Sections 147, 148 and 151(2) – Reassessment – Notice u/s. 148 – Sanction for issuance of notice – Designated authority Additional Commissioner – Sanction by Commissioner – Notice not valid – Order of reassessment without jurisdiction and invalid

17. CIT vs. Aquatic Remedies
P. Ltd.; 406 ITR 545 (Bom):

Date of order: 25^th
July, 2018

A. Y. 2004-05

Sections 147, 148 and 151(2) – Reassessment – Notice u/s. 148 –
Sanction for issuance of notice – Designated authority Additional Commissioner
– Sanction by Commissioner – Notice not valid – Order of reassessment without
jurisdiction and invalid

The assessee was in the business of
trading in pharmaceutical product. The Assessing Officer issued a notice u/s.
148 of the Income-tax Act, 1961 to reopen the assessment for the A. Y. 2004-05.
The assessee contended that the issuance of the notice for reopening of the
assessment was without jurisdiction since the sanction for issuing the notice
had to be obtained from the Additional Commissioner according to section 151(2)
but the sanction had been obtained from the Commissioner which was in breach of
the sanction and therefore without jurisdiction. The Assessing Officer rejected
the claim and passed the assessment order u/s. 147.

The Tribunal allowed the appeal and
quashed the reassessment order passed by the Assessing Officer.

On appeal by the Revenue, the
Bombay High Court upheld the decision of the Tribunal and held as under:

“i)    U/s.
151(2) sanction to issue notice u/s. 148 has to be issued by the Additional
Commissioner. The Assessing Officer had not sought the approval of the
designated officer but the Commissioner which was evident from the form used to
obtain the sanction and the Additional Commissioner had not granted permission
to initiate reassessment proceedings against the assessee.

ii)    The
view of the Additional Commissioner was subject to the approval of his superior
– the Commissioner. Thus, there was no final sanction granted by the Additional
Commissioner for issuing the notice u/s. 148 to reopen assessment. Further, it
was the Commissioner who had directed the issuance of the notice u/s. 148 to
the Assessing Officer.

iii)    The order of the Tribunal in quashing the order u/s. 143(3)
r.w.s. 147 was correct. No question of law arose.”