Sportking India Ltd Vs JCIT (ITAT Delhi)
Approval Defect Fatal- CIT’s Approval Cannot Replace JCIT Sanction -Strict Compliance of section 151 Mandatory -ITAT Delhi Deletes 14.75-Crore Reassessment
Assessee filed return for AY 2006-07 declaring income of ₹35.13 lakh without offering MAT on book profits of ₹2.91 crore u/s 115JB. AO initially completed assessment u/s 143(3) on 23.12.2008. Subsequently, reassessment was initiated by issuing notice u/s 148 on 31.03.2011 & completed on 30.12.2011, determining income at ₹14.75 crore after making adjustments for earlier years’ depreciation, deferred tax & provision for income tax. CIT(A) upheld both the reopening & additions.
Before Tribunal, Assessee argued that reassessment was void ab initio since approval u/s 151(2) was granted by CIT instead of the designated Joint Commissioner. It was contended that this statutory requirement was mandatory & its breach rendered reopening invalid. Reliance was placed on decisions of Bombay High Court in Ghanshyam K. Khabrani (2012) & Delhi High Court in SPL’s Siddhartha Ltd. (2011) which held that satisfaction of a specified authority under law cannot be substituted by a superior authority. Assessee further pointed out that there was no failure to disclose material facts during the original assessment. Revenue defended the reassessment but could not dispute the fact that approval was granted by CIT.
Tribunal observed that its earlier order dated 25.07.2014 in ITA No.3405/Del/2013 had specifically revived the jurisdictional ground, requiring adjudication. It held that sanction by CIT, though a higher authority, could not replace statutory satisfaction of JCIT mandated under s.151(2). Such a defect went to the root of jurisdiction & was incurable. Consequently, Tribunal quashed the reassessment proceedings as void ab initio. Since reassessment itself was invalid, the additions made to book profits under MAT automatically became infructuous.
FULL TEXT OF THE ORDER OF ITAT DELHI
