INCOME TAX OFFICER, WARD-1, NELLORE vs. VENKATA RAMANAMMA SAKAMURI, NELLORE

Facts

The assessee did not file an income tax return for AY 2018-19 despite significant financial transactions, including cash deposits (over Rs. 2.97 crore) and TCS on liquor purchases. The Assessing Officer initiated reassessment under Section 147, making substantial additions to her income. The CIT(A) quashed the assessment, finding the Section 148 notice invalid due to improper approval.

Held

The tribunal upheld the CIT(A)'s decision, ruling that the notice under Section 148, issued on 07.04.2022 for AY 2018-19 (beyond three years from the end of the relevant AY), required approval from a higher authority (Principal Chief Commissioner/Director General) as per Section 151(ii) of the Income Tax Act, as amended by the Finance Act, 2021. Since the AO obtained approval only from the Principal Commissioner of Income Tax (an authority competent for cases within three years), the reassessment proceedings were initiated without valid jurisdiction and were therefore quashed.

Key Issues

Whether the reassessment proceedings initiated under Section 147 by issuing a notice under Section 148 were valid when the requisite approval, as mandated by Section 151(ii) of the Income Tax Act (as amended by Finance Act, 2021) for cases beyond three years from the end of the relevant assessment year, was not obtained from the competent specified authority.