ACIT, Circle-1, Kadapa, Kadapa V. G.V. Sudarshan Reddy, Kadapa, Kadapa

ITA 830/HYD/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6005 (ITAT-HYDERABAD)
• Duration Of Justice: 9 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2016
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 29-02-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 18-06-2015
• Court: TRIBUNAL
• Department Lawyers: M SITARAM
• Assessee Lawyers: K A SAI PRASAD
• Keywords: Reopening of assessment; Depreciation; Difference of opinion; Tax effect; Reason to believe; Change of opinion
• Section: 40A(3); 143(3); 147; 148; 144; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH ES A , HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. ASST. YEAR APPELLANT RESPONDENT 454/HYD/2015 2007 - 08 SRI G.V. MADAN MOHA N REDDY, PROP: SWETHA TRANSPORTS, KADAPA ROAD, YERRAGUNTLA MANDAL, KADAPA DIST., [PAN: AGFPG3302G] THE INCOME TAX OFFICER, WARD - 2, KADAPA 453/HYD/2015 SRI G.V. SUDARSHAN REDDY, PROP: SRI SAI KRISHNA TRANSPORTS, MUDDANUR ROAD, YERRAGUNTLA MANDAL, KADA PA DIST., [PAN: ACMPR7088P] 830/HYD /2015 ASST. COMMISSIONER OF INCOME TAX, CIRCLE - I, KADAPA SRI G.V. SUDARSHAN REDDY, PROP: SRI SAI KRISHNA TRANSPORTS, MUDDANUR ROAD, YERRAGUNTLA MANDAL, KADAPA DIST., [PAN: ACMPR7088P] FOR ASSESSEE : SHRI K . A. SAI P RASAD , AR FOR REVENUE : S HRI M. SITARAM , DR DATE OF HEARING : 2 9 - 0 2 - 201 6 DATE OF PRONOUNCEMENT : 23 - 0 3 - 201 6 O R D E R PER BENCH : THESE ARE MAINLY APPEALS BY ASSESSEE S FOR THE AYS. 2007 - 08 CONSEQUENT TO THE INITIATION OF PROCEEDINGS U/S . 147 OF THE INCOME ITA NOS. 453/HYD/2015, 454/HYD/2015 & & 830/HYD/2015 : - 2 - : TAX ACT [ACT] AND COMPLETION OF ASSESSMENT BY THE ASSESSING OFFICER (AO) U/S. 144 R.W.S. 147. SINCE FACTS IN BOTH THE CASES ARE SIMILAR, THESE ARE CONSIDERED TOGETHER. THERE WERE REVENUE APPEALS AGAINST THESE ORDERS CONSEQUENT TO THE ORDERS OF CIT(A) - KURNOOL DT. 17 - 02 - 2015. THE CROSS - APPEAL IN THE CASE OF SRI G.V. MADAN MOHAN REDDY BY THE REVENUE WAS DISMISSED ON TAX EFFECT WHEREAS APPEAL IN ITA NO. 830/HYD/2015 IS CROSS - APPEAL BY THE REVENUE AGAINST THE ORDER OF THE CIT(A) IN THA T ASSESSEES CASE. 2. BOTH THE ASSESSEES HEREIN ARE TRANSPORT CONTRACTORS AND FILED RETURNS OF INCOME ON 31 - 10 - 2007. IN BOTH THE CASES, SCRUTINY ASSESSMENTS HAVE BEEN COMPLETED ON 11 - 05 - 2009 BY THE ACIT, TIRUPATI, WHEREIN CERTAIN ADDITIONS HAVE BEEN MA DE. IN BOTH THE CASES, NOTICES U/S. 148 WERE ISSUED ON 12 - 06 - 2012 I.E., AFTER FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR BY TAKING APPROVAL FROM THE JCIT AS STATED IN THE ASSESSMENT ORDER. THE REASONS FOR REOPENING ARE ALSO SIMILAR IN THE SENSE THAT AO INTEND TO INVOKE THE PROVISIONS U/S. 40(A)(IA) AND 40A(3) . IN BOTH THE CASES, ASSESSMENTS HAVE BEEN COMPLETED U/S. 144 R.W.S. 147 AND LD. CIT(A) GAVE PARTIAL RELIEF ON THE QUANTUM ADDITIONS MADE WHILE SUSTAINING THE ORDER OF THE AO WHEN ASSESSEE QUESTI ONED THE JURISDICTION FOR INITIATING PROCEEDINGS U/S. 147. THE GR OUNDS RAISED BY ASSESSEES ARE ALSO SIMILAR. 2.1 . FOR THE SAKE OF CLARITY , THE FACTS IN THE CASE OF SRI G.V. MADAN MOHAN REDDY IN ITA NO. 454/HYD/2015 ARE DISCUSSED ELABORATELY. AS STATE D ABOVE, ASSESSEE HEREIN HAS FILED THE RETURN OF INCOME DECLARING AN INCOME OF RS. 9,74,000/ - AND AO ASSESSED THE TOTAL INCOME AT RS. 11,24,000/ - DISALLOWING A ROUND - SUM AMOUNT OF RS. 1,50,000/ - TOWARDS VARIOUS EXPENDITURES VIDE PARAS 2 & 3 OF ITA NOS. 453/HYD/2015, 454/HYD/2015 & & 830/HYD/2015 : - 3 - : THE ASSESSME NT ORDER. PROCEEDINGS U/S. 147 WERE INITIATED AND THE REASONS FOR INITIATION OF PROCEEDINGS AS INDICATED BY THE AO VIDE LETTER DT. 1 4 - 08 - 2014 ARE AS UNDER: IT IS VERIFIED FROM THE LEDGER ACCOUNT OF TRANSPORT CHARGES PAID DEBITED TO THE P&L ACCOUNT FOR T HE F.Y. 2006 - 2007 THAT THERE IS VIOLATION TO THE PROVISIONS OF TDS ON PAYMENTS MADE TO THE OWNERS OF TRANSPORT VEHICLES, WHICH IS TO BE DISALLOWED U/S. 40(A)(IA) OF THE IT ACT, 1961. IT IS ALSO FOUND THAT THE ABOVE PAYMENTS ARE MADE IN EXCESS OF RS. 20,00 0/ - IN A DAY AND 20% OF SUCH SUMS TO BE DISALLOWED U/S. 40A(3) OF THE I.T.ACT, 1961. THERE IS SUPPRESSION OF RECEIPTS FROM M/S. ACE CONCRETES (SIRUSERI BRANCH) FOR THE ASSESSMENT YEAR 2007 - 08, WHICH ARE TO BE BROUGHT TO TAX. THERE IS A DIFFERENCE IN INTE REST RECEIPTS FROM THE SECURITY DEPOSIT WITH ZUARI CEMENTS LTD., YERRAGUNTLA. HENCE, I BELIEVE THAT INCOME ASSESSABLE TO TAX FOR THE ASSESSMENT YEAR 2007 - 08 HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE IT ACT, 1961 AND NOTICE U/S. 148 H AS BEEN ISSUED AS PER THE PROCEDURE. IN THE NOTICE ISSUED U/S. 148, IT WAS CLEARLY STATED THAT NOTICE IS BEING ISSUED AFTER OBTAINING THE NECESSARY SATISFACTION OF JCIT/CBDT. ASSESSEE DID NOT REPRESENT IN THE RE - ASSESSMENT PROCEEDINGS AND AO COMPLETED A SSESSMENT U/S. 144 R.W.S. 147 MAKING ADDITIONS TOWARDS DISALLOWANCE U/S. 40(A)(IA) AT RS. 26,71,74 8/ - , DISALLOWANCE U/S. 40A(3) AT RS. 3,24,058/ - , DIFFERENCE IN GROSS RECEIPTS AT RS. 1,50,458/ - , DIFFERENCE IN INTEREST RECEIP TS AT RS. 8,144/ - . ASSESSEE PRE FERRED AN APPEAL BEFORE THE LD. CIT(A). APART FROM MERITS OF VARIOUS ADDITIONS, THE MAIN GROUND OF APPEAL WAS REGARDING THE VALIDITY OF RE - ASSESSMENT PROCEEDINGS U/S. 147. LD. CIT( A) WHILE LISTING OUT THE FACTS AS NOTED FROM THE PERUSAL OF ASSESSMENT REC ORD, RECORDS THE OBJECTIONS OF ASSESSEE REGARDING THE VALIDITY OF RE - AS SESSMENT PROCEEDINGS AS UNDER IN PARA 4.1: ITA NOS. 453/HYD/2015, 454/HYD/2015 & & 830/HYD/2015 : - 4 - : A. ALL THE CONDITIONS WERE BASED ON THE MATERIAL ALREADY AVAILABLE ON RECORD DURING ORIGINAL ASSESSMENT PROCEEDINGS; B. IF THE ASSESSING OF FICER FAILED TO ACT ON MATERIAL AVAILABLE ON RECORD DURING ORIGINAL ASSESSMENT PROCEEDINGS, HE CANNOT REOPEN THE ASSESSMENT. SUCH ACTION AMOUNTS TO CHANGE OF OPINION. NO NEW MATERIAL WAS BROUGHT ON RECORD TO REOPEN THE ASSESSMENT. C. THE ASSESSING OFFIC ER CANNOT REOPEN THE ASSESSMENT ON A MERE CHANGE OF OPINION AS HELD IN THE CASE OF CIT VS. KELVINATOR OF INDIA LTD., 320 ITR 561. THEREFORE, THE VERY INITIATION OF PROCEEDINGS U/S. 147 IS NOT VALID. D. THAT NOTICE U/S. 148 WAS ISSUED BEYOND THE PERIOD OF 4 YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR. SUCH NOTICE CAN BE ISSUED ONLY AFTER OBTAINING APPROVAL OF COMMISSIONER/CHIEF COMMISSIONER WHO ACCORDS THE PERMISSION AFTER BEING SATISFIED WITH THE REASONS RECORDED BY THE ASSESSING OFFICER. IN THE INST ANT CASE, THE PERMISSIONS WAS TAKEN FROM THE JOINT COMMISSIONER OF INCOME TAX AND NOT FROM THE COMMISSIONER OF INCOME TAX. THEREFORE, THE NOTICE U/S. 148 WAS ISSUED WITHOUT APPROVAL OF APPROPRIATE AUTHORITY. THEREFORE, REASSESSMENT IS TO BE QUASHED. 3. LD. CIT(A) HOWEVER, REJECTED THE CONTENTIONS BY STATING AS UNDER: 4.2 THE INFORMATION ON RECORD IS CAREFULLY CONSIDERED. AS PER THE EXPLANATION (1) TO SECTION 147, MERE FURNISHING OF INFORMATION TO THE ASSESSING OFFICER DOES NOT NECESSARILY AMOUNT TO DISCLOSURE. THE EXPLANATION (1) READ AS UNDER: EXPLANATION 3 FOR THE PURPOSE OF ASSESSMENT OR REASSESSMENT UNDER THIS SECTION, THE ASSESSING OFFICER MAY ASSESS OR REASSESS THE INCOME IN RESPECT OF ANY ISSUE, WHICH HAS ESCAPED ASSESSMENT, AND SUCH ISSU E COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, NOTWITHSTANDING THAT THE REASONS FOR SUCH ISSUE HAVE NOT BEEN INCLUDED IN THE REASONS RECORDED UNDER SUB - SECTION (2) OF SECTION 148. DURING ORIGINAL ASSESSMENT PROCEE DINGS, THE ASSESSING OFFICER DID NOT FORM ANY OPINION ON ANY OF THE ADDITIONS MADE IN THE REASSESSMENT. THEREFORE, IT CANNOT BE SAID THERE IS CHANGE OF OPINION. FURTHER, IN THE CASE OF CONSOLIDATED PHOTO & FINVEST LTD. VS. ACIT 281 ITR 394, THE HON'BLE DE LHI HIGH COURT HELD THAT THE PRINCIPLE OF CHANGE OF OPINION IS APPLICABLE ONLY WHERE THE ASSESSING OFFICER APPLIED HIS MIND AND TAKEN CONSCIOUS DECISION ON THE ISSUE. IT IS NOT APPLICABLE TO A CASE WHERE THE ASSESSING OFFICER DID NOT ADDRESS HIMSELF TO TH E ISSUE. ITA NOS. 453/HYD/2015, 454/HYD/2015 & & 830/HYD/2015 : - 5 - : FURTHER, WHETHER THE SANCTION FOR ISSUE OF NOTICE WAS GIVEN BY THE JOINT COMMISSIONER OF INCOME TAX OR COMMISSIONER OF INCOME TAX IS A MERE ADMINISTRATIVE PROCEDURE PRESCRIBED BY THE ACT. EITHER JOINT COMMISSIONER OR COMMISSIONER WOULD ACCORD APPROVAL FOR ISSUE OF NOTICE ONLY IF THEY ARE SATISFIED WITH THE REASONS RECORDED BY THE ASSESSING OFFICER. THEREFORE, I CONSIDER THERE IS NO MERIT IN THE ARGUMENT OF THE ASSESSEE. THEREFORE, THIS GROUND OF APPEAL IS DISMISSED. 4 . LD. COUNSEL MAINLY R EFERRED TO THE VALIDITY OF PROCEEDINGS. REFERRING THE PROVISIONS OF SECTION 147, IT WAS SUBMITTED THAT THE PROVISO TO SECTION 147 REQUIRES THAT THERE SHOULD BE FAILURE ON THE PART OF ASSESSEE TO DISCLOSE FULLY AND TRULY ALL THE MATERIAL FACTS NECESSARY FO R HIS ASSESSMENT , AS AN ASSESSMENT U/S. 143(3) HAS BEEN COMPLETED BY THE AO IN THIS CASE. FURTHER REFERRING TO THE PROVISIONS OF SECTION 151, IT WAS SUBMITTED THAT WHEN THE ASSESSMENT HAS BEEN REOPENED U/S. 147, IN A CASE WHERE PROCEEDINGS U/S. 143(3) HAS BEEN COMPLETED, THE APPROVAL HAS TO BE OBTAINED FROM THE PR. CHIEF COMMISSIONER OR CHIEF COMMISSIONER OR PR. COMMISSIONER OR COMMISSIONER, BUT NOT FROM JOINT COMMISSION ER . SINCE THERE IS A FAILURE ON THE PART OF THE A O IN OBTAINING APPROVAL FROM THE AUTH ORITY AS PER THE STATUTE, THE CONSEQUENTIAL PROCEEDINGS ARE INVALID IN LAW. LD. COUNSEL RELIED ON THE FOLLOWING CASE LAW: I. CIT VS. SPLS SIDDHARTHA LTD., [17 TAXMANN.COM 138] (DEL); II. GSR HOTELS & ESTATES PVT. LTD., VS. DCIT IN ITA NO. 1254/HYD/2013 DT. 04 - 11 - 2015; III. ADANI PORTS AND SPECIAL ECONOMIC ZONE LTD., VS. DCIT [35 TAXMANN.COM 338] (GUJARAT); ITA NOS. 453/HYD/2015, 454/HYD/2015 & & 830/HYD/2015 : - 6 - : IV. DSJ COMMUNICATION LTD., VS. DCIT [ 41 TAXMANN.COM 151] (BOMBAY); V. ITO WARD - 10(3), HYD. VS. THE ARMED FORCES OFFICERS COOPERATIVE HOUSING SOCIETY IN I TA NO. 987/HYD/2014 DT. 18 - 02 - 2015; 4 .1 . LD. DR HOWEVER, VEHEMENTLY ARGUED THAT THERE IS FAILURE ON THE PART OF ASSESSEE IN FURNISHING THE INFORMATION AND CONSEQUENTLY, THE PROVISO TO SECTION 147 IS SATISFIED. FURTHER, HE RELIED ON THE ORDER OF THE LD. CIT(A) TO SUBMIT THAT AO HAS TAKEN APPROVAL FROM THE JOINT COMMISSIONER WHICH SATISFIES THE PROVISIONS. HE DEFENDED THE ORDER OF AO AND CIT(A). 5 . WE HAVE CONSIDERED THE ISSUE AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE OTHER MATE RIALS ON RECORD. UNDISPUTEDLY, ASSESSMENT IN CASE OF ASSESSEE WAS ORIGINALLY COMPLETED U/S 143(3) BY MAKING CERTAIN DISALLOWANCE OF EXPENDITURE IT IS ALSO NOT DISPUTED THAT NOTICE U/S 148 IN PURSUANCE TO WHICH IMPUGNED ASSESSMENT ORDER HAS BEEN PASSED BY A O WAS ISSUED ON 12 - 06 - 2012 I.E. AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR . ASSESSEE IS OBJECTING TO THE INITIATION OF PROCEEDING BY AO BY CONTENDING THAT THE PROVISIONS OF SECTION 151(1) HAVE NOT BEEN COMPLIED AND PROVISO TO S EC 147 HAS BEEN VIOLATED . THEREFORE, BEFORE DECIDING THE ISSUE OF VALIDITY OF THE NOTICE U/S 148 OF THE ACT AND PROCEEDINGS U/S 147 , IT IS RELEVANT TO LOOK INTO THE PROVISIONS OF SECTION 151(1) OF THE ACT, WHICH ARE EXTRACTED HEREIN FOR READY REFERENCE: ITA NOS. 453/HYD/2015, 454/HYD/2015 & & 830/HYD/2015 : - 7 - : 151. (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 O F ASSISTANT COMMISSIONER [OR DEPUTY 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 TH E END OF THE RELEVANT ASSESSMENT YEAR, NO SUCH NOTICE SHALL BE ISSUED UNLESS THE [ PRINCIPAL CHIEF COMMISSIONER OR ] CHIEF COMMISSIONER OR [ PRINCIPAL COMMISSIONER OR ] COMMISSIONER IS SATISFIED, ON THE REASONS RECORDED BY THE ASSESSING OFFICER AFORESAID, THA T IT IS A FIT CASE FOR THE ISSUE OF SUCH NOTICE. ON PLAIN READING OF THE AFORESAID PROVISION, IT IS PATENT AND OBVIOUS THAT IN CASE OF AN ASSESSEE WHERE ASSESSMENT HAS EARLIER BEEN COMPLETED U/S 143(3) OR 147 OF THE ACT, NOTICE U/S 148 CANNOT BE ISSUED A FTER EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR WITHOUT OBTAINING PRIOR APPROVAL OF (PR) CCIT/ (PR) CIT. 5 .1 . FURTHER PROVISIONS OF SEC . 147 ARE AS UNDER: IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABL E TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153 , ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, OR RECOMPUTE THE LOSS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE, AS THE CASE MAY BE, FOR THE ASSESSMENT YEAR CONCERNED (HEREAFTER IN THIS SECTION AND IN SECTIONS 148 TO 153 REFERRED TO AS THE RELEVANT ASSESSMENT YEAR) : PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB - SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOM E CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN RE SPONSE TO A ITA NOS. 453/HYD/2015, 454/HYD/2015 & & 830/HYD/2015 : - 8 - : NOTICE ISSUED UNDER SUB - SECTION (1) OF SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT, FOR THAT ASSESSMENT YEAR: PROVIDED FURTHER THAT NOTHING CONTAINED IN THE FIRST PROVISO SHALL APPLY IN A CASE WHERE ANY INCOME IN RELATION TO ANY ASSET (INCLUDING FINANCI AL INTEREST IN ANY ENTITY) LOCATED OUTSIDE INDIA, CHARGEABLE TO TAX, HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR: PROVIDED ALSO THAT THE ASSESSING OFFICER MAY ASSESS OR REASSESS SUCH INCOME, OTHER THAN THE INCOME INVOLVING MATTERS WHICH ARE THE SUBJECT MATTERS OF ANY APPEAL, REFERENCE OR REVISION, WHICH IS CHARGEABLE TO TAX AND HAS ESCAPED ASSESSMENT. EXPLANATION 1: XXXXXXXXXX EXPLANATION 2: XXXXXXXXXX EXPLANATION 3: XXXXXXXXXX EXPLANATION 4: XXXXXXXXXX 5 .2 . IF WE EXAMINE THE FACTS OF THE PRESENT CA SE VIS - - VIS THE AFORESAID STATUTORY PROVISION, TWO CLEAR FACTS EMERGE. FIRSTLY, IN ASSESSEES CASE AS ASSESS MENT ORDER U/S 143(3) HAS ALREADY BEEN PASSED , AND AS THERE IS NO EVIDENCE THAT THERE IS FAILURE ON THE PART OF ASSESSEE; PROCEEDINGS INITIATED ARE IN VIOLATION OF STATUTORY REQUIREMENT. I T IS NOTICED THAT WHILE RECORDING THE SATISFACTION, THE AO HAS NOT GIVEN ANY FINDING THAT THERE IS FAILURE O N THE PART OF ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT. AS CA N BE SEEN FROM THE SATISFACTION EXTRACTED ABOVE, AO NOTICES THAT IT IS VERIFIED FROM THE LEDGER ACCOUNT AND TRANSPORT CHARGES PAID . THEREFORE, IT CANNOT BE STATED THAT THERE IS FAILURE ON THE PART OF ASSESSEE TO DISCLOSE. THE ENTIRE MATERIAL WHICH WAS THE BASIS FOR AOS SATISFACTION IS AVAILABLE ON RECORD. CONSEQUENTLY, REOPENING OF ASSESSMENT AFTER END OF FOUR YEARS FROM THE RELEVANT ASSESSMENT ITA NOS. 453/HYD/2015, 454/HYD/2015 & & 830/HYD/2015 : - 9 - : YEAR CANNOT BE APPROVED , UNLESS IT SATISFIES THE CONDITIONS PRESCRIBED BY THE STATUTE. 5 .3 . SECONDLY, THE APPROVAL OBTAINED IS FROM AN AUTHORITY WHO IS LOWER IN RANK THAN WHAT WAS PRESCRIBED, I . E ., APPROVAL FROM JCIT AND NOT FROM (PR) CCIT/ (PR) CIT. THEREFORE, THE MANDATORY CONDITIONS OF SECTION 151(1) HAVE NOT BEEN SATISFIED. LD. CIT(A) HAS TRIED TO OVERCOME T HE OBJECTION OF ASSESSEE AS WELL AS THE STATUTORY REQUIREMENT BY OBSERVING THAT IT IS MERELY AN ADMINISTRATIVE PROCEDURE . IN CASE OF CIT VS. SPLS SIDDHARTHA LTD. , [ 345 ITR 223 ] , THE HONBLE DELHI HIGH COURT HAS HELD THAT A NOTICE U/S 148 IN VIOLATION OF S ECTION 151(1) IS WITHOUT JURISDICTION AFFECTING THE VALIDITY OF THE ASSESSMENT ORDER ITSELF, HENCE, CANNOT BE CONSIDERED TO BE AN IRREGULARITY CURABLE U/S 292B. THE HONBLE HIGH COURT OBSERVED, 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. FURTHER, THE HONBLE COURT HELD, SATISFACTION OF ONE AUTHORITY CANNOT BE SUBSTITUTED BY SATISFACTION OF ANOTHER AU THORITY. WHEN A STATUTE REQUIRES A THING TO BE DONE IN A CERTAIN MANNER, IT SHALL BE DONE IN THAT MANNER ALONE. 5 .4 . ON BOTH THE COUNTS, THERE IS A CLEAR VIOLATION OF PROVISIONS OF SECTION 147 AS WELL AS SECTION 151(1), WHILE INITIATING THE PROCEEDINGS U /S. 147 AND ISSUING THE NOTICE U/S. 148 ON 12 - 06 - 2012. WHEN THE FACTS WERE SO CLEAR, AND ASSESSEE RAISES OBJECTION BEFORE THE LD. CIT(A), IT IS INCUMBENT O N THE CIT(A) TO ITA NOS. 453/HYD/2015, 454/HYD/2015 & & 830/HYD/2015 : - 10 - : CONSIDER THE SAME. WHEN THE STATUTORY PROVISIONS ARE VERY CLEAR, IT IS NOT APPROPRI ATE ON THE PART OF THE LD. CIT(A) , WHO IS A JUDICIAL OFFICER , TO REJECT THE CONTENTIONS STATED THAT THE SANCTION IS A MERE ADMINISTRATIVE PROCEDURE PRESCRIBED BY THE ACT. S INCE THE STATUTE IS VERY CLEAR ABOUT WHO SHOULD GRANT THE APPROVAL AND WHEN THERE I S VIOLATION OF THE SAME THE ORDER BECOMES BAD IN LAW , AS PROCEEDINGS ITSELF ARE AB - INITIO VOID . 6 . F OR THESE REASONS PLACING RELIANCE ON THE PRINCIPLES LAID DOWN BY VARIOUS CO - ORDINATE BENCHES ALSO AND ALSO ON THE DECISIONS OF HIGH COURT RELIED UPON BY THE LD. COUNSEL IN HIS ARGUMENTS, WE ARE SATISFIED THAT THE PROCEEDINGS INITIATED ARE AB - INITIO VOID AND ACCORDINGLY, THEY ARE TO BE QUASHED. SINCE WE HAVE QUASHED THE PROCEEDINGS ITSELF, THERE IS NO NEED TO ADJUDICATE ON THE VARIOUS ADDITIONS MADE BY TH E AO IN THE ASSESSMENT ORDER WHICH ARE BEING CONTESTED IN THE GROUNDS RAISED BY ASSESSEE IN GROUND NO. 4. IN VIEW OF THIS, THE GROUND IS TREATED AS ACADEMIC IN NATURE. IN THE RESULT, GROUNDS ARE ALLOWED AND APPEAL IN ITA NO. 454/HYD/2015 IS ALLOWED. ITA NO. 453/HYD/2015 : 7 . IN THIS CASE OF SRI G.V. SUDARSHAN REDDY, ASSESSEE HAS OFFERED AN INCOME OF RS. 12,78,290/ - AND AO HEREIN ALSO MADE ADDITION OF RS. 1,50,000/ - IN THE ORDER DT. 11 - 05 - 2009 HEREIN ALSO, THE REASONS RECORDED ARE SIMILAR AND AFTER END O F FOUR YEARS FROM THE ASSESSMENT YEAR, APPROVAL OF THE JCIT WAS ONLY OBTAINED AS AGAINST THE STATUTORY REQUIREMENT OF APPROVAL FROM THE CIT OR THE AUTHORITY ABOVE. FOR THE DETAILED REASONS STATED IN THE APPEAL OF SRI G.V. MADAN MOHAN REDDY IN ITA NO. 454/ HYD/2015 ABOVE, WE ITA NOS. 453/HYD/2015, 454/HYD/2015 & & 830/HYD/2015 : - 11 - : ARE OF THE OPINION THAT THERE IS VIOLATION OF PROVISIONS OF SECTION 147 AS WELL AS SECTION 151(1), CONSEQUENTLY THE PROCEEDINGS ARE HEL D AB - INITIO VOID AND ACCORDINGLY ASSESSEES GROUNDS ON THAT ARE ALLOWED . GROUND NO. 4 ON THE ADDITION OF RS. 16,11,595/ - ACCORDINGLY BECOMES ACADEMIC IN NATURE. SINCE WE HAVE QUASHED THE PROCEEDINGS ITSELF, THE CONTENTIONS RAISED BY REVENUE ON THE RELIEF GRANTED BY THE CIT(A) BECOMES INFRUCTUOUS. ACCORDINGLY, REVENUES APPEAL ITA 830/HYD/2015 IS DISMISSE D. 8 . IN THE RESULT, ITA NO S . 453/HYD/2015 AND 454/HYD/2015 ARE ALLOWED AND ITA NO. 830/HYD/2015 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD MARCH , 2016 SD/ - SD/ - (P. MADHAVI DEVI) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 23 RD MARCH , 2016 TNMM ITA NOS. 453/HYD/2015, 454/HYD/2015 & & 830/HYD/2015 : - 12 - : COPY TO : 1. SRI G.V. MADAN MOHAN REDDY, PROP: SWETHA TRANSPORTS, KADAPA ROAD, YERRAGUNTLA MANDAL, KADAPA. C/O. CH. P ARTHASARATHY & CO., 1 - 1 - 298/2/B/3, 1 ST FLOOR, SOWBHAGYA AVENUE, ST. NO. 1, ASHOKNAGAR, HYDERABAD. 2. SRI G.V. SUDARSHAN REDDY, PROP: SRI SAI KRISHNA TRANSPORTS, OPP: Z.P. HIGH SCHOOL, MUDDANUR ROAD, YERRAGUNTLA MANDAL, KADAPA DIST . C/O. CH. PARTHASARATHY & CO., 1 - 1 - 298/2/B/3, 1 ST FLOOR, SOWBH AGYA AVENUE, ST. NO. 1, ASHOKNAGAR, HYDERABAD. 3 . ASST. COMMISSIONER OF INCOME TAX, CIRCLE - I, KADAPA, INCOME TAX OFFICE, NEAR RTC BUS STAND, SIMHAPURI COLONY, KADAPA. 4 . THE INCOME TAX OFFICER , WARD - 2 , KADAPA . 5 . CIT (APPEALS) , KURNOOL . 6 . CIT , KU RNOOL . 7 . D.R. ITAT, HYDERABAD. 8 . GUARD FILE.