Case Law Details
Makam Industries Pvt Ltd Vs DCIT (ITAT Delhi)
The ITAT Delhi allowed the assessee’s appeal and quashed reassessment proceedings on jurisdictional grounds. The assessee’s case had earlier been assessed u/s 153C/143(3), but the AO later reopened the assessment u/s 147 based on investigation information and made addition u/s 68 relating to sale consideration received. The assessee challenged the validity of reopening on the ground that approval u/s 151 granted by the PCIT was mechanical and invalid.
The Tribunal observed that the approval column contained only the remark “As per Annexure,” and the annexure merely reproduced the reasons recorded by the AO without any independent satisfaction or approval by the PCIT. Holding that valid sanction u/s 151 is a mandatory jurisdictional requirement, the Tribunal concluded that reassessment proceedings were initiated without proper approval and therefore were void ab initio. Consequently, the entire reassessment order was quashed and merits were not examined.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal by the assessee is directed against the order of the ld. ld. CIT – 25, Delhi dated 27.01.2025 pertaining to A.Y 2013-14.
2. The sum and substance of the grievance of the assessee is that the assessment order passed u/s 147/143(3) of the Income-tax Act, 1961 [the Act, for short] is bad in law, barred by limitation and without jurisdiction.
3. Representatives of both the sides were heard at length. Case records carefully perused. Relevant documentary evidence brought on record duly considered in light of Rule 18(6) of the ITAT Rules. Judicial decisions relied upon duly considered.
4. Briefly stated, the facts of the case are that the assessee the assessee is a company incorporated under the Companies Act, 1956. The assessee company filed its return of income for the Assessment Year 2013-14 on 27.08.2013 declaring a total loss of Rs. 14,950/-. Subsequently, a search was conducted on 13.04.2017 and consequent thereto, proceedings u/s 153C/143(3) of the Act were initiated for six A.Ys including the A.Y 201314 on the assessee company. In pursuant to the said proceedings, the assessment order u/s 153C/143(3) of the Act was passed on 26.11.2019 accepting the income declared in the return of income filed by the assessee company.
5. Subsequent to the assessment, the return was again selected for reassessment proceedings on the basis of information received form the Investigation Wing and notice u/s 148 of the Act dated 30.03.2021 was issued and served on the assessee company. In response to the said notice, the assessee company filed its return of income on 26-04-2021. The AO was not satisfied regarding receipt of Rs. 2,29,99,339/- from M/s Pranam Foods Pvt Ltd towards sale of assets held by the assessee company. The AO made the addition of Rs. 2,29,99,339/- u/s 68 of the Act vide his order u/s 147/143(3) of the Act on 24.02.2022.
6. Aggrieved by the above mentioned addition u/s 147/143(3) of the Act, the assessee went in appeal before the ld. CIT(A) who confirmed the said addition. Aggrieved further, the assessee is in appeal before us.
7. Before us, the ld. counsel for the assessee pointed out to Format for taking approval u/s 151 of the Act at page 207 of the Paper Book and vehemently stated that in the column of granting approval u/s 151 of the Act, the PCIT has only put a remark “As per Annexure”. Further, the ld. AR pointed out to the said ‘Annexure’ to show that it contained the reasons recorded by the Assessing Officer to reopen the assessment and for seeking approval of the PCIT for reopening the case. In such a scenario, the ld. counsel for the assessee strongly contested that there is no valid approval granted by the PCIT u/s 151 of the Act and as per the “Annexure”, cannot be considered as approval.
8. Per contra, the ld. DR relied on the orders of the authorities below and could hardly controvert the submissions of the assessee.
9. We have heard the rival submissions and have perused the relevant material on record. We find that the Assessing Officer has sought for approval u/s 151 of the Act from the ld. PCIT and the ld PCIT has remarked in column for grant of approval “As per Annexure”. Further, we find that the said ‘Annexure’ is nothing but reasons recorded by the AO for reopening the case. We, therefore, agree with the contention of the ld. counsel for the assessee that there is no valid approval granted by the ld PCIT u/s 151 of the Act for reopening the case. Since the proceedings have been initiated on invalid assumption of jurisdiction, the entire assessment proceedings got vitiated and deserves to be quashed. We therefore, are of the considered view that in the absence of valid grant of approval u/s 151 of the Act, the entire re assessment proceedings are vitiated and the same is therefore quashed.
10. Since we have quashed the assessment order, we do not find it necessary to dwell into the merits of the case.
11. In the result, the appeal of the assessee in ITA No. 1673/DEL/2025 is allowed.
The order is pronounced in the open court on 06.02.2026.
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