DY.CIT-4(1), INDORE vs. ARVINDER KAUR CHHABRA, INDORE

The assessee filed its return of income under section 139(1) of the Act on 07.11.2017, declaring total income of Rs.11,08,210/-. Subsequently, information was received by the Assessing Officer pursuant to a search conducted in the case of a third party, indicating alleged suppression of sales by the assessee. 4. Based on the aforesaid information, the Assessing Officer initiated reassessment proceedings by issuing a notice under section 148 of the Act on 30.06.2021. The said notice fell within the period covered by the judgment of the Hon'ble Supreme Court in Union of India v. Ashish Agarwal (2022) 444 ITR 1 (SC). Pursuant to the directions of the Hon'ble Supreme Court and the CBDT Instruction dated 11.05.2022, the Assessing Officer proceeded under section 148A of the Act. A communication dated 26.05.2022 was issued to the assessee, to which a reply was submitted on 09.06.2022. Thereafter, the Assessing Officer passed an order under section 148A(d) on 18.07.2022 and issued a fresh notice under section 148 on 19.07.2022 after obtaining approval from the learned Principal Commissioner of Income Tax. Subsequently, the Assessing Officer completed the reassessment

Aggrieved by the assessment order, the assessee preferred an appeal before the learned CIT(A), challenging both the validity of the reassessment proceedings and the addition made on merits. The learned CIT(A), in paragraphs 6.1 and 6.5 of the impugned order, recorded that the original notice under section 148 was issued on 30.06.2021 and that the subsequent notice under section 148 was issued on 19.07.2022 after obtaining approval from the Principal Commissioner of Income Tax.

The learned CIT(A), relying upon the judgment of the Hon'ble Supreme Court in Union of India v. Rajeev Bansal (2024) 469 ITR 46 (SC), held that approval was required from the authority specified under section 151(ii) of the Act. Since the approval had been obtained from the Principal Commissioner of Income Tax instead of the Principal Chief Commissioner of Income Tax or another authority specified under section 151(ii), the reassessment proceedings were held to be invalid. Consequently, the learned CIT(A) quashed the reassessment proceedings and deleted the addition of Rs.92,71,642/- without adjudicating the grounds raised by the assessee on merits.

The learned Departmental Representative (DR) submitted that the learned CIT(A) had erred in quashing the reassessment proceedings by proceeding on an incorrect appreciation of the

We have heard the learned Departmental Representative and perused the assessment order, the impugned appellate order and the material available on record. The undisputed position emerging from the impugned order is that the original notice under section 148 was issued on 30.06.2021, whereas the subsequent notice under section 148 was issued on 19.07.2022 pursuant to the directions of the Hon'ble Supreme Court in Ashish Agarwal (supra). We find that the learned CIT(A), while examining the validity of the reassessment proceedings, was required to consider the effect of the original notice dated 30.06.2021, the subsequent proceedings undertaken pursuant to the judgment in Ashish Agarwal (supra), the applicable provisions of TOLA and the principles laid down by the Hon'ble Supreme Court in Rajeev Bansal (supra). The validity of the sanction under section 151 must be determined with reference to the statutory provisions applicable to the reassessment proceedings, read with the directions of the Hon'ble Supreme Court. The mere fact that the subsequent notice was issued on 19.07.2022 does not dispense with the requirement of examining

We further observe that the learned CIT(A), having quashed the reassessment proceedings on the preliminary legal ground, did not adjudicate the substantive grounds concerning the addition of Rs.92,71,642/- made under section 68 of the Act. Since the validity of the reassessment proceedings constitutes a threshold jurisdictional issue, the same is required to be determined before the merits of the addition can be considered. Accordingly, the issue relating to the validity of the reassessment proceedings requires examination in accordance with the applicable statutory provisions and the binding judgments of the Hon'ble Supreme Court.

In view of the above, the matter is restored to the file of the learned CIT(A) for fresh adjudication of the validity of the reassessment proceedings after examining the original notice, the subsequent notice, the sanction granted under section 151, and the applicable provisions of TOLA in the light of the judgments referred to above. In the event the reassessment proceedings are held to be valid, the learned CIT(A) shall adjudicate all the remaining grounds raised by the assessee on merits, including the addition of Rs.92,71,642/- under section 68 of the Act, by passing a reasoned and speaking order in accordance with law.

In the result, the appeal filed by the Revenue is allowed for