AO Obtains Invalid Sanction for Reopening Assessment Beyond Three Years u/s 148: ITAT Quashes Notice and Proceedings [Read Order]
Since the matter was reopened beyond three years from the end of the assessment year, all actions based on the notice were void.
Reopening - assessment - Taxscan
Reopening - assessment - Taxscan
The Mumbai Bench of Income Tax Appellate Tribunal (ITAT ) quashed the notice under section 148 of the Income Tax Act,1961 and reassessment proceedings, as the Assessing Officer (AO) reopened the assessment beyond three years without proper approval from the Principal Chief Commissioner or equivalent authority.
Niraj Sarju Mandal,appellant-assessee, challenged the reopening of the case for A.Y. 2016-17 on the validity of the notice issued under section 148. The case was reopened beyond three years from the end of the relevant assessment year.
According to the amended provisions of section 147/148, effective from April 1, 2021, sanction from the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General was required before issuing the notice.
How to Audit Public Charitable Trusts under the Income Tax Act Click Here
However, the AO obtained approval only from the Principal Commissioner of Income Tax (PCIT), making the notice under section 148 invalid.
The assessee relied on the Mumbai Tribunal’s decision in ACIT Vs Manish Financial (ITA No. 5050/Mum/2024 dated December 2, 2024) to support this position.
The Senior Departmental Representative supported the order of the lower authorities.
A single member bench of Pawan Singh (Judicial Member) examined the arguments and orders carefully. It found that the case was reopened after more than three years from the end of the assessment year.
Know Practical Aspects of Tax Planning, Click Here
According to the law, approval from the Principal Chief Commissioner or similar authorities was required before reopening. But the AO got approval only from the Principal Commissioner, which was not valid.
Because of this, the notice under section 148 was invalid, and all actions based on it were void. The tribunal followed the Mumbai Tribunal’s decision in ACIT Vs Manish Financial.
Therefore, the notice under section 148 and reassessment proceedings under section 147 were quashed. Since the main issue was decided in favor of the assessee, other grounds were not considered. The appeal was allowed.
Support our journalism by subscribing to Taxscanpremium. Follow us on Telegram for quick updates
