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2020 (1) TMI 786 - HC - Income TaxValidity of reopening of assessment u/s 147 - as argued mandatory prior approval required under Section 151 from the Principal Commissioner, Income Tax, Noida, was not obtained before initiation of the aforesaid reassessment proceedings - HELD THAT - Satisfaction arrived at by the authority satisfies all the requirements of law as contemplated under Section 147 of the I.T. Act, 1961 and explained by judicial pronouncements in that regard. The petitioner was granted full opportunity to state his case before the authorities in his objections against the issuance of notice under Section 148 of the I.T. Act, 1961 for the Assessment Year 201213. The petitioner duly availed the aforesaid remedy. The authorities while deciding the objections of the petitioner passed detailed speaking orders which again reflect due application of mind on the facts and material in the record. The Deputy Commissioner of Income Tax, Circle5( 1) (1), Gautam Buddh Nagar while disposing of the aforesaid objection of the petitioner against issuance of the notice under Section 148 in its order dated 26.11.2019 considered the objections of the petitioner. The objections of the petitioner were dealt with on a point to point basis. While passing the order dated 26.11.2019 the competent Revenue Authority found that necessary prerequisite of Section 147 that there should be an escapement of income stood fulfilled. The reasons recorded in that regard were found to be valid. The authority also noticed the admission of the assessee that he had incurred Long Term Capital Gain of ₹ 47,43,264/during Financial Year 201112, however, the same has not been disclosed in his ITR The validity of the refusal of the request of the petitioner to cross examine Ashok Kumar Kayan, Sunil Kumar Kayan, Devesh Kumar Kayan whose statements were part of the material, was also affirmed as held Income Tax Act, 1961 does not have any provision which may empower the undersigned to enforce the cross examination of a third party by the assessee. However, the statements of Shri Ashok Kumar Kayan are being provided to the assessee for ready reference. Approval under Section 151 of the I.T. Act, 1961, prior to initiation of proceedings under Section 148 of the I.T. Act, 1961 is a jurisdictional prerequisite. In the absence of such approval the proceedings would fall to the ground for want of jurisdiction. As such, the assessee is fully entitled to a copy of the order passed under section 151 of the I.T. Act, 1961 and correspondingly, the Assessing Officer is obliged to handover a copy of the same, as and when the assessee seeks for it. There is no infirmity in the reassessment proceedings and the same are not liable to be interfered with.
Issues Involved:
1. Validity of the reassessment proceedings initiated under the Income Tax Act, 1961. 2. Adequacy of the "reasons to believe" recorded for income escapement. 3. Compliance with the mandatory prior approval under Section 151 of the I.T. Act, 1961. 4. Right of the assessee to receive a copy of the approval under Section 151. 5. Refusal to allow cross-examination of witnesses. Issue-wise Detailed Analysis: 1. Validity of the Reassessment Proceedings: The petitioner-assessee challenged the reassessment proceedings initiated by the Revenue for the Assessment Year 2012-13 under the relevant provisions of the Income Tax Act, 1961. The petitioner contended that the proceedings were invalid due to the absence of mandatory prior approval from the Principal Commissioner of Income Tax, Noida, as required under Section 151 of the I.T. Act, 1961. 2. Adequacy of the "Reasons to Believe": The petitioner also disputed the "reasons to believe" recorded by the assessing officer on 22.03.2019, which formed the basis for the reassessment. The assessing officer had detailed the reasons, citing credible information about tax fraud involving M/s DLS Exports Pvt. Ltd. and related beneficiaries, including the petitioner. Statements from various individuals, such as Devesh Upadhyay and Ashok Kumar Kayan, were recorded, revealing the modus operandi of providing bogus share capital/premium and long-term capital gains (LTCG). The Deputy Commissioner of Income Tax, Circle-1, Noida, concluded that the petitioner had concealed capital gains of ?49,10,240, which had escaped assessment. 3. Compliance with Section 151 of the I.T. Act, 1961: The petitioner argued that the reassessment proceedings lacked jurisdiction as the mandatory prior approval under Section 151 was not obtained. However, the assessing authority's orders dated 28.10.2019 and 26.11.2019 confirmed that the notice under Section 148 was issued after obtaining the requisite approval from the Principal Commissioner of Income Tax, Noida. The court found no reason to doubt the correctness of these findings, and the argument was rejected. 4. Right to Receive a Copy of the Approval: The court addressed the issue of whether the assessee was entitled to receive a copy of the approval under Section 151. The Revenue authority had denied providing the copy, citing it as an internal matter. However, the court held that the approval under Section 151 is a jurisdictional prerequisite, and the assessee is entitled to a copy of the order. The refusal to provide the copy was deemed unsustainable in law. 5. Refusal to Allow Cross-Examination: The petitioner requested to cross-examine witnesses, such as Ashok Kumar Kayan, whose statements were part of the material used for reassessment. The Deputy Commissioner of Income Tax, Circle-5(1)(1), Gautam Buddh Nagar, refused the request, stating that the witnesses were not within 200 km of the office and that the Income Tax Act, 1961, did not empower the authority to enforce such cross-examination. The court found no provision compelling a differing view from the authority's decision. Conclusion: The court concluded that the reassessment proceedings were valid and complied with the legal requirements under the I.T. Act, 1961. The "reasons to believe" were adequately recorded, and the mandatory prior approval under Section 151 was obtained. The petitioner was entitled to a copy of the approval order, and the refusal to provide it was incorrect. The court found no infirmity in the reassessment proceedings and disposed of the writ petition accordingly.
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