2025 (11) TMI 1947 - AT - Income Tax

Reopening under Section 148 issued before Section 151 sanction communication invalidated, resulting in quashing of reassessment and assessment.

A reopening notice issued under the income tax regime was held invalid because it was issued before the communication of the requisite administrative ... Reopening of assessment - notice was issued by the AO prior to the communication of sanction u/s 151 - Effect of departmental notings and internal approval - HELD THAT:- Notice issued u/s 148 of the Act on 26.03.2019, even before the communication of the order from the ld. PCIT to the ld. AO which was actually done on 28.03.2019, therefore, the notice issued u/s 148 of the Act is invalid as the same was issued even prior to the communication of approval u/s 151 of the Act to the ld. AO thereby rendering all the consequential proceedings including the assessment framed to be nullity and invalid in the eyes of law. Therefore, we are inclined to quash the reopening of assessment and the consequent order passed by the ld. Assessing Officer. The case of the assessee find support from the decision of Sethi Auto Service Station and Anr. [2008 (10) TMI 659 - SUPREME COURT] to state that notings in a departmental file do not have the sanction of law to be an effective order. A noting by an officer is an expression of his viewpoint on the subject. It is no more than an opinion by an officer for internal use and consideration of the other officials of the department and for the benefit of the final decision-making authority. Needless to add that internal notings are not meant for outside exposure. Notings in the file culminate into an executable order, affecting the rights of the parties, only when it reaches the final decision-making authority in the department; gets his approval and the final order is communicated to the person concerned. As decided in LAXMINARAYAN R. BHATTAD & ORS [2003 (4) TMI 579 - SUPREME COURT] a right created under an order of a statutory authority must be communicated to the person concerned so as to confer an enforceable right. We are inclined to quash the re-opening of assessment as well as the consequent assessment order. Appeal of the assessee is allowed. Issues: Whether the notice issued under Section 148 of the Income-tax Act, 1961 on 26.03.2019, issued prior to communication of the sanction/approval under Section 151 of the Income-tax Act, 1961, is valid and whether consequent reassessment and assessment framed under Section 147 read with Section 143(3) of the Income-tax Act, 1961 are vitiated.Analysis: The appeal challenges the reopening on the ground that the notice under Section 148 was issued on 26.03.2019, whereas the formal communication of the sanction under Section 151 by the Principal Commissioner of Income-tax (PCIT-4, Kolkata) was conveyed to the Assessing Officer only on 28.03.2019 although the internal approval notation bears an earlier date. The Tribunal examined whether internal notings or an approval recorded in file prior to communication can constitute a valid communicated sanction, having regard to authorities holding that an internal noting or decision attains operative effect only when the final decision-making authority's approval is communicated to the person concerned. The Tribunal applied these principles to the facts and found that the statutory requirement of communication of the sanction to the Assessing Officer before issuance of the Section 148 notice was not complied with.Conclusion: The notice issued under Section 148 of the Income-tax Act, 1961 on 26.03.2019 is invalid for being issued prior to the communication of the sanction under Section 151; consequently the reopening under Section 147 and the assessment order passed under Section 147 read with Section 143(3) are quashed. The appeal is allowed in favour of the assessee.