Jai Prakash Ahuja, Kanpur V. Income Tax Officer-2(2), Kanpur

ITA 341/LKW/2014

• Counselvise Citation: 34123714 RSA 2014
• Duration Of Justice: 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2003-2004
• Appeal Filed On: 05-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K RAM
• Keywords: Reopening of assessment; Invalid notice; Principle of natural justice; Tangible material; Competent authority; Reason to believe
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A , LUCKNOW BEFORE SHRI S UNIL KUMAR YADAV , JUDICIAL MEMBER AND SHRI. A. K. GARODIA , ACCOUNTANT MEMBER ITA NO. 341/LKW/2014 ASSESSMENT YEAR: 2003 - 04 JAI PRAKASH AHUJA 120/500 - B, LAJPAT NAGAR KANPU R V. INCOME TAX OFFICER 2(2) KANPUR PAN: AAKPA6291P (APP ELL ANT) (RESPONDENT) APP ELL ANT BY: SHRI. SWARAN SINGH, FCA RESPONDENT BY: SHRI. R. K. RAM, D.R. DATE OF HEARING: 16 0 6 2014 DATE OF PRONOUNCEMENT: 27 0 6 2014 O R D E R PER SUNIL KUMAR YAD AV: THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A), INTER ALIA, ON THE FOLLOWING GROUNDS: - 1 . THAT THE LD. C.I.T.(A) - !, DEHRADUN HOLDING CONCURRENT CHARGE OF C.I.T.(A) - I I , KANPUR HAS ERRED IN LAW AND ON FACTS IN SUSTAINING THE ACTION OF THE LD. A.O. WITH REGARD TO THE VALIDITY OF INITIATION OF PROCEEDINGS UNDER SECTION 147 OF THE INCOME TAX ACT, 1961. 2 . THAT WHILE SUSTAINING THE INITIATION OF PROCEEDINGS UNDER SECTION 147 OF THE INCOME TAX ACT, 1961, THE LD. C.I.T.(A) - I, DEHRADUN HOLDING CONCURRENT CHARGE OF C.I.T.(A) - II, KANPUR HAS FAILED TO CONSIDER AND APPRECIATE THAT THE NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT, 1961 DATED 31.03.2010 WAS ISSU E D AFTER TAKING APPROVAL OF COMMISSIONER OF INCOME TAX INSTEAD OF JOINT PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 2 - : COMMISSIO NER OF INCOME TAX , RANGE - 2, KANPUR. THEREFORE, THE IMPUGNED RE - ASSESSMENT ORDER IS ILLEGAL AND VOID - AB - INITIO. 3 . THAT THE ALLEGED NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT, 1961 WAS ISSUED BY THE LD. A.O. WAS WITHOUT ASSUMING PROPER JURISDICTION AND T HEREFORE THE IMPUGNED NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT, 1961 WAS ILLEGAL AND VOID AB INITIO. 4 . THAT THE LD. C.I.T.(A) - I , DEHRADUN HOLDING CONCURRENT CHARGE OF C.I.T.(A) - II, KANPUR HAS ERRED IN LAW AND ON FACTS IN SUSTAINING THE ADDITION OF RS.2 ,39,088/ - ON ACCOUNT OF LONG TERM CAPITAL GAINS ON SALE OF PLOT NO. 431/7 BL O CK - H , KAKADEO, KANPUR IN WHICH THE APPELLANT HAD 50% SHARE. 5 . THAT THE ORDER OF THE LD. C.I.T.(A) - I , DEHRADUN HOLDING CONCURRENT CHARGE OF C.I.T.(A) - II, KANPUR IS INSUPPORTABLE IN L AW AND ON FACTS AND DESERVES TO BE SET ASIDE. 6 . THAT THE ADDITIONS SUSTAINED BY THE LD. C.I.T.(A) - I, DEHRADUN HOLDING CONCURRENT CHARGE OF C.I.T.(A) - II, KANPUR ARE UNSUSTAINABLE IN LAW AND ORDER OF LD. C.I.T,(A) - I, DEHRADUN HOLDING CONCURRENT CHARGE OF C.I.T .(A) - II, KANPUR IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE AND EQUITY. THAT ANY OTHER RELIEF OR RELIFS AS YOUR HON O UR MAY DEEM FIT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, BE GRANTED. 2 . THROUGH THESE GROUNDS, THE ASSESSEE HAS RAISED PRELIMINARY OBJECTI ON WITH REGARD TO THE JURISDICTION OF THE ASSESSING OFFICER FOR ISSUING NOTICE UNDER SECTION 148 OF THE INCOME - TAX ACT, 1961 (HEREINAFTER CALLED IN SHORT THE ACT') FOR REOPENING OF ASSESSMENT. IN THIS REGARD, THE LD. COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO THE ASSESSMENT ORDER WITH THE SUBMISSION THAT THE ASSESSING OFFICER HAS RECORDED IN PARA 2 OF THE PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 3 - : ASSESSMENT ORDER THAT FOR REOPENING THE ASSESSMENT , SANCTION WAS ACCORDED BY THE LD. COMMISSIONER OF INCOME - TAX AND THEREAFTER NOTICE UNDER S ECTION 148 OF THE ACT WAS ISSUED. THIS FACT WAS NOT DISPUTED BY THE REVENUE EITHER BEFORE THE LD. CIT(A) OR BEFORE US. THEREFORE, IT IS AN ADMITTED FACT THAT NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED AFTER OBTAINING SANCTION/PERMISSION FROM THE LD. COMMISSIONER OF INCOME - TAX , WHEREAS AS PER SECTION 151(2) OF THE ACT , SANCTION IS REQUIRED FROM THE JT. COMMISSIONER OF INCOME - TAX AND NOT FROM THE LD. COMMISSIONER OF INCOME - TAX. SINCE THE SANCTION FOR REOPENING OF ASSESSMENT WAS NOT ACCORDED BY THE COMP ETENT AUTHORITY, THE ASSESSING OFFICER DID NOT ASSUME JURISDICTION FOR ISSUING NOTICE UNDER SECTION 148 OF THE ACT FOR REOPENING OF ASSESSMENT. THOUGH THE ASSESSEE HAS RAISED A SPECIFIC GROUND BEFORE THE LD. CIT(A), BUT THE LD. CIT(A) DID NOT COMMENT ON I T AND HAS CONFIRMED THE ORDER OF THE ASSESSING OFFICER SUSTAINING THE ADDITIONS MADE BY HIM. 3 . THE LD. COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO THE PROVISIONS OF SECTION 151(2) OF THE ACT , WITH THE SUBMISSION THAT IN THIS CASE ASSESSMENT WAS NOT FRAMED UNDER SECTION 143(3) OF THE ACT, THEREFORE, SUB - SECTION (2) OF SECTION 151 OF THE ACT WILL APPLY TO THE PRESENT CASE AND AS PER SUB - SECTION (2) OF SECTION 151 OF THE ACT, NO NOTICE SHALL BE ISSUED UNDER SECTION 148 OF THE ACT BY AN ASSESSING OFFICE R WHO IS BELOW THE RANK OF JT. COMMISSIONER OF INCOME - TAX AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS THE JT. COMMISSIONER OF INCOME - TAX IS SATISFIED WITH THE REASONS RECORDED BY THE ASSESSING OFFICER THAT IT IS A FIT CA SE FOR ISSUE OF SUCH NOTICE. SINCE SANCTION WAS ACCORDED BY THE LD. COMMISSIONER OF INCOME - TAX FOR ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT, SANCTION WAS NOT VALID AS PER PROVISIONS OF SECTION 151(2) OF THE ACT AND , THEREFORE , THE ASSESSING OFFICER DID NOT ASSUME A VALID JURISDICTION TO ISSUE NOTICE UNDER SECTION 148 OF THE ACT FOR REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE ACT. ONCE NOTICE ISSUED UNDER SECTION 148 OF THE PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 4 - : ACT IS NOT VALID, ASSESSMENT FRAMED CONSEQUENT THERETO DESERVES TO BE A NNULLED. IN SUPPORT OF THESE CONTENTIONS, THE LD. COUNSEL FOR THE ASSESSEE HAS PLACED RELIANCE UPON THE FOLLOWING JUDGMENTS: - ( I ) CIT VS. SPLS SIDDHARTHA LTD [2012] 17 TAXMANN.COM 138 (DELHI) . ( II ) GHANSHYAM K KHABRANI VS. ACIT - 1 [2012] 20 TAXMANN.COM 716 (BOM). ( III ) RAHUL CONSTRUCTIONS VS. DY. CIT [2010] 38 DTR (PUNE)(TRIB) 19. ( IV ) JAI SINGH VS. STATE OF U.P. THROUGH PRINCIPAL IN CIVIL MISC. WRIT PETITION (PIL) NO.35248 OF 2010. COP IES OF THE JUDGMENTS ARE ALSO PLACED ON RECORD. 4 . THE LD. D.R., ON THE OTHER HAND, HAS CONTEN DED THAT SINCE SANCTION WAS ACCORDED BY AN O FFICER SENIOR TO THE JT. COMMISSIONER OF INCOME - TAX , NO DEFECT CAN BE POINTED OUT IN THE SANCTION FOR ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT. MOREOVER, IF SOME TECHNICAL ERROR IS THERE , THAT WOULD BE CO VERED UNDER SECTION 292BB OF THE ACT, AS THE ASSESSEE HIMSELF HAS APPEARED AND PARTICIPATED IN THE PROCEEDINGS. 5 . THE LD. COUNSEL FOR THE ASSESSEE , IN REBUTTAL , WITH REGARD TO THE CURATIVE SECTION 292BB OF THE ACT, HAS CONTENDED THAT THIS PROVISION CAN BE AP PLIED TO PRESUME THAT THE NOTICE REQUIRED UNDER THE LAW IS SERVED UPON THE ASSESSEE WHERE THE ASSESSEE HAS JOINED THE ASSESSMENT PROCEEDINGS, BUT IN THE INSTANT CASE , THE DISPUTE IS WITH REGARD TO THE VALID JURISDICTION FOR ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT. THEREFORE, PROVISIONS OF SECTION 292BB OF THE ACT WOULD NOT APPLY TO THE PRESENT CASE. 6 . THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO INVITED OUR ATTENTION TO THE APPLICATION FILED UNDER RIGHT TO INFORMATION ACT , WITH THE SUBMISSION PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 5 - : THAT ASSES SMENT UNDER SECTION 143(3) OF THE ACT WAS NOT FRAMED IN THIS CASE AS ADMITTED BY THE DEPARTMENT IN REPLY UNDER THE R.T.I. ACT. THEREFORE, PROVISIONS OF SECTION 151(2) OF THE ACT ARE DIRECTLY APPLICABLE AND THE ASSESSING OFFICER WAS REQUIRED TO OBTAIN SANC TION FROM THE JT. COMMISSIONER OF INCOME - TAX AND NOT FROM THE LD. COMMISSIONER OF INCOME - TAX. 7 . HAVING GIVEN A THOUGHTFUL CONSIDERATION TO THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW, MATERIAL AVAILABLE ON RECORD A ND THE JUDGMENTS REFERRED TO BY THE ASSESSEE, IT IS EVIDENT FROM THE REPLY GIVEN BY THE DEPARTMENT TO THE ASSESSEE IN RESPONSE TO THE INFORMATION SOUGHT UNDER R.T.I. ACT, 2005 THAT NO ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS DONE FOR ASSESSMENT YEAR 2003 - 04 PRIOR TO THE RE - ASSESSMENT UNDER SECTION 147 OF THE ACT. IT IS ALSO AN ADMITTED FACT THAT ASSESSMENT WAS REOPENED AFTER FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. THEREFORE, BEFORE ISSUING NOTICE UNDER SECTION 148 OF THE ACT , THE AS SESSING OFFICER WAS REQUIRED TO OBTAIN SANCTION/APPROVAL FROM THE COMPETENT AUTHORITY PRESCRIBED UNDER SECTION 151 OF THE ACT. FOR THE SAKE OF REFERENCE, PROVISIONS OF SECTION 151 OF THE ACT IS EXTRACTED HEREUNDER: - 1 51. SANCTION FOR ISSUE OF NOTICE. -- (1 ) IN A CASE WHERE AN ASSESSMENT UNDER SUB - SECTION (3) OF SECTION 143 OR SECTION 147 HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO NOTICE SHALL BE ISSUED UNDER SECTION 148 BY AN ASSESSING OFFICER, WHO IS BELOW THE RANK OF ASSISTANT COMMISSIONER OR DEPU TY COMMISSIONER, UNLESS THE JOINT COMMISSIONER IS SATISFIED ON THE REASONS RECORDED BY 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 UNLESS THE CHIEF COMMISSIONER OR COMMISSIONER IS SATISFIED, ON THE REASONS PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 6 - : 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 - SECTI ON (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 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS THE JOINT COMMISSIONER IS SATISFIED, ON THE REASON S RECORDED BY SUCH ASSESSING OFFICER, THAT IT IS A FIT CASE FOR THE ISSUE OF SUCH NOTICE. 8 . UNDER SECTION 151 OF THE ACT , THE AUTHORITIES ARE IDENTIFIED WHO CAN ISSUE NOTICE FOR REOPENING OF ASSESSMENT UNDER SECTION 148 OF THE ACT AFTER FORMING A BELIEF TH AT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. AS PER SUB - SECTION (1) OF SECTION 151 OF THE ACT WHERE AN ASSESSMENT IS FRAMED UNDER SUB - SECTION (3) OF SECTION 143 OR 147 OF THE ACT , NO NOTICE SHALL BE ISSUED UNDER SECTION 148 OF THE ACT BY AN ASSESSI NG OFFICER WHO IS BELOW THE RANK OF ASSTT. COMMISSIONER OF INCOME - TAX/DY. COMMISSIONER OF INCOME - TAX UNLESS JT. COMMISSIONER OF INCOME - TAX IS SATISFIED ON THE REASONS RECORDED BY THE ASSESSING OFFICER THAT IT IS A FIT CASE FOR ISSUE OF SUCH NOTICE. IN CAS E ASSESSMENT REQUIRES REOPEN ING AFTER FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR , THE ASSESSING OFFICER IS REQUIRED TO OBTAIN APPROVAL/SANCTION FROM THE CHIEF COMMISSIONER OR COMMISSIONER BEFORE ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT. 9 . SUB - SECTION (2) OF THE ACT DEALS THOSE TYPES OF CASES WHERE ASSESSMENT WAS NOT COMPLETED UNDER SECTION 143(3) OF THE ACT OR 147 OF THE ACT. IN SUCH TYPE OF CASES, NO NOTICE SHALL BE ISSUED UNDER SECTION 148 OF THE ACT BY THE ASSESSING OFFICER, WHO IS BEL OW THE RANK OF JT. COMMISSIONER OF INCOME - TAX AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS JT. COMMISSIONER OF INCOME - TAX IS SATISFIED ON THE REASONS RECORDED BY THE ASSESSING OFFICER THAT IT IS A FIT CASE FOR ISSUANCE OF SUCH NOTICE. IT HAS BEEN CATEGORICALLY MENTIONED IN SUB - SECTION PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 7 - : (2) OF SECTION 151 OF THE ACT THAT SANCTION WAS REQUIRED BY THE ASSESSING OFFICER FROM THE JT. COMMISSIONER OF INCOME - TAX. 10 . IN THE INSTANT CASE, UNDISPUTEDLY NO ASSESSMENT WAS FRAMED UNDER SEC TION 143(3) OF THE ACT OR 147 OF THE ACT AS ADMITTED BY THE DEPARTMENT IN REPLY TO THE INFORMATION SOUGHT UNDER THE R.T.I. ACT. IT IS ALSO AN UNDISPUTED FACT THAT THE ASSESSMENT WAS SOUGHT TO BE REOPENED AFTER FOUR YEARS FROM THE END OF THE RELEVANT ASSES SMENT YEAR I.E. 2003 - 04 , AS NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED ON 31.3.2010. IT IS ALSO AN UNDISPUTED FACT THAT SANCTION/APPROVAL WAS ACCORDED BY THE LD. COMMISSIONER OF INCOME - TAX AND NOT BY THE JT. COMMISSIONER OF INCOME - TAX AS MENTIONED IN THE ASSESSMENT ORDER BY THE ASSESSING OFFICER. 11 . THEREFORE, IT IS ABUNDANTLY CLEAR THAT PROVISIONS OF SUB - SECTION (2) OF SECTION 151 OF THE ACT IS TO BE APPLIED FOR ISSUING NOTICE UNDER SECTION 148 OF THE ACT AND AS PER SUB - SECTION (2) OF SECTION 151 OF THE ACT , THE ASSESSING OFFICER WAS REQUIRED TO OBTAIN SANCTION/APPROVAL FROM THE JT. COMMISSIONER OF INCOME - TAX AND IN THE INSTANT CASE , APPROVAL/SANCTION WAS OBTAINED FROM THE LD. COMMISSIONER OF INCOME - TAX. THEREFORE, WE HAVE NO HESITATION IN HOLDING THAT T HE SANCTION ACCORDED BY THE LD. COMMISSIONER OF INCOME - TAX IS NOT IN ACCORDANCE WITH LAW AND IN SUCH A SITUATION SANCTION ACCORDED TO THE ASSESSING OFFICER IS NOT VALID AND HENCE THE ASSESSING OFFICER COULD NOT ASSUME JURISDICTION TO ISSUE NOTICE UNDER SEC TION 148 OF THE ACT AND IN THAT CASE WHEN THE ASSESSING OFFICER HAS ISSUED NOTICE UNDER SECTION 148 OF THE ACT WITHOUT ASSUMING VALID JURISDICTION, NOTICE ISSUED UNDER SECTION 148 OF THE ACT IS ILLEGAL AND VOID AB INITIO. 12 . WE HAVE CAREFULLY EXAMINED THE PRO VISIONS OF SECTION 292BB OF THE ACT AS REFERRED TO BY THE REVENUE AND WE FIND THAT SECTION 292BB OF THE ACT IS PRESUMPTIVE SECTION AND ON THE BASIS OF IT, IT CAN BE PRESUMED THAT NOTICE REQUIRED TO BE SERVED WAS SERVED UPON THE ASSESSEE IF THE PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 8 - : ASSESSEE JOI NS THE ASSESSMENT PROCEEDINGS. FOR THE SAKE OF REFERENCE, WE EXTRACT THE PROVISIONS OF SECTION 292BB OF THE ACT AS UNDER: - 292BB. NOTICE DEEMED TO BE VALID IN CERTAIN CIRCUMSTANCES. WHERE AN ASSESSEE HAS APPEARED IN ANY PROCEEDING OR COOPERATED IN ANY IN QUIRY RELATING TO AN ASSESSMENT OR REASSESSMENT, IT SHALL BE DEEMED THAT ANY NOTICE UNDER ANY PROVISION OF THIS ACT, WHICH IS REQUIRED TO BE SERVED UPON HIM, HAS BEEN DULY SERVED UPON HIM IN TIME IN ACCORDANCE WITH THE PROVISIONS OF THIS ACT AND SUCH ASSES SEE SHALL BE PRECLUDED FROM TAKING ANY OBJECTION IN ANY PROCEEDING OR INQUIRY UND ER THIS ACT THAT THE NOTICE WAS (A) NOT SERVED UPON HIM ; OR (B) NOT SERVED UPON HIM IN TIME ; OR (C) SERVED UPON HIM IN AN IMPROPER MANNER : 13 . THEREFORE, PROVISIONS OF SEC TION 292BB OF THE ACT IS NOT APPLICABLE IN THE PRESENT FACTS OF THE CASE, AS THE ISSUE IN DISPUTE IS WITH REGARD TO THE VALIDITY OF JURISDICTION ASSUMED BY THE ASSESSING OFFICER FOR ISSUING NOTICE UNDER SECTION 148 OF THE ACT. 14 . WE HAVE ALSO CAREFULLY PERUSE D VARIOUS JUDGMENTS RENDERED ON THE SUBJECT AND WE FIND THAT IN THE CASE OF CIT VS. SPLS SIDDHARTHA LTD . (SUPRA), THE HON'BLE DELHI HIGH COURT HAS CATEGORICALLY HELD THAT IT IS AN ESTABLISHED PRINCI PLE OF LAW THAT IF A PARTICULAR AUTHORITY HAS BEEN DESIGN ATED TO RECORD HIS/HER SATISFACTION ON ANY PARTICULAR ISSUE, THEN IT IS THAT AUTHORITY ALONE WHO SHOULD APPLY HIS/HER INDEPENDENT MIND TO RECORD HIS/HER SATISFACTION AND FURTHER MANDATORY CONDITION IS THAT THE SATISFACTION RECORDED SHOULD BE 'INDEPENDENT' AND NOT 'BORROWED' OR 'DICTATED' SATISFACTION. THE RELEVANT OBSERVATIONS OF THE HON'BLE HIGH COURT ARE EXTRACTED HEREUNDER: - A NOTICE SEEKING TO REOPEN ASSESSMENT UNDER SECTION 148 WAS ISSUED AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 9 - : ASS ESSMENT YEAR. SINCE FOUR YEARS HAD ELAPSED, THE ASSESSING OFFICER WAS REQUIRED TO TAKE APPROVAL OF THE COMPETENT AUTHORITY UNDER SECTION 151(1). THE ASSESSING OFFICER THUS ISSUED NOTICE AFTER TAKING APPROVAL OF THE COMMISSIONER. THE OBJECTION OF THE ASSESS EE BEFORE THE TRIBUNAL WAS THAT THE ASSESSING OFFICER HAD NOT TAKEN THE APPROVAL FROM THE JOINT COMMISSIONER, INSTEAD, APPROVAL WAS TAKEN FROM THE COMMISSIONER WHO WAS NOT COMPETENT TO APPROVE EVEN WHEN HE WAS A HIGHER AUTHORITY INASMUCH AS SECTION 151 SPE CIFICALLY MENTIONS JOINT COMMISSIONER AS THE COMPETENT AUTHORITY. THIS CONTENTION OF THE ASSESSEE WAS ACCEPTED BY THE TRIBUNAL THEREBY QUASHING THE ASSESSMENT PROCEEDINGS. IT WAS APPARENT FROM RECORDS THAT THE ASSESSING OFFICER HAD SPECIFICALLY SOUGHT THE APPROVAL OF THE COMMISSIONER ONLY. THEREFORE, IT COULD NOT BE SAID THAT THE JOINT COMMISSIONER/ADDITIONAL COMMISSIONER HAD GRANTED THE APPROVAL. FURTHER, NO DOUBT, THE FILE WAS ROUTED THROUGH ADDITIONAL COMMISSIONER. HOWEVER, HE ALSO, IN TURN FORWARDED THE SAME TO THE COMMISSIONER. [PARA 4] IT IS CLEAR THAT THE ADDITIONAL CIT DID NOT APPLY HIS MIND OR GAVE ANY SANCTION. INSTEAD, HE REQUESTED COMMISSIONER TO ACCORD THE APPROVAL. IT, THUS, CANNOT BE SAID THAT IT IS AN IRREGULARITY CURABLE UNDER SECTION 2925. [PARA 5] SECTION 116 ALSO DEFINES THE INCOME - TAX AUTHORITIES AS DIFFERENT AND DISTINCT AUTHORITIES. SUCH DIFFERENT AND DISTINCT AUTHORITIES HAVE TO EXERCISE THEIR POWERS IN ACCORDANCE WITH LAW AS PER THE POWERS GIVEN TO THEM IN THE SPECIFIED CIRCUMSTANCES. IF POWERS CONFERRED ON A PARTICULAR AUTHORITY ARE ARROGATED BY OTHER AUTHORITY WITHOUT MANDATE OF LAW, IT WILL CREATE CHAOS IN THE ADMINISTRATION OF LAW AND HIERARCHY OF ADMINISTRATION WILL MEAN NOTHING. SATISFACTION OF ONE PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 10 - : AUTHORITY CANNOT BE SUBSTITUTED BY THE SATISFACTION OF THE OTHER AUTHORITY. IT IS TRITE THAT WHEN A STATUTE REQUIRES, A THING TO BE DONE IN A CERTAIN MANNER, IT SHALL BE DONE IN THAT MANNER ALONE AND THE COURT WOULD NOT EXPECT ITS BEING DONE IN SOME EITHER MANNER. [PARA 7] THUS, IF AUTH ORITY IS GIVEN EXPRESSLY BY AFFIRMATIVE WORDS UPON A DEFINED CONDITION, THE EXPRESSION OF THAT CONDITION EXCLUDES THE DOING OF THE ACT AUTHORISED UNDER OTHER CIRCUMSTANCES THAN THOSE AS DEFINED. IT IS ALSO ESTABLISHED PRINCIPLE OF LAW THAT IF A PARTICULAR AUTHORITY HAS BEEN DESIGNATED TO RECORD HIS/HER SATISFACTION ON ANY PARTICULAR ISSUE, THEN IT IS THAT AUTHORITY ALONE WHO SHOULD APPLY HIS/HER INDEPENDENT MIND TO RECORD HIS/HER SATISFACTION AND FURTHER MANDATORY CONDITION IS THAT THE SATISFACTION RECORDED SHOULD BE 'INDEPENDENT' AND NOT 'BORROWED' OR 'DICTATED' SATISFACTION. LAW IN THIS REGARD IS NOW WELL - SETTLED. [PARA 8] THE APEX COURT IN THE CASE O/ANIRUDH SINHJI KARAN SINHJI JADEJA V. STATE OF GUJARAT [1995] 5 SCC 302 HAS HELD THAT IF A STATUTORY AUTHO RITY HAS BEEN VESTED WITH JURISDICTION, HE HAS TO EXERCISE IT ACCORDING TO ITS OWN DISCRETION. IF DISCRETION IS EXERCISED UNDER THE DIRECTION OR IN COMPLIANCE WITH SOME HIGHER AUTHORITIES INSTRUCTION, THEN IT WILL BE A CASE OF FAILURE TO EXERCISE DISCRETIO N ALTOGETHER. [PARA 9] THEREFORE, THE TRIBUNAL HAS RIGHTLY DECIDED THE LEGAL ASPECT, KEEPING IN VIEW WELL - ESTABLISHED PRINCIPLES LAW LAID DOWN IN CATENA OF JUDGMENTS INCLUDING THAT OF THE SUPREME COURT. [PARA 10] 15 . SIMILAR VIEW WAS ALSO REITERATED BY THE HO N'BLE BOMBAY HIGH COURT IN THE CASE OF GHANSHYAM K KHABRANI VS. ACIT - 1 (SUPRA) BY HOLDING PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 11 - : THAT WHEN SECTION 151(2) OF THE ACT MANDATES SATISFACTION OF JT. COMMISSIONER OF INCOME - TAX FOR ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT , THE REOPENING OF ASSE SSMENT WITH THE APPROVAL OF THE LD. COMMISSIONER OF INCOME - TAX IS NOT SUSTAINABLE. THE RELEVANT OBSERVATIONS OF THE HON'BLE BOMBAY HIGH COURT ARE ALSO EXTRACTED HEREUNDER FOR THE SAKE OF REFERENCE: - THE ASSESSMENT OF THE ASSESSEE FOR ASSESSMENT YEAR 200 4 - 05 WAS SOUGHT TO BE REOPENED BY ISSUING A NOTICE DATED 30 - 3 - 2011 BEYOND A PERIOD OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. THE REASONS ON THE BASIS OF WHICH THE ASSESSMENT FOR ASSESSMENT YEAR 2004 - 05 WAS SOUGHT TO BE REOPENED WERE FOUNDED ON A LETTER DATED 11 - 3 - 2010 RECEIVED FROM THE ADDITIONAL DIRECTOR OF INCOME - TAX (INVESTIGATION) TO THE EFFECT THAT AN AMOUNT APPROXIMATELY OF RS. 10 CRORES WAS RECEIVED BY THE ASSESSEE DURING THE FINANCIAL YEAR 2002 - 03 CORRESPONDING TO ASSESSMENT YEAR 2003 - 04 BUT FOR THE ASSESSMENT YEAR 2003 - 04, ONLY AN ADDITION OF RS. 4.9 CRORES WAS MADE AND SINCE AN AMOUNT OF RS. 5.1 CRORES REMAINED TO BE TAXED, SAID AMOUNT WAS SOUGHT TO - BE TAXED AS INCOME HAVING ESCAPED ASSESSMENT FOR ASSESSMENT YEAR 2004 - 05. THE ASSESS EE CHALLENGED IMPUGNED NOTICE CONTENDING THAT THE ASSESSING OFFICER COULD NOT HAVE ANY REASON TO BELIEVE THAT THERE WAS ESCAPEMENT OF INCOME FOR ASSESSMENT YEAR 2004 - 05, SINCE EVEN ACCORDING TO THE REVENUE, INCOME WHICH HAD BEEN RECEIVED IN ASSESSMENT YEAR 2003 - 04 HAD ESCAPED ASSESSMENT; THAT THE LETTER OF THE ADDITIONAL DIT DATED 11 - 3 - 2010 WAS AVAILABLE WHEN THE ORDER OF ASSESSMENT FOR ASSESSMENT YEAR 2003 - 04 WAS PASSED AND, HENCE, THERE WAS ABSOLUTELY NO FRESH OR TANGIBLE MATERIAL ON THE BASIS OF WHICH TH E ASSESSMENT WAS SOUGHT TO BE REOPENED , FOR ASSESSMENT YEAR 2004 - 05; AND THAT UNDER SECTION 151(2) THE APPROVAL WAS REQUIRED TO BE ISSUED BY THE PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 12 - : ADDITIONAL COMMISSIONER BUT IN THE INSTANT CASE, THE ADDITIONAL COMMISSIONER HAD NOT GRANTED APPROVAL, HE HAVI NG FORWARDED THE PROPOSAL SUBMITTED BY THE ASSESSING OFFICER TO THE COMMISSIONER. HELD ON ADMITTED FACTS NO REASONABLE PERSON DULY INFORMED IN LAW COULD HAVE FORMED A REASON TO BELIEVE THAT THERE WAS AN ESCAPEMENT OF INCOME IN ASSESSMENT YEAR 2004 - 05. THE CASE OF THE REVENUE IS THAT AN AMOUNT OF RS. 10 CRORES WAS RECEIVED BY THE ASSESSEE DURING THE FINANCIAL YEAR CORRESPONDING TO ASSESSMENT YEAR 2003 - 04 BUT HAS NOT BEEN BROUGHT TO TAX. THAT BEING THE POSITION, IT IS IMPOSSIBLE TO COMPREHEND AS TO HOW THE AS SESSMENT FOR ASSESSMENT YEAR 2004 - 05 CAN BE REOPENED. THE PROCEEDINGS FOR ASSESSMENT YEAR 2003 - 04 ARE PENDING IN APPEAL. THE REVENUE IS AT LIBERTY TO SEEK RECOURSE TO ITS LEGITIMATE POWERS AVAILABLE IN LAW IN RELATION TO ASSESSMENT YEAR 2003 - 04 WHERE THE A PPEAL IS PENDING. THE MANDATORY REQUIREMENT OF SECTION 147 IS THAT THERE MUST BE A REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. EX - FACIE THE REASONS WHICH WERE DISCLOSED TO THE ASSESSEE CANNOT FORM THE BASIS OF A REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT FOR ASSESSMENT YEAR 2004 - 05. MOREOVER, IT IS EVIDENT THAT EVEN THE LETTER DATED 11 - 3 - 2010 OF THE ADDITIONAL DIT (INVESTIGATION) WAS MUCH PRIOR TO THE FLNALIZATION OF THE ASSESSMENT FOR ASSESSMENT YEAR 2003 - 04 ON 27 - 12 - 2010. THEREFORE, TH IS IS NOT A CASE WHERE THERE IS ANY TANGIBLE MATERIAL ON THE BASIS OF WHICH THE ASSESSMENT FOR ASSESSMENT YEAR 2004 - 05 CAN LEGITIMATELY BE OPENED. [PARA 5] THE SECOND GROUND UPON WHICH THE REOPENING IS SOUGHT TO BE CHALLENGED IS THAT THE MANDATORY REQUIREM ENT OF SECTION 151(2) HAS NOT BEEN FULFILLED. SECTION 151 REQUIRES A SANCTION TO BE TAKEN PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 13 - : FOR THE ISSUANCE OF A NOTICE UNDER SECTION 148 IN CERTAIN CASES. IN THE INSTANT CASE, AN ASSESSMENT HAD NOT BEEN MADE UNDER SECTION 143(3) OR SECTION 147 FOR ASSESSME NT YEAR 2004 - 05. HENCE, UNDER SUB - SECTION (2) OF SECTION 151, NO NOTICE CAN BE ISSUED UNDER SECTION 148 BY AN ASSESSING OFFICER WHO IS BELOW THE RANK OF JOINT COMMISSIONER AFTER THE EXPIRY OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR I UNLESS TH E JOINT COMMISSIONER IS SATISFIED, ON THE REASONS RECORDED BY SUCH ASSESSING OFFICER, THAT IT IS A FIT CASE FOR THE ISSUE OF SUCH NOTICE. THE EXPRESSION 'JOINT COMMISSIONER' IS DEFINED IN SECTION 2(28C) TO MEAN A PERSON APPOINTED TO BE A JOINT COMMISSIONER OF INCOME - TAX OR AN ADDITIONAL COMMISSIONER OF INCOME - TAX UNDER SECTION 117(1). IN THE INSTANT CASE, THE RECORD BEFORE THE COURT INDICATES THAT THE ASSESSING OFFICER SUBMITTED A PROPOSAL ON 28 - 3 - 2011 TO THE COMMISSIONER (APPEALS) THROUGH THE ADDITIONAL CO MMISSIONER. ON 28 - 3 - 2011, THE ADDITIONAL COMMISSIONER FORWARDED THE PROPOSAL TO THE COMMISSIONER. ON THIS, A COMMUNICATION WAS ISSUED ON 29 - 3 - 2011 FROM THE OFFICE OF THE COMMISSIONER (1) CONVEYING APPROVAL TO THE PROPOSAL SUBMITTED BY THE ASSESSING OFFICER . THERE IS MERIT IN THE CONTENTION RAISED ON BEHALF OF THE ASSESSEE THAT THE REQUIREMENT OF SECTION 151(2) COULD HAVE ONLY BEEN FULFILLED BY THE SATISFACTION OF THE JOINT COMMISSIONER THAT THIS IS A FIT CASE FOR THE ISSUANCE OF A NOTICE UNDER SECTION 148. SECTION 151(2) MANDATES THAT THE SATISFACTION HAS TO BE OF THE JOINT COMMISSIONER. THAT EXPRESSION HAS A DISTINCT MEANING BY VIRTUE OF THE DEFINITION IN SECTION 2(28C). THE COMMISSIONER IS NOT A JOINT COMMISSIONER WITHIN THE MEANING OF SECTION 2(28C). IN T HE INSTANT CASE, THE ADDITIONAL COMMISSIONER FORWARDED THE PROPOSAL SUBMITTED BY THE ASSESSING OFFICER TO THE PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 14 - : COMMISSIONER. THE APPROVAL WHICH HAS BEEN GRANTED IS NOT BY THE ADDITIONAL COMMISSIONER BUT BY THE COMMISSIONER. THERE IS NO STATUTORY PROVISION U NDER WHICH A POWER TO BE EXERCISED BY AN OFFICER CAN BE EXERCISED BY A SUPERIOR OFFICER. WHEN THE STATUTE MANDATES THE SATISFACTION OF A PARTICULAR FUNCTIONARY FOR THE EXERCISE OF A POWER, THE SATISFACTION MUST BE OF THAT AUTHORITY. WHERE A STATUTE REQUIRE S SOMETHING TO BE DONE IN A PARTICULAR MANNER, IT HAS TO BE DONE IN THAT MANNER. [PARA 6] ONCE THE COURT HAS COME TO THE CONCLUSION THAT THERE WAS NO COMPLIANCE OF THE MANDATORY REQUIREMENTS OF SECTIONS 147 AND 151(2), THE NOTICE REOPENING THE ASSESSMENT C ANNOT BE SUSTAINED IN LAW. [PARA 7] . 16 . FOLLOWING THE AFORESAID JUDGMENTS OF THE HON'BLE DELHI AND BOMBAY HIGH COURT, THE ITAT DELHI BENCH IN THE CASE OF INCOME TAX OFFICER VS. TIRUPATI CYLINDERS LTD., NEW DELHI (SUPRA) HAS ALSO HELD THAT UNDER SECTION 151 OF THE ACT, IT WAS ONLY THE JT. COMMISSIONER OR ADDL. COMMISSIONER WHO COULD GRANT THE APPROVAL FOR ISSUUANCE OF NOTICE UNDER SECTION 148 OF THE ACT AND IF THE APPROVAL IS NOT GRANTED BY THE JT. COMMISSIONER OR ADDL. COMMISSIONER AND INSTEAD IT WAS GRANTED BY THE LD. COMMISSIONER OF INCOME - TAX , THEN THE SAME WAS NOT AN IRREGULARITY CURABLE UNDER SECTION 292B OF THE ACT AND NOTICE UNDER SECTION 148 OF THE ACT WOULD BE INVALID AND VOID AB INITIO. THE TRIBUNAL ACCORDINGLY QUASHED THE ASSESSMENT AFTER HOLD ING THAT REOPENING WAS NOT DONE IN ACCORDANCE WITH THE PROVISIONS OF THE ACT. 17 . AGAIN THE SAME VIEW WAS TAKEN BY THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF RAHUL CONSTRUCTIONS VS. DY. CIT (SUPRA). 18 . KEEPING IN VIEW THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE JUDGMENTS REFERRED TO ABOVE, WE ARE OF THE CONSIDERED PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 15 - : OPINION THAT SANCTION ACCORDED BY THE LD. COMMISSIONER OF INCOME - TAX TO THE ASSESSING OFFICER FOR ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT WAS NOT PROPER, THEREFORE, THE ASSESSI NG OFFICER DID NOT ASSUME PROPER JURISDICTION TO ISSUE NOTICE UNDER SECTION 148 OF THE ACT. THUS, NOTICE ISSUED UNDER SECTION 148 OF THE ACT IS INVALID AND , THEREFORE , ASSESSMENT FRAMED CONSEQUENT THERETO IS INVALID AND VOID AB INITIO. WE ACCORDINGLY QUA SH THE ASSESSMENT FRAMED CONSEQUENT TO ILLEGAL/INVALID NOTICE. 19 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27.6.2014. SD/ - SD/ - [ A. K. GARODIA ] [ S UNIL KUMAR Y ADAV ] ACCOUNTANT MEMBER JUDICIAL MEMBER DAT ED: 27 TH JUNE , 2014 JJ: 2006 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR ASSISTANT REGISTRAR PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ )