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Facts
The assessee, Shree Jeenshashan Seva Shiksha Sanskar Sankul Trust, appealed against an assessment order for AY 2011-12, passed under Section 143(3) read with Section 147 after reopening. The primary legal challenge by the assessee was the invalidity of the reopening due to the alleged absence of the mandatory approval under Section 151 of the Income-tax Act for issuing the notice under Section 148.
Held
The Tribunal observed that the revenue authorities failed to produce the mandatory approval under Section 151, stating the approval letter was 'not available/traceable'. Relying on National Thermal Power Co. Ltd. Vs. CIT, the Tribunal held that without the Section 151 approval, the Section 148 notice and subsequent assessment under Section 143(3) read with Section 147 were invalid, leading to the quashing of the assessment order.
Key Issues
Whether the assessment order passed under Section 143(3) read with Section 147 is invalid due to the revenue authorities' failure to produce the mandatory approval under Section 151 for issuing the notice under Section 148.
Sections Cited
143(3), 147, 148, 151, 12A, 142(1)
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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
आदेश/ O R D E R
Per B.M. Biyani, A.M.:
Feeling aggrieved by order of first appeal dated 29.05.2023 passed by learned Commissioner of Income-Tax (Appeals), National Faceless Appeal Centre, Delhi [“CIT(A)”] which in turn arises out of assessment-order dated 31.03.2011 passed by learned ITO, Exemption, Ujjain [“AO”] u/s 143(3) r.w.s. 147 of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2011-12, the assessee has filed this appeal on following grounds raised in Form No. 36: Page 1 of 9 Shree Jeenshashan Seva Shiksha Sanskar Sankul AY 2011-12 “1. The Id. CIT(A) erred in upholding validity of reopening. The reopening of assessment is invalid for various reasons.
The Id. CIT(A) erred in treating the appellant trust as unregistered when learned CIT(E) had already granted certificate u/s 12A after the trust had made necessary amendments.
Fresh claim: the Ld. CIT(A) erred in confirming Unsecured loan as income.
4. The Id. CIT(A) erred in not disposing all the grounds raised in the detailed submission of appeal.
5. The appellant reserves right to add amend or alter any or all the ground of appeal on or before the date of hearing”
2. The background facts leading to present appeal are such that the AO issued notice dated 07.06.2016 u/s 148 to assessee-trust for undertaking action u/s 147. In response, the assessee filed return of income on 13.09.2016. The AO also issued notices u/s 143(2)/142(1) which were duly complied by assessee. Finally, the AO completed assessment vide order dated 22.12.2017 u/s 143(3) r.w.s. 147 after making certain adjustments and thereby determining total income at Rs. 16,19,470/-. Aggrieved, the assessee carried matter in first-appeal but did not get any success. Now, the assessee has come before us in next appeal assailing the orders of lower- authorities.
3. Before us, Ld. AR for assessee/appellant raised a legal claim that the AO has undertaken proceeding u/s 147 through notice dated 07.06.2016 u/s 148 after recording reasons. But, however, the AO has not obtained any approval from higher authorities as mandated by section 151. Therefore, the issuance of notice u/s 148 itself was illegal and consequently the entire
Page 2 of 9 AR submitted that this claim of assessee is a legal claim; goes to the root of the matter; does not call for any new evidence; and can be decided on the basis of material already held on record. Therefore, in view of the decision in National Thermal Power Co. Ltd. Vs. CIT (1998) 229 ITR 383 (SC), the assessee’s claim must be admitted and adjudicated.
Ld. DR for revenue/respondent did not dispute the admissibility of assessee’s claim for adjudication but, however, demanded time to call for a report from AO qua the approval u/s 151. Therefore, the hearings were adjourned from time to time and sufficient opportunities were given to the revenue for producing copy of approval. Ultimately, the Ld. DR for revenue could submit following letters of AO:
Page 3 of 9 Page 4 of 9 Page 5 of 9 Date 31.08.2024 Page 6 of 9 Page 7 of 9 and narrated the reporting made therein by AO.
We have considered submissions of both sides. At first, we admit the legal claim raised by assessee in terms of National Thermal Power Co. Ltd. Vs. CIT (1998) 229 ITR 383 (SC) that the approval u/s 151 was not obtained by AO from higher authorities. To adjudicate this claim, we refer the letters of AO re-produced above. The AO has clearly reported that the approval u/s 151 is not available/traceable in the records of revenue.
Section 151 clearly prescribes that no notice u/s 148 shall be issued by AO without obtaining approval from prescribed higher authorities, on the reasons recorded, that it is a fit case for the issue of notice. Since the revenue authorities are unable to produce the approval u/s 151, the notice issued by AO u/s 148 become an invalid notice and consequently the entire assessment framed by AO u/s 143(3) r.w.s. 147 also becomes invalid.
Therefore, in present case, agreeing with Ld. AR’s submissions, we quash the assessment-order passed by AO. The assessee succeeds in its claim.
Since we have quashed the assessment-order itself, adjudication of other grounds/claims by us is not required. Even otherwise, neither side
Page 8 of 9 hearing, therefore also no adjudication is required from us.
Resultantly, this appeal is allowed.
Order pronounced by putting on notice board as per Rule 34 of ITAT Rules, 1963 on 30/01/2025