2019 (7) TMI 807 - HC - Income Tax

Validity of reopening notice u/s 148 - no approval from the competent authority - addition on account of bogus purchase - ITAT treating the notice u/s. 148 as void ab initio - HELD THAT - No doubt in the present case, AO has applied for such approval which was granted on 29.03.2014, but before grant of approval, the AO has already issued notice on 28.03.2014 which is without any jurisdiction. He can issue notice only after getting approval. Thus, the ld. CIT(A) has rightly quashed the assessment because the very foundation for issuance of notice u/s 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 Thus so far as the date of grant of approval and the date of issue of notice u/s 148 is concerned, and in the absence of any contrary evidence on record, we would not like to interfere with this appeal. - Decided against revenue

Summary

Issues:
Validity of reopening the case under Section 147 of the Income Tax Act, 1961 and issuing notice under Section 148 of the Act.

Analysis:
The Tax Appeal under Section 260A of the Income Tax Act, 1961 was filed by the Revenue against the order passed by the Income Tax Appellate Tribunal, Ahmedabad. The main question proposed by the Revenue was whether the ITAT erred in treating the notice u/s. 148 as void ab initio and deleting the addition of a significant amount on account of bogus purchase. The CIT's finding highlighted a discrepancy where the notice u/s 148 was issued before the approval of the Commissioner of Income Tax, rendering it void ab initio. The Tribunal affirmed this finding, emphasizing that the approval from the competent authority is a prerequisite for issuing a notice under Section 148. The Tribunal concluded that the absence of such approval makes the notice void ab initio, leading to the quashing of the assessment. The Tribunal dismissed the appeal of the Revenue based on these grounds.

In light of the consistent findings regarding the discrepancy between the date of grant of approval and the date of issue of the notice under Section 148, the High Court declined to interfere with the appeal. The Court noted the absence of any contradictory evidence on record and upheld the decision to dismiss the appeal. Consequently, the appeal filed by the Revenue was rejected based on the established facts and legal requirements under the Income Tax Act, 1961.

In summary, the judgment revolved around the issue of the validity of reopening the case under Section 147 and issuing a notice under Section 148 of the Income Tax Act, 1961. The Court upheld the findings that the notice was void ab initio due to being issued before obtaining necessary approval from the competent authority. This violation of Section 151 of the IT Act led to the dismissal of the appeal by the Revenue. The importance of adhering to procedural requirements and obtaining approval before issuing notices under Section 148 was emphasized throughout the judgment, ultimately resulting in the dismissal of the appeal.