2024 (9) TMI 1134 - HC - Income Tax

Validity of reopening of assessment - reasons to believe - required approval of the Commissioner of Income Tax - HELD THAT - AO had recorded reasons for believing that there was income escaping assessment which reasons, were also appended to the request for approval made to the Commissioner. The Commissioner had obviously read the reasons and made a written order that he was satisfied on the basis of reasons recorded, that this was a fit case for notice issued under Section 148. Section 151 requires the Principal Commissioner to be satisfied of the reasons recorded by the AO that it was a fit case for issuance of such notice, where the notice was issued beyond expiry of 4 years. There is no requirement for the Commissioner to record his own reasons and it would suffice that he records the satisfaction regarding the reasons recorded by the Assessing Officer. We find absolutely no reason to interfere with the notice issued under Section 148, on the grounds raised in the writ petition.

Issues:
1. Notice issued under Section 148 of the Income Tax Act, 1961 for the assessment year 2013-14.
2. Approval requirement under Section 151 for issuing the notice.
3. Compliance with the approval process by the Principal Commissioner of Income Tax.
4. Adequacy of reasons for re-opening assessment under Section 148.
5. Interpretation of satisfaction required under Section 151 by the approving authority.
6. Condonation of delay in filing statutory appeal against assessment order.

Analysis:

1. The judgment concerns a notice issued under Section 148 of the Income Tax Act, 1961 for the assessment year 2013-14 to the petitioner, who is engaged in the business of iron and steel. The petitioner had initially sought reasons for the notice issuance, as per the decision in GKN Driveshafts (India) Ltd. v. Income Tax Officer and Others.

2. The petitioner's counsel highlighted the absence of recorded approval as mandated by Section 151 of the Act, emphasizing the importance of such approval for re-opening assessments.

3. A Division Bench of the Court directed the production of the order of approval by the appropriate authority, specifically noting the requirement for the Principal Commissioner of Income Tax to sanction notices issued after a certain period, as seen in Annexure-S and Annexure-T provided by the Department.

4. The Department produced communications indicating approval for issuing notices under Section 148 for the petitioner and other assesses, covering multiple assessment years, with detailed reasons enclosed in Annexure-A.

5. The petitioner's argument centered on the mechanical nature of the approval process, citing judgments from the Delhi High Court and the Supreme Court to support the contention that mere affirmative responses like 'Approved' or 'Yes' do not fulfill the statutory requirements.

6. The Court differentiated the present case from precedents where inadequate reasons were given for re-opening assessments, emphasizing that the Commissioner's satisfaction with the reasons recorded by the Assessing Officer is sufficient under Section 151, as long as the reasons are considered and approved appropriately.

7. The judgment concluded that there was no justification to interfere with the notice issued under Section 148 based on the grounds raised in the writ petition, indicating that the assessment order could be challenged through statutory appeal, subject to limitations and the possibility of condonation for delays.

8. The Court allowed for the condonation of the period during which the writ petition was pending for considering appeals, emphasizing that the delay would be evaluated based on the writ petition's pendency alone, dismissing the petition with the mentioned liberty for further action.

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