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Issues: (i) whether reassessment under section 148 was valid when approval was obtained from the Principal Commissioner instead of the statutorily specified authority for a notice issued within four years from the end of the assessment year; (ii) whether the addition relating to alleged share application money could be sustained on the facts.
Issue (i): whether reassessment under section 148 was valid when approval was obtained from the Principal Commissioner instead of the statutorily specified authority for a notice issued within four years from the end of the assessment year.
Analysis: The notice was issued within four years from the end of the relevant assessment year, so the approval had to be taken from the Joint Commissioner or Additional Commissioner. Approval having been obtained from the Principal Commissioner did not satisfy the statutory requirement. The defect went to the root of the reassessment and rendered the reopening invalid.
Conclusion: The reassessment was quashed and this issue was decided in favour of the assessee.
Issue (ii): whether the addition relating to alleged share application money could be sustained on the facts.
Analysis: The balance sheet did not show receipt of the alleged share capital or increase in share capital during the relevant year. The assessment record also did not identify the source from which such money was received. On these facts, the factual basis for the addition was not made out.
Conclusion: The addition was held to be unsustainable and this issue was decided in favour of the assessee.
Final Conclusion: The reassessment was invalid and the consequential addition could not be sustained, resulting in relief to the assessee.
Ratio Decidendi: Where reassessment is initiated within the prescribed four-year period, sanction must be obtained from the authority specifically named by law, and approval by a different authority vitiates the reopening.
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