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Facts
The Revenue filed an appeal, and the assessee filed a cross-objection against the Ld. CIT(A)'s order for AY 2018-19. The cross-objection faced a delay in filing, which was attributed to an inadvertent error in recording the date of receipt of the notice of appeal.
Held
The Tribunal condoned the delay of 19 days in filing the cross-objection. The core issue was the validity of reassessment proceedings, specifically the approval for reopening obtained from the Principal Commissioner instead of the Principal Chief Commissioner as required by Section 151 for cases beyond three years.
Key Issues
The primary issue was whether the reassessment proceedings were valid when the sanction for reopening was obtained from the PCIT, whereas Section 151 mandated approval from the Principal Chief Commissioner for cases beyond three years from the end of the relevant assessment year.
Sections Cited
151, 148A, 148, 143(3), 143(1)
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Income Tax Appellate Tribunal, MUMBAI BENCH “A” MUMBAI
Before: SHRI OM PRAKASH KANT & MS. KAVITHA RAJAGOPAL
ORDER PER OM PRAKASH KANT, AM
Lotus Grih Nirman Pvt. Ltd. 2 & CO No. 105/MUM/2025
This appeal by the Revenue and cross-objection by the assessee are directed against order dated 31.12.2024 passed by the Ld. Commissioner of Income-tax (Appeals) – 49, Mumbai [in short ‗the Ld. CIT(A)‘] for assessment year 2018-19.
2. Regarding the cross-objection, the Registry pointed out delay of 28 days in filing before the ITAT. In response, the Ld. counsel for the assessee submitted that the notice of the Revenue‘s appeal was received on 20.03.2025, whereas, in the cross objection memo filed in form No. 36A, inadvertently it was mentioned as received on 31.12.2024.
We have heard the rival submissions of the parties on the issue of condonation of delay in the filing of the cross-objection by the assessee. The assessee has explained that the delay occurred due to an inadvertent error in Form No. 36A of recording the date of receipt of the notice of appeal filed by the Revenue as 31.12.2024, whereas the appeal of the Revenue itself has been filed on 28/02/2025. It has been submitted that the actual date of receipt of the said notice was 20.03.2025. If this date is taken as the correct date of receipt of the Revenue‘s Form No. 36, then the cross- objection was to be filed within 30 days i.e. 18/04/2025, whereas cross objection has been filed on 7/05/2025, thus, there is a delay of 19 days in filing the cross objection. The assessee explained that delay happened at the end of the staff of consultant dealing with Lotus Grih Nirman Pvt. Ltd. 3 & CO No. 105/MUM/2025 filing the cross objection. Considering the explanation offered by the assessee and small period of 19 days , we condoned the delay and cross objection is admitted for adjudication."
Learned counsel for the assessee invited our attention to the cross-objection and submitted that the issues raised therein go to the very root of the matter. It was, therefore, urged that the cross- objection be taken up for consideration at the outset. Both parties were in agreement that Ground No. 1 of the cross-objection be argued first.
3.1 The assessee, in the said ground, has challenged the very validity of the reassessment proceedings, primarily on the ground that the approval for reopening under Section 151 of the Income Tax Act, 1961 (hereinafter referred to as ―the Act‖), was obtained from the Principal Commissioner of Income Tax (PCIT), whereas, in terms of the statutory mandate applicable during the relevant period, such approval ought to have been obtained from the Principal Chief Commissioner of Income Tax. In support of this contention, learned counsel for the assessee has placed on record a copy of the order passed under Sections 148A(d) and 148 of the Act, which, on its face, indicates that the approval for issuance of notice was granted by the PCIT.
To ascertain the correctness of this submission and to determine the authority competent to grant sanction under the Act, it is Lotus Grih Nirman Pvt. Ltd. 4 & CO No. 105/MUM/2025 necessary to reproduce the relevant extract of Section 151 of the Act, as applicable during the relevant assessment year:
“151. Sanction for issue of notice. The specified authority for the purposes of Section 148 and Section 148A shall be,— (i) the Principal Commissioner or Principal Director or Commissioner or Director, if three years or less have elapsed from the end of the relevant assessment year; (ii) the Principal Chief Commissioner or Principal Director General or, where there is no Principal Chief Commissioner or Principal Director General, the Chief Commissioner or Director General, if more than three years have elapsed from the end of the relevant assessment year.”
4.1 A plain reading of the above provision makes it abundantly clear that in cases where a period of more than three years has elapsed from the end of the relevant assessment year, the sanction for reopening is required to be accorded by the Principal Chief Commissioner or the Principal Director General, or in their absence, by the Chief Commissioner or Director General, as the case may be.
4.2 In the present case, the assessment year in question is A.Y. 2017–18, and the notice under Sections 148 and 148A(d) was issued on 25.07.2022—well beyond the statutory threshold of three years from the end of the said assessment year. In such Lotus Grih Nirman Pvt. Ltd. 5 & CO No. 105/MUM/2025 circumstances, the authority competent to grant approval was the Principal Chief Commissioner of Income Tax or the equivalent authority as prescribed. However, the record reflects that sanction was obtained from the PCIT, which, prima facie, does not satisfy the requirement of Section 151 of the Act. For ready reference, copy of notice u/s 148A(d) i.e. extracted as under:
“Order u/s. 148A(d) of the Income tax Act, 1961 In this case, the assessee company e-filed its return of income on 30.10.2017 declaring total income at Rs. Nil after set off of b/f losses of Rs.3,15,788/- as per normal provision of the Act for A.Y. 2017-18. Return was processed u/s 143(1) of the Income-tax Act, 1961 (hereinafter, 'the Act') accordingly. Subsequently, the case was selected for scrutiny under CASS and order u/s 143(3) of the Act was passed on 29.12.2019 assessing total income at Rs. 11,79,670/-. 2. ……. 3. ……. 4. ……. 5. ……. 6. …….
This order under section 148A(d) of the Act is passed with the prior approval of the Principal Commissioner of Income Tax Central-4, Mumbai as per the provision of section 151 of the Act.” 4.3 Identical issue has been decided by the coordinate Bench in the case of Lotus Logistics and Developers p ltd in and CO No. 49/Mum/2025. Relevant finding of the Tribunal is reproduced as under: “7.1 In the instant case the assessment year involved is 2017-18 and notice u/s 148 has been issued on 29-07-2022, which is evidently beyond the period of three years from the end of the relevant assessment year and therefore, sanction for issue of notice was to be obtained from the Principal Chief Commissioner or Chief Commissioner Of Income Tax whereas approval of PCIT, Centre-Mumbai-4, has been obtained and therefore the approval not been in accordance with law. Respectfully following the coordinate bench(supra), the notice u/s 148 of the Act issued therefore,
Lotus Grih Nirman Pvt. Ltd. 6 & CO No. 105/MUM/2025 suffer from jurisdiction defect and therefore, notice being bad in law the entire reassessment proceedings stand quashed. The ground No. 1c of the cross objection of the assessee is allowed.” 4.4 This being a jurisdiction requirement, following the Tribunal in the case of Lotus Logistics and Developers p ltd (supra), the re- assessment proceeding in the case of the assessee is held to be void ab-initio. The cross-objection of the assessee is accordingly allowed.
Since the re-assessment proceeding itself has been held as bad in law, the grounds raised by the Revenue in its appeal are rendered infructuous.
In the result, appeal of the revenue is dismissed whereas cross-objection of the assessee is allowed.
Order pronounced by way of display of result on notice board under Rule 34(4) of ITAT Rules, 1963 on 19/05/2025.