INCOME TAX OFFICER, WARD-3(3)(1), AHMEDABAD, AHMEDABAD vs. AMBALIA HITESH CHHAGANLAL HUF, AHMEDABAD

Facts

The Revenue challenged the CIT(A)'s deletion of an addition of Rs. 2.92 crore as bogus Long Term Capital Gain (LTCG) made under Section 68 during reassessment proceedings for AY 2016-17 & 2017-18. The reassessment was initiated based on information from a search operation. The assessee raised a legal ground concerning the validity of the sanction for reopening.

Held

The Tribunal held that the reassessment proceedings were void ab initio and without jurisdiction. This was because the sanction for issuing the Section 148 notice, issued more than three years after the relevant assessment year, was granted by an incompetent authority (Principal Commissioner instead of Principal Chief Commissioner or Chief Commissioner) as explicitly required by Section 151(ii) of the Income Tax Act.

Key Issues

Whether the sanction for initiating reassessment proceedings under Section 147/148 was obtained from the statutorily competent authority as per Section 151 of the Income Tax Act, thereby rendering the entire proceedings valid.