Reopening us 147 after four years with Addl CIT approval bad. Notice u/s 148 was illegal as approval/satisfaction of CCIT/CIT was required u/s 151(1) – ITAT
ABCAUS Case Law Citation:
ABCAUS 1188 (2017) (03) ITAT
The Ground of Appeal:
The effective grounds contested by the assessee was that the notice issued u/s 148 of the Income Tax Act, 1961 (‘the Act’) was illegal, bad in law and without jurisdiction as no approval had been obtained from the component authority as required u/s 151.
Assessment Year : 2006-07
Date/Month of Pronouncement: March, 2017
Important Case Laws Cited/relied upon:
CIT vs. SPL’s Siddhartha Ltd
Brief Facts of the Case:
The case of the assessee was reopened on the basis of information received from Investigation suggesting that notice u/s 148 was required to be issued to bring the tax the undisclosed income regarding the accommodation entries obtained by beneficiaries. Accordingly, the notice u/s 148 of the IT Act, 1961 was issued after obtaining approval u/s 151(2) by the Additinal Commissioner of Income Tax (Addl. CIT.).
Thereafter, the AO completed the assessment u/s 147/143(3) of the Actand made additions u/s. 68 for bogus accommodation entries and u/s 69C for expenditure incurred to arrange accommodation entry.
The assessee contested the order by preferring an appeal before the CIT(A), who upheld the reopening and partly allowed the appeal of the assessee.
Observations made by the Tribunal:
The ITAT observed that the original assessment was completed u/s 143(3) on 24.12.2008 and the notice issued on 21.3.2013 u/s 148 of the Act which was beyond four years after obtaining approval u/s 151(2) of the Act.
The Tribunal observed that according to Section 151(1) of the Act, after the expiry of the 4 years from the end of the relevant assessment year, no notice u/s 148 shall be issued unless the Chief Commissioner or Commissioner is satisfied on the reasons recorded by the AO that is fit case for the issue of such notice.
The ITAT observed that the case of the Assessee fall under section 151(1) and not u/s. 151(2) because according to section 151(2) in the cases other than the case fallen under sub-section (1) of Section 151, no notice shall be issued u/s. 148 by the AO, who is below the rank of JCIT, unless the JCIT is satisfied on the reasons recorded by such AO, that is a fit case for the issuance of such notices.
The ITAT opined that the instant case fall u/s 151(1) of the Act. As the case of the assessee had been reopened the assessment after the expiry of 4 years, the approval/satisfaction should be from the Chief Commissioner or Commissioner only. However, the case of the assessee had been reopened and notice u/s 148 has been issued with the approval of the Addl. CIT.
The Tribunal was of the view that the approval had not been obtained from the Competent Authority but the satisfaction for reopening the assessment had been obtained from the Addl CIT in contravention to the provisions of section 151.
Held:
It was held that the notice u/s 148 was bad in law and accordingly it was quashed
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