M/s. Raj Metal Co., Delhi V. ITO, New Delhi

ITA 2842/DEL/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6433 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 2
• Next Hearing Date: 20-12-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 18-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B RAMANJANEYULU
• Assessee Lawyers: VIVEK SINGHAL
• Keywords: Competent authority
• Section: 143(3); 148; 6; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : SMC-II : NEW DELHI BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER ITA NO.2842/DEL/2016 ASSESSMENT YEAR : 2006-07 RAJ METAL CO., 4962, SADAR BAZAR, DELHI. PAN : AAAFR3947F VS. ITO, WARD-39(3), 21 ST FLOOR, CIVIC CENTRE, JL NEHRU MARG, PRATYAKSH KAR BHAWAN, NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VIVEK SINGHAL, CA RESPONDENT BY: SHRI B. RAMANJANEYULU, SR. DR DATE OF HEARING : 20.12.2016 DATE OF PRONOUNCEMENT: 21.12.2016 ORDER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) ON 18.03.2016 IN RELATION TO THE ASSESSMENT YEAR 2006-07. 2. THE ASSESSEE HAS RAISED AN ADDITIONAL GROUND WHI CH READS AS UNDER:- THAT AS IN THE CASE OF THE APPELLANT/ASSESSEE THE ASSESSMENT ORDER FOR A.Y. 2006-07 WAS PASSED U/S 143(3) ON 30.04.2008 BY THE INCOME TAX OFFICER WARD 39(2) NEW DELHI, THEREFORE THE ISSUE O F NOTICE U/S 148 ON 30.03.2013 AFTER TAKING SANCTION FOR APPROVAL FROM THE JOINT COMMISSIONER OF INCOME TAX RANGE 39 NEW DELHI IS VOID AB-INITIO AND ITA NO.2842/DEL/2016 2 THEREFORE THE CONSEQUENT RE-ASSESSMENT ORDER DATED 31.01.2014 IS BAD IN LAW AND DESERVES TO BE QUASHED. 3. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT THE ASSESSEE FILED R ETURN ON 22.9.2006 WHICH WAS ORIGINALLY PROCESSED U/S 143(1) ON 31.1.2007. THEREAFTER, AN ORDER U/S 143(3) DATED 30.4.2008 WAS PASSED ACCEPTING THE RET URNED INCOME. A COPY OF THIS ORDER HAS BEEN PLACED ON RECORD. THEREAFTE R, THE AO INITIATED INSTANT RE-ASSESSMENT PROCEEDINGS AND PASSED THE ORDER DATE D 31.1.2014 U/S 144 READ WITH 147 OF THE ACT. REASONS FOR REASSESSMENT HAVE BEEN RECORDED ON PAGE 2 OF THE ORDER. IT HAS BEEN MENTIONED ON THE SAME PAGE THAT THE AO TOOK: ADMINISTRATIVE APPROVAL FROM THE JOINT CIT, RANGE-39, NEW DELHI, GRANTED ON 28.3.2013, THE ASSESSMENT OF THE ASSESSE E FOR AY 2006-07 WAS REOPENED AS PER SECTION 147 OF I. TAX ACT. EVENTU ALLY, THE ASSESSMENT WAS COMPLETED BY MAKING AN ADDITION OF RS.11,17,449/-. THE ASSESSEES APPEAL WAS DISMISSED BY THE LD. CIT(A) AND THE ADDITION WA S ENHANCED TO RS.13,46,486/-. 4. THE ASSESSEE HAS RAISED THE ABOVE ADDITIONAL GRO UND, WHICH IS APPARENTLY A LEGAL GROUND NOT REQUIRING ANY FRESH I NVESTIGATION OF FACTS. THE SAME IS, THEREFORE, ADMITTED FOR ADJUDICATION. THE SHORT POINT RAISED BY THE ITA NO.2842/DEL/2016 3 LD. AR IS THAT THE INSTANT REASSESSMENT SHOULD HAVE BEEN DONE ONLY AFTER TAKING APPROVAL FROM THE CHIEF COMMISSIONER OR COMM ISSIONER, AS THE CASE MAY BE, SINCE THE ORIGINAL ASSESSMENT IN THIS CASE WAS COMPLETED U/S 143(3) AND THE SANCTION FOR REASSESSMENT ACTUALLY OBTAINED FROM JCIT RENDERED THE ASSESSMENT ORDER VOID AB INITIO . 5. MATERIAL PART OF SECTION 151, PRIOR TO ITS SU BSTITUTION BY THE FINANCE ACT, 2015, READS AS UNDER :- `SANCTION FOR ISSUE OF NOTICE. 151. (1) IN A CASE WHERE AN ASSESSMENT UNDER SUB-SECTIO N (3) OF SECTION 143 OR SECTION 147 HAS BEEN MADE FOR THE RELEVANT ASSES SMENT YEAR, NO NOTICE SHALL BE ISSUED UNDER SECTION 148 BY AN ASSESSING O FFICER, WHO IS BELOW THE RANK OF ASSISTANT COMMISSIONER OR DEPUTY COMMISSION ER, UNLESS THE JOINT COMMISSIONER IS SATISFIED ON THE REASONS RECORDED B Y SUCH ASSESSING OFFICER THAT IT IS A FIT CASE FOR THE ISSUE OF SUCH NOTICE : PROVIDED THAT, AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, NO SUCH NOTICE SHALL BE ISSUED UNL ESS THE CHIEF COMMISSIONER OR COMMISSIONER IS SATISFIED, ON THE R EASONS RECORDED BY THE ASSESSING OFFICER AFORESAID, THAT IT IS A FIT CASE FOR THE ISSUE OF SUCH NOTICE. (2) IN A CASE OTHER THAN A CASE FALLING UNDER SUB-S ECTION (1), NO NOTICE SHALL BE ISSUED UNDER SECTION 148 BY AN ASSESSING OFFICER , WHO IS BELOW THE RANK OF JOINT COMMISSIONER, AFTER THE EXPIRY OF FOUR YEA RS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS THE JOINT COMMISSI ONER IS SATISFIED, ON THE REASONS RECORDED BY SUCH ASSESSING OFFICER, THAT IT IS A FIT CASE FOR THE ISSUE OF SUCH NOTICE. 6. A BARE PERUSAL OF SUB-SECTION (1) OF SECTION 151 REVEALS THAT SANCTION FOR ISSUE OF NOTICE SHOULD BE OBTAINED BY THE AO FR OM JCIT. IN CASE A ITA NO.2842/DEL/2016 4 PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT A SSESSMENT YEAR HAS EXPIRED AND THE ORIGINAL ASSESSMENT WAS MADE U/S 14 3(3) OR SECTION 147, THEN, THE PROVISO PROVIDES THAT NO NOTICE CAN BE IS SUED WITHOUT SEEKING SANCTION FROM THE CHIEF COMMISSIONER OF INCOME-TAX OR COMMISSIONER OF INCOME-TAX. SUB-SECTION (2) OF SECTION 151, ON THE OTHER HAND, APPLIES TO CASES NOT FALLING UNDER SUB-SECTION (1). THE EFFEC T OF SUB-SECTION (2) IS THAT WHERE NO ASSESSMENT WAS EARLIER MADE, NOTICE CAN BE ISSUED BY AN AO U/S 148 AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR ONLY AFTER OBTAINING SANCTION FROM JCIT. THUS , IT IS APPARENT THAT THERE ARE TWO CATEGORIES OF CASES REQUIRING SANCTION FOR ISSUE OF NOTICE U/S 148 VIZ., THOSE IN WHICH ASSESSMENT WAS EARLIER MADE U/ S 143(3) OR SECTION 147, WHICH ARE COVERED U/S 151(1) OF THE ACT AND REST OF THE CASES, WHICH ARE COVERED U/S 151(2) OF THE ACT. 7. ADVERTING TO THE FACTS OF THE INSTANT CASE, IT I S FOUND AS AN ADMITTED POSITION THAT THE ORIGINAL ASSESSMENT WAS COMPLETED U/S 143(3) ON 30.4.2008 AND THE SANCTION WAS OBTAINED BY THE AO O N 28.3.2013, THAT IS , AFTER A PERIOD OF FOUR YEARS FROM THE END OF THE RE LEVANT ASSESSMENT YEAR, BEING, 2006-07. IN THAT VIEW OF THE MATTER, THE CA SE IS DIRECTLY COVERED UNDER PROVISO TO SUB-SECTION (1) OF SECTION 151 AS PER WHICH THE SANCTION ITA NO.2842/DEL/2016 5 WAS REQUIRED FROM CHIEF COMMISSIONER OR COMMISSIONE R AND NOT JCIT. IT IS APPARENT FROM THE ASSESSMENT ORDER THAT THE AO O BTAINED SANCTION FROM JCIT. AS THE PRE-REQUISITE OF RE-ASSESSMENT, BEING, SANCTION FROM THE COMPETENT AUTHORITY, WAS OBTAINED BY THE AO FROM A WRONG AUTHORITY, THE PROCEEDINGS FLOWING THEREFROM AND THE CONSEQUENTIAL ORDER PASSED CANNOT BE SUSTAINED. 8. THE HONBLE JURISDICTIONAL HIGH COURT IN CIT VS. SPLS SIDDHARTHA LTD. (2012) 345 ITR 223 (DEL) DEALT WITH ALMOST SIMILAR SITUATION. THE AO IN THAT CASE SOUGHT APPROVAL OF COMMISSIONER ONLY A S AGAINST THE REQUIRED SANCTION FROM THE JCIT. THE HONBLE HIGH COURT HELD THAT IT COULD NOT BE SAID THAT THE JOINT COMMISSIONER/ADDITIONAL COMMISS IONER HAD GRANTED THE APPROVAL AND ACCORDINGLY SET ASIDE THE NOTICE AND T HE CONSEQUENTIAL ASSESSMENT. 9. AS SUCH, I AM OF THE CONSIDERED OPINION THAT THE AO DID NOT ACQUIRE A VALID JURISDICTION FOR THE REASSESSMENT. THE ASSESS MENT ORDER IS QUASHED AND THE RESULTANT APPEAL ORDER IS CONSEQUENTLY SET ASID E. IN VIEW OF MY DECISION ON THE ADDITIONAL GROUND QUASHING THE RE-ASSESSMENT ORDER PASSED BY THE AO FOR NOT OBTAINING SANCTION FROM A COMPETENT AUTH ORITY BEFORE ISSUING ITA NO.2842/DEL/2016 6 NOTICE U/S 148, THERE IS NO NEED TO ADJUDICATE ON T HE GROUNDS TAKEN IN THE MEMORANDUM OF APPEAL. 10. IN THE RESULT, THE APPEAL FILED BY THE AS SESSEE IS ALLOWED. THE DECISION WAS PRONOUNCED IN THE OPEN COU RT ON 21 ST DECEMBER, 2016. SD/- (R.S. SYAL) ACCOUNTANT MEMBER DATED: 21 ST DECEMBER, 2016. DK COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR DY. REGISTRAR, ITAT, NEW DELHI