Sri Sundari Enterprises Vs ITO (ITAT Chennai)
The Chennai ITAT quashed the reassessment proceedings for AY 2018-19 holding that a notice issued u/s 148 beyond three years from the end of the assessment year is invalid if approval is obtained only from the PCIT instead of the PCCIT as mandated u/s 151(ii).
The Tribunal admitted the assessee’s additional legal ground following NTPC Ltd. and held that the issue went to the very root of jurisdiction. In the present case, although notice u/s 148A(b) was issued within three years, the final notice u/s 148 was issued on 06.04.2022 after expiry of three years from AY 2018-19. However, approval was obtained only from the PCIT and not from the PCCIT.
Relying heavily on the Chennai Bench ruling in Meganapuram Primary Agricultural Cooperative Credit Society, the Tribunal reiterated that separate sanction is required for issuance of notice u/s 148 after completion of proceedings u/s 148A. Approval granted earlier for notice u/s 148A(b) cannot automatically validate the later notice u/s 148. Otherwise, the very purpose of section 148A — giving the assessee an opportunity before reopening — would stand defeated.
The ITAT also referred to the Madras High Court ruling in Core Logistic Company and the Bombay High Court decision in Vodafone Idea Ltd., reiterating that where notice u/s 148 is issued beyond three years, sanction must necessarily come from the authority prescribed u/s 151(ii), i.e., PCCIT/PCIT equivalent higher authority.
