Re-assessment Order Quashed for AY 2015-16 Due to Invalid Proceedings Under Income Tax Act Sections 147 and 151.

The ITAT allowed the assessee's appeal, quashing the re-assessment order for AY 2015-16 due to invalid initiation of proceedings under Section 147 of the Income Tax Act, 1961. The Tribunal found that the approval obtained from the Additional Commissioner of Income Tax did not satisfy the requirements of Section 151, which mandates sanction from higher authorities, rendering the proceedings invalid.

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Issues involved: Validity of approval u/s 151 for initiation of proceedings u/s 147 of the Income Tax Act, 1961.

Summary:
The appeal was filed by the assessee against the order of the Commissioner of Income Tax (Appeals)-IV, Kanpur concerning AY 2015-16. The main contention raised was the absence of valid approval u/s 151 for initiation of proceedings u/s 147. The assessee argued that the approval obtained from the Additional Commissioner of Income Tax was not in line with the requirement of Section 151, as it should have been obtained from the Principal Chief Commissioner of Income Tax/ Chief Commissioner of Income Tax Principal Commissioner of Income Tax/ Commissioner of Income Tax due to the lapse of four years from the end of the assessment year. The entire proceedings were challenged on the grounds of lack of proper sanction of the competent authority, which rendered the re-assessment order invalid and bad in law.

The Tribunal noted that the approval obtained from the Additional Commissioner of Income Tax instead of the superior authorities as required by Section 151 did not meet the legal requirements. It was emphasized that Section 151 serves as a crucial safeguard for the valid initiation of re-assessment proceedings, and the satisfaction of the competent authority is essential before proceeding u/s 147. The Tribunal referred to a case law where it was held that irregularity in obtaining the sanction of the competent authority is a substantive defect incurable under the provisions of the Act. As a result, the re-assessment order was quashed at the threshold, and the appeal of the assessee was allowed.

Therefore, the entire re-assessment proceedings were deemed invalid due to the lack of proper approval u/s 151, and the appeal of the assessee was allowed based on this ground.

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