2017 (1) TMI 518 - HC - Income Tax

Reopening of assessment - AO has not obtained approval of the appropriate authority as required under Section 151 - Held that - it is not in dispute that after the impugned Notices are issued relying upon and considering the directions issued by the learned CIT A made in the Appeal for AY 2011- 2012 the directions issued by the learned CIT A have been set-aside by the Income Tax Appellate Tribunal. In that view of the matter the impugned reopening proceedings for the respective assessment years for want of approval under Section 151 of the Act cannot be sustained. While quashing and setting aside the impugned Notices at this stage it is observed that in case the Revenue succeeds in the Appeal that may be filed against the decision of the learned Tribunal setting aside the direction issued by the learned CIT A in the Appeal for AY 2011-2012 and the directions issued by the learned CIT A are restored. In that case it would be open for the Revenue to submit appropriate application/s in the present proceedings to revive the present writ petitions and thereafter the same may be considered in accordance with law and on merits.

Summary

Issues:
1. Reopening of assessment beyond the statutory time limit.
2. Requirement of obtaining approval under Section 151 of the Income-tax Act, 1961.
3. Impact of directions issued by the Commissioner of Income-tax [Appeals] on reopening of assessments.
4. Quashing and setting aside of impugned Notices for various assessment years.
5. Potential revival of writ petitions based on the outcome of the Revenue's appeal.

Analysis:
1. The petitioner-assessee challenged the impugned Notices issued under Section 148 of the Income-tax Act, 1961, seeking to reopen assessments for different years. The main contention was the reopening of assessments beyond the statutory time limits, i.e., six years for one year and four to six years for others.

2. The petitioner argued that the Assessing Officer did not obtain approval under Section 151 of the Act before reopening the assessments. The Revenue contended that approval was unnecessary based on directions from the Commissioner of Income-tax [Appeals] in a related appeal. The Patna High Court's decision was cited to support the Revenue's position on reassessment proceedings initiated post-appeal.

3. However, after the impugned Notices were issued, the Income Tax Appellate Tribunal set aside the directions issued by the Commissioner of Income-tax [Appeals]. This action rendered the reopening proceedings unsustainable due to the lack of approval under Section 151 of the Act.

4. The Court noted that as of the current situation, the Tribunal's decision stands unchallenged by the Revenue. Consequently, the approval under Section 151 was necessary, which was not obtained. The Court allowed the petitions and quashed the impugned Notices for the respective assessment years.

5. The Court clarified that the quashing of the Notices was without prejudice to any rights and contentions in the potential appeal by the Revenue against the Tribunal's decision. If the Revenue succeeds in the appeal and the directions issued by the Commissioner of Income-tax [Appeals] are reinstated, the Revenue can file appropriate applications to revive the writ petitions for further consideration.

In conclusion, the Court allowed the petitions, quashed the impugned Notices for the assessment years in question, and left room for potential revival based on the outcome of the Revenue's appeal against the Tribunal's decision.