Tribunal cancels assessment due to lack of jurisdiction, deeming it void ab initio.

The Tribunal allowed the appeal filed by the assessee, canceling the assessment made by the Assessing Officer under Section 143(3) r.w.s. 148 of the Act. The Tribunal found that the reopening of the assessment lacked proper application of mind by the Principal Commissioner of Income-tax, rendering the assumption of jurisdiction invalid. Consequently, the assessment was deemed void ab initio and was set aside by the Tribunal. Other legal and factual issues raised by the assessee were not addressed as they were considered academic in nature.

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Issues:
Validity of reopening assessment by Assessing Officer.

Analysis:
The appeal was filed by the assessee against the order of the CIT(A) dated 20.02.2019. The assessee, a partnership firm engaged in ginning and pressing of cotton, had filed a return of income declaring Rs.5,14,300/-. The Assessing Officer, in the original assessment under Section 143(3), determined the total income at Rs.3,84,53,522/- after adding Rs.3,79,39,222/-. Subsequently, the assessment was reopened based on information regarding an accommodation entry of Rs.50 lakhs and cash deposits of Rs.57,45,000/-. The Assessing Officer made an addition of Rs.50 lakhs as unexplained cash credit under Section 68 of the Act. The CIT(A) upheld the assessment and the addition, leading to the appeal before the Tribunal.

In Ground Nos. 2 & 3, the assessee challenged the validity of the reopening of the assessment, alleging that the approval given by the Principal Commissioner of Income-tax was mechanical and lacked proper application of mind. The learned Counsel for the assessee cited judicial precedents to support this claim. The DR argued that the approval was granted after due consideration of the reasons recorded by the Assessing Officer. The Tribunal examined the approval process and relevant case laws cited.

The Tribunal observed that the approval given by the Principal Commissioner of Income-tax with a simple "Yes" lacked proper application of mind, similar to cases cited by the assessee's Counsel. Referring to the decisions of the Madhya Pradesh High Court and the Delhi High Court, the Tribunal held that the requirement of approval is a safeguard against arbitrary exercise of power by the Assessing Officer. The Tribunal concluded that the assumption of jurisdiction to reopen the assessment was invalid, rendering the assessment void ab initio and liable to be cancelled.

Based on the above findings, the Tribunal allowed the appeal filed by the assessee, canceling the assessment made by the Assessing Officer under Section 143(3) r.w.s. 148 of the Act. Consequently, the Tribunal did not delve into other legal and factual issues raised by the assessee, deeming them academic in nature.

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