2005 (8) TMI 81 - HC - Income Tax

Sanction of the Chief Commissioner or the Commissioner of Income-tax before issuing the notice - interpreting the provisions of sub-section (2) of section 151 -assessment/ reassessment has been completed under sub-section (3) of section 143 or section 147 of the Act and the notice under section 148 of the Act, dated September 12, 2000, had been issued much after the expiry of the period of four years from the end of the relevant assessment years - it is well-settled that a notice issued without obtaining the prior sanction of the authority mentioned in the provisions of section 151, whether it is the proviso to sub-section (1) or sub-section (2), would be invalid and the entire proceeding taken in pursuance thereof is liable to be quashed as the same would be without jurisdiction. - impugned notices are invalid, cannot be sustained and are hereby set aside. Consequently, all proceedings taken in pursuance of these notices are also set aside.

Issues Involved:
1. Validity of notices issued under section 148 of the Income-tax Act, 1961.
2. Requirement of prior approval for issuing notices after four years.
3. Alleged change of opinion by the assessing authority.
4. Jurisdictional authority for issuing notices.

Issue-wise Detailed Analysis:

1. Validity of Notices Issued under Section 148 of the Income-tax Act, 1961:
The petitioner challenged the validity of notices dated September 12, 2000, issued under section 148 of the Income-tax Act for the assessment years 1991-92 to 1994-95. The court noted that the petitioner had previously filed returns, which were processed under section 143(1)(a) and later scrutinized under section 143(2). The Deputy Commissioner found the commission income to be non-genuine and assessed it on a protective basis. However, in subsequent reassessment proceedings, no addition was made to the commission income, and the assessment was completed on the same figures. The petitioner argued that the new notices were a result of a change of opinion, which is not permissible under section 147.

2. Requirement of Prior Approval for Issuing Notices After Four Years:
The court emphasized the necessity of obtaining the Chief Commissioner or Commissioner's satisfaction before issuing notices under section 148 if four years had expired since the end of the relevant assessment year, as stipulated in the proviso to sub-section (1) of section 151. The court found that the notices dated September 12, 2000, were issued without obtaining such approval, rendering them invalid. The court cited several precedents, including CIT v. Maharaja Pratapsingh Bahadur of Gidhaur and Union of India v. Rai Singh Deb Singh Bist, which established that notices issued without the required sanction are invalid.

3. Alleged Change of Opinion by the Assessing Authority:
The petitioner contended that the new notices were based on the same reasons as earlier notices, indicating a change of opinion. The court agreed, noting that the assessing authority had already examined the issue in detail in the order dated December 31, 1998, and found no reason to add the commission income. The court held that the proceedings initiated by the new notices amounted to harassment and were not permissible under law.

4. Jurisdictional Authority for Issuing Notices:
The court analyzed the jurisdictional requirements under sections 147, 148, and 151 of the Act. It noted that the term "Assessing Officer" includes various officers, but for issuing notices after four years, the satisfaction of the Chief Commissioner or Commissioner is mandatory. The court found that the notices in question were issued with the approval of the Joint Commissioner, not the Chief Commissioner or Commissioner, as required. This procedural lapse rendered the notices and subsequent proceedings invalid.

Conclusion:
The court concluded that the notices dated September 12, 2000, issued under section 148 for the assessment years 1991-92 to 1994-95, were invalid due to the lack of required approval from the Chief Commissioner or Commissioner. Consequently, all proceedings based on these notices were set aside. The writ petitions were allowed, and the parties were directed to bear their own costs.

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