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Income Tax Appellate Tribunal, CUTTACK BENCH, CUTTACK
Before: SHRI CHANDRA MOHAN GARG & LAXMI PRASAD SAHU
IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK
BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER AND LAXMI PRASAD SAHU, ACCOUNTANT MEMBER
ITA No.227/CTK/2016 Assessment Year : 2009-2010
Metro Project, Main Road, Joda Vs. ITO, Keonjhar Ward, Keonjhar Market, At/PO: Joda, Keonjhar PAN/GIR No.AAPFM 4281 J (Appellant) .. ( Respondent)
Assessee by : Shri P.C.Sethi, AR Revenue by : Shri Subhendu Dutta, DR
Date of Hearing : 18 /12/ 2019 Date of Pronouncement : 23/12/ 2019
O R D E R Per C.M.Garg,JM This is an appeal filed by the assessee against the order of the
CIT(A), Cuttack dated 4.3.2016 for the assessment year 2009-2010.
The assessee has raised the following grounds of appeal:
“ 1. That, the learned CIT (A) has committed serious error in not quashing the assessment order passed by the learned Assessing Officer which is per se illegal, unjust, without jurisdiction, arbitrary and contrary to the provisions of the Act and has been passed in gross violation to the principles of natural justice.
That, the learned CIT (A) has committed serious error in not quashing the assessment order as the reopening assessment made by the learned Assessing Officer u/s 147 of the Income-tax Act, 1961 (Hereinafter referred as "the Act") is per se illegal, without jurisdiction as much as no sanction as required u/s 151 of the Act has been take in issuing notice u/s 148 of the Act.
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That, the learned CIT (A) has committed serious error in not quashing the assessment order as the reason mentioned for reopening of assessment u/s 147 of the Act is not coming within the meaning of section u/s 147 of the Act and for which the notice u/s 148 of the Act is illegal and the assessment order should have been annulled by the learned CIT (A).
That, the learned CIT (A) has committed a serious error in not deleting the addition made by the learned Assessing Officer u/s 40(a)(ia) of the Act made by the learned Assessing Officer and not deciding the issues correctly.
That, the learned CIT (A) has committed a serious error in not deleting the addition of Rs. 1,92,000/- made by the learned Assessing Officer u/s 40(b) of the Act.
That, the learned CIT (A) has committed a serious error in not deleting the addition of Rs. 1,59,82,228/- made by the learned Assessing Officer u/s 40(a)(ia) of the Act. 7. That, the learned CIT (A) has committed a serious error in not deleting the addition made by the learned Assessing Officer of Rs. 16,00,000/-which is contrary to the facts and circumstances of the case and for which same is liable to be deleted.
That, the learned CIT(A) has erred both in law and in fact to disallow which has already been paid and nothing remains payable u/s 40(a)(ia) of the Act and for which the addition u/s 40a(ia) of the Act is liable to be deleted.
That, the cost of appeal may be given to be appellant in accordance with the Rules.”
As agreed by both the sides, first of all, we proceed to decide the
legal grounds taken in Ground Nos.2 to 3 of appeal of the assessee
challenging the validity of initiation of reassessment proceedings u/.s.147 of
the Act without approval for initiation of such proceedings u/s.151 of the
Act.
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In the beginning of the arguments, ld DR submitted that he has
received relevant assessment records and he also submitted the copies of
the letter of the ld CIT, Sambalpur to Assessing Officer granting approval
u/s.151(1) of the Act dated 21.11.2013 forming of approval and copy of the
reasons recorded dated 10.12.2013. Copies of these documents were
provided to the ld counsel for the assessee.
Ld counsel for the assessee submitted that the reopening of
assessment u/s.147 of the Act is perse illegal without jurisdiction as no valid
sanction for initiation of proceedings as required u/s.151 of the Act has
been taken by the AO prior to issuance of notice u/s.148 of the Act. Ld
counsel further submitted that the ld CIT(A) has erred in not quashing the
re-assessment order as the reasons mentioned for reopening of assessment
is not coming within the meaning of requirement of section 147 of the Act
and because of that the notice u/s.148 of the Act is also illegal and bad in
law and all the proceedings including orders of lower authorities should be
annulled on this count.
Further drawing our attention towards copy of the letter dated
21.11.2013 written by ld JCIT, Range-1, Sambalpur to ITO, forming of
approval enclosed thereto and copy of the reasons recorded by the AO
dated 10.12.2013, ld counsel submitted that from the letter of ld JCIT,
Range-1, Sambalpur dated 21.11.2013, it is clear that the AO vide his letter
No.3034 dated 7.11.2013 requested the JCIT to grant approval u/s.151(1)
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of the Act in five cases and in turn, ld JCIT informed the Assessing Officer
that the records have been perused and accorded for issuance of notice
u/s.148 of the Act in five cases including the present assessee for
assessment year 2009-2010. Ld counsel for the assessee submitted tht
from the copies of the reasons submitted before the Bench by ld DR it is
also discernible that the reasons have been recorded subsequently on
10.12.2013. Therefore, it is amply clear that neither on 7.11.2013 nor
when the AO requested the ld JCIT to grant approval u/s.151 of the Act on
21.11.2013 on which dated ld JCIT granted so called approval u/s.151 of
the Act, no reasons were in existence and reasons have been recorded on
10.12.2013 i.e. after lapse of substantial time. Ld counsel vehemently
pointed out that these facts clearly indicate that when the AO sought
approval from ld JCIT and ld JCIT granted approval to the AO u/s.151 of the
Act on 21.11.2012, there was no reason on the record of the AO and thus,
the approval u/s.151 of the Act has been granted without perusing and
considering the reasons and without application of mind to the reasons
recorded by the AO. Ld counsel strenuously contended that on this ground,
initiation of reassessment proceedings, issuance of notice u/s.148 and
subsequent proceedings including impugned reassessment order passed
u/s.147 of the Act r.w.s. 144 of the Act and ld CIT(A) order have to be held
as bad in law and thus, same may kindly be quashed.
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Replying to above, ld DR submitted that the scope of approval is
inter-departmental correspondence which could not be questioned by the
assessee before the Tribunal especially when he has participated in the
proceedings before the AO as well as ld CIT(A) without any objection.
On careful consideration of the rival submissions, we are of the
considered view that prior to initiation of reassessment proceedings and
issuance of notice u/s.148 of the Act, it is the duty of the AO to obtain
approval u/s.151 of the Act from the competent authority, which was JCIT
in the present case. The purpose of section 151 of the Act is to introduce a
supervisory check over the work of the assessing officer, particularly, in the
context of reopening of assessment. The law expects the assessing officer
to exercise the power under section 147 of the Act to reopen an assessment
only after due application of mind. If for some reason, there is an error that
creeps into this exercise by the assessing officer, then the law expects the
superior officer to be able to correct that error. For obtaining approval, the
AO is required to send copy of the reasons alongwith assessment records
particularly in the prescribed form for grant of approval u/s.151 of the Act
and after perusing the entire material and due application of mind, the
competent authority i.e. JCIT is required to grant approval u/s.151 of the
Act. These provisions are mini-code of procedures for initiation of
reassessment proceedings in the case where the assessment has been
completed. Not following due procedure by the AO and approving authority
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makes the entire proceedings, reassessment order and ld CIT(A) order bad
in law. From the documents submitted by ld DR, we clearly gather that the
AO requested the ld JCIT vide letter dated 7.11.2013 and in turn ld JCIT
granted approval in five cases including the case of the assessee for
assessment year 2009-2010 informing the AO regarding grant of approval
dated 21.11.2013. However, from the copy of reasons submitted by ld DR,
extracting the assessment record, we clearly observe that the reasons have
been recorded on 10.12.2013 after completion of correspondence between
the AO and ld JCIT regarding approval u/s.151 of the Act. Therefore, we
safely presume that at the time of seeking approval from the ld JCIT on
7.11.2013 and also at the time of granting approval by ld JCIT u/s.151 of
the Act on 21.11.2013, no reasons for reopening of assessment u/s.147 of
the Act and issuing notice u/s.148 of the Act were in existence and reasons
have been recorded after lapse of substantial time period during the next
month i.e. on 10.12.2013. Thus, ld JCIT has granted approval without
perusing the reasons required to be recorded by the AO for reopening of
the assessment and issuing notice u/s.148 of the Act. It is well settled Law
that validity of re-assessment proceedings is to be examined with reference
to the reasons recorded for reopening of the assessment Consequently, we
hold that ld JCIT has granted approval u/s.151 of the Act without perusing
any reasons and without application of mind which is fatal to the initiation
of reassessment proceedings and issuing notice u/s.148 of the Act.
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The Hon’ble Supreme Court approving the Judgment of Hon’ble
Madhya Pradesh High Court in the case of Commissioner of Income Tax,
Jabalpur (MP) vs., S. Goyanka Lime & Chemicals Ltd., [2015] 46
taxmann.com 313 held as under :
“SLP dismissed against High Court’s ruling that where Joint Commissioner recorded satisfaction in mechanical manner and without application of mind to accord sanction for issuing notice under section 148, reopening of assessment was invalid.”
Hon'ble High Court of Delhi dated 31.08.2017 in WP(C) No. 614/2014
in the case of Yum Restaurants Asia Pte Ltd. vs. DDIT held that the glaring
mistakes in the proforma for approval is the valid ground for quashing the
assessment on the premise of non-application of mind by all the authorities
involved in the process of recording reasons and providing satisfaction u/s.
151 of the Act.
Hence, respectfully following the judgments cited supra, and in view
of the glaring facts on which the reassessment proceedings have been
initiated, we quash the reassessment order u/s.144/147 of the Act dated
3.7.2014 and allow the legal grounds of the assessee.
As we have quashed the reassessment proceedings while
adjudicating the legal grounds, other grounds taken by the assessee have
become infructuous and same are not adjudicated upon.
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In the result, appeal of the assessee is allowed.
Order pronounced on 23/12/2019.
Sd/- sd/- (Laxmi Prasad Sahu) (Chandra Mohan Garg) ACCOUNTANT MEMBER JUDICIAL MEMBER Cuttack; Dated 23/12/2019 B.K.Parida, SPS Copy of the Order forwarded to : 1. The Appellant : Metro Project, Main Road, Joda Market, At/PO: Joda, Keonjhar
The Respondent. ITO, Keonjhar Ward, Keonjhar 3. The CIT(A)-, Cuttack 4. Pr.CIT- , Cuttack 5. DR, ITAT, Cuttack 6. Guard file. //True Copy//
By order
Sr.Pvt.secretary ITAT, Cuttack
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