ITAT Strikes Down Reassessment Due to Wrong Authority’s Approval, Co-op Society Wins Appeal [Read Order]
The tribunal's insistence on proper approval channels serves as a check against hurried reassessments, especially for entities like credit societies that often operate with limited compliance
![ITAT Strikes Down Reassessment Due to Wrong Authority’s Approval, Co-op Society Wins Appeal [Read Order]](https://images.taxscan.in/h-upload/2025/07/30/2070993-itat-pune-quashes-reassessment-order-taxcsan.webp "ITAT Strikes Down Reassessment Due to Wrong Authority’s Approval, Co-op Society Wins Appeal [Read Order]")
The Pune Bench of Income Tax Appellate Tribunal (ITAT) quashed reassessment proceedings against a cooperative credit society after finding the tax department used an unauthorized officer's approval to initiate the case. The ruling emphasizes strict compliance with hierarchical approval requirements under income tax laws. Latur-based Arthbharti Nagari Sahakari Patsanstha...
The Pune Bench of Income Tax Appellate Tribunal (ITAT) quashed reassessment proceedings against a cooperative credit society after finding the tax department used an unauthorized officer's approval to initiate the case. The ruling emphasizes strict compliance with hierarchical approval requirements under income tax laws.
Latur-based Arthbharti Nagari Sahakari Patsanstha Maryadit, a cooperative credit society that faced reassessment for AY 2018-19 over alleged unexplained cash deposits. While the society had originally failed to file returns, it later declared nil income with ₹14.31 lakh deduction under Section 80P. The ITO disallowed this deduction citing non-filing of original returns, despite making no additions on the cash deposits that triggered the reassessment.
Complete Guide to Reassessment: Comprehensive Topic-wise Analysis, Circulars, Case Laws & Practical Insights, Click Here
Judicial Member Vinay Bhamore and Accountant Member Dr. Dipak P. Ripote identified a fatal flaw in the proceedings, the reassessment approval came from a Principal Commissioner when the law mandated Principal Chief Commissioner's authorization for cases beyond three years. The tribunal relied on the Bombay High Court's Holiday Developers verdict (2024) which struck down similar proceedings for identical procedural lapses.
The ITAT noted the department's contradictory stance: initiating reassessment based on cash deposits but ultimately challenging only the 80P deduction. This "mismatch between allegations and additions" further weakened the case. The bench also referenced the Siemens Financial Services ruling (2023) where the Bombay HC quashed notices approved by lower-ranking officers.
Want a deeper insight into the Income Tax Bill, 2025? Click here
For Arthbharti society, the decision brings relief from what it argued was an arbitrary denial of cooperative tax benefits. The tribunal's insistence on proper approval channels serves as a check against hurried reassessments, especially for entities like credit societies that often operate with limited compliance resources.
The ruling clarifies that tax authorities cannot bypass statutory hierarchies when reopening old cases, even if they later identify different issues during assessment. By invalidating the entire proceeding due to the defective approval, the ITAT has reinforced that procedural safeguards matter as much as substantive tax claims.
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
