DCIT Vs Pranavkumar Prafulchandra Vora (ITAT Mumbai)
Reopening Beyond 3 Years Invalid Where Escaped Income & lt; ₹50 Lakh – Wrong Sanction u/s 151 Vitiates Reassessment – ITAT Mumbai
The Tribunal adjudicated cross appeals relating to alleged penny stock transactions where the AO reopened assessment and made addition u/s 68 alleging accommodation entries in the scrip of Alankit Ltd. However, the assessee challenged jurisdiction through cross-objection, contending that notice u/s 148 issued under the new regime dated 28.07.2022 was beyond three years and sanctioned by an incorrect authority.
Relying on the Supreme Court decision in Union of India v. Rajeev Bansal, ITAT analysed the sanction hierarchy under section 151 (illustrated in the comparative table reproduced around page 6) and held that when reopening is beyond three years, approval must be from higher authorities such as Principal Chief Commissioner/Chief Commissioner. Further, where alleged escaped income is below ₹50 lakh, reopening itself cannot be initiated after three years under the amended regime. In the present case, escaped income was ₹37.76 lakh and approval was granted only by the Principal Commissioner, rendering the notice jurisdictionally defective.
Accordingly, the Tribunal quashed the reassessment notice and entire proceedings as void ab initio. Since jurisdiction failed, issues on merits became academic; Revenue’s appeal was dismissed while assessee’s cross-objection was partly allowed.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
