2021 (9) TMI 801 - AT - Income Tax

Reopening of assessment u/s 147 - Assessee challenging notice for want of jurisdiction, without proper approval and satisfaction of higher authorities u/s 151 of the Act and also barred by limitation - A.Ys. 2008-09 - HELD THAT - It was categorically admitted in its report that notice U/s 148 of the Act for the year under consideration i.e. A.Y. 2008-09 was issued after lapse of four years from the relevant assessment years and the approval for the year under consideration was accorded by the Addl.CIT, Range-2, Jaipur and not from the Pr.CIT/CIT. Admittedly, the competent authorities to accord the approval as per Section 151 of the Act was Pr.CIT/CIT and not the Addl.CIT, therefore, issuance of notice U/s 148 and consequent assessment order passed are invalid, illegal and are liable to be quashed on the ground that same were not issued by the competent authority and thus stands quashed. See M/S N.C. CABLES LTD. 2017 (1) TMI 1036 - DELHI HIGH COURT - Thus we quash the proceeding U/s 147. Reopening of assessment on account of cash deposit in his bank account - A.Y. 2009-10 - assessee has not filed his return of income and issued notice u/s. 148 and after recording reasons that income of assessee had escaped assessment in the meaning u/s 147 of the Act - HELD THAT - Approval u/s 151 cannot be given of all the 56 assessee's in a single documents, as all assessee's are the independent and separate also the reason recorded are different in each case and it is not possible that there shall be same reasons. Looking to these facts and record it is also held that the procedures and way of approval and satisfaction is not proper. Here AO initiated proceedings u/s. 147 r.w.s. 148 on basis of information furnished and CIT gave approval without applying his mind in slipshod manner. As approval/sanction given by CIT was without recording his own independent satisfaction as noted above, therefore the reopening was not sustainable as per above judicial pronouncements and irregularities noted. There were clear irregularities and violation of the provision of Sec. 151 of the Act and very foundation of the issuance of the notice u/s 148 was not as per law. Then in that eventuality, we are of the view that the issuance notice 148 of the Act and all the consequent proceedings and assessment order passed was not in accordance with law - Decided in favour of assessee.

Summary

Issues Involved:
1. Validity of the reassessment proceedings under sections 147 and 148 of the Income Tax Act.
2. Validity of the approval process under section 151 of the Income Tax Act.
3. Adequacy of the opportunity provided to the assessee to be heard.
4. Legality of the addition of unexplained cash deposits under section 69A.
5. Charging of interest under sections 234A, 234B, and 234C.

Issue-wise Detailed Analysis:

1. Validity of the reassessment proceedings under sections 147 and 148:
The assessee challenged the reassessment proceedings on the grounds that the notice under section 148 was issued after the expiry of four years from the end of the relevant assessment year without proper jurisdiction. The Tribunal observed that the notice under section 148 was issued on 24.03.2015 for A.Y. 2008-09, which was beyond the four-year limit, making it mandatory to obtain approval from the Principal Commissioner or Commissioner as per section 151(1). The Tribunal concluded that the issuance of the notice and the consequent assessment order were invalid and illegal due to the lack of proper approval from the competent authority.

2. Validity of the approval process under section 151:
The Tribunal noted that the approval for issuing the notice under section 148 was obtained from the Additional CIT, not the Principal Commissioner or Commissioner, which is contrary to the provisions of section 151(1). Furthermore, the approval process was found to be mechanical and lacking the necessary application of mind, as evidenced by the mere use of the word "approved" without any detailed satisfaction recorded. The Tribunal relied on judicial precedents, including the case of Pr. CIT vs. N.C. Cables Ltd., to support its decision that the approval process was not in compliance with the law, rendering the reassessment proceedings invalid.

3. Adequacy of the opportunity provided to the assessee to be heard:
The assessee argued that the assessment was made ex parte without providing adequate and reasonable opportunity to be heard. The Tribunal acknowledged that the assessee had requested documents from the assessment record, which were not provided, and this lack of opportunity to present their case was a breach of natural justice. Consequently, the Tribunal found the ex parte assessment to be improper.

4. Legality of the addition of unexplained cash deposits under section 69A:
The Tribunal examined the addition of ?50,65,000/- and ?1,15,00,500/- made by the Assessing Officer under section 69A for the A.Ys. 2008-09 and 2009-10, respectively. The assessee contended that the cash deposits were from the sale agreement of agricultural land, which was later canceled, and the money was redeposited to return to the buyer. The Tribunal found that the Assessing Officer failed to disprove the evidence provided by the assessee and relied on assumptions and presumptions. Therefore, the Tribunal concluded that the additions were not justified.

5. Charging of interest under sections 234A, 234B, and 234C:
The assessee contested the charging of interest under sections 234A, 234B, and 234C. Given that the reassessment proceedings were quashed, the Tribunal deemed it unnecessary to adjudicate this issue separately, as the basis for charging interest no longer existed.

Conclusion:
The Tribunal quashed the reassessment proceedings for both A.Ys. 2008-09 and 2009-10 due to the invalidity of the approval process under section 151 and the lack of proper jurisdiction. Consequently, the additions made under section 69A and the charging of interest under sections 234A, 234B, and 234C were also set aside. The appeals filed by the assessee were allowed in full.