ITAT Mumbai Quashes Section 263 Revision Over Invalid Section 151 Sanction

Anumita Infrastructure Private Limited Vs PCIT (ITAT Mumbai)

Summary: The assessee, Anumita Infrastructure Private Limited, filed its return for A.Y. 2017–18 declaring total income of Rs. 19,370/-. A regular assessment under section 143(3) was completed on 22.10.2019 at the returned income. Reassessment proceedings were subsequently initiated by notice under section 148 dated 29.07.2022, and the reassessment was completed under sections 147, 143(3) and 144B on 28.02.2023 at the same returned income. In the reassessment order, the Assessing Officer relied upon earlier findings that the assessee was a conduit entity and that the real income arising from its activities had already been considered in the assessment of Shri Shirish C. Shah. The PCIT later invoked section 263, principally on the ground that the reassessment order did not contain an enquiry into alleged penny stock and accommodation-entry transactions identified through third-party search actions, and set aside the reassessment order with directions. Before the Tribunal, the assessee raised jurisdictional objections concerning the sanction under section 151, the notice under section 148, and the reassessment procedure under the post-2021 regime.

The assessee contended that approval for issuance of notice under section 148 had been obtained on 26.07.2022, before the order under section 148A(d) dated 29.07.2022, and that the approval had been granted by the PCIT even though more than three years had elapsed from the end of A.Y. 2017–18. The Revenue disputed the maintainability of those objections in proceedings arising from section 263 and contended that the assessee should have challenged the reassessment before the CIT(A). The Tribunal first considered whether the jurisdictional challenge could be examined in the section 263 appeal. Relying upon the Supreme Court decision in Union of India vs. Rajeev Bansal, together with the principles stated in Kiran Singh, Keshab Narayan Banerjee and Westlife Development, the Tribunal held that a jurisdictional defect in the foundational reassessment proceedings could be examined in collateral proceedings for determining whether revisionary jurisdiction under section 263 could validly be exercised. It then applied the time-linked sanctioning hierarchy under section 151. Since the end of the relevant assessment year was 31.03.2018 and the notice under section 148 was issued on 29.07.2022, the Tribunal held that section 151(ii), rather than section 151(i), governed the sanction.