Section 151(ii) Approval by Wrong Authority Quashes Reassessment: Mumbai ITAT

Jobanputra Charitable Trust Vs ACIT (ITAT Mumbai Bench)

Even a Charitable Trust Cannot Be Reopened on the Charity of an Incompetent Sanction: PCIT’s Approval Invalid When Section 151(ii) Required PCCIT’s Nod – ITAT Mumbai

Summary: The assessee, Jobanputra Charitable Trust, challenged a reassessment order passed u/s 143(3) r.w.s. 147, under which the AO made an addition of ₹41.30 lakh by treating certain expenditure as non-genuine.

The trust challenged the reassessment on several grounds. It disputed the validity of the reopening, alleged violation of natural justice on account of denial of cross-examination and contested the addition on merits.

Before the Tribunal, the assessee raised an additional legal ground contending that the reassessment was void ab initio because the approval required u/s 151 had not been obtained from the competent specified authority.

The assessee submitted that the notice u/s 148 and order u/s 148A(d) were issued on 06.04.2022 for AY 2018-19. Since more than three years had elapsed from the end of the relevant assessment year, approval was mandatorily required from the higher authority specified u/s 151(ii).

However, the approval was granted by the PCIT (Central)-3, Mumbai, who was an authority covered by section 151(i) and not the competent authority for a reopening undertaken beyond three years.