IN THE INCOME TAX APPELLATE TRIBUNAL, ‘D’ BENCH MUMBAI BEFORE: SHRI AMIT SHUKLA, JUDICIAL MEMBER &

MS PADMAVATHY S, ACCOUNTANT MEMBER ITA No.486/Mum/2025 (Assessment Year :2016-17 ITO-34.2.1, Mumbai Vs. Mangal Suresh Karkhanis

302, New Shirin Lane, Vaishali Nagar Building No.2, Satrasta Mahalaxmi Mumbai- 400 011 PAN/GIR No.AQRPK5724A (Appellant) .. (Respondent CO No.155/Mum/2025 (Arising out of ITA No.486/Mum/2025)

(Assessment Year :2016-17 ITO-34.2.1, Mumbai Vs. Mangal Suresh Karkhanis

302, New Shirin Lane, Vaishali Nagar Building No.2, Satrasta Mahalaxmi Mumbai- 400 011 PAN/GIR No.AQRPK5724A (Appellant) .. (Respondent Assessee by Shri Gaurav Kabra, CA Revenue by Shri Annavaran Kosuri, Sr.

AR Date of Hearing 03/07/2025 Date of Pronouncement 04/09/2025 / O R D E R आदेश PER AMIT SHUKLA (J.M):

This appeal filed by the Revenue and the cross-objection filed by the assessee emanate from the order dated

25.11.2024 passed by the National Faceless Appeal Centre (“CIT(A)”), arising from the reassessment framed under section 147 r.w.s. 143(3) of the Income-tax Act, 1961 (“the Act”) for Assessment Year 2016–17.

2. The Revenue has challenged the deletion of additions made on account of alleged penny stock transactions, whereas the assessee, in cross-objection, has questioned the very assumption of jurisdiction by the Assessing Officer to reopen the assessment.

3. At the very outset, the Learned Authorised Representative (“Ld. AR”) appearing for the assessee assailed the validity of the reassessment proceedings themselves. He specifically questioned the competence of the sanction granted under section 151 of the Act, which, in the present case, had been accorded by the Principal Commissioner of Income Tax–5, Mumbai. According to the Ld. AR, such approval was without jurisdiction, having been granted mechanically and without due application of mind by an authority who is not the “specified authority” contemplated under the law for the relevant period. He explained that the year under consideration is A.Y. 2016–17. Under the statutory framework, an assessment could be reopened within six years from the end of the relevant assessment year. Thus, the period for reopening culminated on 31.03.2023. The notice under section 148 was in fact issued on 13.05.2021, i.e., within limitation. Therefore, the assessee raised no grievance as to limitation. However, since the reopening was initiated after more than three years from the end of the relevant assessment year (31.03.2017), the requirement of law under the amended section 151(ii) was that sanction had to be granted only by the Principal Chief Commissioner or Principal Director General, or in their absence, the Chief Commissioner or Director General. In the assessee’s case, however, sanction was granted by the Principal Commissioner of Income Tax–5, Mumbai, who had no jurisdiction to do so. Accordingly, it was contended that the order under section 148A(d) and the notice under section 148 are vitiated ab initio.

4. In this regard, the Ld. AR drew attention to the substituted provisions of section 151, effective from

01.04.2021, reproduced as under:

[Sanction for issue of notice.

151. Specified authority for the purposes of section148 and section 148A shall be,—

(i) Principal Commissioner or Principal Director or Commissioner or Director, if three years or less than three years have elapsed from the end of the relevant assessment year;

(ii) Principal Chief Commissioner or Principal Director General or where there is no Principal Chief Commissioner or Principal Director General, Chief Commissioner or Director General, if more than three years have elapsed from the end of the relevant assessment year.]

4.1. He stressed that the provision consciously draws a line of demarcation between cases within three years and cases beyond three years, and for the latter, mandates scrutiny by the senior-most officers of the Department.

5. Reliance was placed upon the judgment of the Hon’ble Supreme Court in Union of India v. Ash