Durga Agencies Pvt. Ltd. Vs ITO (ITAT Delhi)
Delhi Tribunal quashed reassessment proceedings initiated against Assessee for AY 2017-18, holding that the mandatory approval required u/s 151(ii) was not obtained from the Principal Chief Commissioner of Income Tax. The defect was found to be jurisdictional, rendering the reassessment void.
Assessee challenged the validity of notice u/s 148 dated 29.07.2022 issued by ITO. The notice was issued beyond three years from the end of the relevant assessment year, i.e., AY 2017-18. In such cases, approval of Principal Chief Commissioner or equivalent authority is mandatory u/s 151(ii). However, in the instant case, the approval was obtained only from Pr. CIT, Delhi.
Assessee argued that the notice lacked jurisdiction as it was not backed by valid sanction & relied upon judicial precedents including Communist Party of India (Marxist) vs. IT Dept. (Delhi HC, 2025 SCC Online Del 3233), Bhagwan Sahai Sharma vs. DCIT (Delhi HC, 2025 SCC Online Del 3443) & ITAT Mumbai in Manish Jagdish Joshi vs. CIT (DRP-3) & ACIT vs. Surya Ferrous Alloys Pvt. Ltd.
Tribunal observed that Notice u/s 148 dated 29.07.2022 was issued after the permissible 3-year period from AY 2017-18. Hence, approval under the extended time limit ought to have come from the Principal Chief Commissioner/Director General as per s.151(ii). In Assessee’s case, such higher-level approval was absent, making the notice void ab initio. Tribunal also cited Delhi High Court’s ruling in Communist Party of India (Marxist), which categorically held that reassessment proceedings without sanction of the specified authority are unsustainable. The High Court had quashed both the notice & subsequent proceedings in similar circumstances. Respectfully following Delhi High Court & consistent judicial view, Tribunal quashed the reassessment proceedings, holding the notice u/s 148 as invalid for want of proper approval. Consequently, all subsequent proceedings including assessment order & demand stood annulled. Since the assessment was quashed on jurisdictional grounds, other grounds raised by Assessee were left open.
