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TMI Blog2015 (1) TMI 1014X X X X Extracts X X X X X X X X Extracts X X X X ..... ts, bad in law, the assessment framed be annulled. 3. Because the CIT(A) has erred on facts and in law in upholding the addition of ₹ 79,00,000/- being realization of sundry debtors as unexplained cash credit u/s.68, which is contrary to facts, bad in law and be deleted. 4. Because the CIT(A) has erred on facts and in law in upholding the addition of ₹ 3,95,000/- under sec. 69 of the Act. (wrongly mentioned in the appellate order as ₹ 4,95,000/-) being alleged commission paid for procuring cheques for ₹ 79,00,000/- being dues outstanding to be realized. 5. Because the amount of ₹ 79,00,000/- having been taxed in the earlier year i.e. A.Y. 2001-02 as income from commission, question of treating the same as unexplained cash credit u/s.68 does not arise. 6. Because the assessee having not incurred any expenditure of ₹ 3,95,000/- nor there being any material or evidence on record, the CIT(A) has erred on facts and in law in upholding the addition under section 69 of the Act, 1961. 7. Because the CIT(A) has erred on facts and in law in upholding the addition of ₹ 4,82,750/- being 10% of the total charges paid to UPSEB and claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that as per section 151 of the Act, it was only Joint Commissioner of Income-tax or the Addl. Commissioner who could grant the approval for issuance of notice under section 148 of the Act and if the approval is not granted by the Joint Commissioner or Addl. Commissioner and instead it was granted by the ld. Commissioner of Income-tax, then the same was not an irregularity curable under section 292B of the Act and notice under section 148 of the Act would be invalid and void ab initio. The relevant observations of the Tribunal are extracted hereunder for the sake of reference:- 7. Having given a thoughtful consideration to the rival submissions and from a careful perusal of the orders of the authorities below, material available on record and the judgments referred to by the assessee, it is evident from the reply given by the Department to the assessee in response to the information sought under R.T.I. Act, 2005 that no assessment under section 143(3) of the Act was done for assessment year 2003-04 prior to the reassessment under section 147 of the Act. It is also an admitted fact that assessment was reopened after four years from the end of the relevant assessment year. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Act deals those types of cases where assessment was not completed under section 143(3) of the Act or 147 of the Act. In such type of cases, no notice shall be issued under section 148 of the Act by the Assessing Officer, who is below the rank of Jt. Commissioner of Income-tax after expiry of four years from the end of the relevant assessment year unless Jt. Commissioner of Income-tax is satisfied on the reasons recorded by the Assessing Officer that it is a fit case for issuance of such notice. It has been categorically mentioned in sub-section (2) of section 151 of the Act that sanction was required by the Assessing Officer from the Jt. Commissioner of Income-tax. 10. In the instant case, undisputedly no assessment was framed under section 143(3) of the Act or 147 of the Act as admitted by the Department in reply to the information sought under the R.T.I. Act. It is also an undisputed fact that the assessment was sought to be reopened after four years from the end of the relevant assessment year i.e. 2003-04, as notice under section 148 of the Act was issued on 31.3.2010. It is also an undisputed fact that sanction/approval was accorded by the ld. Commissioner of Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erused various judgments rendered on the subject and we find that in the case of CIT vs. SPL S Siddhartha Ltd. (supra), the Hon'ble Delhi High Court has categorically held that it is an established principle of law that if a particular authority has been designated to record his/her satisfaction on any particular issue, then it is that authority alone who should apply his/her independent mind to record his/her satisfaction and further mandatory condition is that the satisfaction recorded should be independent and not borrowed or dictated satisfaction. The relevant observations of the Hon'ble High Court are extracted hereunder:- A notice seeking to reopen assessment under section 148 was issued after the expiry of four years from the end of the relevant assessment year. Since four years had elapsed, the Assessing Officer was required to take approval of the competent authority under section 151(1). The Assessing Officer thus issued notice after taking approval of the Commissioner. The objection of the assessee before the Tribunal was that the Assessing Officer had not taken the approval from the Joint Commissioner, instead, approval was taken from the Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statutory authority has been vested with jurisdiction, he has to exercise it according to its own discretion. If discretion is exercised under the direction or in compliance with some higher authorities instruction, then it will be a case of failure to exercise discretion altogether. [Para 9] Therefore, the Tribunal has rightly decided the legal aspect, keeping in view well-established principles law laid down in catena of judgments including that of the Supreme Court. [Para 10] 15. Similar view was also reiterated by the Hon'ble Bombay High Court in the case of Ghanshyam K Khabrani vs. ACIT-1 (supra) by holding that when section 151(2) of the Act mandates satisfaction of Jt. Commissioner of Income-tax for issuance of notice under section 148 of the Act, the reopening of assessment with the approval of the ld. Commissioner of Income-tax is not sustainable. The relevant observations of the Hon'ble Bombay High Court are also extracted hereunder for the sake of reference:- The assessment of the assessee for assessment year 2004- 05 was sought to be reopened by issuing a notice dated 30- 3-2011 beyond a period of 4 years from the end of the relevant assessment year. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is of a reason to believe that income has escaped assessment for assessment year 2004-05. Moreover, it is evident that even the letter dated 11-3- 2010 of the Additional DIT (Investigation) was much prior to the flnalization of the assessment for assessment year 2003-04 on 27-12-2010. Therefore, this is not a case where there is any tangible material on the basis of which the assessment for assessment year 2004-05 can legitimately be opened. [Para 5] The second ground upon which the reopening is sought to be challenged is that the mandatory requirement of section 151(2) has not been fulfilled. Section 151 requires a sanction to be taken for the issuance of a notice under section 148 in certain cases. In the instant case, an assessment had not been made under section 143(3) or section 147 for assessment year 2004-05. Hence, under sub-section (2) of section 151, no notice can be issued under section 148 by an Assessing Officer who is below the rank of Joint Commissioner after the expiry of 4 years from the end of the relevant assessment year I unless the Joint Commissioner is satisfied, on the reasons recorded by such Assessing Officer, that it is a fit case for the issue of such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner or Addl. Commissioner and instead it was granted by the ld. Commissioner of Income-tax, then the same was not an irregularity curable under section 292B of the Act and notice under section 148 of the Act would be invalid and void ab initio. The Tribunal accordingly quashed the assessment after holding that reopening was not done in accordance with the provisions of the Act. 5. Since the impugned issue is squarely covered by the aforesaid order of the Tribunal, we find no justification to take a contrary view in this matter. We, accordingly following the aforesaid order of the Tribunal, hold that since the approval was obtained by the Assessing Officer from the ld. Commissioner of Income-tax instead of Joint Commissioner of Income-tax or the Addl. Commissioner of Income-tax under section 151(2) of the Act, notice under section 148 of the Act is invalid and void ab initio. We accordingly quash the assessment after holding that the reopening was not done in accordance with the provisions of the Act. 6. In the result, appeal of the assessee is allowed. Order was pronounced in the open court on the date mentioned on the captioned page. - - TaxTMI - TMITax - Income T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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