HC Quashes Re-Assessment since Conditions of s. 151(1) not fulfilled [Read Judgment]

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The Chhattisgarh High Court, recently quashed a notice and order under Section 148  only on account of non-fulfillment of the condition precedent as is envisaged under the of the provision to section 151(1) of the Income Tax Act.

Justice P. Sam Koshy was hearing a writ petition filed by assessee assailing the notice issued under Section 148 of the Income Tax Act, 1961 and also the order whereby the objections preferred by the petitioner questioning the issuance of notice dated was rejected.

The AO had already issued a notice under Section 143 (2) of the Act and completed assessment under Section 143 (3) of the Act. Later, after four years, the income tax department had issued a notice under Section 148 of the Act for reopening of the assessment proceeding for the year 2010-11.

Before the High Court, the petitioner contended that the present notice is illegal as the same was issued beyond the prescribed period of limitation under the Act and the reasons assigned are entirely baseless and that there was absolutely no tangible material available with the department for re-opening the assessment. On contrary revenue stated the issuance of notice under Section 148 of the Income Tax Act are proper, legal and justified and pressed the relevance of section 151 of Income Tax Act, wherein proper sanction from the higher Authorities has been taken by the Department.

The Court observed that there can be no dispute as regards the requirement of Act to be strictly complied with but the missing fact, Section 151(1) the proviso therein, specifically deals with the Commissioner to be satisfied on the reasons recorded by the Assessing officer for issuance of a notice after the expiry of 4 years from the end of the relevant assessment year.

In a recent decision of Apex court in the case of Jeans Knit (P) Ltd. Bangalore vs. Deputy Commissioner wherein held that the writ petitions are maintainable questioning the issuance of notice under Section 148 if prima facie it is established that initiation is contrary to the provisions of the Income Tax Act.

Finally, relying on various courts judgment the bench declared that this Court finds that issuance of notice under Section 148 at the first instance itself was without a proper sanction as is required under the proviso to Section 151(1) of the Income Tax Act and also added that the impugned notice under Section 148 stands set aside /quashed.

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