Bombay High Court Strikes Down Reassessment Notice Against LinkedIn Singapore: Wrong Authority Granted Section 151 Approval
Case Reference
Linkedin Singapore PTE. Ltd. Vs ACIT (Bombay High Court)
Background and Overview
The Bombay High Court recently adjudicated upon the validity of reassessment proceedings initiated against LinkedIn Singapore PTE. Ltd., with the central question revolving around whether the approval granted under Section 151 of the Income Tax Act, 1961 was conferred by the appropriate sanctioning authority. The assessment year in question was 2019–20, and the Court found the facts of this matter to be substantially analogous to its earlier ruling in Kartik Sureshchandra Gandhi v. Assistant Commissioner of Income Tax [2023] 154 taxmann.com 193 (Bombay).
Key Issue: Jurisdiction of the Approving Authority
What the Approval Form Revealed
At the heart of this dispute was the approval form filed along with the affidavit-in-reply, affirmed on 21st November 2023 by one Sanjay V Deshmukh, then holding the position of Commissioner of Income Tax, International Taxation. Box-9 of the said approval form — which pertains to the applicable time limit for the proceedings — reflected that the case fell under Section 149(1)(b) of the Income Tax Act, 1961, meaning the reassessment was being initiated beyond three years but within ten years from the end of the relevant assessment year.
The Legal Consequence of Box-9 Entry
This entry carried significant jurisdictional implications. Under the statutory framework, where proceedings fall within the extended limitation window prescribed by Section 149(1)(b), the approval for initiating reassessment must be granted by the Principal Chief Commissioner of Income Tax — a higher-ranking authority. In the present matter, however, the approval had been granted by Mr. Vijay Shankar, who held the position of Commissioner of Income Tax (CIT) — an authority below the requisite rank. The assessee's counsel, Mr. Kamdar, argued that this rendered the entire approval invalid for want of jurisdiction.
Revenue's Explanation and Court's Rejection
The System-Generated Entry Argument
The Revenue's representative, Mr. Subir Kumar, sought to defend the approval by contending that the entry in Box-9 was not a deliberate selection but was automatically populated by the system based on the relevant dates — specifically, that the assessment year was 2019–20 and the approval date was 27th April 2023. The argument appeared to suggest that the system, and not the approving officer, was responsible for indicating the extended time-limit category.