Dharminder Sethi Vs ITO (ITAT Amritsar)
Sanction From a Senior Officer Is Not Enough; It Must Come From the Officer Named by Law: Reassessment & ₹29.32 Lakh Addition Quashed
The Amritsar ITAT has quashed reassessment proceedings for AY 2016-17 on the ground that the sanction for issuing notice u/s 148 was obtained from the PCIT instead of the specified authority prescribed u/s 151(ii). Since more than three years had elapsed from the end of the relevant assessment year, approval was required from the higher authority specifically named in Section 151(ii). Approval from an authority not empowered by the statute could not be treated as a curable procedural irregularity.
The assessee, Dharminder Sethi, filed his return for AY 2016-17 on 17.10.2016 declaring a total income of ₹3,76,060. The Department subsequently issued a notice under the erstwhile Section 148 during the period covered by the Supreme Court’s decision in Union of India v. Ashish Agarwal [2022] 444 ITR 1 (SC).
In Ashish Agarwal, the Supreme Court directed that reassessment notices issued under the old law during the transition to the new reassessment regime should be treated as deemed show-cause notices u/s 148A(b). The Department was required to furnish the information and material relied upon, provide an opportunity to the assessee, pass an order u/s 148A(d) and thereafter issue a consequential notice u/s 148, wherever permissible in law.
