AO cannot Issue Notice to Reopen Income Tax Assessment after 3 Years Without Pr. CCIT Approval: ITAT Quashes Notice against Saif Ali Khan [Read Order]
The Tribunal relied on the reassessment notice itself, which reflected approval from the Principal Commissioner of Income Tax, thereby confirming the procedural defect and rendering the reopening invalid
ITAT Mumbai, Saif Ali Khan, Income Tax Assessment
ITAT Mumbai, Saif Ali Khan, Income Tax Assessment
The Income Tax Appellate Tribunal (ITAT), Mumbai, has held that a reassessment notice issued under Section 148 of the Income Tax Act, 1961, without valid approval under Section 151, is void ab initio. The Tribunal ruled that since the reopening pertained to an assessment year beyond three years, the mandatory approval of the Principal Chief Commissioner of Income Tax (PCIT) was not obtained, rendering the proceedings invalid.
The appeal was filed by the Bollywood Actor, Saif Ali Mansoor Ali Khan Pataudi against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [CIT(A)], for the Assessment Year (AY) 2016–17. The dispute arose after the Assessing Officer reopened the assessment by issuing a notice dated 24 August 2022 under Section 148, disallowing Tax Deducted at Source (TDS) credit of ₹50 lakhs and enhancing the assessment without a show cause notice under Section 251(2) of the Income Tax Act, 1961.
The appellant represented by K.K. Lalkaka, argued that the reassessment proceedings were bad in law since the approval for issuance of the notice was taken from the PCIT instead of the Principal Chief Commissioner of Income Tax (PCCIT), as required under Section 151 of the Income Tax Act, 1961.
It further contended that TDS credit cannot be treated as an “asset” for the purposes of Section 149(1)(b), that the information relied upon was not sourced from the Comptroller and Auditor General as required under Explanation 1(ii) to Section 148, and that the notice was also barred by limitation.
The Revenue represented by Sujatha Iyangar defended the reassessment, arguing that the approval process required verification. However, upon perusal of the records, the bench noted that the approval was indeed granted by the PCIT, which was not in accordance with the amended statutory mandate.
The Bench comprising of Judicial Member, Pawan Singh and Accountant Member, Renu Jauhri held that since more than three years had elapsed from the end of the relevant assessment year, approval was mandatorily required from the PCCIT under Section 151. As this statutory requirement was not met, the notice under Section 148 was invalid, and the entire reassessment proceedings stood quashed.
The Income Tax Appellate Tribunal did not adjudicate on the merits of the disallowance, observing that the legal infirmity itself was sufficient to allow the appeal.
Accordingly, the appeal was allowed, and the reassessment proceedings were declared void.
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