ITO Vs Santosh Jaynarayan Sharma (ITAT Pune)
Reassessment Quashed for Want of Proper Approval under Section 151: ITAT Pune
The Pune Bench of the Income Tax Appellate Tribunal (ITAT) disposed of the Revenue’s appeal and the assessee’s cross-objection for AY 2017-18, holding that the reassessment proceedings were void ab initio due to invalid sanction under section 151 of the Income-tax Act.
In the present case, the Assessing Officer issued notice under section 148 on 26.07.2022, i.e. after expiry of three years from the end of AY 2017-18, where the alleged escapement of income was below ₹50 lakh. The approval for issuing notice was obtained from the Principal Commissioner of Income Tax (PCIT) instead of the Principal Chief Commissioner/Chief Commissioner of Income Tax, as mandatorily required under section 151(ii) of the post-2021 reassessment regime.
The Tribunal noted that this issue is squarely covered by the jurisdictional Bombay High Court decision in Alag Property Construction Pvt. Ltd. v. ACIT, which held that approval by an incorrect authority vitiates the entire reassessment. Applying the same principle, the ITAT held that non-compliance with section 151 goes to the root of jurisdiction and renders the notice under section 148 invalid.
Accordingly, the ITAT allowed Ground No. 1 of the assessee’s cross-objection, quashed the reassessment proceedings, and held that all other grounds raised by the Revenue and assessee became academic and infructuous. The Revenue’s appeal was dismissed, and the cross-objection was partly allowed.
FULL TEXT OF THE ORDER OF ITAT PUNE
