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Facts
The Revenue filed an appeal against the CIT(A)'s order, while the assessee filed a cross-objection. The case involves reassessment proceedings initiated for AY 2015-16. The assessee's primary contention was that the reassessment was invalid due to jurisdictional lapses.
Held
The Tribunal held that the reassessment proceedings were invalid because the sanction for issuing the notice u/s 148 was obtained from the Additional CIT instead of the Principal CIT, as required for reassessment after four years. Consequently, the notice u/s 148 was quashed.
Key Issues
Whether the reassessment proceedings were validly initiated when the sanction for issuing the notice u/s 148 was obtained from the Additional CIT instead of the Principal CIT, for an assessment year beyond four years.
Sections Cited
147, 148, 143(3), 234B, 142(1), 68, 151
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Income Tax Appellate Tribunal, DELHI ‘G’ BENCH,
Before: SHRI SATBEER SINGH GODARA, & SHRI NAVEEN CHANDRA
of the assessee are directed against the order of the NFAC, Delhi dated 06.09.2024 for A.Y 2015-16 respectively. Page 1 of 7 & CO No. 23/DEL/2025 [A.Y. 2015-16] Swati Menthol and Allied Chemicals
Since the appeal and cross objections were heard together and pertain to same assessee, they are being disposed of by this common order for the sake of convenience and brevity.
3. The assessee has raised the following grounds of appeal in its cross objections:
“1. The CIT(A) has erred in law and on facts in holding the reassessment as valid without there being any speaking order. The reassessment is wrong and bad in law, beyond jurisdiction and has to be quashed.
2. The appellant contends that the reassessment is invalid as:- i) it is beyond 4 years there is no failure on the part of the assessee, ii) there is no fresh tangible material which has come to the knowledge of the AO or CIT(A), iii) it is only a review of the original assessment already completed u/s 143(3). The reopening u/s 147 would tantamount to change of opinion, iv) there is no independent application of mind by the Ld. A.O. except relying mechanically upon an enquiry conducted by I&Cl wing, the copy of which is not provided to the assessee despite several requests.
The appellant contends that the very fact that notice u/s 148 was issued by ACIT and reasons recorded were signed by JCIT without any date suffers from grave jurisdictional lapse. The Page 2 of 7 & CO No. 23/DEL/2025 [A.Y. 2015-16] Swati Menthol and Allied Chemicals
reassessment proceedings were void ab initio and therefore the reassessment order deserves to be quashed. 4. The above grounds are independent and without prejudice to each other. 5. The computation of total income is wrong and bad in law; the tax and interest computed u/s 234B is wrong and bad in law. 6. The appellant prays that the may be allowed to add, amend, forego any of the grounds at the time of hearing.”
Brief facts of the case are that the assessee is engaged in the business of manufacturing and sales of Menthol and its allied products.
The assessee filed a return of income declaring a total income of Rs. 9,76,84,680/- under normal provisions and total income of Rs. 17,04,21,037/- under MAT on 30.09.2015.
The AO received an information from the I&CI wing for A.Y. 2015- 16, that the assessee has been in receipt of share premium of Rs. 2,68,00,000/- and share face value of Rs. 33,50,000/- and the source of investment was not fully verifiable. Accordingly, the case was reopened under section 148, by issuance of notice u/s 148 of the I. T. Act, 1961 issued on 30.03.2021 after getting approval of the Addl. CIT, Range 1, Muradabad.
In compliance to notice u/s 148 of the I.T Act, 1961, the assessee filed income tax return on 29.04.2021 declaring total income of Rs. Page 3 of 7 & CO No. 23/DEL/2025 [A.Y. 2015-16] Swati Menthol and Allied Chemicals 9,76,84,680/- under normal provisions and total income of Rs. 17,04,21,037/- under MAT. Notice u/s 143(2) and 142(1) of the act along with reasons of re-opening was issued on 30.06.2021 to furnish the response on or before 30.07.2021. The assessing officer finally made an addition of Rs 3,01,50,000/-, received as share capital with premium, u/s 68 of the Act and disallowed expense of Rs 7,14,555/- and assessed the total income at Rs 12,85,49,235/-.
Aggrieved, the went in appeal before the ld. CIT(A) who allowed relief to the assessee.
Now before us, the ld. counsel for the assessee has challenged the assumption of jurisdiction by the Assessing Officer, in its cross objections, on the ground that the notice u/s 148 was issued on 30.03.2021 for AY 2015-16 after getting approval from the Addl CIT, Range – 1, Moradabad which is against the mandate of law. It is the say of the ld. counsel for the assessee that the A.Y 2015-16 is beyond 4 years and hence sanction u/s 151 of the Act should have been obtained from the PCIT instead of the Addl. CIT.
The assessee relied upon the decision of the Hon'ble Supreme Court in the case of ITO Vs. Rinku R. Rai 454 ITR 35 which dismissed the SLP against the Bombay High Court 454 ITR 33 wherein it was held that in reassessment proceedings after four years, sanction of Addl. Page 4 of 7 & CO No. 23/DEL/2025 [A.Y. 2015-16] Swati Menthol and Allied Chemicals Commissioner is not valid and necessary sanction/approval should have been obtained from the PCIT instead of Addl. CIT.
Per contra, the Revenue is aggrieved against the action of the ld. CIT(A) in accepting the submissions of the assessee that identity and creditworthiness of the share applicant was verifiable ignoring the observations of the Assessing Officer who has made the additions recording the detailed reasons.
We have heard the rival submissions and have perused the relevant material on record. We find that the notice u/s 148 was issued for the on 30.03.2021 for AY 2015-16 after getting approval from the Addl CIT, Range – 1, Moradabad. We find that the year under consideration, i.e., A.Y 2015-16, is beyond 4 years from the end of relevant assessment year 2021-22 and hence as per the provisions of section 151 of the Act, the sanction to issue notice u/s 148, should have been obtained from the PCIT instead of the Addl. CIT.
Respectfully following the decision of the Hon'ble Apex Court in the case of ITO VS. Rinku R. Rai [supra] wherein it has been held that in reassessment proceedings after four years, sanction of Addl.
Commissioner has been held to be not valid and necessary sanction/approval should have been obtained from the PCIT instead of Addl. CIT, we hold the assumption of jurisdiction, in the instant case, to Page 5 of 7 & CO No. 23/DEL/2025 [A.Y. 2015-16] Swati Menthol and Allied Chemicals be invalid and accordingly, notice u/s 148 is quashed. Ground 1 & 2 raised by the assessee in its cross objections are allowed whereas the grounds of appeal of the Revenue stand dismissed.
In the result, the appeal of the Revenue in is dismissed whereas the cross objection of the assessee in CO No. 23/DEL/2025 is allowed.
The order is pronounced in the open court on 04.11.2025.