TaxTMI 
TaxTMI 
2025 (6) TMI 1119
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....from the Ld. Pr. CIT u/s. 151 of the Act. 3. Brief facts of the case are that the assessee filed the return of income on 28.09.2012 declaring total income at Rs. 1,75,03,350/-. The case of the assessee was selected for scrutiny and assessment was framed u/s. 143(3) of the Act on 30.03.2015 accepting the returned income. Thereafter, a search and survey operation was conducted on Rungta Group on 28.05.2015 by the Investigation Directorate, Kolkata. Though the assessee was not covered under the said search, the Assessing Officer after considering the facts of the case and statement recorded on oath of Shri M. P. Rungta and impounded seized documents from survey premises at 107, Pragati Towers, 26 Rajendra Place, New Delhi-110008 which was also subjected to survey operation u/s. 133A. Besides, the assessee was also subjected to survey operation u/s. 133A at 107, Pragati Towers, 26 Rajendra Place, New Delhi-110008. The Assessing Officer found that though the assessee claimed that the impounded material did not belong to the assessee but since the assessee failed to explain the same and there was no compliance to the proceedings u/s. 148 of the Act, the Assessing Officer framed the asse....
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....oval used the phrase "may be reopened" which means that the issuance of notice was left at the discretion of the Assessing Officer. The Ld. AR vehemently argued that in absence of any satisfaction of the higher authorities i.e. ld. Pr. CIT no notice u/s. 148 could have been issued. The Ld. AR further submitted that the Income Tax Act itself provides interpretation of the word "may and "shall" in the different provisions contained in the said Act by referring that whether the same is discretionary or mandatory. The Ld. AR referred to the words of section 151 of the Act which states that no notice u/s. 148 of the Act shall be issued by an Assessing Officer without the approval of competent authority which means that sanction of the competent authority is mandatory and any notice without such sanction would be invalid. The Ld. AR thereafter referred to the penalty provisions as contained in section 271, 271A, 271AAA, 271AAB and 271AAC etc. where the legislature has used the word "may" stated that the Assessing Officer may impose or forward penalty meaning thereby that legislature has given a discretion to the Assessing Officer. The Ld. AR, therefore, prayed that the literal rule of in....
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....ed that "Yes, I am satisfied. May be reopened" which is valid and thereafter the assessee cannot be allowed to question the same. By finding the miniscule and an insignificant coverage in the wording used by the authorities the Ld. DR, therefore, prayed that the ground raised by the assessee may be dismissed. 8. After hearing both the parties and perusing the material on record we find that in this case the case of the assessee was reopened u/s. 147 after obtaining approval of the competent authority which is Pr. CIT and thereafter, notice u/s. 148 was issued on 28.03.2019. The counsel for the assessee has challenged the validity of the proceedings u/s. 147 r.w.s. 148 of the Act on the ground that the approval granted by the competent authority i.e. ld. Pr. CIT u/s. 151 of the Act is invalid. The proceedings u/s. 147 r.w.s. 148 of the Act for the sake of ready reference is extracted below: 9. A perusal of para 13 of the said form regarding the reason u/s. 148 for obtaining approval of Ld. Pr. CIT states that while granting approval the Ld. Pr. CIT has mentioned "Yes, I am satisfied. May be reopened", which means that the Ld. Pr. CIT while granting the approval has left the issuan....
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....iterally the provision must be held to confer a discretion on the Adjudicating Authority (NCLT). 66. In Hiralal Rattanlal v. State of Uttar Pradesh 5, this Court held :- "22 In construing a statutory provision, the first and the foremost rule of construction is the literary construction. All that we have to see at the very outset is what does that provision say? If the provision is unambiguous and if from that provision, the legislative intent is clear, we need not call into aid the other rules of construction of statutes. The other rules of construction of statutes are called into aid only when the legislative intention is not clear." 67. In B. Premanand v. Mohan Koikal 6, this Court held:- "9. It may be mentioned in this connection that the first and foremost principle of interpretation of a statute in every system of interpretation is the literal rule of interpretation. The other rules of interpretation e.g. the mischief rule, purposive interpretation, etc. can only be resorted to when the plain words of a statute are ambiguous or lead to no intelligible results or if read literally would nullify the very object of the statute. Where the words of a statute are absolutely....
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....from the format of approval placed before us that Ld. Pr. CIT by stating that 'may be reopened' has casually acted in this matter without application of mind and it amounts to non-authoritative and non-mandatory direction to the Assessing Officer. In our opinion, the provisions of the Act have to be interpreted under the literal sense without waste or turning to change the meaning thereof. We find that in the Income Tax Act the words 'may' and 'shall' have been used in the different sections connoting different meaning. In this case, the Ld. Pr. CIT while granting the approval has used the word 'may' which contained that this decision of the Assessing Officer to issue the notices. So far as the literal interpretation of statute is concerned, we draw strength from the decision of the Hon'ble Apex Court in the case of B. Premannand & Ors. Vs. Mohan Koikal & Ors. (supra), wherein the Hon'ble Apex Court while interpreting the Rule of Interpretation has held as under: "It may be mentioned in this connection that the first and foremost principle of interpretation of a statute in every system of interpretation is the literal rule of interpretation. The other rules of interpretation e.g.....
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.... of the statute". In Union of India and another vs. Hansoli Devi and others 2002 (7) SCC (vide para 9), this Court observed: "It is a cardinal principle of construction of a statute that when the language of the statute is plain and unambiguous, then the court must give effect to the words used in the statute and it would not be open to the courts to adopt a hypothetical construction on the grounds that such construction is more consistent with the alleged object and policy of the Act." 12. Therefore, it is apparent from the above that a rule of interpretation i.e. to be followed for interpretation of statute is literal rule and the word 'shall' cannot be changed for 'may'. Therefore, we are of the view that sanction accorded by the Ld. Pr. CIT for issuance of notice u/s. 148 of the Act is not a valid approval in terms of section 151 of the Act and accordingly, the reassessment proceeding passed on the invalid approval are itself invalid and accordingly quashed. ITA No. 2315/Kol/2024 for Assessment Year 2013-14 13. We have quashed the reassessment proceeding in ITA No. 2257/Kol/2024 for AY 2012-13 which was passed on the invalid approval. In this appeal also, we apply the r....
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.... was placed for approval, therefore, we are inclined to hold that the approval granted by the Addl. CIT (C), Range-3, Kolkata is not in accordance with law, the provisions of the Act as the same has been given without any independent satisfaction and application of mind, therefore, we are inclined to quash the same. We find support while drawing the conclusion from the decision of the Hon'ble Delhi High Court in the case of CIT Vs. SPL's Siddhartha Ltd. 345 ITR 223 (Del.) and SBC Minerals P. Ltd. s. ACIT [2024] 167 taxmann.com 113 (Del.). The operative part of the decision in the case of the CIT Vs. SPL's Siddhartha Ltd. (supra) is extracted as under: "Sanction for issue of notice - Assessment year 2002-03 - Whether when a particular authority has been designated to record his/her satisfaction on any particular issue, then it is that authority alone who should apply his/her independent mind to record his/her satisfaction and satisfaction so recorded should be 'independent' and not 'borrowed' or 'dictated' satisfaction - Held, yes Thus, if authority is given expressly by affirmative words upon a defined condition, the expression of that condition excludes....
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.... proforma was stamped amounting to approval by the Board leaves much to be desired. It is a case where literally a mere stamp is affixed. It is signed by a Under Secretary underneath a stamped 'Yes' against the column which queried as to whether the approval of the Board had been taken. Rubber stamping of underlying material is hardly a process which can get the imprematur of this Court as it suggests that the decision has been taken in a mechanical manner. Even if the reasoning set out by the ITO was to be agreed upon, the least, which is expected, is that an appropriate endorsement is made in this behalf setting out brief reasons. Reasons are the link between the material placed on record and the conclusion reached by an authority in respect of an issue, since they help in discerning the manner in which conclusion is reached by the concerned authority. Our opinion is fortified by the decision of the Apex Court in Union of India v. ML Capoor AIR 1974 SC 87 wherein it was observed as under :- "27 We find considerable force in the submission made on behalf of the respondents that the "rubber-stamp" reason given mechanically for the supersession of each officer does no....
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....proving authority having to indicate what the thought process was, is missing in the aforementioned approval order. While elaborate reasons may not have been given, at least there has to be some indication that the approving authority has examined the material prior to granting approval. Mere appending the expression 'Yes I am satisfied' says nothing. The entire exercise appears to have been ritualistic and formal rather than meaningful, which should be the rationale for the safeguard of an approval by a high ranking official. Reasons are the link between material placed on record and the conclusion reached by the authority in respect of an issue, since they help in discerning the manner in which the conclusion is reached by the concerned authority. [Para 14] Mere repeating of the words of the statute, mere rubber stamping of the letter seeking sanction or using similar words like 'Yes, I am satisfied' will not satisfy the requirement of law. [Para 18] Mere repeating of the words of the statute, mere rubber stamping of the letter seeking sanction or using similar words like 'Yes, I am satisfied' will not satisfy the requirement of law. Hence, it is viewe....
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....d the Bench to get a clarification on this issue. Accordingly, the case record was called. 23. On the next date of hearing the file was placed before us, the record of file and register were placed before us and was duly examined. We find that in the assessment file folder a blank approval as extracted above was available. However, at the same time, another copy was also available which was sent by the competent authority but this was a photo copy and not the original copy available, therefore, considering the facts before us and conflicting records and absence of any ordinary approval available in the assessment folder, we have to draw an adverse inference against the revenue and inclined to hold that which is a valid approval granted by the competent authority. Consequently, from Sl. No. 7 of the same approval granted which states that "whether the main provisions of sec. 147 or its first proviso is applicable, we note that it has been mentioned that the first proviso of section 147 is applicable which is against a totally non-application of mind by the Assessing Officer as well as the competent authority. The first proviso to section 147 provides that bear assessment has been f....