DCIT Vs Assure Jewels Pvt. Ltd. (ITAT Delhi)
Improper Approval Renders Reopening Invalid for AY 2015-16- Approval Beyond 4 Years Must Be from Principal Commissioner – ITAT Upholds Quashing of Reassessment
Revenue filed appeal against the order of CIT(A), Delhi dated 29.04.2024, whereby reassessment initiated u/s 147 was quashed on the ground of invalid approval u/s 151.
AO had recorded reasons on 19.10.2020 & issued notice b after obtaining sanction from the Joint Commissioner of Income Tax, Central Range-IV, Delhi. CIT(A) noted that the relevant assessment year was 2015-16 & four years from the end of that year had expired on 31.03.2020. Hence, under section 151(1), the competent sanctioning authority was the Principal Commissioner or Commissioner & not the JCIT. Since AO obtained approval from the JCIT instead of the prescribed authority, the reopening was held to be invalid.
CIT(A) relied upon Sidhmicro Equities (P.) Ltd. v. DCIT [(2023) 150 taxmann.com 460 (Bom.)], wherein the Bombay High Court held that after expiry of four years, approval must be granted only by the Principal Commissioner or Commissioner, & reopening based on JCIT approval is void. The Hon’ble Supreme Court had dismissed the SLP against this ruling, confirming its correctness.
Accordingly, CIT(A) quashed the reassessment as void-ab-initio for lack of valid approval. The Tribunal, after examining the facts & the precedents, upheld the CIT(A)’s decision, observing that once four years had elapsed, approval from JCIT was legally insufficient. The reassessment proceedings were therefore invalid & liable to be quashed.
