Re-assessment notice issued without prior approval of jurisdictional CIT contravenes mandate of Section 151(2) and hence invalid: Banglore ITAT

Short Overview of the case:

Assessee is carrying on the business in real estate transactions.

Consequent to some search proceedings conducted in the hands of M/s. H.M. Constructions and other group cases on 30.6.2011, the case of the assessee was reopened by issuing a notice dated 27.3.2012 u/s 148 of the Act.

 In the assessment order, the A.O. has stated that the notice u/s 148 was issued after obtaining prior approval of the CIT.

On appeal, the issue before Tribunal was whether re-assessment notice issued without prior approval of jurisdictional CIT contravenes mandate of Section 151(2) and hence is invalidated.

ITAT observed as under:

undisputed fact is that the assessee was not earlier assessed to tax for assessment year 2005-06 and hence no assessment order u/s 143(3) of the Act is available. In that situation, the provisions of section 151(2) of the Act is applicable to the facts of the present case, as per which the A.O. is required to obtain approval from Joint Commissioner of Income tax. On the contrary, the A.O. has obtained approval from Commissioner of Income Tax.

The question is whether approval from a superior authority is fatal to the assessment proceedings or not?

An identical issue has been examined by High Court of Bombay in the case of Ghanshyam K. Khabrani and it was held that when 151(2) of the Act mandates that sanction to be taken for issuance of notice u/s 148 of the Act in certain cases has to be of Joint Commissioner, then reopening of assessment with the approval of Commissioner is unsustainable;

identical view has been expressed by High Court of Delhi in the case of Soyuz Industrial Resources Ltd.

Accordingly, following above said decisions rendered by High Court of Bombay and Delhi, we hold that notice issued u/s 148 of the Act with the prior approval of CIT is not in accordance with the provisions of section 151(2) of the Act and hence the same is not sustainable.

In that view of the matter the impugned assessment order would get vitiated. Accordingly, the assessee wins on this issue.

In view of the above, we quash the orders passed by the tax authorities for the year under consideration.

Since we have quashed the assessment order on legal grounds, there is no necessity to address other grounds urged by the assessee.