TaxTMI 
TaxTMI 
2022 (3) TMI 787
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.... (iii) to declare that the reassessment proceedings initiated under section 147 through impugned notice under section 148 are illegal and without jurisdiction being based on borrowed jurisdiction. (iv) to declare that the reassessment proceedings initiated under section 147 through impugned notice under section 148 are illegal and without jurisdiction for requisite sanction under section 151 of the Act was granted by an authority other than the authority designated in sub-section (2) of section 151 of the Act. (v) to stay all proceedings pursuant to the impugned notice (Annexure P/1) and direct respondent No.4 not to pass final orders till disposal of present petition. (vi) to pass such other order and/or further order and/or orders as the Hon'ble High Court may deem fit and proper in the facts and circumstances of the case." 2. Mr. S. Rajeshwar Rao, learned counsel for petitioner would submit that respondents have started proceedings of re- assessment of income tax returns submitted by petitioner for the assessment year 2017-18 without following the procedure established in this regard under the Act of 1961. Section 147 of the Act of 1961....
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....ner of Income Tax is required. If it is within four years then approving authority would be the Joint Commissioner of Income Tax. In case at hand, the Principal Commissioner of Income Tax has given approval under Section 151 of the Act of 1961, which is contrary to the provisions of Section 151 of the Act of 1961. Hence, it cannot be said that approval has been obtained from the competent authority. He contended that when Statue authorizes a specific officer to accord approval for issuing notice under Section 148 of the Act of 1961, then it is for that officer only i.e. Joint Commissioner of Income Tax, to accord approval and not for any other officer even superior in rank. In support of his contention, he places reliance upon judgements of Bombay High Court in case of Ghanshyam K Khabrani vs. ACIT reported in 2012 (3) TMI 266 and The Commissioner of Income Tax Central-4 vs. Aquatic Remedies Pvt. Ltd. reported in 2018 (8) TMI 135. Another ground raised by learned counsel for petitioner is that approval, as stated to have been granted to the Assessing Officer under Section 151 of the Act of 1961, does not contain signature of designated authority. He submits that even if it is co....
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....e at hand, though petitioner has disclosed deposits in other bank accounts but did not explain source of that amount in proper manner in return and this was the basis for initiating proceeding against petitioner. The DDIT taking into consideration returns and other documents submitted, called upon petitioner to furnish details and explanation by issuing summons, which was replied by petitioner. Reply submitted was not found to be satisfactory, therefore, case was forwarded to the Assessing Officer, who based on information received from DDIT and considering the return as also the bank statement, issued notice under Section 148 of the Act of 1961. Petitioner finding that there is no specific mention of reasons to believe for initiating proceeding of re-assessment, submitted request letter to Assessing Officer, which was replied by Assessing Officer, along with copy of reasons recorded for opining to issue notice under Section 148 of the Act of 1961, which is also placed on record by petitioner from Page No.32 onwards of writ petition. A glance of Page No.32 of writ petition would show that after the chart showing different deposits in different banks, the Assessing Officer has menti....
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....cific mention of name and designation of the authority, who had granted approval under Section 151 of the Act of 1961, in Annexure P-5. Hence, this submission of learned counsel for the petitioner is not acceptable. The Assessing Officer has also issued notice under Section 142 of the Act of 1961 for furnishing details of accounts and documents specified in Annexure to notice. Hence, there is compliance of 4th Paragraph of the Standard Procedure dated 1.10.2018 for recording satisfaction as issued by the Central Board of Direct Taxes. In 4th Paragraph of Standard Procedure, it is mentioned that enquiry which is to be made by Assessing Officer must have a live-link with the information received / collected / found by him. In view of contents of 4 th Paragraph, it is Assessing Officer who has to link the procedure initiated by him with the proceedings of information received/ collected by other officers also. Here in this case, the DDIT issued summons under Section 131 of the Act of 1961 and when reply of petitioner was not found satisfactory, the DDIT forwarded the case to Assessing Officer. Thus, there is compliance of the provisions of 4th Paragraph of Standard Procedure dated 10.....
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.... that mentioning of name and designation of authority will authenticate documents, is not correct. He submits that the Act of 1961, as prevailing in the year 2017-18, or issuance of notice under Section 148 of the Act of 1961, it is mandatory and pre- condition to record satisfaction of reasons to believe by Assessing Officer and it is not for him to consider mode of information received as it was prevailing in the Act of 1961 prior to the year 2017-18. 5. Learned counsel for respondents would submit that submission of learned counsel for petitioner with respect to digital signature in approval under Section 151of the Act of 1961 is also not correct for the reason that when there is mention of DIN and Document Number in the notice, the signature of designated authority becomes immaterial because DIN & Document Number is issued based on code provided to a particular officer. She places her reliance upon Instructions dated 4.3.2021 (Annexure R2 to 4/2) issued by Ministry of Finance, Govt. of India, New Delhi 6. I have heard learned counsel for the parties and perused the record. 7. So far as first submission of learned counsel for petitioner that before issuing notice under ....
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....`information' is of the widest amplitude and comprehends a variety of factors. Nevertheless the power under Section 34 (1) (b), however wide it may be, is not plenary because the discretion of the Income-tax officer is controlled by the word "reason to believe". It was so held by this Court in Bhimraj Pannalal v. Commissioner of Income Tax (1961) 41 ITR 221 (SC) : TC 51 R. 300, while affirming the decision of the Patna High Court in Bhimraj Panna Lal v. Commissioner of Income Tax (1957) 32 ITR 289 (Pat) : TC 51R 301. This legal proposition, however, is not disputed. It, therefore, follows that information may come from external sources or even from materials already on the record or may be derived from the discovery of new and important matter or fresh facts. The word `information" will also include true and correct state of the law derived from relevant judicial decisions either of the Income-tax authorities or other courts of law which decide income-tax matters. Where the ground on which the original assessment is based is held to be erroneous by a superior court in some other case, that will also amount to a fresh information which comes into existence subsequent to the o....
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....sment from an investigation of the materials on the record, or the facts disclosed thereby or from other enquiry or research into facts or law. If these conditions are satisfied then the Income-tax officer would have complete jurisdiction to re-open the original assessment. It is obvious that where the Income-tax officer gets no subsequent information, but merely proceeds to re-open the original assessment without any fresh facts or materials or without any enquiry into the materials which form part of the original assessment, Section 34 (1) (b) would have no application." 8. In case at hand, the DDIT on the basis of information issued summons to assessee. In reply to summons, the assessee failed to satisfactorily explain source of cash deposit of Rs. 22,17,720/- during demonetization period. Based on said information, Assessing Officer verified PAN details and recorded reasons to believe that cash deposit to the tune of Rs. 22,17,720/- remained unexplained, which falls under clause (b) of Explanation to Section 147 of the Act of 1961. In case of Phool Chand Bajrang Lal (supra) Hon'ble Supreme Court while considering validity of reassessment notice has observed thus:- ....
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....lief was not at all bona fide one. In present case, reasons assigned for issuance of proposal under Section 148 of the Act of 1961 clearly mentions about application of mind by Assessing Officer based on information received from the DDIT and also about verification of PAN details of assessee. 10. In case of Raymond Wollen Mills (supra) Hon'ble Supreme Court while considering challenge to issuance of notice under Section 148 of the Act of 1961 has held thus:- "3.In this case, we do not have to give a final decision as to whether there is suppression of material facts by the assessee or not. We have only to see whether there was prima facie some material on the basis of which the Department could reopen the case. The sufficiency or correctness of the material is not a thing to be considered at this stage. We are of the view that the court cannot strike down the reopening of the case in the facts of this case. It will be open to the assessee to prove that the assumption of facts made in the notice was erroneous. The assessee may also prove that no new facts came to the knowledge of the Income-tax Officer after completion of the assessment proceeding. We are not expres....
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....8 of IT Act 1961'. The words used while recommending for issuance of notice are sufficient to infer in clear terms that the Joint Commissioner of Income Tax applied his mind on proposal sent to him by the Assessing Officer, recorded his satisfaction for issuance of notice under Section 148 of the Act of 1961. Hence, in view of aforementioned facts, even if name of approving authority is mentioned to be 'Principal Commissioner of Income Tax', the same would not make the 'approval' itself invalid. The object of Section 151 of the Act of 1961 is that approval to be accorded by the Joint Commissioner of Income Tax (in the facts of case) and if Joint Commissioner approves the proceedings/ proposal sent by the Assessing Officer to be a fit case, then, in the opinion of this Court, the approval under Section 151 of the Act of 1961 giving details of approving authority as Principal Commissioner of Income Tax in itself will not make the approval invalid. Reliance on the judgment delivered in case of Ghanshyam K Khabrani (supra) placed by learned counsel for petitioner to support his contention that approval under Section 151 of the Act of 1961 is not in accordance with l....