Introduction
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, in the case of Amitabh Tayal (ITA Nos. 636 & 637/Del/2026), delivered a significant ruling on 06.05.2026, addressing the validity of reassessment proceedings initiated under Section 148 of the Income Tax Act, 1961. The core issue revolved around the jurisdictional validity of a notice issued beyond the statutory time limit, specifically concerning the approval required under Section 151 of the Act. The Tribunal quashed the reassessment order and the consequential penalty under Section 271AAC(1), relying on the Supreme Court’s decision in Rajeev Bansal (469 ITR 46). This commentary provides a deep legal analysis of the case, focusing on the procedural and jurisdictional aspects that led to the invalidation of the assessment order.
Facts of the Case
The assessee, Amitabh Tayal, was subjected to reassessment for Assessment Year (AY) 2017-18 following an investigation into an entry operator, Shri Joginder Pal Gupta. The Assessing Officer (AO) alleged that the assessee had received bogus unsecured loans amounting to Rs. 2,25,00,000 from a shell company controlled by the entry operator. During the assessment proceedings, the assessee failed to comply, leading to an addition under Section 69D of the Act. The assessee’s first appeal before the Commissioner of Income Tax (Appeals) [CIT(A)] was dismissed in limine due to a six-month delay in filing, which was not condoned.
The assessee then approached the ITAT, challenging both the quantum addition and the penalty. Crucially, the assessee raised a jurisdictional issue for the first time before the Tribunal: the notice under Section 148, issued on 18.07.2022, was approved by the Principal Commissioner of Income Tax (PCIT) instead of the Principal Chief Commissioner of Income Tax (PCCIT), as required under Section 151(ii) of the Act. The assessee argued that, following the Supreme Court’s ruling in Rajeev Bansal, the approval for notices issued beyond three years from the end of the relevant assessment year must be obtained from the PCCIT, not the PCIT.
Reasoning of the ITAT
The ITAT, comprising Judicial Member Shri Yogesh Kumar US and Accountant Member Shri Sanjay Awasthi, focused on the jurisdictional validity of the reassessment notice. The Tribunal acknowledged that the assessee had been non-compliant at lower levels but emphasized that the issue of jurisdiction was fundamental and could be raised for the first time before the ITAT.
The Tribunal examined the timeline of the case. For AY 2017-18, the extended period under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) allowed the PCIT to grant approval under Section 151(i) only until 30.06.2021. Since the notice under Section 148 was issued on 18.07.2022, it was beyond the PCIT’s authority. The Tribunal referred to paragraphs 77-78 of the Rajeev Bansal judgment, which explicitly states that for AY 2017-18, any notice issued after 30.06.2021 requires approval from the PCCIT under Section 151(ii). The approval in this case was obtained from the PCIT on 18.07.2022, which was nearly 12 months after the extended deadline. Therefore, the notice was invalid, and the consequent assessment order was quashed as being illegal and void ab initio.
The Tribunal also addressed the penalty under Section 271AAC(1), which was levied based on the quantum addition. Since the quantum order was quashed, the penalty could not survive independently and was directed to be deleted.
Conclusion
The ITAT allowed both appeals of the assessee, quashing the reassessment order and the penalty. The ruling underscores the importance of strict adherence to procedural requirements, particularly regarding the approval of reassessment notices under Section 151. The Tribunal’s reliance on the Rajeev Bansal precedent reinforces the principle that jurisdictional defects cannot be cured by subsequent compliance or by the assessee’s prior non-cooperation. This case serves as a critical reminder for tax authorities to ensure that all statutory conditions are met before initiating reassessment proceedings, especially when the notice is issued beyond the standard time limits.