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2012 (8) TMI 39 - AT - Income TaxReopening of assessment u/s 147 - Held that - As under Section 151(2) no notice can be issued u/s 148 by AO who is below the rank of Joint Commissioner after the expiry of 4 years from the end of the relevant AY unless the Joint Commissioner is satisfied, on the reasons recorded by such AO, that it is a fit case for the issue of such notice - as in present case the Additional Commissioner of Income Tax forwarded the proposal submitted by the AO to the CIT. The approval which has been granted is not by the Additional Commissioner of Income Tax but by the Commissioner of income Tax - this is not a fit case for the issuance of a notice under Section 148 & CIT is not a Joint Commissioner within the meaning of Section 2(28C) - the reopening of assessment by the A.O. u/s 147 is not sustainable - in favour of assessee.
Issues Involved:
1. Legality and justification of the reopening of the assessment under Section 147 of the Income Tax Act. 2. Compliance with the statutory requirements under Sections 147 and 151 of the Income Tax Act. Issue-wise Detailed Analysis: 1. Legality and Justification of the Reopening of the Assessment under Section 147: The assessee filed a return of income showing Rs. 73,97,050, which was processed under Section 143(1) of the Income Tax Act. A subsequent order under Section 154 revised the income to Rs. 64,51,555. The assessment was reopened under Section 147 by issuing a notice under Section 148. The AO finalized the assessment under Section 143(3) read with Section 147, determining the total income at Rs. 2,86,05,160, making certain additions. The assessee challenged the reopening of the assessment before the CIT(A), who upheld the AO's action. On further appeal, the assessee argued that the AO took approval from the CIT instead of the Addl. CIT, as mandated by the Act, relying on decisions from the Delhi and Bombay High Courts. The Department argued that the Addl. CIT had applied his mind and that the statutory requirement was fulfilled. 2. Compliance with Statutory Requirements under Sections 147 and 151: The Tribunal examined the statutory provisions under Section 151, which require the satisfaction of the Joint Commissioner for reopening assessments after four years. The Tribunal noted that the AO submitted the proposal to the CIT through the Addl. CIT, who forwarded it to the CIT with a summary, and the CIT approved the proposal. The Tribunal found that the requirement of Section 151(2) was not fulfilled, as the satisfaction of the Joint Commissioner was required. The approval was granted by the CIT, who is not a Joint Commissioner or Addl. Commissioner within the meaning of Section 2(28C). The Tribunal cited the Bombay High Court's decision in Shri Ghanshyam K. Khabrani, which held that the satisfaction must be of the Joint Commissioner, and the Delhi High Court's decision in CIT Vs. SPL's Siddhartha Ltd., which emphasized that the satisfaction of a particular functionary cannot be substituted by another. Conclusion: The Tribunal concluded that the reopening of the assessment under Section 147 was not sustainable in law due to non-compliance with the mandatory requirement of Section 151(2). Consequently, the order passed by the AO under Section 143(3) read with Section 147, sustained by the CIT(A), was quashed. The assessee's appeal was allowed, and the other grounds did not require adjudication. Final Judgment: The assessee's appeal was allowed, quashing the reopening of the assessment under Section 147 and the subsequent order passed by the AO.
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