ITAT Mumbai Dismisses Revenue's Appeals: Reassessment Proceedings Declared Void Ab Initio for Non-Compliance with Section 151(ii) Sanction Requirement

Overview of the Dispute

The Mumbai Bench of the Income Tax Appellate Tribunal, in ITAs No. 8644 & 8645/Mum./2025, pronounced its order on 19 June 2026, dismissing both appeals filed by the Revenue. The appeals arose from orders passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, dated 30 October 2025, relating to Assessment Years 2016-17 and 2018-19 in the case of ITO Vs Neelesh Hasmukh Doshi HUF.

The central question before the Tribunal was whether reassessment proceedings initiated under Section 148 of the Income-tax Act, 1961, could be sustained when the mandatory prior approval under Section 151(ii) was obtained from an authority lower in rank than the one prescribed by law — particularly in cases where the reopening was sought beyond three years from the end of the relevant assessment year.

Background and Factual Matrix

Nature of the Reassessment Proceedings

The Assessing Officer had issued notices under Section 148 of the Income-tax Act, 1961, for both the assessment years under consideration. Before doing so, the AO obtained approval under Section 151(ii) from the Principal Commissioner of Income Tax – 19, Mumbai.

The critical dates of notice issuance were:

  • AY 2016-17 — Notice under Section 148 issued on 27 July 2022
  • AY 2018-19 — Notice under Section 148 issued on 28 April 2022

Both these dates fell beyond the three-year threshold calculated from the end of the respective assessment years, which is the legally significant dividing line under Section 151 of the Income-tax Act, 1961.

Core Contention on Sanctioning Authority

Before the Tribunal, counsel for the assessee raised a fundamental jurisdictional objection. The argument was straightforward but legally decisive: when reassessment is sought beyond three years from the end of the relevant assessment year, Section 151(ii) of the Income-tax Act, 1961, mandates that the approval must be granted exclusively by the Principal Chief Commissioner of Income Tax — not by the Principal Commissioner of Income Tax.

Since both notices had been issued beyond the three-year window, and since the approval in both cases had been granted by the Principal Commissioner of Income Tax rather than the Principal Chief Commissioner of Income Tax, the assessee contended that the entire reassessment exercise was fundamentally flawed and legally unsustainable.

Judicial Precedents Relied Upon

The assessee placed reliance on the following binding and persuasive judicial authorities: