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TMI Blog2016 (3) TMI 328X X X X Extracts X X X X X X X X Extracts X X X X ..... support of its decision. - Decided in favour of the revenue. - GA No. 2488 of 2006, ITA No.297 of 2006 - - - Dated:- 4-3-2016 - Girish Chandra Gupta And Asha Arora, JJ. For the Appellant : Mr. Ananda Sen, Adv For the Respondent : Mr. M. P. Agarwal Adv., Mr. Ranjan Sinha Adv ORDER Girish Chandra Gupta J. The assessee has come up in appeal under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act ) against an order of the Income Tax Appellate Tribunal, C - Bench, Kolkata dated 7th July, 2005 in ITA Nos.1421, 1422 and 1423 (Kolkata) of 2004 for the assessment years 1990-91, 1991-92 and 1992-93. By the order dated 18th December, 2006 a Division Bench of this Court admitted this appeal on the following substantial questions of law:- I) Whether on the facts and in the circumstances of the case, the learned Tribunal erred in law in upholding the action of reassessment, when admittedly the approval accorded by the concerned authority for such reopening was given in a mechanical manner which was itself without jurisdiction and bad in law? II) Whether on the facts and in the circumstances of the case when the jurisdictional aspe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment and that was the moot point in that case. The Supreme Court has observed that Commissioner has mechanically accorded permission to reopen the assessment and thereby notice issued u/s. 148 was treated as invalid. In the said case the Hon ble Supreme Court has observed that if only the Commissioner had read the report carefully, he could never have come to conclusion on the material before him that it is a fit case to issue notice u/s. 148. The issue of the present case is totally different. In the instant case, for the AY 90-91 it was found by the AO that investment to the extent of ₹ 77,910/- for purchasing of truck was not disclosed before the I.T. Authorities, hence the appellant had taxable income for the relevant period but the same was not shown before the Department. In fact, the appellant did not file any return for any of the 3 assessment years under question before receipt of notice u/s. 148 of the Act from the Department. The balance sheet and P L A/c for all the assessment years under consideration were filed along with the return for the assessment year 1995-96 only. The AO after duly recording the reasons has sent his proposal to the higher aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were originally taken in the memorandum of appeal before the Tribunal. The Tribunal by an order dated 7th July, 2005 dismissed the appeal of the assessee and held as follows:- in the case before us the assessee has brought no other contrary material except that no satisfaction was recorded by the Addl. C.I.T.. while giving sanction as envisaged u/s. 151 (2) at the Income Tax Act. It is also not the case of the assessee that the Assessing Officer has no reason to believe that any income chargeable to tax has escaped assessment nor any assessment year under appeal. It is also not the case of the assessee that the reasons recorded by the Assessing Officer are not sufficient for initiating proceeding u/s. 148 or they are barred by limitation. It is also not the case of the assesse that the assessee has disclosed fully or truly all materials facts necessary for its assessment for the assessment years under appeal. Since all other conditions are fulfilled and the Addl. C.I.T. has signed question No..12 after verifying the contents of the form for recording of reasons and the assessee has not challenged the recording of reasons for reopening of the assessment as recorded by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice shall be issued under Section 148 by an Assessing Officer, who is below the rank of Assistant Commissioner or Deputy Commissioner, 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 notice: Provided that, after the expiry of four years from the end of the relevant assessment year, no such notice shall be issued unless the Chief Commissioner or Commissioner is satisfied, on the reasons recorded by the Assessing Officer aforesaid, that it is a fit case for the issue of such notice. (2) In a case other than a case falling under sub-section (1), no notice shall be issued under Section 148 by an Assessing Officer, who is below the rank of Joint Commissioner, after the expiry of four years from the end of the relevant assessment year, 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 notice. 1[Explanation.-For the removal of doubts, it is hereby declared that the Joint Commissioner, the Commissioner or the Chief Commissioner, as the case may be, being satisfied on the reasons recorded by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see has shown to have taken loans from various parties of Calcutta. From D.I.'s Inv. No. A/P/Misc.(5)D.I./63- 64/5623, dated 13-8-65, forwarded to this office under CIT, Bihar and Orissa, Patna's letter No. Inv.(Inv.)15/65-66/1953-2017, dated Patna 24-9-65, it appears that these persons are name lenders and the transactions are bogus. Hence proper investigation regarding these loans is necessary. The name of some of the persons from whom money is alleged to have taken on loan on Hundis are: 1. Seth Bhagwan Singh Sricharan. 2. Lakha Singh Lal Singh. 3. Radhakissen Shyam Sunder. The amount of escapement involved amounts to ₹ 1,00,000. The Apex Court held as follows: In his report the Income Tax Officer does not set out any reason for coming to the conclusion that this is a fit case to issue notice under Section 148. The material that he had before him for issuing notice under Section 148 is not mentioned in the report. In his report he vaguely refers to certain communications received by him from the CIT, Bihar and Orissa. He does not mention the facts contained in those communications. All that he says is that from those communicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lause (a) or (b) of Section 147. Therefore he could not have issued a notice under Section 148. Further the report submitted by him under Section 151(2) does not mention any reason for coming to the conclusion that it is a fit case for the issue of a notice under Section 148. We are also of the opinion that the Commissioner has mechanically accorded permission. He did not himself record that he was satisfied that this was a fit case for the issue of a notice under Section 148. To Question 8 in the report which reads whether the Commissioner is satisfied that it is a fit case for the issue of notice under Section 148 , he just noted the word yes and affixed his signatures thereunder. We are of the opinion that if only he had read the report carefully, he could never have come to the conclusion on the material before him that this is a fit case to issue notice under Section 148. The important safeguards provided in Sections 147 and 151 were lightly treated by the Income Tax Officer as well as by the Commissioner. Both of them appear to have taken the duty imposed on them under those provisions as of little importance. They have substituted the form for the substance. The jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugamal Rajpal (supra) was relied upon by the assessee both before the CIT(A) and the tribunal. Both the authorities below have rightly held that the said case has no manner of application to the facts of this case. In Chhugamal Rajpal (supra) the assessing officer did not have adequate material before him to satisfy the requirement of either clause (a) or (b) of section 147. It was in this backdrop that the court held that the Commissioner had mechanically accorded sanction without first recording that he was satisfied that it was a fit case for the issue of a notice under Section 148. In the instant case the assessee has not even contended that the reasons recorded by the assessing officer were irrelevant and as such he had no reason to believe that any income chargeable to tax had escaped assessment. In United Electrical Co. P. Ltd. v CIT reported in (2002) 258 ITR 317 (Del) the Delhi High Court while explaining the circumstances where a notice u/s.148 may be quashed held as follows:- It is, thus, trite, that when a challenge is made to the action under Section 147 of the Act what the Court is required to examine is whether some material exists on record for the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act. In the case of CIT Vs- Norton Motors reported in (2005) 275 ITR 595 the Punjab Haryana High Court has explained the scope of Section 292B in the following words:- A reading of the above reproduced provision makes it clear that a mistake, defect or omission in the return of income, assessment, notice, summons or other proceeding is not sufficient to invalidate an action taken by the competent authority, provided that such return of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the provisions of the Act. To put it differently, section 292B can be relied upon for resisting a challenge to the notice, etc., only if there is a technical defect or omission in it. However, there is nothing in the plain language of that section from which it can be inferred that the same can be relied upon for curing a jurisdictional defect in the assessment notice, summons or other proceeding. In other words, if the notice, summons or other proceeding taken by an authority suffers from an inherent lacuna affecting his/its jurisdiction, the same cannot be cured by having resort to section 292B. In the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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