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Facts
The assessee's appeal arises from an order of reassessment passed under Section 147 of the Income Tax Act, 1961. The issue pertains to the validity of the sanction obtained for reopening the assessment, which was obtained from the Principal Commissioner of Income Tax (PCIT) instead of the Principal Chief Commissioner of Income Tax (PCCIT).
Held
The Tribunal held that since the reassessment was initiated beyond three years from the end of the relevant assessment year, the sanctioning authority should have been the PCCIT as per Section 151 of the Act. Obtaining sanction from the PCIT was deemed incorrect and therefore, the reassessment proceedings were vitiated.
Key Issues
Whether the sanction for reopening the assessment under Section 151 of the Income Tax Act, 1961 was validly obtained from the PCIT when the reassessment was initiated beyond three years.
Sections Cited
147, 144B, 151, 148A, 148
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Income Tax Appellate Tribunal, DELHI BENCH “C”: NEW DELHI
Before: SHRI M. BALAGANESH & SHRI SUDHIR KUMAR
O R D E R PER M. BALAGANESH, A. M.: 1. The appeal in AY 2017-18, arise out of the order of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as „ld. NFAC‟, in short] in Appeal No. ITBA/NFAC/S/250/2024-25/1074408001(1) dated 12.03.2025 against the order of assessment passed u/s 147 r.w.s 144B of the Income-tax Act, 1961 (hereinafter referred to as „the Act‟) dated 18.05.2023 by the Assessing Officer, Assessment Unit, Income Tax Department (hereinafter referred to as „ld. AO‟).
The Ground No. 9 raised by the assessee is as to whether the assumption of jurisdiction of the Learned AO under section 147 of the Act could be construed as valid when the approval under section 151 of the Act has been obtained from Learned Principal Commissioner of Income Tax (PCIT) instead of Learned Principal Chief Commissioner of Income Tax (PCCIT ) .
We have heard the rival submissions and perused the materials available on record. The issue involved is reopening of assessment for the Assessment Year 2017-18. For this purpose, the Learned AO obtained approval under section 151 of the Act from the Learned PCIT which fact is quite evident from the order passed under section 148 of the Act dated 21-7-2022. Since the reopening in the instant case has been made beyond 3 years from the end of the relevant assessment year, the specified sanctioning authority for the purposes of section 148 of the Act is Learned PCCIT. Since the approval in the instant case has been obtained from a wrong authority, the entire reassessment proceedings gets vitiated. Reliance in this regard has been rightly placed by the Learned AR before us on the decision of the Hon‟ble Jurisdictional Delhi High Court in the case of Kids Dream International Private Limited vs ACIT in W P (C ) 2814/2023 dated 24-2-2025 . The relevant operative portion of the said order is reproduced below:-
“2. As is evident from the above, the solitary question which was canvassed for our consideration was the issue of sanction as contemplated under section 151 of the Income Tax Act, 1961 [“Act”]. 3.The reassessment action for Assessment Year [“AY”] 2017-18 came to be commenced immediately after a lapse of three years from the end of the relevant AY. It is in the aforesaid backdrop that Mr. Kantoor, learned counsel, had submitted that the said sanction accorded by the Principal Commissioner of Income Tax [“PCIT”] would not sustain.
We note that while dealing with the said question, we had in Abhinav Jindal H.U.F. v. Commissioner of Income Tax and Ors [2024 SCC OnLine Del 6585] duly enunciated the legal position which would obtain. We had ultimately in Abhinav Jindal held that the Taxation & Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 [“TOLA”] provisions would have no bearing on the identification of the competent authority under section 151 for according sanction.
5. In view of the aforesaid, and since undisputedly the facts of the present case the sanction was accorded only by the PCIT, the reassessment action would not sustain.
6. Accordingly and for all the aforesaid reasons, we allow the instant writ petition and quash the impugned order referable to section 148A(d) dated 30 July 2022 and notice under section 148 of even date.”
4. Respectfully following the same, the reassessment proceedings are hereby quashed and Ground No. 9 raised by the assessee is allowed.
Since the entire reassessment is quashed, the other grounds raised by the assessee both on law as well on facts need not be gone into and they are left open.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 19/11/2025.