Light Chit Fund Pvt Ltd Vs ITO (ITAT Hyderabad)
Hyderabad ITAT Quashes Reassessment for Want of Proper Sanction under Section 151; Wrong Approval Authority Is a Jurisdictional Defect
The Hyderabad ITAT quashed the reassessment proceedings for AY 2018-19 after holding that the notice issued under section 148 and the order passed under section 148A(d) were invalid as they had been approved by the Principal Commissioner of Income-tax (PCIT) instead of the Principal Chief Commissioner/Chief Commissioner, the authority prescribed under section 151(ii) where more than three years had elapsed from the end of the relevant assessment year. The Tribunal first condoned the 259-day delay in filing the appeal, accepting that the delay was caused by the Managing Director’s serious medical condition and surgery, following the Supreme Court’s liberal approach in Vidya Shankar Jaiswal v. ITO. On merits, relying on Union of India v. Ashish Agrawal, the Telangana High Court’s decision in Deloitte Consulting India Pvt. Ltd., CBDT Instruction No. 1/2022, and the Supreme Court’s ruling in ACIT v. LinkedIn Singapore Pte. Ltd., the Tribunal held that sanction by the correct specified authority is a mandatory jurisdictional requirement and cannot be substituted by approval from a lower authority. It further observed that the validating provision inserted by the Finance Act, 2026 under section 292BC cures only procedural or technical defects in approvals and does not validate an approval granted by an authority lacking statutory jurisdiction. Consequently, the reassessment order passed under section 147 read with section 144B was quashed, leaving the additions on merits open.
