Delhi High Court
Commissioner Of Income Tax-8 ... vs Soyuz Industrial Resources Ltd. on 27 February, 2015
Author: S.Ravindra Bhat
$~44
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Decided on 27th February, 2015
+ ITA 158/2015
COMMISSIONER OF INCOME TAX-8 (ERSTWHILE CIT-III)
..... Appellant
Through Ms. Suruchi Aggarwal, sr. standing
counsel
versus
SOYUZ INDUSTRIAL RESOURCES LTD. ..... Respondent
Through Mr. Mayank Jain and Mr. Madhur Jain,
Advs.
CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
HON'BLE MR. JUSTICE R.K.GAUBA
MR. JUSTICE S. RAVINDRA BHAT (OPEN COURT)
%
1. The Revenue is aggrieved by the order of the Income Tax Appellate
Tribunal (hereinafter referred to as "the ITAT") dated 22.08.2014 dismissing
its appeal ITA No. 3853/Del/2010. It urges that in the given circumstances of
the case, the ITAT's findings that the Commissioner of Income Tax lacked the
authority to sanction re-assessment proceedings through issuance of notice
under Section 148, was unjustified.
2. The brief facts of the case are that for Assessment Year (AY) 2002-03,
the assessee had filed its returns in a normal course on 16.10.2002. The
assessment was framed under Section 143(1). Based upon information received
by the Assessing Officer (AO), a satisfaction note was recorded sometime in
early 2009 and a notice was issued in 2009 i.e. four years beyond the end of the
assessment year, under proviso to Section 147(1). The re-assessment
proceedings were completed on 31.12.2009. The assessee in its appeal urged
that the notice under Section 147 was unsustainable for the reason it was not
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approved by the competent authority in accordance with Section 151 of the
Act. This argument ultimately found favour with the ITAT which, inter alia,
held as follows:-
"8. We have heard rival submission and perused the material on
record. In the instant case admittedly, neither assessment u/s 143
(3) nor u/s 147 was completed prior to issuance of notice u/s 148
of the Act. The notice u/s 148 of the Act was issued on 25.3.2009
i.e. four years beyond the end of the assessment year. Therefore
u/s 151 (2) of the Act is applicable to the facts of instant case
Section 151(2) of the Act read as under :
"(2) In a case other than a case falling under sub-
section (1), no notice shall be issued under section 148
by an Assessing Officer, who is below the rank of Joint
Commissioner, after the expiry of four years from the
end of the relevant assessment year, unless the Joint
Commissioner is satisfied, on the reasons recorded by
such Assessing Officer, that it is a fit case for the issue
of such notice."
8.1. Hence the sanctioning authority as per section 151(2) of the
Act for issuance of notice u/s 148 ought to have been the Joint
Commissioner of Income Tax. However on perusal of the
assessment records which was placed before us, it is clear that
the sanction for issuance of notice u/s 148 was granted by the
Commissioner of Income Tax. A copy of the reason recorded for
reopening the assessment is placed at page 26 of the paper book
filed by the assessee on 7.9.2010. The Ld. DR's contention is that
assessee did not raise any objection before the AO on this issue.
The contention of the Ld. DR is that once the assessee submits to
the jurisdiction to the AO then subsequently objection with
reference to jurisdiction cannot be raised. The sanction by
competent authority, as mentioned in section 151 only can assign
proper jurisdiction to the Assessing Officer and if such sanction
was not obtained, the Assessing Officer lacked the jurisdiction to
complete the reassessment proceedings. When the legislature has
specifically assigned jurisdiction to a particular authority under
the Act to grant sanction then, if all other conditions are fulfilled,
the sanction has to be granted by that very authority. This
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function cannot be delegated to any other authority. It is the legal
duty cast upon that authority to perform the said function. If that
authority fails in performing his legal functions and the same is
performed by the other authority then it goes to the very root of
proper assumption or jurisdiction by the authority which was
required to take that sanction. This is a purely legal issue and can
be raised at any stage of proceeding."
3. During the course of the contentions, the Revenue had argued that even
otherwise Section 292B of the Act precluded the assessee's objection as to the
jurisdictional infirmity of the notice. This was repelled by the ITAT itself. It
relied upon a Division Bench ruling in Commissioner of Income Tax
V. S.P.L's Siddhartha Ltd. (2012) 345 ITR 223.
4. The Revenue contends that the ITAT fell into error and relies upon the
proviso to Section 151(1) to say that in all cases where re-assessment is
proposed, the approval of the highest authorities such as the Principal Chief
Commissioner, Principal Commissioner or the Commissioner, is essential and
that in the facts of this case such authorization had, in fact, been secured prior
to issuance of notice.
5. Section 151 reads as follows:-
"151. Sanction for issue of notice.- (1) In a case where an
assessment under sub-section (3) of section 143 or section 147
has been made for the relevant assessment year, no notice
shall be issued under section 148 by an Assessing Officer, who
is below the rank of Assistant Commissioner or Deputy
Commissioner, unless the Joint 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,
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on the reasons recorded by the Assessing Officer aforesaid,
that it is a fit case for the issue of such notice.
(2) In a case other than a case falling under sub-section (1),
no notice shall be issued under section 148 by an Assessing
Officer, who is below the rank of Joint Commissioner, after
the expiry of four years from the end of the relevant
assessment year, unless the Joint Commissioner is satisfied,
on the reasons recorded by such Assessing Officer, that it is a
fit case for the issue of such notice.
6. A plain textual analysis of the above provisions would indicate the
following:-
(i) Where the original assessment is a result of scrutiny assessment
[Section 143(3)] or made in the course of re-assessment
proceedings (Section 147) - but within the initial period, Section
151(1) applies. The competent authority would then be the Joint
Commissioner;
(ii) In the same fact situation, in case the notice is sought to be issued
under Section 147 and the proviso to Section 147(1) i.e. beyond
the extended four-year period, the competent authority for prior
approval to the proposal would be the Principal Chief
Commissioner, or Chief Commissioner or Principal
Commissioner or Commissioner;
(iii) In case the original assessment is completed "other than" i.e.
otherwise than under Section 143(3) or during the course of re-
assessment proceedings, competent authority would be the Joint
Commissioner.
7. The ITAT examined the applicability of Section 292B based upon the
decision in S.P.L's Siddhartha Ltd.(supra), which rejected the revenue's
contention about its application holding that where a jurisdictional infirmity
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strikes at the root, invalidating the issuance of notice, Section 292B cannot
rescue it.
8. The Revenue's argument seems plausible and even logical because the
Commissioner or a Chief Commissioner is unarguably ranked higher in
authority than a Joint Commissioner. Yet at the same time, this Court has to
give effect to plain words of the statute which unambiguously states that the
competent authority in such cases is the Joint Commissioner (and not the Chief
Commissioner or the Principal Commissioner). The Revenue's submissions
that all such cases, are covered under proviso to Section 147(1), the competent
authority for prior approval would be four superior officers, renders Section
151(2) superfluous. If anything the Court is clear that it is not its job to render,
in the process of interpretation, an entire provision academic or inoperative.
This court is of the opinion that accepting the Revenue's position would result
in that consequence. The Court also invokes the principle enunciated by the
Privy Council in Nazir Ahmad V. Emperor, AIR 1936 PC 253 : AIR 193 that if
the statute mandates that something be done in a particular manner, it should
be in that manner or not at all. In this case, since the original assessment was
completed "other than" the eventualities contemplated in Section 151(1), i.e. it
was processed under Section 143(1). Thus, clearly Section 151(2) applied.
9. For the above reasons, the Court holds that there is no infirmity in the
order of the ITAT. No substantial question of law arises. The appeal is
therefore dismissed.
S. RAVINDRA BHAT, J
R.K.GAUBA, J
FEBRUARY 27, 2015/vld
ITA 158/2015
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