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Income Tax Appellate Tribunal, DELHI BENCH “DB”, NEW DELHI
Before: Dr. B.R.R. KUMAR & SH. YOGESH KUMAR US
These appeals have been filed by the assessee against the order of the CIT(A), Dehradun dated 27.02.2018. Since both the appeals deal with the common issues, they are being adjudicated together.
The assessee is a Board constituted under the Provision of the Water (Prevention and Control of Pollution) Act, 1974 in order to exercise the power conferred and perform the functions assigned to it under that Act. Assessment proceedings for the year under consideration were initiated u/s. 147 of the IT Act, 1961 by issuing of notice u/s. 148 of the IT Act, 1961 in this case consequence of information that the assessee was enjoying substantial interests income amounting to Rs.97,64,672/- during the year and it did not furnish ITR for the year under consideration before initiating proceeding u/s.147 of IT Act, 1961.
As per the AO, copy of the reasons recorded were provided to the assessee on 04.03.2016 and the assessee was asked to file objections if any till 07.03.2016. The Assessee did not respond to the reasons recorded.
The addition has been confirmed by the Ld. CIT(A). Aggrieved the assessee filed appeal before us.
At the outset, the assessee argued that reopening of the case u/s. 147 of the IT Act, 1961 was bad in law as having done in violation of statutory conditions of section 147 to 151 of the IT Act.
We have perused the reasons for reopening of the case and the notice issued. The notice issued and the reasons recorded by the DCIT vide order dated 19.03.2015 are as under :-
Notice under section 148 of the Income Tax Act, 1961 Office of the DY.Commissioner of Income Tax, Circle -2, Dehradun
Dated 19.03.2015 PAN / GIR : AAALU0160D To, Uttarakhand Environment Protection & Pollution Control Board E-115, Nehru Colony, Dehradun Sir/ Madam, Whereas I have reasons to believe that your income/ the income of __________________ chargeable to tax for the Assessment Year 2008-09 that in respect of which you are assessable ________________________________/ escaped Assessment within the proceedings of Section 148 of the Income Tax Act, 1961.
I, therefore, propose to assess/ re-assess/ re-compute the income/ loss / deprecation allowance for the said assessment year and I hereby require you to deliver to me within 30 days from the date of service of this notice, a return in the prescribed form of your income/ the income of ________________________________________________ in respect of which you are assessable for the said Assessment Year 2008-09.
(K. D. Bhatt) DY. Commissioner of Income Tax Circle-2, Dehradun
Reasons for initiation of proceeding u/s. 147 of the IT Act, 1961 19.03.2015 The assessee is a Board constituted under the provisions of the (Water Prevention and Control of Pollution) Act, !974 in order to exercise the power conferred has substantial income by way of interest on FDRs but has not been filing any returns and playing tax thereon. The details are as below :
F.Y A.Y Interest on Interest of Surplus income FDRs Saving 2007-08 2008-09 9147556 617116 9764672
The provisions of the Water (Prevention and Control of Pollution) Act, 1974 have been perused. The relevant part thereof reproduced below :
“Every State Board shall be a body corporate with the name specified by the State Government in the Notification under sub-section (1), having perpetual succession and a common seal with power, subject to the provisions of this Act, to acquire, hold and dispose of property and to contract, and may be, by the said name, sue or be sued.”
A perusal of these provisions makes it clear that the assessee is a Corporate body with separate legal personality which is independent of Government. It has its own funds and is required to maintain its separate accounts and get the same audited. Hence, there is no doubt level of Central Government of other State Governments has not been exempted under the provision of section 10 of the IT Act.
In view of the foregoing, I have reasons to believe that the income chargeable to tax amounting to Rs.97,64,672/- for A.Y. 2008-09 has escaped assessment Proceedings u/s. 147 of the IT Act is being initiated in order to bring the same to tax. DCIT 19.03.2015
The provision of section 151, pertain into sanction for issue of notice are as under :- Sanction for issue of notice: “151 (1) No notice shall be issued under section 148 by an Assessing Officer , after the expiry of a period of four years from the end of the relevant assessment year, unless the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commission is satisfied on the reasons recorded by the Assessing Officer, that it is a fit case for the issue of such notice. (2) In a case other than a case failing under sub-section (1), no notice shall be issued under section 148 by an Assessing Officer, who is below the rank of Joint Commissioner, unless the Joint Commissioner is satisfied, on the reasons recorded by the Assessing officer, that it is a fit case for the issue of such notice.”
From the above it can be deciphered that the reasons have been recorded by the DCIT on 19.03.2015 and notice u/s.148 has been issued on 19.3.2015. The assessment years involved before us pertain to A.Y. 2008-09 and 2009-10. As per the provisions of section 151, the Assessing Officer who is the DCIT in this case is not the competent authority to issue the notice without the sanction of the competent authorities as envisaged. The approval of the competent authority has not been brought on record by the revenue. Hence, we hereby hold the assessment in this case are void ab- initio.
Order pronounced in the open Court on 24.05.2022.