ITO Vs RMP Holdings Pvt. Ltd. (ITAT Delhi)
Wrong Sanction, Wrong Timing – ITAT Delhi Strikes Down Reopening- Notice Beyond 3 Years Needs Pr. CCIT Nod – Reopening Held Void
Delhi ITAT has upheld the order of CIT(A), annulling the reassessment proceedings . for AY 2017-18. Tribunal held that the notice issued u/s 148 was invalid as it lacked the sanction of the correct “specified authority” prescribed u/s 151 & was also barred by limitation.
Assessee, engaged in the business of finance & investment, had originally filed a NIL return of income for AY 2017-18. The assessment was completed u/s 143(3) at ₹1.65 crore. Subsequently, based on information arising out of a search conducted in the Pankaj Goyal group, it was alleged that Assessee had taken accommodation entries of ₹3.57 crore from Asian Bulls Capital Pvt. Ltd. during the demonetization period to convert unaccounted cash into accounted transactions. Relying on the statement of one of the key persons of the group, AO reopened the assessment & made additions of ₹4.11 crore u/s 68 r.w.s. 115BBE & 69C.
On appeal, CIT(A) examined the validity of the reassessment notice & found that the notice u/s 148 dated 27.07.2022 was issued after more than three years from the end of AY 2017-18 (i.e., after 31.03.2021). As per sec 151, sanction in such cases could only be granted by the Principal Chief Commissioner or Chief Commissioner (Pr. CCIT/CCIT). However, AO had merely obtained approval from the PCIT, who was not the competent authority. Following the ruling of the Supreme Court in Union of India vs. Rajiv Bansal (2024), CIT(A) held that the approval was invalid & consequently, the reassessment proceedings were void-ab-initio.
