2017 (9) TMI 657 - AT - Income Tax

Reopening of assessment - non applying the provisions of section 147 r.w.s.151 - non approval from competent authority - Held that - In the absence of approval of the competent authority designated under s.151 of the Act, the notice issued under s.148 of the Act for assumption of jurisdiction under s.147 is vitiated and non-est. The entire reassessment proceedings is accordingly a non-starter. Consequently, the orders of the AO & CIT(A) are required to be quashed - Decided in favour of assessee.

Summary

Issues:
Challenge to jurisdiction under section 147 of the Income Tax Act without proper approval under section 151.

Analysis:
The appeal contested the assumption of jurisdiction under section 147 of the Income Tax Act without complying with the provisions of section 151. The assessment was initially completed under section 143(1) of the Act, then reopened under section 147 through a notice under section 148. The total income declared was substituted by assessed income, resulting in an addition on account of long term capital gains. The appellant argued that the reasons recorded for reopening lacked substance and approval under section 151 was obtained from an incompetent authority. The appellant cited a similar case where the objection was upheld in favor of the assessee. The Revenue did not dispute the appellant's claim but relied on the CIT(A)'s order. The Tribunal examined the case thoroughly, referencing a previous decision where the objection of lack of jurisdiction under section 147 was addressed. The Tribunal found that the AO's action was based on a wrongful belief and the approval process was flawed. As the notice under section 148 was issued without proper approval from the designated competent authority under section 151, the reassessment proceedings were deemed invalid. Consequently, the orders of the AO and CIT(A) were quashed, and the appeal of the assessee was allowed.

This detailed analysis highlights the core issue of challenging the jurisdiction under section 147 without appropriate approval under section 151 of the Income Tax Act. The judgment emphasized the importance of following procedural requirements and ensuring that the jurisdiction assumed by the Assessing Officer is legally sound. The Tribunal's decision was based on a thorough examination of the reasons recorded for reopening the assessment and the approval process, ultimately concluding that the reassessment proceedings were invalid due to the lack of proper approval from the competent authority designated under section 151. The judgment serves as a reminder of the significance of procedural compliance in tax matters and the consequences of failing to adhere to statutory provisions.