The Dy. Commr. Of Income Tax, Cir.-1(1), RAJKOT-GUJARAT V. Smt. Krushnaba P. Jadeja, RAJKOT-GUJARAT

ITA 612/RJT/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4276 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 11-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DM RINDANI
• Keywords: Competent authority
• Section: 143(3); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMEBR ./ I.T.A. NO. 612/RJT/2015 ( ASSESSMENT YEAR : 2007-08) DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 1(1), RAJKOT, ROOM NO.508, AAYAKAR BHAVAN, RACE COURSE RING ROAD, RAJKOT 360 001 / VS. SMT. KRUSHNABA P. JADEJA, ASHAPURA KRUPA, 5-SAI NAGAR SOCIETY, RAJKOT ./ ./ PAN/GIR NO. : ACYPJ6178N ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI PRAVEEN VERMA, SR. D.R. / RESPONDENT BY : SHRI D. M. RINDANI, A.R. DATE OF HEARING 27/06/2018 !'# / DATE OF PRONOUNCEMENT 02/08/2018 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE REVENUE AGAINST THE ORDER OF THE CIT(A)-1, RAJKOT ( CIT(A) IN SHORT), DATED 30.10.2015 ARISING IN THE ASSESSMENT ORDER DATED 13.03.2015 PASSED BY THE ASSESSING OFFICER (AO) UND ER S. 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (THE ACT) CO NCERNING AY 2007-08. ITA NO. 612/RJT/15 [DCIT VS. SMT. KRUSHNABA P. JADE JA] A.Y. 2007-08 - 2 - 2. THE REVENUE IN THE INSTANT CASE HAS ASSAILED TH E ACTION OF THE CIT(A) IN HOLDING THE RE-ASSESSMENT AS INVALID. 3. TO BEGIN WITH, THE LEARNED AR FOR THE ASSESSEE SHRI D. M. RINDANI IN THE REVENUES APPEAL VEHEMENTLY SUPPORTE D THE CONCLUSION DRAWN BY THE CIT(A) SETTING ASIDE THE JU RISDICTION ASSUMED BY THE AO UNDER S.147 OF THE ACT. THE LEAR NED AR FOR THE ASSESSEE REFERRED TO A SANCTION OBTAINED IN PRESCRI BED FORM MOVED BY THE AO FOR APPROVAL FROM THE COMPETENT AUTHORITY OF HIS ACTION PROPOSING TO INITIATE REOPENING PROCEEDINGS UNDER S .147 OF THE ACT AND SUBMITTED THAT THE APPROVAL UNDER S.151 OF THE ACT IN THE INSTANT CASE HAS BEEN TAKEN FROM THE ADDITIONAL COMMISSIONE R OF INCOME TAX, RANGE-1, RAJKOT. THE LEARNED AR THEREAFTER SU BMITTED THAT ASSESSMENT IN THE INSTANT CASE WAS EARLIER CARRIED OUT UNDER S.143(3) OF THE ACT VIDE ORDER DATED 11.12.2009 DETERMINING TOTAL INCOME AT RS.5,72,210/-. THEREAFTER, A NOTICE UNDER S.148 OF THE ACT WAS ISSUED ON 19.03.2014 SEEKING TO ASSESS ALLEGED ESCA PED INCOME. CLEARLY THUS, THE ACTION UNDER S.147 OF THE ACT HAS BEEN TAKEN AFTER THE EXPIRY OF 4 YEARS FROM THE END OF RELEVANT AY 2 007-08. THE LEARNED AR THEREAFTER ADVERTED OUR ATTENTION TO THE PROVISIONS OF SECTION 151 OF THE ACT AS THEN EXISTED AND POINTED OUT THAT IN THESE CIRCUMSTANCES, WHERE ASSESSMENT HAS BEEN CARRIED OU T UNDER S.143(3) OF THE ACT IN THE CASE OF AN ASSESSEE AND FOUR YEARS HAVE ELAPSED SINCE THE END OF THE RELEVANT ASSESSMENT YE AR (AS IS THE CASE IN THE INSTANT APPEAL), THE COMPLETED ASSESSMENT CA N BE REOPENED ONLY WITH THE SATISFACTION ON ESCAPED INCOME BY C IT OR CCIT. THE LEARNED AR THEREAFTER ADVERTED OUR ATTENTION TO THE APPROVAL MEMO UNDER S.151 OF THE ACT DATED 18.03.2014 YET AG AIN AND SUBMITTED THAT THE APPROVAL IN THE INSTANT CASE HAS BEEN OBTAINED FROM ADDITIONAL CIT INSTEAD OF CCIT CONCERNED AS RE QUIRED UNDER ITA NO. 612/RJT/15 [DCIT VS. SMT. KRUSHNABA P. JADE JA] A.Y. 2007-08 - 3 - S.151 OF THE ACT. THUS, IN VIEW OF THE WRONG APPRO VAL, THE CONDITION OF SECTION 151 IS NOT MET. THE LEARNED A R THUS SUBMITTED THAT THE NOTICE UNDER S.148 ISSUED IN CONSEQUENCE O F WRONG APPROVAL IS VITIATED TO THE CORE AND CONSEQUENTLY THE ENTIRE RE-ASSESSMENT ORDER PURSUANT TO SUCH ILLEGAL NOTICE IS NULL AND V OID. 4. THE LEARNED SENIOR DR SHRI PRAVEEN VERMA, ON THE OTHER HAND SUPPORTED THE ACTION OF THE AO. 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS ON THE ISSUE CONCERNING ASSUMPTION OF JURISDICTION UNDER S .147 OF THE ACT. 6. SECTION 151 PROVIDES FOR SANCTION OF DESIGNATED SUPERIOR AUTHORITIES IN APPROPRIATE CASES BEFORE ISSUANCE OF NOTICE UNDER S. 148 R.W.S. 147 OF THE ACT. THUS, THE POWER CONFERRE D UPON THE AO FOR REOPENING THE ASSESSMENT IS NOT AN UNBRIDLED ON E. IT IS HEDGED WITH SEVERAL SAFEGUARDS CONCEIVED IN THE INTEREST O F ELIMINATING ROOM FOR ABUSE OF POWER OF REOPENING BY THE ASSESSI NG OFFICERS. ALL THE REQUIREMENTS BEFORE INITIATION OF RE-ASSESS MENT PROCEEDINGS MUST BE GIVEN DUE AND EQUAL WEIGHT. IF UNDER THE P ROVISIONS OF THE ACT, AN AUTHORITY IS REQUIRED TO EXERCISE POWERS OR TO DO AN ACT IN A PARTICULAR MANNER THEN THAT POWER HAS TO BE EXERCIS ED AND THE ACT HAS TO BE PERFORMED IN THAT MANNER ALONE AND NOT IN ANY OTHER MANNER. 7. A BARE GLANCE OF THE APPROVAL MEMO SHOWS THAT TH E AO HAS PROCEEDED TO INITIATE THE ACTION UNDER S.147 OF THE ACT ON THE BASIS OF SATISFACTION OF THE ADDITIONAL CIT TOWARDS ESC APEMENT AS FORWARDED TO HIM BY THE AO. THUS, THE APPROVAL OF THE ADDITIONAL CIT UNDER S.151 OF THE ACT IN THE INSTANT CASE HAS SET THE ITA NO. 612/RJT/15 [DCIT VS. SMT. KRUSHNABA P. JADE JA] A.Y. 2007-08 - 4 - PROCEEDINGS UNDER S.147 OF THE ACT INTO MOTION. HOW EVER, AS EVIDENT, THE ASSESSMENT HAVING BEEN FRAMED UNDER S. 143(3) OF THE ACT EARLIER AND FOUR YEARS HAVE ELAPSED SINCE THE E ND OF THE RELEVANT ASSESSMENT YEAR AT THE TIME OF ISSUANCE OF NOTICE, THE CASE COULD BE REOPENED ONLY WITH THE SATISFACTION ON ESCAPED IN COME BY THE SUPERIOR AUTHORITY NAMELY CIT OR CCIT IN TERMS OF S ECTION 151 OF THE ACT. AS THE LAW ENVISAGE, AFTER THE END OF THE FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, THE PERMIS SION OF SUPERIOR COMPETENT AUTHORITY AS STATUTORILY DESIGNATED IS A SIN QUA NON PRIOR TO INITIATION OF ACTION UNDER S.147/148 OF THE ACT. ON FACTS, IT IS UNDISPUTED BY THE REVENUE THAT THE SATISFACTION H AS BEEN FORMED BY THE ADDITIONAL CIT ALONE TO ENABLE THE AO TO ISS UE NOTICE FOR REOPENING OF THE ASSESSMENT. IT WAS ON THE BASIS O F SATISFACTION AND APPROVAL OF THE ADDITIONAL CIT THAT THE RE-ASSE SSMENT WAS INITIATED AND COMPLETED. CLEARLY, THE APPROVAL OF THE COMPETENT AUTHORITY STATUTORILY REQUIRED UNDER S.151 OF THE A CT HAS NOT BEEN TAKEN IN THE INSTANT CASE. 8. IN THE PRESENT CASE, IT WAS OBLIGATORY ON THE PA RT OF THE AO TO OBTAIN SANCTION OF THE COMMISSIONER CONCERNED TOWAR DS HIS SATISFACTION ON THE ESCAPEMENT OF INCOME. THE AP PROVAL OF ADDITIONAL CIT IS THUS NOT ADEQUATE AND TANTAMOUNT TO NO APPROVAL UNDER S. 151 OF THE ACT. HONBLE BOMBAY HIGH COURT IN CASE OF GHANSHYAM K. KHABRANI VS. ACIT 346 ITR 443 (BOM) HA S HELD THAT SANCTION BY ANOTHER AUTHORITY IS NOT A VALID SANCTI ON. WE ARE ALIVE TO THE CONCERN THAT SECTION 292B OF THE ACT TAKES CARE OF CERTAIN EVENTUALITIES AND ENABLE THE INCOME TAX AUTHORITIES TO CURE DEFECTS IN ORDERS, NOTICES ETC. HOWEVER, ANY IRREGULARITY O F SUBSTANTIVE NATURE TOWARDS EXERCISE OF JURISDICTION IS NOT A CU RABLE DEFECT UNDER ITA NO. 612/RJT/15 [DCIT VS. SMT. KRUSHNABA P. JADE JA] A.Y. 2007-08 - 5 - S. 292B OF THE ACT AS OBSERVED BY THE HONBLE DELHI HIGH COURT IN CASE OF CIT VS. SPLS SIDDARTHA LTD. 345 ITR 223 (D EL). 9. IN VIEW OF THE DELIBERATIONS NOTED ABOVE, THE EN TIRE RE- ASSESSMENT PROCEEDINGS UNDER S.147 OF THE ACT IS WI THOUT SANCTION OF LAW AND CONSEQUENTLY, THE RE-ASSESSMENT ORDER DA TED 13.03.2015 IS BAD IN LAW. THE CIT(A) IN OUR VIEW HAS RIGHTLY SET ASIDE THE JURISDICTION USURPED BY THE AO IN THIS REGARD. 10. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. SD/- SD/- (MAHAVIR PRASAD) (PRADIP KUMA R KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 02/08/2018 TRUE COPY S. K. SINHA COPY OF THE ORDER FORWARDED TO:- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITA T, RAJKOT THIS ORDER PRONOUNCED IN OPEN COURT ON 02/08/20 18