VIJAYSINGH MADHAVRAO PATWARDHAN,MUMBAI V. THE ASSISTANT COMMISSIONER OF INCOME TAX-26(1), MUMBAI (NOW DCIT-41(1)(1), MUMBAI), MUMBAI

ITA 2688/MUM/2025

AI Insights

The case involves Vijaysingh Madhavrao Patwardhan, who appealed against the order of the National Faceless Appeal Centre (NFAC), Delhi, for the assessment year 2006-07. The primary contention was the validity of the reopening of his assessment under section 147 of the Income Tax Act, following the discovery of undisclosed deposits in a foreign bank account. The Assessing Officer (AO) had reopened the assessment without the necessary approval from the competent authority as mandated by section 151(1) of the Act, leading to the Tribunal's decision to quash the assessment order.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 633342 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2006-2007
• Other Referred Cases: Svitzer Hazira (P.) Ltd. vs. Asst. CIT [2022] 135 taxmann.com 136 (Bom), Voltas Ltd. vs. Asst. CIT [2022] 141 taxmann.com 127 (Bom)
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAVITHA KAUSHIK
• Assessee Lawyers: . SVITZER HAZIRA P. LTD. VS. ASST. TAXMANN.COM BOM; RAKESH JOSHI
• Keywords: Unexplained cash credit; Reopening of assessment; Competent authority
• Section: 147; 148; 143(3); 2

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “F” BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, VP AND SHRI NARENDRA KUMAR BILLAIYA, AM ITA No. 2688/Mum/2025 (Assessment Year:2006-07) Vijaysingh Madhavrao Patwardhan 4 Sangli Villa, 10th Road, North Extension JVPS, Mumbai-400 051 Vs. Asst. CIT-26(1) Now DCIT-41(1)(1) Kautilya Bhawan, Bandra Kurla Complex, Bandra East, Mumbai-400 051 PAN/GIR No. AGLPP 8828 J (Appellant) : (Respondent) Appellant by : Shri Rakesh Joshi Respondent by : Ms. Kavitha Kaushik Date of Hearing : 04.06.2025 Date of Pronouncement : 09.06.2025 O R D E R Per Saktijit Dey, VP: This is an appeal by the assessee against order dated 17.03.2025, passed by National Faceless Appeal Centre (‘NFAC’ for short), Delhi for the assessment year (A.Y.) 2006-07. 2. In ground nos. 1 & 2, the assessee has challenged the validity of reopening of assessment u/s. 147 of the Act. 3. Briefly stated, the assessee is a resident individual. For the assessment year under dispute, the assessee had filed his return of income on 31.0.2006, declaring income of Rs.20,29,400/-. Subsequently, the return of income so filed was revised, offering total income of Rs.13,42,690/-. The assessment, in case of the assessee, was completed u/s. 2 ITA No. 2688/Mum/2025 (A.Y.2006-07) Vijaysingh Madhavran Patwardhan vs. Asst. CIT 143(3) of the Act, vide order dated 04.09.2012, determining the total income at Rs.14,32,990/-. 4. Post completion of assessment as aforesaid, the Assessing Officer (AO) received information that the assessee maintained a foreign bank account in HSBC, Geneva, during the relevant year. He further found that deposits in the said bank account were not disclosed as ‘income’. Based on such information, the A.O. reopened the assessment u/s. 147 of the Act, by issuing a notice u/s. 148 of the Act on 12.112014. In response to the said notice, the assessee filed objections questioning the validity of reopening of assessment on the ground of lack of proper approval by the competent authority. The objections filed by the assessee were rejected by the AO. Thereafter, the A.O. proceeded to complete the assessment u/s. 143(3) / 147 of the Act vide order dated 30.03.2015, adding back an amount of Rs.1,89,49,053/-, representing alleged unexplained credits in HSBC bank account. The assessee challenged the assessment order so passed, inter alia, on the ground that the reopening of assessment u/s. 147 of the Act is invalid due to lack of proper approval by the competent authority in terms of section 151 of the Act. 5. The first appellate authority, however, did not find merit in the contentions of the assessee and dismissed the appeal. 6. We have considered rival contentions and perused the materials on record. It is the say of the assessee that since in assessee’s case, the original assessment was completed u/s. 143(3) of the Act and the initiation of proceedings u/s. 147 of the Act was after expiry of four years from the end of the relevant assessment year, the authority competent to grant approval u/s. 151(1) of the Act is the Principal Commissioner of Income 3 ITA No. 2688/Mum/2025 (A.Y.2006-07) Vijaysingh Madhavran Patwardhan vs. Asst. CIT Tax/Commissioner of Income Tax. He submitted, in the facts of assessee’s case, no approval of the competent authority in terms with section 151(1) of the Act was taken prior to issuance of notice u/s. 148 of the Act. Thus, it was contended that the entire proceeding relating to reopening of assessment is vitiated, hence, invalid. In support of such contention, ld. Counsel appearing for the assessee relied upon the following decisions: 1. Svitzer Hazira (P.) Ltd. vs. Asst. CIT [2022] 135 taxmann.com 136 (Bom) 2. Voltas Ltd. vs. Asst. CIT [2022] 141 taxmann.com 127 (Bom) 7. The learned Departmental Representative ('ld. DR' for short) relied upon the observations of the first appellate authority. 8. On perusal of the facts on record, it is observed that while disposing of objections of the assessee, challenging the reopening of assessment, the A.O. in order dated 14.01.2015, a copy of which is placed at pg. no. 8 of the paper book, has clearly and categorically stated that since, notice u/s. 148 of the Act was issued by the Joint Commissioner, no approval in terms with section 151 of the Higher Authority was obtained. On a carefully going through the provisions contained u/s. 151(1) of the Act, we find, in a case where original assessment has been completed u/s. 143(3)/147 of the Act and the proceedings u/s. 147 of the Act is initiated after expiry of four years from the end of the relevant assessment year, as per the proviso to section 151(1) of the Act, as it stood prior to amendment and is applicable to the assessment year under dispute, the competent authority who can grant approval for issuance of notice u/s. 148 of the Act is the PCIT/CIT and not any authority below him. In the facts of the present appeal, admittedly, prior to issuance of notice u/s. 148 of the Act, the A.O. has not obtained any approval of the competent authority in terms with the proviso contained u/s. 151(1) of the Act. That being 4 ITA No. 2688/Mum/2025 (A.Y.2006-07) Vijaysingh Madhavran Patwardhan vs. Asst. CIT the established factual position on record, the reopening of assessment u/s. 147 of the Act, is completely vitiated, hence, invalid. In our considered opinion, while rejecting assessee’s contentions on the ground that in terms with section 151(2) of the Act, no approval was required to be taken. The first appellate authority has completely misconstrued the statutory provision, thereby, misconceived the legal position. Hence, the reasoning of the first appellate authority is unsustainable. For the aforestated reasons, we hold that the reopening of assessment u/s. 147 of the Act and the assessment order passed in consequence thereof are invalid. Accordingly, we quash the assessment order. 9. In view our decision above, ground no. 3 having become purely academic, does not require adjudication. 10. In the result, the appeal is allowed as indicated above. Order pronounced in the open court on 09.06.2025 Sd/- Sd/- (N. K. Billaiya) (Saktijit Dey) Accountant Member Vice President Mumbai; Dated : 09.06.2025 Roshani, Sr. PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. The CIT(A) 4. CIT - concerned 5. DR, ITAT, Mumbai 6. Guard File BY ORDER, (Dy./Asstt. Registrar) ITAT, Mumbai "