Prakasam District Police Welfare Association Vs ITO (ITAT Hyderabad)
Conclusion: Reassessment proceedings was invalid for a notice issued beyond three years without the sanction of the prescribed higher authority as prior approval must mandatorily be obtained from the authorities specified under Section 151(ii) and approval by the Principal Commissioner was not valid in such cases.
Held: Assessing Officer (AO) commenced proceedings under Section 147 in respect of Assessment Year (AY) 2018-19 on the basis of information received by him from the Risk Management Strategy of the Central Board of Direct Taxes (CBDT) in respect of large amounts of financial transactions. An order under Section 148A(d) was issued on 08.04.2022 and the notice under Section 148 was issued on 09.04.2022. The assessment was made on 05.03.2024 with addition of ₹3,92,22,536 as unexplained cash deposits. The appeal filed by assessee against CIT (A)’s order was rejected, and thereafter the case came up for consideration before the Tribunal. Assessee stated that since notice for AY 2018-19 was issued on 09.04.2022 which was beyond three years from the end of the relevant assessment year, AO had to seek sanction from the authorities mentioned under Section 151(ii) (Principal Chief Commissioner or Chief Commissioner). However, it was issued with sanction from PCIT only. Revenue department could not rebut the factual position regarding the date of the notice and the level of approval obtained. It was held that under the amended provisions introduced by the Finance Act, 2021, where notice under Section 148 was issued beyond three years, prior approval must mandatorily be obtained from the authorities specified under Section 151(ii). Approval by the Principal Commissioner was not valid in such cases. The defect was jurisdictional and not curable. Reliance was placed on Union of India v. Ashish Agarwal and jurisdictional High Court rulings to affirm that statutory safeguards under Sections 148A and 151 were mandatory.
