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2017 (9) TMI 120 - HC - Income TaxReopening of assessment - reopening was after the expiry of four years from the end of the relevant AY - mandatory requirement under Section 151(2) - necessary approval - Held that - Where the original assessment is processed under Section 143 (1) of the Act and the reopening is sought to be done after the expiry of four years from the end of the relevant AY the mandatory requirement under Section 151 (2) of the Act is that the approval for the reopening of the assessment should be by an officer of the rank of the Joint Commissioner (in this case the Addl. DIT) and not other officer including a superior officer. The argument that the approval by an officer superior to the Joint Commissioner will satisfy the requirement of Section 151 (2) of the Act was categorically negated by this court in the aforementioned decision in SPL s Siddhartha Ltd. 2011 (9) TMI 640 - DELHI HIGH COURT No hesitation in concluding that in the present case the mandatory requirement under Section 151 (2) of the Act as it stood at the relevant time has not been fulfilled and therefore the reopening of the assessment for the AY 2005-06 by the impugned notice is bad in law. For the aforementioned reasons the notice dated 28th March 2012 issued by the AO to the petitioner under Section 148 of the Act and the order dated 25th January 2013 passed by the AO rejecting the Petitioner s objections thereto are hereby quashed. - Decided in favour of assessee.
Issues:
1. Validity of notice seeking to reopen assessment for AY 2005-06 under Section 148 of the Income Tax Act, 1961. 2. Approval requirement under Section 151(2) of the Act by an officer of the rank of Joint Commissioner for reopening assessment. 3. Interpretation of the approval process for reopening assessment by a superior officer. 4. Compliance with statutory provisions for reopening assessment. Analysis: Issue 1: Validity of Notice to Reopen Assessment The writ petition challenged a notice dated 28th March 2012 issued by the Deputy Director of Income Tax seeking to reopen the assessment for AY 2005-06. The petitioner contended that the notice and subsequent proceedings were bad in law. Issue 2: Approval Requirement under Section 151(2) The petitioner argued that for reopening the assessment after the expiry of four years from the end of the relevant AY, approval under Section 151(2) by an officer of the rank of Joint Commissioner was mandatory. However, in this case, the approval was granted by an officer superior to the Joint Commissioner, which was deemed insufficient. Issue 3: Interpretation of Approval Process The court examined the approval process for reopening the assessment and noted that the Addl. DIT only "put up for approval" the file without granting approval himself. The argument that the superior officer's approval satisfied the requirement of Section 151(2) was rejected based on precedent. Issue 4: Compliance with Statutory Provisions The court referred to previous judgments to emphasize that the approval by an officer higher than the Joint Commissioner did not fulfill the statutory requirement under Section 151(2) of the Act. The court held that the reopening of the assessment based on the notice dated 28th March 2012 was invalid in law. In conclusion, the court quashed the notice issued by the AO under Section 148 of the Act and the order rejecting the petitioner's objections. The judgment highlighted the importance of strict compliance with statutory provisions for reopening assessments, specifically emphasizing the requirement of approval by an officer of the rank of Joint Commissioner as mandated by Section 151(2) of the Act.
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