MAYURBHAI MANGALDAS PATEL vs. INCOME TAX OFFICER

The   assessee   has   filed   this   appeal   challenging   the judgment   of   Income   Tax   Appellate   Tribunal   raising   the following questions for our consideration : “(1) Whether on facts and in law, the Income Tax Appellate Tribunal is right in holding that provisions of S.151(2) of the   Income   Tax   Act   are   complied   with   when   actual satisfaction was taken of Commissioner only? (2)Whether   on   facts   and   in   law,   the   additional commissioner is said as satisfied on the reasons recorded when   after   signing   approval   sheet   as   satisfied,   he forwarded it for approval of higher authority? (3) Whether on facts and in law, the Income Tax Appellate Tribunal is right in holding that provisions of S.151(2) are complied with when Assessing Officer has sent form for approval of Commissioner only which was routed through Addl. Commissioner?

Whether on facts and in law, the Income Tax Appellate Tribunal is right in not following its own decisions?

Whether on facts and in law, the Income Tax Appellate Tribunal is right in observing that irregularity of taking sanction for issue of notice u/s 151 is curable defect u/s 292B of the Income Tax Act?”

Though multiple questions are raised, one single issue that arises in the appeal is whether the requirement of sub­ section(2) of section 151 of the Act were satisfied before issuance of notice under section 148 of the Act.

Case   of   the   assessee   is   that   the   authority   competent referred to in sub­section(2) of section 151 was the Joint Commissioner,   instead   in   the   present   case,   higher authority   i.e.   Commissioner   was   approached   and necessary  sanction/approval   was  granted  by  him  which would vitiate the initiation of proceedings for reassessment. The Tribunal however took the view that even the Joint Commissioner had granted such approval. Merely because the Commissioner had also applied his mind, would not vitiate the proceedings.

In this background, counsel for the appellant  drew our attention to the necessary approval order which is verbatim reproduced by the Tribunal in the impugned judgment. He relied   on   the   judgment   of   Supreme   Court   in   case   of Anirudhsinhji Karansinhji Jadeja v/s. State of Gujarat reported in AIR 1995 SC 2390 and on the judgment of Delhi High Court in case of Commissioner of Income­tax v.   SPL's   Siddhartha   Ltd reported   in   (2012)   17 taxmann.com 138 (Delhi).

On   the   other   hand,   learned   counsel   for   the   Revenue opposed   the   appeal   contending   that   the   Tribunal   has appreciated   facts   properly   and   found   that   conditions   of sub­section(2) of section 151 are satisfied.

The   approval   is   granted   in   printed   proforma   which contains   as   many   as   13   entries.   Entries   no.   1   to   11 referred to relevant informations concerning the case on hand, such as, income of the assessee, his PAN number, order of assessment in question, etc.. Entry no.11 pertains to   reasons   for   the   formation   of   belief   that   income chargeable to tax had escaped assessment.   Entry no.12 reads as under : “Whether   the   Addl.   Commissioner   is   satisfied   on   the reasons recorded by the AO that it is a fit case for the issue of notice u/s.148”

It   is   thus   undisputable   that   Joint   Commissioner   had expressed his satisfaction that it was a fit case for issuing notice of reopening of the assessment. This was on the basis of reasons recorded by the Assessing Officer which were also furnished to him. His satisfaction and approval was therefore, complete.

Sub­section(2)   of   section   151   provides   that   in   cases specified therein, no notice under section 148 of the Act would be issued by an Assessing Officer who is below the rank   of   Joint   Commissioner,   unless   the   Joint Commissioner is satisfied, on the reasons recorded by the Assessing Officer that it is a fit case for issuance of such notice. Clearly thus, this requirement was fulfilled.

The legal proposition is that when the statute casts a duty on a certain administrative officer, the same must be performed by him and the satisfaction arrived at even by the higher authority would not be sufficient. However, in the   present   case,   there   was   no   lack   of   satisfaction   or exercise of power by the Joint Commissioner. He in clear terms, expressed his satisfaction that on the basis of the reasons recorded by the Assessing Officer, it was a fit case for issuance of notice under section 148 of the Act. Merely because   the   papers   were   thereafter   for   some   erroneous reason   also   placed   before   the   Commissioner   who   also recorded   his   similar   satisfaction   would   not   take   away anything from the previous conclusion.

In case of Anirudhsinhji Karansinhji Jadeja (supra), the   sanction   to   be   granted   under   the   Terrorist   and Disruptive Activities (Prevention) Act, 1987 had to be done by the D.S.P. Instead of exercising such powers, he made a report   to   the   Additional   Chief   Secretary   and   asked   his permission   to   proceed   under   the   TADA   Act.   This   was clearly found in breach of statutory requirement by the Supreme   Court.   Relying   upon   and   referring   to   this judgment of Supreme Court, Delhi High Court in case of SPL's   Siddhartha   Ltd   (supra),   quashed   the   notice   of reopening of assessment, in which satisfaction, as referred to   in   section   151   of   the   Act,   was   arrived   at   by   the Commissioner,   though   the   proper   authority   was   Joint Commissioner.   It   was   a   case   where   the   Joint Commissioner had not recorded any such satisfaction but merely placed the file before the Commissioner for his view. Both these cases are therefore, clearly distinguishable.

In the result Tax Appeal and Civil Application   are dismissed.