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Facts
The Revenue filed an appeal against the order of the CIT(A)/NFAC. The assessee was engaged in business of extracting and trading various commodities. The case was reopened under Section 147/148 due to cash deposits in the bank account. The Assessing Officer initiated reassessment proceedings and issued a notice under Section 148.
Held
The Tribunal condoned the delay in filing the cross objection by the assessee. The Tribunal found that the approval for issuing the notice under Section 148 was not obtained from the appropriate authority as per Section 151 of the IT Act, making the reassessment proceedings illegal and void ab initio.
Key Issues
Whether the reassessment proceedings are invalid due to non-compliance with Section 151 of the IT Act regarding prior approval for issuing notice u/s 148.
Sections Cited
147, 148, 142(1), 144, 144B, 69A, 151
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Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE
Before: SHRI MANISH BORAD & SHRI VINAY BHAMORE
िनधा�रण वष� / Assessment Year : 2016-17 Rajaram Ramswarup Jaju, Vs. ITO, Ward Hingoli 223, Jaju Industries Atre Camp at Parbhani, Nagar, Selu, Parbhani. Parbhani- 431503. PAN : AAKPJ4951H Appellant Respondent Revenue by : Shri Basavaraj Hiremath Assessee by : Shri Anand R. Partani & Shri Darshan R. Gattani Date of hearing : 09.12.2024 Date of pronouncement : 07.03.2025 आदेश / ORDER
PER VINAY BHAMORE, JM:
This appeal filed by the Revenue is directed against the order dated 15.07.2024 passed by Ld. CIT(A)/NFAC for the assessment C.O. No.35/PUN/2024 year 2016-17. The assessee is also in cross objection bearing Cross Objection No.35/PUN/2024.
Facts of the case in brief are that the assessee is engaged in the business of extracting cotton seed wash oil and trading edible oil, oil cake, cotton seed, wheat, Jwari, Soyabean, Toor, Chana, etc., through its proprietorship, “M/s Jaju Industries”. The assessee filed his return of income for the year under consideration on 10.10.2016 declaring total income of Rs.13,77,900/-. The case was reopened u/s 148 of the IT Act based on the ground that the assessee had deposited cash amounting to Rs.55,30,281/- in his bank account maintained with Shri Renuka Mata Multi State Urban Co-operative Credit Society Ltd. during the financial year 2015-16. Considering this information, the Assessing Officer initiated reassessment proceedings u/s 147 of the IT Act for the Assessment Year 2016-17. Following the initiation of proceedings, a notice u/s 148 dated 17.06.2021 was issued by the AO, in accordance with the provisions of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, and as per subsequent Notification No.38 dated 27.04.2021, which extended the time limit for issuing notices u/s 148 to 30.04.2021 and 30.06.2021, respectively, C.O. No.35/PUN/2024 requiring the appellant to file a return of income. In response to the aforesaid notice, the appellant did not file any return of income. During the assessment proceedings, various notices u/s 142(1) of the IT Act were issued by the Assessing Officer to the assessee on multiple dates, requiring the submission of relevant details concerning the cash deposited by the assessee in his bank account along with its source; however, the assessee failed to furnish any information. Given the assessee’s non-compliance and failure to provide the requested information, the Assessing Officer proceeded to conclude the assessment based on best judgment u/s 147 r.w.s. 144 and 144B of the IT Act. Consequently, the total cash deposits made by the assessee in the bank account were added to its returned income u/s 69A of the IT Act, and the total income of the assessee was assessed at Rs.69,08,181/- vide assessment order dated 12.05.2023.
Before Ld. CIT(A)/NFAC, the assessee has raised 7 grounds of appeal and two additional grounds of appeal. Ld. CIT(A)/NFAC adjudicated only additional ground no.2 and allowed the appeal of the assessee and ground nos.1 to 7 and additional ground no.1 were not adjudicated having been rendered academic since the appeal was C.O. No.35/PUN/2024 already allowed on additional aground no.2. It is this order against which the Revenue is in appeal before this Tribunal as well as the assessee has also filed cross objection raising as many as 7 grounds.
4. First we shall take up cross objection filed by the assessee for adjudication. C.O. No.35/PUN/2024 – By Assessee : 5. There is a delay of 61 days in filing of the above cross objection before this Tribunal. In this regard, the assessee has filed an application for condonation of delay supported by an affidavit. In this regard, it was submitted by Ld. AR that the intimation of second appeal filed by the Department before the Tribunal was not known to the assessee. It was only when the assessee received notice of hearing on 09.12.2024 via Registered Post, the assessee came to know about the appeal filed by the Department and immediately contacted his Chartered Accountant who suggested to file this cross objection. It was further submitted that above delay of 61 days was unintentional and due to the fact of having no knowledge of filing of appeal by the Department. Accordingly, it was prayed to condone the delay and admit the cross objection for adjudication. Ld. DR requested before the Bench not to condone C.O. No.35/PUN/2024 the delay and requested to dismiss the same. In this regard, we find that the application for condonation of delay has been filed which is duly supported by an affidavit and we are satisfied with the reasons mentioned in the application for condonation of delay and we are of the considered opinion that the assessee was prevented by reasonable cause in not filing the cross objection within the time limit prescribed by the Statute. Accordingly, we condone the delay of 61 days and admit the cross objection for adjudication.
6. Ld. AR appearing from the side of the assessee submitted before us that the order passed by Ld. CIT(A)/NFAC is justified. However, it was also submitted that the assessee has raised legal ground no.2 before Ld. CIT(A)/NFAC which was not decided by him since the appeal of the assessee was decided on additional ground no.2 and, therefore, Ld. CIT(A)/NFAC has not adjudicated all other grounds including ground no.2 raised before him by the assessee. Now, before us Ld. AR of the assessee has raised 7 ground in his cross objection including ground no.1 which was also raised before Ld. CIT(A)/NFAC as ground no.2 in the memo of appeal Form No.35. In this regard, Ld. AR further submitted that C.O. No.35/PUN/2024 ground no.1 raised in the cross objection is a legal ground which reads as under:- “1. Under the facts and circumstances of the case and in law, the order issued under section 148A(b) of the Act and notice issued under section 148 of the Act are bad in law as the AO has not taken prior approval of the appropriate specified authority as specified in section 151 of the Act. Hence the reassessment proceedings are liable to be quashed.”
7. With regard to the above ground no.1, Ld. AR submitted before us that the Assessing Officer has not taken prior approval of the appropriate authority as specified in section 151 and, therefore, the order passed u/s 148A(b) and notice issued u/s 148 are bad in law & consequently the reassessment order passed is also illegal. Accordingly, it was requested that the reassessment proceedings are liable to be quashed.
8. With regard to the above ground no.1 raised by the assesse in his cross objection, Ld. DR appearing from the side of the Revenue submitted before us, that no such irregularity has taken place, therefore, the ground raised by the assessee needs to be dismissed.
9. With regard to the above ground no.1 raised by the assessee in his cross objection, we find that prior to issue of notice u/s 148, the Assessing Officer is required to take prior approval of the C.O. No.35/PUN/2024 appropriate authority as specified in section 151 of the IT Act. In this regard, we refer to relevant provision of section 151, which are as under :- “[Sanction for issue of notice.
Specified authority for the purposes of section 148 and section 148A shall be. (i) Principal Commissioner or Principal Director or Commissioner or Director, if three years or less than three years have elapsed from the end of the relevant assessment year, (ii) Principal Chief Commissioner or Principal Director General or where there is no Principal Chief Commissioner or Principal Director General, Chief Commissioner or Director General, if more than three years have elapsed from the end of the relevant assessment year.]”
From perusal of the above section, it is crystal clear that if the case is reopened within 3 years from the end of the relevant assessment year, the approval u/s 151(i) is to be obtained from the Pr. Commissioner of Income Tax and if the case is being reopened after 3 years from the end of the relevant assessment year, the approval u/s 151(ii) is required to be obtained from Pr. Chief Commissioner of Income Tax. In the instant case in hand, we find that the period involved is assessment year 2016-17 and the notice u/s 148 was issued on 17.06.2021 i.e. after three years from the end of relevant Assessment Year. Therefore, it is apparent that the case is reopened after 3 years and accordingly the approval was required C.O. No.35/PUN/2024 to be obtained as per section 151(ii) from Pr. Chief Commissioner of Income Tax. In this regard, we find that the approval in the instant case was obtained from Pr. Commissioner of Income Tax. It was obviously not correct since the case was reopened after 3 years from the end of the relevant assessment year, the approval as per section 151(ii) was required to be obtained from Pr. Chief Commissioner of Income Tax. In support of this contention, Ld. AR has produced copy of notice issued u/s 148 of the Act on page no.28 of the paper book, wherein it has been specifically mentioned at Sr. No.3 that this notice is being issued after obtaining the prior approval of the Pr.CIT-1, Nashik accorded on 20.07.2022 vide Reference No.NSK/Pr.CIT-1/Appr. u/s148/Range-1, Abd./2022- 23/1476. Accordingly, we find force in the arguments of Ld. Counsel of the assessee that the approval to issue notice u/s 148 was not obtained from appropriate authority and therefore, the consequential reassessment order is illegal and void ab initio since the approval was not obtained from appropriate authority. In this regard, Ld. Counsel of the assessee further relied on the order passed by Hon’ble Supreme Court in the case of Union of India vs. Rajeev Bansal (Civil Appeal No.8629/2024) wherein Hon’ble C.O. No.35/PUN/2024 Supreme Court has continuously emphasized the necessity for obtaining approval from the specified authority as mandated under the amended provisions of the IT Act. Ld. Counsel of the assessee further relied on the judgement passed in the case of Siemens Financial Services Pvt. Ltd. vs. DCIT, Circle-8(2)(1), Mumbai (WP No.4888 of 2022) dated 25.08.2023 wherein Hon’ble Bombay High Court has held as under :- “As held by this court in J. M. Financials (Supra), Sidhmicro Equities (P) Ltd. (Supra) and confirmed by the Apex Court that any notice issued without the sanction of the correct sanctioning authority will be invalid. This court in Godrej Industries Limited v. DCIT 16 has held that an assessment can be reopened under section 147 and 148 of the Act only on the jurisdictional preconditions being satisfied strictly. This Court held that sanction of a superior officer to the reasons recorded in terms of section 151 should be obtained before issuing the notice under section 148 of the Act and all jurisdictional requirements are required to be satisfied cumulatively and even if one of the numerous jurisdictional requirements necessary for issuing the notice under section 148 of the Act are not satisfied, the reopening of an assessment would fail. Hence, in the present facts also since the approval of the specified authority in terms of section 151(ii) of the Act is a jurisdictional requirement and in the absence of complying with this requirement, the reopening of assessment would fail.”
Respectfully following the above decision passed by Hon’ble Bombay High Court (supra), which was also followed in subsequent judgement passed by Hon’ble Bombay High Court in the case of Gigantic Mercantile (P.) Ltd. vs. ACIT, 165 taxmann.com 646 (Bombay), we allow the ground no.1 raised in the cross objection C.O. No.35/PUN/2024 filed by the assessee and hold that the reassessment order passed by the Assessing Officer is not correct since the notice issued u/s 148 for which the approval was not obtained from the appropriate authority according to the provisions of section 151(ii) of the IT Act. Thus, this ground no.1 raised by the assessee in cross objection is allowed.
The assessee has also raised ground nos.2 to 7 in his cross objection. Since we have already declared the reopening of the assessment as invalid, the consequential reassessment order also becomes void ab initio & non-est, therefore, these ground nos.2 to 7 becomes only academic hence not required to be adjudicated, therefore, dismissed as such.
In the result, the cross objection filed by the assessee in C.O. No.35/PUN/2024 is partly allowed.
– By Revenue : 14. Since we have already decided the cross objection of the assessee wherein the reassessment order has been declared as invalid and void ab initio, the appeal filed by the Revenue becomes infructuous hence dismissed.