Issue of notice u/s 148 before approval by CIT is void ab initio- SC dismissed SLP

Issue of notice u/s 148 before approval by CIT is void ab initio- Supreme Court dismissed SLP 

In a recent judgment, Hon’ble Supreme Court dismissed the Special Leave Petition of the Revenue against the judgment that Issue of notice u/s 148 before grant of approval by CIT was void ab initio

ABCAUS Case Law Citation:
ABCAUS 4170 (2024) (07) SC

The Assessing Officer (AO) received information from DGIT Investigation that the assessee was beneficiary of the accommodation entries. Accordingly, he recorded reasons and issued notice u/s 148. The AO thereafter completed the assessment under section 143(3) r.w.s. 147 of the Act by making a large addition on account of bogus purchases.

Dissatisfied with the assessment order, the assessee carried the matter in appeal before the CIT(A). He raised the issue of validity of notice u/s 148 of the Act. He contended that before the issuance of notice under section 148 of the Act necessary approval was required from the Commissioner of Income Tax as per section

151 of the Act. This approval was obtained by the AO one day after the notice was already issued. The CIT(A) thereafter held that the AO had issued notice without jurisdiction, hence, the assessment order was not sustainable.

The Tribunal observed that Section 151 of the Act contemplates that no notice under section 148 shall be issued by the Assessing Officer, after the expiry of a period of four years from the end of the relevant assessment year, unless necessary approval from Commissioner or competent authority is obtained.

The Tribunal held that since before grant of approval, the AO had already issued notice u/s 148 which was without any jurisdiction. He can issue notice only after getting approval. The Tribunal stated that CIT(A) had rightly quashed the assessment because the very foundation for issuance of notice under section 148 is the approval from the competent authority, i.e. Commissioner of Income Tax, and in the absence of such, such notice is void ab initio.

The Hon’ble High Court noted that concurring findings of fact were clear that the date of grant of approval was after the date of issue of notice under Section 148 of the Act. In the absence of any contrary evidence the appeal was dismissed.

Not satisfied with the judgment of the Hon’ble High Court, the Revenue approached the Hon’ble Supreme Court by filing a Special Leave Petition (SLP). The Hon’ble Supreme Court stated that having regard to the concurrent finding of facts recorded by all the authorities as well as by the High Court, it was not inclined to interfere in the matter.

Accordingly, the Special Leave Petition filed by the Commissioner of Income Tax was dismissed.

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