Krishna Enterprises Vs ITO (ITAT Bangalore)
Wrong Sanction, Wrong Authority & One-Line Bulk Approval: ITAT Bangalore Quashes Reassessments for AYs 2014-15, 2016-17 & 2017-18
Bangalore ITAT allowed all three appeals filed by Shri Krishna Enterprises for AYs 2014-15, 2016-17 & 2017-18 and quashed the reassessment proceedings in entirety on the ground of invalid sanction u/s 151.
For AYs 2016-17 & 2017-18, the Tribunal held that since more than three years had elapsed from the end of the relevant assessment years, sanction for reopening was mandatorily required from the Principal Chief Commissioner of Income Tax in terms of section 151(ii). However, the approvals were granted by the Principal Commissioner of Income Tax, rendering the reassessment proceedings void ab initio. The Tribunal relied upon recent Bombay High Court rulings, including Alag Property Construction (P.) Ltd. and Ramesh Bachulal Mehta, and held that sanction by an authority not specified under section 151(ii) vitiates jurisdiction itself.
For AY 2014-15, although approval was claimed to be from the Principal Chief Commissioner of Income Tax, the Tribunal found that a common, mechanical approval covering 83 assessees through a single communication was granted with a mere endorsement of “Approved”, without any case-specific application of mind. Following the Chandigarh ITAT decision in Rosha Alloys (P.) Ltd., the Bench held that such bulk, omnibus sanction reflects total non-application of mind and cannot sustain a valid reopening.
The Tribunal categorically observed that sanction u/s 151 is not an empty formality and must demonstrate conscious application of mind to the facts of each assessee and each assessment year. In absence of valid and lawful sanction, all reassessment orders for AYs 2014-15, 2016-17 & 2017-18 were quashed, and the appeals of the Assessee were allowed in full.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
