DCIT, CIRCLE-17(1), HYD, HYDERABAD vs. DIVYA SHAKTI GRANITES LTD., HYD, HYDERABAD

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ITA 887/HYD/2015Status: DisposedITAT Hyderabad17 September 2021AY 2009-105 pages

In favour of the Revenue: the Revenue's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the reassessment proceedings were invalid because the necessary sanction from the prescribed authority under Section 151(2) of the Income Tax Act was not obtained. The satisfaction of the Joint Commissioner is a mandatory condition for issuing a notice under Section 148 by an AO below the rank of Joint Commissioner.

What were the facts?

The assessee company filed its return of income, and the Assessing Officer (AO) initiated reassessment proceedings under Section 147 after forming reasons to believe income had escaped assessment. The AO issued a notice under Section 148, which was followed by a reassessment order under Section 143(3) r.w.s. 147.

What were the issues?

Whether the reassessment proceedings initiated under Section 147 were invalid due to the lack of mandatory sanction from the prescribed authority under Section 151(2) of the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 151,Section 147,Section 148,Section 143(3)

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, HYDERABAD ‘A’ BENCH, HYDERABAD.

Before: SHRI S.S. GODARA & SHRI L. P. SAHU

For Appellant: Shri Pawan Kumar Chakrapani

Heard together (2 matters)

ITA No.887/Hyd/2015
C.O. No.59/Hyd/2015

Read from the judgment's own cause title. This page is filed under one of them.

BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI L. P. SAHU, ACCOUNTANT MEMBER (Through Virtual Hearing) C.O. No.59/Hyd/2015 (Assessment Year : 2009-10) Dy. Commissioner of Income Tax, Circle 17(1), Hyderabad. …..Appellant. Vs. M/s. Divya Shakti Granites Ltd., 7-1-58, Divya Shakti Complex, Ameerpet, Hyderabad. …..Respondent/Cross Objector. PAN AABCD 0680K Assessee By : Shri Pawan Kumar Chakrapani. Revenue By : Shri Sunku Srinivas. (D.R.) Date of Hearing : 7.9.2021. Date of Pronouncement : 17.09.2021. O R D E R Per Shri S.S. Godara, J.M. : This Revenue’s appeal and assessee's Cross Objection and 59/Hyd/2015 for assessment year 2009-10 arise from the Commissioner of Income Tax (Appeals)-5, Hyderabad’s order dt.16.03.2015 passed in case No.0657/2014-15/CIT(A)-5 in proceedings under Section 143(3) r.w.s. 147 of Income Tax Act, 1961 (‘the Act’).

C.O. No.59/Hyd/2015 Heard both the parties. Case file perused.

2.

We notice at the outset that the assessee's C.O. No.59/Hyd/2015 raises the first and foremost legal issue that the impugned reassessment framed on 28.12.2014 is an invalid one on account of the fact that the prescribed authority u/s. 151(2) of the Act had not granted the necessary sanction to the corresponding reasons recorded by the Assessing Officer. This issue admittedly goes to the root of the matter. We therefore proceed to decide the assessee's foregoing legal ground at this stage. A few relevant facts may be noticed.

3.

This assessee is a company manufacturing granite slabs. It had filed its return of income on 22.09.2009. This followed the Assessing Officer’s section 143(3) regular assessment framed on 5.12.2011 and his 154 rectification notice issued on 2.12.2012. Case records indicate that the Assessing Officer thereafter formed reasons to believe that the assessee's taxable income liable to be assessed has escaped assessment. He thus issued 148 notice C.O. No.59/Hyd/2015 dt.10.03.2014 i.e. well before the expiry of four years from the end of the relevant assessment year coming to 31.03.2014. The same culminated in section 143(3) r.w.s. 147 reassessment dt.28.12.2014 as upheld in the CIT(A)’s order. Here comes the issue between the parties. 4. The assessee's case before us is that it was the DCIT, Circle 1(2), Hyderabad who had issued section 148 notice dated 10.3.2014 (Page 39). And that the said notice had been “ISSUED AFTER THE NECESSRY SATISFACTION OF THE CIT-1, HYDERABAD” This clinching fact has gone unrebutted from the department’s side. We therefore quote 151 of the Act at this stage prescribing the following conditions : “ 151 Sanction for issue of notice – (1) No notice shall be issued u/s.148 by an Assessing Officer, after the expiry of a period of four years from the end of the relevant assessment year, unless the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner is satisfied, on the reasons recorded by the Assessing Officer, that it is a fit case for the issue of such notice.

C.O. No.59/Hyd/2015 (2) In a case other than a case falling under sub-section(1), no notice shall be issued u/s. 148 by an Assessing Officer, who is below the rank of Joint 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.”

The Revenue’s contention before us refers to section 292B of the Act that the assessee is estopped from raising the instant legal issue. We find no merit since the foregoing statutory applies in the prescribed circumstances than curing the impugned inherent defect. We further make it clear that the legislature had itself used the clinching statutory expression “unless” in section 151(2) of the Act which sufficiently indicates that the satisfaction of the Joint Commissioner concerned in case of the Assessing Officer having ranked below him, is indeed a mandatory condition only. We wish to emphasise there that the hon'ble apex court’s Full Bench decision in Dilip Kumar (2018) 9 SCC 1 (SC) (FB) has settled the law that the provisions of a taxing statute have to be interpreted in stricter manner only. We C.O. No.59/Hyd/2015 therefore adopt the very analogy herein as well to hold that the impugned reopening is non-est in the eyes of law. All other pleadings on merits are rendered infructuous.

5.

To sum up, Revenue’s appeal 887/Hyd/2015 is dismissed and assessee's C.O. No.59/Hyd/2015 is allowed in above terms. A copy of this common order be placed in respective case files.

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