EXULT IT SERVICES PVT. LTD. (FORMERLY KNOWN AS WILLIS INDIA BROKERS PVT LTD.),MUMBAI vs. ITO 14 (3)(4), MUMBAI

On the facts & circumstances of the case, the Ld. Assessing Officer has rejected the objection raised by the appellant in the reassessment proceedings without dealing with the issues raised therein. The conclusion reached by the Ld. Assessing Officer and confirmed by the Ld. Commr. of Income Tax (Appeals) is erroneous. The appellant prays that the reassessment order passed by the Ld. Assessing Officer and confirmed by the Ld. Commr. of Income Tax (Appeals) may be set aside and cancelled as it is bad in law.

At the outset, the learned counsel for the assessee took up to the first proposition against reopening of assessment that the satisfaction recorded and approval granted under section 151(1) of the Act for reopening of assessment under section 147 is not according to the law laid down and there is no objective satisfaction recorded by the PCIT.

The learned Counsel for the assessee stated that in the present appeal, the relevant Assessment Year is 2009-10 and original assessment was framed by the DCIT-1 (3), Mumbai under section 143(3) of the Act vide order dated 19.12.2011 and subsequently, a notice under section 148 of the Act dated 29.03.2016 was issued i.e. beyond four years despite the fact that the assessee has filed all the relevant material for completion of assessment and there is no failure on the part of the assessee to disclose the material facts truly in his return of income. The assessment under section 143(3) read with section 148 was framed by DCIT 1(3)(2), Mumbai vide order dated 22.12.2016 i.e. reassessment. The learned Counsel for the assessee took us through the assessee‟s paper book and relevant page 39, wherein the proposal for obtaining approval on the reasons recorded and initiation of proceedings under section 147 of the Act from Pr. Commissioner of Income Tax is Exuit IT Services P. Ltd; 09-10 enclosed. The learned Counsel for the assessee drew our attention to Paras 11 and 12 of the proposed approval and the relevant approval reads as under: -

Whether the Addl. CIT satisfied on the Yes it is satisfied a fit case for reopening reasons recorded by the Assessing Officer, that it is a fit case for the issue of notice under section 147 (ANU KRISHNA AGGARWAL) Addl. CIT, Range 1(3), Mumbai, 12 Whether the CIT is satisfied on the Yes I am satisfied that it is a fit case for reasons recorded by the Assessing issue of notice u/s 148 of the Act. Officer, that it is a fit case for the issue of notice u/s 147 (Vidhu Shekhar Singh) Pr. CIT-1, Mumbai This approval is dated 28.03.2016. 5. In view of the above, the learned Counsel for stated that the CIT(A) has recorded his satisfaction for reopening of assessment in a mechanical manner rather he has to record a subjective satisfaction for issuance of notice under section 148 of the Act on the reasons recorded. For this, the learned Counsel for the assessee relied on the decisions of Hon‟ble Madhya Pradesh High Court in the case of CIT vs. S. Goyanka Lime & Chemicals Ltd. (2015) 56 taxman.com 390 (Madhya Pradesh) and Arjun Singh Vs. Asst. Director of Income-tax (2000) 246 ITR 363 (MP)

On the other hand, learned Sr. Departmental Representative, Shri Sumit Kumar supported the order of CIT(A). Exuit IT Services P. Ltd; 09-10 7. After considering the rival submissions and perusing the relevant material on record, we noted from the perusal for reopening of assessment under section 147 of the Act mooted by the Assessing Officer vide dated 21.03.2016 and satisfaction recorded by PCIT-12, Mumbai vide dated 28.03.2016. The recorded satisfaction reads as “ Yes I am satisfied that it is a fit case for issue of notice u/s 148 of the Act”. From his satisfaction it is clear that he is satisfied but from the recorded satisfaction it is clear that the satisfaction recorded which is not in terms of section 151 of the Act and the relevant provisions of section 151 reads as under:-

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. Exuit IT Services P. Ltd; 09-10 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.”

Further, the Hon‟ble Madhya Pradesh High court followed the decision of co-ordinate Bench of Madhya Pradesh High court in the case of Arjun Singh (supra), wherein following the principle are laid down:-

As against the above judgment, the Revenue file SLP before the Hon‟ble Supreme court but SLP was also dismissed by Hon‟ble Supreme Court.