AO bound to obtain Approval from Authorities in case of Time Barred Re-Assessment as per the direction of CIT(A): Gujarat HC [Read Judgment]

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In the case Raghunath Dev Patil v. ACIT, the division bench of the Gujarat High Court held that re-assessment proceedings initiated after 6 years,in pursuance to the order of the CIT(A), which was subsequently quashed by the Tribunal is subject to section 151 of Income Tax Act and the Assessing Officer in such a case, is bound to obtain approval from the appropriate authorities.

The Court was considering a bunch of petitions filed against the notices proposing re-assessment against the assesse son the basis of the directions from the first appellate authority. The petitioners contented that the notices are liable to be quashed on the sole ground that the assessment proceedings are time barred and the assessing authority failed to obtain approval from the appropriate authorities as mandated under section 151 of the Income Tax Act. Opposing the contentions, the Revenue submitted that since the re-assessment was initiated in pursuance of the direction of the first appellate authority, there is no need to seek further approval from the authorities and the proceedings cannot be challenged on ground of limitation.

The bench noted that the order of the CIT(A) directing re-assessment were set aside by the Tribunal on second appeal. In view of this, the bench opined that the impugned re-assessment proceedings cannot be sustained for want of approval of appropriate authorities as required under section 151 of the Income Tax Act.

With regard to the contention of the Revenue that it proposes to prefer an appeal against the order of the ITAT, the division bench comprising of Justice M.R Shah and Justice B.N Karia said “However, the fact remains that as on today, there is no appeal preferred and the order passed by the learned CIT [A] quashing and setting aside the directions issued by the learned CIT [A] in the Appeal for AY 2011-2012 stands. In that view of the matter, as on today, the approval under Section 151 of the Act was required, which in the present set of cases, has not been obtained. Therefore, either it may be open for the Assessing Officer to obtain the approval, as required under Section 151 of the Act before reopening of the assessment for AY 2008-2009 and 2009-2010 or the impugned notices may be setaside; subject to the ultimate outcome of the Appeal that may be filed by the Revenue against the decision of the learned Tribunal quashing and setting aside the directions issued by the learned CIT [A] in the Order for AY 2011-2012, which is the base for issuance of the impugned notices.”

Read the full text of the Judgment below.

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