Devanshi Sharma Vs ITO (ITAT Mumbai)
The assessee challenged reopening proceedings relating to alleged bogus LTCG exemption u/s 10(38) from sale of shares, where the AO treated sale proceeds as fictitious and made additions after reopening u/s 147. The primary issue before ITAT was jurisdictional validity of the reassessment initiated through order u/s 148A(d) and notice u/s 148.
The Tribunal observed that both the order u/s 148A(d) and notice u/s 148 were issued after expiry of three years from the end of AY 2017-18. As per sec. 151(ii), sanction in such cases must be obtained from PCCIT/CCIT level authority, whereas the AO had obtained approval only from PCIT. Relying on binding judicial precedents including Supreme Court principles on sanction as a jurisdictional pre-condition, ITAT held that absence of approval from the correct specified authority vitiates the reassessment proceedings.
Accordingly, the order u/s 148A(d), notice u/s 148 and consequential assessment were declared invalid and quashed. Since the appeal was allowed on legal grounds, other issues were left open.
Key Takeaways:
- Proper sanction u/s 151 is a jurisdictional requirement; wrong authority approval invalidates reopening.
- For cases beyond 3 years, approval must be from PCCIT/CCIT level – PCIT approval is insufficient.
- ITAT followed SC ratio emphasizing sanction as a safeguard against mechanical reopening.
- Strong precedent for challenging 148A(d) proceedings of AY 2017-18 issued post-Ashish Agarwal transition.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
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