Reassessment notice u/s 148 beyond three years requires approval from Principal Chief Commissioner u/s 151(ii); approval from Principal Commissioner invalid, rendering proceedings void. 2023 proviso not retrospective.

ORDER

PER RAVISH SOOD, JM:

The present appeal filed by the assessee is directed against the order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, dated 19/05/2025, which in turn arises from the order passed by the Assessing Officer (for short, “AO”) under section 147 r.w.s 144 r.w.s 144B of the Income Tax Act, 1961 (for short, “the Act”), dated 13/02/2024 for the Assessment Year (AY) 2018-19. The assessee has assailed the impugned order of the CIT(A) on the following grounds of appeal:

1. “The learned Commissioner ought to have appreciated that the assessee along with her reply denying that deposits in the Bank, submitted an Affidavit confirming the facts stated in the letter, denying the transactions as her business transactions, therefore, without disproving the contents of the Affidavit the learned Commissioner erred in sustaining the order of the Assessing Officer, wherein, the transactions of the firm (Petrolbunk) are treated as the turnover of the assessee to estimate the income at Rs.21,70,582/-.

2. The learned Commissioner ought to have appreciated that merely mentioning the assessees PAN in the Bank account of the firm will not become the turnover of the assessee as the income of the assessee, is to be determined considering the facts of the case, therefore, erred in sustaining the order of the Assessing Officer wherein, the transactions of the firm are treated as turnover of the assessee to estimate the income at Rs.21,70,582/-.

3. The learned Commissioner erred in confirming the order of the Assessing Officer, wherein, an amount of Rs.7,23,52,760/- is estimated in the hands of assessee as turnover and further 3% of the such turnover at Rs.21,70,582/- is determined as income.

4. The notice u/s 148 is issued on 07.04.2022, by the jurisdictional Officer Ward-1, Khammam, therefore, the same is an invalid notice for not having issued by the faceless assessment unit as held by the Honorable Telangana High Court (Jurisdictional HC) as held in the case of Kanakanala Ravinder Reddy Vs ITO in WP.No.25903/2022, dt: 14.09.2023.

5. The alleged income is escaped is only at Rs.21,70,582/-, therefore, the learned Assessing Officer erred in issuing notice u/s 148 for the assessment year 2018-19 beyond a period of three years in violation of provisions of section 149 of the IT Act.

6. The notice u/s 148 is issued on 07.04.2022, which is beyond three years from the subject assessment year 2018-19, the learned AO ought to have taken prior approval of the PCCIT, therefore, the notice u/s 148 and the order u/s 147 r.w.s 144, are in violation provisions of section 151 of the IT Act, therefore, are to be held as null and void.

7. The appellant craves leave to add to, amend OR modify the above grounds of appeal either before OR at the time of hearing of the appeal, if it is considered necessary.

8. The order of the Learned Commissioner of Income Tax (Appeals) is against the law, weight of evidence and probabilities of case.”

2. Succinctly stated, the AO based on information flagged by the Risk Management (RMS) observed that the income of the assessee chargeable to tax had escaped assessment within the meaning of section 147 of the Act. The AO taking cognizance of the fact that the assessee had not filed his return of income for the subject year passed an order under section 148A(b) of the Act, dated 07/04/2022. Thereafter, the AO issued notice under section 148 of the Act, dated 07/04/2022.

3. The AO observed that the assessee during the subject year had carried out substantial financial transactions, viz., (i