2025 (3) TMI 651 - AT - Income Tax

Reopening of assessment - validity of notice issued u/sec.148 Mandation to get approval must be obtained from the Principal Chief Commissioner or Principal Director General. HELD THAT - Respectfully following the decision of Union of India vs. Rajeev Bansal 2024 (10) TMI 264 - SUPREME COURT (LB) and also the decisions of Manish Financial 2024 (12) TMI 1539 - ITAT MUMBAI and Manish Jagdish Joshi 2024 (9) TMI 347 - ITAT MUMBAI we are of the considered view that the notice issued by the Assessing Officer u/sec.148 of the Act dated 30.07.2022 by obtaining prior approval from the Principal Commissioner of Income Tax-1 Hyderabad dated 27.07.2022 and consequential final assessment order dated 02.03.2024 passed by the Assessing Officer u/sec.147 r.w.s.144C(13) of the Act is illegal void ab initio and thus we quash the final assessment order dated 27.07.2022 passed by the Assessing Officer. Appeal of the Assessee is allowed.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment include:

Whether the notice issued under section 148 of the Income Tax Act, 1961, dated 30.07.2022, was valid given the procedural requirements under the amended provisions of section 151 of the Act.
Whether the final assessment order dated 02.03.2024 was time-barred under section 153(2) of the Act.
Whether the additions made under section 69A of the Act for unexplained investments were justified, considering the assessee's status as a Non-Resident Indian (NRI).
Whether the reassessment proceedings should have been initiated under section 153C rather than section 147, given the search and seizure operation conducted under section 132.
Whether the initiation of parallel assessment proceedings for the same assessment year was valid.

2. ISSUE-WISE DETAILED ANALYSIS

Validity of Notice under Section 148

Relevant Legal Framework and Precedents: The amended provisions of section 151 of the Income Tax Act specify that if an assessment is reopened after three years from the end of the relevant assessment year, the approval must be obtained from the Principal Chief Commissioner or Principal Director General.
Court's Interpretation and Reasoning: The Tribunal found that the notice issued on 30.07.2022 was with the approval of the Principal Commissioner of Income Tax, which was not in accordance with the specified authority requirement under section 151(ii).
Conclusions: The notice issued was deemed invalid, rendering the reassessment order void ab initio.

Time-Barred Assessment Order

Relevant Legal Framework: Under section 153(2), the assessment should be completed within twelve months from the end of the financial year in which the notice under section 148 was served.
Court's Interpretation: The Tribunal noted that the final assessment order dated 02.03.2024 was passed beyond the permissible time limit.
Conclusions: The assessment was considered time-barred, further invalidating the proceedings.

Additions under Section 69A

Relevant Legal Framework: Section 69A deals with unexplained money, investments, etc., and its applicability to NRIs was questioned.
Key Evidence and Findings: The assessee argued that the investments were made from earnings outside India and were not liable to be taxed under section 69A.
Application of Law to Facts: The Tribunal found merit in the assessee's argument that the source of the investment was not from income accrued in India.
Conclusions: The additions under section 69A were deemed unjustified.

Initiation of Proceedings under Section 153C

Relevant Legal Framework: Section 153C applies when incriminating material is found during a search related to a person other than the one searched.
Court's Interpretation: The Tribunal agreed with the assessee that section 153C was the appropriate provision given the circumstances.
Conclusions: The initiation under section 147 was improper.

Parallel Assessment Proceedings

Relevant Legal Framework: Legal precedents suggest that parallel proceedings for the same assessment year are not permissible.
Court's Interpretation: The Tribunal found the initiation of parallel proceedings to be invalid.
Conclusions: The proceedings were not in accordance with the law.

3. SIGNIFICANT HOLDINGS

The Tribunal held that the notice issued under section 148 was invalid due to the lack of proper approval from the specified authority, rendering the reassessment order void ab initio.
The assessment order was time-barred under section 153(2), further invalidating the proceedings.
The additions under section 69A were unjustified, as the investments were made from earnings outside India.
The initiation of proceedings should have been under section 153C, not section 147, given the search and seizure context.
Parallel proceedings for the same assessment year were deemed invalid.

The Tribunal quashed the final assessment order dated 02.03.2024, allowing the appeal in favor of the assessee.

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