Income Tax Appellate Tribunal - Jaipur
Mahaveer Prasad Gupta, Jaipur vs Dcit, Jaipur on 13 November, 2017
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IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR
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BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM
vk;dj vihy la-@ITA No. 499/JP/2016
fu/kZkj.k o"kZ@Assessment Year : 2006-07
Sh. Mahaveer Prasad Gupta, cuke DCIT,
85, Nemi Nagar, Vs. Circle-7,
Vaishali Nagar, Jaipur. Jaipur.
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ABVPG8261B
vihykFkhZ@Appellant izR;FkhZ@Respondent
fu/kZkfjrh dh vksj l@
s Assessee by : Shri Anil Mathur (Adv.) &
Shri Dileep Shivpuri (Adv.)
jktLo dh vksj ls@ Revenue by : Shri P.P.Meena
lquokbZ dh rkjh[k@ Date of Hearing : 31/10/2017
mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 13/11/2017
vkns'k@ ORDER
PER: VIJAY PAL RAO, J.M. This appeal by the assessee is directed against the order dated 21st March 2016 of CIT(Appeals) for the assessment year 2006-07. The assessee has raised the following grounds as under:-
"1. That on facts and in circumstances of case, ld. CIT(Appeals) grossly erred and acted illegality in confirming the issue of notice u/s 148 and finalization of assessment proceeding by the AO. U/s 143(3) of the Act.
2. That on law as well as on the facts and in circumstances of the case, ld. CIT(Appeals) grossly erred and was acted illegally in confirming the addition of a sum of Rs. 48,11,521/- on account of ITA No. 499/JP/2016 Sh. Mahaveer Prasad Gupta Vs. DCIT alleged brokerage receipt without any basis and rational justification."
2. Ground number 1 is regarding validity of reopening of assessment under section 148 of the Income Tax Act. The assessee is an individual and working as Development Officer with LIC. He filed his return of income for the assessment year under constitution on 28 July 2006 reporting taxable income of rupees 6,85,520/-. The original assessment was completed under section 143(3) of the Income Tax Act on 3rd October 2008 whereby the return income was accepted. Subsequently a survey action under section 133A was carried out by the Income Tax Department on 14th August 2012 in case of M/s. Vedang Colonizers Private Limited. During the survey proceedings a document was impounded containing an account of Balaji Vihar scheme developed by M/s. Luxmi Grih Nirman Sahkari Samiti Limited Jaipur. Based on this document the AO noted that the assessee received a sum of rupees 4811521 as brokerage income on land dealings. Accordingly the AO proposed to reopen the assessment and assess the said brokerage income to tax by issuing a notice under section 148 on 20th March 2013. The assessing officer completed the reassessment whereby an addition of rupees 48,11,521/- was made on account of brokerage 2 ITA No. 499/JP/2016 Sh. Mahaveer Prasad Gupta Vs. DCIT receipts. The assessee challenged the action of the assessing officer before the CIT(appeals) and raise an objection against validity of reopening of the assessment. However, CIT(appeal) did not accept the objection of the assessee and held that assessing officer was having tangible material as detected during the course of Survey proceedings under section 133A to form the opinion that the income assessable to tax on account of brokerage receipt in land dealings has escaped assessment.
3. Before us ld. AR of the assessee has submitted that the original assessment was completed under section 143(3) and thereafter the AO reopened the assessment after the expiry of 4 years on 20th March 2013. Therefore, the approval was required to be taken from Commissioner of Income Tax or Chief Commissioner of Income Tax before issuing the notice under section 148 of the Act. Ld. AR of the assessee has submitted that in the case of the assessee the approval was granted by J CIT as per the performa of approval at page number 44 & 45 of the paper book. Thus ld AR of the assessee has contended that reopening of the assessment is invalid as the assessing officer had no jurisdiction to proceed with the reassessment when the approval was not granted by a competent authority as provided under section 151(1) 3 ITA No. 499/JP/2016 Sh. Mahaveer Prasad Gupta Vs. DCIT of the act. He has referred to the proviso to section 151(1) of the Income Tax Act and submitted that in case the assessment is reopened after 4 years from the end of the assessment year then the approval for reopening of the assessment is required to be granted by the chief commissioner or Commissioner as case may be on satisfaction of the regions recorded by the assessing officer that it is a fit case for issue of notice. Since in the case of the assessee reopening is after the expiry of 4 years from the assessment year and approval was granted by the JS CIT and not by the competent authority as provided under section 151(1) of the Income Tax Act therefore, the reopening under section 148 is invalid and the consequential reassessment is void ab-initio. In support of his contention he has relied upon the decision of Hon'ble jurisdiction High Court honorable jurisdiction High Court in case of Dhadha Exports vs ITO reported in 377 ITI 347. Thus ld. AR has submitted that while considering the an identical issue Hon'ble jurisdiction High Court has held that the notice issued under section 148 after 4 years from the assessment year was not valid as the approval was obtained only from joint Commissioner and the entire proceedings stood vitiated for want of competence. The ld AR has also relied upon a series of decisions on this point wherein it has been held that the notice 4 ITA No. 499/JP/2016 Sh. Mahaveer Prasad Gupta Vs. DCIT issued under section 148 after 4 years from the end of the assessment year without the sanction of chief Commissioner or commissioner as per the proviso to section 151(1) is invalid. Hence, the ld. AR of the assessee has contended that a notice issued under section 148 without obtaining the saction of the chief commissioner or commissioner is not valid and consequently the entire reassessment proceedings are void and not sustainable in law.
4. On the other hand ld. Dr has submitted that this plea has not been raised by the assessee before the authorities below and therefore, this cannot be raised first time at this stage. He has further contended that the assessee raised the objection against the reopening of the assessment on the ground that assessing officer issued the notice under section 148 and initiated the proceedings of reassessment without any basis and without authority of law. Therefore, the objection of the assessee before the CIT(appeals) was that the reasons recorded by the assessing officer for reopening of the assessment are not sufficient to believe that the income assessable to tax has escaped assessment. He has relied upon the impugned order of the CIT (Appeals).
5. We have considered the rival submissions as well as well as relevant material on record. The assessee has challenged the validity of 5 ITA No. 499/JP/2016 Sh. Mahaveer Prasad Gupta Vs. DCIT reopening of assessment on the ground that a notice issued under section 148 and reasons recorded by the AO for reopening of the assessment are not valid as the necessary approval was not obtained from the chief commissioner or Commissioner but the approval was obtained from Joint commissioner. Therefore, when the approval was not granted by the competent authority then the notice issued under section 148 is invalid. There is no quarrel on the point that in case of reopening of assessment under section 148 of the Income Tax Act after expiry of 4 years from the relevant assessment year the approval of reasons recorded by AO is required to be granted by the Commissioner aor chief Commissioner as case may be as per the provisions of section 151(1) of the Income Tax Act as exist at the relevant point of time. The notice issued under section 148 after 4 years with the approval of joint Commissioner is not a valid notice because the competent authority to approve the reasons recorded by AO is the commissioner or chief commissioner on his satisfaction that the income assessable to tax as proposed by the assessing officer has escaped assessment after going through the relevant record and the reasons recorded by the assessing officer. Without the approval of the competent authority the AO is not empowered to issue the notice under section 148 and therefore, such 6 ITA No. 499/JP/2016 Sh. Mahaveer Prasad Gupta Vs. DCIT notice issued under section 148 is invalid and consequential proceedings under section 147 read with section 143 void for want of jurisdiction and not sustainable under law. In the case of the assessee here is no dispute about the fact that the notice under section 148 issued on 20th March 2013 was after the expiry of 4 years from the assessment year under consideration and the original assessment was also frame under section 143(3) of the Act. Therefore, on principle we find merits in the contention of the assessee however, neither this issue was raised before the authorities below nor it was adjudicated. We find that though the assessee raised an objection againstthe notice issued under section 148 of the Act and consequential reassessment completed under section 147 read with section 143(3) of the Act however, it was based on entirely a different plea and ground that the assessing officer was having no reason to believe that the income accessible to tax add escaped assessment. The grounds raised by the assessee before the CIT(appeals) are reproduced as under:-
"1) That on facts and in circumstances of case the learned assessing officer grossly erred and acted illegally in issuing notice u/s 148 of the Act and finalizing assessee u/s 147/143(3) of the Act.
2) That on facts and in circumstances of case addition of a sum of Rs. 48,11,521/- on account of alleged brokerage receipt is absolutely illegal, arbitrary and without any basis.7 ITA No. 499/JP/2016
Sh. Mahaveer Prasad Gupta Vs. DCIT
3) Assessee craves indulgence to add, delete, modify or alter any grounds of appeal on or before hearing."
6. We further note that even no such arguments and contentions was raised by the assessee as apparent from the impugned order of CIT(appeals). There it is Apparent that assessee did not raised this particular contention and plea of invalidity of the notice issued under section 148 for want of the approval of the competent Authority under section 151(1) of the Act. Since this issue has been raised by the assessee first time before the Tribunal and goes to the root of the matter but subject to the verification of the fact that the approval was obtained from joint commissioner and not from the chief commissioner or Commissioner as provided under section 151(1) of the Act. Accordingly, in the facts and circumstances of the case and in the interest of Justice we set aside this issue to the record of the CIT(appeals) for consideration and adjudication of this ground of the assessee.
7. Since the legal issue raised by the assessee is set aside to the record of the CIT(appeals) which goes to the root of the matter therefore, we do not propose to go into the merits of the addition as raised in the ground number 2 of the appeal which is left open. 8 ITA No. 499/JP/2016
Sh. Mahaveer Prasad Gupta Vs. DCIT In the result, appeal of the assessee is allowed for statistical purpose.
Order pronounced in the open court on 13/11/2017 Sd/- Sd/-
¼foØe flag ;kno½ ¼fot; iky jko½
(Vikram Singh Yadav) (Vijay Pal Rao)
ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member
Tk;iqj@Jaipur
fnukad@Dated:- 13/11/2017.
*Santosh.
vkns'k dh izfrfyfi vxzfs 'kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant- Sh. Mahaveer Prasad Gupta, 85, Nemi Nagar, Vaishali Nagar, Jaipur.
2. izR;FkhZ@ The Respondent- DCIT. Circle-7, Jaipur.
3. vk;dj vk;qDr@ CIT
4. vk;dj vk;qDr@ CIT(A)
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur.
6. xkMZ QkbZy@ Guard File {ITA No. 499/JP/2016} vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar 9