Facts of the Case

The assessee, Smita, filed her return of income for Assessment Year 2018-19 declaring total income of ₹6,07,870. Subsequently, the Assessing Officer issued a notice under Section 148 on the allegation that the assessee sold a flat for a consideration of ₹30 lakhs whereas the stamp duty valuation was ₹46.50 lakhs, resulting in alleged escapement of income. The reassessment was completed under Section 147 read with Section 144 by adopting the stamp duty value and computing capital gains accordingly. The CIT(A), NFAC, Delhi upheld the reassessment and the addition made by the Assessing Officer.

Issues Involved

Whether reassessment proceedings are valid when the mandatory approval granted under Section 151 for issuance of notice under Section 148 is not furnished to the assessee, and whether such non-supply vitiates the assumption of jurisdiction under Section 147.

Petitioner’s Arguments

The assessee raised an additional legal ground contending that although notice under Section 148 was issued, the approval granted under Section 151 of the Act was never furnished to the assessee along with the reasons recorded. It was submitted that even the assessment order did not indicate that such approval was ever supplied. Reliance was placed on the judgment of the Delhi High Court in TIA Enterprises Pvt. Ltd. and the ITAT Delhi Bench decision in Sunil Kumar Jain vs. ITO, wherein reassessment proceedings were held to be invalid due to non-supply of approval under Section 151.

Respondent’s Arguments

The Revenue supported the orders of the lower authorities and contended that the reassessment proceedings were validly initiated in accordance with law.

Court Order / Findings

The ITAT Ranchi observed that it was an undisputed fact that the approval granted under Section 151 of the Act was never furnished to the assessee. The Tribunal noted that the assessment order also did not record that such approval was supplied or served. Relying on the binding judicial precedents of the Delhi High Court in TIA Enterprises Pvt. Ltd. and the coordinate bench decision in Sunil Kumar Jain vs. ITO, the Tribunal held that approval under Section 151 is a mandatory requirement and must be furnished to the assessee. Non-supply of such approval renders the reassessment proceedings invalid and bad in law. Since the reassessment itself was quashed on legal grounds, the Tribunal did not adjudicate the issues on merits.

Important Clarification

The Tribunal clarified that approval under Section 151 forms an integral part of reassessment proceedings and its supply to the assessee is mandatory. Failure to furnish such approval vitiates the entire reassessment proceedings and strikes at the very assumption of jurisdiction under Section 147.

Final Outcome

The appeal filed by the assessee was allowed, and the reassessment order passed under Section 147 of the Income-tax Act for Assessment Year 2018-19 was quashed as being without jurisdiction and invalid in law.

Link to Download Order- https://www.mytaxexpert.co.in/uploads/1769080945_SMITARANCHIVS.ITOWARD34CHAIBASA.pdf

 

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