Reopening of Assessment Under Section 147 Invalid Without Prior Approval Under Section 151(ii) of IT Act

The ITAT Pune held that reopening of assessment under section 147 was invalid as the AO failed to obtain prior approval from the appropriate authority as required under section 151(ii) of the IT Act. Relying on precedents from the Bombay HC, the tribunal allowed the assessee's appeal and set aside the reassessment order and notice issued under section 148 for non-compliance with mandatory approval provisions.

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ISSUES:

Whether the Assessing Officer's issuance of notice under section 148 of the Income Tax Act without obtaining prior approval from the appropriate specified authority as mandated under section 151 renders the reassessment proceedings invalid'Whether the approval obtained from an incorrect authority under section 151 affects the validity of the reassessment notice and consequent assessment order'Whether the reassessment order passed without compliance with jurisdictional preconditions under sections 147, 148, 148A(b), 144, 144B, and 69A of the Income Tax Act is liable to be quashed'Whether grounds raised by the assessee challenging the reassessment order become academic once the reassessment itself is held invalid?

RULINGS / HOLDINGS:

The issuance of notice under section 148 without obtaining prior approval from the appropriate specified authority as required under section 151 is "illegal and void ab initio," and the reassessment proceedings consequent thereto are liable to be quashed.Approval obtained from the Principal Commissioner of Income Tax instead of the Principal Chief Commissioner of Income Tax (when the reassessment is initiated after three years from the end of the relevant assessment year) is not valid, rendering the notice under section 148 and the reassessment order invalid.The reassessment order passed without strict compliance with jurisdictional preconditions under sections 147, 148, 148A(b), 144, 144B, and 69A is invalid and cannot be sustained.Once the reassessment proceedings are declared invalid, all other grounds challenging the reassessment order become academic and are not adjudicated.

RATIONALE:

The Court applied the statutory framework of the Income Tax Act, specifically sections 147, 148, 148A(b), 151, 144, 144B, and 69A, emphasizing the mandatory nature of jurisdictional preconditions before reopening assessments.Section 151 mandates that prior approval for issuing notice under section 148 must be obtained from the Principal Chief Commissioner if more than three years have elapsed from the end of the relevant assessment year; failure to do so vitiates the proceedings.The Court relied on authoritative precedents, including the Supreme Court's ruling emphasizing the necessity of obtaining approval from the specified authority and the Bombay High Court's decisions holding that any notice issued without sanction of the correct authority is invalid, reinforcing that jurisdictional requirements must be strictly complied with.The Court recognized that non-compliance with section 151's approval requirement is a jurisdictional defect that renders the reassessment order void ab initio, thereby obviating the need to consider other grounds raised against the reassessment order.

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