BALDEVBHAI BHIKHABHAI PATEL vs. DY COMMISSIONER OF INCOME TAX
What did the High Court hold?
The High Court held that the notice dated March 21, 2014, for reopening the assessment for AY 2007-08 was valid. The Court found that the proposal for reopening, along with the reasons recorded by the Assessing Officer, was placed before the Additional Commissioner of Income Tax. The Additional Commissioner, after perusing the materials, recorded his satisfaction in writing that it was a fit case for issuing notice under Section 148 of the Act. This satisfaction was further reiterated in a forwarding letter to the Assessing Officer, explicitly approving the proposal under Section 151(1) of the Act. The Court concluded that this constituted an integrated exercise of application of mind and grant of sanction. Citing its own decision in Lalita Ashwin Jain (supra), the Court observed that even a brief statement of reasons by the sanctioning authority, or a simple 'yes' to the Assessing Officer's reasons, would suffice if application of mind is demonstrable from the record. In this case, the record clearly showed the Additional Commissioner had perused the materials, recorded his satisfaction, and approved the reopening. Therefore, the assumption of jurisdiction under Section 147 was valid.
What were the facts?
The petitioner, Baldevbhai Bhikhabhai Patel, an individual engaged in land brokerage in Surat, is challenging a notice dated March 21, 2014, issued by the Dy. Commissioner of Income Tax to reopen his assessment for Assessment Year (AY) 2007-08. The original assessment for AY 2007-08 was processed under Section 143(1) and accepted without scrutiny. A survey operation at the petitioner's business premises on March 23, 2013, led to the impounding of diaries and loose papers. Based on these impounded materials, the Assessing Officer formed reasons to believe that income had escaped assessment and issued the impugned notice to reopen the assessment.
What were the issues?
1. Whether the notice dated March 21, 2014, issued by the respondent-Assessing Officer to reopen the petitioner's assessment for AY 2007-08 is valid, considering the reasons recorded and the sanction obtained under Section 151(1) of the Income Tax Act, 1961. Assessee's Contention: The petitioner challenged the validity of the notice, primarily on the grounds of non-application of mind by the sanctioning authority. (Implicit from the court's detailed discussion on sanction). Revenue's Contention: The revenue contended that the sanction for reopening was validly obtained, with the Additional Commissioner of Income Tax having applied his mind to the reasons recorded by the Assessing Officer and the impounded materials. The revenue presented documents and the original file to demonstrate the proper procedure followed.
Which sections of the Income-tax Act were involved?
Section 143(1),Section 133A,Section 131,Section 147,Section 148,Section 151(1)
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
ORAL ORDER (PER : HONOURABLE MR.JUSTICE AKIL KURESHI)
The petitioner has challenged the Notice dated 21.03.2014 of the respondentAssessing Officer to reopen the petitioner’s assessment for the A.Y. 200708. 2. The brief facts of the case are as under;
The petitioner is an individual and is engaged in the business of brokerage from dealing in land in and around the City of Surat. For the A.Y. 200708, the Return filed by the petitioner was processed u/s.143(1) of the Income Tax Act, 1961 (“the Act” for short) and was accepted without scrutiny. A survey operation was carried out at the business premises of the petitioner on 23.03.2013 during which certain diaries and loose papers were found and impounded. On the basis of the contents of such impounded materials, the Assessing Officer reopened the assessment for the A.Y. 200708, for which the impugned Notice came to be issued. In order to do so, he had recorded the following reasons; “In this case assessee has filed return of income for A.Y. 2007-08 showing salary income of Rs.52,108/-, Rs.2,29,780 under the head capital gains and income from other sources of Rs.2,311/- and total income of Rs.28,419/-. During the course of survey u/s.133A of the IT Act at the business premises of Shri Baldevbhai Bhikhabhai Patel on 23.03.2013 certain diaries and loose papers were found and impounded as per annexure BFI-1 to BFI-35. ON perusal of this impounded papers and written submission in responses to summons u/s.131 of the Act, it is noticed that some pages of the impounded diaries and loose papers are related to the land transactions and receipts of cash received from other persons and the cast payments made to others pertaining to the period F.Y. 2006-07, i.e. A.Y.2007-08. The details of the same are given in brief as under; “Sr. No. Anne. No. Page No. Issue(s) Involved / Action Suggested 1 BFI-2 3 As per the market trend prevalent in the real estate market 200=00 means total three zero (000) is to be added after the amount and in this way the transaction are: i) As per the details of page there are total 5 entries with date 14.05.06, 15.05.06, 15.05.2006, 01.06.2006, 30.06.2006 and 11.07.2006 and total amount is written as ”7500=00 and signed" and similar other amohnts are written in this way. it shows the payment made to Ravjibhai Karemshibhai Sutaria and Ghansyambhai and Parabatbhai Iasmatbhai Golakia amounting to Rs. 75,00,000/-. It is presumed that this unaccounted money of its. 75,00,000/- paid by the assessee did not reflect in his books of accounts It is necessary to verify the source of funds utilized and the accounting treatment given in the accounts / retum of income of the person involved. 2 BFI-3 3 As per the details of page there are total 5 entries with a period of 18.09.2006 to 11.10.2006 and amount is written as “2500=00 paid to Maganbhai Jhinzala, 2270=00 received from N.P., 2000=00 loan received from Ghansyam Jewellers, 250/00 given to J.P., 300/00 RECEIVED FROM KUMAR.
'
it shows the payment received from the above said persons. It is presumed that this unaccounted money of Rs. 74,20,000/- has been received by Shri. Baldeobhai Bhikhabhai Patel which has not disclosed in his regular books of accounts. This amount is required to be treated as undisclosed income of Baldevbhai and to be added in the return of income for the financial year mentioned above.
4 i) Received Rs. 10,00,000/- from Ghanshymbhai on 08.10.2006. ii) Received Rs. 10,00,000/- from Manganbhai Jinzala on 09.10.2006. iii) Received cash of Rs. 50,00,000/- from K. AHD to whom loan given returned back.
iv) Paid Rs. 2,50,000/- to Reva Mama at Native Place on 16.11.2006. it shows the payment made to above said persons/received from the above said persons. It is presumed that this unaccounted transaction 70,25,000/- has been received by Shri. Baldeobhai Bhikhabhai Patel which has not disclosed in his regular books of accounts. This amount is required to be treated as undisclosed income of Baldevbhai and to be added in the return of income for the financial year mentioned above. 5 i) Rs. 10,70,000/- is cash balance on 6.11.2006. ii) Rs. 50,000/- given to Sanjay for operation on 16.11.2006. iii) Rs. 100,000/- given for House Hold Expenses on 16.11.2006. iv) Rs. 80,000/- given to Puiari to do the Jap (religious rituals). v) Rs.2,00,000/- given to mother for purchase of sarees & to be paid in village on 16.11.2000. vi) Rs. 1,00,000/- withdrawal for House Hold Expenses by Baldevbhai - it shows the payment made to above said persons/received from the above said persons. It is presumed that this unaccounted transaction of Rs. 53,00,000/- has been paid by Shri. Baldeobhai Bhikhabhai Patel which has not disclosed in his regular books of accounts. This amount is required to be treated as undisclosed income of Baldevbhai and to be added in the return of income for the financial year mentioned above. 6 i) Paid Rs. 500,000/- in cash to AHD on 19.11.2006. ii) Rs. 50,000/- paid to Sanjay for MilI on 20.11.2006. iii) Rs. 2,50,000/- lump sum paid to Vishnubhai on 20.11.2006. it shows the payment made to above said persons. It is presumed that this unaccounted transaction of Rs. 10,00,000/- has been paid by Shri. Baldeobhai Bhikhabhai Patel which has not disclosed in his regular books of accounts. This amount is required to be treated. as undisclosed income of Baldevbhai end to be added in the return of“income for the financial year mentioned above. 7 i) Rs. 2,50,000/- loan from Vishnubhai yet to be paid. ii) Rs. 2,50,000/- from Rambhai lump Sum Balance to paid.
it shows the amount is received from the above said persons as loan. It is presumed that this unaccounted transaction of Rs. 5,00,000/- has been received by Shri. Baldeobhai Bhikhabhai Patel which has not disclosed in his regular books of accounts. This amount is required to be treated as undisclosed income of Baldevbhai and to be added in the return of income for the financial year mentioned above. 3 BFI-5 4 As per the details of page there are total 5 entries with a period of 18.09.2006 to 11.10.2006 and amount is written as “11000/00 (25,000 $) taken as loan and invested in land. Amount is written as 10000/00 taken from USA for purchase of land at Vesu. 4000/00 received on 10.06.2006 for investment in Vesu land. 900/00 received on 15.08.2006. 900/00 received cash for ticket on 05.10.2006. it shows that the amount is received in cash from the above said persons as loan routed through the different persons in the unaccounted books of accounts of assessee and not reflected in the regular books of accounts. The amount of 25,000 US Dollars is in fact money of the assessee shown to be routed through different person in his unaccounted books. Please state as to why the above amount should not be treated as unaccounted income channeled through different person in your unaccounted books of account and not added to your total income. This amount of Rs. 2,68,00,000/- is required further verification. 6 As per the details of page six there are total 2 entries with a period of 22.06.2006 written as “7000/00 taken loan. Other entry is written as 6000/00 loan taken from Panchal of Vapi for investment in land.
it shows the amount is received from the above said persons as loan. It is presumed that this unaccounted transaction of Rs. 1,30,00,000/- has been received by Shri. Baldeobhai Bhikhabhai Patel which has not disclosed in his regular books of accounts. This amount is. required to be treated as undisclosed income of Baldevbhai and to be added in the return of income for the financial year mentioned above. 4 BFI-7 1 WRITTEN AS 45 Bigha - 9300 Rate - 1/2% share, Varachha Road, Bhareba. 1345000/= 10.01.06 Ghansyambhai. The amount is written in code word and the transaction shows that the amount is invested in purchase of land with 50% share of Ghansyambhai. It is presumed that this unaccounted transaction has been made by Shri. Baldeobhal Bhikhabhai Patel and the half share of Ghansyambhal is written at Rs.13,45,000/-. The half share of the assessee Baldevbhai has not been disclosed and noted on this page and in his regular books of accounts. This amount is required to be treated as undisclosed income of Baldeobhai and to be added in the return of income for the financial year mentioned above. 3 Written as Chautabazar - Ghansyambhai (profit) - 2,80,000/- Chauta Profit taken in account.
The amount is written in code word and the transaction shows that the Profit received is noted for account and there is a signed. It is presumed that this unaccounted transaction has been made by Shri. Baldeobhai Bhikhabhai Patel with Ghansyambhai profit earned is written at Rs.2,80,000/-. The share of profit of the assessee Baldevbhai has not been disclosed and and noted on this page and in his regular books of accounts. This amount is required to be treated as undisclosed income of Baldevbhai and to be added in the return of income for the financial year mentioned above. 5 BFI-8 2 Written as 200 with circle thereupon 18.06 X 9.12=28200. 100 with circle thereupon 8.10.06 8.22 = 13100 Total 41400. 69000 - Abhawala 34640 to be taken from Ghansyambhai Total 5 entries of different amount. Total of the amount is 2000/00 + 2500/00 + 200/00 + 500/00 + 1900/00. Narration of the amount is about giving the above amount to Baldevlal AHD from residence of Babulal, Bhupabhai, J.P. Shah, Bhikhabhai Glamour and Ghansyambhai Jewellers. Period is mentioned between 2006-07. In this page the details regarding the amount given to different person is written. As per the code mentioned above have 2000/00 means Rs.20,00,000/- 2500/00 means Rs.25,00,000/- 200/00 means Rs.2,00,000/- 500/00 means Rs.5,00,000/- 1900/-- means Rs.19,00,000/- Hence, the total of Rs.71,00,000/- of unaccounted money is given to different person which is not recorded in the regular books of account. This amount is to be added to the total income of the assessee. 3 In this page the details regarding the amount given to different persons is written. As per the code mentioned above have 250/00 means Rs.2,50,000/- 500/00 means Rs.5,00,000/- 500/00 means Rs.5,00,000/- 2000/00 means Rs.20,00,000/-
Hence the total of Rs.2,75,00,000/- of unaccounted money is given to different person which is not recorded in the regular books of account. This amount is to be added to the total income of the assessee. 4 In this page the details regarding the amount given to different person is written. As per the code mentioned above have 5000/00 means Rs. 50,00,000/- 500/00 means Rs. 5,00,000/- 1000/00 means Rs. 10,00,000/- 5000/00 means Rs. 50,00,000/- 33,750/00 means Rs.3,37,50,000/- 55/00 means Rs. 5,00,000/-
Hence, the total of Rs.4,57,50,000/- of unaccounted money is given t0 different person which is not recorded in the regular books of account. This amount is to be added to the total income of the assessee. 11 In this page the details is regarding the land purchased at Chandkheda and the amount is written code word. As per the code mentioned above have 20000/00 means Rs. 2,00,00,000/- 300000/= means Rs. 30,00,000/- 50000/- means Rs. 50,00,000/- Hence, the total of Rs. 2,80,00,000/- of unaccounted money is given to different person which is not recorded in the regular books of account. . This amount is to be added to the total income of the assessee. 12 In this page the details regarding the amount received from Baldevbhai & Maganbhai of Chandkheda and others are reflected. As per the code mentioned above have 13691/50 means Rs. 1,36,91,000/- Received from Baldevbhai. 13691/50 means Rs. 1,36,91,000/- Received from Maganbhai. Hence, the total of Rs. 2,73,82,000/- of unaccounted money is shown as receipt from Baldevbhai which is not recorded in the regular books of account. This amount is to be added to the total income of the assessee. 13 In this page, there is an entry in code word as 4200/00, it means 42,00,000/- received on account of sale of plots at Saroli on 05.03. 07. Here the unaccounted money receipt is shown as receipt from the sale of land at Saroli which is not recorded in the regular books of accounts of the assessee. This amount is to be added to the total income of the assessee. 15 In this page, there is an entry in code word as 1296 X 4500 = 58320/00, Area Rate It means the total cost of the land is of Rs.5,83,20,000/- invested in Saroli-Godan village land. There are also money transactions on 17.03.07 & 30.03.07 through Sanjay Angadia and Ghansyambhai in Code word totaling to Rs. 2,80,00,000/-. The unaccounted investment made in the above said land. The above said money transactions are not recorded in the regular books of accounts of the assessee. This amount is to be added to the total income of the assessee. 16 In this page, there is an entry in code word Sandipbhai (Ring Road) (Nr. Badaj Village) as 10 bigha X Total - 4000 purchased share 25%. There are total three entries in code word total of which is as 8000/00, means Rs.80,00,000/-. The assessee has made unaccounted investment in the above said land. The above said money transactions are not recorded in the regular books of accounts of the assessee. This amount is to be added to the total income of the assessee. BFI-22 9 In this page, there is an entry for receipt of 40 with cut circle there upon in the name of Shri Baldevbhai B Patel who has 25% share in land at Vesu survey No. old 556 paiki 352/2 for receipt of money. It means the assessee has received the amount of Rs. 40,00,000/- being the 25% share. There is an entry in code word as 3500 with circle there upon for the period from 7.3.2006 to 26.9.2006 in the name of Jayant L Patel and Kirti K Panchal. It means the total transaction is of Rs 35 lakhs. The assessee has made unaccounted investment in the above said land The above said money transactions are not recorded in the regular books of accounts of the assessee. This amount is to be added to the total income of the assessee. 10 In this page, there is an entry in the name of Jayant L. Patel for the payment made on 29.11.2006 and 2.12.2006 of Rs.8,00,000/-. The assessee has made payment from his unaccounted sources to the above said person. The above said money transactions are not recorded in the regular books of accounts of the assessee. This amount is to be added to the total income of the assessee. The above said inventoried diaries apparently represent the records of receipts, expenses, withdrawals and dues of Shri Baldevbhai Patel for the period for the F.Y. 2006-07. Transactions reflected in the above annexures did not reflect in the books of accounts of the assessee. This payments are found unaccounted / unexplained expenditure for the F.Y. 2006-07 relevant to A.Y. 2007-08. Where any books of accounts, other documents found in the possession of control of any person in the course of survey u/s.133A, it may be presumed that such books of accounts, other documents belong to such persons. It is clear that since the above documents have been impounded from the assessee’s premises, there is reasonable presumption that these documents belong to the assessee and so do the contents therein. From the return of income and based on the information received, I have reason to believe that the assessee failed to disclose fully and truly all material facts for assessment of his case for A.Y. 2007-08. Hence, the undisclosed income amounting to Rs.44,50,77,000/- reflected in the impounded diaries / loose papers are required to be taxed in the hands of the assessee. Accordingly, I am satisfied that the income chargeable to tax has escaped assessment and hence, it is a fit case for reopening the assessment within the meaning of section 147 of the Act.”
The petitioner first applied for settlement of the case before the Settlement Commission. Such application was, however, rejected by the Settlement Commission by an order dated 29.09.2016. On account of the pendency of the petitioner’s application before the Settlement Commission, the assessment proceedings arising out of the impugned Notice of reassessment remained suspended. After the petitioner’s application for settlement was rejected, the same were revived. At that stage, the petitioner filed the present petition challenging the notice of reopening. In the meantime, the Assessing Officer went ahead with the reassessment and completed such assessment.
Counsel for the petitioner raised only one ground in support of the petitioner’s challenge, namely that of valid sanction being granted by the competent authority, before issuing the impugned Notice of reopening of assessment. This contention has two limbs, first part being the petitioner’s assertion that no such sanction at all was ever granted and the second being that the sanction, which is produced by the respondent in the affidavit in reply, is not a valid sanction.
1 Elaborating this issue, counsel for the petitioner submitted that initially, the Assessing Officer conceded that no such sanction order is available on record. In the affidavit in reply filed to the Notice issued in this case, the respondent has produced a copy of the sanction, which fails the test of validity because it is mechanically granted, as can be seen from the various defects in the Presentation Form on which the Dy. Commissioner of Incometax has put his signature granting sanction.
2 Counsel further submitted that even the reasons recorded by the Assessing Officer were not placed before the said authority before granting the sanction.
In support of his contention that sanction to be granted by the competent authority u/s.151 of the Act should not be a mechanical exercise, the counsel relied on the following decisions; (A) Rajesh Kumar v. DCIT reported in 287 ITR 91 (SC). (B) Arjun Singh v. ADIT reported in 246 ITR 363 (MP). (C) Smt. Kalpana Shantilal Haria v. ACIT passed in Writ Petition (L) No.3063 of 2017 dated 22.12.2017. (D) CIT v. M/s. S. Goyanka Lime and Chemicals Ltd. passed in ITA No.82 of 2012 dated 14.10.2014. (E) DSJ Communication Ltd. v. DCIT reported in 222 Taxman 480 (Bom). (F) Pr.CIT v. N.C. Cables Ltd. reported in 98 CCH 18 (Del). (G) Yum Restaurant v. DCIT reported in 397 ITR 665 (Del). (H) Shamshad Khan v. ACIT reported in 395 ITR 265 (Del).
1 On the basis of such judgments, counsel for the petitioner vehemently contended that in the present case, the sanction granted by the authority is invalid. There was no application of mind on the part of the Dy. Commissioner of Incometax before authorizing the Assessing Officer to issue Notice of reopening of assessment.
On the other hand, learned counsel for the Department submitted that the Assessing Officer has recorded valid reasons before issuing the Notice for reopening the assessment. Such reasons were placed before the competent authority along with the printed proforma for considering the question whether sanction was to be granted or not. The Dy. Commissioner of Incometax perused the materials on record and granted such sanction after due application of mind.
1 Counsel relied on the judgment of this Court in case of Lalita Ashwin Jain v. Income Tax Officer reported in [2014] 45 taxmann.com 404 (Gujarat) in the context of the validity of sanction. Counsel also drew our attention to the recent judgment of the Division Bench of this Court in case of Aradhna Estate Pvt. Ltd. v. Dy. Commissioner of Income Tax, Circle1 dated 20.02.2018 in Special Civil Application No.21999 of 2017, in which, in the context of similar contention by the counsel for the petitioner, the following observations were made; “16. The contention that the Assessing Officer had merely and mechanically acted on the report of the investigation wing also cannot be accepted. We have reproduced the reasons recorded by the Assessing Officer and noted the gist of his reasons for resorting to reopening of the assessment. We have recorded that the Assessing Officer had perused the materials placed for his consideration and thereupon, upon examination of such materials formed a belief that income chargeable to tax had escaped assessment.”
The facts on record would suggest that the petitioner had filed the Return of Income for the relevant Assessment Year, on which, no scrutiny assessment was made. In other words, the Return was processed u/s.143(1) of the Act. Under such circumstances, the Assessing Officer would have wider scope for reopening the assessment since no scrutiny assessment was, originally, framed. The Assessing Officer, therefore, cannot be stated to have formed any opinion and hence, the question of change of opinion would not arise. This aspect has been discussed by the Supreme Court in case of Assistant Commissioner of Incometax v. Rajesh Jhaveri Stock Brokers P. Ltd. reported in [2007] 291 ITR 500 (SC) and in the case of Dy. Commissioner of Incometax and another v. Zuari Estate Development and Investment Company Ltd. reported in [2015] 373 ITR 661 (SC).
The reasons recorded by the Assessing Officer would suggest that the assessee, who was in the business of land dealings, was subjected to survey operation at his business premises, during which, certain diaries and loose papers were found and impounded. The Assessing Officer processed the contents thereof and prima facie, came to the conclusion that there were sizeable land dealings relatable to the period relevant to the A.Y. in question. He recorded detailed reasons for such purpose. He, therefore, formed a belief that income chargeable to tax to the tune of Rs.44.50 Crores (rounded off) had escaped assessment.
We may recall, the petitioner has not challenged the validity of such reasons. The petitioner’s sole contention is that the sanction required in terms of Section 151 of the Act has not been validly granted. As is well known, sub section (1) of Section 151 of the Act provides that no notice shall be issued u/s.148 of the Act by the Assessing Officer after the expiry of a period of 04 years from the end of relevant Assessment Year unless the Principal Chief Commissioner or the Chief Commissioner or the Principal Commissioner or the Commissioner is satisfied on the reasons recorded by the Assessing Officer that it is a fit case for the issuance of such Notice. Subsection (1) of Section 151 of the Act, thus, provides a safeguard whereby, in a case where the Assessing Officer desires to reopen an assessment, by issuing notice beyond the period of 04 years from the end of relevant Assessment Year, sanction from the above mentioned higher authority would be needed. We discarded the petitioner’s first argument that no sanction at all was granted by the competent authority. The respondents, in response to the Notice issued by this Court, have appeared and filed reply dated 19.12.2017, in which, in relation to the question of sanction, the following averments have been made; “7. It is submitted that during the course of assessment proceedings the assessee had requested to provide him a copy of reasons recorded and approval obtained u/s.151(1) of the IncomeTax Act for the year under consideration. The copy of the reasons recorded was duly provided to the assessee. During the course of assessment proceedings, the assessee had made a noting in the order sheet. Thereafter, vide an RTI application the assessee had requested a photo copy of the case records, order sheet and also requested examination of the case records which were duly provided. In reply to the RTI application it was intimated by this office that copy of approval obtained u/s.151(1) of the IT Act is presently not found on record. It was intimated that since the office had shifted before six months, it is possible that the approval may be in a separate folder and might got detached from the original order.
In view of the above, the assessee filed a Special Civil Application No.21092 of 2017 before the Hon’ble Gujarat High Court alleging that prior sanction u/s.151(1) of the Act was not obtained before reopening the assessment proceedings and the assessing officer was not justified in passing the assessment order. Efforts were put in to obtain a copy of the same from the records of the Office of Jt. CIT, Range 1(3), Surat. Since the Office has shifted around 06 months back, there were many records which were unpacked in cartons. The Jt. CIT, Range 1(3), Surat had specially created a team to trace the records and after lot of searching, the approval folder was traced from the Office. Annexed herewith and marked as AnnexureR/1 is a copy of the approval accorded for the proceedings.”
We now come to the petitioner’s second argument, namely, of the validity of the sanction. The respondent has produced a bunch of documents along with the said affidavit, which contains the sanction order. We have also perused the original file produced before us by the counsel for the Revenue. The materials on record would suggest that the proposal for issuance of notice mooted by the Assessing Officer along with the reasons recorded was placed before the Dy. Commissioner of Incometax, Circle3, Surat in a printed proforma. The Dy. Commissioner of Income tax placed the same before the Addl. Commissioner of Incometax to ascertain his satisfaction whether it was a fit case for issuing Notice u/s.148 of the Act, on which, the Addl. Commissioner of Incometax, in his own hands, put the following remarks; “I am satisfied that it is a fit case to issue Notice u/s.148 of the Incometax Act, 1961 ?”
Below this remark, he put his signature. The Addl. Commissioner of Incometax forwarded such approval to the Dy. Commissioner of Incometax under his letter dated 21.03.2014, in which he stated as under; “Please refer to your proposal received in this office on 20.03.2014 for reopening the assessment u/s.147 of the IT Act in the case of above mentioned assessee for A.Y. 200708. 2. The reasons recorded by you for initiating proceedings u/s.147 of the IT Act, 1961 are perused. After perusal, I am satisfied on the basis of above reasons and considered opinion that this is a fit case for issue of the notice u/s.148 of the IT Act.
Therefore, your proposal for reopening the assessment u/s.147 is hereby approved u/s.151(1) of the Act. You are directed to initiate the proceedings as per law and complete the assessment in time after granting proper opportunity to the assessee.”
It can, thus, be seen that the entire proposal along with necessary details and the reasons recorded by the Assessing Officer were placed before the Addl. Commissioner of Income tax, who, upon perusal of the same, in his own hands, recorded his satisfaction that it was a fit case for issuance of notice u/s.148 of the Act. In the forwarding letter, he reiterated that he had perused the reasons recorded by the Assessing Officer and upon perusal, he was satisfied and was of the considered opinion that it was a fit case for issuance of notice u/s.148 of the Act. He further stated that “therefore, your proposal for reopening the assessment u/s.147 is hereby approved u/s.151(1) of the Act...”.
It can, thus, be seen that the Addl. Commissioner of Incometax had not only put his remarks on the proforma presented before him by the Assessing Officer but also separately conveyed his satisfaction to the Assessing Officer in a separate letter. The application of mind and grant of sanction was, thus, one integrated exercise. Even independently, we have no reason to believe or hold that this was a case of nonapplication of mind. The Addl. Commissioner of Incometax had perused the materials on record, which included the reasons recorded by the Assessing Officer. He had recorded his satisfaction and opinion that it was a fit case for issuance of Notice u/s.148(1) of the Act.
This Court, in the case of Lalita Ashwin Jain (supra), in the context of such requirement, had made the following observations; “17.4 However, so as to aver such allegations of nonapplication of mind all that is desirable is that the Joint Commissioner should briefly state his reasons. However, only because he has nodded in favour of Assessing Officer by writing ‘yes’ to the reasons recorded and accorded permission for reopening of the assessment, the notice of reopening of that count alone cannot fail holding that the assumption of jurisdiction under Section 147 is invalid, if application of mind is demonstrable from the material on record. From the record, it emerges that the reasons recorded were placed before the Assistant Commissioner along with other details in prescribed format. It was only after perusing such details that the Assistant Commissioner agreed that it was a fit case for issuing notice u/s.148 of the Act. Thus, this is not a case where such permission can be stated to have been granted without application of mind. We are satisfied from the overall facts and circumstances that the provisions of the Act are duly complied with in the action of the Joint Commissioner.”
In the result, the petition is dismissed. (AKIL KURESHI, J) (B.N. KARIA, J) PRAVIN KARUNAN
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