TaxTMI 
TaxTMI 
2005 (8) TMI 81
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....on questions of law and also as the counter-affidavits and rejoinder affidavits have been exchanged between the parties, with the consent of learned counsel, they have been heard together and are being disposed of finally by a common order in accordance with the rules of the court. The facts giving rise to the aforesaid writ petitions are as follows: According to the petitioner, he is the founder director of M/s. Ratandeep Pharmaceuticals Private Limited (hereinafter referred to as "the RPPL")/ which has its registered office and also the head office at Muzaffarnagar. It is engaged in the business of manufacture and sale of C.A. sheets for spectacle frame at Dehra Dun. It started its manufacturing activity during the financial year 1989-90 and had been filing its return year after year from that year onwards. It could not do well in its manufacturing activities as a result of which it suffered heavy losses. At a meeting of the board of directors held on July 23, 1990, a resolution was passed authorising its director, Dr. Shashi Kant Garg, the present petitioner, to take up new activities. According to the petitioner, RPPL earned the following commission: Assessment year ....
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....he petitioner and, therefore, the income to the extent of commission paid by AP has escaped assessment. In the reassessment proceeding, the petitioner submitted his explanation which was accepted by respondent No. 3 and in the consolidated order passed on December 31, 1998, for all the assessment years in question, no addition on account of commission income was made. The assessment was completed on the same figure on which it had earlier been made. It may be mentioned here that in the case of the petitioner the returns filed by him for the assessment years 1991-92 to 1994-95 had been processed under section 143(1) of the Act. Respondent No. 3 had held that he did not find apparent reason to add such commission income in the hands of the petitioner in individual capacity. According to the petitioner, after the order dated December 31, 1998, was passed by respondent No. 3, the Commissioner of Income-tax (Administration), exercising powers under section 263 of the Act, vide order dated March 30, 1999, set aside the assessment orders made in the case of Dr. Amar Kant Gupta, proprietor of AP. Pursuant to the said order, respondent No. 3 passed a fresh assessment order in the case of....
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....ice dated September 12, 2000, and the earlier notice dated December 17, 1997, in sum and substance, are the same and, therefore, the proceedings initiated by issuance of notice dated September 12, 2000, are wholly illegal and without jurisdiction and amount to harassment, which is not permissible under law. Sri Garg, learned counsel, further submitted that in respect of each of 12 the assessment years in question, the period of four years had expired on March 31, 1996 (for the assessment year 1991-92); March 31, 1997 (for the assessment year 1992-93); March 31, 1998 (for the assessment year 1993-94) and March 31, 1999 (for the assessment year 1994-95) whereas the impugned notices have been issued on September 12, 2000, i.e., much after the expiry of the period of four years and, therefore, in view of the proviso to sub-section (1) of section 151 of the Act the sanction of the Chief Commissioner or the Commissioner was necessarily to have been obtained without which the notices could not have been issued. He thus submitted that the notices dated September 12, 2000, and all consequential proceedings taken in pursuance thereof are liable to be quashed being wholly without jurisdict....
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....mmissioner. In order to appreciate the issue, it is relevant to reproduce the various provisions of the Act which may throw some light on the matter. Section 2(7A) of the Act defines "Assessing Officer" as follows: "(7A) 'Assessing Officer' means the Assistant Commissioner or Deputy Commissioner or Assistant Director or Deputy Director or the Income-tax Officer who is vested with the relevant jurisdiction by virtue of directions or orders issued under sub-section (1) or sub-section (2) of section 120 or any other provision of this Act, and the Joint Commissioner or Joint Director who is directed under clause (b) of sub-section (4) of that section to exercise or perform all or any of the powers and functions conferred on, or assigned to, an Assessing Officer under this Act;" Section 2(8) of the Act defines "assessment" as follows: "(8) 'assessment' includes reassessment;" Section 2(9A) of the Act defines "Assistant Commissioner" as follows: "(9A) 'Assistant Commissioner' means a person appointed to be an Assistant Commissioner of Income-tax or a Deputy Commissioner of Income-tax under sub-section (1) of section 117;" The words "or a Deputy Commissioner of Income....
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.... this Act in respect of any specified area or persons or classes of persons or incomes or classes of income or cases or classes of cases, shall be exercised or performed by a Joint Commissioner or a Joint Director, and, where any order is made under this clause, references in any other provision of this Act, or in any rule made thereunder to the Assessing Officer shall be deemed to be references to such Joint Commissioner or Joint Director by whom the powers and functions are to be exercised or performed under such order, and any provision of this Act requiring approval or sanction of the Joint Commissioner shall not apply. (5) The directions and orders referred to in sub-sections (1) and (2) may, wherever considered necessary or appropriate for the proper management of the work, require two or more Assessing Officers (whether or not of the same class) to exercise and perform, concurrently, the powers, and functions, in respect of any area or persons or classes of persons or incomes or classes of income or cases or classes of cases; and, where such powers and functions are exercised and performed concurrently, by the Assessing Officers of different classes, any authority lower i....
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....ing the previous year exceeded the maximum amount which is not chargeable to income-tax; (b) where a return of income has been furnished by the assessee but no assessment has been made and it is noticed by the Assessing Officer that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return; (c) where an assessment has been made, but- (i) income chargeable to tax has been underassessed; or (ii) such income has been assessed at too low a rate; or (iii) such income has been made the subject of excessive relief under this Act; or (iv) excessive loss or depreciation allowance or any other allowance under this Act has been computed." Section 148 of the Act deals with the issue of notice where income has escaped assessment to tax, which reads as follows: "148. Issue of notice where income has escaped assessment.-(1) Before making the assessment, reassessment or recomputation under section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, as may be specified in the notice, a return of his income or the income of any other person in respect of which he....
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....peal, reference or revision or by a court in any proceeding under any other law. (2) The provisions of sub-section (1) shall not apply in any case where any such assessment, reassessment or recomputation as is referred to in that sub-section relates to an assessment year in respect of which an assessment, reassessment or recomputation could not have been made at the time the order which was the subject-matter of the appeal, reference or revision, as the case may be, was made by reason of any other provision limiting the time within which any action for assessment, reassessment or recomputation may be taken." Section 151 of the Act deals with the sanction for issue of notice. It reads as follows: "151. Sanction for issue of notice.-(1) In a case where an assessment under sub-section (3) of section 143 or section 147 has been made for the relevant assessment year, no notice shall be issued under section 148 by an Assessing Officer, who is below the rank of Assistant Commissioner or Deputy Commissioner, unless the Joint Commissioner is satisfied on the reasons recorded by such Assessing Officer that it is a fit case for the issue of such notice: Provided that, after the ex....
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....f 2005, Farrukhabad Gramin Bank v. Addl. CIT [2005] 277 ITR 320 (All), decided on July 26, 2005, has held that in view of the definition of the words "Joint Commissioner" in section 2(28C) of the Act, an Additional Commissioner is to be treated as a Joint Commissioner for all purposes. Under section 120 of the Act which deals with the jurisdiction of the income-tax authorities, sub-sections (4) and (5) thereof provide that where there are two or more Assessing Officers to exercise and perform concurrently the powers and functions in respect of any area or person or classes of persons or incomes or classes of income or cases or classes of cases and if such powers and functions are exercised by any higher authorities then any provision of the Act requiring approval or sanction of any such authority shall not apply. Under section 147 of the Act the assessing authority has been empowered to assess or reassess such income which he has reason to believe to have escaped assessment. However, the provisions of section 147 are subject to the provisions of sections 148 to 153 of the Act. Under the proviso to section 147 of the Act it has been stipulated that if an assessment has been made ....
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....s a fit case for the issue of such notice. However, under the proviso to sub-section (1), it has been provided that if the period of four years from the end of the relevant assessment year has expired, no such notice shall be issued unless the Chief Commissioner or Commissioner is satisfied, on the reasons recorded by the Assessing Officer aforesaid, that it is a fit case for the issue of such notice. Sub-section (2) deals with the cases not falling under sub-section (1). It provides that no notice shall be issued under section 148 by an Assessing Officer, who is below the rank of Joint Commissioner, after the expiry of four years from the end of the relevant assessment year, unless the Joint Commissioner is satisfied, on the reasons recorded by such Assessing Officer, that it is a fit case for the issue of such notice. Thus, if a case does not fall under sub-section (1) of section 151 of the Act and four years have expired from the end of the relevant assessment year, notice under section 148 can only be issued by the Joint Commissioner after he is satisfied on the reasons recorded by the Assessing Officer that it is a fit case for issue of such notice. From a perusal of sectio....
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...., the term "Joint Commissioner" is interchangeable with the words "Additional Commissioner" in view of the definition of the term "Joint Commissioner", as given in section 2(28C) of the Act. Having analysed the various provisions of the Act defining jurisdiction of the various authorities and the powers, the procedure to be adopted and the limitations imposed upon such authorities for making assessment or reassessment, we are of the further opinion that if under the provisions of the Act an authority is required to exercise powers or to do an act in a particular manner, then that power has to be exercised and the act has to be performed in that manner alone and not in any other manner. The apex court in the case of Dhanajaya Reddy v. State of Karnataka [2001] 4 SCC 9, CIT v. Anjum M.H. Ghaswala [2001] 252 ITR 1 (SC); [2002] 1 SCC 633, Mehsana District Central Co-operative Bank Ltd. v. State of Gujarat [2004] 118 Comp Cas 507 (SC); [2004] 2 SCC 463 and Ram Phal Kundu v. Kamal Sharma [2004] 2 SCC 759, has held that where a power is given to do a certain thing in a certain way, the thing must be done in that way or not at all. The apex court in the case of Ram Phal Kundu [2004] 2 S....
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....er or Commissioner of Income-tax, as the case may be, has recorded his satisfaction, for issuance of notice as provided under the proviso to sub-section (1) of section 151 of the Act. It may be mentioned here that in all the writ petitions a specific averment and a ground have been taken regarding the notice having been issued without the satisfaction of the Chief Commissioner or Commissioner of Income-tax. In paragraph 32 of Civil Miscellaneous Writ Petition No. 533 of 2002 the following averment has been made: "32. That earlier assessment having been made in the case of the petitioner under section 147, the provisions of section 151(1) reading, as under: '151. Sanction for issue of notice.-(1) In a case where an assessment under sub-section (3) of section 143 or section 147 has been made for the relevant assessment year, no notice shall be issued under section 148 by an Assessing Officer, who is below the rank of Assistant Commissioner or Deputy Commissioner, unless the Joint Commissioner is satisfied on the reasons recorded by such Assessing Officer that it is a fit case for the issue of such notice: Provided that, after the expiry of four years from the end of the rele....
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....isting an enactment enjoining a duty upon the Income-tax Officer to obtain prior approval of the Commissioner, and unless that approval was obtained, the notices could not be issued. The notices were thus invalid." In the case of Union of India v. Rai Singh Deb Singh Bist [1973] 88 ITR 200 the apex court has held as follows: "Before an Income-tax Officer can issue a statutory notice under section 34(1)(a), he must have reason to believe that by reason of omission or failure on the part of an assessee to disclose fully and truly all material facts necessary for his assessment for the years in question, income, profits or gains chargeable to income-tax have escaped assessment during those years. Further, before doing so, he must have recorded his reasons for acting under section 34(1)(a) and the Central Board of Revenue must have been satisfied on those reasons that it is a fit case for the issue of the notice. The recording of the reasons in support of the belief formed by the Income-tax Officer and the satisfaction of the Central Board of Revenue on the basis of the reasons recorded by the Income-tax Officer that it is a fit case for issue of notice under section 34(1)(a) are....
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.... inasmuch as the sanction of the Chief Commissioner or the Commissioner was not obtained before issuance of the notice." In the case of Simplex Concrete Piles (India) Ltd. v. Deputy CIT [2003] 50 262 ITR 605, the Calcutta High Court has held that section 151 is not a provision which enables the Revenue to do something. It is a restriction on the Revenue prohibiting it from doing something. It was a guidance to do such things in the manner provided in section 151 and were the provisions to protect the interest of the assessee. It has further held that section 151 of the Act puts a restriction on the issue of notice by the Assessing Officer which requires the satisfaction of the higher authorities in the respective cases. Under section 151 of the Act, the reopening can be done by the Assessing Officer only with the concurrence or approval or sanction if the Assessing Officer is below the rank of Assistant Commissioner, Deputy Commissioner or Commissioner, before issuing such notice and after the expiry of four years, no notice shall be issued unless the Chief Commissioner or the Commissioner is satisfied on the reasons recorded by the Assessing Officer that it was a fit case for i....