2017 (10) TMI 1313 - AT - Income Tax

Reopening of assessment - non following mandatory conditions u/s 147 to 151 - no reasons recorded by the approving authority, i.e. JCIT giving approval for reopening - Held that - JCIT has not applied his mind independently in giving approval for reopening the impugned case and it is settled law that assessment reopened without valid approval is nullity under law. See CIT Vs. S. Goyanka Lime & Chemical Ltd 2015 (12) TMI 1334 - SUPREME COURT OF INDIA . Assessing Officer has not applied his mind independently while issuing notice u/s 148 of the Act - Decided in favour of assessee.

Summary

Issues involved:
Challenging the validity of reassessment order u/s 143(3)/147 due to lack of jurisdiction and non-compliance with mandatory conditions; Absence of valid approval for reopening the case; Alleged mechanical approval without independent application of mind; Failure to serve mandatory notice u/s 143(2) before reassessment; Lack of independent consideration while issuing notice u/s 148.

Detailed Analysis:

1. Validity of Reassessment Order: The assessee contended that the reassessment order u/s 143(3)/147 lacked jurisdiction and failed to comply with mandatory conditions. The argument was based on the absence of valid approval for reopening the case by the Joint Commissioner of Income Tax. Citing legal precedents, it was highlighted that assessment reopened without valid approval is considered null and void under the law. References were made to relevant case laws such as CIT Vs. S. Goyanka Lime & Chemical Ltd and Central India Electric Supply Co. Ltd Vs. ITO to support the contention that mechanical approval without independent application of mind renders the reassessment invalid.

2. Non-Compliance with Mandatory Notice: The assessee further argued that the Assessing Officer did not serve the mandatory notice u/s 143(2) as required by law. It was emphasized that failure to serve the notice before reassessment renders the entire assessment process invalid. The legal argument was supported by the decision in the case of DIT Vs. Society for Worldwide Inter-bank Financial Telecommunications, where the court held that the assessment completed without a valid notice under s. 143(2) was deemed invalid and set aside.

3. Independent Consideration for Notice u/s 148: The assessee raised concerns regarding the lack of independent consideration by the Assessing Officer while issuing the notice u/s 148. It was pointed out that the notice u/s 143(2) was issued on the same date the return was filed, indicating a lack of independent assessment. The contention was that the Assessing Officer did not apply his mind independently before issuing the notice u/s 148, which further supported the argument for quashing the assessment.

4. Judgment and Conclusion: The Tribunal, after considering the arguments and legal precedents cited, concluded that the Assessing Officer lacked jurisdiction under sections 147/148 of the Income Tax Act. Consequently, the reassessment order was deemed invalid and directed to be quashed. The Tribunal allowed the legal grounds raised by the assessee, emphasizing the importance of compliance with procedural requirements and independent assessment before initiating reassessment proceedings.

5. Applicability of Decision: The Tribunal noted that the legal issues raised in the appeals were identical and applicable to assessment years 2007-08, 2008-09, and 2009-10. The order allowing the appeals of the assessee was pronounced, emphasizing the consistent application of legal principles across the cases.

In summary, the judgment focused on challenging the validity of the reassessment order, highlighting the importance of jurisdiction, compliance with mandatory conditions, and independent assessment before initiating reassessment proceedings. The decision underscored the significance of procedural adherence and independent consideration in ensuring the legality of assessment actions under the Income Tax Act.