2019 (12) TMI 829 - HC - Income Tax

Reopening of assessment u/s 147 - Sanction for issue of notice u/s 151 - HELD THAT - Admittedly the impugned notice u/s 148 was issued in respect of Assessment Year 2002-03 which is clearly after four years from the end of the relevant assessment year. The contention of learned counsel for the parties is not acceptable. The Additional Commissioner is not equivalent to the rank of Commissioner or any other designation as defined under Section 151 (1) of the Act. Therefore the impugned notice (Annexure-1) which has been issued to the petitioner is bad in law and is required to be quashed and the same is quashed. Rule is made absolute to the aforesaid extent.

Summary

Issues:
Challenge to notice under Section 148 of the Income Tax Act, 1961 for contravention of Section 151(1) - Competency of Additional Commissioner to record satisfaction for issuing notice.

Analysis:

The petitioner challenged a notice dated 27.03.2009 issued by the Assistant Commissioner of Income Tax under Section 148 of the Income Tax Act, 1961, contending that it contravened Section 151(1) of the Act. The petitioner argued that the Additional Commissioner, who granted approval for the notice, was not competent under Section 151(1) to record such satisfaction as required by law. The petitioner emphasized that the Additional Commissioner did not hold the rank of Commissioner as specified in the Act, rendering the notice invalid.

The petitioner's counsel relied on various legal precedents to support their contention, highlighting cases such as Commissioner of Income-Tax v. Kelvinator of India Ltd. and others. These cases underscored the importance of adherence to procedural requirements, especially regarding the authority responsible for recording satisfaction for issuing notices under Section 148 of the Act.

In response, the opposing party's counsel attempted to justify the notice by referencing a search assessment completed under sections 153A/143(3) of the IT Act, 1961, and subsequent annulment of the assessment by the CIT(A). The opposing party argued that since the original assessment was annulled, there was no impediment to using search findings to initiate proceedings under Section 147, and approval from the Additional Commissioner was deemed sufficient.

However, the High Court, after careful consideration, found the petitioner's argument valid. It held that the Additional Commissioner did not hold a rank equivalent to that of a Commissioner as required by Section 151(1) of the Act. Consequently, the court deemed the notice issued to the petitioner as legally flawed and ordered its quashing, thereby allowing the writ petition in favor of the petitioner.