2018 (12) TMI 1200 - AT - Income Tax

Reopening of assessment u/s 148 - non grant of approval from competent authority - Held that - Section 151 of the Income Tax Act, 1961 contemplates that no notice under section 148 shall be issued by the AO, after the expiry of a period of four years from the end of the relevant assessment year, unless necessary approval from Commissioner or competent authority is obtained. No doubt in the present case, AO has applied for such approval which was granted on 29.3.2017, but before grant of approval, the AO has already issued notice on 28.3.2014 which is without any jurisdiction. He can issue notice only after getting approval. CIT(A) has rightly quashed the assessment because the very foundation for issuance of notice under section 148 is the approval from the competent authority, i.e. Commissioner of Income Tax, and in the absence of such, such notice is void ab initio. - decided against revenue.

Summary

Issues:
1. Jurisdiction of notice under section 148 of the Income Tax Act, 1961.
2. Addition of &8377; 43,09,98,411/- on account of bogus purchases.

Analysis:
1. The appeal before the Tribunal was against the order of the ld.CIT(A)-3, Surat for the Asstt.Year 2007-08. The Revenue contended that the notice under section 148 was void ab initio, and the assessment order was not sustainable. The ld.CIT(A) had deleted an addition of &8377; 43,09,98,411/- made by the AO on account of bogus purchases. The assessee argued that necessary approval from the Commissioner of Income Tax as per section 151 of the Act was required before issuing the notice under section 148. The AO had issued the notice on 28.3.2014 before obtaining the required approval on 29.3.2014. The ld.CIT(A) held that the notice was issued without jurisdiction, rendering the assessment order unsustainable. The Tribunal upheld this decision, emphasizing that the approval from the competent authority is a prerequisite for issuing a notice under section 148, making the notice void ab initio without such approval. The appeal of the Revenue was dismissed based on these grounds.

2. The facts of the case revealed that the assessee had filed the return of income declaring total income at &8377; 2,40,263/-. Subsequently, an assessment order was passed determining total income at &8377; 6,96,955/-. The AO decided to reopen the assessment based on information received regarding accommodation entries of bogus purchases. An assessment order was framed making an addition of &8377; 43,09,98,411/-. The ld.CIT(A) deleted this addition, leading to the appeal by the Revenue. The Tribunal, after careful consideration, found that the AO had issued the notice under section 148 without the necessary approval, rendering the notice void ab initio. Consequently, the Tribunal upheld the decision of the ld.CIT(A) to delete the addition, as the assessment order was not sustainable due to the jurisdictional issue regarding the notice under section 148. The appeal of the Revenue was dismissed, affirming the deletion of the addition on account of bogus purchases.

In conclusion, the Tribunal dismissed the appeal of the Revenue, upholding the decision of the ld.CIT(A) to delete the addition based on the jurisdictional issue of the notice under section 148. The judgment emphasized the importance of obtaining necessary approval before issuing such notices to maintain the validity of the assessment order.