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

Facts

The Revenue appealed against the CIT(A)'s deletion of an addition made during reassessment for AY 2016-17 and 2017-18. The assessee's case was reopened u/s 147 after information from a search, and the AO treated long-term capital gains as bogus, adding it u/s 68 and taxing u/s 115BBE. A legal issue was raised regarding the validity of the reassessment proceedings, as the notice u/s 148 was issued more than three years after the relevant assessment year, requiring sanction from a higher authority (PCCIT/CCIT) under Section 151(ii), but approval was granted by the Principal Commissioner (PCIT) under Section 151(i).

Held

The Tribunal held that the sanction obtained for initiating reassessment proceedings was from an incompetent authority under Section 151 of the Income Tax Act, as the notice under Section 148 was issued beyond three years from the relevant assessment year. This rendered the reassessment proceedings void ab initio and without jurisdiction. Consequently, the Tribunal dismissed the Revenue's appeals without delving into the merits of the addition.

Key Issues

Whether reassessment proceedings initiated beyond three years from the relevant assessment year are valid if the sanction required under Section 151 is granted by an authority not specified as competent for such cases, thereby making the notice and subsequent proceedings invalid and without jurisdiction.