Notice u/s 148 issued prior to due communication of approval u/s 151 invalid

ITAT quashed reassessment as notice u/s 148 was issued even prior to the due communication of approval u/s 151 to the Assessing Officer.

In a recent judgment, ITAT Kolkata has quashed reopening of assessment as nullity and invalid in the eyes of law when the notice issued u/s 148 was issued even prior to the due communication of approval u/s 151 of the Act to the Assessing Officer.

ABCAUS Case Law Citation:
4840 (2025) (11) abcaus.in ITAT

In the instant case, the assessee had challenged the order passed by the CIT(A), National Faceless Appeal Centre in confirming addition made by Assessing Officer (AO) towards unexplained cash credit.

The appellant assessee filed return of income declaring loss which was processed u/s 143(1) of the Act. The case of the assessee was reopened u/s 147 of the Act by issuing notice u/s 148 of the Act which was duly served upon the assessee.

In compliance to the notice, the assessee filed the return of income declaring the same loss. Thereafter the notice u/s 143(2) and 142(1) of the Act along with questionnaire were issued and the assessee replied and furnished the various details and information as called for by the assessee.

During the course of the assessment proceedings, it was found that during the impugned financial year, the assessee had received large amount of money from several companies. The assessee submitted that the money represented amount received for sale of shares which were purchased by the assessee in earlier assessment years and during the year. Even the companies who paid money to the assessee replied to the notices issued u/s 133(6) of the Act by the AO.

However, the AO rejected the contention of the assessee, without pointing out any defect or deficiency in evidences filed by the assessee and added the amount received to the income of the assessee as an unexplained cash credit in the order passed u/s 147 read with section 143(3) of the Act.

The Tribunal found the approval u/s 151 of the Act was granted by the PCIT before the issuance of the notice as was apparent from the notings and signature of the PCIT on the proposal as moved by the AO however the same was communicated to the assessee two days after issuance of the notice u/s 148 of the Act.

The Tribunal opined that the notice issued u/s 148 of the Act was invalid as the same was issued even prior to the communication of approval u/s 151 of the Act to the AO thereby rendering all the consequential proceedings including the assessment framed to be nullity and invalid in the eyes of law.

The Tribunal observed that the case of the assessee was covered by the decision of the Hon’ble Supreme Court wherein it was held that notings in a departmental file do not have the sanction of law to be an effective order. Notings in the file culminate into an executable order, affecting the rights of the parties, only when it reaches the final decision-making authority in the department; gets his approval and the final order is communicated to the person concerned.

In the light of the above decision and considering the facts and circumcisions of the case, the Tribunal quashed the re-opening of assessment and the consequent assessment order.

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