ACIT Vs Surya Ferrous Alloys Pvt. Ltd. (ITAT Mumbai)
The ITAT Mumbai in the case of ACIT Vs Surya Ferrous Alloys Pvt. Ltd. dismissed the Revenue’s appeal and allowed the assessee’s cross-objection, effectively quashing the reassessment proceedings for the Assessment Year (AY) 2017-18. The Tribunal’s decision was based on a fundamental legal issue concerning the validity of the notice issued under Section 148 of the Income-tax Act. The assessee argued that the notice was invalid because the mandatory prior approval for its issuance was not obtained from the correct statutory authority as specified under Section 151 of the Act.
The reassessment notice, dated July 30, 2022, was issued for AY 2017-18, more than three years after the end of the relevant assessment year (which ended on March 31, 2018). Under the new reassessment regime introduced by the Finance Act, 2021, and specifically Section 151(ii), a notice issued beyond three years from the end of the relevant AY requires the sanction of the Principal Chief Commissioner of Income Tax (PCCIT) or a higher-ranking officer. In this case, the approval was granted by the Principal Commissioner of Income Tax (PCIT), a lower-ranking authority.
The Tribunal referred to a recent Supreme Court decision in Union of India vs. Rajeev Bansal (2024), which provided clarity on the application of the new reassessment regime and the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA). The Supreme Court in the Rajeev Bansal case affirmed that even with the temporal relaxation provided by TOLA, the procedural requirement to obtain sanction from the appropriate hierarchical authority under the new regime remains mandatory. The court had held that the Assessing Officer must obtain prior approval from the authority specified under Section 151 of the new regime before issuing a notice under Section 148.
