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2012 (11) TMI 506 - AT - Income TaxReassessment proceedings - period extending four years - assessee contested against notice as without obtaining prior sanction as required u/s 151 - Held that - No substance in the submission of DR because section 124 primarily deals with the territorial jurisdiction of AO. Section 151 deals with sanction for issue of notice u/s 148 and it nowhere refers to section 124. The sanction by competent authority, as mentioned in section 151 only, can assign proper jurisdiction to the AO and if such sanction was not obtained, the AO lacked the jurisdiction to complete the reassessment proceedings. When the legislature has specifically assigned jurisdiction to a particular authority under the Act to grant sanction then, if all other conditions are fulfilled, the sanction has to be granted by that very authority. This function cannot be delegated to any other authority. It is the legal duty cost upon that authority to perform the said function. If that authority fails in performing his legal functions and the same is performed by the other authority then it goes to the very root of proper assumption of jurisdiction by the authority which was required to take that sanction. This is purely legal issue and can be raised at any stage of proceeding - Hon ble Delhi High Court in the case of CIT VERSUS SPL‟S SIDDHARTHA LTD (2011 (9) TMI 640 - DELHI HIGH COURT) has quashed the reassessment proceedings for want of sanction of Joint Commissioner of Income tax when it was so required as per section 151(2) - appeal decided in favour of assessee.
Issues Involved:
1. Validity of reopening the assessment under Section 148 of the Income Tax Act, 1961. 2. Requirement of obtaining prior sanction under Section 151 of the Income Tax Act, 1961. 3. Jurisdictional challenge based on incorrect approval authority. 4. Merits of the addition of Rs. 10,00,000 to the assessee's income. Detailed Analysis: 1. Validity of Reopening the Assessment under Section 148: The assessee filed its return of income on 31.10.2001, declaring a total income of Rs.12,87,140/-. The return was processed under Section 143(1) on 15.05.2002. The case was reopened by serving a notice under Section 148 on 28.03.2008. The assessee objected to the reopening on the grounds that the approval for reopening was taken in the name of "M/s Sun Ind Investments Technologies Pvt. Ltd." instead of the correct name "M/s Sunint Investments & Technologies Pvt. Ltd." The Assessing Officer dismissed this objection as a mere typographical error and referred to Section 292B, which states that no notice shall be invalid merely by reason of any mistake, defect, or omission. 2. Requirement of Obtaining Prior Sanction under Section 151: The assessee argued before the CIT(A) that the assessment was initiated under Section 147 without obtaining the required prior sanction as per Section 151 of the Act. The CIT(A) dismissed this argument, stating that the assessee did not raise this objection earlier and had submitted to the jurisdiction of the Assessing Officer. The assessee contended that under Section 151(2), since the assessment was completed under Section 143(1), the Assessing Officer was required to obtain the sanction of the Joint Commissioner of Income Tax and not the CIT. The assessee relied on the decision of the Hon'ble Jurisdictional High Court in CIT v. SPL'S Siddhartha Ltd. [2012] 345 ITR 223, which held that only the Joint Commissioner or Additional Commissioner could grant the approval for issuing a notice under Section 148, and any approval granted by the Commissioner of Income Tax was not curable under Section 292B. 3. Jurisdictional Challenge Based on Incorrect Approval Authority: The Department argued that the objection regarding the approval authority was not raised before the Assessing Officer and that the assessee had submitted to the jurisdiction of the Assessing Officer. The Tribunal, however, found no substance in this argument, stating that Section 124 deals with territorial jurisdiction, whereas Section 151 specifically deals with the sanction for issuing a notice under Section 148. The Tribunal emphasized that the sanction by the competent authority as mentioned in Section 151 is crucial for the proper assumption of jurisdiction by the Assessing Officer. If the required sanction was not obtained, the Assessing Officer lacked the jurisdiction to complete the reassessment proceedings. This issue, being purely legal, can be raised at any stage of the proceedings. 4. Merits of the Addition of Rs. 10,00,000 to the Assessee's Income: The Assessing Officer had made an addition of Rs. 10,00,000 to the assessee's income based on the deposit of Rs. 10,00,000 in the account of M/s Rajkar Electricals & Electronics Pvt. Ltd. and the subsequent issuance of a demand draft to the assessee company. The CIT(A) upheld this addition on merits. However, since the Tribunal quashed the reassessment proceedings for lack of proper sanction under Section 151, the adjudication on the merits of the case was deemed academic and not necessary. Conclusion: The Tribunal quashed the reassessment proceedings due to the lack of proper sanction from the Joint Commissioner of Income Tax as required under Section 151(2). Consequently, the appeal of the assessee was allowed, and the merits of the addition were not adjudicated.
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