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Facts
The assessee, a private limited company engaged in wholesale hosiery trading, challenged the validity of reassessment proceedings initiated for AY 2014-15. The Assessing Officer issued a notice u/s 148 after more than three years, with approval from PCIT-7 instead of the PCCIT/CCIT as required by the amended provisions.
Held
The Tribunal held that the notice u/s 148 and the order u/s 148A(d) were invalid and void ab initio because the approval for reopening the assessment was obtained from an incompetent authority. This was in violation of Section 151(ii) of the Income-tax Act, as interpreted by the Delhi High Court in the Ashok Makhija case.
Key Issues
Whether the reassessment proceedings initiated beyond three years for AY 2014-15 are valid when the approval for reopening was granted by PCIT-7 instead of PCCIT/CCIT.
Sections Cited
151, 148, 148A, 149
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Income Tax Appellate Tribunal, DELHI ‘G’ BENCH,
Before: SHRI ANUBHAV SHARMA, & SHRI NAVEEN CHANDRA
This appeal by the assessee is directed against the order of the NFAC, Delhi dated 21.01.2025 pertaining to A.Y 2014-15.
The assessee has raised as many as 5 grounds of appeal. However, the solitary grievance argued before us is with regard to validity of the approval u/s 151 of the Income-tax Act, 1961 [the Act, for short] as the same was not legally obtained from the competent authority and hence the notice u/s 148 of the Act is invalid. assessee is a private limited company and is engaged in the business of wholesale trading in hosiery goods. we find that the Assessing Officer had issued the original notice u/s 148 of the Act on 16.04.2021 for the A.Y under consideration and passed the consequent order u/s 148A(d) on 22.07.2022.
It is the say of the ld. counsel for the assessee that as the reopening was made for A.Y which is beyond three years, the competent authority for approving the issue of notice is the PCCIT. However, the notice was issued with the approval of the PCIT-7, Delhi. Therefore, the notice is invalid and void ab initio. The ld AR further argued that the assessee had requested for an opportunity to cross examine the revenue’s witness whose statement was recorded behind the back of the assessee. However, no opportunity was granted to the assessee to cross examine the revenue’s witness.
Per contra, the ld. DR relied upon the orders of the authorities below. The ld DR did not controvert the factual aspect of the instant case.
We have heard the rival submissions and have perused the relevant material on record. We find in the instant case that the initial notice provisions. The admitted fact is that the reassessment proceedings relates to A.Y 2014-15 and on the basis of the order u/s 148A(d) dated 25.07.2022, the notice u/s 148 was issued on 25.07.2022 with the prior approval of PCIT-7, Delhi. We find that the issuance of notice u/s 148 under the amended provisions, have been initiated after lapse of more than 3 years, therefore the provision of section 151(ii) will kick in. The specified authority to grant approval for reopening the assessment, passing order u/s 148A(d) and issuing notice u/s 148, where more than three years have lapsed from the end of the relevant assessment year, would be PCCIT/CCIT. Notice in the present appeal has been issued with the approval of the PCIT-7 Delhi which is in violation of the provisions of section 151(ii) r.w explanation to section 148A.
The issue of legality of reopening of assessment under the amended provisions of section 148, 148A ,149 and 151 has been answered by the Hon'ble Jurisdictional High Court of Delhi in the case of Ashok Makhija Vs. UOI 466 ITR 283. The relevant findings read as under:
“Held, that as per section 151 of the Income-tax Act, 1961, and considering the fact that the reopening of the case was occurring after a lapse of more than three years, the appropriate authority for issuance of the notice under sections 148 and 148A(b) of the Act should have been either the Principal Chief Commissioner or Principal Director General, or in their absence, the Chief Commissioner or Director General, instead of the Principal Commissioner of Income-tax, who did not fall within the specified authorities outlined in section 151 of the Act. Hence the notice of reassessment dated May 26, 2022 and July 30, 2022 and the order dated July 30, 2022, for the assessment year 2017-18 is quashed. (AY.2017-18)”
Considering the facts of the case in light of the aforementioned decision of the Hon'ble High Court of Delhi [supra], we have no hesitation in holding that the order u/s 148A(d) and notice u/s 148 is bad in law and deserves to be quashed as void ab initio. As we have decided the issue of assumption of jurisdiction as being bad in law, therefore, we do not find any reason to dwell into the merits of the case. The ground 2 is allowed. allowed.