Case Law

ITAT Mumbai: A Bitcoin Reassessment Fell Apart Over Who Signed the Approval, Not the Bitcoin

Published 14 Sept 2026· By Finoscape Editorial Team· 5 min read

Reassessment cases involving cryptocurrency tend to get read for the cryptocurrency. This one is worth reading for something far more mundane, and far more useful to almost any practitioner’s actual practice: whether the person who signed off on reopening the case was even allowed to.

The assessee had sold bitcoin during Assessment Year 2018-19. The Assessing Officer, reopening the assessment on 13 April 2022 — more than three years after the relevant assessment year had ended — added approximately ₹1.24 crore of the sale proceeds as unexplained investment under Section 69. ITAT Mumbai, in an order dated 11 September 2026 (Mohammed Hasseb Mohammed Hanif Khan v. ITO), never reached the question of whether that addition was correct on the facts.

Sidebar: Section 151 draws a line most taxpayers have never heard of and most reassessment notices never mention out loud — reopen within three years, and a Principal Commissioner or Commissioner can sign off; reopen beyond three years, and the law requires someone considerably more senior — a Principal Chief Commissioner or equivalent. It’s a small distinction on paper. On this fact pattern, it was the entire case.

The reopening here happened well beyond the three-year mark, which meant Section 151(ii) — not the lower threshold in Section 151(i) — governed who could validly approve it. The approval had, in fact, come from the Principal Commissioner of Income Tax: the authority competent for a shorter reopening window, not the one Parliament specified for this one. The Tribunal treated that mismatch as fatal to the entire proceeding, holding that “obtaining sanction from the appropriate authority is a precondition” to the Assessing Officer having jurisdiction to reopen at all — not a formality that can be cured after the fact or excused because the underlying addition might otherwise have merit. The reassessment, and the ₹1.24 crore addition with it, was quashed on that ground alone.

Sourcing note, disclosed rather than hidden: the specific facts of this case — case name, figures, dates — were found in only one outlet (TaxGuru) during this cycle’s research; a second, independent report of this exact matter was not located. What does strengthen confidence in the underlying legal principle, if not this specific case’s facts: at least three other current ITAT rulings (Mumbai, Delhi and Hyderabad benches, all reported this same week) apply the identical Section 151(ii) reasoning — including a separate Mumbai Bench ruling in a charitable-trust matter, unrelated in its facts to this one, quashing a reassessment on the same “wrong-authority” defect. That is a genuine, multi-bench pattern this cycle, even though this specific bitcoin case rests on a single source.

Why It Matters

Section 151’s sanctioning-authority requirement is exactly the kind of provision that’s easy for even a diligent Assessing Officer to get wrong, because it depends on correctly classifying which limitation window the reopening falls into before routing the file to the right seniority of officer for approval — and it is exactly the kind of defect that, once identified, ends a reassessment outright, regardless of how strong the underlying addition might otherwise be. This week’s pattern across multiple ITAT benches suggests it is not a one-off administrative slip.

Key Takeaways

ITAT Mumbai quashed a reassessment (and a ₹1.24 crore Section 69 addition tied to bitcoin sale proceeds) because the reopening — beyond the three-year limit — was approved by the Principal Commissioner of Income Tax rather than the more senior authority Section 151(ii) requires for that window.
The Tribunal treated the correct sanctioning authority as a jurisdictional precondition, not a curable formality — meaning the underlying merits of the addition were never reached.
This week saw at least three other ITAT rulings (Delhi, Hyderabad and a separate Mumbai bench) reach the same conclusion on the same Section 151(ii) defect in unrelated fact patterns — a genuine multi-bench trend.
This specific case’s facts rest on a single reporting source (TaxGuru); treat the case-specific figures as provisional pending independent corroboration, while treating the underlying legal principle as well-supported by the broader pattern.

Practical Implications

Whenever a client’s reassessment was reopened more than three years after the relevant assessment year, the very first thing to check — before engaging with the substance of any addition — is who actually signed the Section 151 sanction, and whether that officer’s seniority matches what Section 151(ii) requires for a beyond-three-year reopening. This is a low-cost, high-value check: it can be done from the reassessment file itself, without needing to contest a single fact about the underlying transaction.

Action Checklist

For any reassessment reopened beyond three years from the end of the relevant assessment year, verify the sanctioning authority’s designation against Section 151(ii)’s requirement (Principal Chief Commissioner/Chief Commissioner or equivalent, not a Principal Commissioner/Commissioner).
Raise a Section 151(ii) sanctioning-authority challenge as a threshold jurisdictional objection, separate from — and ideally before — any submissions on the merits of the addition itself.
Track this week’s broader pattern of Section 151(ii) rulings across benches; a client currently defending a beyond-three-year reopening may benefit from citing more than one of them.
Given the single-source sourcing caveat on this specific case, confirm the case details independently (ITAT Mumbai’s own portal, once accessible) before citing it in a specific client submission.

Relevant Sections / Rules / Notifications

Section 69 of the Income-tax Act, 1961 (unexplained investment).
Section 147/148 of the Income-tax Act, 1961 (reassessment, pre-Income-tax Act 2025 framework applicable to AY 2018-19).
Section 151(ii) of the Income-tax Act, 1961 (sanction for issue of notice where more than three years have elapsed).

FAQs

Q: If the sanctioning authority is wrong, does that end the matter permanently, or can the department reopen again with the correct approval?
A: This ruling quashes the specific reassessment as it stood; whether the department could attempt a fresh reopening with a properly sanctioned approval — and whether it would now be time-barred from doing so — is a separate question not addressed in available reporting on this case.

Q: Does this defect apply to every reassessment, or only ones reopened beyond three years?
A: Only reopenings beyond three years trigger the higher Section 151(ii) threshold; reopenings within three years are validly sanctioned by a Principal Commissioner or Commissioner under Section 151(i).

Internal Links

Today’s Intelligence — 14 September 2026 · Income Tax hub

Any future Finoscape coverage of the other Section 151(ii) rulings referenced above, once independently verified with full case details, will be cross-linked here.

Prepared by Finoscape Editorial Team — hello@finoscape.com. This article is for general informational purposes and is based on a single source (TaxGuru) reporting ITAT Mumbai’s order dated 11 September 2026 in Mohammed Hasseb Mohammed Hanif Khan v. ITO. It does not constitute legal or tax advice. Unlike Finoscape’s usual practice of cross-verifying a story across at least two independent outlets, a second independent report of this specific case’s facts was not located in this cycle despite a deliberate search; the broader Section 151(ii) legal principle is corroborated across multiple other current rulings, but the case name, figures and dates specific to this matter should be treated as provisional and independently verified before being relied upon in any client matter.