Steelex Vs ITO (ITAT, Mumbai Bench)
Relevant Facts
In Steelex v. ITO, the Mumbai ITAT examined reassessment for AY 2016–17. The partnership firm returned a loss of ₹40,51,456, processed u/s 143(1), before reopening under the substituted regime.
An order u/s 148A(d) was followed by notice u/s 148 dated 30 July 2022. Approval was granted by the Principal Commissioner of Income Tax on 27 July 2022. The ITAT prioritised this defect because it went to jurisdiction’s root.
More than three years had elapsed from the end of AY 2016–17 when the impugned notice was issued. Therefore, the assessee contended that approval had to come from the Principal Chief Commissioner or Chief Commissioner in accordance with section 151(ii), not from the PCIT. The NFAC rejected the assessee’s challenge, resulting in the appeal before the Tribunal.
Issue Before the Tribunal
The decisive issue was whether a notice u/s 148 issued after expiry of three years from the relevant assessment year could survive when sanction was obtained from the PCIT instead of the authority specifically designated u/s 151(ii).
The connected question was whether TOLA altered the competent authority or merely extended time up to 30 June 2021. If sanction was defective, every consequential proceeding would fail.
