Case Law Details
DCIT Vs Sunil Harischandra Keni (ITAT Mumbai)
In the case of DCIT Vs. Sunil Harischandra Keni, the Income Tax Appellate Tribunal (ITAT) in Mumbai addressed the validity of an assessment made for the assessment year 2017-18, ultimately quashing it due to a lack of proper approval under Section 151 of the Income Tax Act. The Revenue had originally reopened the assessment based on the assumption that the taxpayer had understated income by not declaring a substantial difference between the purchase price of a property and its stamp duty value. The assessment was reopened after obtaining approval from the Principal Commissioner of Income Tax (Pr. CIT), but the appeal challenged the legitimacy of this reopening, particularly as it involved a case beyond the three-year limitation.
The key point in the Tribunal’s decision hinged on a recent ruling from the Bombay High Court regarding the same taxpayer. The High Court concluded that the reopening of the assessment was invalid because the required sanction for assessments beyond three years was not appropriately secured as per Section 151(ii), leading to a jurisdictional issue. Consequently, the ITAT upheld the High Court’s ruling, emphasizing that the lower authority must adhere to the High Court’s interpretation of the law. This led to the dismissal of the Revenue’s appeal, reinforcing the legal requirement for strict compliance with procedural norms in tax assessments, particularly concerning higher authority approvals in cases of reassessment.
The outcome of this case underscores the importance of adherence to established legal protocols in tax assessments and the necessity for authorities to obtain valid approvals when reopening assessments beyond statutory timelines.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal of the Revenue for the assessment year 2017-18 is directed against the order u/s 250 of the Income-tax Act, 1961 dated 19.06.2024 passed by the ld. Commissioner of Income-tax (Appeal), National Faceless Appeal Centre, Delhi.
2. Facts in brief are that the return of income declaring the total income of Rs.16,42,210/- was filed for the year under consideration. As per the information available, the assessee had purchased a property for Rs.70 lakhs during the financial year 2016-17 and the stamp duty value of the same was Rs.1,69,12,500/-, therefore, the difference of Rs.92,12,500/- was taxable u/s 56(2)(vii)(b) of the Income-tax Act, 1961. As per the ‘reason to believe’, there was escapement of income to the extent of difference amount of Rs.92,12,500/- as mentioned above. Consequently, the case of the assessee was reopened by issuing notice u/s 148 of the Act along with the order u/s 148A(d) on 11th July, 2022 after obtaining the approval from Pr. CIT-17, Mumbai. The purchase consideration of the property was taken on the basis of the market value as per the Stamp Value Authority of Rs.1,69,12,500/- and the difference amount of Rs.92,12,500/-was treated as ‘Income from other sources’ u/s 56(2)(vii)(b) of the Act and added to the total income of the assessee vide order u/s 143(3)/147 passed on 29th May, 2023.
3. Aggrieved, the assessee filed appeal before the ld.CIT(A).
4. The ld.CIT(A) has allowed the appeal of the assessee after following the decision of the Hon’ble High Court of Bombay in the case of the assessee in W.P. (L) No.15147 of 2024 dated 06th May, 2024, wherein it is held that the proceedings initiated against the assessee was invalid in view of the invalid sanction obtained u/s 151 (ii) and not u/s 151(i) of the Act. The relevant extract of the decision of the ld. CIT(A) is as under: –
“4.3 Subsequently notice u/s 250 was issued on 07.02.2024 requiring the appellant to submit relevant documents in support of the grounds of appeal. Responding to the same on 04.06.2024, the appellant filed the copy of the order of the Hon’ble High Court of Judicature at Bombay in W.P. (L) No.15147 of 2024 dated 06.05.2024, wherein, the appellant is the petitioner.
4.4 As per the contents of the said order, the Hon’ble Court in the appellant’s own case, following the decision passed by the same court in the case of Siemens Financial Services Private Limited Vs. DCIT and others reported in (2023) 457 ITR 647 (BOM) had held that the proceedings are invalid, in view of the invalid sanction and hence has to be quashed. According to the Hon’ble Court, in the case under consideration, the assessment year is AY 2017-18 and when the same falls beyond the period of 3 years, the sanction ought to have been obtained u/s 151(ii) and not under section 151(i). Accordingly, all consequential notices, assessment orders and consequential orders, if any were quashed and set aside by the Hon’ble Court.
4.5 Since, the decision of the Jurisdictional High Court, more particularly when the same is rendered in the appellant’s own case, is binding on a lower appellate authority, the assessment order passed u/s 147 rws 144B is categorized to be an order passed without jurisdiction and hence the JAO is directed to delete the addition of Rs.99,12,500/- and grant relief to the appellant.
4.6 However, the entire proceedings, would get revived if this order in W.P. (L) No. 15147 of 2024 is challenged before the Supreme Court and a Revenue favourable order gets pronounced.”
5. Heard both the sides and perused the material on record. We have perused the copy of the order of the Hon’ble jurisdictional High Court of Bombay in the case of the assessee vide W.P. (L) No.15147 of 2024 dated 06th May, 2024, wherein the assessment has been quashed because of invalid sanction obtained u/s 151 (ii) and not u/s 151(i) of the Act as discussed, supra, in the findings of the ld.CIT(A). Therefore, following the decision of the Hon’ble jurisdictional High Court, we do not find any reason to interfere in the decision of the ld.CIT(A). Accordingly, all the grounds of the Revenue are dismissed.
6. In the result, the appeal of the Revenue is dismissed.
Order pronounced in the open court on 17.10.2024.
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