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Income Tax Appellate Tribunal, ‘SURAT’ BENCH, SURAT
Before: SHRI RAJPAL YADAV & SHRI AMARJIT SINGH
आयकर अपील�य अ�धकरण। IN THE INCOME TAX APPELLATE TRIBUNAL ‘SURAT’ BENCH, SURAT BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER
Sr. ITA No. & Name of Appellant Name of Asstt.Year Respondent No. 1-2 2677 and Shri Jaysukhbhai Nanubhai Dudhat ITO, Ward-3 2871/Ahd/2013 Bharuch. C/o.Suyog Dye Chemie P.Ltd. A.Y.2004-05 Plot no.6716-17, GIDC and A.Y.2005- Ankleshwar 393 002. 06 ACHPD 6112 F 3 2679/Ahd/2013 Shri Jayagauri Chandresh Devani ITO, Ward-3 A.Y.2004-05 C/o.Sahyog Chemical Pvt.Ltd. Bharuch. Plot no.C1B/7004, GIDC Ankleshwar 393 001. PAN : ACHPD 6116 B 4-5 2678 and Shri Himatbhai Anandbhai Devani ITO, Ward-3 2872/Ahd/2013 C/o.Suyog Dye Chemie P.Ltd. Bharuch. A.Y.2004-05 Plot no.6716-17, GIDC and Ankleshwar 393 002. 2005-06 PAN : ACHPD 6115 C 6-7 950 and Shri Chandrabhai Anandbhai Devani DCIT, Bharuch 951/Ahd/2014 Cir., Bharuch. C/o.Suyog Dye Chemie P.Ltd. A.Y.2004-05 Plot no.6716-17, GIDC and 2005-06 Ankleshwar 393 002. PAN : ACHPD 6113 E 8-9. 952 and Shri Chaturbhai Nanubhai Dudhat ITO, Ward-4 953/Ahd/2014 C/o.Sahyog Chemical Pvt.Ltd. Bharuch. A.Y.2004-05 Plot no.C1B/7004, GIDC and 2005-06 Ankleshwar 393 001. PAN : ACHPD 6114 D
अपीलाथ�/ (Appellant) �� यथ�/ (Respondent) Assessee by : Shri Piyush Chajed, AR Revenue by : Smt.Smita Nair, Sr.DR सुनवाई क� तार�ख/Date of Hearing : 15/11/2018 घोषणा क� तार�ख /Date of Pronouncement: 16 /11/2018 आदेश/O R D E R
ITA No.2677/Ahd/2013 and 8 Others 2 PER BENCH:
Present nine appeals are directed at the instance of the above assessees against separate orders of the ld.CIT(A)-III, Baroda passed for the respective assessment years mentioned in cause title. Since common grounds are raised in all these appeals, except variation in quantum, for the sake of convenience, we proceed to dispose of them by this common order.
The ld.counsel for the assessee has filed applications for admission of additional grounds of appeal in each appeal. He contended that assessments have been reopened in all these cases by issuance of notice under section 148 of the Income Tax Act. As per section 151 of the Act, before reopening of the assessment, approval is required from the Additional Commissioner of Income Tax. The ld.AO though applied for such approval, but the ld.Commissioner has not assigned any satisfaction for granting such approval. Thus, by way of additional ground of appeal, it is pleaded that assessments are not sustainable because no proper approval was granted by the Additional Commissioner of the Income-tax. The ld.counsel for the assessees further relied upon the judgment of Hon’ble Supreme Court in the case of NTPC, 223 ITR 353 and submitted that if the issue goes to affect taxability of the assessee, then that issue can be taken even before the second appellate authority for the first time. The ld.counsel for the assessees placed on record the details of approval note obtained under RTI Act. He submitted that these details were given to the department on the last occasion also for getting information from the AO. The ld.DR on the other hand contended that the assessee did not raise this objection before the ld.CIT()A), therefore, they should not be permitted to raise this objection before the Tribunal for the first time.
ITA No.2677/Ahd/2013 and 8 Others 3 3. We have duly considered rival contention and gone through the record carefully. For assuming proper jurisdiction while reopening of the assessment it was incumbent upon the AO to take approval from the competent authority as contemplated under section 151 of the Act. If such procedure was not followed, then the AO would have acted without jurisdiction. This issue would ultimately go to the root of the dispute because this is a jurisdictional issue. It does not require any discovery of new facts, because if approval is taken, then it must be on the assessment record. There would be no requirement of fresh investigation of facts. Therefore, we admit this ground of appeal and proceed to adjudicate the grounds on merit.
On merit, the ld.counsel for the assessees took us through copies of reasons recorded by the AO on which approval has been sought. These are in single proforma wherein the AO filled the reasons and then transmitted these proforma to the ld.Additional Commissioner of Income-tax, Bharuch for giving approval. We find that ld.Commissioner has not noted a single fact; nor he has stated “yes I have satisfied”. He simply put signature in the column meant for his comment. According to the ld.counsel for the assessees this type of satisfaction is not a satisfaction construed under the law, and therefore, the assessment orders are not sustainable. He made reference to the following decisions:
i) CIT Vs. Goyanka Lime & Chemicals Ltd., 64 taxmann.com 313 (SC); ii) Adani Ports And Special Economic Zone Ltd. Vs. DCIT, 35 taxmann.com 338(Guj); iii) Pr.CIT Vs. M/s.N.C.Cables Ltd., ITA No.335/2015 (Delhi-HC), judgment dated 11.1.2017; iv) Pratik Suryakant Shah Vs. ITO, 77 taxmann.com 260 (Ahd-Trib.)
ITA No.2677/Ahd/2013 and 8 Others 4 5. On other hand, the ld.DR relied upon the orders of the Revenue authorities.
We have duly considered rival submissions and gone through the record carefully. Hon’ble Gujarat High Court in the case of Adani Ports & Special Economic Zone (supra) has considered the issue wherein the Hon’ble Court has taken into consideration section 151 of the Income Tax Act, and thereafter expounded the meaning and scope of conditions enumerated in sections 147, 151 and 148. The discussion made by the Hon’ble High Court reads as under:
“9. The present being a case of issuance of notice after four years from the end of relevant assessment year, and therefore, proviso to sub-section (1) of Section 151 would apply. In such a case, irrespective of the level of Assessing Officer issuing notice for reopening, a pre-condition of the Chief Commissioner or the Commissioner being satisfied on the reasons recorded by the Assessing Officer that it is a fit case for issuance of such notice must be satisfied. This additional safe-guard not only involves the application of mind on the part of the Chief Commissioner or the Commissioner but his satisfaction, which would be based on the reasons recorded by the Assessing Officer, and such satisfaction should be that it is a fit case for issuance of the notice. 10. Admittedly, in the present case, these requirements have not been fulfilled. What the Revenue however argues is that when the Commissioner had perused the suggestions of the audit party, the same should be seen as substantial compliance of such a requirement. 11. We are afraid, such a contention cannot be accepted. Sub-section (1) of Section 151 of the Act is an important procedural safeguard against arbitrary exercise of power of issuing a notice for reopening of assessment previously framed after scrutiny. Proviso to sub-section (1) of Section 151 is applicable, where such notice is issued after expiry of four years from the end of relevant assessment year. In such a case, the requirement of satisfaction to be recorded is that of the Chief Commissioner or Commissioner. Such requirement cannot be seen as technical. Compliance of such requirement is therefore, necessary before issuance of notice under section 148 of the Act. Delhi High Court in case of CIT v. SPL's Sidhartha Ltd. [2012] 345 ITR 223/204 Taxman 115 (Mag.) 17 taxmann.com 138 (Delhi)held and observed as under :-
ITA No.2677/Ahd/2013 and 8 Others 5 "Thus, if authority is given expressly by affirmative words upon a defined condition, the expression of that condition excludes the doing of the Act authorised under other circumstances than those as defined. It is also established principle of law that if a particular authority has been designated to record his/her satisfaction on any particular issue, then it is that authority alone who should apply his/her independent mind to record his/her satisfaction and further mandatory condition is that the satisfaction recorded should be "independent" and not "borrowed" or "dictated" satisfaction. Law in this regard is now well-settled. In Sheo Narain Jaiswal v. Income-tax Officer [1989] 176 ITR 352 (Patna), it was held : "Where the Assessing Officer does not himself exercise his jurisdiction under section 147 but merely acts at the behest of any superior authority, it must be held that assumption of jurisdiction was bad for non-satisfaction of the condition precedent." 12. Under the circumstances, only on this ground, impugned notice dated 21st March 2012 is quashed.”
Opinion of other Hon’ble High Courts is unanimous with that of Hon’ble Gujarat High Court. It is also admitted fact that notice under section 148 in all these cases have been issued after expiry of four years from the end of relevant assessment year. Thus, approval under section 151 in every case was required from the Additional Commissioner. For the sake of reference, we reproduce column in which approval was sought in the case of Shri Jayasukhbhai Nanubhai Dudhat, which read as under: 10 Whether the ADDL.CIT Bharuch Range Bharuch is satisfied on the reasons recorded by the Assessing Officer that it is a fit case for issue of notice under section 148 of the IT Act, 19761 Sd/- ADDL.COMMISSIONER OF INCOME TAX, BHARUCH RANGE, BHARUCH
ITA No.2677/Ahd/2013 and 8 Others 6 8. We have perused every approval. We find that the ld.Additional Commissioner has neither written “yes” nor “no” against the column, what to talk of his satisfaction for authorizing the AO to reopen the assessment. The Hon’ble Gujarat High Court in the case of Adani Port (supra) has observed that sub-section (1) of section 151 of the Act is an important procedural safeguard against arbitrary exercise of power of issuing notice for reopening of the assessment previously framed. Now, the approval nowhere exhibits the satisfaction of the ld.Additional Commissioner. We deem it appropriate to take note of the finding of the Hon’ble Madhya Pradesh High Court in the case of CIT Vs. Goyanka Lime & Chemical Ltd.m, 56 taxmann.com 390 (MP) wherein the Hon’ble Court has observed that expression “yes, I am satisfied” also did not fulfill the requirement of section 151(1) because this does not spell out application of mind objectively. The discussion made by the Hon’ble Madhya Pradesh High Court reads as under:
“7. We have considered the rival contentions and we find that while according sanction, the Joint Commissioner, Income Tax has only recorded so "Yes, I am satisfied". In the case of Arjun Singh (supra), the same question has been considered by a Coordinate Bench of this Court and the following principles are laid down:— 'The Commissioner acted, of course, mechanically in order to discharge his statutory obligation properly in the matter of recording sanction as he merely wrote on the format "Yes, I am satisfied" which indicates as if he was to sign only on the dotted line. Even otherwise also, the exercise is shown to have been performed in less than 24 hours of time which also goes to indicate that the Commissioner did not apply his mind at all while granting sanction. The satisfaction has to be with objectivity on objective material.' 8. If the case in hand is analysed on the basis of the aforesaid principle, the mechanical way of recording satisfaction by the Joint Commissioner, which accords sanction for issuing notice under section 148, is clearly unsustainable and we find that on such consideration both the appellate authorities have interfered into the matter. In doing so, no error has been committed warranting reconsideration.
ITA No.2677/Ahd/2013 and 8 Others 7 9. As far as explanation to Section 151, brought into force by Finance Act, 2008 is concerned, the same only pertains to issuance of notice and not with regard to the manner of recording satisfaction. That being so, the said amended provision does not help the revenue. 10. In view of the concurrent findings recorded by the learned appellate authorities and the law laid down in the case of Arjun Singh (supra), we see no question of law involved in the matter, warranting reconsideration.
Therefore, respectively following the above authoritative judgments, we are satisfied that no proper approval was accorded by the ld.Additional Commissioner and the assessment orders are not sustainable. All the assessment orders are quashed in the cases of all the assesses. However, we wish to observe that these materials have been placed before us by the assessee after obtaining under RTI Act. In case on re-verification at the end of the AO some other material emerges out showing proper approval obtained by the AO or some other communication, then Revenue will be at liberty to apply for recall of this order by way of Misc. Application which should be within time limit provided under the Act.
In the result, all appeals of the assesses are allowed.
Order pronounced in the Court on 16th November, 2018 at Surat.
Sd/- Sd/- (AMARJIT SINGH) (RAJPAL YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat; Dated 16/11/2018