Reassessment Beyond Three Years Invalid Without Proper Approval: ITAT Mumbai

ITAT Mumbai quashed the reassessment proceedings initiated against the company for AY 2018-19 by relying on Bombay High Court rulings in Vodafone Idea Ltd and Siemens Financial Services; the tribunal held reopening invalid as approval was obtained from the wrong authority beyond three years, setting aside all related orders.

Surat Goods Transport Pvt. Ltd. has filed the present appeal in the ITAT Mumbai, challenging an order dated October 23, 2025, passed by the CIT(A)/NFAC Delhi. The case pertains to the Assessment Year 2018-19. The impugned order had sustained the validity of the reopening proceedings initiated through a notice passed under Section 148 r.w.s. 148A of the Act, along with a reassessment order issued under 144B r.w.s. 147 of the Act.

The assessee company filed its income tax return (ITR) for the year in consideration, declaring total income at Rs. 30.76 crore. Subsequently, the tax authorities chose the return for scrutiny under section 143(3) of the Act and successfully completed the return without making any addition. Later, the case was reopened by the Assessing Officer (AO) under Sections 147 and 148, and an addition amounting to Rs. 5.04 lakh was made, being interest paid on a loan of Rs. 1 crore allegedly treated as bogus in AY 2017-18.

The assessee challenged the same before the ITAT Mumbai, raising the argument that the Section 148 notice dated April 07, 2022, was issued after three years from the end of the year in consideration, and according to the change implemented to Section 151 of the Income Tax Act, approval in these types of cases should be taken from the Principal Chief Commissioner or equivalent authority. However, in the present case, approval was taken from the Principal Commissioner of Income Tax (PCIT), which is not correct as per the law.

To announce the final decision in the present case, the tribunal cited an earlier judgement of the Bombay High Court in Vodafone Idea Ltd and the decision in Siemens Financial Services Pvt. Ltd, which ruled that if the reopening of the assessment is more than 3 years from the year under consideration, then approval is required from the higher specified authority. Since, in the present case, approval had been taken from an incorrect authority, the ITAT held the entire reopening proceedings as invalid. Accordingly, the Section 148 notice, the Section 148(d) order, and the reassessment order were set aside. The appeal of the assessee was allowed.