Reopening an assessment with approval from the wrong authority is a legal nullity.

Issue

Is a reassessment proceeding legally valid if the approval for it was obtained from an authority that is lower than the one specified by Section 151 of the Income-tax Act, 1961, for cases that are being reopened after a period of three years?

Facts

The Assessing Officer (AO) initiated reassessment proceedings for the Assessment Year 2017-18.
At the time of initiating these proceedings, more than three years had already passed since the end of that assessment year.
The law, under Section 151(ii), clearly mandates that when reopening an assessment after three years, the approval must be obtained from a higher authority, the Principal Chief Commissioner of Income Tax (PCCIT).
However, the AO in this case took the approval from the Principal Commissioner of Income Tax (PCIT), who is the correct sanctioning authority only for cases that are reopened within three years.

Decision

The High Court ruled decisively in favour of the assessee.

It held that obtaining approval from the correct and specified authority is a mandatory jurisdictional requirement, not a minor procedural or curable defect.
Since the approval for this older case was taken from the PCIT instead of the higher-ranking PCCIT, the approval itself was invalid.
An invalid approval means the entire reassessment proceeding was initiated without proper legal sanction from the very beginning. Therefore, the resulting order passed by the AO was a nullity in the eyes of the law and was set aside.

Key Takeways

Jurisdiction is Non-Negotiable: Getting approval from the correct authority as prescribed by the statute is a fundamental requirement. A failure to comply with this is a fatal flaw that voids the entire proceeding.
There are Stricter Checks for Older Cases: The law intentionally creates a higher bar (requiring approval from a higher-ranking officer) for reopening older assessments. This is a crucial safeguard for taxpayers that is designed to prevent frivolous or unwarranted reassessments, and it must be strictly followed.
An Invalid Sanction Leads to a Void Order: A reassessment order that is based on an invalid sanction is considered void ab initio (void from the beginning). It has no legal standing or effect.
Always Check the Timelines and the Sanctioning Authority: It’s critical for taxpayers and their representatives to check the date on which the assessment is being reopened. If it’s more than three years from the end of the relevant assessment year, the approval must have come from the highest authority (PCCIT/CCIT), not the PCIT/CIT.

IN THE ITAT MUMBAI BENCH ‘SMC’

Amaan Naeem Akhtar Ansari

Income-tax Officer

Sandeep Gosain, Judicial Member

IT Appeal No. 407 (Mum.) of 2025
[Assessment year 2017-18]

MARCH 12, 2025

Rohidas Lokhande for the Applicant. Smt. Usha Gaikwad, Sr. DR for the Respondent.

ORDER

Sandeep Gosain, Judicial Member.- The present appeal has been filed by the assessee challenging the impugned order 01.01.2025 passed u/s 250 of the Income Tax Act, 1961 (‘the Act’), by the National Faceless Appeal Centre, Delhi / CIT(A), for the A.Y 201718. The assessee has raised the following grounds of appeal:

1. In the facts and circumstances of the case and in law the Assessing Officer erred in reopening u/s 148 and passing order u/s 147 r.w.s 144

Mechanically

Without making any inquiry

Only on the basis of borrowed information

even though the reopening was required to be done by FAO instead of JAO

without serving notice u/s 148A(b) at proper address

without providing reasons for reopening

without granting opportunity of being heard personally

without serving order u/s 148A[d]

No asset is found above RS 50 lac

Notice issued after 3 years

Obtaining prior approval of Pr. Commissioner of Income Tax-20 instead of Pr. Chief Commissioner of Income Tax.

1. Considering sale price as the amount of income suppressed by overlooking case aw in 468ITR 105 SC

2. At the outset, I noticed that the appeal of the assessee was rejected by Ld. CIT(A) on the grounds that the same was not filed within limitation.

3. Whereas Ld. AR drawn my attention to the detailed affidavit dated 07.10.2024 which is at paper book page no 7 and the contents of same are reproduced here in below:

1. I, Amaan Ansari date of birth is 07/01/1993.

2. The Learned AO / Assessment Unit has sent all the notices to Room no 6, Haji baugh Chawl, Nehru Road, Vakola Bridge, Santacruz East Mumbai 400055 the said building is demolished more than 10 years ago.

3. I was staying on Rental place at 603, Noble Apartment Rajendra Kamble Road Siddharath Nagar, Vakola, Santacruz East, Mumbai, Maharashtra 400055.

4. Further not given any mobile no and Email address at the time of obtaining PAN and registered E-mail address was not done till 2022 accordingly I did not receive any notices and massages and communication from income tax department write from 20/05/2022 (date of First notice issued offline) till 15/09/2023.

5. I, e-filed my first income tax return of my life for assessment year 2023-24, when my income came in taxable category, on 25TH July 2023 and Fregistered my mobile and Email address at the time of e-filing my income tax return.

6. 1, Amaan Ansari though received demand notice U/s. 147 r.w.s 144 for Rs. 21,83,680/- dated 02/05/2023 physically on 12/04/2024 through income tax officer ward 22(1)(1) because the same was not reflected on income tax portal till 11/04/2024.

7. I humbly pray before your honor to condone the delay of 319 days of filing appeal from 01/06/2023 to 15/04/2024 and the same is a very bona fide reason on account of which the delay has occurred. The Appellant has not been negligent and wants to pursue the Appeal remedy, in as much as, on merits.

4. After having heard the counsels for both the parties and considering the documents placed on record and also taking into consideration the contents of the affidavit and considering the principles laid down by Hon’ble Supreme Court of India in the case of COLLECTOR, LAND ACQUISITION v. Mst. KATIJI [1987] 167 ITR 471 (SC)/ [1987] AIR 1353 (SC) wherein it has been held that where substantial justice is pitted against technicalities of none deliberate delay, then in that eventuality substantial justice is to be preferred, therefore we condone the delay in filing the appeal and the present appeal is admitted to be heard on merits.

5. Since the delay has been condoned by me, hence it is argued by Ld. AR that the case of the assessee is fully covered by the decision of different courts on identical issues. Therefore, I have decided to adjudicate the merits of the claim raised by the assessee.

6. Ground No. 1 raised by the assessee relates to challenging the order of AO in reopening the assessment of the assessee.

7. I have heard the counsels for both the parties on this ground and on the perusal of the assessment order, I noticed that order u/s 148A(d) of the act was issued with the approval of PCIT instead of approval of PCCIT. As the said approval has been sought after three years from the end of the assessment year. In this regard, reliance is placed upon the decision in the following cases:

Gigantic Mercantile (P) Ltd. v. Asstt. CIT 646 (Telangana) 26/7/2024-

(ii)

Cipla Pharma and Life Sciences Ltd. v. Dy. CIT 295 (Bombay) [

iii.

Mrs. Chitra Supekar v. ITO 511 (Bombay)

8. Considering the submissions of the parties and also taking into consideration the decision cited above, I am of the view that approval taken from PCIT is invalid as the same was required to be taken from PCCIT. Hence, the impugned orders has been passed by AO in violation of the provisions of law therefore, the same is held as nullity. Therefore, this ground raised by the assessee stands allowed.

9. Since reopening in the present case has already been held as nullity, therefore, other grounds raised by the assessee are academic in nature and does not require further adjudication.

10. In the net result, appeal filed by the assessee stands partly allowed with no orders to cost.