ITAT Quashes Reassessments as Time-Barred and for Invalid Section 151 Sanction

Heritage Lamps, a Delhi-based partnership firm, faced reassessment for AYs 2014-15, 2016-17, 2017-18 and 2019-20. The Assessing Officer reopened the cases under Section 147 and framed reassessments under Section 147 read with Section 144B, making additions for alleged bogus purchases and unexplained expenditure under Sections 69A and 69C.

For AY 2014-15, the original notice dated 15.06.2021 was issued under the old regime and later treated as a deemed notice under Section 148A(b) pursuant to Union of India v. Ashish Agarwal. Though the assessee replied on 01.06.2022, the order under Section 148A(d) and fresh notice under Section 148 were issued only on 25.07.2022.

For AYs 2016-17 and 2017-18, notices dated 23.07.2022 were issued after more than three years with sanction from the Principal Commissioner. For AY 2019-20, the notice was issued by ACIT, though jurisdiction lay with ITO, Ward 45(1), and no transfer order under Section 127 was produced. The CIT(A) dismissed the appeals.

Main Issue: Whether the notices were barred by limitation in view of Union of India v. Rajeev Bansal; whether sanction under Section 151 from an incompetent authority vitiated jurisdiction; and whether reassessment by an officer lacking jurisdiction without a Section 127 order was void.

ITAT Ruled: For AY 2014-15, the Tribunal held that the surviving limitation period expired on 16.06.2022. Since the order under Section 148A(d) and notice under Section 148 were issued on 25.07.2022, they were time-barred and quashed.

For AYs 2016-17 and 2017-18, approval beyond three years was required from the Principal Chief Commissioner/Chief Commissioner. Sanction by the Principal Commissioner was invalid. Relying on Rajeev Bansal and Communist Party of India (Marxist) v. ACIT, the Tribunal held the reassessments void.

For AY 2019-20, in the absence of a valid Section 127 transfer, the officer lacked jurisdiction. Following Vimal Gupta v. ITO and Sapna Rastogi v. ITO, the reassessment was held void ab initio.

All four reassessment orders were quashed on legal grounds, and the assessee’s appeals were allowed.

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