2022 (4) TMI 1555 - HC - Income Tax

Reopening of assessment u/s 147 - statutory approval for issuance of notice u/s 148 - HELD THAT - In our view, for the case at hand, the approval ought to have been given by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner and not by the Additional Commissioner of Income Tax. We find support for this view in judgment of this court in Voltas Ltd. Vs. ACIT 2022 (4) TMI 594 - BOMBAY HIGH COURT and J.M. Financial and Investment Consultancy Services Pvt. Ltd. 2022 (4) TMI 1446 - BOMBAY HIGH COURT . Therefore, on this ground alone the impugned notice issued u/s 148 is quashed and set aside. Decided in favour of assessee.

Summary

Issues: Validity of approval under Section 151 of the Income Tax Act, 1961 for reopening assessment for A.Y. 2015-2016. Extension of limitation date due to Covid situation.

Validity of Approval under Section 151:
The petitioner argued that the approval for reopening the assessment under section 148 of the Income Tax Act, 1961, was not valid as it was granted by an Additional Commissioner instead of the prescribed authorities. The court examined the approval granted by Additional CIT Range 1(1) and found that it did not comply with the requirements of section 151(1) of the Act. The court cited previous judgments, including Voltas Ltd. Vs. ACIT & Ors. and J.M. Financial and Investment Consultancy Services Pvt. Ltd. Vs. ACIT Circle 3(2)(1) & Ors., to support the view that the approval should have been given by specific higher-ranking authorities. Consequently, the court quashed the notice issued under section 148 of the Act and set aside the consequential orders dated 8th November, 2021, and 15th December, 2021.

Extension of Limitation Date:
The respondents contended that the limitation date for the case had been extended due to the Covid situation, relying on the Taxation and other Laws (Relaxation of Certain Provisions) Act, 2020. However, the court noted that this extension applied only to cases where the limitation was expiring on 31st March 2020. Since the assessment year in question was 2015-2016, the six-year limitation would expire on 31st March 2022. The court emphasized that the Relaxation Act provisions could not be applied as they did not amend the provisions of Section 151 of the Act. Therefore, the extension of time to issue the notice did not validate the approval granted by the Additional Commissioner.

Conclusion:
The High Court of Bombay, in the absence of a valid approval under Section 151 of the Income Tax Act, 1961, and considering the specific provisions regarding the extension of limitation dates, quashed the notice issued under section 148 of the Act and set aside the consequential orders. The judgment highlighted the importance of obtaining approvals from designated authorities as prescribed by law and clarified the limitations of extensions granted due to exceptional circumstances like the Covid situation. The petition was disposed of with no order as to costs.