2025 (9) TMI 1772 - AT - Income Tax

Invalid reassessment sanction under section 151 rendered the reopening void ab initio for want of competent approval.

Reopening was invalid because, for an assessment year more than three years after its end, section 151 required approval from the Principal Chief ... Validity of reopening of assessment - Sanction for reopening beyond three years - Invalid approval u/s 151 - Jurisdictional validity of notice u/s 148A(d) - HELD THAT: - The Tribunal recorded that it was an admitted position that more than three years had elapsed from the end of the relevant assessment year. In such a case, section 151 required approval of the notice under section 148 and the order under section 148A(d) by the Principal Chief Commissioner or Chief Commissioner, and not by the Principal Commissioner. Since the record showed that both the notice and the order under section 148A(d) had been approved by the Principal Commissioner, the statutory requirement as to the specified authority stood violated. Following the decisions noticed by it, the Tribunal held that this defect went to jurisdiction and rendered the initiation of reassessment proceedings unsustainable. [Paras 5, 7] The notice under section 148 was held bad in law and the consequential assessment order was declared void ab initio. Final Conclusion: The Tribunal partly allowed the appeal by accepting the challenge to jurisdiction on the ground of invalid sanction under section 151. The reassessment notice and consequential assessment for A.Y. 2017-18 were quashed, and the remaining grounds were left open. Issues: Whether the reassessment notice and the consequential reassessment proceedings were invalid for want of sanction by the correct specified authority under section 151 of the Income-tax Act, 1961, where more than three years had elapsed from the end of the relevant assessment year.Analysis: The approval for the notice under section 148 and the order under section 148A(d) was granted by the Principal Commissioner of Income Tax. For an assessment year beyond three years from its end, section 151 requires approval from the Principal Chief Commissioner of Income Tax or the Chief Commissioner of Income Tax. The statutory requirement was therefore not met. Following the jurisdictional and other high court decisions referred to in the order, the absence of approval by the competent authority rendered the reopening invalid. The reassessment proceedings, being founded on a notice issued without the requisite sanction, could not be sustained.Conclusion: The notice under section 148 was held to be bad in law and the consequential reassessment order was treated as void ab initio, in favour of the assessee.