2023 (12) TMI 401 - AT - Income Tax

Reassessment proceedings under section 147 quashed for lack of mandatory prior approval under section 151

ITAT Dehradun quashed reassessment proceedings initiated under section 147 for lack of mandatory prior approval under section 151 from competent ... Sanction under section 151 for reopening assessments - Validity of reassessment under section 147/148 - Reopening notice void ab initio for lack of sanction - Admission of additional grounds challenging reassessment - Quashing of reassessment proceedingsSanction under section 151 for reopening assessments - Validity of reassessment under section 147/148 - Reopening notice void ab initio for lack of sanction - Quashing of reassessment proceedings - Reassessment proceedings reopened without prior sanction under section 151 are void ab initio and therefore quashed. - HELD THAT: - The Bench admitted additional grounds challenging the validity of reopening and noted the Revenue's inability to produce any record of approval under section 151. Section 151 mandates prior sanction by the specified authority before issuance of notice under section 148 after the specified period. As there was no approval on record and the Revenue conceded absence of such sanction, the Assessing Officer's assumption of jurisdiction under section 147 lacked the mandatory prerequisite and was therefore void ab initio. Following this conclusion, the Tribunal quashed the entire reassessment proceedings. In view of the quashing, other grounds raised by the assessee were not adjudicated and were left open. [Paras 6, 8]Additional grounds challenging reopening allowed; reassessment proceedings quashed for want of sanction under section 151.Final Conclusion: Both appeals are allowed; reassessment for Assessment Year 2011-12 is quashed as the reopening lacked the mandatory sanction under section 151, and other grounds are left open. Issues involved:The issues involved in this case are related to the validity of reassessment proceedings and the eligibility of the Assessee for exemption u/s 10(26BBB) of the Income Tax Act, 1961.Validity of Reassessment Proceedings:The Assessee challenged the validity of the reassessment proceedings through Additional Grounds. The Bench admitted the Additional Grounds as they were legal issues. It was noted that no approval u/s 151 of the Act was obtained by the Assessing Officer for reopening the assessment. Despite multiple opportunities given to the Revenue, no approval was produced. The absence of approval renders the assumption of jurisdiction u/s 147 of the Act void ab initio. Consequently, the reassessment proceedings were quashed, and the Additional Grounds challenging the validity of the reopening were allowed. Other grounds raised by the Assessee were not adjudicated upon due to the quashing of the reassessment.Eligibility for Exemption u/s 10(26BBB):The Assessee, a corporation set up by the State for the welfare of ex-servicemen, claimed exemption u/s 10(26BBB) of the Act. The Assessee contended that it met the conditions prescribed in the section. However, the Learned Commissioner of Income Tax (Appeals) and the Assessing Officer held otherwise. They argued that the Assessee was not established by a central, state, or provisional act, as required by the Act. The main objectives of the corporation were to provide various benefits to ex-servicemen and their dependents. The Assessee insisted that all conditions under section 10(26BBB) were satisfied. The dispute revolved around the interpretation of the Act regarding the establishment and eligibility criteria for exemption. Conclusion:The Appellate Tribunal quashed the reassessment proceedings due to the absence of approval u/s 151 of the Act, rendering the assumption of jurisdiction void ab initio. As a result, the Assessee's appeals were allowed. The eligibility of the Assessee for exemption u/s 10(26BBB) remained a point of contention, with the Assessee claiming fulfillment of prescribed conditions while the Revenue contended otherwise.