ITAT Delhi on Unsigned Sanction under Section 151: Reassessment under Section 148 Set Aside

Background of the Dispute

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) examined whether a reassessment initiated under Section 147 could survive when the mandatory approval under Section 151 was not properly authenticated by the prescribed authority. The case, Rajesh Kumar Mishra Vs ITO, revolved around the validity of notice issued under Section 148 and the consequential reassessment order passed for A.Y. 2020-21.

The reassessment stemmed from information regarding amounts received from a builder for delay in handing over possession of a property. The assessee had disclosed only part of this amount in the return of income and claimed exemption. The Assessing Officer (AO) reopened the case and made additions treating the disputed amount as interest income.

However, the reassessment was challenged primarily on legal grounds — non-issuance of a valid notice under Section 148A and absence of a proper sanction under Section 151 by the competent authority. The Tribunal ultimately held that the reassessment was void because the sanction under Section 151 was not validly signed by the PCIT, thereby vitiating the entire proceedings.

Procedural Journey of the Case

Assessment and First Appeal

  1. Original Return and Information Trigger

    • For A.Y. 2020-21, the assessee filed a return of income declaring, inter alia, a sum of Rs. 9,91,772/- received from M/s Proview Realtech Pvt. Ltd on account of delay in possession of a property.
    • As per information available under the E-verification Scheme 2021, the total consideration received from the said builder on this count was Rs. 20,90,611/-.
    • The assessee had thus offered only Rs. 9,91,772/- out of Rs. 20,90,611/- in the return, while claiming exemption in respect of the balance.

  2. Reopening under Section 147

    • Based on this discrepancy, the AO issued a notice under Section 148 dated 28.03.2024, reopening the assessment.
    • The AO sought an explanation as to:
      • Why the assessee had declared only Rs. 9,91,772/- instead of the full Rs. 20,90,611/-, and
      • On what basis the assessee had claimed exemption with respect to the balance amount.

  3. Reassessment Order

    • As the assessee’s explanation did not find favour, the AO completed the reassessment under Section 147 read with Section 144 and Section 144B vide order dated 13.01.2025.
    • The total income was determined at Rs. 13,27,422/- after adding Rs. 9,91,772/- as interest income allegedly arising from the compensation received.

  4. Order of the CIT(A)/NFAC

    • The assessee filed an appeal before the CIT(A)/NFAC, challenging both the reopening and the addition.
    • By order dated 19.09.2025, the CIT(A) upheld the reassessment and confirmed the addition of Rs. 9,91,772/- treating it as interest on which TDS had been wrongly deducted.