DCIT Vs Swati Menthol & Allied Chemicals Ltd. (ITAT Delhi)
Reopening After 4 Years Invalid Without PCIT Sanction: ITAT Delhi Quashes 148 Notice Against Swati Menthol & Dismisses Revenue Appeal
Assessee, Swati Menthol & Allied Chemicals Ltd., engaged in manufacturing & sale of menthol products, originally filed return for AY 2015-16 declaring income of ₹9.76 crore (normal) & ₹17.04 crore (MAT). Assessment was reopened on 30.03.2021 based on I&CI Wing’s input regarding share capital & share premium of ₹3.01 crore received during the year. Notice u/s 148 was issued after obtaining sanction from the Addl. CIT, Range-1, Moradabad. AO completed reassessment making addition of ₹3,01,50,000 u/s 68 & disallowance of ₹7,14,555.
Before CIT(A), Assessee challenged the jurisdiction of reopening contending that since AY 2015-16 was beyond 4 years from end of AY 2016-17, the approval must be obtained from the PCIT, not Addl. CIT, as mandated by section 151(1). CIT(A) accepted Assessee’s objection & deleted the additions.
Before Tribunal, Assessee raised jurisdiction as part of its cross-objection, relying on the Supreme Court’s order in ITO v. Rinku R. Rai (454 ITR 35) affirming Bombay High Court judgment that Addl. CIT sanction is invalid for reopening beyond 4 years; only sanction from PCIT or higher authority is legally valid. Tribunal examined the record (pages 4–6) & found that notice u/s 148 was indeed sanctioned only by the Addl. CIT.
Tribunal held that:
