The New Delhi bench of the Income Tax Appellate Tribunal (ITAT) recently invalidated the Income Tax Notice under Section 148 and the reassessment proceedings due to non-compliance with Section 151 of the Income Tax Act, 1961. Additionally, it was found that the approval of the reassessment order by the Joint Commissioner of Income Tax (JCIT) was not recorded.”
The assessee Kamal Kapoor got a sanction from Joint Commissioner of Income Tax (JCIT) under Section 151 of the Income Tax Act to initiate reassessment.
Counsel for the revenue submitted that the CIT (A) is not correct and justified in annulling the assessment order despite the fact that the Addl. CIT had given approval in the case after being satisfied and after recording reason for initiation of reassessment proceedings in the case of the assessee.
The counsel further argued that the Assessing Officer recorded detailed reasons before initiation of reassessment proceedings and also obtained approval of the competent authority as per requirement of provision of the Income Tax Act. Therefore, the CIT (A) granted relief to the assessee without any basis and merely on the basis of hyper technical approach.
He submitted that the sanction from Joint Commissioner of Income Tax under Section 151 of the Income Tax Act to initiate reassessment proceedings is bad in law as he has not recorded his satisfaction and merely approved the proposal of the Assessing Officer in a mechanical manner without application of mind.
The counsel for the assessee argued that the Assessing Officer has passed reassessment order without first disposing the objections of the assessee on issuance of notice under Section 148 of the Income Tax Act. Therefore, on this count the CIT (A) was right in annulling the order of reassessment proceedings and consequent reassessment order.
The Revenue’s counsel argued that the notice is invalid because the Joint Commissioner of Income Tax (JCIT) did not record his satisfaction before its issuance. The approval given by the Additional Commissioner of Income Tax (Addl. CIT) does not fulfill the requirement of recording satisfaction as mandated by Section 151 of the Income Tax Act.
Sh. Amit Goel and Sh. Nippun Mittal were the counsels who represented the assessee, and Sh. AnujGarg represented the revenue.
The bench consisting of two members, the Judicial Member C. M. GARG and the Accountant Member B. R. R. Kumar observed that the CIT (A) noted that the additional CIT (A) had mentioned a word “approved” on the proposal of the Assessing Officer for issuance notice under Section 151 of the Income Tax Act. He has not recorded his satisfaction towards reasons recorded by the Assessing Officer.
The power vested to the Commissioner/ Additional CIT as in the case of the present assessee to grant or not to grant approval is coupled with a duty. Such duty cannot be exercised casually and in a routine manner and he is required to apply his mind to the proposal put up to him for approval in the light of the material relied upon by the Assessing Officer.
The CIT (A) had issued an order stating that the notice issued under Section 148 of the Income Tax Act, as well as the reassessment proceedings and resulting reassessment order, are invalid and should be canceled.
The reason for this is that they were deemed legally invalid and were not carried out in accordance with the mandatory provision of section 151 of the Income Tax Act. As a result, the appeal filed by the revenue was dismissed.
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