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Facts
The assessee's case for A.Y. 2017-18 was reopened by notices u/s 148A(d) and 148, issued on 31.05.2022 and 30.07.2022, respectively, after more than three years from the end of the assessment year. The approval for these notices was granted by the Pr. CIT-2, Mumbai, instead of the higher authorities (Principal Chief Commissioner or Principal Director General/Chief Commissioner/Director General) statutorily required for such cases under Section 151(ii) of the Act.
Held
The Tribunal held that since the notices were issued beyond three years for A.Y. 2017-18, the approval for reopening should have been granted by a specified higher authority as per Section 151(ii) of the Act, read with TOLA. As the approval was granted by an unauthorized authority (Pr. CIT-2, Mumbai), the notice u/s 148 and the subsequent reassessment order were deemed void ab-initio and quashed.
Key Issues
Whether the approval for initiating reassessment proceedings u/s 148 and passing the order u/s 148A(d) for A.Y. 2017-18, granted by an unauthorized authority (Pr. CIT-2) after the three-year limitation period, renders the entire proceedings void ab-initio.
Sections Cited
250, 148A(d), 148, 151, 151(ii), 147, 144B, 151(i), 149(1)(a)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
Before: SHRI NARENDER KUMAR CHOUDHRY
Per : Narender Kumar Choudhry, Judicial Member:
This appeal has been preferred by the Assessee against the order dated 20.09.2024, impugned herein, passed by the National Faceless Appeal Center (NFAC)/ Ld. Commissioner of Income Tax (Appeals) (in short Ld. Commissioner) under section 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2017-18.
Brief facts relevant for adjudication of the case in hand are that the case of the Assessee was reopened by issuing notices dated 31.05.2022 and 30.07.2022 respectively u/s 148A(d) and 148 of the Act. The assessment year involved is 2017-18. It is the mandate of the law as prescribed u/s 151 of the Act that certain authorities are entrusted with the power to grant the approval for issuing the notice u/s 148 of the Act and passing the order u/s 148A(d) of the Act. Admittedly, in the instant case more than 3 years have elapsed from the end of the relevant assessment year i.e. 2017-18 and therefore as per provisions of section 151(ii) of the Act, only Principal Chief Commissioner or Principal Directorate General or Chief Commissioner or Directorate General were empowered/authorized to grant the approval for the purposes of notice and order respectively u/s 148 & 148A(d) of the Act. However as it appears from the sanction/approval dated 30.07.2022, the approval/sanction has been granted by the Pr. CIT-2, Mumbai for issuing the notice u/s 148 of the Act and passing the order u/s 148A(d) of the Act and in pursuance to the said approval, the Assessing Officer (AO) ultimately passed the assessment order u/s 147 r.w.s. 144B of the Act dated 19.05.2023. Therefore, on the basis of order passed under section u/s 148A(d) and notice issued 148 of the Act sans authorization/sanction/approval by the authority who was not empowered, entail the assessment order as void ab-initio. Consequently, on deliberation by the Ld. A.R. and the Ld. D.R., this Court is inclined to quash the assessment order itself being void ab-initio.
The Co-ordinate Bench of the Tribunal in the case of Satish Harnamdas Sethi vs. NFAC in order dated 24.12.2014 has also dealt with the identical issue and/or facts except variation in dates and has taken the same view, as this Court is inclined to do so. For completeness and ready reference, the conclusion drawn by the co-ordinate Bench of the Tribunal is reproduced hereinbelow:
“8.1. From the above, we note that in para 73, in the table last two rows relate to provisions of Section 151(i)(ii) of the new regime prescribing the time limit as well as the specified authority. In para 75, it is very categorically mentioned by the Hon’ble Court that after 01.04.2021, in terms of Ashish Agrawal (supra) the prior approval must be obtained from the appropriate authorities specified u/s.151 of the new regime. This abundantly brings clarity on the aspect of obtaining approval for issue of notice u/s.148 which are fall out of the decision in Ashish Agrawal (supra). In para 77, objective of section 3(1) of TOLA is mentioned which is to relax the time limit for compliance with actions that fall for completion from 20.03.2020 to 31.03.2021. Thus, the objective is specific for providing temporal flexibility. In para 78, the same has been explained by an example taking Assessment Year 2017- 18 which also in specific terms mentions that the authority specified u/s.151(i) of the new regime can grant sanction till 30.06.2021. Thus, while concluding in para 81 on the issue obtaining approval, Hon’ble Court has specifically stated that the Assessing Officer is required to obtain prior approval of the specified authority according to section 151 of the new regime before passing an order u/s.148A(d) or issuing a notice u/s.148. According to the Hon’ble Court, though it had waived off the requirement obtaining prior approval u/s.148A(a) and Section 148Ab, it did not waive the requirement for section 148A(d) and Section 148.
8.2. Taking into consideration the submissions made by the ld. Sr. DR and keeping the same in juxtaposition with the above observations and findings of the Hon’ble Court, we note that the issue we are presently addressing raised before us is not on the aspect of “when” for the procedural compliance for issuance of notice u/s.148 but on the aspect of “by whom” it ought to have been issued. Ld. Sr. DR has contended that there is hierarchical escalation vis-à-vis obtaining approval for issuing notice u/s.148. In this respect, Hon’ble Court has very categorically held in para 75 that the prior approval must be obtained from the appropriate authorities specified u/s.151 of the new regime for the notices issued in terms of Ashish Agrawal (supra) after 01.04.2021. Reference by ld. Sr. DR to Section 149(1)(a) deals with time limit for issuing notice u/s.148. Contention of the ld. Sr. DR that there is no hierarchical escalation for obtaining prior approval for issuing notice u/s.148 is not in coherence with the guidelines mandated by the Hon’ble Apex Court as enunciated above. Repeatedly, Hon’ble Court has stated including by way of illustration that TOLA extends time line from the old regime which survives making the notice validly issued subject to the approval requirements of Section 151 under the new regime. Accordingly, the prior approval requirement is mandated under the section 151 of new regime.
8.3. In the present case, the relevant Assessment Year is 2017- 18 and the time limit of three years lapsed on 31.03.2021 which falls between 20.03.2020 and 31.03.2021 during which provisions of Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA) would apply. Thus, the amended provisions under the Income-Tax Act read with TOLA extended the time limit for granting of approval till
30.06.2021 by the specified authority. Thus, on the above stated facts and law, in the present case, three years had lapsed from the end of the Assessment Year when the order u/s.148A(d) and notice u/s.148 was issued on 31.07.2022. In the present case, since the notice u/s. 148 and order u/s. 148A(b) have been issued beyond the period of three years from the end of the relevant Assessment Year, case of the assessee falls within the provisions of section 151(ii) of the amended law whereby the specified authority for grant of approval is specified as Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General. Contrary to this requirement, the approval obtained in this respect is by Principal Commissioner of Income Tax-17, Mumbai. Accordingly, since a proper sanction by the specified authority had not been obtained for issue of notice u/s.148 under the applicable provisions of law, such notice is invalid and bad in law.
8.4. Keeping in juxtaposition the undisputed and the uncontroverted facts as stated above and the judicial precedent of the Hon'ble Supreme Court in the case of Ashish Agarwal and Rajiv Bansal (supra), we hold that sanction by specified authority has not been obtained by the ld. Assessing Officer in accordance with the provisions contained in section 151 of the Act under the new regime, since notice u/s.148 has been issued beyond three years from the end of the relevant Assessment Year. Accordingly, the said notice issued is invalid and thus quashed. Resultantly, the impugned re-opening proceedings so initiated and the impugned re-assessment order passed thereafter are also quashed.”
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The Hon’ble co-ordinate Bench of the Tribunal in the case of ACIT vs. Surya Ferrous Alloys Pvt. Ltd. in decided on 30.12.2024 as well, considered the identical issue ultimately quashed the reassessment order itself.
Thus, on the aforesaid analyzations, the assessment order itself is quashed.
In the result, the appeal filed by the Assessee stands allowed.
Order pronounced in the open court on 07.01.2025.