Palanisamy Shankarganesh Vs ITO (ITAT Chennai)
Reassessment quashed for wrong sanction u/s 151(ii) – Approval by PCIT invalid after 3 years – ITAT Chennai
In Palanisamy Shankarganesh vs ITO (A.Y. 2018-19), reassessment was initiated alleging bogus purchases based on investigation wing information. The AO issued notice u/s 148 on 05.04.2022, beyond three years from the end of the assessment year, after obtaining approval only from the Principal Commissioner.
The ITAT admitted additional legal grounds and examined section 151. It held that where more than three years have elapsed, approval must be obtained from the specified higher authority such as Principal Chief Commissioner/Chief Commissioner/Director General. Since approval was taken from the Principal Commissioner instead, mandatory jurisdictional conditions were violated.
Relying on jurisdictional High Court rulings, the Tribunal held that non-compliance with section 151(ii) renders reassessment void ab initio. Accordingly, the reassessment order and CIT(A)’s order were set aside and the appeal of the assessee was allowed.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
This appeal filed by the assessee is directed against the order of the NFAC, Delhi (herein after called ‘CIT(A)’ in short], dated 12.09.2025 for the Assessment Year 2018-19.
2. Briefly, the facts of the case are that the appellant is an individual, the return of income for the Assessment Year 2018-19 was filed on 04.10.2018 disclosing a total income of Rs.12,63,200/-. The said return of income was processed u/s 143(1). Subsequently, based on the information received from Deputy Director of Income Tax(Inv) Unit-5(2), Mumbai that the appellant is a beneficiary of bogus invoices provided by M/s. Advanced Computers and Mobiles India Private Limited, the AO formed an opinion that the income got escaped assessment from tax. Accordingly, the AO issued a notice u/s 148 on 05.04.2022. The appellant had not complied with the notice issued u/s 148. The AO after issuing notice u/s 142(1) completed the assessment vide order dated 16.03.2024 and passed order u/s 147 r.w.s.144 r.w.s.144B of the Act at a total income of Rs.36,94,491/-. While doing so, the AO made addition of alleged bogus purchase of computers Rs.24,31,290/- made from M/s. Advanced Computers and Mobiles India Private Limited for alleged failure of the appellant to substantiate the transaction.
