Paras Plaza Pvt. Ltd. Vs ITO (ITAT Kolkata)
Reopening u/s 147 Bad in Law Where 148 Notice Precedes Formal Receipt of Sanction u/s 151 though granted earlier- Communication of Sanction Is Mandatory – Internal Approval Not Enough to Validate 148 Notice
Assessee filed its return declaring a small loss of ₹27,163, which was processed u/s 143(1). Later, AO reopened the case u/s 147 by issuing a notice u/s 148 dated 26.03.2019, alleging unexplained share transactions of ₹3.8 crore. Assessment was completed u/s 147/143(3) with addition of ₹3.8 crore as unexplained cash credit, which was upheld by CIT(A).
Before ITAT, Assessee raised an additional legal ground that the notice u/s 148 was issued before receiving the mandatory approval of the PCIT u/s 151, rendering the entire reassessment invalid.
On examining the records, Tribunal found that:
- AO issued notice u/s 148 on 26.03.2019.
- PCIT’s approval was dated 25.03.2019 but was communicated to AO only on 28.03.2019 through a formal letter.
- Thus, AO acted without valid sanction at the time of issuing the notice, which violated section 151.
Bench relied on the Supreme Court ruling in Sethi Auto Service Station v. DDA (2008) 10 TMI 659 (SC), holding that departmental notings or internal approvals do not attain legal effect until officially communicated. A valid order takes effect only upon communication to the concerned authority or assessee.
