Satisfaction u/s 151 of Income Tax Act is not Empty Formality: ITAT quashes Income Tax Addition made in Mechanical and Stereotyped Manner [Read Order]
Satisfaction us 151 of Income Tax Act is not Empty Formality – ITAT quashes Income Tax Addition made in – Mechanical and Stereotyped Manner – TAXSCAN
Satisfaction us 151 of Income Tax Act is not Empty Formality – ITAT quashes Income Tax Addition made in – Mechanical and Stereotyped Manner – TAXSCAN
The Hyderabad Bench of the Income Tax Appellate Tribunal (ITAT), observed that the satisfaction under Section 151 of the Income Tax Act is not an empty formality and quashed income tax addition made in mechanical and stereotyped manner.
In the present case, the assessee, M/s. ECI Engineering & Construction Co Ltd, has filed the original return of income admitting total income of Rs.7 crores.
The Counsel for the assessee submitted that submitted that the re-opening of the assessment was taken place beyond a period of 4 years and the Assessing Officer has not recorded that there was any omission or failure on the part of the assessee to disclose fully and truly all the material facts for the completion of assessment.
The Departmental Representative submitted that there was a typographical mistake on the part of the Assessing Officer whereby he had wrongly mentioned the date of signing the revised proposal on 19.03.2011 and accepted that it should have been 19.03.2012
The Departmental Representative submitted that the proposal for re-opening was approved and communicated by the ITO and that on account of typographical mistake, the re-assessment cannot be set aside. It was submitted that the Assessing Officer has rightly re-opened the assessment.
There was total nonapplication of mind by the ACIT and also by the CIT, as both the said senior officials had failed to take cognizance of the proposal dt.19.03.2012, wrongly typed as 19.03.2011 on Page 2 reproduced hereinabove. In fact, 19.03.2011 would fall within a period of 4 years whereas 19.03.2012 would fall beyond the period of 4 years.
In case of any re-assessment was made beyond a period of 4 years, then recording of satisfaction by the CIT is compulsory under the Income Tax Act, 1961.
Section 151 of the Income Tax Act, 1961 provides that no notice shall be issued by the Assessing Officer after expiry of 4 years.
The Two-Member Bench of the Tribunal comprising R.K. Panda, Accountant Member and Laliet Kumar, Judicial Member observed that “The satisfaction as contemplated under Section 151 of the Income Tax Act is not an empty formality as the authorities have to apply their mind and record satisfaction. When the authorities were not oblivious to the date of proposal then it cannot be said that they have applied their mind or considered the proposal of the Assessing Officer in its right earnest.”
“The satisfaction was recorded by authorities in a mechanical and stereotyped manner and therefore, the same is not a satisfaction in the eyes of law” the Bench concluded.
To Read the full text of the Order CLICK HERE
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