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2014 (11) TMI 7 - AT - Income TaxReopening of assessment u/s 147 Jurisdiction of AO - Held that - Assessment was reopened after four years from the end of the relevant assessment year - before issuing notice u/s 148 of the Act, the AO was required to obtain sanction/approval from the competent authority prescribed under section 151 of the Act - section 292BB of the Act is presumptive section and on the basis of it, it can be presumed that notice required to be served was served upon the assessee if the assessee joins the assessment proceedings - provisions of section 292BB of the Act is not applicable as the issue in dispute is with regard to the validity of jurisdiction assumed by the AO for issuing notice u/s 148 of the Act following the decision in Shri. Ghanshyam K. Khabrani. Versus Assistant Commissioner of Income Tax 2012 (3) TMI 266 - BOMBAY HIGH COURT u/s 151 of the Act, it was only the Jt. Commissioner or Addl. Commissioner who could grant the approval for issuuance of notice u/s 148 of the Act and if the approval is not granted by the Jt. Commissioner or Addl. Commissioner and instead it was granted by the ld. Commissioner of Income-tax, then the same was not an irregularity curable under section 292B of the Act and notice under section 148 of the Act would be invalid and void ab initio - sanction accorded by the CIT to the AO for issuance of notice u/s 148 of the Act was not proper, therefore, the AO did not assume proper jurisdiction to issue notice u/s 148 of the Act - notice issued u/s 148 of the Act is invalid and assessment framed consequent thereto is invalid and void ab initio Decided in favour of assessee.
Issues Involved:
1. Validity of initiation of proceedings under section 147 of the Income Tax Act, 1961. 2. Validity of the notice issued under section 148 of the Income Tax Act, 1961. 3. Jurisdiction of the Assessing Officer in issuing the notice under section 148 of the Income Tax Act, 1961. 4. Sustaining the addition of Rs. 2,39,088/- on account of Long Term Capital Gains. 5. Overall legality and factual supportability of the order by the CIT(A). Detailed Analysis: 1. Validity of initiation of proceedings under section 147 of the Income Tax Act, 1961: The assessee contested the initiation of proceedings under section 147, arguing that the notice under section 148 was issued after obtaining approval from the Commissioner of Income Tax instead of the Joint Commissioner of Income Tax, which is required under section 151(2) of the Act. The tribunal noted that the Assessing Officer recorded in the assessment order that the sanction for reopening the assessment was obtained from the Commissioner of Income Tax. This fact was undisputed by the Revenue. 2. Validity of the notice issued under section 148 of the Income Tax Act, 1961: The tribunal examined the provisions of section 151(2) which stipulate that no notice under section 148 shall be issued by an Assessing Officer below the rank of Joint Commissioner of Income Tax after four years from the end of the relevant assessment year unless the Joint Commissioner is satisfied with the reasons recorded by the Assessing Officer. Since the sanction was accorded by the Commissioner of Income Tax and not by the Joint Commissioner, the tribunal concluded that the notice issued under section 148 was invalid and void ab initio. 3. Jurisdiction of the Assessing Officer in issuing the notice under section 148 of the Income Tax Act, 1961: The tribunal emphasized that the jurisdiction to issue notice under section 148 must be sanctioned by the appropriate authority as per section 151(2). The tribunal held that since the sanction was obtained from the Commissioner of Income Tax and not the Joint Commissioner, the Assessing Officer did not assume valid jurisdiction to issue the notice under section 148. Consequently, the notice and the subsequent assessment were deemed invalid. 4. Sustaining the addition of Rs. 2,39,088/- on account of Long Term Capital Gains: Given the tribunal's finding that the notice under section 148 was invalid, the tribunal did not need to address the merits of the addition of Rs. 2,39,088/- on account of Long Term Capital Gains. The invalidity of the notice rendered the entire reassessment process void. 5. Overall legality and factual supportability of the order by the CIT(A): The tribunal found that the CIT(A) failed to address the specific ground raised by the assessee regarding the jurisdictional issue. The tribunal concluded that the order of the CIT(A) sustaining the additions made by the Assessing Officer was not legally sustainable due to the invalidity of the notice under section 148. Conclusion: The tribunal quashed the assessment framed consequent to the invalid notice issued under section 148, holding it to be void ab initio. The appeal of the assessee was allowed, emphasizing the necessity of following statutory requirements for jurisdiction and sanction in reassessment proceedings.
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