Chandra S Sabhapathi Vs ITO (ITAT Bangalore)
Bangalore ITAT Quashes Reassessment for Want of Approval from Competent Authority under Section 151(ii)
The Bangalore Bench of the ITAT allowed the assessee’s appeal by quashing the reassessment proceedings on a legal ground, holding that the mandatory approval for initiating reassessment after three years from the end of the relevant assessment year was obtained from the Principal Commissioner of Income Tax (PCIT) instead of the Principal Chief Commissioner of Income Tax (PCCIT), the authority prescribed under section 151(ii).
The assessee had sold an immovable property and claimed exemption under section 54F towards investment in a new residential house. While the Assessing Officer denied exemption relating to the construction component, and the CIT(A) granted relief only for the cost of the vacant land, the Tribunal did not examine these issues on merits.
The Tribunal observed that both the order under section 148A(d) dated 07.04.2022 and the notice under section 148 dated 12.04.2022 were issued more than three years after the end of AY 2018-19. Therefore, approval ought to have been obtained from the PCCIT as mandated by section 151(ii). Since approval had instead been obtained from the PCIT, the jurisdictional requirement was not satisfied, rendering the proceedings invalid.
The Tribunal further noted that the Assessing Officer had relied upon the same approval reference number for the notice under section 148A(b), the order under section 148A(d), and the notice under section 148, indicating that separate statutory approvals had not been obtained for the different stages of reassessment proceedings. This also vitiated the reassessment.
Following earlier coordinate bench decisions on the issue, the Tribunal held that the reassessment proceedings were void ab initio and consequently set aside the assessment. Since the appeal was allowed on the legal issue, the Tribunal left the merits of the section 54F claim open for consideration, if required, in appropriate proceedings.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
