Chattisgarh High Court

Jugal Kishore Paliwal vs Joint Commissioner Of Incom Tax on 1 April, 2022

                                1

                                                               NAFR

       HIGH COURT OF CHHATTISGARH, BILASPUR

                                    Order Reserved on 07.03.2022
                                    Order delivered on 01/04/2022

                      WPT No. 28 of 2022
• Jugal Kishore Paliwal S/o Late Ramavtar Paliwal, aged about
  51 years Proprietor of Shri Ji Rice Product, having his office at,
  Main Road, NH10, Post Sendri, Bilaspur, District Bilaspur (CG)
                                                    ---- Petitioner

                             Versus

1. Joint Commissioner of Income Tax Range 1, Bilaspur, Income
   Tax Department, Aayakar Bhawan, Vyapar Vihar, Bilaspur,
   District Bilaspur 495001 (CG)

2. The Income Tax Officer/ Assessing Officer, Having Office At,
   Ward 2(1), Vyapar Vihar, District Bilaspur (CG)

3. National Faceless Assessment Centre, Through Additional/
   Joint/ Deputy/ Assistant Commissioner of Income Tax
   Department, Ministry of Finance (Goi), Room No. 356 C.R.
   Building, IP Estate, New Delhi, Delhi- 110002.

                                                  ---- Respondents

                      WPT No. 31 of 2022
• M/s Saraswati Agro Industries A Partnership Firm, Having Its Office
  At, Ward No. 12, Kesla, Post Bilha, District Bilaspur, Chhattisgarh,
  Through Its Partner, Shri Manish Kumar Agrawal.
                                                       ---- Petitioner
                             Versus
1. Joint Commissioner of Income Tax Range 1, Bilaspur, Income Tax
   Department, Aayakar Bhawan, Vyapar Vihar, Bilaspur, District
   Bilaspur 495001, Chhattisgarh.
2. The Income Tax Officer / Assessing Officer Ward 2(1) Having Office
   At, Vyapar Vihar, Bilaspur District Bilaspur Chhattisgarh.

3. National Faceless Assessment Centre Through Additional / Joint /
   Deputy / Assistant Commissioner Of Income Tax / Income Tax Officer,
   Income Tax Department, Ministry Of Finance (Goi), Room No. 356
   C.R. Building IP Estate, New Delhi, Delhi 110002.

                                                  ---- Respondents

                      WPT No. 37 of 2022
• Smt. Vidhya Nagdeo W/o Shri Tikam Das Nagdeo Aged About
  63 Years Proprietor of Shri Yash Industries, Having Office At,
                                  2

     NH 130, Main Road, Post Bodri, Bilaspur, District- Bilaspur,
     Chhattisgarh.
                                                       ---- Petitioner
                              Versus
  1. Joint Commissioner of Income Tax Range 1, Bilaspur, Income
     Tax Department, Aayakar Bhawan, Vyapar Vihar, Bilaspur,
     District- Bilaspur, Chhattisgarh-495001
  2. The Income Tax Officer/assessing Officer Having Office At,
     Ward 2(1), Vyapar Vihar, District- Bilaspur, Chhattisgarh.
  3. National      Faceless      Assessment      Centre    Through
     Additional/joint/deputy/assistant Commissioner Of Income Tax
     Department, Ministry Of Finance (Gol), Room No. 356 C.R.
     Building, IP Estate, New Delhi, Delhi-110002
                                                   ---- Respondents

For Petitioners        :      Mr. Ankit Singhal, Advocates.
For Respondents        :      Mrs. Naushina Afrin Ali with Mr. Ajay
                              Kumrani,Advocates on behalf of Mr.
                              Amit Chaudhary, Advocate.

              Hon'ble Mr. Justice Parth Prateem Sahu

                            CAV Order

  1. Since common issue is involved in above three petitions, they

     were heard together and are being decided by this common

     order.


  2. Challenge in these three writ petitions is to the notice issued

     under Section 148 of the Income Tax Act, 1961 (for short 'the

     Act of 1961'), for the assessment year 2016-17.


  3. Facts

of WPT No.28/2022 in brief are that petitioner is running a

rice mill in the name and style of M/s Shri Ji Rice Product.

Petitioner submitted his return on 15.9.2016 for the assessment

year 2016-17 declaring his total income as Rs.13,33,000/-. His

case was selected for compulsory scrutiny based on information

received regarding three suspicious transaction reports. Upon

examination, it revealed that petitioner obtained bogus

purchase bills of Rs.1,73,83,410/- from M/s Shri Shyamji Rice

Agrotech, M/s Navdurga Traders & M/s Shrinath Paddy Process

and thereby income escaped assessment.

4. Facts of WPT No.31/2022 in brief are that petitioner is engaged

in the business of running rice mill.. He submitted his return on

30.9.2016 for the assessment year 2016-17 declaring total

income at Rs.1,49,763/-. Based on information received from

Income Tax Officer (Investigation) Raipur, an enquiry was

conducted in which it revealed that M/s Saraswati Agro

Industries credited Rs.30,00,000/- in the account of bogus entity

related to M/s Deepak Nanjyani during financial year 2015-16

and also obtained bogus purchase bills of Rs.34,20,000/- from

M/s Navdurga Traders and M/s Deepak Nanjyani.

5. Facts of WPT No.37/2022 in brief are that petitioner is engaged

in the business of running rice mill. She submitted her return on

13.10.2016 for the assessment year 2016-17 declaring her total

income as Rs.8,92,380/-. Petitioner's case was selected for

compulsory scrutiny based on information in form of survey

report. As per information, petitioner has shown bogus

purchases from M/s Nav Durga Traders, proprietor of which is

Shri Vijay Kumar Sharma. M/s Nav Durga Traders is bogus

entity having no genuine business.

6. All three petitioners were served with notice under Section 148

of the Act of 1961.

7. Mr. Ankit Singhal, learned counsel for petitioners in above writ

petitions would submit that respondent Department had issued

notice under Section 148 of the Act of 1961 without there being

any reason to believe in terms of Section 147 of the Act of 1961

that income of assessees has escaped assessment. The

Assessing Officer has not supplied reasons to believe along

with notice under Section 148 of the Act of 1961. Material based

upon which Assessing Officer recorded reason to believe was

not supplied nor sanction/ approval under Section 151 of the Act

of 1961 was supplied. On receipt of impugned notice under

Section 148 of the Act of 1961, petitioners submitted an

application (Annexure P-2) before the Assessing Officer for

providing copy of reasons recorded for issuance of notice under

Section 148 of the Act of 1961 along with documents relied

upon as also copy of sanction / approval granted by the Joint

Commissioner of Income Tax under Section 151 of the Act of

1961. Respondents along with Covering Memo dated 27.9.2021

(Annexure P-3) supplied Annexure-A containing reasons for

proceeding under Section 148 of the Act of 1961, but copy of

sanction/approval under Section 151 of the Act of 1961 was not

supplied. Petitioners made reminder request for providing copy

of sanction/approval under Section 151 of the Act of 1961 on

30.9.2021 but the same was not provided to them. As time was

running, petitioners submitted objections (Annexure P-5) to

notice issued under Section 148 of the Act of 1961. In the

objection petitioners raised specific grounds amongst other of

non-supply of copy of sanction/approval granted under Section

151 of the Act of 1961 to be against the principles of natural

justice. Objections submitted by petitioners were decided.

Along with copy of decision taken on objection, copy of

sanction/approval granted under Section 151 of the Act of 1961

was also supplied to petitioners. The sanction/approval under

Section 151 of the Act of 1961 was not signed by the authority

concerned. Sanction / approval letter only mentions "fit case"

which shows that authority granting approval has not applied

mind and granted sanction in a mechanical manner. As per

information of petitioners, record was not forwarded by

Assessing Officer to the approving authority; unless and until

entire material is forwarded, there cannot be satisfaction of

authority approving proposal for issuance of notice under

Section 148 of the Act of 1961. The notice issued under Section

148 of the Act of 1961 is not sustainable and it is liable to be

quashed. He submits that proposal for issuance of notice was

sent to the Joint Commissioner of Income Tax on 31.3.2021,

sanction/approval under Section 151 of the Act of 1961 was

granted on the same day, hence time of grant of sanction is

having significance. In the notice impugned there is mention of

date and time by authority but in the sanction/approval date and

time is not mentioned. It is contended that requirement under

the Act of 1961 is that sanction/approval should be prior to the

date and time of issuance of notice under Section 148 of the Act

of 1961. Time is relevant because 31.3.2021 is the last date for

initiating proceeding of reassessment (within four years). There

is apprehension of petitioners that on the date of issuance of

notice, there was no sanction by the competent authority and in

absence of proper sanction under Section 151 of the Act of

1961, issuance of notice under Section 148 is illegal. In support

of his contention, he places reliance upon the decision of

Bombay High Court dated 21.12.2021 in case of Svitzer Hazira

Pvt. Ltd. v. Assistant Commissioner of Income Tax & ors

reported in Writ Petition No.3554/2019.

Learned Counsel further submitted that except in letter of

approval/sanction, all the documents, which are forwarded to

the petitioners, bears digital signature of authority. In absence

of digital signature on sanction/approval under Section151 of

the Act of 1961, the same cannot be treated to be a valid

approval. In absence of proper sanction/approval, notice under

Section 148 of the Act of 1961 could not have been issued.

Remarks of approving authority, as appearing in approval under

Section 151 of the Act of 1961, would show that there is total

non-application of mind and approval, if any, has been granted

in a mechanical manner. The Joint Commissioner of Income

Tax, who is higher authority, is having important responsibility to

consider material placed before him recording reasons to

believe by Assessing Officer and after analysing reasons

recorded by Assessing Officer, higher authority like Joint

Commissioner of Income Tax or Principal Commissioner of

Income Tax can approve or reject proposal sent by the

Assessing Officer. In case at hand, at the time of considering

proposal for grant of approval, no records and files were

forwarded to the Joint Commissioner of Income Tax. Mere

making mention of 'fit case' or 'yes' in approval by the Joint

Commissioner of Income Tax or Principal Commissioner of

Income Tax while exercising powers under Section 151 of the

Act of 1961 will not be considered to be sanction/approval

granted after proper application of mind and in accordance with

provisions of the Act of 1961. Referring to decision in case of

Commissioner of Income Tax Jabalpur (MP) vs. M/s S.

Goyanka Lime and Chemical Ltd. reported in (2014) SCC

Online MP 4550, he submits that Division Bench of Madhya

Pradesh High Court while dismissing appeal preferred by the

Commissioner of Income Tax has observed that the Joint

Commissioner of Income Tax has only recorded "Yes, I am

satisfied" on the format, which indicates, as if, he was to sign

only on the dotted line without application of mind. The

Department preferred Special Leave Petition No.11916/2015

before Hon'ble Supreme Court against the order of Division

Bench of Madhya Pradesh High Court which came to be

dismissed vide order dated 8.7.2015. In instant case also the

Joint Commissioner of Income Tax has only mentioned "fit case"

on approval which shows total non-application of mind by the

authority, hence impugned notice is liable to be quashed on this

count alone.

He contended that notice under Section 131 of the Act of

1961 is also not issued to petitioners seeking clarification or

explanation. As per direction issued by the Department vide

Notification of the year 2018, the Department is required to

issue notice under Section 131, only after enquiry, proceeding

under Section 147 of the Act of 1961 could have been initiated

by the Assessing Officer. It is for the Assessing Officer to spell

out all reasons and grounds available for reopening of

assessment, but the same are missing in case of petitioners.

No specific reason to believe is recorded satisfying the

Assessing Officer that there is tangible material for issuance of

notice under Section 148 of the Act of 1961. The Assessing

Officer has not conducted any inquiry, only based on

information received from other sources, initiated proceedings

for issuance of notice under Section 148 of the Act of 1961.

Information received from other sources does not fulfil

requirement of Section 147 of the Act of 1961.

In support of his contention, he also places reliance upon

decision of Hon'ble Supreme Court in GKN Driveshafts (India)

Ltd. Vs. Income Tax Officer & ors reported in (2003) 1 SCC

72; judgements of Delhi High Court in cases of Ferrous

Infrastructure Pvt. Ltd. Vs. Deputy Commissioner of

Income Tax reported in 2015 SCC Online Del. 9693; Sabh

Infrastructure Ltd. v. Asstt. Commissioner of Income Tax

reported in 2017 SCC Online Del 10863; Principal

Commissioner of Income Tax-6 v. Meenakshi Overseas Pvt.

Ltd. reported in 2017 SCC Online Del 8691;

8. Mrs. Naushina Aafrin Ali, learned counsel for respondents

vehemently opposes submissions of learned counsel for

petitioners and submits that based on information collected/

received by Assessing Officer about three suspicious

transactions of petitioner Jugalkishore Paliwal (WPT

No.28/2022), first related to M/s Navdurga Traders (Proprietor-

Shri Vijay Kumar Shamra); second related to M/s Shrinath

Paddy Process (Proprietor- Shri Amar Kumar Sahu) and third

related to M/s Shri Shyamji Rice Agrotech (Proprietor- Shri

Sushil Kumar Maurya). Upon examination of all three

suspicious transactions, it revealed that petitioner Jugal Kishore

Paliwal had obtained bogus purchase bills to the tune of

Rs.1,73,83,410/- from aforementioned proprietorship firms in

the financial year 2015-16. Summons were issued under

Section 131 (1A) of the Act of 1961 to Shri Sushil Kumar

Maurya. During course of survey proceedings, entry providers

and other stated on oath that they have provided bogus entries

or bogus bills to various rice millers. During financial year

2015-16 petitioner has obtained bogus purchase bills worth

Rs.55,96,940/- from M/s Shri Shyamji Rice Agrotech;

Rs.73,90,000/- from M/s Navdurga Traders. Money of petitioner

was routed through bank account of M/s Shrinath Paddy

Process at Bank of Bardoa.

In case of petitioner M/s Saraswati Agro Industries (WPT

No.31/2022), upon receiving suspicious transaction report from

the Income Tax Officer (Investigation), Raipur, an enquiry was

conducted in which it revealed that during financial year 2015-

16 petitioner has taken bogus purchase bills of Rs.34,20,000/-

and Rs.30,00,000/- from M/s Navdurga Traders and M/s

Deepak Nanjiyani respectively, which are bogus entities.

In case of petitioner Smt. Vidhya Nagdeo (WPT

No.37/2022) upon receiving suspicious transaction report from

the Income Tax Officer (Investigation), Raipur, it revealed that

petitioner, who is Proprietor of M/s Yash Industries, Bilaspur,

took bogus purchase bills of Rs.80,03,876/- from M/s Navdurga

Traders during financial year 2015-16.

Based upon aforementioned material, the Assessing

Officer formed reasons to believe that income of respective

petitioners escaped assessment. There was prima facie

material available with Assessing Officer based upon which he

recorded reasons to believe that income of assessees' escaped

assessment. Hence, there is due compliance of provisions of

Section 147 of the Act of 1961. She submits that submission of

learned counsel for petitioners that at the time of issuance of

notice under Section 148 of the Act of 1961, proper

approval/sanction under Section 151 of the Act of 1961 was not

there, is not correct. Screen shot of ITBA Portal is filed along

with additional reply dated 7.3.2022 which clearly mentions as

to proceedings initiated by Assessing Officer and on 31.3.2021

print approval was uploaded. In ITBA portal unless and until the

approval is uploaded, the portal will not allow uploading of

notice under Section 148 of the Act of 1961.

She further contended that submission of learned counsel

for petitioners that digital signature is not available in sanction/

approval granted by the Joint Commissioner of Income Tax,

which makes the approval itself invalid, is not correct. Referring

to Section 282 (A) of the Act of 1961, she submits that this

Section provides that mentioning of name and designation of

authority on any document is sufficient for its authentication.

Every income tax authority is provided with separate DIN &

Document Number; in approval granted under Section 151 of

the Act of 1961, DIN & Document Number is specifically

mentioned. She relied upon Notification No.4/2017 issued by

CBDT dated 3.4.2017 in support of her contention.

Furthermore, approval/sanction under Section 151 of the Act of

1961 is an internal correspondence and exchange of document

between authorities, hence it is identified by DIN & Document

number. In approval/sanction under Section 151 of the Act of

1961, the authority concerned has mentioned "yes, fit", which is

mentioned only after due application of mind. The High Court of

Gujarat in case of Lalita Ashwin vs. State of Gujarat reported

in Special Civil Application Nos.1626 & 1627/2014 has

observed that only because the Joint Commissioner of Income

Tax granted approval by writing 'yes' to the reasons recorded,

the notice of reopening cannot fail. Hence, submission of

learned counsel for petitioners that there is no application of

mind by authority concerned is not correct. Approval/sanction

has been supplied little late to the petitioners but the fact

remains that prior to issuance of notice under Section 148 of the

Act of 1961, there was due approval/sanction by competent

authority for issuance of notice, as reflecting from Page No.14

of additional reply i.e. screen shot of web portal. The only

requirement of approving authority is to approve or reject or

sent back proposal. In case at hand, the approving authority

has mentioned 'yes, fit'. Proper reasons are recorded in terms

of Section 147 of the Act of 1961 and further proper approval/

sanction was accorded by authority competent, as required

under Section 151 of the Act of 1961 before issuance of notice

under Section 148 of the Act of 1961. Hence, petitioners are not

entitled for any relief as claimed in these petitions and the same

are liable to be dismissed. She places her reliance in cases of

Kalyanji Mavji & Co. v. CIT reported in (1976) 1 SCC 985; M/S.

Phool Chand Bajrang Lal vs Income-Tax Officer reported in

(1993) 4 SCC 77; ACIT vs. Rajesh Jhaveri reported in (2008)

14 SCC 208; Raymond Woollen Mills Ltd. vs. ITO, Centre

Circle XI, Range Bombay & ors reported in (2008) 14 SCC

218.

9. In reply, learned counsel for petitioners would submit that in

WPT No.37/2022 copy of approval/sanction granted under

Section 151 of the Act of 1961 was provided only on 16.2.2022.

He also pointed out that in all these writ petitions, application

was forwarded to the National Faceless Assessment Centre,

New Delhi for not providing relevant material/ information/

documents and information. With respect to certain information

sought by petitioners in letter dated 17.12.2021 it is mentioned

not available in the office of Income Tax Officer, Bilaspur.

10. At this stage, Mrs. Naushina Afreen Ali, learned counsel for

respondents would submit that along with copy of rejection of

objection, notice under Section 143 (2) of the Act of 1961 was

also issued to the respective petitioners. Petitioners can very

well explain to authority concerned about return submitted by

them under Section 139 of the Act of 1961.

11.I have heard learned counsel for the parties and perused the

documents placed on record by respective parties.

12. So far as submission of learned counsel for petitioners that

there was no proper sanction/approval on the date of issuance

of notice under Section 148 of the Act of 1961 is concerned,

provision under Section 151 of the Act of 1961 provides for

"sanction for issuance of notice". Authority prescribed for grant

of sanction/approval within four years of relevant assessment

year is the 'Joint Commissioner of Income Tax'. Under Section

151 (2) of the Act of 1961 the Joint Commissioner is required to

record his satisfaction on the reasons recorded by Assessing

Officer. Respondents along with their additional reply have

placed on record copy of screen shot of ITBA web portal in

which there is mention of 'print approval' against name of

respective petitioner with DIN number showing status to be

generated with an option to view attachments. From the screen

shot placed on record by respondents along with their additional

return, accord of sanction/approval with DIN number of

authority showing status to be generated on 31.3.2021, prima

facie it cannot be said that there was no sanction/approval for

issuance of notice under Section 148 of the Act of 1961. Along

with additional return respondents have further placed on

record approval/sanction granted under Section 151 dated

31.3.2021 which contains similar DIN Number as is mentioned

in screen shot of ITBA web portal placed on record. Petitioners

have also annexed approval/sanction granted under Section

151 of the Act of 1961 as Annexure P-6 to writ petition. DIN

Number is mentioned in Annexure P-6. Nothing has been

brought on record by petitioners to show that any objection was

raised by them to the effect that DIN number is incorrect or it

was not generated on 31.3.2021, except raising objection

before this Court with respect to manner in which sanction/

approval is granted, as is appearing in sanction order. In view

of aforementioned facts of case, submission of learned counsel

for petitioners that notice under Section 148 of the Act of 1961

is issued without there being any sanction/approval from the

competent authority is not sustainable and it is hereby repelled.

13. Ruling of the Bombay High Court in Svitzer Hazira's case

(supra) on which heavy reliance is placed by learned counsel

for petitioners is of no help to petitioners being based on

different facts. In that case, time of issuance of notice as also

time of granting sanction is specifically mentioned in the

document. Considering both the documents, the Court held that

notice under Section 148 of the Act of 1961 was issued prior to

grant of sanction/approval by competent authority. Time

mentioned in sanction / approval is 15 minutes after the time of

issuance of notice under Section 148 of the Act of 1961. In

these circumstances, Division Bench of Bombay High Court has

passed the order.

14. Another submission of learned counsel for petitioners is that

there was no proper application of mind by authority granting

approval/sanction. Section 151 of the Act of 1961 deals with

sanction for issue of notice. Sub-section (2) of Section 151

requires that the authority granting sanction/approval must be

satisfied on the reasons recorded by Assessing Officer that it is

a fit case for issuance of such notice. In case at hand, on the

basis of analysis of information collected/received and findings

thereon, the Assessing Officer elaborately recorded reasons to

believe in Annexure-A that income of petitioners escaped

assessment and sought permission to proceed under Section

148 of the Act of 1961. Based on reasons to believe recorded

by Assessing Officer in Annexure-A, the approving authority

granted approval under Section 151 of the Act of 1961. At this

stage, this Court is to consider whether notices under Section

148 of the Act of 1961 issued to petitioners are after following

the procedure prescribed under the law or not. In the facts of

the case, I do not find any substance in submission of learned

counsel for petitioners that sanction/approval under Section 151

of the Act of 1961 is bad in law and it is hereby repelled.

15. The judgment in case of S. Goyanka Lime & Chemicals Ltd.

(supra) relied upon by learned counsel for petitioners is

concerned, in that case petitioner therein submitted objection

which was rejected. Final assessment order under Section 143

(3) of the Act of 1961 was passed. Assessee aggrieved by

assessment order filed appeal. Appellate authority considering

entire record and material has held that the authority accorded

sanction not applied his mind and it was done in mechanical

manner. In case at hand that stage is still to come and

petitioners will have the opportunity to raise grounds before

appellate authority. Satisfaction recorded by sanctioning/

approving authority is to be considered based on facts of each

case. In this proceeding where challenge is to the issuance of

notice under Section 148 of the Act of 1961, sufficiency or

correctness of material for reopening of assessment will not be

the consideration. In the opinion of this Court the word 'fit case'

mentioned in 'sanction order / approval under Section 151 of

the Act of 1961' is to be tested along with the reasons' recorded

by the Assessing Officer and records of the proceedings.

16. Coming to next submission of learned counsel for petitioners

that there was no tangible material available for re-opening of

assessment. Perusal of reasons assigned prima facie shows

that Assessing Officer based on information of suspicious

transactions report from the Income Tax Officer (Investigation)

has verified transactions. Notice under Section131A of the Act

of 1961 was also issued and statements were recorded

including of one Sushil Kumar Maurya. Based on statements,

Assessing Officer recorded that petitioners obtained bogus

purchase bills during relevant period. Hon'ble Supreme Court

in case of M/s Phoolchand Bajrang Lal vs. Income Tax

Officer reported in (1993) 4 SCC 77 has observed that

Assessing Officer can start re-assessment proceeding when

fresh facts come to light which were not previously disclosed.

Relevant part of judgment is quoted below for ready reference:-

"From a combined review of the judgements of this Court, it follows that an Income-tax Officer acquires jurisdiction to reopen assessment under Section 147 (a) read with Section 148 of the Income Tax 1961 only if on the basis of specific, reliable and relevant information coming to his possession subsequently, he has reasons which he must record, to believe that by reason of omission or failure on the part of the assessee to make a true and full disclosure of all material facts necessary for his assessment during the concluded assessment proceedings, any part of his income, profit or gains chargeable to income tax has escaped assessment. He may start reassessment proceedings either because some fresh facts come to light which where not previously disclosed or some information with regard to the facts previously disclosed comes into his possession which tends to expose the untruthfulness of those facts. In such situations, it is not a case of mere change of opinion or the drawing of a different inference from the same facts as were earlier available but acting on fresh information. Since, the belief is that of the Income-tax Officer, the sufficiency of reasons for forming the belief, is not for the Court to judge but it is open to an assessee to establish that there in fact existed no belief or that the belief was not at all a bona fide one or was based on vague, irrelevant and non-specific information. To that limited extent, the Court may look into the conclusion arrived at by Income-tax Officer and examine whether there was any material available on the record from

which the requisite belief could be formed by the Income-tax Officer and further whether that material had any rational connection or a live link for the formation of the requisite belief.."

17. In case of Raymond Wollen Mills Ltd. vs. ITO Centre Excise

XI, Range Bombay & ors reported in (2008) 14 SCC 218

Hon'ble Supreme Court while considering as to sufficiency of

reasons to believe at the stage of issuance of notice under

Section 148 of the Act of 1961 has held thus:-

"3.In this case, we do not have to give a final decision as to whether there is suppression of material facts by the assessee or not. We have only to see whether there was prima facie some material on the basis of which the Department could reopen the case. The sufficiency or correctness of the material is not a thing to be considered at this stage. We are of the view that the court cannot strike down the reopening of the case in the facts of this case. It will be open to the assessee to prove that the assumption of facts made in the notice was erroneous. The assessee may also prove that no new facts came to the knowledge of the Income-tax Officer after completion of the assessment proceeding. We are not expressing any opinion on the merits of the case. The questions of fact and law are left open to be investigated and decided by the assessing authority. The appellant will be entitled to take all the points before the assessing authority. The appeals are dismissed. There will be no order as to costs."

18. Hon'ble Supreme Court in above rulings has held that at the

stage of issuance of notice for re-opening of assessment, the

Court is only require to see whether there is prima facie

material available on the basis of which department can reopen

case and not sufficiency or correctness of material to be

considered. Petitioners are having opportunity to reply to notice

under Section 148 of the Act of 1961, participate in proceedings

and raise all grounds available to them in accordance with law.

At this stage, this Court is only required to see whether there is

prima facie material before the Assessing Officer to initiate

proceedings and other requirements under the law, pre-

condition i.e. of taking approval/sanction under Section 151 of

the Act of 1961, before issuance of notice under Section 148 of

the Act of 1961 is followed or not.

19. Next submission of learned counsel for petitioners is that

approval/sanction granted under Section 151 of the Act of 1961

has not been digitally signed and dated. In rebuttal, submission

of learned counsel for respondents is that as per provisions of

Section 282-A of the Act of 1961, mention of name of

competent authority sanction/approval is sufficient. Relevant

portion of Section 282A of the Act of 1961 is extracted below for

ready reference:-

"282A.Authentication of notices and other documents.--(1) Where this Act requires a notice or other document to be issued by any income-tax authority, such notice or other document shall be signed and issued in paper form or communicated in electronic form by that authority in accordance with such procedure as may be prescribed.

(2) Every notice or other document to be issued,

served or given for the purposes of this Act by any income-tax authority, shall be deemed to be authenticated if the name and office of a designated income-tax authority is printed, stamped or otherwise written thereon.

(3) For the purposes of this section, a designated income-tax authority shall mean any income-tax authority authorised by the Board to issue, serve or give such notice or other document after authentication in the manner as provided in sub- section (2)."

20. Perusal of Section 282-A of the Act of 1961 would show that this

provision is brought into by way of amendment for the purpose

of authentication of notice and other documents. Sub-section

(2) of Section 282-A of the Act of 1961 envisages that every

notice or other document to be issued, served or given for the

purpose of this Act by any Income Tax authority shall be

deemed to be authenticated if name and office of designated

income tax authority is printed/stamped or otherwise written

thereon. In view of specific provision under the Act of 1961, the

document i.e. sanction/approval under Section 151 of the Act of

1961 issued by Competent Authority in case of petitioners will

be deemed to be an authenticated document. In the 'Note'