TaxTMI 
TaxTMI 
2024 (1) TMI 58
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....cy, without appreciating that said purchases are genuine purchases beyond doubt and supported by sufficient materials, full quantitative stock records have been maintained, all the goods purchased from said party have been backed by corresponding sales which are accepted to be genuine. 2. On the facts and circumstances of the case and in law, the Commissioner of Income Tax (Appeals), NFAC erred in confirming the addition with respect to the purchase made from M/s International Trade Agency only because a section 133(6) notice was not delivered/return back. 3. The appellant craves leaves to add, to delete or amend any of the above grounds of appeal at the time of hearing." 3. Vide application dated 06/12/2023, the assessee filed the following revised grounds of appeal:- "The Grounds of Appeal mentioned hereunder are without prejudice to one another- 1. The notice issued u/s 148 after obtaining satisfaction of Pr. CIT is bad in law since there was no scrutiny assessment under 143(2) or no prior 147 assessment was done and therefore case is covered u/s 151(2) and therefore the appropriate authority for obtaining the satisfaction was Joint Commiss....
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....revised grounds are legal issues, which can be decided on the basis of material available on record, we are of the view that the same can be admitted for consideration and adjudication in view of the ratio laid down by the Hon'ble Supreme Court in NTPC (supra). 5. The brief facts of the case pertaining to the issue raised vide revised ground no.1, as emanating from the record, are: The assessee is an individual and for the year under consideration e-filed her return of income on 17/09/2011 declaring a total income of Rs. 6,32,210. The return filed by the assessee was processed under section 143(1) of the Act. Subsequently, on the basis of information received from the office of DGIT (Investigation), Mumbai that the assessee is a beneficiary of bogus purchase activity, the proceedings under section 147 of the Act were initiated and notice under section 148 of the Act was issued on 29/03/2018. As per the information received from DGIT (Investigation), Mumbai, M/s International Trade Agency has given bogus purchase bills to the assessee without actual transaction between them. During the hearing, the learned Authorised Representative ("learned AR") by referring to the reasons recor....
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....nder section 148 of the Act. Section 151 of the Act, as existed during the assessment year 2017-18, i.e. at the time of issuance of notice under section 148 of the Act, is reproduced as under:- "Sanction for issue of notice 151. (1) No notice shall be issued under section 148 by an Assessing Officer, after the expiry of a period of four years from the end of the relevant assessment year, unless the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner is satisfied, on the reasons recorded by the Assessing Officer, that it is a fit case for the issue of such notice. (2) In a case other than a case falling under sub-section (1), no notice shall be issued under section 148 by an Assessing Officer, who is below the rank of Joint 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. (3) For the purposes of sub-section (1) and sub-section (2), the Principal Chief Commissioner or the Chief Commissioner or the Principal Commissioner or the Commissioner or the Joint Commissioner, as the case may be, being satisf....
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.... the Assessing Officer aforesaid, that it is a fit case for the issue of such notice. (2) In a case other than a case falling under sub-section (1), 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.] [Explanation.-For the removal of doubts, it is hereby declared that the Joint Commissioner, the Commissioner or the Chief Commissioner, as the case may be, being satisfied on the reasons recorded by the Assessing Officer about fitness of a case for the issue of notice under section 148, need not issue such notice himself.]" 10. From the perusal of the provisions of section 151 of the Act, as existed during the assessment year 2011-12, we find that in cases where an assessment has not been made under section 143(3) or section 147, no notice under section 148 of the Act can be issued by an AO below the rank of Joint Commissioner, after the expiry of four years from the end of the ....
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....provide simplicity, as prior to the amendment section 151 of the Act specified different sanctioning authorities based on various scenarios. 13. Therefore, in view of the above, the question arises whether the manner of granting sanction under section 151 of the Act is in the nature of procedural law. If the answer to the aforesaid question is in the affirmative then we are of the considered view that sanction by the PCIT under section 151 of the Act, in the present case, is in conformity with the provisions of the Act. We find that similar issue came up for consideration before the Hon'ble Jharkhand High Court in Navketan Enterprises v/s CIT, [2001] 250 ITR 508 (Jharkhand), wherein the Hon'ble High Court held that section 151 of the Act is in the nature of procedural law and therefore for the purpose of obtaining the approval, the Assessing Officer has to apply the law as it stands on the day when he decides, by recording his reasons, to invoke section 147 and thus, decides to issue notice under section 148 of the Act. The relevant findings of the Hon'ble High Court, in the aforesaid decision, are reproduced as under:- "6. Section 151 is in the nature of procedural law....
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.... question, nor the passing of the original assessment order with respect of that assessment year. The decision to initiate proceedings under section 147 can be taken at any time after the passing of the original assessment order. It is, therefore, the point of time when this decision is taken which determines the applicability of the law on the subject. In other words, whenever the Assessing Officer decides to initiate proceedings for reassessment, it is only at that point of time that he is to look to the law as it exists then for its proper application to the procedure that he would apply for issuing notice in terms of section 148. The contention of Mr. Moitra is, therefore, totally devoid of any force because the law as it stood at a point of time relatable to the assessment year in question is totally irrelevant and has no applicability whatsoever." 14. Therefore, respectfully following the aforesaid decision of the Hon'ble Jharkhand High Court, the provisions of section 151 of the Act, as it stood during the assessment year 2017-18, i.e. the year in which reasons were recorded by the AO for reopening the assessment and notice under section 148 of the Act was issued, will be....
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....for AY-2010-11 within the meaning of section 147 of the IT Act, 1961. A notice u/s 148 is therefore being issued to re-assess such income and also any other income chargeable to tax which has escaped assessment, which comes to my notice subsequently in the course of proceedings for reassessment for AY-2011-12. 4. In this case more than four years have lapsed from the end of assessment year under consideration. The case is put up before the Pr.CIT.-20, Mumbai for his kind sanction to issue notice u/s.148 in the light of proviso to sub-section (1) of section 151 of I.T. Act, 1961." 16. From the perusal of the aforesaid reasons, it is evident that information was received from the office of DGIT (investigation), Mumbai in respect of various assessees who have taken bogus/hawala/accommodation entries from certain parties to inflate the purchases, resulting in reduction of taxable profit. From the perusal of the aforesaid information, the AO noted that the assessee is one such party and has obtained bogus/hawala purchase bills/entries from the entity named International Trade Agency. Accordingly, the AO recorded the reasons for reopening that income chargeable to tax as indi....
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....led in response to notice issued under section 148 of the Act. Accordingly, statutory notices under section 143(2) as well as section 142(1) of the Act were issued and served on the assessee. The assessee is a proprietor of M/s Padam Prabhu Chemicals and is a reseller of chemicals and solvents. During the assessment proceedings, notice under section 133(6) of the Act was issued to the aforesaid accommodation entry provider, which was returned unserved by the postal authorities with the remark "left/not known". Further, in order to verify the facts, Ward inspector was also deputed to find out the whereabouts of the said party, however it was reported that the said party was not available at the address mentioned in the PAN database of the ITD system. Further, on enquiry in the neighbourhood, it was found that the said party never existed at the given address. The report of the Ward Inspector was brought to the notice of the assessee and the assessee was asked to produce the party for verification and also to produce the stock register, in and out register, delivery challan, lorry receipts, etc. The assessee was also asked to show cause as to why the purchases made from the aforesaid....