AO Is 'Deciding Authority' U/S 148A Income Tax Act, Can't Revise Decision At Instance Of Principal Commissioner: Delhi High Court

The Delhi High Court has held that the Assessing Officer is the “authority” to decide whether a reassessment action under Section 148 of the Income Tax Act 1961 should be initiated against an assessee and his stance can't be revised at the instance of another authority.A division bench of Justices Vibhu Bakhru and Tejas Karia held thus while setting aside the reassessment action initiated after the AO revised his initial decision that it is “not a fit case” for reopening assessment. It observed,“The AO has to decide on the basis of material on record including the reply of an Assessee whether or not it is a fit case to issue a notice under Section 148 of the Act by passing an order with the prior approval of the specified authority. The AO is a deciding authority. In the present case, it is apparent that the AO had decided that it was not a fit case for issuance of a notice under Section 148 of the Act but had, thereafter, revised the said decision apparently on the basis of an approval of the specified authority.”It was alleged that Petitioner-assessee had remitted amounts through its saving bank accounts and the same were not commensurate with the income tax returns filed for the relevant assessment year.Petitioner submitted that though initially the AO accepted the explanation offered by the petitioner and decided that it was not a fit case for issuance of notice under Section 148 however later, the AO further reviewed the order at the instance of the 'specified authority' and thereafter issued another order under Section 148A(d), holding that it was a fit case for issuance of notice under Section 148 of the Act.Notice under Section 148A(d) is issued after considering the assessee's response to the show cause notice (SCN), intimating whether or not it is a fit case to issue reassessment notice under Section 148.Petitioner contended that AO does not have any power to review an order under Section 148A(d).Revenue contended that the AO had merely corrected the earlier order as it had subsequently realised that its order was contrary to the merits and contrary to the approval of the Principal Commissioner of Income Tax granted for re-opening of the assessment.The High Court rejected this contention, stating that AO's reasoning in the impugned order to reopen assessment was completely different from his earlier decision and the AO had provided reasons to support a contrary conclusion. “Clearly, this is not a case of an inadvertent typographical or a clerical error…the AO had passed an order holding that it was not a fit case for issuance of a notice under Section 148 of the Act. However, this order was, subsequently, altered as according to the AO, it was not in conformity with the approval obtained. It does prima facie appear that the procedure adopted by the AO is contrary to law,” the Court held.As such, it allowed the plea and set aside the reassessment action.Appearance: Mr. Ved Jain, Mr. Nischay Kantoor & Ms. Soniya Dodeja, Advs. for Petitioner; Mr. Shlok Chandra, Ms. Nancy Jain, and Ms. Madhavi Shukla, Advs. for RespondentsCase title: Baba Global Ltd v. Assistant Commissioner Of Income Tax, Central Circle 29 & Ors.Citation: 2025 LiveLaw (Del) 784Case no.: W.P.(C) 1155/2024Click here to read order

AO Is 'Deciding Authority' U/S 148A Income Tax Act, Can't Revise Decision At Instance Of Principal Commissioner: Delhi High Court

Kapil Dhyani

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