M/S AMRIT TRD. CO JIND vs. COMMISSIONER OF IT & ANR

This appeal has been preferred by the assessee under Section 260-A of the Income Tax Act, 1961 (for short, “the Act”) against the order of the Income Tax Appellate Tribunal, Chandigarh dated 30.11.2004 in I.T.A. No.958/Chandi/96 claiming following substantial question of law:- “i) Whether in the facts and circumstances of the case the action of the authorities below in initiating the reassessment proceedings merely on the basis of communication dated 12.12.1992 without any reasonable ground having rational connection, is legally sustainable in the eyes of law? ii) Whether in the facts and circumstances of the case the action of the authorities below in initiating proceedings under section 147 of the Act by ignoring the sanction provided under section 151 of the Act which is mandatory, is legally sustainable in the eyes of law? iii) Whether in the facts and circumstances of the case the action of the authorities below in holding the consignment sales to be the sales on account of trading without investigating the same appropriately and acting on its own presumption is legally sustainable in the eyes of law? iv) Whether in the facts and circumstances of the case the action of the authorities below in acting on its own presumption is legally sustainable in the eyes of law?”

The Assessing Officer made assessment in respect of the assessee under Section 143(3) of the Act on 28.2.1991. Thereafter, notice dated 15.2.1993 was issued under Section 148 of the Act for reassessment and accordingly, reassessment was made. On appeal, the CIT(A) set aside the reassessment on the ground that no sanction under Section 151 of the Act had been obtained. On further appeal, the Tribunal set aside the view taken by the CIT(A) on the ground that sanction under Section 151 of the Act was not required where earlier assessment was under Section 143(1)(a) of the Act. Accordingly, reassessment proceedings were restored. The appeal of the assessee in respect of the assessment years where assessment had been made under Section 143(1)(a) and not 143(3) of the Act were dismissed vide order dated 5.1.2011 being I.T.A. No.338 of 2005 M/s Amrit Trading Company v. Commissioner of Income Tax (Appeals) & another and connected matters. However, the present case was separated.

We have heard learned counsel for the parties.

It is not disputed by learned counsel for the revenue that in the present case, assessment had already been made under Section 143(3) of the Act and reassessment was initiated without sanction under Section 151 of the Act, which was not permissible. The Tribunal itself upheld the view of the CIT(A) in cases where assessment was made under Section 143(3) of the Act and reassessment was initiated without following section 151 of the Act with the following observations:- 10............Therefore, in that view of the matter, by respectfully following the earlier order of the Tribunal dated 29.10.2004, we dismiss the departmental appeals on this issue in the aforesaid two cases by holding that notices under section 148 had been issued to the assessees in contravention of section 151.....”

Without noticing the fact that in the present case assessment under section 143(3) of the Act had been made, appeal of the department was allowed, on the ground that section 151 of the Act was not applicable, under an erroneous assumption that assessment had been made under Section 143 (1)(a) and not under Section 143 of the Act. This being the undisputed position, we hold that the Tribunal was not justified in upholding reassessment proceedings in violation of Section 151 of the Act. The questions are answered accordingly.