2007 (9) TMI 307 - AT - Income Tax

Summary

Issues involved:
The issues involved in this case are the validity of reassessment proceedings initiated under section 147 of the Income Tax Act, 1961, and the requirement of obtaining approval from the Chief Commissioner of Income Tax (CIT) for reopening the assessment after the expiry of four years from the end of the relevant assessment year.

Validity of Reassessment Proceedings under Section 147:
The assessee initially filed the return of income in 1992 declaring income, later revised to show a loss. The Assessing Officer (AO) completed the original assessment under section 143(3) based on the original return. Subsequently, proceedings under section 147/148 were initiated, and the AO served a notice under section 148 on the assessee. The assessee objected to the initiation of proceedings under section 147/148, arguing that the notice issued after more than four years from the original assessment was not valid. The CIT(A) quashed the reassessment order, stating that the notice issued under section 148 was not legal and not in accordance with the law, leading to the quashing of the reassessment order under section 143(3)/147.

Requirement of CIT Approval for Reopening Assessment:
The Departmental Representative contended that the CIT's approval was obtained for reopening the assessment after the four-year period. However, the counsel for the assessee argued that the Department failed to produce evidence of the CIT's approval, emphasizing that the CIT's satisfaction is crucial for reopening the assessment after four years. The Tribunal noted that the satisfaction of the CIT should have been obtained before issuing the notice under section 148, as per the proviso to section 151. The Tribunal found that the CIT's satisfaction was not recorded on the reasons for reopening, rendering the reopening of the assessment invalid. The Tribunal dismissed the Departmental appeal, highlighting the importance of CIT's approval for reassessment after the specified period.

Conclusion:
The Tribunal upheld the CIT(A)'s decision to quash the reassessment order, emphasizing the necessity of obtaining the CIT's approval for reopening assessments after the prescribed period. The Tribunal ruled that without the CIT's satisfaction, the reopening of the assessment was not valid, ultimately dismissing the Departmental appeal.