2024 (11) TMI 82 - AT - Income Tax

Validity of reopening of assessment - Valid sanction for issuance of notice u/s 148 - Approval by competent authority under Section 151(1) or not? - HELD THAT - Taking into consideration the entire aspect of the matter as it is evident from the records itself that sanction has not been given by the PCIT or CCIT on the reasons recorded by A.O. for initiating the proceedings u/s 147 for issuing of notice u/s 148 when the reopening is beyond the period of 4 years from the end of relevant assessment year but sanction has been given by the Additional CIT the assumption of jurisdiction by the Learned AO to reopen assessment was not in accordance with the provision under Section 151 of the Act, the notice issued under Section 148 of the Act is found to be, invalid, bad in law and is, therefore, set aside - Assessee appeal allowed.

Issues:
1. Condonation of delay in filing appeal due to COVID pandemic and personal reasons.
2. Additional grounds challenging the maintainability of proceedings.
3. Approval by competent authority under Section 151(1) for issuing notice under Section 148.
4. Validity of assessment based on cash deposit in the bank account.
5. Lack of approval by Principal Commissioner of Income Tax for reopening assessment beyond 4 years.

Analysis:
1. The appeal was delayed by 1865 days due to personal reasons, including the husband's illness and subsequent demise, with a significant portion of the delay attributed to the COVID pandemic. The Tribunal allowed the condonation of delay considering the genuine reasons provided by the assessee and the absence of intentional delay.

2. Additional grounds challenging the maintainability of proceedings were admitted by the Tribunal based on legal issues raised by the assessee regarding the approval granted by the competent authority and the violation of provisions under the Income Tax Act.

3. The issue of approval by the competent authority under Section 151(1) for issuing notice under Section 148 was crucial. The Tribunal found that the Principal Commissioner of Income Tax had not approved the reasons recorded by the Assessing Officer for reopening the assessment, rendering the notice invalid and bad in law. The failure to obtain proper sanction from the appropriate authority was deemed fatal to the assumption of jurisdiction by the Assessing Officer.

4. The assessment was based on a cash deposit in the bank account, and the assessee failed to provide a satisfactory explanation for the source of the deposit. The Tribunal upheld the addition made by the Assessing Officer and the First Appellate Authority due to the lack of compliance by the assessee.

5. The Tribunal, after considering relevant judgments, concluded that the absence of approval by the Principal Commissioner of Income Tax for reopening the assessment beyond 4 years rendered the notice under Section 148 invalid. The Tribunal set aside the order of assessment and allowed the assessee's appeal based on the invalidity of the notice issued by the Assessing Officer.

This comprehensive analysis of the legal judgment highlights the key issues addressed by the Tribunal, including the condonation of delay, approval by the competent authority, validity of assessment, and the lack of approval for reopening the assessment beyond the statutory period. The Tribunal's decision to allow the appeal was primarily based on the procedural irregularities and lack of proper authorization in initiating the reassessment proceedings.

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