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2016 Supreme(Cal) 212
IN THE HIGH COURT AT CALCUTTA
Girish Chandra Gupta and Asha Arora, JJ.
PREM CHAND SHAW (JAISWAL) – Appellant
Vs.
ASSISTANT COMMISSIONER, CIRCLE-38, KOLKATA & ANR. – Respondents
GA No. 2488 of 2006 with ITA No. 297 of 2006
Decided On : 04-03-2016
For the Appellant : Mr. Ananda Sen, Adv.
For the Respondent: Mr. M.P. Agarwal and Mr. Ranjan Sinha Advs.
The Commissioner, while granting sanction u/s. 151(2), must examine the reasons given by the Income Tax Officer and come to an independent decision, and the authority in question should not act mechanically.
Headnote:
INCOME TAX - Reassessment - Approval u/s. 151 - Mechanical Accordance - Validity of Notice u/s. 148 - CIT(A) upheld the validity of the notice u/s. 148 issued by the AO, the assessee challenged the same before the Tribunal, which also upheld the validity of the notice. On appeal to the High Court, HELD dismissing the appeal:
Fact of the Case:
The assessee, an individual engaged in the business of trading in various goods, filed his return of income for the assessment year 1995-96, enclosing particulars of accounts relating to earlier years, claiming no taxable income for those years. The AO, on the basis of the information supplied by the assessee and other information in his possession, concluded that income had escaped assessment for the assessment years 1990-91, 1991-92, and 1992-93. The AO recorded reasons for initiating reassessment proceedings u/s. 147 and obtained approval from the Additional CIT u/s. 151(2). The AO issued a notice u/s. 148 to the assessee, who filed his return in response. The AO completed the assessment for all three years by separate orders u/s. 143(3) r/w s. 147. The assessee appealed to the CIT(A), challenging the validity of the notice u/s. 148 and the additions or disallowances made by the AO. The CIT(A) upheld the validity of the notice and rejected the assessee's plea.
Finding of the Court:
The Tribunal, on appeal by the assessee, dismissed the appeal and upheld the validity of the notices issued u/s. 148 with respect to all the assessment years and the sustainability of the additions and disallowances made. The Tribunal held that the assessee had not brought any contrary material except that no satisfaction was recorded by the Addl. C.I.T. while giving sanction as envisaged u/s. 151(2) at the Income Tax Act. It also held that the assessee had not challenged the recording of reasons for reopening of the assessment as recorded by the Assessing Officer vide his order sheet entry dated 26.03.2001 and that the notices issued the Assessing officer u/s. 148 are valid in law.
Issues: 1. Whether the learned Tribunal erred in law in upholding the action of reassessment, when admittedly the approval accorded by the concerned authority for such reopening was given in a mechanical manner which was itself without jurisdiction and bad in law? 2. Whether on the facts and in the circumstances of the case when the jurisdictional aspect in according the approval for reopening was absent, the action of the learned Tribunal in upholding such approval and thereafter in further upholding the assessment which was beyond four years is perverse?
Ratio Decidendi: 1. The assessee did not contend that the reasons cited by the assessing officer for initiating reassessment proceedings u/s. 147 of the Act were irrelevant or that the assessing officer had no reason to believe that income chargeable to tax had escaped assessment. 2. The Tribunal found that the assessee, without objecting to the validity of the impugned notice, filed his return in compliance thereof and participated in the re-assessment proceedings. 3. The assessee did not challenge the validity of the impugned notice before the CIT(A) or the Tribunal until after receiving the assessment order. 4. The judgment in Chhugamal Rajpal (supra) does not advance the cause of the assessee as in that case, the assessing officer did not have adequate material before him to satisfy the requirement of either clause (a) or (b) of section 147. 5. The judgment in Johri Lal (supra) is also of no assistance to the assessee as the issue in that case was whether a proceeding u/s. 34(1)(b) of Income Tax Act, 1922 could be converted to a proceeding u/s. 34(1)(a) of the said Act.
Final Decision: The appeal is dismissed.
Girish Chandra Gupta, J.
The assessee has come up in appeal under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’) against an order of the Income Tax Appellate Tribunal, ‘C’ - Bench, Kolkata dated 7th July, 2005 in ITA Nos.1421, 1422 and 1423 (Kolkata) of 2004 for the assessment years 1990-91, 1991-92 and 1992-93.
By the order dated 18th December, 2006 a Division Bench of this Court admitted this appeal on the following substantial questions of law:-
(I) Whether on the facts and in the circumstances of the case, the learned Tribunal erred in law in upholding the action of reassessment, when admittedly the approval accorded by the concerned authority for such reopening was given in a mechanical manner which was itself without jurisdiction and bad in law?
(II) Whether on the facts and in the circumstances of the case when the jurisdictional aspect in according the approval for reopening was absent, the action of the learned Tribunal in upholding such approval and thereafter in further upholding the assessment which was beyond four years is perverse?
Briefly stated the facts and circumstances of the case are as follows:-
The assessee an individual is engaged in the business of trading in various goods under the name and style of Ujjwal Steel Udyog which is a proprietorship concern. Along with the return of income for the assessment year 1995-96 the assessee enclosed the particulars of accounts relating to earlier years claiming that there was no taxable income with respect to those years. The assessing officer on the basis of the information supplied by the assessee and other information in his possession came to the conclusion that income had escaped assessment for the assessment years 1990-91, 1991-92 and 1992-93. By the order dated 26th March, 2001 the assessing officer recorded the reasons for initiating the reassessment proceedings under Section 147 of the Act for the aforesaid years. Thereafter, the assessing officer obtained approval of the Additional CIT under Section 151(2) of the Act by the order dated 29th March 2001. Thereafter the assessing officer issued notice under Section 148 of the Act dated 30th March 2001 to the assessee. The assessee filed his return consequent to the aforesaid notice. After hearing the assessee the assessing officer completed the assessment for all three years 199091, 1991-92 and 1992-93 by separate orders passed, u/s.143(3) read with s.147 of the Act, on 31st March, 2003. The assessee preferred an appeal against the order of the assessing officer before the Commissioner of Income Tax (Appeals) (hereinafter referred to as the ‘CIT(A)’). The assessee challenged the validity of the notice under Section 148 and the additions or disallowance made by the assessing officer. The CIT(A) by an order dated 9th June, 2004 while granting partial relief to the assessee rejected the assessee’s plea as regards the validity of the notice issued under Section 148 and held as follows:-
“The Ld. AR has referred a case law reported in (1971) 79 ITR 603 SC in the case of Chhugamal Rajpal Vs. S.P. Chaliha & Ors.
The particular case referred to above deals with different facts as to whether the communication, required investigation, can be a basis for reopening an assessment and that was the moot point in that case. The Supreme Court has observed that Commissioner has mechanically accorded permission to reopen the assessment and thereby notice issued u/s. 148 was treated as invalid. In the said case the Hon’ble Supreme Court has observed that if only the Commissioner had read the report carefully, he could never have come to conclusion on the material before him that it is a fit case to issue notice u/s. 148.
The issue of the present case is totally different. In the instant case, for the AY 90-91 it was found by the AO that investment to the extent of Rs.77,910/- for purchasing of truck was not disclosed before the I.T. Authorities, hence the appellant had taxable income for the re
