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2012 (9) TMI 584 - HC - Income TaxReassessment proceedings - ITAT quashed the notice issued u/s 148 - Held that - In view of the judgment in Rajesh Jhaveri Stock Brokers P. Ltd. (2007 (5) TMI 197 - SUPREME COURT ), after 1st April, 1989, in accepting the returns under Section 143 (1) (a) AO does not apply his mind and that the acknowledgment is received mostly by ministerial staff. In such case where any material is found and the notice u/s 148 has to be issued, the AO is competent to issue the notice except in a case, where more than 4 years have expired. In such cases the satisfaction has to be recorded by an officer higher in rank. The discretion in such a case cannot be left with the A.O. The satisfaction of the Joint Commissioner has to be recorded before the Assessing Officer, who may be an ITO, issues a notice under Section 148. In the present case we find that there is positive finding in the order of CIT (A) that in respect of assessment year 1995-96 the record shows that the Addl. Commissioner of Income Tax has given approval of issuance of notice under Section 148 on 20.3.2002. We, however, do not find any positive finding in this regard in Income Tax Appeal No.749 of 2007 relating to year 1996-97 and 1997-98 - decided in favour of the revenue and remand the matter to the Income Tax Appellate Tribunal to consider the appeal afresh and before considering the matter on merit with regard to assessment years 1996-97 and 1997-98 the Income Tax Appellate Tribunal will ascertain from the record, whether the satisfaction is recorded by the Joint Commissioner or Addl. Commissioner as the case may be or the officer, who was higher to the Income Tax Officer in the relevant year as it is only after he find that such satisfaction is recorded in accordance with Section 152 (2), that he may proceed to decide the appeals - against assessee.
Issues Involved:
1. Validity of reassessment proceedings under Section 147/143(3) of the Income Tax Act. 2. Compliance with Section 151(2) for issuing notice under Section 148. Issue-Wise Detailed Analysis: 1. Validity of Reassessment Proceedings: The primary issue was whether the reassessment proceedings initiated by the Assessing Officer (AO) under Section 147/143(3) were valid. The Tribunal quashed the reassessment proceedings on the grounds that the notice under Section 148 was issued by an officer below the rank of Joint Commissioner, which was a requirement under Section 151(2) of the Act. The Tribunal relied on the judgment in Dr. Shashi Kant Garg v. CIT, 285 ITR 158, which emphasized that if an authority is required to exercise powers or perform an act in a particular manner, it must do so in that specific manner and not otherwise. 2. Compliance with Section 151(2) for Issuing Notice Under Section 148:The Tribunal found that the notices for the assessment years 1995-96, 1996-97, and 1997-98 were issued after the expiry of four years from the end of the respective assessment years. According to Section 151(2), in such cases, the notice under Section 148 could only be issued by an officer not below the rank of Joint Commissioner. The Tribunal noted that the notices were issued by the Income Tax Officer (ITO) and not by the Joint Commissioner, thereby invalidating the reassessment proceedings. For the assessment year 1995-96, the CIT (A) recorded that the Additional Commissioner had given approval for issuing the notice under Section 148 on 20.3.2002, and the notice was issued on 21.3.2002. However, for the assessment years 1996-97 and 1997-98, there was no positive finding regarding the approval by a higher authority. The revenue argued that the Tribunal's reliance on Dr. Shashi Kant Garg's case was misplaced and should have considered the judgment in Ajai Verma v. CIT, (2008) 304 ITR 30 (All), which clarified that Section 151(2) allows an officer below the rank of Joint Commissioner to issue a notice under Section 148 if the Joint Commissioner is satisfied that it is a fit case for such notice. The Supreme Court's judgment in Asstt. Commissioner of Income Tax v. Rajesh Jhaveri Stock Brokers P. Ltd., (2007) 291 ITR 500 (SC) was also cited to explain the difference between 'intimation' and 'assessment order' and the conditions under which reassessment proceedings can be initiated. After considering the submissions, the court agreed with the opinion expressed in Ajai Verma's case, which distinguished the observations made in Dr. Shashi Kant Garg's case. It was held that the satisfaction of the Joint Commissioner must be recorded before an AO below the rank of Joint Commissioner issues a notice under Section 148. Conclusion:The court decided both questions of law in favor of the revenue and against the respondent-assessee. The matter was remanded to the Income Tax Appellate Tribunal to consider the appeals afresh. The Tribunal was instructed to ascertain from the record whether the satisfaction of the Joint Commissioner or Additional Commissioner was recorded in accordance with Section 151(2) before proceeding to decide the appeals on merits for the assessment years 1996-97 and 1997-98. All three income tax appeals were allowed, and the impugned orders of the Income Tax Appellate Tribunal were set aside.
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