2017 (6) TMI 1115 - AT - Income Tax

Assessing Officer's Lack of Jurisdiction Invalidates Re-assessment Proceedings

The Tribunal found that the Assessing Officer lacked jurisdiction to re-open the assessment under Section 147 of the Income Tax Act due to the absence of ... Reopening of assessment - reason to believe - AO jurisdiction to issue notice - permission from competent authority - Held that:- In the present case, notice under section 148 have been issued by ACIT, Circle 1(1) Chandigarh on 27.03.2007 after expiry of four years from the end of the relevant assessment year, therefore, the satisfaction of the Joint Commissioner of Income Tax on the reasons recorded by the Assessing Officer that it is a fit case for issuing of such notice is required, however, in the present case, no satisfaction on such reasons recorded by the Assessing Officer have been obtained from the JCIT. In the notice under section 148, the approval from the Commissioner of Income Tax, Chandigarh is mentioned and in another satisfaction, the Addl. CIT accorded his approval on 26.03.2008 after issue of notice under section 148 which is wholly null and void. The Assessing Officer, therefore, did not have jurisdiction to issue notice under section 148 without obtaining the approval and sanction of the Jt. CIT. - Decided in favour of assessee. Issues Involved:1. Re-opening of assessment under Section 147 of the Income Tax Act.2. Validity of notice issued under Section 148 of the Income Tax Act.3. Additions of Rs. 10,000, Rs. 18,555, and Rs. 7,30,000 to the assessee's income.Issue-wise Detailed Analysis:1. Re-opening of Assessment under Section 147:The assessee challenged the re-opening of the assessment under Section 147 of the Income Tax Act. It was argued that the Assessing Officer (AO) did not have valid jurisdiction to re-open the assessment as the necessary approval from the Joint Commissioner of Income Tax (JCIT) was not obtained. The AO issued the notice under Section 148 on 27.03.2007, but the approval from the Additional Commissioner of Income Tax (Addl. CIT) was recorded on 26.03.2008, which is after the notice was issued. This discrepancy rendered the notice void and invalid.2. Validity of Notice Issued under Section 148:The validity of the notice under Section 148 was questioned on the grounds that it was issued without the necessary sanction from the JCIT as required by Section 151(2) of the Income Tax Act. The approval was instead obtained from the Commissioner of Income Tax (CIT), which is not in compliance with the statutory requirement. The Tribunal referred to several judicial precedents, including decisions from the Delhi High Court, Rajasthan High Court, and Bombay High Court, which emphasized that the satisfaction for issuing notice under Section 148 must be recorded by the designated authority, i.e., the JCIT, and not any other authority.3. Additions to the Assessee's Income:The AO made additions to the assessee's income, including Rs. 10,000 for short declaration of salary income, Rs. 18,555 for non-declaration of income from house property, and Rs. 7,30,000 under the head 'income from other sources' against the assessee's claim of agricultural income. However, since the re-opening of the assessment and the issuance of the notice under Section 148 were found to be invalid, the entire re-assessment proceedings, including these additions, were deemed void.Conclusion:The Tribunal concluded that the AO lacked jurisdiction to issue the notice under Section 148 without the proper sanction from the JCIT. Consequently, the re-assessment proceedings were vitiated due to this jurisdictional error. The issuance of the notice under Section 148 was set aside and quashed, and all resultant proceedings and additions made in the re-assessment order were deleted. The appeal of the assessee was allowed, and the order was pronounced in the open court.