2014 (9) TMI 764 - HC - Income Tax

Notice for reopening of assessment u/s 148 bar of limitation under Proviso to section 151(1) Held that - The original assessment was u/s 143(3) - The notice u/s 148 was sought to be issued more than four years after the end of the relevant AY 1998-99 - Notice u/s 148 was issued on 29 March 2005 - clearly the proviso to sub-section (1) of Section 151 was attracted - the entire exercise of re-opening of the assessment u/s 148 fails to meet the basic jurisdictional requirement under the proviso to sub-section (1) of Section 151 since under the proviso no notice can be issued except on the satisfaction of the Commissioner or, as the case may be, the Chief Commissioner thus, the notice for re-assessment is set aside Decided in favour of assessee.

Summary

Issues:
Challenge to re-assessment notice for Assessment Year 1998-99 and order disposing objections to re-opening of assessment.

Analysis:
The petitioner challenged a notice for re-assessment issued for Assessment Year 1998-99 by the Assessing Officer on 29 March 2005. The petitioner's return of income for A.Y. 1998-99 was filed on 30 November 1998 and assessed on 22 March 2000 under Section 143(3) of the Income Tax Act, 1961. Subsequently, a notice under Section 148 was received on 29 March 2005. The petitioner filed writ proceedings challenging the re-assessment notice, which was remanded back to the Assessing Officer to dispose of objections. The objections were rejected by the Assessing Officer on 10 June 2014.

The main contention raised by the petitioner was that the assessment was re-opened beyond the four-year period from the end of the relevant assessment year, and since the original assessment was under Section 143(3), no notice could be issued without the sanction of the Chief Commissioner or Commissioner. The Assessing Officer rejected this objection, stating that the satisfaction required for issuance of notice was of the Assessing Officer and not of any higher authority.

The petitioner later disclosed that no permission was obtained from the Commissioner/Chief Commissioner before issuing the notice under Section 148. The Revenue admitted that the approval was not sought due to lack of awareness about the previous assessment being completed under Section 143(3).

Section 151(1) prohibits the issuance of a notice under Section 148 without the satisfaction of the Chief Commissioner or Commissioner after four years from the end of the relevant assessment year. In this case, as the original assessment was under Section 143(3) and the notice under Section 148 was issued more than four years later without obtaining the necessary permission, the jurisdictional requirement under Section 151 was not met.

Consequently, the re-assessment notice dated 29 March 2005 was quashed and set aside for being issued without the required satisfaction of the Chief Commissioner or Commissioner. The writ petition was allowed with no order as to costs.