2025 (8) TMI 183 - AT - Income Tax

Reassessment Notice Under Section 148 Invalid Without Prior Approval Under Section 151, Quashing AO's Additions

The ITAT Kolkata held that the reassessment notice issued under section 148 was invalid due to the Assessing Officer's failure to obtain prior approval ... Reopening of assessment u/s 147 - prior approval from competent authority u/s 151 - notice beyond 3 years - HELD THAT:- AO obtained approval only from PCIT which is contrary to the statutory requirement. We place reliance in the decision of Subhra Basu vs. Union of India [2022 (8) TMI 1586 - CALCUTTA HIGH COURT] held that reassessment notice issued without prior approval as mandated u/s 151 of the Act is invalid and liable to be quashed. We further note that since in the present case the Assessing Officer failed to obtain requisite approval from PCCIT for issuance of reassessment notice beyond 3 years, the proceedings are deemed to be non-compliance to the statutory requirement under the law and the consequent additions made by the AO are also not justified. Therefore, the additions made by the AO are quashed. In view of the above, we hold that the notice issued u/s 148 of the act is invalid due to non-compliance of section 151 - Appeal of the assessee is allowed. ISSUES: Whether the reassessment notice issued under section 148 of the Income Tax Act beyond three years from the end of the relevant assessment year is valid without prior approval as mandated by section 151 of the Act.Whether the Assessing Officer complied with the statutory requirement of obtaining prior approval from the appropriate authority before issuing the reassessment notice under section 148 for income escaping assessment exceeding three years but below ten years.Whether the addition made under section 56(2)(vii) of the Act on the difference between stamp duty value and sale consideration is justified. RULINGS / HOLDINGS: The reassessment notice issued under section 148 beyond three years from the end of the relevant assessment year is invalid if prior approval as required under section 151 of the Act is not obtained.Since the income escaping assessment was below Rs. 50 lakh, prior approval was required from the Principal Chief Commissioner of Income Tax (PCCIT), but the Assessing Officer obtained approval only from the Principal Commissioner of Income Tax (PCIT), which is contrary to the statutory requirement, rendering the notice invalid.The additions made by the Assessing Officer under section 56(2)(vii) of the Act are quashed due to invalidity of the reassessment proceedings arising from non-compliance with section 151. RATIONALE: The Court applied the provisions of sections 148, 149(1)(b), and 151 of the Income Tax Act, which prescribe limitation periods and mandatory prior approval requirements for issuance of reassessment notices beyond three years but within ten years.The decision relied on the ruling of the jurisdictional High Court holding that reassessment notices issued without the prescribed prior approval under section 151 are invalid and liable to be quashed.The Court acknowledged the extension of limitation under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, as upheld by the Supreme Court, but emphasized strict compliance with section 151 approval requirements.No unique interpretation or doctrinal shift was noted; the ruling reaffirmed established statutory mandates and precedent regarding validity of reassessment notices and prior approval requirements.