ACIT-CC-7(3), MUMBAI V. LOTUS GRIH NIRMAN PRIVATE LIMITED , MUMBAI

ITA 1484/MUM/2025

AI Insights

The case involves an appeal by the Revenue against the order of the Commissioner of Income-tax (Appeals) and a cross-objection by the assessee, Lotus Grih Nirman Pvt. Ltd., concerning the reassessment for the assessment year 2017-18. The primary legal issue was the validity of the reassessment proceedings, specifically the authority who granted approval for reopening the assessment under Section 151 of the Income Tax Act, 1961. The Tribunal found that the necessary approval was not obtained from the correct authority, leading to the conclusion that the reassessment was not legally valid.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 360864 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-05-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Assessment Year: 2017-2018
• Other Referred Cases: Lotus Logistics and Developers Pvt Ltd in ITA No. 627 and CO No. 49/Mum/2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAM KRISHN KEDIA
• Assessee Lawyers: NIRAJ SONI
• Keywords: Condonation of delay; Reassessment proceedings
• Section: 143(3)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “A” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND MS. KAVITHA RAJAGOPAL (JUDICIAL MEMBER) ITA No. 1484/MUM/2025 Assessment Year: 2017-18 ACIT, CC-7(3), Mumbai Room No. 655, Floor 6th, Aayakar Bhavan, M.K.Road, Mumbai-4000202 Vs. M/s Lotus Grih Nirman Pvt Ltd. 1201,12th Floor Lotus Link Square, near Apna Bazar, D N Nagar, New Link Road, Andheri West, Mumbai- 400 053 PAN NO. AABCL 0864 D Appellant Respondent CO No. 105/MUM/2025 (Arising out of ITA No. 1484/MUM/2025) Assessment Year: 2017-18 M/s Lotus Grih Nirman Pvt Ltd. 1201,12th Floor Lotus Link Square, near Apna Bazar, D N Nagar, New Link Road, Andheri West, Mumbai- 400 053 Vs. ACIT, CC-7(3), Mumbai Room No. 655, Floor 6th, Aayakar Bhavan, M.K.Road, Mumbai-4000202 PAN NO. AABCL 0864 D Appellant Respondent Assessee by : Mr. Niraj Soni Revenue by : Mr. Ram Krishn Kedia, CIT-DR Date of Hearing : 08/05/2025 Date of pronouncement : 19/05/2025 ORDER PER OM PRAKASH KANT, AM Lotus Grih Nirman Pvt. Ltd. 2 ITA No. 1484/MUM/2024 & CO No. 105/MUM/2025 This appeal by the Revenue and cross-objection by the assessee are directed against order dated 31.12.2024 passed by the Ld. Commissioner of Income-tax (Appeals) – 49, Mumbai [in short ‗the Ld. CIT(A)‘] for assessment year 2018-19. 2. Regarding the cross-objection, the Registry pointed out delay of 28 days in filing before the ITAT. In response, the Ld. counsel for the assessee submitted that the notice of the Revenue‘s appeal was received on 20.03.2025, whereas, in the cross objection memo filed in form No. 36A, inadvertently it was mentioned as received on 31.12.2024. 2. We have heard the rival submissions of the parties on the issue of condonation of delay in the filing of the cross-objection by the assessee. The assessee has explained that the delay occurred due to an inadvertent error in Form No. 36A of recording the date of receipt of the notice of appeal filed by the Revenue as 31.12.2024, whereas the appeal of the Revenue itself has been filed on 28/02/2025. It has been submitted that the actual date of receipt of the said notice was 20.03.2025. If this date is taken as the correct date of receipt of the Revenue‘s Form No. 36, then the cross- objection was to be filed within 30 days i.e. 18/04/2025, whereas cross objection has been filed on 7/05/2025, thus, there is a delay of 19 days in filing the cross objection. The assessee explained that delay happened at the end of the staff of consultant dealing with Lotus Grih Nirman Pvt. Ltd. 3 ITA No. 1484/MUM/2024 & CO No. 105/MUM/2025 filing the cross objection. Considering the explanation offered by the assessee and small period of 19 days , we condoned the delay and cross objection is admitted for adjudication.\" 3. Learned counsel for the assessee invited our attention to the cross-objection and submitted that the issues raised therein go to the very root of the matter. It was, therefore, urged that the cross- objection be taken up for consideration at the outset. Both parties were in agreement that Ground No. 1 of the cross-objection be argued first. 3.1 The assessee, in the said ground, has challenged the very validity of the reassessment proceedings, primarily on the ground that the approval for reopening under Section 151 of the Income Tax Act, 1961 (hereinafter referred to as ―the Act‖), was obtained from the Principal Commissioner of Income Tax (PCIT), whereas, in terms of the statutory mandate applicable during the relevant period, such approval ought to have been obtained from the Principal Chief Commissioner of Income Tax. In support of this contention, learned counsel for the assessee has placed on record a copy of the order passed under Sections 148A(d) and 148 of the Act, which, on its face, indicates that the approval for issuance of notice was granted by the PCIT. 4. To ascertain the correctness of this submission and to determine the authority competent to grant sanction under the Act, it is Lotus Grih Nirman Pvt. Ltd. 4 ITA No. 1484/MUM/2024 & CO No. 105/MUM/2025 necessary to reproduce the relevant extract of Section 151 of the Act, as applicable during the relevant assessment year: “151. Sanction for issue of notice. The specified authority for the purposes of Section 148 and Section 148A shall be,— (i) the Principal Commissioner or Principal Director or Commissioner or Director, if three years or less have elapsed from the end of the relevant assessment year; (ii) the Principal Chief Commissioner or Principal Director General or, where there is no Principal Chief Commissioner or Principal Director General, the Chief Commissioner or Director General, if more than three years have elapsed from the end of the relevant assessment year.” 4.1 A plain reading of the above provision makes it abundantly clear that in cases where a period of more than three years has elapsed from the end of the relevant assessment year, the sanction for reopening is required to be accorded by the Principal Chief Commissioner or the Principal Director General, or in their absence, by the Chief Commissioner or Director General, as the case may be. 4.2 In the present case, the assessment year in question is A.Y. 2017–18, and the notice under Sections 148 and 148A(d) was issued on 25.07.2022—well beyond the statutory threshold of three years from the end of the said assessment year. In such Lotus Grih Nirman Pvt. Ltd. 5 ITA No. 1484/MUM/2024 & CO No. 105/MUM/2025 circumstances, the authority competent to grant approval was the Principal Chief Commissioner of Income Tax or the equivalent authority as prescribed. However, the record reflects that sanction was obtained from the PCIT, which, prima facie, does not satisfy the requirement of Section 151 of the Act. For ready reference, copy of notice u/s 148A(d) i.e. extracted as under: “Order u/s. 148A(d) of the Income tax Act, 1961 In this case, the assessee company e-filed its return of income on 30.10.2017 declaring total income at Rs. Nil after set off of b/f losses of Rs.3,15,788/- as per normal provision of the Act for A.Y. 2017-18. Return was processed u/s 143(1) of the Income-tax Act, 1961 (hereinafter, 'the Act') accordingly. Subsequently, the case was selected for scrutiny under CASS and order u/s 143(3) of the Act was passed on 29.12.2019 assessing total income at Rs. 11,79,670/-. 2. ……. 3. ……. 4. ……. 5. ……. 6. ……. 7. This order under section 148A(d) of the Act is passed with the prior approval of the Principal Commissioner of Income Tax Central-4, Mumbai as per the provision of section 151 of the Act.” 4.3 Identical issue has been decided by the coordinate Bench in the case of Lotus Logistics and Developers p ltd in ITA No. 627 and CO No. 49/Mum/2025. Relevant finding of the Tribunal is reproduced as under: “7.1 In the instant case the assessment year involved is 2017-18 and notice u/s 148 has been issued on 29-07-2022, which is evidently beyond the period of three years from the end of the relevant assessment year and therefore, sanction for issue of notice was to be obtained from the Principal Chief Commissioner or Chief Commissioner Of Income Tax whereas approval of PCIT, Centre-Mumbai-4, has been obtained and therefore the approval not been in accordance with law. Respectfully following the coordinate bench(supra), the notice u/s 148 of the Act issued therefore, Lotus Grih Nirman Pvt. Ltd. 6 ITA No. 1484/MUM/2024 & CO No. 105/MUM/2025 suffer from jurisdiction defect and therefore, notice being bad in law the entire reassessment proceedings stand quashed. The ground No. 1c of the cross objection of the assessee is allowed.” 4.4 This being a jurisdiction requirement, following the Tribunal in the case of Lotus Logistics and Developers p ltd (supra), the re- assessment proceeding in the case of the assessee is held to be void ab-initio. The cross-objection of the assessee is accordingly allowed. 5. Since the re-assessment proceeding itself has been held as bad in law, the grounds raised by the Revenue in its appeal are rendered infructuous. 6. In the result, appeal of the revenue is dismissed whereas cross-objection of the assessee is allowed. Order pronounced by way of display of result on notice board under Rule 34(4) of ITAT Rules, 1963 on 19/05/2025. Sd/- Sd/- (KAVITHA RAJAGOPAL) (OM PRAKASH KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 19/05/2025 Disha Raut, Stenographer Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. Lotus Grih Nirman Pvt. Ltd. 7 ITA No. 1484/MUM/2024 & CO No. 105/MUM/2025 BY ORDER, //True Copy// (Assistant Registrar) ITAT, Mumbai "