2022 (3) TMI 787 - HC - Income Tax

Validity of reopening of assessment u/s 147 - unexplained cash deposits - Eligible reasons to believe that income chargeable to tax escaped assessment for that year - HELD THAT - DDIT issued summons under Section 131 of the Act of 1961 to the assessee. Reply submitted by assessee was not found to be satisfactory. Matter was forwarded to the Assessing Officer who in turn verified PAN details of assessee recorded reasons in terms of Section 147 of the Act of 1961 and thereafter issued notice to him under Section 148 of the Act of 1961. Hence it cannot be said that at the stage of issuance of notice there was no prima facie material for reasons to belief that income escaped assessment. Consequently I do not find any force in first submission of learned counsel for petitioner and it is hereby repelled Approval accorded under Section 151 of the Act of 1961 is not by appropriate authority - The words used while recommending for issuance of notice are sufficient to infer in clear terms that the Joint Commissioner of Income Tax applied his mind on proposal sent to him by the Assessing Officer recorded his satisfaction for issuance of notice under Section 148 - Hence even if name of approving authority is mentioned to be Principal Commissioner of Income Tax the same would not make the approval itself invalid. The object of Section 151 of the Act of 1961 is that approval to be accorded by the Joint Commissioner of Income Tax (in the facts of case) and if Joint Commissioner approves the proceedings/ proposal sent by the Assessing Officer to be a fit case then in the opinion of this Court the approval under Section 151 giving details of approving authority as Principal Commissioner of Income Tax in itself will not make the approval invalid - in case at hand Joint Commissioner of Income Tax recorded satisfaction on the proposal of Assessing Officer by mentioning that it is a fit case for issuance of notice. In view of above facts of the case second ground raised is also not tenable. Approval granted u/s 151 does not bear digital signature of authority referring to note appended to approval - The note appended says if digitally signed the date of digital signature may be taken as date of document . Submission of learned counsel for petitioner in the opinion of this Court is not acceptable in view of provisions of Section 282 (a) of the Act of 1961 which provides that notice or other documents to be issued for the purpose of the Act of 1961 by any income-tax authority shall be deemed to be authenticated if name and designation is provided. In approval under Section 151 of the Act of 1961 name designation and office is printed. Hence submission of learned counsel for petitioner that approval is not digitally signed is also not sustainable more so when it bears DIN Document Number. - Decided against assessee.

Issues Involved:
1. Validity of the notice issued under Section 148 of the Income Tax Act, 1961.
2. Compliance with the procedure established under Section 147 and Section 151 of the Income Tax Act, 1961.
3. Validity of approval granted under Section 151 without a digital signature.
4. Compliance with the Standard Procedure issued by the Central Board of Direct Taxes.

Detailed Analysis:

1. Validity of the Notice Issued Under Section 148:
The petitioner challenged the notice issued under Section 148 on the grounds that it lacked the "reasons to believe" as mandated by Section 147. The court examined the documents and found that the Assessing Officer had indeed recorded reasons based on information from the Deputy Director of Income Tax (DDIT). The DDIT had issued summons under Section 131 and 133, and the petitioner failed to satisfactorily explain the source of cash deposits during the demonetization period. This led the Assessing Officer to believe that there was an escapement of income, thus justifying the issuance of the notice under Section 148. The court cited the Supreme Court rulings in Kalyanji Mavji & Co. v. CIT and Phool Chand Bajrang Lal vs Income-Tax Officer to support that the information and reasons were sufficient for reopening the assessment.

2. Compliance with Section 147 and Section 151:
The petitioner argued that the approval for the reassessment was not obtained from the competent authority as required by Section 151. The court found that the Joint Commissioner of Income Tax had indeed recorded satisfaction with the reasons provided by the Assessing Officer, and the Principal Commissioner of Income Tax had approved the proposal. The court held that the approval process was compliant with Section 151, and the approval by the Principal Commissioner did not invalidate the process as the Joint Commissioner had applied his mind and recorded satisfaction.

3. Validity of Approval Without Digital Signature:
The petitioner contended that the approval under Section 151 was invalid as it lacked a digital signature. The court referred to Section 282A of the Income Tax Act, which states that a document is deemed authenticated if it contains the name and designation of the authority. The court found that the approval document had the necessary details and was thus valid even without a digital signature, especially since it bore a DIN and Document Number.

4. Compliance with Standard Procedure:
The petitioner argued that the Standard Procedure issued by the Central Board of Direct Taxes was not followed, particularly the issuance of summons under Section 131 before recording satisfaction. The court found that the DDIT had issued the necessary summons, and the Assessing Officer had followed the procedure by verifying the PAN details and recording reasons for the belief that income had escaped assessment. The court held that the Standard Procedure was complied with, and there was a live link between the information received and the proceedings initiated.

Conclusion:
The court dismissed the petition, finding no merit in the arguments presented by the petitioner. The issuance of the notice under Section 148 was valid, the approval process under Section 151 was compliant, and the lack of a digital signature did not invalidate the approval. The court also found that the Standard Procedure had been followed appropriately.

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