Notice u/s 148 issued prior to approval granted by competent authority bad in law

Notice u/s 148 issued prior to approval granted by competent authority bad in law

In the instant case, the assessee had challenged the order passed by the CIT(A) in upholding the assessment order passed u/s 143(3) r.w.s. 147 of the Income Tax Act, 1961 (the Act) in as much as that the reassessment proceedings initiated against the assessee were invalid, void ab-initio without jurisdiction.

ABCAUS Case Law Citation
ABCAUS 3507 (2021) (06) ITAT

Important case law relied referred:
ITO vs. Shri Ashok Jain

The Assessing Officer (AO) had made an re-assessment in pursuance to the notice u/s 148 served on the assessee.

The AO while completing the re-assessment made an addition on account of unexplained cash deposit in the bank account. 

he CIT(A) did not give any relief to the assessee.

Before the Tribunal, the assessee contended that the notice under section 148 was issued to him after recording reasons for the reopening the assessment.

The assessee submitted that since in the instant case, the AO wanted to issue notice after expiry of four years, therefore, for reopening of assessment beyond four years from the end of the relevant assessment year, a prior approval is required under section 151(1)/151(2) of the Act.

It was submitted that the approval was granted by the Pr.CIT. However, the notice u/s 148 was issued by the AO one day before  the approval was granted.   

Thus, it was contended that the notice issued under section 148 in itself was bad in law

Notice u/s 148 issued before approval bad in law

The Tribunal observed that the AO after recording the reasons to believe that the income had escaped assessment within the meaning of Section 147 sought required approval.

The Tribunal further noted that on the day the Additional CIT gave his approval that it was a fit case for the issue of notice u/s 148, the AO issued the notice, whereas the Pr CIT had issued his consent the very next day.

The Tribunal opined that on the day of issue of notice u/s 148 the AO was not empowered to issue such notice. Therefore, the notice was without jurisdiction and on this very foundation, the reassessment order was not sustainable.

The Tribunal held that very action of the AO in initiating the issuance of notice u/s 148 was unsustainable and outside the jurisdiction.

Accordingly, the impugned order was quashed and the appeal was allowed in favour of the assessee.

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