SRI. BILIGIRIRANGANATHSWAMY MULTI PURPOSE CO-OPERATIVE SOCIETY ,CHAMARAJANAGAR vs. INCOME TAX OFFICER, WARD-1 , CHAMARAJANAGAR

Brief facts of the case shows that, assessee is a Multi- purpose Co-operative Society wherein the Risk Management Strategy flagged issue that assessee has deposited cash in its current account with Union Bank of India of Rs.1,50,000/- and further cash withdrawal from the same bank of Rs.6,09,87,000/-, assessee has not filed any return of income. Therefore, notice under section 148 of the Act was issued on 06.04.2022 including the show cause notice was issued by the Ld. AO, however no response was received. Ld. AO has noted “8” instances where the notices are served but no response was received. Accordingly, to verify the genuineness of the transaction notice under section 133(6) of the Act dated 07.07.2023 was issued to the Union Bank of India for the bank statements. It was found that the assessee has withdrawn an amount of Rs.2,03,29,000/- and deposited cash of Rs.50,000/-. Further, it was verified that the total credits deposits are Rs.2,31,16,741/- and accordingly the same was added as unexplained money under section 69A of the Act by an assessment order passed under section 147 r.w.s. 144 r.w.s. 144B of the Act by order dated 02.03.2024.

Against this order, assessee preferred an appeal before Ld.CIT(A) wherein the Ld.CIT(A) also issued four notices but no response was submitted and therefore he dismissed the appeal of the assessee holding assessee is not interested in prosecuting this appeal and did not find any infirmity in the order of the Ld.AO.

Assessee,aggrieved with the above order is in appeal before us.

The assessee challenged the fact that notice issued for the A.Y. 2018-19 is not proper as the approval is taken from the wrong Authority and therefore on this ground itself the order deserves to be quashed. To support his contention, he referred to the notice issued under section 148A of the Act dated 21.03.2022 wherein the approval was taken by the PCIT, Bengaluru-3 this is apparent as per Paragraph 4 of the order. He further referred to the order passed under section 148A(d) of the Act wherein it is specifically stated that approval of PCIT, Bengaluru-3 was obtained on 05.04.2022. He submits that in the notice under section 148 of the Act dated 06.04.2022 in Paragraph No. 3 it is specifically stated that approval of PCIT, Bengaluru-3, was obtained on 05.04.2022. He submits that the reopening has been made after three years and therefore the approval should have been taken not by the Principal Commissioner of Income Taxbut of the Chief Commissioner of Income Tax (“CCIT”). He submitted that the provisions of section 151 of the Act specificallysay that the sanction for issue of notice should have been obtained under clause(ii) to section 151 of the Act. He further relied on the decisions of Hon’ble Bombay High Court in the case of Pacific Exports in W.P.No.17243 of 2023 and Chitra Supekar [2023] 149 taxmann.com 26.

Ld. Departmental Representative vehemently supported the order of the Ld. Lower Authorities and submitted that assessee has not produced any details before the Ld. Lower Authorities and therefore the orders have been passed in accordance with law. It was further submitted that now the assessee is raising the jurisdictional issue which he should not have raised at this stage.

In view of the above facts, the bench granted time to the Ld.DR of ten days to submit that the approval granted by the PCIT, Bengaluru-3 is correct. Till to date, no such information was submitted.

As the facts available on record before us are so glaring that there is no need to restore the issue back to the lower authorities.

We have carefully considered the rival contentions and perused the order of the Ld. Lower Authorities. In fact, the issue here is that assessee did not file its return of income for the A.Y.2018-19, the case of the assessee was reopened by issue of notice under section 148 of the Act on 06.04.2022. According to the copies of the notices submitted by the Ld.Authorized Representative, the prior approval was obtained from the PCIT, Bengaluru-3 on 05.04.2022. According to the provisions of section 151 of the Act, if three years or less than three years have elapsed from the end of the relevant assessment year, the approval should 6 have been taken from the Principal Commissioner of Principal Director or Commissioner of Director. In any other case, i.e.,if the time elapses are more than three years, approval should have been obtained from Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General etc. In this case admittedly three years have elapsed from the end of the relevant assessment year. Therefore, for the A.Y. 2018-19, if thenotice is issued on 06.04.2022, naturally the prior approval should have been obtained from Principal Chief Commissioner under section 151(ii) of the Act. In this case, the approval is of PCIT, Bengaluru-3. This is evident from the various notices placed before us. Therefore, there is no proper approval obtained by the Ld. AO before reopening the case of the assessee. In view of the above facts, the assessment order passed by the Ld. AO cannot be upheld but deserves to be quashed. The decisions relied on by the Ld. Authorized Representative are also on this issue. 7 Accordingly, we quash the assessment order passed as no proper approval for the reopening of the assessment has been obtained in terms of the provisions of section 151 of the Act. Accordingly, this ground of appeal is allowed.

In the result, appeal of the assessee is allowed.