ITAT Mumbai quashes reassessment for invalid Section 151(ii) approval

Ramlal G Suthar Vs ITO (ITAT Mumbai)

The Income Tax Appellate Tribunal (ITAT) Mumbai ruled in favor of Ramlal G Suthar, quashing the reassessment order under Sections 147 r.w.s. 144B of the Income-tax Act, 1961. The dispute arose over the issuance of a notice under Section 148 for the assessment year 2017-18. The assessee argued that the approval for reassessment was granted by the Principal Commissioner of Income Tax (Pr. CIT) instead of the Principal Chief Commissioner, as required by Section 151(ii). The ITAT cited the Supreme Court’s decision in UOI vs. Rajiv Bansal and the coordinate bench ruling in Manish Financials to conclude that procedural compliance was not met, rendering the reassessment invalid. The Tribunal emphasized that for notices issued after three years from the relevant assessment year, sanction must come from the Principal Chief Commissioner or an equivalent authority, not the Pr. CIT.

Further, the assessee contested the valuation method used to add Rs. 20.42 lakh as deemed income under Section 56(2)(vii)(b). The Assessing Officer relied on a Valuation Officer’s report, which was based on stamp duty valuation rather than a physical inspection. The ITAT, however, did not deliberate further on these issues, as the invalid approval under Section 151(ii) was sufficient to quash the reassessment. This decision reinforces the importance of strict adherence to procedural requirements in reassessment cases. As a result, ITA 3224/Mum/2024 was allowed in favor of the assessee.