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Facts
The assessee's income tax return for AY 2012-13, initially declaring a loss, was reopened under Section 147 of the Income Tax Act. During reassessment, an addition of ₹3.80 crores was made as unexplained cash credit. The assessee challenged the validity of the reassessment on the ground that the notice under Section 148 was issued on 26.03.2019, before the mandatory approval under Section 151 was formally communicated to the Assessing Officer on 28.03.2019, even though the approval was granted on 25.03.2019.
Held
The Tribunal, relying on Supreme Court precedents, held that an official decision or approval only becomes effective upon its communication to the concerned party. Since the notice under Section 148 was issued prior to the communication of the Section 151 approval to the Assessing Officer, the initiation of reassessment proceedings was invalid. Consequently, the notice and all subsequent proceedings, including the assessment order, were deemed null and void.
Key Issues
Whether reassessment proceedings initiated by a notice under Section 148 are valid if the mandatory approval under Section 151 is communicated to the Assessing Officer after the date of issuing the notice.
Sections Cited
147, 148, 143(3), 151, 143(1), 143(2), 142(1), 133(6), 139(1), 150(1), 150(2)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH, KOLKATA
This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 21.10.2024 for the AY 2012-13.
By virtue of the following additional ground the ld. Counsel for the assessee challenged the validity of the assessment order framed u/s 147 / 143(3) of the Act dated 28.12.2019 on the ground that the notice u/s 148 of the Act on 26.03.2019 was issued even before the mandatory approval of the sanctioning authority was received i.e. PCIT-4, Kolkata, approval u/s 151 of the Act.
“IV. The impugned reassessment order dated 28th December, 2019 passed 143(3) read with section 147 the Act in the case of assessee for the assessment year 2012-13 is without jurisdiction, illegal invalid and bad in law. The reassessment proceedings were wrongly initiated vide notice dated 26.03.2019 under section 148, even prior to receipt of the proforma/ form containing the mandatory approval of the sanctioning
After hearing the rival contentions and perusing the materials available on record, we find that in this case the notice u/s 148 of the Act was issued by the ld. AO on 26.03.2019, whereas the approval was communicated to the ld. AO, the ACIT, Circle10(2), Kolkata by ITO Ward 10(4), Kolkata for PCIT-4, Kolkata vide letter dated “No. Pr. CIT-4/Kol/148/2018-19/13414 Dated 28.03.2019 To The DCIT, Circle-10(2), Kolkata Sir, Sub: Approval for reopening of proceedings u/s. 147 of the I.T. Act, 1961 in the case of M/s. Paras Plaza Pvt. Limited.; PAN AAECP8301N for the A.Y. 2012-13- matter regarding. Please refer to the above I am directed to inform you that Ld. Principal Commissioner of Income Tax- 4. Kolkata, has given his kind sanction for reopening of proceedings u/s. 147 of the Income Tax Act, 1961, in respect of the above-mentioned case. I am enclosing herewith the form for recording the reasons for initiating proceedings under section 148 and obtaining the approval of the Pr. Commissioner of Income Tax- 4. Kolkata, on the above-mentioned case for your information and necessary action. Encl: As stated above Yours faithfully Sd/- (Bikash Ranjan Gain) ITO, Tech-4, Kolkata For Pr. CIT-4 Kolkata Dated: 28.03.2019.
We note that though the approval u/s 151 of the Act was granted by the PCIT-4, Kolkata on 25.03.2019, as is apparent from the notings and signature of the ld. PCIT on the proposal as moved by the ld. AO however the same was communicated to the assessee on 28.03.2019. For the sake of ready reference, the said approval is extracted as under: -
We note that the notice was issued by the ld. AO on 26.03.2019, meaning thereby that the same was issued prior to the communication of sanction u/s 151 of the Act. In our opinion, the notice issued u/s 148 of the Act on 26.03.2019, even before the communication of the order from the ld. PCIT to the ld. AO which was actually done on “12. It is trite to state that notings in a departmental file do not have the sanction of law to be an effective order. A noting by an officer is an expression of his viewpoint on the subject. It is no more than an opinion by an officer for internal use and consideration of the other officials of the department and for the benefit of the final decision-making authority. Needless to add that internal notings are not meant for outside exposure. Notings in the file culminate into an executable order, affecting the rights of the parties, only when it reaches the final decision-making authority in the department; gets his approval and the final order is communicated to the person concerned.
In Bachhittar Singh Vs. The State of Punjab3, a Constitution Bench of this Court had the occasion to consider the effect of an order passed by a Minister on a file, which order was not communicated to the person concerned. Referring to the Article 166(1) of the Constitution, the Court held that order of the Minister could not amount to an order by the State Government unless it was expressed in the name of the Rajpramukh, as required by the said Article and was then communicated to the party concerned. The court observed that business of State is a complicated one and has necessarily to be conducted through the agency of a large number of officials and authorities. Before an action is taken by the authority concerned in the name of the Rajpramukh, which formality is a constitutional necessity, nothing done would amount to an order creating rights or casting liabilities to third parties. It is possible, observed the Court, that after expressing one [1962] Supp 3 SCR 713 opinion about a particular matter at a particular stage a Minister or the Council of Ministers may express quite a different opinion which may be opposed to the earlier opinion. In such cases, which of the two opinions can be regarded as the "order" of the State Government? It was held that opinion becomes a decision of the Government only when it is communicated to the person concerned.
To the like effect are the observations of this Court in Laxminarayan R. Bhattad & Ors. Vs. State of Maharashtra & Anr.4, wherein it was said that a right created under
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 03.11.2025.