ASSISTANT COMMISSIONER OF INCOME TAX v. M.P. EXPORT CORPORATION LTD
[Citation -2007-LL-0921-3]

Citation 2007-LL-0921-3
Appellant Name ASSISTANT COMMISSIONER OF INCOME TAX
Respondent Name M.P. EXPORT CORPORATION LTD.
Court ITAT
Relevant Act Income-tax
Date of Order 21/09/2007
Assessment Year 1992-93
Judgment View Judgment
Keyword Tags deduction under section 80hhc • reassessment proceedings • re-opening of assessment • reopening of assessment • reassessment order • regular assessment • original return • issue of notice • valid notice
Bot Summary: The Assessing Officer did not accept the objections of the assessee and concluded that notice under section 148 which was served on the assessee was a valid notice for reopening of the assessment as there exists a case of escapement of income in terms of section 147 of the Act. The assessee challenged the reopening of the assessment before the learned CIT(A) and it was submitted that the notice under section 148 cannot be issued after expiry of four years from the end of the relevant assessment year i.e. 1992-93 if the original assessment order is made under section 143(3) unless the income has escaped the assessment for the reason of failure on the part of the assessee to make return under section 139 or in response to notice issued under section 142(1) or section 148 or to disclose fully or truly all material facts necessary for assessment for that assessment year. The relevant provisions under the Act are envisaged in sections 149 and 151 which read as under: Under section 151: In a case where as assessment under sub-section of section 143 or section 147 has been made for the relevant assessment year, no notice shall be issued under section 148, unless the 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 relevant assessment year, 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 fit case for the issue of such notice. In a case other than a case falling under sub section, no notice shall be issued under section 148 by an Assessing Officer, who is below the rank of Commissioner, after the expiry of four years from the end of the relevant assessment year, unless the Commissioner is satisfied, on the reasons recorded by such Assessing Officer, that it is fit case for the issue of such notice. The Assessing Officer, while invoking the provision under section 147 and making the reassessment, has not stated any reason and the basic requirements and legality for issuing the notice under section 148 after four years from the end of the relevant assessment year when the original assessment has been made. The Assessing Officer has made reference of the amended position of section 147 of the Income-tax Act and concluded that the notice issued under section 148 is a valid notice and re-opening of the proceeding for the assessment year 1992-93 is legal. As per the proviso to section 151 reproduced above in case of reopening under section 147 after expiry of four years from the end of the relevant assessment year, no such notice shall be issued unless the Chief Commissioner of Income-tax or the Commissioner is satisfied on the reasons recorded by the Assessing Officer aforesaid that it is a fit case for issue of such notice.


120 ITD 460 Per Bhavnesh Saini, Judicial Member. : This appeal by revenue is directed against order of CIT(A)-II, Bhopal, dated 29-3-2004 for assessment year 1992-93 on following grounds: "On facts and in circumstances of case, CIT(A) erred in - 1.quashing reassessment proceedings initiated by Assessing Officer under section 147 of Income-tax Act, 1961." 2. We have heard learned representatives of both parties and gone through material available on record. 3. Briefly, facts of case are that assessee filed original return of income on 31-12-1992 declaring income at Rs. 3,14,900. assessee revised return on 31-3-1994 and declared loss of Rs. 69,20,248. Assessing Officer has declined to accept revised return and completed original assessment under section 143(3) on 13-2-1995 on basis of original return on total income of Rs. 38,40,535. Thereafter, proceedings under section 147/148 were initiated and notice under section 148 was served upon assessee on 28-3-2001. assessee objected to initiation of proceedings under section 147/148 of Act. Assessing Officer did not accept objections of assessee and, therefore, concluded that notice under section 148 which was served on assessee was valid notice for reopening of assessment as there exists case of escapement of income in terms of section 147 of Act. 4. assessee challenged reopening of assessment before learned CIT(A) and it was submitted that notice under section 148 cannot be issued after expiry of four years from end of relevant assessment year i.e. 1992-93 if original assessment order is made under section 143(3) unless income has escaped assessment for reason of failure on part of assessee to make return under section 139 or in response to notice issued under section 142(1) or section 148 or to disclose fully or truly all material facts necessary for assessment for that assessment year. It was explained that assessee filed return of income and disclosed all material facts upon which regular assessment is framed under section 143(3) on 13-2-1995. Therefore, notice issued after expiry of more than four years is not valid and, therefore, prayed that reassessment may be quashed. learned CIT(A) considering submissions of assessee quashed reassessment order. His findings are reproduced below: "I have carefully gone through order of Assessing Officer and also considered submission and relevant case laws relied upon AR. In instant case, original assessment has been made under section 143(3) on 13-2-1995. On perusal of this order, Assessing Officer has mentioned that revised return filed by appellant on 31-3-1994 cannot be considered as filed under section 139(5) because original return has not been filed as per provision of section 139(1). Therefore, then Assessing Officer has disallowed bad debts amounting to Rs. 1,19,37,753 claimed in revised return. However, she has allowed deduction under section 80HHC at Rs. 11,76,970. In order under appeal, Assessing Officer has withdrawn deduction under section 80HHC by taking action under section 147/148. appellant has agitated only re-opening of assessment and has contended that notice issued after period of four year is not in accordance with provisions of law. relevant provisions under Act are envisaged in sections 149 and 151 which read as under: Under section 151: (1) In case where as assessment under sub-section (3) of section 143 or section 147 has been made for relevant assessment year, no notice shall be issued under section 148 (by Assessing Officer, who below rank of Assistant Commissioner (or Deputy Commissioner), unless (Joint) Commissioner is satisfied on reasons recorded by such Assessing Officer that it is fit case for issue of such notice): Provided that, after expiry of four years from end of relevant assessment year, no such notice shall be issued unless Chief Commissioner or Commissioner is satisfied, on reasons recorded by Assessing Officer aforesaid, that it is fit case for issue of such notice. (2) In case other than case falling under sub section (1), no notice shall be issued under section 148 by Assessing Officer, who is below rank of (Joint) Commissioner, after expiry of four years from end of relevant assessment year, unless (Joint) Commissioner is satisfied, on reasons recorded by such Assessing Officer, that it is fit case for issue of such notice. Assessing Officer, while invoking provision under section 147 and making reassessment, has not stated any reason and basic requirements and legality for issuing notice under section 148 after four years from end of relevant assessment year when original assessment has been made. Assessing Officer has made reference of amended position of section 147 of Income-tax Act and concluded that notice issued under section 148 is valid notice and re-opening of proceeding for assessment year 1992-93 is legal. After considering facts of case, submissions of appellant and relevant provisions of Act, I am of view that proceeding initiated in appellant s case under section 147 and notice issued under section 148 are not legal and also not in accordance with provisions of law. Since notice issued under section 148 is not valid, consequential proceedings based upon such notice also cannot be termed as valid. Therefore, reassessment order passed under section 143(3)/147 is quashed. In result, appeal is fully allowed." 5. ld. Departmental Representative relied upon order of Assessing Officer and submitted that findings of learned CIT(A) are not in accordance with law because 148 notice could be issued even after four years with prior approval of CIT. ld. counsel for assessee on other hand, submitted that there is no satisfaction of CIT granting approval for reopening of assessment after expiry of 4 years from end of relevant assessment year as per proviso to section 151 of Act and as such appeal of revenue is liable to be dismissed. ld. counsel for assessee submitted that it is legal issue arising from order of learned CIT(A) and material available on record and as such goes to root of matter and could be decided by Tribunal. 6. On other hand, learned Departmental Representative objected to submissions of ld. counsel for assessee and submitted that this point was not raised before learned CIT(A) and as such cannot be agitated at this stage. learned Departmental Representative filed detailed paper book and submitted that Assessing Officer has recorded reasons for reopening of assessment on 23-3-2001 and sent proposal to CIT, Bhopal, for obtaining approval as per proviso to section 151 of Act. He has filed copy of ITNS-10, copy of reasons and also filed letter dated 23-3-2001 referred to CIT, Bhopal, making request for giving his approval as contained under section 151 of Act. learned Departmental Representative also filed copy of dispatch register of CIT, Bhopal, to show that approval of Commissioner of Income-tax was dispatched to Assessing Officer on 26-3-2001. learned Departmental Representative further submitted that in notice under section 148 it was clearly explained to assessee that said notice under section 148 is issued after obtaining necessary satisfaction of Commissioner o f Income-tax. learned Departmental Representative, however, submitted that separate satisfaction of Commissioner of Income-tax is not traceable and cannot be filed. learned Departmental Representative submitted that on basis of above documents it is clearly proved that learned CIT has recorded his satisfaction and given approval to reopening of assessment after expiry of 4 years from end of relevant assessment year and as such objection of assessee has no force and is liable to be rejected. learned Departmental Representative filed list of cases in which reopening of assessment was held to be valid which is taken on record. 7. On other hand, ld. counsel for assessee reiterated submissions made before authorities below and submitted that since department has failed to produce said register of Commissioner of Income-tax giving approval to reopening of assessment after 4 years, above documents would not prove anything in favour of department and would only raise presumption that Commissioner of Income-tax might have would only raise presumption that Commissioner of Income-tax might have issued sanction and approval of reopening of assessment. He has, however, submitted that satisfaction of Commissioner of Income-tax in giving approval to reassessment is not mere formality and department should also prove that learned CIT applied his mind to facts and circumstances of case before giving approval. He submitted that sanction of learned CIT, is must for reopening of assessment after four years. In support of his contention he has relied upon following decisions: 1.Decision of Hon ble Allahabad High Court in case of Dr. Shashi Kant Garg v. CIT [2006] 285 ITR 158 2.Decision of Hon ble Calcutta High Court in case of East India Hotels Ltd. v. Dy. CIT [1993] 204 ITR 435 3.Decision of Hon ble Bombay High Court in case of German Remedies Ltd. v. Dy. CIT [2006] 287 ITR 494 8. We have considered rival submissions and material available on record. It is not in dispute that return of income was originally filed on 31-12- 1992 on which assessment was completed under section 143(3) on 13-2- 1995. As per proviso to section 151 reproduced above in case of reopening under section 147 after expiry of four years from end of relevant assessment year, no such notice shall be issued unless Chief Commissioner of Income-tax or Commissioner is satisfied on reasons recorded by Assessing Officer aforesaid that it is fit case for issue of such notice. It is admitted fact that reopening is done in this case by recording reasons after four years from end of relevant assessment year. Therefore, satisfaction of Commissioner should have been obtained before issue of notice on reasons recorded by Assessing Officer. sanction of learned CIT is, therefore, must for reopening assessment after four years. decisions relied upon by ld. counsel for assessee are, therefore, applicable to support submissions of ld. counsel for assessee. Hon ble Bombay High Court in case of German Remedies Ltd. (supra) went to extent of observing that as matter of fact while granting approval, it was obligatory on his part to verify whether there was any failure on part of assessee to disclose full and true relevant facts in return of income filed in assessment of income of that year. It was also obligatory on part of learned CIT to consider whether or not power to reopen is being invoked within period of four years from end of assessment year to which they relate. In this case it was held that approval granted suffers from non-application of mind. issue before learned CIT(A) was validity of reopening of assessment. learned CIT(A) considered issue in light of section 151 of Act. Though assessee has not raised above submissions specifically but point in issue was considered by Commissioner of Income-tax with regard to basic requirements and legality for issuing notice under section 148 after four years from end of relevant assessment year when original assessment has been made. We may point out (sic) assessee can raise this point before Tribunal for first time as respondent defending order of learned CIT(A) which was based on only question whether there was any satisfaction of Commissioner of Income-tax on reasons recorded by Assessing Officer for reopening of assessment after four years. matter is, therefore, arising from material available on record. Rule 27 of Appellate Tribunal Rules provides that respondent in appeal can support order appealed against on any of grounds decided against him even though he may not have filed independent appeal or cross objection. Therefore, assessee was justified in raising such point before Tribunal which does not involve investigation into fact and that opportunity is given to both sides to meet contentions. Therefore, there is no reason for Tribunal in accepting contention of learned Departmental Representative. same view is taken by ITAT, Delhi Bench, in case of ITO v. Smt. Gurinder Kaur [2007] 288 ITR (AT) 207. 9. material on record produced by learned Departmental Representative before Tribunal shows that Assessing Officer recorded reasons for reopening after four years from end of relevant assessment year and sent proposal to Commissioner of Income-tax for his approval or his satisfaction as per section 151. In ITNS-10 there is no signature of Commissioner of Income-tax on column where satisfaction of Commissioner of Income-tax is to be recorded. No satisfaction of Commissioner of Income-tax is produced before us despite giving several opportunities to learned Departmental Representative to produce sanction order of Commissioner of Income-tax giving approval to reopening under section 148 of Act. Ultimately, learned Departmental Representative submitted that satisfaction of Commissioner of Income- tax in this case is not traceable being old matter. only copy of dispatch register is filed which does not contain if any satisfaction of Commissioner of Income-tax was recorded as per law. Unless satisfaction of Commissioner of Income-tax is produced before Tribunal, it cannot be decided whether Commissioner of Income- tax applied his mind on reasons recorded by Assessing Officer before giving approval to reopening of assessment under section 148 of Act. Therefore, decision of Hon ble Bombay High Court in case of German Remedies Ltd. (supra) is clearly applicable against revenue. In view of above discussion, it is proved on record that Commissioner of Income-tax has not recorded his satisfaction on reasons recorded by Assessing Officer in reopening of assessment. Proviso to section 151 is, therefore, not satisfied in this case. decisions cited by learned Departmental Representative are not on point in issue as regards satisfaction of Commissioner of Income- tax as required under section 151 of Act. Therefore, same would not support case of revenue. 10. Considering above facts, objection of ld. counsel for assessee is sustained. Resultantly, we hold that reopening of assessment is not valid. There is no merit in departmental appeal. same is, accordingly, dismissed. *** ASSISTANT COMMISSIONER OF INCOME TAX v. M.P. EXPORT CORPORATION LTD.
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