The Income Tax Appellate Tribunal (ITAT), Allahabad Bench quashed the reopening of the assessment against Aries Marketers as the notice was issued after the expiry of 4 years.
The assessee company, Aries Marketers Pvt. Ltd filed its return of income for the assessment year under consideration declaring a total income of Rs.25,27,660/-. The assessment was completed. Thereafter, the Assessing Officer has reopened the assessment by issuing notice and completed the reassessment.
The assessee challenged the action of the Assessing Officer before the ld. CIT(A) and also challenged the validity of reopening of the assessment for want of necessary sanction/satisfaction of Pr. CCIT/CCIT/PCIT/CIT. The ld. CIT(A) upheld the validity of reopening.
The assessee has submitted that the original assessment was completed under section 143(3) and the reopening is after the expiry of four years from the end of the assessment year, therefore, the proviso to sub Section (1) of Section 151 is applicable in this case and thereby the Assessing Officer cannot issue a notice under section 148 without prior sanction of Pr. CCIT/CCIT/PCIT /CIT as the case may be.
On the other hand, the department has submitted that the provision of Section 151(1) is attracted only when the reopening is done by the Assessing Officer who is below the rank of ACIT/DCIT whereas in the case in hand, reopening of the assessment is by the DCIT who is not below the rank of ACIT/DCIT and consequently, subsection (2) of Section 151 is applicable in this case, which requires the sanction of JCIT and not Pr. CCIT/CCIT/PCIT/CIT.
The coram consisting of a Judicial Member Vijay Pal Rao said that in the new substituted provision of Section 151(1) it is a mandatory requirement for issuing notice under section 148 after the expiry of four years from the end of the relevant assessment year that unless the Pr. CCIT/CCIT/PCIT/CIT is satisfied with the reasons recorded by the AO that it is fit to issue such notice.
The ITAT clarified that there is no difference in the higher authority whose satisfaction is required prior to issuing notice under section 148 in all the cases where the notice under section 148 is issued after the expiry of four years from the end of the relevant assessment year.
Therefore, the tribunal held that the reopening of the assessment is quashed being void and consequently the reassessment order is also liable to be quashed as void ab initio.
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