2013 (10) TMI 1417 - AT - Income Tax

Validity of re-assessment proceedings - approval granted by Commissioner of Income Tax instead of Additional Commissioner / Joint Commissioner - Held that - It is duly recorded in the order of Ld. CIT(A) that the AO had obtained the approval of Commissioner of Income Tax on 31/3/2009. In support the assessee had also filed a letter issued by Commissioner of Income Tax, which is reproduced in the above part of this order. Therefore, there remains no dispute on the fact that re-assessment proceedings have been initiated on the approval received by the AO from Commissioner of Income Tax and the said approval was not given of Additional Commissioner / Joint Commissioner of Income Tax. There is also no dispute that the approval has been issued after a period of four years from the end of the relevant assessment year. If these facts are undisputed, then it has to be held that the reassessment proceedings based on an approval granted by Commissioner of Income Tax instead of Additional Commissioner / Joint Commissioner of Income Tax are required to be held to be invalid. The relevant portion of aforementioned decision has already been reproduced. Relying thereon, we decide this issue in favour of assessee.

Summary

Issues Involved:
1. Validity of reassessment proceedings.
2. Deletion of addition on account of Long-Term Capital Gains (LTCG).

Detailed Analysis:

Validity of Reassessment Proceedings:

The primary issue addressed was the validity of the reassessment proceedings initiated by the Assessing Officer (AO). The appellant argued that the reassessment proceedings were invalid due to improper approval under Section 151 of the Income Tax Act, 1961. Specifically, the approval for reassessment was obtained from the Commissioner of Income Tax instead of the Joint Commissioner of Income Tax, which is a requirement under Section 151(2) when the original assessment was not made under Section 143(3) or Section 147 and more than four years had elapsed from the end of the relevant assessment year.

The Tribunal referred to the provisions of Section 151 and the relevant case law, including the Bombay High Court decision in Ghanshyam K. Kabrani vs. ACIT, which held that the satisfaction for issuing a notice under Section 148 must be obtained from the Joint Commissioner of Income Tax. The Tribunal noted that in the present case, the approval was indeed granted by the Commissioner of Income Tax, which rendered the reassessment proceedings invalid. The Tribunal emphasized that when the statute mandates the satisfaction of a particular authority, it must be that authority's satisfaction, and it cannot be substituted by another authority's satisfaction.

Deletion of Addition on Account of LTCG:

The revenue's appeal also contested the deletion of an addition of Rs. 26,99,739/- made by the AO on account of Long-Term Capital Gains (LTCG). The revenue argued that the CIT(A) erred in deleting the addition without remanding the issue back to the AO to verify the original Memorandum of Understanding (MOU) and obtain the opinion of a signature expert.

However, since the Tribunal concluded that the reassessment proceedings were invalid, it rendered the revenue's grounds of appeal regarding the LTCG addition infructuous. The Tribunal stated that if the reassessment proceedings themselves are invalid, any assessment made pursuant to such proceedings would be non-est (non-existent).

Conclusion:

The Tribunal dismissed the appeal filed by the revenue on the ground that the reassessment proceedings were invalid due to the improper approval under Section 151. Consequently, the issues raised by the revenue regarding the deletion of the LTCG addition were deemed infructuous. The order of the CIT(A) was upheld, and the appeal by the revenue was dismissed.

Order Pronouncement:

The order was pronounced in the open court on 10/10/2013.