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2022 (11) TMI 138 - HC - Income TaxValidity of Reopening of assessment - mandatory procedure of a prior inquiry u/s 148-A has not been followed - HELD THAT - As apparent that as regards the subsequent notices dated 8th April, 2021 u/s 148 for the two AYs in question, since the mandatory procedure of a prior inquiry u/s 148-A of the Act has not been followed, those notices are unsustainable in law and they are hereby quashed. The initial notices u/s 148 issued on 31st March, 2021 Section 151 of the Act as it stood prior to 1st April, 2021 would apply. In terms thereof, undeniably, the previous sanction for issuance of both the notices was taken only of the Additional CIT and not of either the Principal Chief CIT (for AY 2015-16) or the Principal CIT (for AY 2016-17). The reply of the Department is simply that the Additional CIT is one of the authorities to reopen the assessment u/s 147 - This still does not answer the requirement of previous sanction having to be obtained only from the Principal Chief CIT (for AY 2015-16) and Principal CIT (for AY 2016-17). The sanction is of the Addl. CIT who is not the competent sanctioning authority. The notices u/s 148 issued in respect of both the AYs on 31st March, 2021 are illegal as they are contrary to Section 151 of the Act as it stood prior to 1st April, 2021. The impugned notices u/s 148 of the Act issued on 31st March, 2021 in respect of both AYs are also hereby quashed.
Issues:
Challenging notices under Section 148 of the Income Tax Act, 1961 for two different Assessment Years (AYs) based on the satisfaction of the Additional CIT, Range-1, Bhubaneswar; legality of subsequent notices dated 8th April, 2021; applicability of newly inserted Section 148-A of the Act; reliance on the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020; compliance with procedural statutory requirements. Analysis: 1. Legality of Notices under Section 148: The petitioner challenged the notices dated 31st March, 2021, for both AYs 2015-16 and 2016-17, issued under Section 148 of the Income Tax Act, 1961, based on the satisfaction of the Additional CIT, Range-1, Bhubaneswar. The petitioner contended that for AY 2015-16, the satisfaction should have been of the Principal Chief CIT and not the Additional CIT. Similarly, for AY 2016-17, the petitioner argued that the notice was not in line with the newly inserted Section 148-A of the Act, which requires an inquiry by the Assessing Officer before issuing the notice. The Department relied on the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, and subsequent notifications by the CBDT to extend the time limit for issuing the notice. The court held that the subsequent notices dated 8th April, 2021, were unsustainable as they did not follow the mandatory inquiry under Section 148-A, and thus, quashed these notices. 2. Compliance with Section 151 of the Act: The court further analyzed the compliance with Section 151 of the Act concerning the initial notices issued on 31st March, 2021. It was found that the previous sanction for both notices was obtained only from the Additional CIT, not the competent authorities, i.e., the Principal Chief CIT for AY 2015-16 and the Principal CIT for AY 2016-17. The Department's argument that the Additional CIT is authorized to reopen assessments under Section 147 was deemed insufficient. Therefore, the court ruled that the notices issued on 31st March, 2021, were illegal as they contravened Section 151 of the Act, and consequently, quashed these notices as well. 3. Disposal of Writ Petitions: The court clarified that while quashing the notices, the Department could proceed afresh in compliance with all procedural statutory requirements for the respective AYs. The writ petitions were disposed of with this clarification, allowing the Department to take necessary actions in accordance with the law for the mentioned AYs. Overall, the judgment focused on the legality of the notices issued under Section 148 of the Income Tax Act, 1961, for the two AYs, highlighting the importance of compliance with procedural requirements and the authority responsible for granting sanction in such cases.
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