Invalid Sanction Under Section 151 Vitiates Reassessment: ITAT Jaipur Quashes Order in Deepak Sharma Case
The procedural mechanics of reopening an assessment under the Income Tax Act 1961 require strict adherence to statutory mandates, particularly concerning the jurisdictional authority empowered to grant approval. A recent judicial pronouncement by the Income Tax Appellate Tribunal (ITAT), Jaipur, in the case of Deepak Sharma Vs ITO (ITAT Jaipur), bearing Appeal Number ITA No: 1321/JPR/2025 and dated 08/10/2026, serves as a critical reminder of this principle. The Tribunal unequivocally ruled that obtaining sanction from an incorrect authority under Section 151 is a fatal jurisdictional defect that cannot be cured by invoking the provisions of Section 292B.
This comprehensive analysis delves into the factual matrix, the complex timeline involving the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act 2020 (TOLA), the impact of landmark Supreme Court rulings, and the ultimate rationale that led to the quashing of the reassessment proceedings for the Assessment Year (AY) 2016-17.
Factual Matrix of the Dispute
The genesis of the dispute traces back to the return of income filed by the assessee for AY 2016-17, wherein a total income of ₹2,68,300 was declared. The transaction that caught the scrutiny of the revenue authorities involved the sale of a real estate asset. Specifically, the assessee had alienated Plot No. 109, located at Bhaskar Enclave-A, Village Murlipura, Tehsil Chaksu, Jaipur. This plot, measuring 250 square yards, was originally acquired on 08.05.2015 for a consideration of ₹4,75,000. Subsequently, it was sold via a registered sale deed executed on 04.09.2015, with the documented sale consideration reflecting an amount of ₹3,51,000.
The trajectory of the case shifted dramatically following a search and seizure operation conducted under Section 132 of the Income Tax Act 1961 on the Chandra Prakash Agarwal Group on 28.07.2016. During the post-search investigative phase, the assessee was summoned by the authorities. In a statement recorded under Section 131 on 30.11.2016, the assessee admitted that the actual sale price of the aforementioned plot was ₹6,900 per square yard, translating to a total consideration of ₹17,25,000. The assessee further elaborated that out of this total amount, ₹3,51,000 was received through banking channels (cheque), while the substantial balance of ₹13,74,000 was received in cash.
Relying on this evidentiary statement, the revenue department initiated reassessment proceedings. However, during the course of these proceedings, the assessee retracted the earlier statement through a formal affidavit. To substantiate the retraction and the originally declared sale value, the assessee placed reliance on several documents, including the registered purchase and sale deeds, corresponding bank statements, an affidavit from the property broker, and crucially, the sale deed of the immediately adjacent property (Plot No. 110), which was sold on the exact same day for an identical consideration.
The Assessing Officer (AO) dismissed the retraction, adopting the sale consideration at the enhanced figure of ₹17,25,000. After deducting the purchase cost of ₹4,76,900, the AO computed a Short Term Capital Gain of ₹12,48,100, culminating in an assessed total income of ₹15,16,400. This addition was subsequently upheld by the Commissioner of Income Tax (Appeals) [CIT(A)], who characterized the delayed retraction affidavit (dated 03.03.2023) as a mere afterthought.