Adarsh Developers Vs ITO (ITAT Mumbai)
Reopening Beyond 3 Years Invalid – Approval by PCIT Instead of PCCIT Violates Sec 151(ii) – Entire Reassessment Quashed – ITAT Mumbai
AO reopened assessment u/s 147 alleging undervaluation of property u/s 43CA & estimated GP addition; CIT(A) upheld reassessment and additions. Assessee raised additional legal grounds challenging validity of notice u/s 148 under new regime.
ITAT held that where notice is issued beyond 3 years, approval must be obtained from specified higher authority as per Sec 151(ii). In present case, sanction was granted by PCIT instead of PCCIT/CCIT, rendering assumption of jurisdiction invalid. Tribunal relied on UOI vs Rajeev Bansal and observed that sanction by correct authority is jurisdictional precondition (refer approval hierarchy table extracted from SC decision on page 7). Consequently, notice u/s 148, order u/s 148A(d) and entire reassessment proceedings were quashed. Since reopening itself failed, issues on Sec 50C/43CA additions became academic. Assessee appeal allowed
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The present appeal filed by the assessee arises out of the order dated 23/10/2025 passed by the NFAC, Delhi [hereinafter the “Ld.CIT(A)”] for A.Y. 2017-18 on following grounds of appeal:-
“1. On the facts and circumstances of the case and in law, the learned C17(A)NFAC has erred in dismissing the appeal ex-parte, without providing adequate opportunity of being heard and without considering the written submissions on record, thereby violating the principles of natural justice. The order passed is bad in law and liable to be quashed.
2. The learned CIT(A) erred in summarily upholding the additions without adjudicating the specific grounds and submissions filed, particularly regarding valuation, FMV, and correctness of invoking Section 50C. The order is non-speaking, mechanical, and deserves to be set aside.
3. On the facts and circumstances of the case and in law, the learned CIT(A) erred in upholding the addition of R69,40, 767/ – under Section 50C without appreciating that the assessee had disputed the stamp duty valuation and had submitted a valuation report, thereby obligating the AO to make a reference to DVO under Section 50C(2).
4. The learned CIT(A) erred in upholding the Section 50C addition without considering the valuation report submitted by the appellant demonstrating that the stamp duty value did not represent the correct fair market value.
5. The learned CIT(A) erred in confirming the addition of R2,42,590/ – towards estimated gross profit without granting any opportunity, without any basis, and without any discussion
6. The learned CIT(A) erred in holding that the AO had considered the assessee replies, whereas the AO had ignored the detailed submissions filed by the appellant during reassessment, thereby rendering the assessment order perverse, arbitrary and contrary to law.
7. The learned CIT(A) erred in upholding the reassessment order u/s 147 when:
a. there was no failure to disclose material facts,
b. the reasons recorded were incorrect and based on mere “information”, and
c. the reopening was based on change of opinion and without any tangible material.
8. Stamp Duty Value Cannot Be Adopted when Property is Stock-in-Trade. Without prejudice, the learned authorities failed to appreciate that the property sold represented stock-in-trade of the construction business, and therefore Section 50C is not applicable.
9. The appellant craves leave to add, alter or amend any of the grounds at the time of hearing.
2. Assesse has also raised additional grounds challenging the validity of notice u/s 148 and the consequent re-assessment proceedings, which are as under:-
“1.0 On facts and circumstances of the case and in Law, the notice issued u/s. 148 and order passed u/s 148A(d) are bad in law, since had been issued in violation of 1st Proviso to Sec 149(1), thereby the notice issued u/s 148 and consequential reassessment order passed u/s 147 are bad in law;
2.0 On facts and circumstances of the case and in law, the notice issued u/s. 148 after lapse of 3 years is bad in law, since had been issued without obtaining the approval from Specified authority viz. Pr. CCIT prescribed u/s. 151(4 thereby violating the law settled by Hon’ble Apex Court in the case of UOI vs. Rajeev Bansal (167 taxmann. corn 70);
3.0 On facts and circumstances of the case and in law, the order passed u/s 148A(d) and notice issued u/s. 148 is bad-in-law, since had not been issued by Faceless Assessing Officer (FAO) and been issued by Jurisdictional Assessing Officer (JAO), on violating the provision of Sec. 151A of the Act;
The appellant craves leave to add, amend, alter and/or withdraw any of the grounds of appeal at the time of hearing.”
2.1. After hearing both sides and considering the nature of the additional grounds, the Tribunal finds that the same are purely legal in nature and do not require investigation of any fresh facts. The Hon’ble Supreme Court in the case of NTPC Ltd. v. CIT reported in (1998) 229 ITR 383 (SC) and in the case of Jute Corporation of India Ltd. v. CIT reported in (1991) 187 ITR 688 (SC) has held that an appellate authority is empowered to admit additional grounds involving question of law arising from facts already on record. Respectfully following the aforesaid decisions and considering that the additional grounds go to the root of the matter, the additional grounds raised by the assessee are admitted for adjudication.
