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2017 (11) TMI 1459 - AT - Income TaxReopening of assessment - approval sought by the AO for initiating proceedings u/s. 147 - Held that - This noting of the Addl. DIT, in our considered opinion, does constitute the approval of the competent authority in the instant case. Merely on the basis that Addl. DIT after recording his satisfaction sent the file to the DIT instead of sending it back to the AO and the DIT having given second approval in the matter, it cannot be said, in the peculiar circumstances of the case, that the competent authority, i.e., Addl. DIT did not accord its approval for initiating proceedings u/s. 147 against the assessee nor does the second approval given by DIT go to mitigate the authenticity of approval given by ld. Addl. DIT, as noted above. In fact, the first approval was given by the competent authority in the instant case. Such facts do not exist in the reported case relied by the ld. CIT(A). Therefore, the decision reached by the ld. CIT(A) on this count cannot be supported. Regarding variance between the proposal sent for approval and the reasons recorded as supplied to the assessee, which led the ld. CIT(A) to hold the re-assessment proceedings as invalid, we find that none of the parties before us have submitted the copy of reasons supplied to the assessee. The reasons recorded, as supplied to the assessee, are also not reproduced in any of the orders of authorities below. The contention of the ld. DR is that there is no variance in the reasons supplied to assessee and those proposed for approval. The substance of both is one and the same. In absence of copy of reasons supplied to the assessee before us, it is not possible to verify the alleged variance and to decide this issue at this stage. We, therefore, restore this issue to the file of ld. CIT(A) to examine whether the pith and substance of the reasons recorded as supplied to the assessee and the reasons contained in the proposal for approval is same or not. Appeal of the Revenue is allowed for statistical purposes.
Issues Involved:
1. Validity of proceedings under sections 147/148 of the Income Tax Act. 2. Approval for issuing notice under section 148 by the competent authority. 3. Variance between the proposal for approval and the reasons recorded for reopening the case. Detailed Analysis: 1. Validity of proceedings under sections 147/148 of the Income Tax Act: The Revenue appealed against the order of the CIT(A) which held that the proceedings under sections 147/148 were invalid. The CIT(A) based its decision on the fact that the approval for issuing the notice under section 148 was not obtained from the competent authority as required by section 151(2) of the Act. The CIT(A) relied on the judgment of the Hon'ble Delhi High Court in the case of CIT vs. SPL’s Siddhartha Ltd., which emphasized that the approval must be from the Joint Commissioner/Addl. Commissioner, not the Commissioner of Income Tax. 2. Approval for issuing notice under section 148 by the competent authority: The Assessing Officer (AO) had obtained approval from the Addl. Commissioner of Income Tax for reopening the case. The Revenue argued that the Addl. Commissioner had duly recorded his satisfaction for reopening the case, distinguishing it from the SPL’s Siddhartha Ltd. case where the Addl. Commissioner did not record any satisfaction and merely referred the matter to the Commissioner. The Tribunal found that in this case, the Addl. Commissioner had indeed recorded his satisfaction, thus constituting proper approval as per section 151(2). The Tribunal noted, "We may proceed to reopen the case u/s. 147 as proposed above. I am satisfied that this is a fit case for issue of notice u/s. 148." 3. Variance between the proposal for approval and the reasons recorded for reopening the case: The CIT(A) also held the reassessment proceedings invalid due to an alleged variance between the proposal for approval and the reasons recorded for reopening the case. The Tribunal, however, noted that neither party submitted the copy of the reasons supplied to the assessee, making it impossible to verify the alleged variance. The Tribunal emphasized that the substance of the reasons should be consistent with the proposal. The Tribunal restored this issue to the CIT(A) to examine whether the reasons recorded and supplied to the assessee were substantively the same as those proposed for approval. The Tribunal stated, "The difference in terminology, if any, used both in proposal and reasons recorded, would, in our opinion, not go to invalidate the proceedings unless it is found that the additions made u/s. 147 are not in consonance with the reasons recorded." Conclusion: The Tribunal concluded that the CIT(A) did not consider the distinguishing features of the case compared to SPL’s Siddhartha Ltd. It found that the Addl. Commissioner had properly recorded his satisfaction, thus the approval was valid. The Tribunal restored the issue of variance to the CIT(A) for further examination and directed that the CIT(A) should decide on the merits of the addition if the variance was found to be immaterial. The appeal of the Revenue was allowed for statistical purposes.
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