ACIT Vs Munjal Holdings (ITAT Delhi)
Wrong Sanction Under Amended Section 151 Is Fatal: ITAT Upholds Quashing of Reassessment Despite Rajeev Bansal
The Delhi Bench “E” of the ITAT, in ACIT v. Munjal Holdings (AY 2016-17), dismissed the Revenue’s appeal and upheld the CIT(A)’s order quashing the reassessment, holding that the notice under section 148 dated 30.07.2022 was void for want of proper sanction under amended section 151(ii).
The assessee’s original assessment under section 143(3) had accepted the returned income. Reassessment was later initiated based on information alleging sham dividend income and bogus short-term capital loss. After the Ashish Agarwal judgment, the earlier notice was treated as a notice under section 148A(b), an order under section 148A(d) was passed, and a fresh notice under section 148 was issued on 30.07.2022, with approval taken from the Principal Commissioner of Income Tax.
The Delhi High Court, in the assessee’s own writ petition, had already quashed the order under section 148A(d) and the consequent section 148 notice, holding that since the notice was issued after expiry of three years from the end of the relevant assessment year, approval ought to have been taken from the higher specified authority prescribed under section 151(ii)—namely the Principal Chief Commissioner / Principal Director General / Chief Commissioner / Director General—and not from a lower authority.
Before the ITAT, the Revenue argued that in view of the Supreme Court decision in Union of India v. Rajeev Bansal, the Delhi High Court judgment relied upon by the CIT(A) no longer survived. Rejecting this contention, the Tribunal undertook a detailed analysis of Rajeev Bansal and held that far from diluting the requirement, the Supreme Court had reaffirmed that prior approval from the correct specified authority under the amended section 151 is a jurisdictional pre-condition for issuance of notice under section 148.
Applying the ratio of Rajeev Bansal and following the Delhi High Court decision in Communist Party of India (Marxist), the ITAT held that the reassessment notice in the present case was squarely invalid, as approval was taken from an authority not competent under section 151(ii). Once the foundational notice itself was quashed by the jurisdictional High Court, all consequential reassessment proceedings automatically collapsed.
Accordingly, the ITAT confirmed the CIT(A)’s order, dismissed the Revenue’s appeal on the legal ground alone, and declined to adjudicate the issues on merits, holding that they had become purely academic
FULL TEXT OF THE ORDER OF ITAT DELHI
