JUS Infratech Private Limited Vs ACIT (ITAT Delhi)
Delhi ITAT Quashes Reassessment of ₹1.44 Crore: Approval From PCIT Instead of Pr. CCIT Is Jurisdictionally Fatal Where Reopening Is Beyond 3 Years
The Delhi ITAT quashed reassessment proceedings for AY 2016-17 holding that where the notice u/s 148 was issued beyond three years from the end of the relevant assessment year, sanction was mandatorily required from the specified authority under section 151(ii), i.e. the Principal Chief Commissioner of Income Tax. Approval obtained merely from the PCIT rendered the assumption of jurisdiction invalid.
The reassessment arose from information obtained during a search on a third party, according to which the assessee had allegedly received an accommodation entry of ₹90 lakh from Pavaki Propbuild Pvt. Ltd. An original section 148 notice was issued on 28.06.2021 under the old reassessment regime, followed by another notice on 07.07.2022 under the new regime after obtaining approval from PCIT.
The reassessment resulted in two additions-₹90 lakh relating to Pavaki Propbuild Pvt. Ltd. and ₹54,00,685 relating to security deposits received from Savita Holdings Pvt. Ltd., aggregating to about ₹1.44 crore.
The ITAT relied particularly upon the Supreme Court decisions in Union of India v. Ashish Agarwal and Rajeev Bansal . It reproduced the Supreme Court’s proposition that sanction from the appropriate authority is a precondition for the AO to assume jurisdiction u/s 148, and that section 151(ii) requires sanction from a higher authority where more than three years have elapsed.
Since the alleged escaped income was ₹90 lakh-exceeding ₹50 lakh-and the proceedings for AY 2016-17 were initiated beyond three years, the ITAT held that approval had necessarily to be obtained from the Pr. CCIT and not the PCIT. The Tribunal also relied upon the Delhi High Court rulings in Vikram Kapahi and Kusum Healthcare (P) Ltd.
As the statutorily prescribed authority had not granted the sanction, the Tribunal held that the very assumption of jurisdiction was illegal. Consequently, the entire reassessment order-including the additions aggregating to approximately ₹1.44 crore-was quashed and the assessee’s appeal allowed.
