Sonu Mandhana Vs ITO (ITAT Bangalore)
Bangalore ITAT Quashes Reassessment: PCIT Not Competent to Sanction Notice Issued Beyond Three Years
The assessee declared income of ₹3.82 lakh for AY 2016-17. Based on Investigation Wing information alleging bogus long-term capital gains from a penny-stock transaction, the assessment was reopened and share-sale consideration of ₹32.25 lakh was added as unexplained cash credit under section 68.
The ITAT noted that the order under section 148A(d) and notice under section 148 were issued on 28 July 2022, after more than three years had elapsed from the end of AY 2016-17—even after considering the extension under TOLA up to 30 June 2021. Therefore, under section 151(ii), approval was required from the Principal Chief Commissioner, Chief Commissioner, Principal Director General or Director General.
However, approval had been obtained only from the Principal Commissioner of Income Tax, who was not the competent specified authority at that stage. Following the Bombay High Court ruling in Ramesh Bachulal Mehta and the Supreme Court decision in Rajeev Bansal, the Tribunal held that approval from the proper authority is a mandatory precondition for assuming reassessment jurisdiction.
Accordingly, the notice under section 148 was declared void ab initio, and the entire reassessment proceedings-including the assessment order under section 147 read with section 144B-were quashed. The grounds relating to the penny-stock addition and other jurisdictional issues were left open as academic.
