Keshri Rice Industries Vs DCIT (ITAT Raipur)
The ITAT Raipur has quashed a reassessment notice for AY 2016-17, ruling it was invalid due to a jurisdictional error where the approval was granted by an incorrect authority.
The ITAT Raipur, in the case of Keshri Rice Industries Vs DCIT, delivered a significant ruling on the procedural validity of a reassessment. The Tribunal allowed the assessee’s appeal, holding that the reassessment was invalid due to a fatal jurisdictional error in the approval process. The core of the dispute was whether the correct senior authority had sanctioned the reassessment notice for Assessment Year (AY) 2016-17.
The case began when the tax department received information that the assessee had routed a substantial sum of ₹1.22 crore through a bank account of a shell company. Since the assessee had not filed a return, the Assessing Officer (AO) initiated reassessment proceedings. However, the assessee challenged the validity of these proceedings on legal grounds, arguing that the approval for the reassessment notice was granted by an incorrect authority.
The ITAT’s decision focused on the provisions of Section 151 of the Income-tax Act, as amended by the Finance Act, 2021. The Tribunal noted that for reassessment notices issued more than three years after the end of the relevant assessment year, the approval must be from a higher-ranking official, specifically the Principal Chief Commissioner or Director General. In this case, the relevant assessment year was 2016-17, and the reassessment notice was issued in July 2022, well beyond the three-year mark (which ended on March 31, 2020). The assessee demonstrated that the approval for the notice was granted by the Principal Commissioner of Income Tax, an authority with jurisdiction only for cases within the three-year limit.
