Facts of the Case

The assessee filed her return of income for Assessment Year 2014-15, which was originally processed. The Assessing Officer issued a notice under Section 148 dated 29.03.2019 proposing reopening of the assessment. The assessee challenged the validity of the reopening on the ground that mandatory approval under Section 151(2) of the Income-tax Act was obtained from the Joint Commissioner of Income Tax only on 31.03.2019, i.e., after issuance of the notice under Section 148. The reassessment proceedings culminated in an assessment order which was upheld by the CIT(A), NFAC, leading to the appeal before the Tribunal.

Issues Involved

Whether a notice issued under Section 148 without obtaining prior approval as mandated under Section 151(2) is valid in law, whether subsequent approval can cure the jurisdictional defect, and whether participation of the assessee in assessment proceedings attracts the curative provisions of Section 292BB.

Petitioner’s Arguments

The assessee contended that the notice under Section 148 was issued on 29.03.2019 whereas the approval of the Joint Commissioner was granted only on 31.03.2019, clearly violating the mandatory requirement of prior sanction under Section 151(2) as it stood at the relevant time. It was argued that absence of prior approval goes to the root of jurisdiction and renders the notice and all consequential proceedings void ab initio. The assessee further submitted that Section 292BB cannot cure such a fundamental jurisdictional defect.

Respondent’s Arguments

The Revenue argued that the assessee had participated in the reassessment proceedings and therefore could not challenge the validity of the notice at a later stage. It was contended that the approval was granted and that any procedural lapse stood cured by virtue of Section 292BB of the Act.

Court Order / Findings

The ITAT Kolkata examined the order-sheet entries and documents placed on record, including the approval letter issued by the Joint Commissioner. The Tribunal recorded a categorical finding that the approval under Section 151(2) was granted on 31.03.2019, subsequent to the issuance of notice under Section 148 on 29.03.2019. The Tribunal held that prior approval is a mandatory jurisdictional requirement and that sanction obtained after issuance of notice does not satisfy the statutory mandate. It was further held that Section 292BB cannot cure a complete lack of jurisdiction arising from non-compliance with Section 151(2). Consequently, the notice under Section 148 was held to be invalid and the entire reassessment proceedings were quashed.

Important Clarification

The Tribunal clarified that approval under Section 151 must precede the issuance of notice under Section 148. Any approval granted after issuance of notice is legally ineffective. Jurisdictional defects arising from lack of prior sanction cannot be cured by assessee’s participation in proceedings or by invoking Section 292BB.

Final Outcome

The appeal filed by the assessee was allowed. The notice issued under Section 148 dated 29.03.2019 and the consequential reassessment proceedings for Assessment Year 2014-15 were quashed as being without jurisdiction and invalid in law.

Source Link - https://itat.gov.in/public/files/upload/1767269431-4n8TaS-1-TO.pdf

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