M/s Global Associates, Bangalore V. DCIT, Bangalore

ITA 602/BANG/2015

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4785 (ITAT-BANGALORE)
• Duration Of Justice: 6 year(s) 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 08-09-2021
• Assessment Year: 2005-2006
• Appeal Filed On: 10-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANKAR GANESH
• Section: 143(3); 201; 147; 148

Judgement Text

ITA NO.602/BANG/2015 M/S. GLOBAL ASSOCIATES, BENGALURU IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI B.R. BASKARAN, ACCOUNTANT MEMBER ITA NO.602/BANG/2015 ASSESSMENT YEAR : 2005-06 M/S. GLOBAL ASSOCIATES NO.14, GENEVA HOUSE CUNNINGHAM ROAD BANGALORE 560 052 PAN NO :AAGFG0074L VS. DEPUTY COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE-1(4) BENGALURU APPELLANT RESPONDENT APPELLANT BY : SHRI NARENDRA SHARMA, A.R. RESPONDENT BY : SHRI SANKAR GANESH, D.R. DATE OF HEARING : 08.09.2021 DATE OF PRONOUNCEMENT : 30.09.2021 O R D E R PER B.R. BASKARAN, ACCOUNTANT MEMBER: THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 29.12.2014 PASSED BY LD. CIT(A)-11, BENGALURU AND I T RELATES TO ASSESSMENT YEAR 2005-06. THE ASSESSEE HAS RAISED A S MANY AS 18 GROUNDS. AT THE TIME OF HEARING, WE HEARD THE PARTI ES ON GROUND NO.6 WHICH READS AS UNDER: 6. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OU GHT TO HAVE APPRECIATED THAT THE NOTICE ISSUED BY OBTAINING PRI OR APPROVAL FROM THE LEARNED COMMISSIONER OF INCOME-TAX IS BAD IN LAW AN D CONTRARY TO THE PROVISIONS OF SECTION 151(2) OF THE ACT ON THE FACT S AND CIRCUMSTANCES OF THE CASE. ITA NO.602/BANG/2015 M/S. GLOBAL ASSOCIATES, BENGALURU PAGE 2 OF 6 2. THE LD. A.R. SUBMITTED THAT THE ASSESSEE IS AN AOP CONSTITUTED AS PER AGREEMENT OF VENTURE EXECUTED ON 19.3.2004. THE ASSESSEE IS CARRYING ON THE BUSINESS IN REAL ES TATE TRANSACTIONS. CONSEQUENT TO SOME SEARCH PROCEEDINGS CONDUCTED IN THE HANDS OF M/S. H.M. CONSTRUCTIONS AND OTHER GROUP CASES ON 30 .6.2011, THE CASE OF THE ASSESSEE WAS REOPENED BY ISSUING A NOTI CE DATED 27.3.2012 U/S 148 OF THE ACT. IN THE ASSESSMENT OR DER, THE A.O. HAS STATED THAT THE NOTICE U/S 148 OF THE INCOME-TA X ACT,1961 ['THE ACT' FOR SHORT] WAS ISSUED AFTER OBTAINING PRIOR AP PROVAL OF THE COMMISSIONER OF INCOME TAX, KARNATAKA (CENTRAL), BE NGALURU. 3. THE LD. A.R. SUBMITTED THAT THE ASSESSEE WAS NOT EA RLIER ASSESSED TO TAX AND HENCE THE A.O. SHOULD HAVE OBTA INED PERMISSION FROM JOINT COMMISSIONER OF INCOME TAX AS PER PROVISIONS OF SECTION 151(2) OF THE ACT AND NOT FRO M LD. COMMISSIONER OF INCOME TAX. ACCORDINGLY HE SUBMITT ED THAT THE AO SHOULD NOT HAVE OBTAINED APPROVAL FROM LD COMMIS SIONER OF INCOME TAX, SINCE HE IS NOT THE APPROPRIATE AUTHORI TY. HENCE THE IMPUGNED ASSESSMENT IS INVALID AND LIABLE TO BE QUA SHED. IN SUPPORT OF THESE CONTENTIONS, THE LD. A.R. PLACED H IS RELIANCE ON THE FOLLOWING DECISIONS: 1. GHANSHYAM K. KHABRANI VS. ACIT (2012) 20 TAXMANN.CO M 716 (BOM.) 2. CIT VS. SOYUZ INDUSTRIAL RESOURCES LTD. (2015) 58 T AXMANN.COM 336 (DELHI) 3. CIT VS. SPLS SIDDHARTHA LTD. (2012) 17 TAXMANN.COM 138 (DELHI.) 4. GAJINDER SINGH CHHABRA VS. ITO (2014) 50 TAXMANN.CO M 312 (DELHI-TRIB) 5. SARDAR BALBIR SINGH VS. ITO (2015) 61 TAXMANN.COM 3 20 (LUCKNOW-TRIB) 4. THE LD. D.R. ON THE CONTRARY SUBMITTED THAT THE PRO VISIONS OF SECTION 151 OF THE ACT PRESCRIBE FOR GETTING APPROV AL FROM HIGHER AUTHORITIES, IN ORDER TO PROTECT THE INTERESTS OF T HE ASSESSEE. ITA NO.602/BANG/2015 M/S. GLOBAL ASSOCIATES, BENGALURU PAGE 3 OF 6 CONSIDERING THE OBJECT OF PROVISIONS OF SECTION 151 OF THE ACT, APPROVAL GIVEN BY LD. CIT, WHO IS SUPERIOR TO JOINT COMMISSIONER SHOULD NOT BE FOUND FAULT WITH. ACCORDINGLY, HE SU BMITTED THAT THE APPROVAL BY LD. CIT WILL NOT VITIATE ASSESSMENT PRO CEEDINGS. HE ALSO SUBMITTED THAT THE PROPOSAL FOR APPROVAL BEFOR E LD. CIT IS USUALLY SENT THROUGH JOINT COMMISSIONER AND HENCE J OINT COMMISSIONER IS ALSO AWARE OF THE PROCEEDINGS. 5. WE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECO RD. THE PROVISIONS OF SECTION 151 OF THE ACT, THEN EXISTING READS AS UNDER: 151. 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 ASSESSME NT YEAR, NO NOTICE SHALL BE ISSUED UNDER SECTION 148 BY AN ASSESSING OFFICER, W HO IS BELOW THE RANK OF ASSISTANT COMMISSIONER OR DEPUTY COMMISSIONER UNLES S 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 PRINCIPAL CHIEF COMMISSIONER OR CHIEF COMMISSIONER OR PRINCIPAL COM MISSIONER OR COMMISSIONER IS SATISFIED, ON THE REASONS RECORDED BY THE ASSESSING OFFICER AFORESAID, THAT IT IS A FIT CASE FOR THE ISSUE OF S UCH 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, W HO 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 S ATISFIED, ON THE REASONS RECORDED BY SUCH ASSESSING OFFICER, THAT IT IS A FI T CASE FOR THE ISSUE OF SUCH NOTICE 6. IN THE INSTANT CASE, UNDISPUTED FACT IS THAT THE AS SESSEE WAS NOT EARLIER ASSESSED TO TAX FOR ASSESSMENT YEAR 200 5-06 AND HENCE NO ASSESSMENT ORDER U/S 143(3) OF THE ACT IS AVAILA BLE. IN THAT SITUATION, THE PROVISIONS OF SECTION 151(2) OF THE ACT IS APPLICABLE TO THE FACTS OF THE PRESENT CASE, AS PER WHICH THE A.O . IS REQUIRED TO OBTAIN APPROVAL FROM JOINT COMMISSIONER OF INCOME T AX. ON THE ITA NO.602/BANG/2015 M/S. GLOBAL ASSOCIATES, BENGALURU PAGE 4 OF 6 CONTRARY, THE A.O. HAS OBTAINED APPROVAL FROM LD. C OMMISSIONER OF INCOME TAX. THE QUESTION IS WHETHER APPROVAL FROM A SUPERIOR AUTHORITY IS FATAL TO THE ASSESSMENT PROCEEDINGS OR NOT? AN IDENTICAL ISSUE HAS BEEN EXAMINED BY HONBLE HIGH C OURT OF BOMBAY IN THE CASE OF GHANSHYAM K. KHABRANI (SUPRA) AND IT WAS HELD THAT WHEN 151(2) OF THE ACT MANDATES THAT SANC TION TO BE TAKEN FOR ISSUANCE OF NOTICE U/S 148 OF THE ACT IN CERTAIN CASES HAS TO BE OF JOINT COMMISSIONER, THEN REOPENING OF ASSE SSMENT WITH THE APPROVAL OF COMMISSIONER IS UNSUSTAINABLE. THE REL EVANT OBSERVATIONS MADE BY HONBLE HIGH COURT OF BOMBAY I N THIS REGARD ARE EXTRACTED BELOW: 6. - THE SECOND GROUND UPON WHICH THE REOPENING IS SOUGH T TO BE CHALLENGED IS THAT THE MANDATORY REQUIREMENT OF ELE CTION 151(2) HAS NOT BEEN FULFILLED. SECTION 151 REQUIRES A SANCTION TO BE TAKEN FOR THE ISSUANCE OF A NOTICE UNDER SECTION 148 IN CERTAIN C ASES. IN THE PRESENT CASE, AN ASSESSMENT HAD NOT BEEN MADE UNDER SECTION 143(3) OR.SECTION 147 FOR A.Y. 2004-05. HENCE, UNDER SUB-SECTION 2 OF SECTION 151, NO NOTICE CAN BE ISSUED UNDER SECTION 148 BY AN ASSESSING OFF ICER WHO IS BELOW THE RANK OF JOINT COMMISSIONER AFTER THE EXPIRY OF 4 YE ARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS THE JOINT COMMISSIO NER IS - SATISFIED, ON THE REASONS RECORDED BY SUCH ASSESSING OFFICER, THA T IT IS A FIT CASE FOR THE ISSUE OF SUCH NOTICE. THE EXPRESSION 'JOINT COMMISS IONER' IS DEFINED IN SECTION 2(28C) TO MEAN A PERSON APPOINTED TO BE A J OINT COMMISSIONER OF INCOME TAX OR AN ADDITIONAL COMMISSIONER OF INCOME TAX UNDER SECTION 117(1). IN THE PRESENT CASE, THE RECORD BEFORE THE COURT INDICATE THAT THE ASSESSING OFFICER SUBMITTEDPROPOSAL ON 28 MARCH 201 1 TO THE CIT(1) THANE THROUGH THE ADDITIONAL COMMISSIONER OF INCOME-TAX R ANGE (1) THANE. ON 28 MARCH 2011, THE ADDITIONAL CIT FORWARDED THE PROPOS AL TO THE CIT AND AFTER RECORDING A GIST OF THE COMMUNICATION OF THE ASSESS ING OFFICER STATED THAT : 'AS REQUESTED BY THE A.O. NECESSARY APPROVAL FOR IS SUE OF NOTICE U/S. 148 MAY KINDLY HE GRANTED IN CASE, IF APPROVED.' ON THIS A COMMUNICATION WAS ISSUED ON 29 MARCH 2011 FROM THE OFFICE OF THE CIT( 1) CONVEYING APPROVAL TO THE PROPOSAL SUBM ITTED BY THE ASSESSING OFFICER. THERE IS MERIT IN THE CONTENTION RAISED ON BEHALF OF THE ASSESSEE THAT THE REQUIREMENT OF SECTION 151(2) COU LD HAVE ONLY BEEN FULFILLED BY THE SATISFACTION OF THE JOINT COMMISSI ONER 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 JOI NT COMMISSIONER. THAT ITA NO.602/BANG/2015 M/S. GLOBAL ASSOCIATES, BENGALURU PAGE 5 OF 6 EXPRESSION HAS A DISTINCT MEANING BY VIRTUE OF THE DEFINITION INFECTION 2(28C). THE COMMISSIONER-OF INCOME TAX IS NOT A JOI NT COMMISSIONER WITHIN THE MEANING OF SECTION 2(28C). IN THE PRESEN T CASE, THE ADDITIONAL COMMISSIONER OF INCOME TAX FORWARDED THE PROPOSAL S UBMITTED BY THE ASSESSING OFFICER TO THE COMMISSIONER OF INCOME TAX APPROVAL WHICH HAS BEEN GRANTED IS NOT BY THE ADDITIONAL COMMISSIONER OF INCOME TAX BUT BY THE COMMISSIONER OF INCOME TAX. 'THERE IS NO STATUT ORY PROVISION HEREUNDER WHICH A POWER TO BE EXERCISED BY AN OFFIC ER CAN BE EXERCISED BY A SUPERIOR OFFICER. WHEN THE STATUTE MANDATES TH E SATISFACTION OF A PARTICULAR FUNCTIONARY FOR THE EXERCISE OF A POWER, THE SATISFACTION MUST BE OF THAT AUTHORITY. WHERE A STATUTE REQUIRES SOME THING TO BE DONE IN A PARTICULAR MANNER. IT HAS TO BE DONE IN THAT MANNER . IN A SIMILAR SITUATION THE DELHI HIGH COURT IN (.37 . V. SPL'S SIDDHARTHA LID. [2012] 204 TAXMAN 115 / 17 TAXMANN.COM 138 (DELHI) HELD THAT P OWERS WHICH ARE CONFERRED UPON A PARTICULAR AUTHORITY HAVE TO BE EX ERCISED BY THAT AUTHORITY AND THE SATISFACTION WHICH THE STATUTE MA NDATES OF A DISTINCT AUTHORITY CANNOT BE SUBSTITUTED BY THE SATISFACTION OF ANOTHER. WE ARE IN RESPECTFUL AGREEMENT WITH THE JUDGEMENT OF THE DELH I HIGH COURT. 7. IDENTICAL VIEW HAS BEEN EXPRESSED BY HONBLE HIGH C OURT OF DELHI IN THE CASE OF SOYUZ INDUSTRIAL RESOURCES LTD . (SUPRA). ACCORDINGLY, FOLLOWING ABOVE SAID DECISIONS RENDERE D BY HONBLE HIGH COURT OF BOMBAY AND DELHI, WE HOLD THAT NOTICE ISSUED U/S 148 OF THE ACT WITH THE PRIOR APPROVAL OF LD. CIT I S NOT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 151(2) OF THE ACT AND HENCE THE SAME IS NOT SUSTAINABLE. IN THAT VIEW OF THE MATTER THE IMPUGNED ASSESSMENT ORDER WOULD GET VITIATED. ACCO RDINGLY, THE ASSESSEE WINS ON THIS ISSUE. 8. IN VIEW OF THE ABOVE, WE QUASH THE ORDERS PASSED BY THE TAX AUTHORITIES FOR THE YEAR UNDER CONSIDERATION. SINC E WE HAVE QUASHED THE ASSESSMENT ORDER ON LEGAL GROUNDS, THER E IS NO NECESSITY TO ADDRESS OTHER GROUNDS URGED BY THE ASS ESSEE. ITA NO.602/BANG/2015 M/S. GLOBAL ASSOCIATES, BENGALURU PAGE 6 OF 6 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH SEPT, 2021. SD/- (N.V. VASUDEVAN) VICE PRESIDENT SD/- (B.R. BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED 30 TH SEPT, 2021. VG/SPS COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.