₹1.24-Crore Bitcoin Addition Crashes for Want of the Right Password: PCIT’s Approval Invalid Where Section 151(ii) Required PCCIT’s Sanction – ITAT Mumbai
Summary: The assessee challenged the reassessment framed for AY 2018-19, in which the AO treated bitcoin sale proceeds of ₹1,24,55,654 as unexplained investment u/s 69.
The assessee originally challenged the reopening on the grounds that the notice u/s 148 was invalid and that the reassessment represented a mere change of opinion. He also disputed the addition relating to the bitcoin transactions on merits.
Before the Tribunal, the assessee raised an additional legal ground contending that the reopening was void because the AO had not obtained approval from the competent specified authority mandated u/s 151.
Since the additional ground went to the root of the AO’s jurisdiction and did not require investigation into any fresh facts, the Tribunal admitted it.
The notice u/s 148 was issued on 13.04.2022 for AY 2018-19. By then, more than three years had elapsed from the end of the relevant assessment year. The approval for reopening was, however, obtained from the PCIT-3, Mumbai.
The assessee contended that where a notice is issued after expiry of three years, section 151(ii) requires sanction from a higher authority, namely, the PCCIT, Principal Director General, Chief Commissioner or Director General. The PCIT is the specified authority under section 151(i) for cases where three years or less have elapsed, but not for cases falling beyond that period.
