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2025 (2) TMI 495 - AT - Income TaxValidity of assessment u/s 147 - valid sanction/approval accorded u/s 151 or not? - Sanctioning Authority u/s 151(ii) when order is passed beyond three years from the end of assessment year. HELD THAT - As per section 151 of the Act approval of Principal Chief Commissioner or Principal Director General Chief Commissioner or Director General is required for an order under section 148A(d) of the Act when the order is passed beyond three years from the end of assessment year. In this case the order under section 148A(d) of the Act was passed 06.04.2022 for A.Y.2018-19 which is beyond a period of three years from the end of the Assessment Year with the approval of Principal Commissioner of Income Tax. As decided in Holiday Developers (P.) Ltd 2024 (8) TMI 286 - BOMBAY HIGH COURT since more than three years have expired from the end of the assessment year Sanctioning Authority u/s 151(ii) of the Act should be the Principal Chief Commissioner of Income Tax ( PCCIT ) and not the PCIT. Thus order under Section 148A(d) of the Act and notice under section 148 are quashed. Decided in favour of assessee.
The appeal in this case was filed by the assessee against the order of the Commissioner of Income Tax (Appeals) for the Assessment Year 2018-19. The assessee raised several grounds of appeal challenging the validity of the assessment proceedings and the addition made by the Assessing Officer. The key issues presented and considered in this case are as follows:Issues Presented and Considered:1. Validity of Assessment Proceedings based on the issue for which the case was reopened.2. Validity of Assessment Proceedings initiated under section 147 without proper approval under section 151(2) of the Income Tax Act.3. Compliance with the provisions of issuing notices under sections 148A and 148 of the Act.4. Proper adherence to the provisions of section 148A in initiating assessment proceedings under section 147.5. Disposal of objections raised by the appellant before passing the Assessment Order.6. Disallowance of the claim under section 80P of the Act.7. Right to add, amend, or modify grounds of appeal at the time of hearing.Issue-Wise Detailed Analysis:1. The Tribunal considered the legal issue of the validity of the assessment proceedings based on the issue for which the case was reopened. The Tribunal analyzed the relevant legal framework of sections 147 and 148A of the Income Tax Act. The Tribunal found that the order under section 148A(d) of the Act was passed beyond three years from the end of the Assessment Year without the approval of the Principal Chief Commissioner as required by section 151(2) of the Act. The Tribunal relied on the decision of the Hon'ble Bombay High Court in Holiday Developers (P.) Ltd. vs. ITO and held that the order under section 148A(d) and the notice under section 148 were invalid. Consequently, the legal ground raised by the assessee on this issue was allowed.2. The Tribunal also examined the validity of the Assessment Proceedings initiated under section 147 without proper approval under section 151(2) of the Income Tax Act. The Tribunal found that the approval granted by the Principal Commissioner of Income Tax, Nashik, was not in compliance with the provisions of section 151(2) when the order was passed beyond three years from the end of the Assessment Year. Following the decision of the Hon'ble Bombay High Court, the Tribunal quashed the order under section 148A(d) and the notice under section 148.3. The Tribunal further analyzed the compliance with the provisions of issuing notices under sections 148A and 148 of the Act. The Tribunal noted that the notices were issued by the Jurisdictional Assessing Officer instead of the required Faceless Assessing Officer as per section 151A read with section 144B of the Act. The Tribunal referred to relevant case laws and held that the proceedings initiated were without jurisdiction.Significant Holdings:The Tribunal held that the order under section 148A(d) and the notice under section 148 were invalid due to the lack of proper approval from the Principal Chief Commissioner as required by section 151(2) of the Income Tax Act. The Tribunal allowed the legal ground raised by the assessee on this issue and quashed the order and notice. The Tribunal dismissed the remaining grounds as unadjudicated since both parties only argued on the legal issue. The appeal of the assessee was partly allowed.In conclusion, the Tribunal's decision focused on the legal issues raised by the assessee regarding the validity of the assessment proceedings and the compliance with relevant provisions of the Income Tax Act. The Tribunal's analysis and interpretation of the legal framework led to the partial allowance of the assessee's appeal based on the invalidity of the order and notice issued by the Assessing Officer.
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