KALPESH PRANJIVANBHAI BHADJA,MORBI vs. ADDITIONAL / JOINT / DEPUTY / ASSISTANT COMMISSIONER OF INCOME TAX/ INCOME-TAX OFFICER, DELHI

As per the details available with assessing officer, the assessing officer noted that the assessee is one of the account holders and had made cash deposits of Rs. 63,44,491/-, into his account maintained with SRMSCS during the year under consideration which has never been accounted for and never been offered to taxation. From the information, it transpires that the assessee had made substantial cash deposits in the account held with Shri Renuka Mata Multi State Urban Co-operative Credit Society Ltd during the year under consideration and did not file its return of income and hence, the transactions mentioned above remained unexplained. After due analysis of the relevant information and verification from different portals, it was observed by the assessing officer that the income has escaped assessment, as the income is not commensurate with the original return of income filed on 21.03.2017 for the year under consideration. Thus, the information and material available on record in the case of the assessee suggest that income of Rs.63,44,491/-, cash deposits made by the assessee during the year under consideration, chargeable to tax, has escaped assessment. Therefore, the assessing officer issued the notice during the assessment proceedings to explain the transaction. However, the assessee did not file reply,therefore, in view of the above facts and circumstances, the assessing officer made an addition of Rs.63,44,491/-, in the hands of assessee, u/s 69 of the Act.

Aggrieved by the order of the assessing officer, the assessee carried the matter in appeal before the Ld. CIT(A) who has confirmed the action of the assessing officer, therefore, the assessee is in further appeal before this Tribunal.

Shri Mahesh Paun, ld. Counsel for the assessee argued that notice u/s 148A of the Act was not issued and was not generated by the Department, therefore re- assessment proceedings initiated by the department is itself bad in law as the notice u/s 148A of the Act was not issued at all to the assesse. For this, the ld. Counsel for the assessee submitted the relevant documents and evidences taken from the site of the Income Tax Department before the Bench and stated that notice u/s 148A of the Act never generated and notice u/s 148A of the Act never issued to the assessee, hence the reassessment order framed in the case of the assessee should be quashed.

Shri Mahesh Paun, ld. Counsel for the assessee also argued that the approval u/s. 151 of the Act was not taken from the specified authority of Income Tax. That is, the approval u/s. 151 of the Act is not signed in the eye of law, therefore the reassessment order should be quashed on this ground also.

On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity.

I have heard, both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. I find merit in the submissions of learned Counsel for the assessee and noted that where no valid notice under section 148A(b) of the Income-tax Act, 1961 is issued or served Page | 4 upon the assessee, and the reassessment proceedings are initiated under section 147/148 of the Act, without complying with the mandatory procedure prescribed under section 148A of the Act, then in that circumstances, the entire reassessment proceedings are liable to be quashed as being without jurisdiction. After substitution of sections 147 to 151 by the Finance Act, 2021 w.e.f. 01.04.2021, compliance with section 148A is a condition precedent before issuance of notice under section 148 of the Act. Section 148A of the Act mandates that before issuing notice under section 148 of the Act, the Assessing Officer shall:

Therefore, issuance of notice under section 148A(b) is not a mere procedural formality; it is a jurisdictional requirement. If such notice was never issued, and not digitally generated on the income-tax portal, or no evidence exists regarding generation of notice, then the reassessment may become void ab initio. I note that a reassessment proceeding derives jurisdiction from a valid notice. If the foundational notice itself is absent, invalid, or non-existent, subsequent proceedings collapse. Where statute requires a thing to be done in a particular manner, it has to be done in that manner alone. The Hon’ble Supreme Court in the case of Union of India v. Ashish Agarwal,(2022) 444 ITR 1 (SC)held that after 01.04.2021, reassessment proceedings must comply with the substituted provisions including section 148A of the Act. The Court recognized section 148A as a mandatory safeguard available to the assessee. Though the case dealt with old notices issued under unamended law, the Supreme Court emphasized that the Page | 5 new regime grants procedural protection to assessee before reopening assessment. Therefore, failure to follow mandatory procedure under section 148A of the Act, vitiates the reassessment proceedings. The opportunity contemplated under section 148A(b) of the Act is a substantive right of the assessee.Hence, where statutory procedure and proper service requirements were not complied with before issuance of notice under section 148 of the Act, then the reassessment proceedings, should be quashed. That is, if notice under section 148A(b) of the Act, was never issued, and never generated by the Income-tax Department,or department fails to establish valid issuance/service, then in that circumstances, the reassessment proceedings initiated under section 147/148 are liable to be quashed as void ab initio for lack of jurisdiction, since compliance with section 148A is mandatory and foundational to assumption of reassessment jurisdiction. Therefore, the reassessment order framed by the assessing officer under section 147 r.w.s.144 of the Act dated 15.03.2024, being void, ab initio, and should be quashed.

I also find merit in the submissions of learned Counsel for the assessee to the effect that approval under section 151 of the Income tax Act 1961, was not taken by the prescribed Income Tax Authority. Under the reassessment scheme contained in sections 147 to 151 of the Income-tax Act, 1961, approval of the “specified authority” under section 151 is a jurisdictional condition precedent for issuance of notice under section 148 of the Act. If such approval is not obtained, or obtained from an incorrect authority, then in that circumstances the entire reassessment proceedings are liable to be quashed. I have examined the fact that in the assessee’s case under consideration, the approval under section 151 of the Act was not taken by the specified Income Tax Authority.After substitution by the Finance Act, 2021, section 151 prescribes the “specified authority” whose approval is mandatory before issuance of notice under section 148 of the Act. Therefore, if approval under section 151 of the Act, was not taken, or was taken Page | 6 from wrong authority, then in that circumstances the notice issued under section 148 and consequential reassessment order framed under section 147 are liable to be quashed as void ab initio for lack of valid jurisdiction. Therefore, I quash the reassessment order framed by the assessing officer under section 147 r.w.s.144 of the Act dated 15.03.2024, being void, ab initio and therefore, should be quashed.

In view of the reasons set out above, as also bearing in mind entirety of the case, I am of the considered view that in the assessee’s case under consideration notice under section 148A of the Act was not generated and was not issued to the assessee and approval under section 151 of the Act was not taken by the specified Income Tax Authority, therefore, reassessment proceedings are bad in law and hence not valid. I, therefore, quash the reassessment proceedings. As the reassessment itself is quashed, all other issues on merits of the additions, in the impugned assessment proceedings, are rendered academic and infructuous.

In the result, appeal of the assessee, is allowed.