Invalid Reassessment Notice due to Lack of PCCIT Approval: ITAT quashes Additions [Read Order]

The Kolkata Bench of Income Tax Appellate Tribunal ( ITAT ) quashed the additions made by the Assessing Officer (AO) after finding that the reassessment notice issued under section 148 was invalid due to the AO’s failure to obtain prior approval from the Principal Chief Commissioner of Income Tax ( PCCIT ), as required under section 151 of the Income Tax Act,1961.

Arnab Kumar Goswami, appellant-assessee, declared an income of Rs. 3,52,310/- for the assessment year. He purchased a property at Rajarhat for Rs. 25,00,000/-, while the stamp duty value was Rs. 35,36,655/-. The difference of Rs. 10,36,655/- was shared between the assessee and his spouse, with each receiving Rs. 5,18,327/-. The AO added Rs. 5,18,327/- to the assessee’s income under section 56(2)(vii) of the Act.

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Later, the AO issued a notice for reassessment. The assessee responded by reaffirming his earlier income declaration and submitting relevant documents, including bank statements and details of the property purchase.

The assessee, aggrieved by the decision, appealed to the Commissioner of Income Tax(Appeals)[CIT(A)], who dismissed the appeal and upheld the decision of the AO.

The assessee dissatisfied with the order of CIT(A) appealed before the tribunal.

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The tribunal, after hearing both parties and reviewing the records, found that the notice under section 148 was issued after 3 years from the relevant assessment year. Since the income that allegedly escaped assessment was below Rs. 50 lakh, prior approval from the PCCIT was required as per section 151 of the Act. However, the AO only obtained approval from the Principal Commissioner of Income Tax (PCIT), which was not in line with the law.

The tribunal referred to a decision by the Jurisdictional High Court in Subhra Basu vs. Union of India (WPA 18828 of 2022), where it was ruled that a reassessment notice issued without the required approval is invalid and can be quashed.

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The two member bench comprising Sonjoy Sarma ( Judicial Member ) and Rakesh Mishra ( Accountant Member ) found that the AO's failure to obtain approval from the PCCIT made the proceedings invalid, and the additions made were unjustified. As a result, it quashed the additions and held that the notice under section 148 was invalid.

In short,the appeal filed by the assessee was allowed.

To Read the full text of the Order CLICK HERE

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