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Income Tax Appellate Tribunal, SURAT BENCH, SURAT
Before: SHRI SUDHANSHU SRIVASTAVA & SHRI VIKRAM SINGH YADAV, ACCOUTANT MEMBER
IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE: SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI VIKRAM SINGH YADAV, ACCOUTANT MEMBER ITA No. 442/SRT/2018 Assessment Year :2008-09 Ashok Ramanlal Patel, HUF Income-Tax Officer 25-B Sarjan Society, Vs. (Intl. Taxn), Athwalines, Surat Surat PAN/GIR No.: AABHA9394N अपीलाथ� /Appellant ��यथ� /Respondent Assessee by : Shri Rasesh Shah (CA) Revenue by : Shri B.P.K. Panda (Sr. DR) Date of Hearing : 10/05/2019 Date of Pronouncement : 26/06/2019 ORDER PER: VIKRAM SINGH YADAV, A.M. This is an appeal filed by the assessee against the order of ld. CIT(A)-13, Ahmedabad dated 24.08.2018 wherein he has confirmed the levy of penalty amounting to Rs 1,07,367 u/s 271(1)(c) of the Act.
Briefly stated, the facts of the case are that assessment was completed u/s 147 r/w 143(3) vide order dated 28.03.2013 wherein long term capital gains amounting to Rs 5,21,200 was brought to tax. The penalty proceedings were separately initiated under section 271(1)(c) for concealing long term capital gains. Subsequently, the assessee preferred an appeal before the ld CIT(A) which was dismissed by him. However, on further appeal before the Tribunal, the initiation of the reassessment proceedings by issuance of notice u/s 148 was quashed in absence of approval/sanction of the appropriate
ITA No. 544-551/SRT/2018 Sh. Jigneshkumar S. Modi HUF, Surat vs. ITO, Bardoli authority u/s 151 of the Act. The relevant findings of the Coordinate Bench in ITA No. 148/Ahd/2016 dated 22.11.2018 reads as under:-
“5. We have heard the respective parties. Perused the relevant record. In order decide the issue raised on the maintainability of notice u/s 148 of the Act, since the same admittedly issued for re-opening of the case of the assessee after expiry of four years from the end relevant assessment years we need to deal with the section 151 of the Act which is as follows:
"..No notice shall be issue under section 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 or Commissioner is satisfied on the reasons recorded by the officer, that it is a fit case for the issue of such notice. In a case other than a case falling under sub-section (1), no notice shall be issued under the section 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.
For the purposes of sub-section (1) and sub-section (2), the Principal Chief Commissioner or Chief Commissioner or the Principal Commissioner or Commissioner or the Joint Commissioner, as the case may be, being satisfied on the reasons recorded by the Assessing Officer about fitness of a case for the issue of notice section 148, need not issue such notice himself." It appears from record that no such sanction has been accorded by the authority. On the reason recovering satisfaction by the ld. AO for such re- opening of assessment u/s 148 of the Act. Neither any copy of the instruction as submitted by the ld. DR has provided to us in the course of hearing of the 2
ITA No. 544-551/SRT/2018 Sh. Jigneshkumar S. Modi HUF, Surat vs. ITO, Bardoli matter. We have further perused the judgment passed by the Co-ordinate Bench in ITA No. 274/Ahd/2014/Srt for A.Y 2003-4, deciding this particular issue of obtaining sanction from the competent authority before issuing notice u/s.148 of the Act for re-opening of assessment. The Id. Co-ordinate Bench, in that particular matter rejected the initiation of proceedings u/s.148 of the Act, as bad in Law, in the absence of sanction and/or prior approval of the competent authority for such re-opening, the relevant portion whereof is as follows: "..9. Thus, sub-section (2) of 151. of the Act deals with those type of cases where assessment was not completed under 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 Joint Commissioner of Income-tax after expiry of four years. unless Joint 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. In the instant case, undisputedly no assessment was framed under section 143 (3) of the Act or 147 of the Act It is also undisputed fact that fact that assessment is sought to be reopened after four years from the end of relevant assessment year i.e. 2003-04, as notice under section 148 was issued on 30.03.2010. It is also noticed that from the reply dated 21.08.2017 by the AO (Paper Book Page No. 17) as furnished to the assessee in response to specific query raised as to whether any approval /sanction before issue of notice under section 148 was obtained is not discernible nor supplied meaning thereby that no prior approval of competent authority was obtained before issue of notice under section 148 of the Act Therefore, in such circumstances, initiation of proceedings under section 148 is bad-in-law and not legally tenable; and the assessment framed in consequence thereto deserve to be quashed, therefore, the same is quashed. This view is also supported by decision of coordinated bench in the case. of Shri Shabbir Rafiqbhai Depariya 3
ITA No. 544-551/SRT/2018 Sh. Jigneshkumar S. Modi HUF, Surat vs. ITO, Bardoli (supra). Further reliance is placed in the case of M/s G T L v. ACIT 37 ITR 376 (Mum) wherein there was no mention of authorization of higher authority to initiate reassessment proceedings of taking approval, the initiation of proceeding is vitiated and bad-in-law, reassessment proceeding was to be quashed. We further rely on the decision of Honble Delhi High Court in the case of CIT v. SPL Siddhartha Ltd. 345 ITR 223 (Del) in support of our view Since we have quashed the reassessment proceeding, therefore, we are refrained for dealing the issue on merit However, we may mention that no addition can be made on account of opening capital balance brought forward from earlier year in the impugned assessment year as the same is not income of current year. In view of these facts, circumstances and legal position, the appeal of the assessee is allowed..."
Respectfully relying on the specific judgment, we are of the opinion that since there is no approval/or sanction accorded by the higher authority to the ld. AO for such re-opening of assessment, initiation of re-assessment proceedings u/s 148 is vitiated. Needless to mention that addition made on such re-opening is bad in law, we thus, quashed re-assessment proceedings and allow the appeal preferred by the assessee.”
Heard both the parties and gone through the material available on record. Given that initiation of the reassessment proceedings by issuance of notice u/s 148 was itself quashed by the Co-ordinate Bench and consequent reassessment order passed u/s 143(3) r/w 147 was held bad in law, the very basis for levy of penalty, which is addition of long term capital gains, doesn’t survive and exist anymore, therefore, on this ground itself, the impugned
ITA No. 544-551/SRT/2018 Sh. Jigneshkumar S. Modi HUF, Surat vs. ITO, Bardoli penalty proceedings are set-aside and the penalty so levied is hereby directed to be deleted. In the result, appeal of the assessee is allowed.
Order pronounced in the Open Court on 26/06/2019.
Sd/- Sd/- (Sudhanshu Srivastava) (Vikram Singh Yadav) Judicial Member Accountant Member
Dated:- 26/06/2019 Copy of the order forwarded to: The Appellant- Ashok Ramanlal Patel, Surat 1. The Respondent- ITO (Intl. Taxn), Surat 2. 3. CIT CIT(A) 4. 5. DR, ITAT, 6. Guard File {ITA No. 442/SRT/2018} By order, / / TRUE COPY / / Asst. Registrar