2010 (12) TMI 164 - AT - Income Tax

Sanction for issue of notice - Assessee contended that since the original assessment order was passed under section 143(3) of the Act and notice under section 148 was issued after the expiry of 4 years as per proviso to section 151(1) the AO must have taken the sanction of the CCIT or CIT to reopen a completed assessment - Accordingly there is no alternate except to agree with the view taken by the ld. J.M. and answer the question that in the given facts and circumstances of the case the requisite mandatory sanction under section 151 of the Act for issuing notice under section 148 has not been obtained by the Assessing Officer

Summary

Issues Involved:
1. Whether the requisite mandatory sanction under section 151 of the Income-tax Act, 1961, for issuing notice under section 148, was obtained or not.

Detailed Analysis:

1. Facts of the Case:
The original assessment under section 143(3) was completed on 29.01.2001. Subsequently, proceedings under section 147 were initiated via notice dated 24.03.2005 issued under section 148 after obtaining approval from the JCIT, Range-I, Agra. The assessee challenged the validity of the jurisdiction of the Assessing Officer (AO) on the grounds that the notice under section 148 was issued after the expiry of 4 years from the relevant assessment year without the requisite sanction from the Chief Commissioner of Income Tax (CCIT) or Commissioner of Income Tax (CIT), as mandated by the proviso to section 151(1).

2. Tribunal's Decision:
The learned Accountant Member (A.M.) and the learned Judicial Member (J.M.) had differing opinions on whether the sanction from CCIT or CIT was required. The A.M. held that the approval from the Joint Commissioner of Income Tax (JCIT) was sufficient, while the J.M. contended that the sanction from CCIT or CIT was necessary as per the decision of the jurisdictional High Court in the case of Dr. Shashi Kant Garg v. CIT, 285 ITR 158 (All.) and the Calcutta High Court in East India Hotels Limited v. DCIT, 204 ITR 435.

3. Interpretation of Section 151:
Section 151(1) stipulates that no notice under section 148 shall be issued by an AO below the rank of Assistant Commissioner or Deputy Commissioner unless the JCIT is satisfied on the reasons recorded by such AO. The proviso to section 151(1) requires that after the expiry of four years from the end of the relevant assessment year, no such notice shall be issued unless the CCIT or CIT is satisfied on the reasons recorded by the AO. Section 151(2) applies to cases where the assessment has not been completed under section 143(3) or section 147.

4. Analysis of Jurisdictional High Court Decisions:
The Allahabad High Court in Dr. Shashi Kant Garg v. CIT held that for notices issued after the expiry of four years, the satisfaction of the CCIT or CIT is mandatory. This interpretation was based on the proviso to section 151(1), which requires the satisfaction of the higher authority for reopening assessments after four years. The Calcutta High Court in East India Hotels Limited v. DCIT also emphasized the necessity of obtaining the sanction of the CCIT or CIT for issuing notices under section 148 after the expiry of four years.

5. Conclusion:
The Tribunal, after considering the rival submissions and the relevant legal provisions, concluded that the proviso to section 151(1) mandates the satisfaction of the CCIT or CIT for issuing notices under section 148 after the expiry of four years from the end of the relevant assessment year. The Tribunal noted that the jurisdictional High Court's decision in Dr. Shashi Kant Garg v. CIT is binding and must be followed. Therefore, the requisite mandatory sanction under section 151 of the Act for issuing notice under section 148 was not obtained by the AO in the given facts and circumstances of the case.

6. Final Decision:
The matter shall be referred back to the regular Bench for further proceedings in light of the conclusion that the mandatory sanction under section 151 was not obtained.