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Facts
The assessee's original assessment for AY 2006-07 was completed u/s. 143(3). Subsequently, the AO reopened the assessment u/s. 147 based on information about an undisclosed foreign bank account. The reopening notice was issued on 12.11.2014, which is more than four years after the end of the assessment year.
Held
The Tribunal held that since the original assessment was completed u/s. 143(3) and the reopening was initiated after four years from the end of the assessment year, approval from the PCIT/CIT was required as per the proviso to section 151(1) of the Act. As no such approval was obtained, the reopening of assessment is invalid.
Key Issues
Whether reopening of assessment u/s. 147 is valid when initiated after four years without proper approval from the competent authority as per section 151(1) of the Act.
Sections Cited
147, 148, 143(3), 151, 151(1)
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Income Tax Appellate Tribunal, “F” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY, VP & SHRI NARENDRA KUMAR BILLAIYA, AM
O R D E R Per Saktijit Dey, VP:
This is an appeal by the assessee against order dated 17.03.2025, passed by National Faceless Appeal Centre (‘NFAC’ for short), Delhi for the assessment year (A.Y.) 2006-07.
In ground nos. 1 & 2, the assessee has challenged the validity of reopening of assessment u/s. 147 of the Act.
Briefly stated, the assessee is a resident individual. For the assessment year under dispute, the assessee had filed his return of income on 31.0.2006, declaring income of Rs.20,29,400/-. Subsequently, the return of income so filed was revised, offering total income of Rs.13,42,690/-. The assessment, in case of the assessee, was completed u/s. Rs.14,32,990/-.
Post completion of assessment as aforesaid, the Assessing Officer (AO) received information that the assessee maintained a foreign bank account in HSBC, Geneva, during the relevant year. He further found that deposits in the said bank account were not disclosed as ‘income’. Based on such information, the A.O. reopened the assessment u/s. 147 of the Act, by issuing a notice u/s. 148 of the Act on 12.112014. In response to the said notice, the assessee filed objections questioning the validity of reopening of assessment on the ground of lack of proper approval by the competent authority. The objections filed by the assessee were rejected by the AO. Thereafter, the A.O. proceeded to complete the assessment u/s. 143(3) / 147 of the Act vide order dated 30.03.2015, adding back an amount of Rs.1,89,49,053/-, representing alleged unexplained credits in HSBC bank account. The assessee challenged the assessment order so passed, inter alia, on the ground that the reopening of assessment u/s. 147 of the Act is invalid due to lack of proper approval by the competent authority in terms of section 151 of the Act.
The first appellate authority, however, did not find merit in the contentions of the assessee and dismissed the appeal.
We have considered rival contentions and perused the materials on record. It is the say of the assessee that since in assessee’s case, the original assessment was completed u/s. 143(3) of the Act and the initiation of proceedings u/s. 147 of the Act was after expiry of four years from the end of the relevant assessment year, the authority competent to grant approval u/s. 151(1) of the Act is the Principal Commissioner of Income approval of the competent authority in terms with section 151(1) of the Act was taken prior to issuance of notice u/s. 148 of the Act. Thus, it was contended that the entire proceeding relating to reopening of assessment is vitiated, hence, invalid. In support of such contention, ld. Counsel appearing for the assessee relied upon the following decisions:
Svitzer Hazira (P.) Ltd. vs. Asst. CIT [2022] 135 taxmann.com 136 (Bom) 2. Voltas Ltd. vs. Asst. CIT [2022] 141 taxmann.com 127 (Bom)
The learned Departmental Representative ('ld. DR' for short) relied upon the observations of the first appellate authority.
On perusal of the facts on record, it is observed that while disposing of objections of the assessee, challenging the reopening of assessment, the A.O. in order dated 14.01.2015, a copy of which is placed at pg. no. 8 of the paper book, has clearly and categorically stated that since, notice u/s. 148 of the Act was issued by the Joint Commissioner, no approval in terms with section 151 of the Higher Authority was obtained. On a carefully going through the provisions contained u/s. 151(1) of the Act, we find, in a case where original assessment has been completed u/s. 143(3)/147 of the Act and the proceedings u/s. 147 of the Act is initiated after expiry of four years from the end of the relevant assessment year, as per the proviso to section 151(1) of the Act, as it stood prior to amendment and is applicable to the assessment year under dispute, the competent authority who can grant approval for issuance of notice u/s. 148 of the Act is the PCIT/CIT and not any authority below him. In the facts of the present appeal, admittedly, prior to issuance of notice u/s. 148 of the Act, the A.O. has not obtained any approval of the competent authority in terms with the proviso contained u/s. 151(1) of the Act. That being is completely vitiated, hence, invalid. In our considered opinion, while rejecting assessee’s contentions on the ground that in terms with section 151(2) of the Act, no approval was required to be taken. The first appellate authority has completely misconstrued the statutory provision, thereby, misconceived the legal position. Hence, the reasoning of the first appellate authority is unsustainable. For the aforestated reasons, we hold that the reopening of assessment u/s. 147 of the Act and the assessment order passed in consequence thereof are invalid. Accordingly, we quash the assessment order.
In view our decision above, ground no. 3 having become purely academic, does not require adjudication.
In the result, the appeal is allowed as indicated above.