2013 (12) TMI 72 - HC - Income Tax

validity of re-assessment u/s 147 - Necessary sanction as required by Section 151 (2) of the Act, was not obtained for initiation of re-assessment - Held that - There was a approval dated 08/5/2010 by Joint Commissioner, Income Tax which has been mentioned in the assessment order itselfAs per explanation to section 151 added by Finance Act, 2008 with retrospective effect - It is not necessary that the Joint Commissioner himself may issue notice - The explanation which was added was not available when the Tribunal decided the matter - The explanation covers this issue - Decided in favour of Revenue.

Summary

Issues involved:
1. Jurisdictional validity of re-assessment proceedings under Sections 147/148 of the Income Tax Act, 1961.
2. Authority to issue notice under Section 148 of the Income Tax Act, 1961.

Analysis:

Issue 1: Jurisdictional validity of re-assessment proceedings under Sections 147/148 of the Income Tax Act, 1961:
The case involved an appeal against the judgment and order of the Income Tax Appellate Tribunal regarding the initiation of re-assessment proceedings for the Assessment Year 1995-96. The assessee contended that the re-assessment proceedings were without jurisdiction as the necessary sanction as required by Section 151(2) of the Act was not obtained, and the notice under Section 148 was issued by the Income Tax Officer instead of the Joint Commissioner. The Tribunal, relying on a previous judgment, held that the notice issued by the Assessing Officer without proper jurisdiction vitiated the entire proceedings. The Tribunal concluded that the jurisdiction was not correctly assumed by the Assessing Officer, leading to the quashing of all subsequent proceedings. The appellant argued that the notice was validly issued after obtaining approval from the Joint Commissioner, and there was no error in the jurisdiction assumed by the Assessing Officer.

Issue 2: Authority to issue notice under Section 148 of the Income Tax Act, 1961:
The respondent did not dispute that approval was obtained from the Joint Commissioner for issuing the notice under Section 148. Referring to a Division Bench judgment, it was established that the Assessing Officer, empowered by the Commissioner of Income Tax's sanction, could issue the notice under Section 148. The Division Bench clarified that the purpose of the sanction requirement was proper supervision by a superior officer in the Department. The Finance Act, 2008, added an explanation to Section 151, stating that the Joint Commissioner, Commissioner, or Chief Commissioner, if satisfied with the reasons recorded by the Assessing Officer, need not issue the notice personally. The retrospective effect of this explanation clarified that it was not mandatory for the Joint Commissioner to issue the notice himself.

In conclusion, the High Court allowed the appeal, setting aside the Tribunal's judgment, and remitted the matter back to the Tribunal for fresh consideration on merits. The clarification provided by the explanation added to Section 151 of the Income Tax Act, 1961, supported the validity of the notice issued by the Assessing Officer after obtaining approval from the Joint Commissioner, thus upholding the jurisdictional validity of the re-assessment proceedings.