Issuance of Notice under Section 148 without Approval of Higher Authorities: ITAT quashes Assessment Order

The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has recently, in an appeal filed before it, on finding about the issuance notice under Section 148 of the Income Tax Act, without approval of the higher authorities, quashed an assessment order. The aforesaid observation was made by the Delhi ITAT, when an appeal was preferred before it by the Assessee, as directed against the order dated 29.07.2017 of the Commissioner of Income Tax (Appeals), Muzaffarnagar. The grounds of the assessee’s appeal being that on the facts and circumstances of the case, the Assessing Officer erred in law, in issuing a notice under Section 148, without obtaining the mandatory approval under Section 151 from the concerned officer, and further that on the facts and circumstances of the case, the Assessing Officer erred in law by recording ambiguous reasons, merely stating that, long term capital gains, which were not shown by the assessee has assessment, without disclosing the valid reasons which led the Assessing Officer to take action under Section 147/148 of the Income Tax Act, the brief facts of the case were that the assessee was a resident individual, who, for the assessment year under dispute, had filed her return of income on 05.07.2010, declaring income of Rs.3,03,670. Subsequently, the Assessing Officer received information that though the assessee had sold immovable property during the year, however, she had not offered capital gain to tax. Therefore, the A.O reopened the assessment under Section 147, by issuing a notice under Section 148 on 18.02.2015, and completed the assessment under Section 143(3)/148, vide order dated 23.02.2016 by adding short term capital gain of Rs.21,69,496. Against the assessment order so passed, the assessee preferred an appeal before the Commissioner (Appeals). However, the assessee’s appeal was dismissed. And it is in this situation that the assessee has preferred the instant appeal before the Tribunal. Hearing the opposing contentions of both sides and thereby perusing the materials available on record, the ITAT observed: “I have heard Shri Sushil Kumar, learned counsel appearing for the assessee and Shri Om Parkash, learned senior Departmental Representative. The specific contention of learned counsel appearing for the assessee, qua, additional ground no.1 is, prior to issuance of notice under Section 148 of the Act, the Assessing Officer had not obtained any approval of the higher authorities in terms of section 151(2) of the Act. It is observed, while taking note of the aforesaid pleading of the assessee, the Bench vide order dated 13.01.2023 had directed the Assessing Officer to submit a report indicating whether approval under Section 151 of the Income Tax Act, was obtained prior to issuance of notice under Section 148 of the Income Tax Act.” “Though, the Assessing Officer has not furnished any report, however, the assessment records are made available to the Bench through learned Departmental Representative. On careful perusal of the assessment records, it is observed that there is no such approval of the higher authorities in terms of section 151(2) of the Income Tax Act available in the assessment record. Further, neither, there is any order sheet entry or any other documents available in the assessment record which can indicate that the Assessing Officer had obtained approval under Section 151(2) of the Income Tax Act prior to issuance of notice under Section 148 of the Income Tax Act. In fact, learned Departmental Representative could not controvert the aforesaid factual position. It is further relevant to observe, in response to a letter of the assessee seeking various information including copy of approval, if any, under Section 151 of the Income Tax Act, the Assessing Officer in letter dated 19.12.2022 has simply mentioned ‘not applicable’. Even, in the notice dated 18.02.2015 issued under Section 148 of the Income Tax Act, the Assessing Officer has not even pointed out that approval was taken under Section 151(2) of the Income Tax Act. Rather, on perusal of the original notice issued under Section 148 of the Income Tax Act, a copy of which is available in the assessment record, it is seen that the Assessing Officer has struck off the paragraph with reference to the approval under Section 151 of the Income Tax Act”, the ITAT added “The aforesaid facts available on record, clearly demonstrate that prior to issuance of notice under Section 148 of the Income Tax Act, the Assessing Officer has not obtained any approval of the higher authorities in terms of section 151(2) of the Income Tax Act. On a reading of section 151 of the Income Tax Act, it is very much clear that before issuance of notice under Section 148 of the Income Tax Act, approval of the higher authorities is a mandatory statutory requirement”, Saktijit Dey, the Judicial Member further noted. Thus, the ITAT held: “In the facts of the present appeal, it is evident that the Assessing Officer has failed to follow such mandatory requirement in law. That being the factual position emerging on record, the issuance of notice under Section 148 of the Income Tax Act, is wholly without jurisdiction. Therefore, the proceedings initiated in pursuance to such notice culminating in the impugned assessment order is also without jurisdiction. Therefore, I have no hesitation in declaring the assessment order null and void. Accordingly, the impugned assessment order is quashed and the order of learned Commissioner (Appeals) is set aside. In the result, the appeal is allowed.” Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates

Issuance of Notice under Section 148 without Approval of Higher Authorities: ITAT quashes Assessment Order

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