ITAT Mumbai Quashes Reassessments for AYs 2016–17 to 2022–23 Over Unsigned Sanction and Wrong Issuing Authority
Pranav B Prem
The Income Tax Appellate Tribunal (ITAT) Mumbai Bench “C”, comprising Judicial Member Sandeep Gosain and Accountant Member Prabhash Shankar, has quashed reassessment proceedings against J Kumar Infraprojects Ltd for Assessment Years (AYs) 2016–17 to 2022–23, holding that the notices issued under Section 148 of the Income-tax Act, 1961, were invalid due to procedural defects.
The tribunal allowed the assessee’s additional grounds on two jurisdictional lapses — (i) absence of a valid signature on the sanction granted under Section 151, and (ii) issuance of the reassessment notice by the Jurisdictional Assessing Officer (JAO) instead of the Faceless Assessing Officer (FAO) as mandated under the faceless assessment scheme.
Background
The case stemmed from reassessment proceedings initiated against the company based on information allegedly suggesting escapement of income. For AY 2016–17, the Assessing Officer issued a notice under Section 148 after obtaining an approval under Section 151 from the Principal Commissioner of Income Tax (PCIT). Similar proceedings were also initiated for subsequent years.
During the appellate stage, the assessee raised additional grounds contending that:
The sanction obtained under Section 151 was neither physically signed nor digitally signed by the PCIT, and hence was invalid in law.
The reassessment notices post 1 April 2022 were required to be issued by FAOs as per CBDT Notification No. 18/2022, but were instead issued by JAOs.
Absence of Signature on Sanction
The ITAT examined the approval under Section 151 and found that the document bore only the name and designation of the sanctioning authority without any manual or digital signature. The assessee relied on division bench rulings of the Allahabad High Court in Vikas Gupta v. UOI and Daujee Abhushan Bhandar Pvt. Ltd. v. UOI, which held that signing the sanction is a mandatory requirement and that unsigned approvals are invalid.
The Revenue cited the single judge ruling of the Chhattisgarh High Court in Bharat Krishi Kendra v. UOI, which upheld unsigned approvals, but the ITAT held that, in the absence of a jurisdictional High Court decision, the view favourable to the assessee must prevail, particularly when supported by division bench rulings. Holding that the unsigned approval could not confer jurisdiction, the tribunal declared the notice under Section 148 for AY 2016–17 to be “bad in law” and quashed the consequent reassessment order under Sections 143(3) read with 147.
Issuance of Notice by JAO Instead of FAO
On the second issue, the assessee argued that per CBDT Notification No. 18/2022 and Section 151A, reassessment notices from 1 April 2022 were to be issued by FAOs under the faceless regime. In this case, the notice had been issued by the JAO. The assessee relied on Bombay High Court judgments in Hexaware Technologies Ltd. v. ACIT and Ganesh Nivrutti Jagtap v. ITO, where reassessment notices issued by JAOs in similar situations were quashed.
The Revenue contended that search-related cases assigned to the Central Charge were excluded from the faceless regime and placed reliance on contrary views from other High Courts. However, the ITAT noted that there was no stay on the Bombay High Court rulings cited by the assessee and, since the present case fell within Bombay High Court’s jurisdiction, those rulings were binding.
The ITAT quashed the reassessment proceedings for AY 2016–17 on both counts — invalid sanction under Section 151 and jurisdictional defect in issuance of notice. Given the identical facts and issues for AYs 2017–18 to 2022–23, the tribunal extended the same relief for all years under appeal.
Appearance
Counsel For Appellant: K Shivram Sr. Advocate & Shri Shashi Bekal
Counsel For Respondent: Neena Jeph, CIT DR
Cause Title: J Kumar Infraprojects Ltd. V. DCIT
Case No: ITA No. 4147/Mum/2024
Coram: Prabhash Shankar [Accountant Memer], Sandeep Gosain [Judicial Member]
