps shall be taken against thePetitioner. On the pleadings being completed, we deem it appropriateto issue ‘Rule’ and have taken up the Petition for final hearing. 3.The Petitioner, engaged in real estate business and duringthe course of his business activity, purchases plot/plots anddevelop the same for its sale. Upto the AY 2010-11, the Petitioner regularly filed hisIncome Tax Returns, however, for the subsequent years from AY2011-12 till 2016-17, the Tax Returns on his behalf were not filedas the Petition plead that though the Petitioner submitted hisBooks of Account to the Tax Consultant, the process of filing theReturns was not complete and the Petitioner was under the beliefthat the Returns on his behalf were regularly filed. The Petitioner,therefore, engaged a new Tax Consultant in the year 2016 and asthe time limit for filing the Returns for the previous years hadelapsed, the Petitioner availed the opportunity to make disclosuresunder the Income Disclosure Scheme (IDS), 2016. 4.The Petitioner offered his income under the IDS, includinghis income from the real estate business. Since he was coveredunder Section 5A of the Income Tax Act, half of his income wassubjected to tax in the name of his wife, Mrs. Madhuri PrabhakarNerulkar and they opted for presumptive taxation scheme underSection 44AD of the Income Act, which gives an option to anAssessee to offer his income from the business at the rate of 8% ofthe gross receipts or higher sum to tax. Taking advantage of thesaid provision, the Petitioner, along with his Wife, offered their income from the real estate business to tax under Section 44AD of the Income Tax Act for the AY 2011-12 to AY 2015-16. It was accompanied by a declaration that the amount ofundisclosed income offered under the IDS was credited to theBank Account, the details of which were also furnished. Accordingto the Petitioner, he had disclosed the transactions in immovableproperties involving sale and purchase, and this included thedisclosure by his wife. income from the real estate business to tax under Section 44AD of the Income Tax Act for the AY 2011-12 to AY 2015-16. It was accompanied by a declaration that the amount ofundisclosed income offered under the IDS was credited to theBank Account, the details of which were also furnished. Accordingto the Petitioner, he had disclosed the transactions in immovableproperties involving sale and purchase, and this included thedisclosure by his wife. The Petitioner, therefore, took benefit of the IDS in 2016,which permitted any person to make a declaration on or after thecommencement of the scheme i.e. 01.06.2016, but before30.09.2016, to be accompanied with a declaration of undisclosedincome chargeable to tax prior to the Financial Year 2016-17 to bemade to the jurisdictional Principal Commissioner orCommissioner in such form as prescribed in the IncomeDeclaration Scheme Rules, 2016. 5.The assessment of the Petitioner for the AY 2011-12, AY2012-13 and AY 2013-14 was reopened by the Assessing Officer inrelation to his business of real estate involving the purchase andsale of properties, in which, the Petitioner participated through hisTax Consultant. For the AY 2015-16, the Income Tax Officer, Panaji, issued anotice under Section 148 of the Income Tax Act on 31.03.2021 andtwo other notices were issued on 08.10.2021 and 25.11.2021. Similarly, notices were also issued for the AY 2014-15 and AY2016-17. The Petitioner filed his Return of Income under Section148 on 01.02.2022, which resulted in issuance of notice underSection 143(2) on 11.02.2022, which disclose that the assessmentwas reopened on account of the fact that the Petitioner hadentered into some transactions of purchase and sale of property,but he had not filed his Return of Income and therefore, hisReturns did not take into consideration his income in thedeclaration filed under the IDS. This was followed by a show cause notice in form of draftassessment order dated 22.02.2022, alleging that the Petitionerhad failed to comply with the notices and therefore, the IncomeTax Officer proposed to make the best judgment assessment byadding all the amounts which were the basis of reopening theassessment and five days time was given to file his Returns, butthe Petitioner failed to respond. This resulted in passing of the final assessment order byRespondent No. 2 to the best of his judgment on 21.03.2022, to befollowed by a notice of demand issued by Respondent No. 1 underSection 156 of the Income Tax Act. A notice was also issued underSection 274 asking the Petitioner to show cause as to why apenalty should not be imposed. 6.Being aggrieved, the Petitioner filed an Application underSection 264 of the Income Tax Act on 21.09.2022, alleging that his income declared under the IDS was not taken into consideration. The Petitioner also made an attempt to explain the source ofthe purchase of the property, and also alleged that in respect ofsale transactions, deduction of the cost of acquisition has not beenallowed, apart from the fact that the stamp duty value of theproperty, which did not depict the true fair value of the property,has been accepted as the basis. Upon a notice of hearing being issued to the Petitioner, byorder dated 14.11.2023, Respondent No. 1, disposed of theApplication, by partially rejecting the Application, by referring tothe income declared by the Assessee and his Spouse under the IDSfor AY 2013-14 and AY 2014-15. However, the objection raised bythe Assessee regarding the sale consideration came to be rejectedby directing the Assessing Officer to pass the consequential order,which resulted in passing of the order by Respondent No. 1 on11.03.2024. Upon a notice of hearing being issued to the Petitioner, byorder dated 14.11.2023, Respondent No. 1, disposed of theApplication, by partially rejecting the Application, by referring tothe income declared by the Assessee and his Spouse under the IDSfor AY 2013-14 and AY 2014-15. However, the objection raised bythe Assessee regarding the sale consideration came to be rejectedby directing the Assessing Officer to pass the consequential order,which resulted in passing of the order by Respondent No. 1 on11.03.2024. 7.The learned Counsel for the Petitioner, Mr. Dhiren Gandhiwhile raising the challenge to the order dated 31.03.2021, to befollowed by the consequential orders, would submit that the noticeunder Section 148 of the Income Tax Act, 1961, suffers from agross error as the same is issued after obtaining necessarysatisfaction of the Principal Commissioner of Income Tax (PCIT),Panaji. Inviting our attention to Section 151 of the Income Tax Actas substituted by the Finance Act, 2015 w.e.f. 01.06.2015, hewould submit that his case is covered by sub-section (2) of Section151 and according to him, under the said clause, no notice shall beissued by an Assessing Officer, unless the Joint Commissioner issatisfied on the reasons recorded by such Assessing Officer that itis a fit case for issuance of a notice. Submitting that the orderissued under Section 148 on 31.03.2021 for the AY 2015-16, withthe applicability of Taxation and Other Laws (Relaxation andAmendment of Certain Provisions) Act, 2020 (TOLA, 2020), asthe new regime came into effect from 01.04.2021, he would submitthat the provisions of grant of sanction in operation from the saiddate is covered by the decision of the Apex Court in Union ofIndia Vs. Rajeev Bansal[1]. He would also place reliance on the decision of the BombayHigh Court in the case of Ghanshyam K. Khabrani Vs.Assistant Commissioner of Income Tax Circle-1[2], insupport of his submission that when the Income Tax Act hasconferred the power of sanction by according the satisfaction ofthe distinct Authorities, then the mandate of the statute must bestrictly followed and when the statute mandates the satisfaction ofa particular functionary for exercise of the power, the satisfaction must be of that Authority alone. 1[2024] 167 taxmann.com 70 (SC) 2[2012] 20 taxmann.com 716 (Bom) 21[st] July 2025 Reliance is also placed upon a further decision of theBombay High Court in the case of Commissioner of IncomeTax, Central-4 Vs. Aquatic Remedies (P) Ltd.[3] 8.Contesting the stand of the Petitioner, Ms. Linhares for theRevenue, has placed before us the approval under Section 151 ofthe Income Tax Act with respect to the assessment of thePetitioner for AY 2015-16 and according to her, from the saiddocument, it is evident that for the income escaping assessmentcomputed at Rs.2,05,90,000/- and the date of proposal ismentioned as 27.03.2021 and the recommendation remarks inColumn No. 3, record as below:- “The reasons recorded by the A.O. is seen. I amsatisfied that it is a fit case for reopening theassessment. Accordingly, recommended for approval.” 9.The approving Authority in the said approval order is Mr.Amrapalli Das, PCIT, Panaji, and the approval order record thatinformation having been received by the DIT (Intelligence &Criminal Investigation), Bengaluru through system for AY 2015-16, in respect of immovable properties transaction, cash deposit incase of Prabhakar Gajanan Nerulkar, who had sold and purchasedvarious properties. 3[2018] 96 taxmann.com 609 (Bom) 21[st] July 2025 “The reasons recorded by the A.O. is seen. I amsatisfied that it is a fit case for reopening theassessment. Accordingly, recommended for approval.” 9.The approving Authority in the said approval order is Mr.Amrapalli Das, PCIT, Panaji, and the approval order record thatinformation having been received by the DIT (Intelligence &Criminal Investigation), Bengaluru through system for AY 2015-16, in respect of immovable properties transaction, cash deposit incase of Prabhakar Gajanan Nerulkar, who had sold and purchasedvarious properties. 3[2018] 96 taxmann.com 609 (Bom) 21[st] July 2025 The information received was verified by the ITO (I & CI) onthe basis of the sale deeds from various Sub-Registrars, BankStatements from the Bank and it was noted that the Assessee hadgone for IDS in the F.Y. 2014-15 and had shown negligible incomeand has also admitted that they are not maintaining any Books ofAccount and are unable to furnish the sources of purchase andexplain whether income on sales has been accounted or not. 10.In the wake of this, the PCIT, Panaji, recorded thus:- “(4) In view of the above, I have reason to believethat Rs.2,05,90,000/- assessable in respect of AY2015-16 has escaped assessment within the meaning ofSection 147 read with Explanation 2(b) of the IncomeTax Act, 1961, which needs to be brought to tax andhence, it is a fit case to invoke the provisions of Section147 of the Income Tax Act, 1961.that Rs.2,05,90,000/- assessable in respect of AY2015-16 has escaped assessment within the meaning ofSection 147 read with Explanation 2(b) of the IncomeTax Act, 1961, which needs to be brought to tax andhence, it is a fit case to invoke the provisions of Section147 of the Income Tax Act, 1961. (5) In this case more than four years have lapsedfrom the end of the assessment year underconsideration. Hence, necessary sanction to issuenotice under Section 148 has been obtained separatelyfrom the Principal Commissioner of Income Tax,Panaji, as per the provision of Section 151 of theIncome Tax Act, 1961.” 11.According to Ms. Linhares, the case of the Petitioner,including that of his Wife, is governed by the old regime and as per clause (1) of Section 151 of the Income Tax Act, and therefore, the approval is obtained by the PCIT. By relying upon the affidavit of the Income Tax Officer i.e.Respondent No. 3, she would submit that the Petitioner is anindividual and governed by Section 5A under the Portuguese CivilCode and the Petitioner’s case for AY 2015-16 was reopened underSection 148 of the Income Tax Act, 1961, on 31.03.2021, afterobtaining approval from the competent Authority as the Petitionerhad entered into financial transactions of Rs.2,05,90,000/- anddeclared a negligible income of Rs.2,65,721/- under the IDS for AY2015-16. By referring to the financial transactions carried out bythe Petitioner and his Spouse during the FY 2014-15, an income ofRs.2,05,90,000/- was found to have escaped assessment,according to her, the assessment under Section 147 read withSection 144 along with Section 144B of the Income Tax Act for theAY 2015-16 was completed by the National Faceless AssessmentCentre on 21.03.2022. This was preceded by issuance and serviceof notices on the Petitioner and thereafter, in absence of noresponse from the Petitioner, by order dated 21.03.2022, theincome was assessed at Rs.20,89,65,850/- after the addition ofRs.2,05,90,000/- under Section 69A of the Income Tax Act. 12.An exhaustive reply is iled on the merits of the matter, but since Mr. Gandhi has restricted his case only on the point as to 12.An exhaustive reply is iled on the merits of the matter, but since Mr. Gandhi has restricted his case only on the point as to whether the case of the Petitioner would be governed by sub-section(1) or sub-section (2) of Section 151 of the Income Tax Act, anadditional aidavit in reply is iled, wherein it is stated that thenotice was issued on 31.03.2021 for the AY 2015-16, after expiry offour years from the relevant assessment year and therefore, sanctionwas obtained under Section 151(1) of the Income Tax Act beforenotice was issued under Section 148, as per the law in force as onthat date. It is categorically stated in the aidavit that for AY 2015-16, six years limitation expired on 31.03.2022 and therefore, theprovisions of the Relaxation Act are not applicable and the time toissue notice may have been extended under the TOLA, but it wouldnot amount to amending the provisions of Section 151 of the Act. 13.Without prejudice to the aforesaid contention, a specificstatement is made on affidavit by stating thus: 6.Without Prejudice to the above, I say that in thepetitioner's case, on 27.03.2021, the reasons recordedby the A.O were seen by the Range-I, Panaji that is theAdditional Commissioner/Joint Commissioner andupon satisfaction it was found to be a fit case for re-opening the assessment. Accordingly, it wasrecommended for approval. On 30.03.2021, the PCIT,Panaji, the approving authority found it to be fit casefor issue of Notice u/sec. 148 of the IT Act. In short, the case of the Respondents that notice underSection 148 is issued after expiry of four years from the end ofrelevant assessment year with the satisfaction of the PCIT inaccordance with Section 151 of the Income Tax Act and Section151(2) is not applicable and therefore, the satisfaction of the JointCommissioner was not required. 14.In order to appreciate the counter arguments advanced, it isnecessary to reproduce Section 151 as it stood substituted in theIncome Tax Act, 1961 by the Finance Act, 2015 w.e.f. 01.06.2015. 151. (1) No notice shall be issued under section 148 by anAssessing Officer, after the expiry of a period of fouryears from the end of the relevant assessment year,unless the Principal Chief Commissioner or ChiefCommissioner or Principal Commissioner orCommissioner is satisfied, on the reasons recorded bythe Assessing Officer, that it is a fit case for the issue ofsuch notice. (2) In a case other than a case falling under sub-section (1), no notice shall be issued under section 148 byan Assessing Officer, who is below the rank of JointCommissioner, unless the Joint Commissioner issatisfied, on the reasons recorded by such AssessingOfficer, that it is a fit case for the issue of such notice. (3) For the purposes of sub-section (1) and sub-section (2), the Principal Chief Commissioner or the ChiefCommissioner or the Principal Commissioner or theCommissioner or the Joint Commissioner, as the case may be, being satisfied on the reasons recorded by theAssessing Officer about fitness of a case for the issue ofnotice under section 148, need not issue such noticehimself.] 15.Section 148 is the provision pertaining to issuance of noticewhere income has escaped assessment and provision 148, prior toits amendment by Finance Act, 2024 reads thus: (3) For the purposes of sub-section (1) and sub-section (2), the Principal Chief Commissioner or the ChiefCommissioner or the Principal Commissioner or theCommissioner or the Joint Commissioner, as the case may be, being satisfied on the reasons recorded by theAssessing Officer about fitness of a case for the issue ofnotice under section 148, need not issue such noticehimself.] 15.Section 148 is the provision pertaining to issuance of noticewhere income has escaped assessment and provision 148, prior toits amendment by Finance Act, 2024 reads thus: 148. Issue of notice where income has escapedassessment.—Beforemakingtheassessment,reassessment or recomputation under section 147, andsubject to provisions of Section 148A, the AssessingOfficer shall serve on the assessee a notice, along with acopy of the order passed, if required, under clause (d)of Section 148A, requiring him to furnish within aperiod of three months from the end of the month inwhich such notice is issued, or such further period asmay be allowed by the Assessing Officer on the basis ofan application made in this regard by the assessee, areturn of his income or the income of any other personin respect of which he is assessable under this Actduring the previous year corresponding to the relevantassessment year, in the prescribed form and verified inthe prescribed manner and setting forth such otherparticulars as may be prescribed; and the provisions ofthis Act shall, so far as may be, apply accordingly as ifsuch return were a return required to be furnishedunder section 139: Provided that no notice under this section shall beissued unless there is information with the AssessingOfficer which suggests that the income chargeable to tax has escaped assessment in the case of the assesseefor the relevant assessment year and the AssessingOfficer has obtained prior approval of the specifiedauthority to issue such notice. Provided further that no such approval shall berequired where the Assessing Officer, with the priorapproval of the specified authority, has passed anorder under clause (d) of section 148A to the effect thatit is a fit case to issue a notice under this section. Provided also that any return of income, required to befurnished by an assessee under this section andfurnished beyond the period allowed shall not bedeemed to be a return under section 139. 16.By Finance (No. 2) Act of 2024, amended Section 148 andSection 148A read thus: 148. Issue of notice where income has escapedassessment.—(1) Before making the assessment,reassessment or recomputation under Section 147, theAssessing Officer shall, subject to the provisions ofSection 148-A, issue a notice to the assessee, along witha copy of the order passed under sub-section (3) ofSection 148-A, requiring him to furnish, within suchperiod as may be specified in the notice, not exceedingthree months from the end of the month in which suchnotice is issued, a return of his income or income of anyother person in respect of whom he is assessable underthis Act during the previous year corresponding to therelevant assessment year: Provided that no notice under this section shall beissued unless there is information with the AssessingOfficer which suggests that the income chargeable totax has escaped assessment in the case of the assesseefor the relevant assessment year: Provided further that where the Assessing Officer hasreceived information under the scheme notified underSection 135-A, no notice under this section shall beissued without prior approval of the specifiedauthority. (2) The return of income required under sub-section(1) shall be furnished in such form and verified in suchmanner and setting forth such other particulars, asmay be prescribed, and the provisions of this Act shall,apply accordingly as if such return were a returnrequired to be furnished under Section 139: Provided that no notice under this section shall beissued unless there is information with the AssessingOfficer which suggests that the income chargeable totax has escaped assessment in the case of the assesseefor the relevant assessment year: Provided further that where the Assessing Officer hasreceived information under the scheme notified underSection 135-A, no notice under this section shall beissued without prior approval of the specifiedauthority. (2) The return of income required under sub-section(1) shall be furnished in such form and verified in suchmanner and setting forth such other particulars, asmay be prescribed, and the provisions of this Act shall,apply accordingly as if such return were a returnrequired to be furnished under Section 139: Provided that any return of income required undersub-section (1), furnished after the expiry of the periodspecified in the notice under the said sub-section, shallnot be deemed to be a return under Section 139. (3) For the purposes of this section and Section 148-A, the information with the Assessing Officer whichsuggests that the income chargeable to tax has escapedassessment means,— (i) any information in the case of the assessee for therelevant assessment year in accordance with the riskmanagement strategy formulated by the Board fromtime to time; or (ii) any audit objection to the effect that theassessment in the case of the assessee for the relevantassessment year has not been made in accordance withthe provisions of this Act; or (iii) any information received under an agreementreferred to in Section 90 or Section 90-A of the Act; or (iv) any information made available to the AssessingOfficer under the scheme notified under Section 135-A;or (v) any information which requires action inconsequence of the order of a Tribunal or a Court; or (vi) any information in the case of the assesseeemanating from survey conducted under Section 133-A, other than under sub-section (2-A) of the saidsection, on or after the 1st day of September, 2024. 148-A. Procedure before issuance of notice underSection 148.—(1) Where the Assessing Officer hasinformation which suggests that income chargeable totax has escaped assessment in the case of an assesseefor the relevant assessment year, he shall, beforeissuing any notice under Section 148 provide anopportunity of being heard to such assessee by servingupon him a notice to show cause as to why a noticeunder Section 148 should not be issued in his case andsuch notice to show cause shall be accompanied by theinformation which suggests that income chargeable totax has escaped assessment in his case for the relevantassessment year. (2) On receipt of the notice under sub-section (1), theassessee may furnish his reply within such period, asmay be specified in the notice. (3) The Assessing Officer shall, on the basis ofmaterial available on record and taking into accountthe reply of the assessee furnished under sub-section(2), if any, pass an order with the prior approval of thespecified authority determining whether or not it is afit case to issue notice under Section 148. (4) The provisions of this section shall not apply toincome chargeable to tax escaping assessment for anyassessment year in the case of an assessee where theAssessing Officer has received information under thescheme notified under Section 135-A. (2) On receipt of the notice under sub-section (1), theassessee may furnish his reply within such period, asmay be specified in the notice. (3) The Assessing Officer shall, on the basis ofmaterial available on record and taking into accountthe reply of the assessee furnished under sub-section(2), if any, pass an order with the prior approval of thespecified authority determining whether or not it is afit case to issue notice under Section 148. (4) The provisions of this section shall not apply toincome chargeable to tax escaping assessment for anyassessment year in the case of an assessee where theAssessing Officer has received information under thescheme notified under Section 135-A. 17.Section 148A prescribe the procedure to be followed beforeissuance of notice under Section 148 and contemplate theinformation received by the Assessing Officer, suggesting that theincome chargeable to tax has escaped assessment for the relevantAssessment Year and in such a case, he shall, before issuing anynotice, provide opportunity of hearing to such Assessee by servingupon him a notice to show cause as to why a notice under Section148 should not be issued and this shall be accompanied with theinformation, suggesting which income chargeable to tax hadescaped assessment in his case for the relevant years. Upon receiptof the reply from the Assessee and on the basis of the materialavailable, it is open for the Assessing Officer to pass an order with the prior approval of the specified Authority, determining whether or not it is a fit case to issue notice under Section 148. 18.Another provision which was amended is Section 149,setting out the time limit for the notices under Sections 148 and148A, which reads thus: 149. Time limit for notices under Sections 148 and 148-A.—(1) No notice under Section 148 shall be issued forthe relevant assessment year,— (a) if three years and three months have elapsedfrom the end of the relevant assessment year, unlessthe case falls under clause (b); (b) if three years and three months, but not morethan five years and three months, have elapsed fromthe end of the relevant assessment year unless theAssessing Officer has in his possession books of accountor other documents or evidence related to any asset orexpenditure or transaction or entries which show thatthe income chargeable to tax, which has escapedassessment, amounts to or is likely to amount to fiftylakh rupees or more. (2) No notice to show cause under Section 148-Ashall be issued for the relevant assessment year,— (a) if three years have elapsed from the end of therelevant assessment year, unless the case falls underclause (b); (b) if three years, but not more than five years, haveelapsed from the end of the relevant assessment yearunless the income chargeable to tax which has escapedassessment, as per the information with the AssessingOfficer, amounts to or is likely to amount to fifty lakhrupees or more. 19.Section 151, which is substituted w.e.f. 01.09.2024 nowreads thus: 151. Sanction for issue of notice.—Specified authorityfor the purposes of Sections 148 and 148-A shall be theAdditional Commissioner or the Additional Director orthe Joint Commissioner or the Joint Director, as thecase may be. 20.It is necessary to take into account the regime, which wasenforced by introducing a statute to provide for amendments andrelaxations of certain Acts and matters connected therewith inform of the Taxation and Other Laws (Relaxation and Amendmentof Certain Provisions) Act, 2020 which came into force on31.03.2020 and granted relaxation, where any time limit had beenspecified, prescribed or notified under specified Act, whichincluded the Income Tax Act, 1961, which fall during the periodbetween 20.03.2020 till 31.12.2020, or such other date after31.12.2020, which the Central Government may by Notificationmay specify for completion or compliance of the contemplatedaction. 20.It is necessary to take into account the regime, which wasenforced by introducing a statute to provide for amendments andrelaxations of certain Acts and matters connected therewith inform of the Taxation and Other Laws (Relaxation and Amendmentof Certain Provisions) Act, 2020 which came into force on31.03.2020 and granted relaxation, where any time limit had beenspecified, prescribed or notified under specified Act, whichincluded the Income Tax Act, 1961, which fall during the periodbetween 20.03.2020 till 31.12.2020, or such other date after31.12.2020, which the Central Government may by Notificationmay specify for completion or compliance of the contemplatedaction. 21.Chapter III of the said Act incorporated the amendments tothe Income Tax Act, 1961, and it has enumerated variousprovisions of the Income Tax Act, which were substituted in thewake of the enactment of the Act of 2020 in view of the COVIDpandemic. It also introduced a provision for faceless jurisdiction ofIncome Tax Authorities w.e.f. 01.11.2020 and also introduced aprovision of faceless inquiry or valuation in the form of Section142B w.e.f. 01.11.2020. The Hon’ble Apex Court in the case of Rajeev Bansal(supra) had an occasion to deal with the provisions of the IncomeTax Act including Section 148 and Section 148A, Section 149,Section 151 being juxtaposed against Section 3 of TOLA Act, 2020and in the background of the Finance Act, 2021, which amendedthe provisions dealing with reassessment procedure w.e.f.01.04.2021. The background facts disclose that the Notifications dated23.01.2021 and 27.04.2021, issued by the Central Governmentunder Section 3(1) of TOLA contain an explanation declaring thatthe provisions under the old regime shall apply to thereassessment proceedings initiated under them and directed theAssessing Officers to apply the provisions of the old regime forreassessment notices issued after on 01.04.2021 and accordingly,the Assessing Officer issued reassessment proceedings between01.04.2021 to 30.06.2021 by relying upon the provisions underSection 148 under the old regime. When these reassessment notices were challenged by theAssessee before the various High Courts, the High Court allowedthe Writ Petitions and quashed the reassessment notices, issuedbetween 01.04.2021 and 30.06.2021 under the old regime on theground that Sections 147 to 151 were substituted by the FinanceAct, 2021 w.e.f. 01.04.2021 and in the absence of any savingclause, the Revenue could initiate proceedings after 01.04.2021only in accordance with the provisions of the new regime sincethey were more beneficial to the Assessee. 22.In Union of India Vs. Ashish Agarwal[4], the Apex Courtheld that it was in agreement with the view taken by various HighCourts in holding that the benefit of the new provisions shall bemade available even in respect of the proceedings relating to pastassessment years, provided Section 148 notice has been issued onor after 01.04.2021. However, it was held that the Revenue issuedthe reassessment notices, under a bonafide belief that theamendments may not have been enforced and therefore, byexercising jurisdiction under Article 142 in order to balance theinterest of the Revenue and the Assessee, it was directed that thereassessment notices issued under the old regime shall be deemedto have been issued under Section 148A(b) of the new regime. 22.In Union of India Vs. Ashish Agarwal[4], the Apex Courtheld that it was in agreement with the view taken by various HighCourts in holding that the benefit of the new provisions shall bemade available even in respect of the proceedings relating to pastassessment years, provided Section 148 notice has been issued onor after 01.04.2021. However, it was held that the Revenue issuedthe reassessment notices, under a bonafide belief that theamendments may not have been enforced and therefore, byexercising jurisdiction under Article 142 in order to balance theinterest of the Revenue and the Assessee, it was directed that thereassessment notices issued under the old regime shall be deemedto have been issued under Section 148A(b) of the new regime. 23.However, on 11.05.2022, the Central Board of Direct Taxesissued instructions for the implementation of the decision inAshish Agarwal (supra) and clarified that the decision will applyto all cases where extended reassessment notices have beenissued, irrespective of the fact whether notices have beenchallenged or not. The instructions issued were based on thepresumption that notices issued under Section 148 of the newregime, travel back in time with their original date i.e. the actualdate on which the Section 148 notice under the old regime wasissued. Based on this, the Assessing Officers considered the repliesfurnished by the Assessee and passed orders under Section148A(d). The notices were thereafter issued under Section 148 ofthe new regime between July and September 2022 for the AY2013-14, 2014-15, 2015-16, 2016-17 and 2017-18. These noticescame to be challenged before several High Courts, which declaredthe notices to be invalid on the ground that they were time-barredand issued without the appropriate sanction of the specifiedauthority. 24.The aforesaid decisions included the decision of the Bombay High Court in J.M. Financial and Investment ConsultancyServices Private Limited Vs. Assistant CIT, Circle 3(2)(1)& Others[5] (Writ Petition No. 1050 of 2022). The Petition came tobe allowed by setting aside the notice dated 31.03.2021 issued 5[2023] 451 ITR 205 (Bom) under Section 148 for the AY 2015-16, by expressing that sincefour years have expired from the end of the relevant assessmentyear as provided under Section 151(1), it is only the Principal ChiefCommissioner or the Chief Commissioner or the PrincipalCommissioner or the Commissioner, who could have accorded theapproval and not the Additional Commissioner of Income Tax. 25.The Three-Judges Bench of the Apex Court in RajeevBansal (supra) considered the provisions of TOLA as introducedin the Income Tax Act and clarified that a notice could be issuedunder Section 148 of the new regime for the AY 2021-22 andbefore, only if the time limit for issuance of such notice continuedto exist under Section 149(1)(b) of the old regime. It was clarifiedthat the notices have to be judged according to the law, existing onthe date the notice is issued and Section 149 of the old regimeprovided two time limits; (i) four years for all situations and (ii)beyond four years and within six years, if the income that escapedassessment amounted to Rupees One Lakh or more. After 01.04.2021, the time limit prescribed under the newregime came into force, when the ordinary time limit of four yearswas reduced to three years and therefore, in all situations,reassessment notices could be issued under the new regime if notmore than three years have elapsed from the end of the relevantassessment year. After 01.04.2021, the time limit prescribed under the newregime came into force, when the ordinary time limit of four yearswas reduced to three years and therefore, in all situations,reassessment notices could be issued under the new regime if notmore than three years have elapsed from the end of the relevantassessment year. 26.Specifying that the first proviso requires the determinationof whether the time limit prescribed under Section 149(1)(b) of theold regime continues to exist for the assessment year 2021-22 andbefore. Resultantly, a notice under Section 148 of the new regimecannot be issued if the period of six years from the end of therelevant assessment year has expired at the time of issuance of thenotice which ensured that the new time limit of ten yearsprescribed under Section 149(1)(b) of the new regime appliesprospectively. In absence of the proviso to Section 149(1)(b) of thenew regime, the Revenue could have had the power to reopenassessment for the year 2012-13, if it had escaped assessmentamounting to Rupees Fifty Lakhs or more, but the proviso hadlimited the retrospective operation of Section 149(1)(d) to protectthe interests of the Assessee. As such by a conjoint reading of theproviso along with Section 149(1)(b), reassessment notices couldbe issued after three years only if the income charged is more thanRupees Fifty Lakhs and the proviso to Section 149(1)(b) limits theretrospectivity of that provision with respect to the time limitsspecified in Section 149(1)(b) of the old regime. 27.In paragraph 73 of the decision, with reference to Section151, as regards obtaining the sanction of the specified Authority soas to save the Assessee from harassment, resulting from themechanical reopening of assessment, by representing the prescription under the old regime and the new regime, hascategorically set out as under: 73. Section 151 imposes a check upon the power ofthe Revenue to reopen assessments. The provisionimposes a responsibility on the Revenue to ensure thatit obtains the sanction of the specified authority beforeissuing a notice under Section 148. The purpose behindthis procedural check is to save the assesses fromharassment resulting from the mechanical reopeningof assessments (Srikrishna Private Ltd v. ITO), (1996) 9SCC 534 [4]. A table representing the prescriptionunder the old and new regime is set out below: 28.In paragraph 74, the correlation of the Authority with thetime when the notice is issued is clearly set out as below: 74. The above table indicates that the specifiedauthority is directly co-related to the time when thenotice is issued. This plays out as follows under the oldregime: (i) If income escaping assessment was less thanRupees one lakh: (a) a reassessment notice could beissued under Section 148 within four years afterobtaining the approval of the Joint Commissioner; and(b) no notice could be issued after the expiry of fouryears; and (ii) If income escaping was more than Rupees onelakh: (a) a reassessment notice could be issued withinfour years after obtaining the approval of the JointCommissioner; and (b) after four years but within sixyears after obtaining the approval of the PrincipalChief Commissioner or Chief Commissioner orPrincipal Commissioner or Commissioner. 29.The test to determine whether the provisions of TOLA apply to Section 151 of the new regime was set out by stating as below: (i) If income escaping assessment was less thanRupees one lakh: (a) a reassessment notice could beissued under Section 148 within four years afterobtaining the approval of the Joint Commissioner; and(b) no notice could be issued after the expiry of fouryears; and (ii) If income escaping was more than Rupees onelakh: (a) a reassessment notice could be issued withinfour years after obtaining the approval of the JointCommissioner; and (b) after four years but within sixyears after obtaining the approval of the PrincipalChief Commissioner or Chief Commissioner orPrincipal Commissioner or Commissioner. 29.The test to determine whether the provisions of TOLA apply to Section 151 of the new regime was set out by stating as below: “If the time limit of four years from the end of anassessment year falls between 20.03.2020 and31.03.2021, then the specified Authority under Section151(i) has an extended time till 30.06.2021 to grantapproval. In case of Section 151 of the old regime, thetest is, “if the time limit of four years from the end ofthe assessment year falls between 20.03.2020 and31.03.2021, then the specified Authority under Section151(2) has the time till 31.03.2021 to grant approval.The time limit for Section 151 of the old regime expireson 31.03.2021 because the new regime comes into effecton 01.04.2021.” 30.The case before us clearly falls within the aforesaid time lineas the AY 2015-16 and the period of four years from the end of theassessment year clearly fell between 20.03.2020 and 31.03.2021and therefore, the case is governed by the old regime as the newregime came into effect from 01.04.2021. Hence, the case of the Petitioner is governed by clause (2),where it is the Joint Commissioner, who should be satisfied withthe reasons recorded by the Assessing Officer that it is a fit case forissuance of notice, and it is not a case governed by clause (1) ofSection 151. However, the notice under Section 148 records that itis being issued after obtaining the satisfaction of the PCIT, Panaji,who is not the competent Authority. 31.The observations in the case of Ghanshyam K. Khabrani (supra) clearly come into play where it was observed thus: “There is merit in the contention raised on behalf of theassessee that the requirement of section 151(2) couldhave only been fulfilled by the satisfaction of the JointCommissioner that this is a fit case for the issuance of anotice under section 148. Section 151(2) mandates thatthe satisfaction has to be of the Joint Commissioner.That expression has a distinct meaning by virtue of thedefinition in section 2(28C). The Commissioner ofIncome-tax is not a Joint Commissioner within themeaning of section 2(28C). In the present case, theAdditional Commissioner of Income-tax forwarded theproposal submitted by the Assessing Officer to theCommissioner of Income-tax. The approval which has been granted is not by the Additional Commissioner ofIncome-tax but by the Commissioner of Income-tax.There is no statutory provision here under which apower to be exercised by an officer can be exercised bya superior officer. When the statute mandates thesatisfaction of a particular functionary for the exerciseof a power, the satisfaction must be of that authority.Where a statute requires something to be done in aparticular manner, it has to be done in that manner. Ina similar situation the Delhi High Court in CIT v. SPL'sSiddhartha Ltd. (ITA No. 836 of 2011 decided onSeptember 14, 2011)—since reported in (2012) 345 ITR223 (Delhi) held that powers which are conferred upona particular authority have to be exercised by thatauthority and the satisfaction which the statutemandates of a distinct authority cannot be substitutedby the satisfaction of another. We are in respectfulagreement with the judgment of the Delhi High Court.” 32.In the wake of the above, since we are of the view that theAuthority at whose satisfaction must have issued the notice underSection 148 was not the PCIT, Panaji, but the Joint Commissioneras contemplated under sub-section (2) of Section 151, the noticeissued under Section 148 on 31.03.2021 at Annexure D-1, is liableto be quashed and set aside as a consequence, the assessmentorder passed under Section 147 dated 21.03.2022 as well as theorder dated 14.11.2023 under Section 264 of the Income Tax alsocannot be sustained and are liable to be quashed and set aside. Signed by: ESHA SAINATH VAIGANKARDesignation: Personal AssistantDate: 31/07/2025 14:44:46 33.The Petition is made absolute in terms of prayer clause (a). No order as to costs. NIVEDITA P. MEHTA, J. BHARATI DANGRE, J.