Star Ceramics Vs ITO (ITAT Bangalore)
Invalid Approval Sinks Reassessment -Wrong Authority, Wrong Notice – Tribunal Deletes ₹62 Lakh Additions in Reopening Case
Bangalore Tribunal in has quashed the reassessment order & deleted additions of over ₹62 lakh, holding that reopening of assessment was bad in law due to lack of valid sanction u/s 151.
Assessee, a partnership firm engaged in ceramic tiles & allied trade, had filed return of income on presumptive basis u/s 44AD declaring income of ₹1,45,090. Based on a search on Mehta Finance, AO alleged that Assessee had taken an accommodation entry of ₹50 lakh & made cash payment of ₹62.55 lakh. The case was reopened u/s 147 & assessed u/s 144. Additions of ₹50 lakh u/s 68 for unexplained loan & ₹12,55,107 u/s 69A for unexplained cash were made, resulting in assessed income of ₹64,00,196. CIT(A) confirmed the reassessment & sustained the additions.
Before Tribunal, Assessee challenged the validity of reopening on several legal grounds. It was argued that since the alleged escaped income exceeded ₹50 lakh & notice was issued after more than 3 years from the end of relevant A.Y., sanction ought to have been obtained from Principal Chief Commissioner/Chief Commissioner, whereas approval was wrongly taken from Principal CIT. Further, the notice u/s 148 dated 30.06.2022 was a manual notice without Document Identification Number (DIN), & was also issued by jurisdictional AO instead of Faceless Unit, rendering it invalid. Reliance was placed on Supreme Court rulings in Union of India v. Ashish Agarwal, Rajeev Bansal (2024) & Bombay HC decision in Cipla Pharma & Life Sciences Ltd.
