INCOME TAX ACT, 1961

Section 147,151

Reassessment - Validity - Reopening after expiry of four years from the end of assessment year and original assessment completed under section 143(3) - AO issued notice under section 148 without prior sanction of PCCIT/CCIT/PCIT/CIT

Assessee-company filed its return of income for assessment year under consideration and the assessment was completed under section 143(3). Thereafter, AO reopened the assessment by issuing notice under section 148 and completed reassessment under section 147. Assessee submitted that the original assessment was completed under section 143(3) and the reopening was after the expiry of four years from the end of the assessment year, therefore, the proviso to section 151(1) would be applicable and thereby the AO could not have issued the notice under section 148 without prior sanction of PCCIT/CCIT/PCIT/CIT. Thus, the assessee contended that the reopening was not valid as the AO issued the notice under section 148 only after taking sanction of Jt. CIT. Held: In the new substituted provision of section 151(1), it is mandatory requirement for issuing notice under section 148 after expiry of four years from the end of the relevant assessment year that unless the PCCIT/CCIT/PCIT/CIT is satisfied on the reasons recorded by the AO that it is fit case for issue such notice. Thus, there is no difference in the higher authority whose satisfaction is required prior to issuing notice under section 148 in all the cases where the notice under section 148 is issued after the expiry of four years from the end of the relevant assessment year. Therefore, once the reopening is after expiry of four years from the end of assessment year and the original assessment was completed under section 143(3), then irrespective of the rank of the AO who has reopened the assessment, it is mandatory condition that satisfaction of PCCIT/CCIT/PCIT/CIT is required. Hence, reopening in the case in hand was not valid as the AO did not satisfy the mandatory condition as provided under section 151(1) read with proviso being the satisfaction of PCCIT/CCIT/PCIT/CIT. Accordingly, the reopening of the assessment was void and consequently the reassessment order was quashed as void ab initio.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2007-08

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