ITO Vs Ruptex Mineral Water Private Limited (ITAT Delhi)
Reopening Beyond Three Years Invalid for Want of Proper Sanction: ITAT Delhi Quashes Reassessment in Accommodation Entry Case
The Delhi Bench of the ITAT allowed the assessee’s cross-objection and dismissed the Revenue’s appeal for AY 2017-18 by quashing the entire reassessment proceedings on a jurisdictional ground relating to invalid sanction under section 151 of the Income-tax Act.
The case arose out of a demonetisation-related survey alleging bogus sales and accommodation entries, pursuant to which the Assessing Officer reopened the assessment and made an addition of ₹4.11 crore under section 68 along with a commission disallowance under section 69C. The CIT(A) had partly allowed the appeal by restricting the addition to ₹43.09 lakh and deleting the commission disallowance.
Before the Tribunal, the assessee raised a legal objection that the initial notice under section 148 dated 27.04.2021 and the subsequent notice issued on 30.07.2022 were beyond three years from the end of the relevant assessment year. In such cases, sanction under section 151(ii) is mandatorily required from the Principal Chief Commissioner / Principal Director General / Chief Commissioner / Director General. However, in the present case, approval was obtained only from the Principal Commissioner of Income Tax, who was not the competent authority.
Following binding precedents of the Delhi High Court and coordinate benches, including Communist Party of India (Marxist) and Sampark Management Consultancy LLP, the ITAT held that the defect in sanction goes to the root of jurisdiction and renders the reassessment void ab initio.
Since the reassessment itself was held invalid, the Tribunal did not examine the merits of additions under sections 68 and 69C. Consequently, the Revenue’s appeal was dismissed and the assessee’s cross-objection was allowed in full.
FULL TEXT OF THE ORDER OF ITAT DELHI
