2015 (3) TMI 278 - HC - Income Tax

Validity of reopening of assessment - ITAT s findings that the CIT lacked the authority to sanction re-assessment proceedings through issuance of notice u/s 148 - whether notice under Section 147 not approved by the competent authority in accordance with Section 151 of the Act? - Held that - This Court has to give effect to plain words of the statute which unambiguously states that the competent authority in such cases is the Joint Commissioner (and not the Chief Commissioner or the Principal Commissioner). The Revenue s submissions that all such cases, are covered under proviso to Section 147(1), the competent authority for prior approval would be four superior officers, renders Section 151(2) superfluous. If anything the Court is clear that it is not its job to render, in the process of interpretation, an entire provision academic or inoperative. This court is of the opinion that accepting the Revenue s position would result in that consequence. In this case, since the original assessment was completed other than the eventualities contemplated in Section 151(1), i.e. it was processed under Section 143(1). Thus, clearly Section 151(2) applied. Thus there is no infirmity in the order of the ITAT. No substantial question of law arises. - Decided against revenue.

Summary

Issues:
1. Jurisdictional authority for sanctioning re-assessment proceedings under Section 148.
2. Applicability of Section 292B in case of jurisdictional infirmity.
3. Interpretation of Section 151 regarding competent authority for sanctioning notice.

Jurisdictional Authority for Sanctioning Re-assessment Proceedings under Section 148:
The High Court addressed the issue of whether the Commissioner of Income Tax had the authority to sanction re-assessment proceedings through the issuance of a notice under Section 148. The ITAT held that the sanctioning authority as per Section 151(2) of the Act for issuing a notice under Section 148 should have been the Joint Commissioner of Income Tax. However, in this case, the sanction for the notice was granted by the Commissioner of Income Tax. The Court emphasized that the jurisdictional authority for sanction cannot be delegated to another authority, as it is a legal duty cast upon the specified authority. The Court concluded that if the required sanction was not obtained from the designated authority, the Assessing Officer lacked jurisdiction to complete the reassessment proceedings.

Applicability of Section 292B in Case of Jurisdictional Infirmity:
The Revenue contended that Section 292B of the Act precluded the assessee's objection regarding the jurisdictional infirmity of the notice. However, the ITAT rejected this argument, relying on a Division Bench ruling. The Court agreed with the ITAT's decision, emphasizing that where a jurisdictional infirmity invalidates the issuance of notice, Section 292B cannot remedy the situation.

Interpretation of Section 151 Regarding Competent Authority for Sanctioning Notice:
The Court analyzed Section 151 of the Act to determine the competent authority for sanctioning a notice under different circumstances. It clarified that under Section 151(1), in cases of scrutiny assessment or re-assessment within the initial period, the Joint Commissioner is the competent authority. However, in cases where the notice is issued under Section 147 beyond the four-year period, the approval of higher authorities such as the Principal Chief Commissioner or Commissioner is essential. The Court emphasized that the plain words of the statute must be given effect, even if the Revenue's argument seems logical, to avoid rendering any provision inoperative. The Court invoked the principle that if a statute mandates a specific procedure, it must be followed accordingly. In this case, since the original assessment was completed differently from the scenarios in Section 151(1), Section 151(2) applied.

In conclusion, the High Court upheld the ITAT's decision, stating that no substantial question of law arose, and dismissed the appeal.