DEEPAK GHANSHAMDAS TAKHTANI,KHAR vs. INCOME TAX WARD WARD 22(1)(1),MUMBAI, MUMBAI

Before adverting to the merits of the addition, we deem it appropriate, as a matter of judicial propriety and settled legal discipline, to first examine the juri ictional challenge raised by the assessee, since if the assumption of juri iction itself is found to be infirm, the entire superstructure of the reassessment would necessarily collapse.

The brief factual matrix germane to the issue of reopening is that the assessee’s case was reopened under section 147 on the basis of information received to the effect that the assessee had deposited cash aggregating to ₹89,39,000/- in his bank account maintained with Canara Bank during the demonetisation period. Based on this information, notice under section 148 of the Act was issued on 28.07.2022 for the assessment year under consideration.

From a perusal of the notice placed in the paper book, it is evident that the said notice under section 148 was issued after obtaining approval of the Principal Commissioner of Income Tax-20, Mumbai, on 26.07.2022. Thereafter, an order Deepak Ghanshamdas Takhtani

In the present case, however, the approval has admittedly been granted by the Principal Commissioner of Income Tax. This, in our considered opinion, strikes at the very root of juri iction and is not a mere procedural irregularity curable under law.

This precise issue now stands squarely covered by the decision of the Hon’ble Bombay High Court in Chitra Supekar vs. NFAC in Writ Petition No. 15580 of 2022. The relevant observations of the Hon’ble High Court, which have a direct and binding bearing on the issue before us, read as under: Deepak Ghanshamdas Takhtani

The ratio laid down by the Hon’ble juri ictional High Court leaves no room for ambiguity. Once the statute expressly designates a particular authority for grant of approval, any deviation therefrom vitiates the proceedings ab initio. Juri iction cannot be conferred by consent, acquiescence, or administrative convenience.

Apart from the aforesaid judgment, there is a consistent line of decisions rendered by various coordinate benches of this Tribunal, wherein it has been categorically held that where more than three years have elapsed from the end of the relevant assessment year, the Assessing Officer is mandatorily required to obtain prior approval from the Principal Chief Commissioner of Income Tax or the equivalent authority specified under section 151 of the Act. Any sanction obtained from an authority lower in rank is no sanction in the eyes of law.

This principle has now received authoritative affirmation from the Hon’ble Supreme Court as well, wherein it has been reiterated that the conditions prescribed for assumption of juri iction under reassessment provisions are mandatory Deepak Ghanshamdas Takhtani

Applying the aforesaid settled legal position to the facts of the present case, we have no hesitation in holding that the notice issued under section 148 of the Act is bad in law, having been issued on the basis of approval granted by an authority not competent under section 151 of the Act. The defect goes to the very juri iction of the Assessing Officer and is, therefore, incurable.

Once the initiation of reassessment itself is held to be invalid, the consequential reassessment order framed pursuant thereto cannot survive and is liable to be quashed. In view of this legal conclusion, the other grounds raised by the assessee on merits of the addition become purely academic in nature and are, therefore, not adjudicated upon.

In the result, the appeal filed by the assessee stands allowed, and the impugned reassessment proceedings are hereby quashed.