Reassessment Invalidated for Wrong Sanction Under Section 151: ITAT Pune in Premlata Bisht Bhandari Vs ITO

Background of the Dispute

The Pune Bench of the Income Tax Appellate Tribunal (ITAT) in Premlata Bisht Bhandari Vs ITO has struck down reassessment proceedings on the sole ground that the mandatory prior approval under Section 151 was taken from the wrong authority. The decision reiterates that where a notice under Section 148 is issued beyond three years from the end of the relevant assessment year, sanction must be obtained from the Principal Chief Commissioner of Income Tax (PCCIT) and not from the Principal Commissioner of Income Tax (PCIT).

The Tribunal, following binding precedent of the Bombay High Court in Alag Property Construction Pvt. Ltd. Vs. ACIT and its own earlier rulings, concluded that the defect in sanction was jurisdictional and fatal to the proceedings. As a result, the reassessment order was quashed without going into the merits of the additions.

Facts of the Case

Assessee and Assessment Year

  • The assessee is an individual, Premlata Bisht Bhandari.
  • The dispute relates to Assessment Year 2016-17.
  • The assessee had not filed any return of income for this year prior to initiation of reassessment.

Trigger for Reassessment

According to the record, during a search conducted in the case of Bhagvati Developers, certain material was seized. Based on this information, the Assessing Officer (AO) formed a belief that income chargeable to tax had escaped assessment in the hands of the assessee for AY 2016-17.

Notice under Section 148 and Subsequent Return

  1. The AO initiated proceedings under Section 147 by issuing a notice under Section 148 dated 14.07.2022.
  2. This notice was issued well after three years from the end of AY 2016-17.
  3. The notice itself recorded that it was issued with prior approval of the Principal Commissioner of Income Tax-3, Pune.
  4. In response to this notice, the assessee filed a return of income on 08.08.2022, declaring income of Rs. 98,740/-.
  5. The assessment was ultimately completed under Section 147 read with Section 144 vide order dated **31.05.2023`.

First Appeal and Further Challenge

The National Faceless Appeal Centre (NFAC), Delhi, acting as Commissioner (Appeals), passed an order under Section 250 on **10.09.2025`, sustaining the reassessment. Aggrieved, the assessee filed an appeal before the ITAT, challenging both:

  • The validity of the reassessment proceedings on legal grounds, and
  • The additions made on merits.

However, at the hearing, the assessee’s counsel focused first on the jurisdictional challenge relating to sanction under Section 151.

Assessee’s Contention

The principal legal contention raised by the assessee was:

  • Since the notice under Section 148 dated 14.07.2022 was issued beyond three years from the end of AY 2016-17,
  • In terms of the amended Section 151, the prescribed authority for granting prior approval was the Principal Chief Commissioner of Income Tax (PCCIT), not the PCIT.
  • The AO, however, had obtained approval only from the Principal Commissioner of Income Tax-3, Pune.
  • This, according to the assessee, was not in compliance with Section 151, rendering the entire reassessment void for lack of jurisdiction.

To support this argument, reliance was placed on:

  • The Bombay High Court decision in Alag Property Construction Pvt. Ltd. Vs. ACIT; and
  • Recent Pune ITAT rulings, particularly:
    • Santosh Jaynarayan Sharma Vs. ITO – ITA No.2324/PUN/2025, order dated 06.01.2026, and
    • **Siddharth Raikumar Nahar vs.