2024 (6) TMI 657

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....The challenge thus strikes to the root of the litigation and hence acquires primacy over other issues. The cross objection is thus taken up for adjudication at the first instance. 3. When the matter was called for hearing, the ld. Counsel for the assessee submitted at the outset that the assessee filed return of income for A.Y. 2011-12 on 30.07.2011 declaring total income at Rs. 20,53,602/-. The assessment was concluded under s. 143(1) of the Act. However, based on certain information stated to be collected by the AO alleging escapement of income in the hands of the assessee, the AO recorded reasons under Section 148(2) of the Act dated Nil proposing reopening of the concluded assessment under Section 147 of the Act by issuing notice under Section 148(1) of the Act. For the purposes of reopening the assessment and issuance of notice under s. 148 of the Act, an approval was sought by the AO from the competent authority namely, Principal Commissioner of Income Tax (Pr.CIT) in terms of Section 151 of the Act. The approval as per requisition memo was accorded by the Pr.CIT, Delhi on 29.03.2018. Based on such approval under Section 151 of the Act, a notice dated 29.03.2018 was issued....

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....asons recorded, the AO himself conceded that the assessee had furnished cash book showing entries towards purchase and sale of land in rural areas in cash. Thus, impliedly the cash transactions in question forming the basis for alleged escapement were already forming part of the books of account. The Pr.CIT was thus expected to look and offer some comment to justify his sanction to reopen the case in such circumstances. Some of the comments showing application of mind in the circumstances could be (a) whether when the transactions are recorded, a preliminary case of escapement can be made out or not (b) the maintainability of allegation on non-reporting of such transaction in ITR etc. The Ld. Counsel contended that there is no requirement in ITR to report such transactions received by way of advances made or refund of advances. In the absence of any specific column assigned, the assessee was estopped from making disclosure of such transactions in the ITR and therefore such assertions giving rise to belief towards escapement owing to non disclosure is also without any foundation. 3.4 The ld. counsel adverted to sanction so accorded by the PCIT and submitted that a generic and cos....

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....eds to record its own reasons for sanction under Section 151 of the Act. Once, the approval is granted, the statutory presumption is to be drawn that the competent authority has acted with due application of mind. The ld. DR thus submitted that the sanction granted by the Pr.CIT cannot be faulted in law having regard to the plain language of the provisions of Section 151 of the Act. 5. We have carefully weighed the rival contentions and perused the material available on record. 5.1 While several facets challenging the assumption of jurisdiction under Section 147 are involved, we consider it expedient to address ourselves on the legitimacy of approval granted by Pr.CIT under Section 151 of the Act as vehemently questioned on behalf of the assessee. 5.2 Since the primary issue hinges around the validity of approval to the reasons for reopening concluded assessment, the typed copy of such Approval Memo / requisition memo under s. 151 of the Act is reproduced hereunder for easy reference; "Certified True Copy of form for recording the reason for initiating proceedings under Section 148 and obtaining the approval of the pr. Commissioner of Income Tax" 1. Name and....

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....initiate the action under Section 147 of the Act on the basis of satisfaction of the Pr.CIT towards escapement as forwarded to him by the AO through the office of the Additional Commissioner of Income Tax. In other words, the prior approval of the Pr.CIT under Section 151 of the Act in the instant case has set the proceedings under Section 147 of the Act into motion. As the law envisage, the permission of superior authority as statutorily designated is a sine qua non to prior to initiation of action under Section 147/148 of the Act. The Pr.CIT in the instant case was the competent authority statutorily designated for this purpose. It was thus on the basis of satisfaction and approval of the Pr.CIT that the re-assessment was initiated and completed. The legitimacy of satisfaction of the PCIT for the purposes of sanction under s. 151 has however been called into question in the instant case. 6. As pointed out on behalf of the assessee, the Pr.CIT has simply recorded 'action u/s. 148 approved' towards sanction of reassessment proceedings. Ostensibly, the sanction granted is muted and non-descript. Section 151 of the Act operates as one of the potent safeguards against the arbitrary....