Reassessment Beyond 3 Years Invalid Without Higher Authority Approval: ITAT Quashes Reopening Notices
The Income Tax Appellate Tribunal (ITAT), Kolkata, dismissed the appeal filed by the Income Tax Department against the order of CIT(A). The tribunal confirmed that AO must obtain approval from the higher authority, like Pr. CCIT to reopen assessments beyond three years.
The reassessment notices for the AY 2016-17 and 2017-18 were issued in August 2022. The revenue argued that the approval granted by the Pr. CIT was valid, saying that the Pr. CIT also has the power to give approval in such cases. While the assessee argued that for reassessment done beyond three years, with an amount of more than Rs 50 lakh, the approval should have been taken from the Pr. CCIT, not the Pr. CIT.
The tribunal agreed with the assessee, observing that the reassessment notices were actually issued beyond the three-year limit and the same is not allowed under the income tax law. Section 151 of the Income Tax Act requires mandatory approval from higher authority before reopening assessments beyond three years.
The Tribunal also cited High Court and Supreme Court rulings which support this view. Accordingly, the ITAT held that the approval was invalid, and it quashed the notices and the assessment orders.
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