Reopening of assessment unsustainable in absence of satisfaction of competent authority

Ganesh Umanath Nayak Vs ITO (ITAT Mumbai)

ITAT Mumbai held that reopening of assessment unsustainable as there is no satisfaction of the competent authority before issuance of notice under section 148 of the Income Tax Act.

Facts- The assessee in appeal has challenged the validity of assessment order on the ground of jurisdiction as well as on merits of the addition.

Assessee submits that the assessment for A.Y. 2008-09 in the case of assessee was reopened beyond the period of four years. As per the provisions of the Act, AO was required to take approval from the Competent Authority u/s.151 of the Act before issuing notice u/s. 148 of the Act . Assessee referred to the notice u/s. 148 of the Act at page No.1 of the Paper Book to highlight that in the notice received by the assessee, it is not mentioned that necessary satisfaction of the CIT has been received. The assessee thereafter, referred to the reasons recorded at page -2 of the Paper Book to show, there is no mention of approval from CIT in the reasons recorded. The assessee submits that the notice issued u/s. 148 of the Act lacks jurisdiction, hence, the reassessment is liable to be quashed on this ground alone.

Conclusion- The primary submission of the assessee challenging the validity of notice issued u/s. 148 is that there is no satisfaction of the competent authority before issuing notice u/s. 148 of the Act. Undisputedly, the Assessing Officer has reopened the assessment for Assessment Year 2008-09 beyond period of four years. Approval/satisfaction from the Competent Authority as specified under the Act was mandatory before issuing notice u/s. 148 of the Act. In the absence of satisfaction, notice issued u/s. 148 of the Act suffers from inherent incurable defect, hence, proceedings arising from defective notice are vitiated. Sufficient opportunity was granted to the Revenue to rebut the contentions raised by the assessee. The Revenue failed to furnish report from the Assessing Officer controverting the arguments raised by the ld. Authorized Representative for the assessee assailing validity of the notice. In the absence of any documentary evidence to show that approval /satisfaction was obtained from Competent Authority before issuing notice u/s. 148 of the Act, the notice u/s. 148 is held to be bad in law/invalid, consequently, proceedings arising there from are vitiated.

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