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2016 (1) TMI 1071 - AT - Income TaxValidity of reopening of assessment - non taking permission from the Joint/Additional Commissioner in terms of Section 151(2) - Held that - In the present case, admittedly the AO was not sure as to whether scrutiny assessment was passed in this case or not which is clear from his report furnished to the ld. CIT(A) for obtaining his permission/sanction. The ld. CIT(A) on perusing the record found that no order u/s 143(3) of the Act was passed in the assessee s case for the year under consideration and thereafter, he quashed the assessment by following the judgment of the Hon ble Jurisdictional High Court in the case of CIT Vs SPL s Siddhartha Ltd. 2011 (9) TMI 640 - DELHI HIGH COURT In the present case also the AO had not taken the permission from the Joint/Additional Commissioner in terms of Section 151(2) of the Act. Therefore, reassessment framed without proper permission from the competent authority was rightly quashed by the ld. CIT(A). We do not see any infirmity in the impugned order, accordingly do not see any merit in this appeal of the department. - Decided in favour of assessee
Issues Involved:
1. Legality of reopening the assessment. 2. Validity of the assessment order due to lack of proper authorization under Section 151 of the Income Tax Act. Issue-wise Detailed Analysis: 1. Legality of Reopening the Assessment: The department appealed against the order of CIT(A) which quashed the reopening of the assessment and held it to be null and void. The original assessment was completed under Section 143(3) of the Income Tax Act, 1961, with an income of Rs. 25,42,690/-. The case was later reopened based on information from the Directorate of Investigation, New Delhi, regarding bogus accommodation entries. The Assessing Officer (AO) framed the assessment at an income of Rs. 55,45,710/- by making additions under Section 68 of the Act. The CIT(A) quashed the assessment, observing that the notice under Section 148 was issued beyond four years without obtaining permission from the prescribed authority in terms of Section 151 of the Act. 2. Validity of the Assessment Order Due to Lack of Proper Authorization: The CIT(A) found that the AO had obtained approval from the Commissioner of Income Tax (CIT) instead of the Joint/Additional Commissioner, as required by Section 151 of the Act. The CIT(A) emphasized that since the notice was issued beyond four years from the end of the assessment year, the AO should have obtained permission from the Joint/Additional Commissioner. The CIT(A) relied on the judgment of the Hon'ble Delhi High Court in the case of CIT Vs SPL's Siddhartha Ltd., which held that the approval from the Commissioner instead of the Joint Commissioner was not a curable irregularity under Section 292B, rendering the notice invalid. Department's Argument: The department argued that the assessee did not disclose the true income and obtained bogus accommodation entries. The AO's addition was justified, and the CIT(A) was not correct in deleting the same. The department relied on several case laws to support their argument. Tribunal's Analysis: The Tribunal considered the submissions of both parties and reviewed the material on record. The Tribunal noted that the AO was unsure whether a scrutiny assessment was passed, as evident from the report furnished to the CIT for obtaining permission. The CIT(A) found no order under Section 143(3) for the year under consideration and quashed the assessment by following the judgment in CIT Vs SPL's Siddhartha Ltd. The Tribunal reiterated that the satisfaction of one authority cannot be substituted by another, and the AO had not taken permission from the Joint/Additional Commissioner as required by Section 151(2). Conclusion: The Tribunal upheld the CIT(A)'s decision, stating that the reassessment framed without proper authorization was rightly quashed. The appeal of the department was dismissed, and the Tribunal found no merit in the department's appeal. Final Order: The appeal of the department was dismissed, and the order was pronounced in the Court on 05/11/2015.
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