2022 (12) TMI 429 - AT - Income Tax

Reopening of assessment u/s 147 - Necessity of obtaining of approval u/s 151 of the Act from the competent authority - AO proceeded on the basis of AIR information and issued a verification letter - HELD THAT - As concluded that the AO has not obtained mandatory approval under sub-section (1) of section 151 of the Act before issuing notice u/s 148 of the Act from the competent authority, therefore, this omission vitiates the reassessment proceedings, notice u/s 148 of the Act and consequent reassessment order dated 05.12.2016 being bad in law and without assuming valid jurisdiction by the AO as per the mandate of section 151 of the Act. Therefore, on this count, legal ground of the assessee is allowed and reassessment proceedings, notice u/s 148 of the Act and consequent impugned assessment order are quashed. - Decided in favour of assessee.

Issues Involved:

1. Validity of reassessment order under sections 148/144.
2. Compliance with mandatory conditions under sections 147 to 151.
3. Addition of Rs. 12,56,487/- on the grounds of the land not being agricultural.
4. Denial of exemption under sections 54B/54F.
5. Service and issuance of notice under section 148.
6. Obtaining mandatory approval under section 151.

Issue-wise Detailed Analysis:

1. Validity of Reassessment Order under Sections 148/144:

The assessee challenged the reassessment order framed under sections 148/144, arguing that the Assessing Officer (AO) did not assume jurisdiction as per law and did not comply with mandatory conditions under sections 147 to 151. The tribunal found that the AO initiated reassessment proceedings beyond the period of four years from the relevant assessment year and did not obtain mandatory approval from the Principal Commissioner of Income Tax (PCIT) as required under section 151. Consequently, the reassessment order dated 05.12.2016 was quashed.

2. Compliance with Mandatory Conditions under Sections 147 to 151:

The tribunal noted that the AO failed to obtain the necessary approval from the competent authority before issuing the notice under section 148, which is a mandatory requirement under section 151. The tribunal emphasized that non-compliance with this provision vitiates the reassessment proceedings and the consequent reassessment order.

3. Addition of Rs. 12,56,487/- on Grounds of Land Not Being Agricultural:

The assessee contested the addition of Rs. 12,56,487/- on the grounds that the land sold was agricultural. However, the tribunal did not adjudicate on the merits of this issue since it had already quashed the reassessment order on legal grounds.

4. Denial of Exemption under Sections 54B/54F:

The assessee also challenged the denial of exemption under sections 54B/54F. Similar to the previous issue, the tribunal did not delve into this matter as the reassessment order had already been invalidated due to procedural lapses.

5. Service and Issuance of Notice under Section 148:

The tribunal examined whether the notice under section 148 was properly issued and served. Although the AO issued the notice within the period of limitation, it was returned by the postal department due to an incomplete address. The tribunal found that the AO did not make any further attempts to gather the complete address or reissue the notice. However, it held that providing the notice to the assessee's brother was sufficient compliance under section 148.

6. Obtaining Mandatory Approval under Section 151:

The tribunal emphasized that obtaining approval from the competent authority under section 151 before issuing a notice under section 148 is mandatory, especially when the reassessment is initiated after four years from the end of the relevant assessment year. The tribunal found that the AO did not comply with this requirement, which invalidated the reassessment proceedings.

Conclusion:

The tribunal quashed the reassessment proceedings, the notice under section 148, and the consequent reassessment order dated 05.12.2016 due to the AO's failure to obtain mandatory approval under section 151. As a result, the appeal filed by the assessee was allowed, and the tribunal did not adjudicate on the merits of the other grounds raised by the assessee.

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