SAVITA GUPTA,ETAH V. INCOME TAX OFFICER-4(3)(1), ETAH

ITA 327/AGR/2024

AI Insights

The case involves an appeal by Savita Gupta against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, which pertained to the reassessment of her income for the Assessment Year 2013-14. The primary contention was regarding the mechanical and non-judicious nature of the approval for reopening the assessment under Section 151 of the Income Tax Act, 1961. The Tribunal examined whether the dual approvals from the Additional Commissioner and the Principal Commissioner for reopening the assessment were valid. Citing precedents and legal provisions, the Tribunal concluded that such dual approvals were not in accordance with the statutory requirements, leading to the quashing of the reassessment proceedings.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 847238 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Agra
• Assessment Year: 2013-2014
• Appeal Filed On: 30-08-2024
• Other Referred Cases: ACIT vs Bharti Axa Life Insurance Company Ltd, Ghanshyam K Khabrani, CIT v. SPL'S Siddhartha Ltd., Aquatic Remedies (P.) Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIL KUMAR
• Assessee Lawyers: ANURAG SINHA
• Keywords: Reassessment proceedings; Question of law; Depreciation; Reopening of assessment; Capital Gains; Principle of natural justice; Wrong claim; Competent authority; Reason to believe; Bogus
• Section: 147; 148; 143(3); 54

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, (DB) AGRA BEFORE : SHRI MAHAVIR SINGH, HON’BLE VICE PRESIDENT AND SHRI M. BALAGANESH, HON’BLE ACCOUNTANT MEMBER ITA No. 327/Agr/2024 Assessment Year : 2013-14 Savita Gupta Ahata Bhannamal, Gandhi Market, Etah -207001 U.P.) Vs Income Tax Officer-4(3)(1), Etah. PAN : AIDPG5189R (Appellant) (Respondent) (Physical hearing) Assessee by Shri Anurag Sinha, Adv. Department by Shri Anil Kumar, Sr. DR Date of hearing 17/03/2026 Date of pronouncement 24/03/2026 ORDER PER M. BALAGANESH, ACCOUNTANT MEMBER This is an appeal has been filed by the assessee against the order dated 06.06.2024 passed by the Learned Commissioner of Income Tax (Appeals)/ National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “the CIT(A)\"] u/s. 250 of the Income tax Act, 1961 (hereinafter referred to as \"the Act\"] for the assessment year 2013-14. 2. Though the assessee has raised several grounds of appeal, we find that assessee vide Ground No. 4 had raised a ground the approval granted under section 151 of the Act by the competent authority according sanction for reopening the assessment is mechanical in nature , without due application of mind and is not in Printed from counselvise.com 2 ITA No. 327Agr/2024 Savita Gupta accordance with law. This goes to the root of the matter and hence we take up the same first for adjudication. 3. We have heard the rival submissions and perused the materials available on record. The return of income for the Assessment Year 2013-14 was originally filed by the assessee on 21-12-2013 declaring total income of Rs. 2.15,000/-. The assessment was completed u/s 143(3) of the Act on 14-12-2015 determining total income of the assessee at Rs. 2,74,470/-. The learned AO observed that during the year under consideration, the assessee has sold an immovable property for 75 lakhs, the circle value of the property stood at Rs. 80 lakhs. On perusal of the record, it was found that assessee had made bogus claims towards cost of construction amounting to Rs. 13,42,340/-. During the assessment proceedings, the assessee had provided original copy of agreement dated 15-08-2004 with Shri Raju, contractor. This agreement was made on 15-08-2004 for construction of residential house at Hata Bhannamal, Gandhi Market, Etah, whereas the sold property exists at Vijaynagar colony ( Thandi Sarak, Etah). Also the sold property was acquired in March 2005, whereas the agreement for construction of house was made in August 2004. Accordingly, the learned AO concluded that this agreement dated 15-08-2004 was of no relevance. Moreover, the assessee had purchased a house at Hindu Nagar, Etah and had claimed deduction under Section 54 of the Income Tax Act of Rs. Printed from counselvise.com 3 ITA No. 327Agr/2024 Savita Gupta 58,41,680/-. For this, the assessee had purchased a residential house at Hindu Nagar, Etah on 6-11-2012 for Rs. 40 lakhs and shown rest of the amount of Rs. 18,41,680/- towards construction. For this, the learned AO observed that assessee submitted an agreement dated 10-5-2013 for construction of residential property at Hata Bhannamal, Gandhi Market, Etah. The learned AO noted that since the new property was acquired at Hindu Nagar, Etah and this contract for construction was made at different location and also the property sold at Vijayanagar, Etah is a commercial property, therefore assessee is not entitled for deduction under section 54 of the Act. Thus he observed that that assessee has claimed excess deduction of Rs. 13,42,340/- and Rs. 58,41,680/- against Long Term Capital Gains resulting into escapement of income of Rs. 71,84,020/-. 4. Accordingly, notice under Section 148 of the Act was issued to the Assessee on 29-03-2019 after obtaining approval from the Learned Principal Commissioner of Income Tax, Aligarh. The said notice was duly served upon the Assessee. The Learned AR before us placed on record the proforma seeking approval under Section 151 of the Act, which is reproduced hereunder:- “Form for the recording the reasons for initiating proceedings u/s 147 and for obtaining approval of the Principal Commissioner of Income Tax 1. Name & address of the assessee Smt. Savita Gupta R/o Bhannamal Etah 2. PAN AIDPG5189 3. Status Ind Printed from counselvise.com 4 ITA No. 327Agr/2024 Savita Gupta 4. Ward/Circle/Rang Ward-3(2), Etah 5. Assessment year in respect of which proposed to issue notice u/s 148 2013-14 6. Quantum of income which has escaped assessment Rs. 71,84,020/- 7. Whether provisions of section 147 are applicable Yes 8. Whether the assessment is proposed to be made for the first time, if yes, please state:- Yes a Whether any voluntary return of income has been filed Yes b If so, the date of filing of the said return of income 21.12.13 9 If answer to the Sl. No. 8 is negative please state a Income originally assessed NA b Whether it is fit case of under assessment, assessment at too low a rate, assessment which has been made the subject of excessive relief or allowing of excessive loss or depreciation. Yes 10. Whether the provisions of Sec. 150(1) are applicable. If the rely is in affirmative, the relevant facts may be brought out that the provisions of Sec. 150(2) would not stand if the way of initiating proceedings u/s 147. No 11. Reasons for the belief that income has escaped assessment- The assessee viz. Smt Savita Gupta has filed her ROI for AY 2013-14 on 21/12/2013 at Rs.2,15,000/- u/s 139 of the IT Act. The case of the assessee was selected for CASS scrutiny u/s 143(2) of the IT Act. The assessment was completed u/s 143(3) of the IT Act on 14/12/2015 at Rs.2,74,470/-. During the year under consideration, the assessee has sold an immovable property for Rs. 75,00,000/-, the circle value of this property is Rs.80,00,000/-. On perusal of the records, it is found that the assessee has bogus claim towards cost of construction amounting of Rs. 13,42,340/-. During the assessment proceedings, the assessee has provided original copy of agreement dated 15/08/04 with Shri Raju Thekedar. This agreement was made on 15/08/2004 for construction of residential house at Hata Bhannamal Gandhi Market Etah whereas the sold property exists at Vijay Nagar Colony (Thandi Sarak Etah). Also, the sold property was acquired in March 2005 whereas the agreement for construction of house was made in Aug 2004. Therefore, this agreement has no relevance. More ever, the assessee has purchased a house at Hindu Nagar Etah and has claimed deduction u/s 54 of the IT Act of Rs.58,41,680/-. For this, she has purchased a residential house at Hindu Nagar Etah on 06/11/2012 for Rs.40,00,000/- and has shown rest amount of Rs. 18,41,680/- towards construction. For this, she has submitted an agreement dated 10/05/2013 for construction of residential property at Hata Bhannamal Gandhi Market Etah. Since the new property has acquired at Hindu Nagar Etah and this contract for construction was made at different location. Also, the property sold (at Vijay nagar Colony) is a commercial property; therefore, she is not entitled for deduction u/s 54 of the IT Act. Printed from counselvise.com 5 ITA No. 327Agr/2024 Savita Gupta Thus, the assessee has claimed excess deduction of Rs.13,42,340/- and Rs.58,41,680/- against LTCG resulting into escapement of income of Rs.71,84,020/-. Thus, I have reason to believe that income of Rs.71,84,020/- as mentioned above has escaped assessment within meaning of Sec 147 of the IT Act 1961. In this case, a ROI was filed for the year under consideration and scrutiny assessment u/s 143(3)/147 of the Act was already made. Accordingly, in this case, only requirement to initiate proceedings u/s 147 is reason to believe which has been recorded above. It is pertinent to mention here that in this case the assessee has filed ROI for the year under consideration and assessment as stipulated u/s 2(40) of the Act was made. In view of the above, the provisions of clause (c) of Explanation 2 to Sec 147 are applicable to facts of this case and the AY under consideration is deemed to be a case where income chargeable to tax has escaped assessment. Income tax officer Ward-3(2), Etah 12. Whether the Joint/Addl. Commissioner of Income tax is satisfied for issue of notice u/s 148 recorded by the ITO that it is a fit case for issue of notice u/s 148. Dtd: 19.03.2019 Satisfied. It is a fit case for issue of notice u/s 148 of the I. T. Act, 1961 (A.K. Mishra) JCIT, Range-Etah 13. Whether the Principal Commissioner of Income Tax is satisfied for issue of notice u/s 148 recorded by the ITO that it is a fit case for issue of notice u/s 148. 20.03.2019 Yes, I am satisfied with the reasons recorded by AO as at ‘A’ that it is a fit case for issue of notice u/s 148 of the I. T. Act, 1961 (A.S. Singh) Pr.CIT, Aligarh 5. From the above proforma, it could be seen that approval under Section 151 of the Act has been given both by the Learned Joint Commissioner of Income Tax, Range, Etah and also by the Learned Principal Commissioner of Income Tax, Aligarh. The Learned JCIT has accorded the approval on 19-03- 2019 and the Learned PCIT has accorded the approval on 20-03-2019. Now, the short question that arises for our consideration is as to whether when Printed from counselvise.com 6 ITA No. 327Agr/2024 Savita Gupta approval has been obtained from both Learned JCIT as well as Learned PCIT in a superfluous manner, whether the same would become fatal to the entire reassessment proceedings. This issue is no longer res integra in view of the co- ordinate bench decision of Mumbai Tribunal in the case of ACIT vs Bharti Axa Life Insurance Company Ltd reported in 128 taxmann.com 23 (Mumbai Trib) dated 31-3-2021 wherein it was held that where reopening of assessment had been done beyond 4 years from end of relevant assessment year, approval and sanction under section 151 to issue notice for reopening assessment ought to have been granted only by Commissioner alone, hence, where satisfaction of Additional Commissioner was also obtained in addition to approval of Commissioner, said approval became invalid in terms of section 151 of the Act. The relevant operative portion of the said order is reproduced below:- “4.9.2. We further find that the sanction obtained in terms of section 151 of the Act was not provided to the assessee along with the reasons recorded despite assessee asking for the same in writing before the ld AO. This, in our considered opinion, is against the settled principles of natural justice as reopening of an assessment is an extraordinary power available to the ld AO and it should not be done in a cavalier manner. That is why the legislature in its wisdom had put lot of restrictions by imposing conditions for seeking approval and sanction from a superior officer in terms of section 151 of the Act. Hence the said approval obtained from competent authority ought to have been furnished by the ld AO along with the reasons recorded for reopening the assessment to the assessee. Moreover, in the instant case, the approval of both Additional CIT as well as ld PCIT had been obtained by the ld AO in terms of section 151 of the Act as is evident in the statutory proforma enclosed by the ld DR before us. Since the reopening in the instant case had been done beyond 4 years from the end of the relevant assessment year, approval and sanction ought to have been granted only by ld PCIT alone. Hence this is a case where satisfaction of ld Additional CIT is also obtained in addition to the approval of ld PCIT, the said approval becomes invalid in terms of section 151 of the Act. It is trite Printed from counselvise.com 7 ITA No. 327Agr/2024 Savita Gupta law that if the law requires an act to be done in a particular manner, more particularly acts conferring jurisdiction like the present one, then, such act has to be done in that manner alone and the same cannot be compromised in any manner whatsoever. On perusal of the standard proforma for seeking approval in terms of section 151 of the Act, the legislature in its wisdom had prescribed such proforma, clearly demarcating and defining the circumstances under which the approval had to be granted by ld Additional CIT and circumstances under which the approval had to be granted by the ld PCIT. The said defined circumstances cannot be rendered otiose by obtaining approval from both Additional CIT as well as ld PCIT by the ld AO, as was done in the present case before us. 4.9.2.1 Reliance in this regard was rightly placed by the ld AR on the decision of Hon'ble Jurisdictional High Court in the case of Ghanshyam K Khabrani reported in 346 ITR 443 (Bom) wherein it was held that :— 6. The second ground upon which the reopening is sought to be challenged is that the mandatory requirement of election 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 cases. 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 officer who is below the rank of Joint Commissioner after the expiry of 4 years from the end of the relevant Assessment Year 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. 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 present case, the record before the Court indicate that the Assessing Officer submitted a proposal on 28 March 2011 to the CIT(1) Thane through the Additional Commissioner of Income- Tax Range (1) Thane. On 28 March 2011, the Additional CIT forwarded the proposal to the CIT and after recording a gist of the communication of the Assessing Officer stated that : \"As requested by the A.O. Necessary approval for issue of notice u/s. 148 may kindly be 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 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 infection 2(28C). The Commissioner-of Income-tax is not a Joint Commissioner within the meaning Printed from counselvise.com 8 ITA No. 327Agr/2024 Savita Gupta of Section 2(28C). In the present case, the Additional Commissioner of Income-tax forwarded the proposal submitted 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 statutory provision hereunder 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 requires something to be done in a particular manner, it has to be done in that manner. In a similar situation the Delhi High Court in CIT v. SPL'S Siddhartha Ltd. [2012] 204 Taxman 115/17 taxmann.com 138 (Delhi) held that powers which are conferred upon a particular authority have to be exercised by that authority and the satisfaction which the statute mandates of a distinct authority cannot be substituted by the satisfaction of another. We are in respectful agreement with the judgment of the Delhi High Court. 7. In view of the findings which we have recorded on submissions (i), (ii) and (iv), it is not necessary for the Court to consider submission (iii) which has been urged on behalf of the Assessee. Once the Court has come to the conclusion that there was no compliance of the mandatory requirements of Section 147 and 151(2), the notice reopening the assessment cannot be sustained in law. 4.9.2.2 Reliance in this regard was rightly placed by the ld AR on the decision of Hon'ble Jurisdictional High Court in the case of Aquatic Remedies (P.) Ltd. (supra) wherein it was held that:— 6. Before considering the rival submissions, it is necessary to reproduce the relevant extracts from 'FORM FOR RECORDING REASONS FOR INITIATING PROCEEDINGS U/S. 148 OF THE ACT, AND FOR OBTAINING APPROVAL OF THE COMMISSIONER OF INCOME TAX, CENTRAL -V, MUMBAI' tendered across the Bar. The Form itself indicates that the Assessing Office had submitted the proposal to obtain approval of the Commissioner of Income-tax before issuing the notice dated 25th March, 2011. The remark by Additional Commissioner of Income-tax on the form, is as under:— \"12. Remark of the Addl. CIT: Yes. I am satisfied. It is a fit case to re-open the case u/s. 147 of the Act. The notice u/s. 148 may be issued subject to CIT approval. Sd/- (VIRENDRA OJHA) Addl. Commissioner of Income Tax, Central Range 10, Mumbai.\" It, thereafter, was examined by the Commissioner of Income-tax who expressed his approval in the following form: Printed from counselvise.com 9 ITA No. 327Agr/2024 Savita Gupta \"13. Remark of the CIT Yes, I am satisfied that in view of facts, … as indicated in the Annexure, it is a fit case for issue of notice u/s. 148 of the I.T. Act. Sd/- (H.C. JAIN) Commissioner of Income Tax, Central IV, Mumbai.\" 7. Further, the learned Counsel for the parties also produce before us a letter dated 24th March, 2011 addressed by the Additional Commissioner of Income-tax to the Commissioner of Income-tax and letter dated 25th March, 2011 from the office of the Commissioner of Income-tax to the Additional Commissioner of Income Tax. The letter dated 24th March, 2011 records the view of Additional Commissioner of Income-tax that he agrees with the reasons given by the Assessing Officer to issue the re-opening notice and seeks permission of the Commissioner of Income-tax to enable the Assessing Officer to issue the reopening notice for Assessment Year 2004-05. While, letter dated 25th March, 2011 from the office of the Commissioner of Income Tax, addressed to the Additional Commissioner of Income-tax states that he has granted approval to the Assessing Officer to issue a notice under section 148 of the Act. All the three communications, referred to herein above in paragraphs 6 and in this paragraph, are taken on record and marked A, B & C for identification. 8. Mr. Tejveer Singh, learned Counsel appearing for the Revenue submits that the Additional Commissioner of Income-tax is the jurisdictional Officer to grant sanction under section 151 (2) of the Act. This, Officer he, submits has recorded his satisfaction with the reasons recorded by the Assessing Officer to issue the re-opening notice. Thus, the requirement of Section 151 (2) of the Act is satisfied inasmuch as the Additional Commissioner of Income-tax has found it to be a fit case for issuing of notice. It is further submitted that even though, the approval was obtained from the Commissioner of Income-tax for issuance of the notice, it does not take away the fact that the Additional Commissioner of Income-tax was satisfied with reasons recorded by the Assessing Officer. Therefore, it is submitted that the notice dated 25th March, 2011, cannot be said to be without jurisdiction. 9. It is undisputed position before us that in terms of section 151(2) of the Act, the sanctioning/permission to issue notice under section 148 of the Act has to be issued by the Additional Commissioner of Income Tax. We find that the Assessing Officer had not sought the approval of the Designated Officer but of the Commissioner of Income Tax. This is clear from the Form used to obtain the sanction. In any case, the approval/satisfaction recorded in the form submitted for sanction of the Commissioner of Income-tax by the Assessing Officer reproduced herein above, it is clear that the Additional Commissioner of Printed from counselvise.com 10 ITA No. 327Agr/2024 Savita Gupta Income-tax had not granted permission to initiate re-opening proceedings against the Respondent-Assessee. The view of the Additional Commissioner of Income-tax was subject to the approval of his superior - the Commissioner of Income Tax. Thus, there was no final sanction granted by the Additional Commissioner of Income-tax for issuing the notice dated 25th March, 2011 to re-open the Assessment. Further, it is the Commissioner of Income-tax who directed the issuance of the notice under section 148 of the Act to the Assessing Officer. Thus, it is very clear that the final sanction/approval was that of the Commissioner of Income-tax as indicated in the Form and also in the two letters dated 24th March, 2011 and 25th March, 2011. 10. This Court in Ghanshyam K Khabrani (supra) while dealing with almost similar/identical situation has observed as under:— \" The approval which has been granted is not by the Additional Commissioner of Income-tax but by the Commissioner of Income Tax. There is no statutory provision here under 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 manner, it has to be done in that manner. In a similar situation, the Delhi High Court in CIT v. SPL's Siddhartha Ltd. (ITA No. 836 of 2011 decided on September 14, 2011) - since reported in [2012] 345 ITR 223 (Delhi) held that powers which are conferred upon a particular authority have to be exercised by that authority and the satisfaction which the statute mandates of a distinct authority cannot be substituted by the satisfaction of another. We are in respectful agreement with the judgment of the Delhi High Court.\" (emphasis supplied) 11. In the aforesaid facts, the view taken by the Tribunal, cannot be found fault with as it merely follows the decision of this Court in Ghanshyam K Khabrani (supra). Therefore, the question as framed does not give rise to any substantial question of law. Thus, not entertained. 12. Accordingly, Appeal dismissed. No order as to costs. The Special Leave Petition preferred by the revenue before the Hon'ble Apex Court against this judgment was dismissed in Aquatic Remedies (P.) Ltd. (supra).” 6. Respectfully following the aforesaid decision of Mumbai Tribunal , which in turn relied upon the decision of Hon’ble Bombay High Court and Hon’ble Delhi High Court supra, we hold that the reopening has been made in the instant case by taking approval u/s 151 of the Act from both the Additional CIT as well as Principal Printed from counselvise.com 11 ITA No. 327Agr/2024 Savita Gupta CIT which would not be in consonance with the provisions of section 151 of the Act and hence would become fatal to the entire assumption of jurisdiction and consequential framing of reassessment proceedings by the learned AO. Accordingly, the entire reassessment proceedings are hereby quashed. Hence, one of the facets of Ground No.4 challenging the validity of assumption of jurisdiction u/s 147 of the Act is allowed in the above mentioned terms. Since the reassessment is quashed on this technical issue, the other legal grounds raised by the assessee as well as the grounds raised by the assessee on merits need not be adjudicated and they are left open. 7. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 24.03.2026 -Sd/- -Sd/- (MAHAVIR SINGH) (M. BALAGANESH) VICE PRESIDENT ACCOUNTANT MEMBER Dated: 24/03/2026 * Santosh Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, Agra Printed from counselvise.com "