2022 (4) TMI 1530 - HC - Income Tax

Validity of reopening of assessment u/s 147 - reopening beyond period of four years - Invalid approval u/s 151 - sanction has been given by Additional Commissioner of Income Tax (ACIT), Joint Commissioner of Income Tax and not Principal Commissioner - HELD THAT - Since four years had expired from the end of the relevant assessment year as provided under Section 151(1) of the Act, it is only the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner who could have accorded the approval and not the Joint Commissioner of Income Tax. On this ground alone, we will have to set aside the impugned notice. Consequently, the order on objections passed also has to be quashed and set aside.

Summary

Issues:
1. Validity of re-opening of assessment for A.Y. 2015-16 based on approval under Section 151 of the Income Tax Act, 1961.

Analysis:
The High Court of Bombay addressed the issue of the validity of the re-opening of assessment for the assessment year 2015-16, focusing on the primary ground of invalid approval under Section 151 of the Income Tax Act, 1961. The court noted that the approval for re-opening was given by the Additional Commissioner of Income Tax (ACIT) and Joint Commissioner of Income Tax, instead of the authorized Principal Chief Commissioner, Chief Commissioner, Principal Commissioner, or Commissioner. Referring to a previous judgment, the court emphasized that since more than four years had elapsed from the end of the relevant assessment year, the Taxation and Other Laws (Relaxation of Certain Provisions) Act, 2020, would not apply. Consequently, the court held that only the designated higher authorities could have accorded the approval for re-opening, rendering the notice dated 26th March, 2021, and the subsequent order on objections dated 6th February, 2022, invalid.

The court allowed the petition in favor of the petitioner, granting the prayer clause seeking a Writ of Certiorari or any appropriate writ to quash and set aside the notice dated 26th March, 2021, and the subsequent order dated 6th February, 2022. The petition was disposed of accordingly, affirming the invalidity of the re-opening of assessment based on the lack of proper approval under Section 151 of the Income Tax Act, 1961.