MAHAVEER PRASAD GUPTA,JAIPUR vs. DCIT, JAIPUR

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR Jh fot; iky jko] U;kf;d lnL; ,oa Jh foØe flag ;kno] ys[kk lnL; ds le{k BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA No. 499/JP/2016 fu/kZkj.k o"kZ@Assessment Year : 2006-07 cuke Sh. Mahaveer Prasad Gupta, DCIT, Vs. 85, Nemi Nagar, Circle-7, Vaishali Nagar, Jaipur. Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ABVPG8261B vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri Anil Mathur (Adv.) & Shri Dileep Shivpuri (Adv.) jktLo dh vksj ls@ Revenue by : Shri P.P.Meena lquokbZ dh rkjh[k@ Date of Hearing : 31/10/2017 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 13/11/2017 vkns'k@ ORDER

PER: VIJAY PAL RAO, J.M. This appeal by the assessee is directed against the order dated 21st March 2016 of CIT(Appeals) for the assessment year 2006-07. The assessee has raised the following grounds as under:- “1. That on facts and in circumstances of case, ld. CIT(Appeals) grossly erred and acted illegality in confirming the issue of notice u/s 148 and finalization of assessment proceeding by the AO. U/s 143(3) of the Act. 2. That on law as well as on the facts and in circumstances of the case, ld. CIT(Appeals) grossly erred and was acted illegally in confirming the addition of a sum of Rs. 48,11,521/- on account of

ITA No. 499/JP/2016 Sh. Mahaveer Prasad Gupta Vs. DCIT

alleged brokerage receipt without any basis and rational justification.”

under section 148 of the Income Tax Act. The assessee is an individual

and working as Development Officer with LIC. He filed his return of

income for the assessment year under constitution on 28 July 2006

reporting taxable income of rupees 6,85,520/-. The original assessment

was completed under section 143(3) of the Income Tax Act on 3rd

October 2008 whereby the return income was accepted. Subsequently a

survey action under section 133A was carried out by the Income Tax

Department on 14th August 2012 in case of M/s. Vedang Colonizers

Private Limited. During the survey proceedings a document was

impounded containing an account of Balaji Vihar scheme developed by

M/s. Luxmi Grih Nirman Sahkari Samiti Limited Jaipur. Based on this

document the AO noted that the assessee received a sum of rupees

4811521 as brokerage income on land dealings. Accordingly the AO

proposed to reopen the assessment and assess the said brokerage

income to tax by issuing a notice under section 148 on 20th March

2013. The assessing officer completed the reassessment whereby an

addition of rupees 48,11,521/- was made on account of brokerage

ITA No. 499/JP/2016 Sh. Mahaveer Prasad Gupta Vs. DCIT

receipts. The assessee challenged the action of the assessing officer

before the CIT(appeals) and raise an objection against validity of

reopening of the assessment. However, CIT(appeal) did not accept the

objection of the assessee and held that assessing officer was having

tangible material as detected during the course of Survey proceedings

under section 133A to form the opinion that the income assessable to

tax on account of brokerage receipt in land dealings has escaped

assessment.

assessment was completed under section 143(3) and thereafter the AO

reopened the assessment after the expiry of 4 years on 20th March

2013. Therefore, the approval was required to be taken from

Commissioner of Income Tax or Chief Commissioner of Income Tax

before issuing the notice under section 148 of the Act. Ld. AR of the

assessee has submitted that in the case of the assessee the approval

was granted by J CIT as per the performa of approval at page number

44 & 45 of the paper book. Thus ld AR of the assessee has contended

that reopening of the assessment is invalid as the assessing officer had

no jurisdiction to proceed with the reassessment when the approval was

not granted by a competent authority as provided under section 151(1) 3

ITA No. 499/JP/2016 Sh. Mahaveer Prasad Gupta Vs. DCIT

of the act. He has referred to the proviso to section 151(1) of the

Income Tax Act and submitted that in case the assessment is reopened

after 4 years from the end of the assessment year then the approval for

reopening of the assessment is required to be granted by the chief

commissioner or Commissioner as case may be on satisfaction of the

regions recorded by the assessing officer that it is a fit case for issue of

notice. Since in the case of the assessee reopening is after the expiry of

4 years from the assessment year and approval was granted by the JS

CIT and not by the competent authority as provided under section

151(1) of the Income Tax Act therefore, the reopening under section

148 is invalid and the consequential reassessment is void ab-initio. In

support of his contention he has relied upon the decision of Hon’ble

jurisdiction High Court honorable jurisdiction High Court in case of

Dhadha Exports vs ITO reported in 377 ITI 347. Thus ld. AR has

submitted that while considering the an identical issue Hon’ble

jurisdiction High Court has held that the notice issued under section 148

after 4 years from the assessment year was not valid as the approval

was obtained only from joint Commissioner and the entire proceedings

stood vitiated for want of competence. The ld AR has also relied upon a

series of decisions on this point wherein it has been held that the notice

ITA No. 499/JP/2016 Sh. Mahaveer Prasad Gupta Vs. DCIT

issued under section 148 after 4 years from the end of the assessment

year without the sanction of chief Commissioner or commissioner as per

the proviso to section 151(1) is invalid. Hence, the ld. AR of the

assessee has contended that a notice issued under section 148 without

obtaining the saction of the chief commissioner or commissioner is not

valid and consequently the entire reassessment proceedings are void

and not sustainable in law.

been raised by the assessee before the authorities below and therefore,

this cannot be raised first time at this stage. He has further contended

that the assessee raised the objection against the reopening of the

assessment on the ground that assessing officer issued the notice under

section 148 and initiated the proceedings of reassessment without any

basis and without authority of law. Therefore, the objection of the

assessee before the CIT(appeals) was that the reasons recorded by the

assessing officer for reopening of the assessment are not sufficient to

believe that the income assessable to tax has escaped assessment. He

has relied upon the impugned order of the CIT (Appeals).

relevant material on record. The assessee has challenged the validity of

ITA No. 499/JP/2016 Sh. Mahaveer Prasad Gupta Vs. DCIT

reopening of assessment on the ground that a notice issued under

section 148 and reasons recorded by the AO for reopening of the

assessment are not valid as the necessary approval was not obtained

from the chief commissioner or Commissioner but the approval was

obtained from Joint commissioner. Therefore, when the approval was

not granted by the competent authority then the notice issued under

section 148 is invalid. There is no quarrel on the point that in case of

reopening of assessment under section 148 of the Income Tax Act after

expiry of 4 years from the relevant assessment year the approval of

reasons recorded by AO is required to be granted by the Commissioner

aor chief Commissioner as case may be as per the provisions of section

151(1) of the Income Tax Act as exist at the relevant point of time. The

notice issued under section 148 after 4 years with the approval of joint

Commissioner is not a valid notice because the competent authority to

approve the reasons recorded by AO is the commissioner or chief

commissioner on his satisfaction that the income assessable to tax as

proposed by the assessing officer has escaped assessment after going

through the relevant record and the reasons recorded by the assessing

officer. Without the approval of the competent authority the AO is not

empowered to issue the notice under section 148 and therefore, such

ITA No. 499/JP/2016 Sh. Mahaveer Prasad Gupta Vs. DCIT

notice issued under section 148 is invalid and consequential

proceedings under section 147 read with section 143 void for want of

jurisdiction and not sustainable under law. In the case of the assessee

here is no dispute about the fact that the notice under section 148

issued on 20th March 2013 was after the expiry of 4 years from the

assessment year under consideration and the original assessment was

also frame under section 143(3) of the Act. Therefore, on principle we

find merits in the contention of the assessee however, neither this issue

was raised before the authorities below nor it was adjudicated. We find

that though the assessee raised an objection againstthe notice issued

under section 148 of the Act and consequential reassessment

completed under section 147 read with section 143(3) of the Act

however, it was based on entirely a different plea and ground that the

assessing officer was having no reason to believe that the income

accessible to tax add escaped assessment. The grounds raised by the

assessee before the CIT(appeals) are reproduced as under:-

“1) That on facts and in circumstances of case the learned assessing officer grossly erred and acted illegally in issuing notice u/s 148 of the Act and finalizing assessee u/s 147/143(3) of the Act. 2) That on facts and in circumstances of case addition of a sum of Rs. 48,11,521/- on account of alleged brokerage receipt is absolutely illegal, arbitrary and without any basis. 7

ITA No. 499/JP/2016 Sh. Mahaveer Prasad Gupta Vs. DCIT

3) Assessee craves indulgence to add, delete, modify or alter any grounds of appeal on or before hearing.”

was raised by the assessee as apparent from the impugned order of

CIT(appeals). There it is Apparent that assessee did not raised this

particular contention and plea of invalidity of the notice issued under

section 148 for want of the approval of the competent Authority under

section 151(1) of the Act. Since this issue has been raised by the

assessee first time before the Tribunal and goes to the root of the

matter but subject to the verification of the fact that the approval was

obtained from joint commissioner and not from the chief commissioner

or Commissioner as provided under section 151(1) of the Act.

Accordingly, in the facts and circumstances of the case and in the

interest of Justice we set aside this issue to the record of the

CIT(appeals) for consideration and adjudication of this ground of the

assessee.

record of the CIT(appeals) which goes to the root of the matter

therefore, we do not propose to go into the merits of the addition as

raised in the ground number 2 of the appeal which is left open.

ITA No. 499/JP/2016 Sh. Mahaveer Prasad Gupta Vs. DCIT In the result, appeal of the assessee is allowed for statistical purpose. Order pronounced in the open court on 13/11/2017 Sd/- Sd/- ¼fot; iky jko½ ¼foØe flag ;kno½ (Vikram Singh Yadav) (Vijay Pal Rao) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 13/11/2017. *Santosh. आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. vihykFkhZ@The Appellant- Sh. Mahaveer Prasad Gupta, 85, Nemi Nagar, Vaishali Nagar, Jaipur. 2. izR;FkhZ@ The Respondent- DCIT. Circle-7, Jaipur. 3. vk;dj vk;qDr@ CIT 4. vk;dj vk;qDr@ CIT(A) 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत. 6. xkMZ QkbZy@ Guard File {ITA No. 499/JP/2016} vkns'kkuqlkj@ By order,

सहायक पंजीकार@Aेेज. त्महपेजतंत