2025 (3) TMI 993 - AT - Income Tax

Reassessment proceedings u/s 147 - Valid sanction u/s 151 - prescribed authority as to whether it should be the jurisdictional commissioner or Principal Commissioner under section 151(i) or the Principal Chief Commissioner under clause (ii) of the Act as the case may be - HELD THAT - Section 151(ii) approval in the instant case involving escaped income of Rs. 50 lakhs or more had to be obtained under the new regime from the Principal Chief Commissioner etc. We accordingly adopt the foregoing detailed discussion mutatis mutandis to conclude that the impugned section 148 proceedings herein are not sustainable in law for want of valid section 151(ii) approval in very terms. The impugned reopening/reassessment stands quashed therefore. Appeal of assessee allowed.

ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment include:

1. Whether the reassessment proceedings initiated under section 147 of the Income-tax Act, 1961 were barred by time limitation as per section 149(1).

2. Whether the notice issued under section 148 and the subsequent order under section 148A(d) were valid given the procedural requirements and time limitations specified under section 151 of the Act.

3. Whether the Tribunal has the authority to admit additional grounds of appeal that pertain to the legality of the proceedings, even if raised at a later stage.

ISSUE-WISE DETAILED ANALYSIS

1. Time Limitation and Legality of Reassessment Proceedings

Relevant Legal Framework and Precedents: The legal framework involves sections 147, 148, 149, and 151 of the Income-tax Act, 1961. Section 149(1) prescribes the time limits for issuing notices for reassessment, and section 151 outlines the authorities required to sanction such notices. The Tribunal referenced the Supreme Court decision in Union of India v. Rajeev Bansal, which clarified the procedural requirements for sanctioning notices under the new regime post-1 April 2021.

Court's Interpretation and Reasoning: The Tribunal observed that the notice under section 148 was issued after more than three years from the end of the relevant assessment year. Therefore, the sanction for the notice should have been obtained from the "Principal Chief Commissioner" or equivalent authority as per section 151(ii) of the new regime.

Key Evidence and Findings: The Tribunal noted that the notice was issued without the necessary sanction from the appropriate authority, which is a mandatory procedural requirement under the new regime.

Application of Law to Facts: The Tribunal applied the legal principles from the Rajeev Bansal case to determine that the failure to obtain the correct sanction rendered the reassessment proceedings invalid.

Treatment of Competing Arguments: The Revenue's objections regarding the timing of the additional grounds were dismissed based on precedents allowing the Tribunal to consider such grounds if they pertain to the root of the matter and all relevant facts are on record.

Conclusions: The Tribunal concluded that the reassessment proceedings were invalid due to non-compliance with section 151(ii), and therefore, the proceedings were quashed.

2. Admission of Additional Grounds of Appeal

Relevant Legal Framework and Precedents: The Tribunal relied on the Supreme Court decision in National Thermal Power Co. Ltd. v. CIT, which allows the admission of additional grounds if they pertain to legal issues and do not require new fact-finding.

Court's Interpretation and Reasoning: The Tribunal reasoned that since the additional grounds raised by the appellant pertained to the legality of the proceedings and were crucial for determining the correct tax liability, they were admissible.

Key Evidence and Findings: The Tribunal found that all necessary facts for adjudicating the additional grounds were already on record.

Application of Law to Facts: The Tribunal applied the legal principles to admit the additional grounds, emphasizing the importance of substantial justice.

Treatment of Competing Arguments: The Revenue's objections to the admission of additional grounds were overruled, as the Tribunal emphasized the importance of addressing legal issues that go to the root of the matter.

Conclusions: The Tribunal admitted the additional grounds of appeal for adjudication.

SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning: The Tribunal cited the Supreme Court's decision in Union of India v. Rajeev Bansal, emphasizing the procedural checks imposed by section 151 to prevent mechanical reopening of assessments. The Tribunal also noted, "Section 151(ii) of the new regime prescribes a higher level of authority if more than three years have elapsed from the end of the relevant assessment year."

Core Principles Established: The judgment reinforced the principle that procedural compliance with section 151 is crucial for the validity of reassessment proceedings. It also highlighted the Tribunal's authority to admit additional grounds that address the legality of proceedings.

Final Determinations on Each Issue: The Tribunal determined that the reassessment proceedings were invalid due to non-compliance with section 151(ii) and quashed the proceedings. It also admitted the additional grounds of appeal, emphasizing the Tribunal's role in ensuring substantial justice.

← Previous Next →