2012 (11) TMI 860 - HC - Income Tax

Sanction for Income Tax Notice: Chief Commissioner or Commissioner's Approval Essential

The High Court dismissed the appeal by the Income Tax department challenging the order of the income tax appellate Tribunal. The Court held that proper ... Sanction of Authority u/s 151 before issue of Notice u/s 148 - held that:- No Notice can be issued after expiry of four years from the end of the relevant assessment year, unless the Chief Commissioner or the Commissioner is satisfied on the reasons supported by the assessing officer that it is a fit case for issuance of notice - no substantial question of law involved in this appeal for its admission Proviso to Section 151 empowers the Chief Commissioner or the Commissioner of the Income Tax Act to accord sanction and this power has not been vested to any other officer irrespective of fact as to whether the assessing officer is Assistant Commissioner or the Deputy Commissioner or any other officer.- appeal is dismissed. Decision in case of [Shashi Kant Garg vs. Commissioner of Income Tax & others 2005 (8) TMI 81 - ALLAHABAD HIGH COURT] followed. Issues:Validity of notice under section 148 of the Income Tax Act and the consequent assessment proceedings due to lack of proper sanction of the Authority mentioned in section 151 of the Act.Analysis:The High Court was presented with an appeal by the Income Tax department challenging the order of the income tax appellate Tribunal regarding the requirement of proper sanction for issuing notices under section 148 of the Income Tax Act. The main question of law raised was whether the Tribunal was correct in deeming the notice and assessment proceedings invalid due to the absence of proper sanction as per section 151 of the Act. The department argued that according to Section 151(4) of the Act, only in cases where the assessing officer is not below the rank of Assistant Commissioner or Deputy Commissioner, sanction of the Chief Commissioner or Commissioner is necessary for issuing notices under section 143(3) or section 148. In this specific case, the assessment was conducted by an officer of the rank of Assistant Commissioner or Deputy Commissioner, and the sanction was provided by the Additional Commissioner.The Court carefully examined the proviso under Section 151 of the Act, which states that after four years from the end of the relevant assessment year, no notice under Sub Section 1 shall be issued without the satisfaction of the Chief Commissioner or Commissioner based on the reasons supported by the assessing officer. The department contended that the term 'aforesaid' in the proviso referred only to assessments conducted by the Assistant Commissioner or Deputy Commissioner, not by any other officer. However, the Court disagreed with this interpretation, emphasizing that the power to accord sanction lies solely with the Chief Commissioner or Commissioner, regardless of the rank of the assessing officer. The Court highlighted that if the legislature intended for the Additional Commissioner to be the sanctioning authority in cases where the assessment is done by an Income Tax Officer, it would have been explicitly stated in the Act. The Court's stance was reinforced by a previous decision in the case of Shashi Kant Garg vs. Commissioner of Income Tax & others (2006) 285 ITR 158.Ultimately, the Court concluded that there was no substantial question of law warranting the appeal's admission and dismissed the appeal. The judgment clarified the significance of proper sanction by the Chief Commissioner or Commissioner for issuing notices under section 148 of the Income Tax Act, regardless of the rank of the assessing officer, as mandated by the provisions of the Act and supported by legal precedents.