2009 (7) TMI 1097 - AT - Income Tax

Summary

Issues Involved:
1. Jurisdiction of notice issued u/s 147.
2. Applicability of section 147.
3. Authority of Commissioner of Income-tax (Appeals) to direct issuance of notice u/s 147.
4. Confirmation of income determination by the Assessing Officer.
5. Timeliness of notice issued u/s 143(2).

Summary:

1. Jurisdiction of Notice Issued u/s 147:
The assessee challenged the jurisdiction of the notice issued u/s 147 by the Assessing Officer on the direction of the Commissioner of Income-tax (Appeals). The Tribunal agreed with the assessee, citing the Supreme Court's interpretation in Rajinder Nath v. CIT [1979] 120 ITR 14 (SC), which limits the meaning of "finding" and "direction" in section 153(3). The Tribunal concluded that the direction from the Commissioner of Income-tax (Appeals) was beyond jurisdiction and did not bind the Assessing Officer.

2. Applicability of Section 147:
The Tribunal examined various case laws, including Hindustan Lever Ltd. v. R. B. Wadkar, Asst. CIT (No. 1) [2004] 268 ITR 332 (Bom) and Devidayal Rolling Mills v. Y. R. Saini, Asst. CIT [2006] 285 ITR 514 (Bom), which emphasized that the Assessing Officer must establish a failure on the part of the assessee to disclose material facts for reopening assessments beyond four years. The Tribunal found that the Assessing Officer did not independently satisfy this requirement, rendering the notice u/s 147 invalid.

3. Authority of Commissioner of Income-tax (Appeals) to Direct Issuance of Notice u/s 147:
The Tribunal held that the Commissioner of Income-tax (Appeals) does not have the power to direct the Assessing Officer to issue a notice u/s 147. This power exclusively vests in the Assessing Officer, and any such direction must be accompanied by the Assessing Officer's satisfaction regarding income escapement. The Tribunal cited Chunnilal Onkarmal P. Ltd. v. ITO [1983] 139 ITR 380 (MP) to support this view.

4. Confirmation of Income Determination by the Assessing Officer:
The Tribunal noted that the Commissioner of Income-tax (Appeals) had already deleted the income determination of Rs. 1,76,458 by the Assessing Officer. Therefore, the confirmation of this income determination was erroneous and beyond the jurisdiction of the Commissioner of Income-tax (Appeals).

5. Timeliness of Notice Issued u/s 143(2):
The Tribunal found that the notice issued u/s 143(2) was barred by time, as it was served after one year. This procedural lapse further invalidated the assessment order dated March 29, 2006.

Conclusion:
The Tribunal allowed the assessee's appeal, canceling the order of the Commissioner of Income-tax (Appeals) and holding that the notice issued u/s 147 was without jurisdiction. The Tribunal also noted that the notice u/s 143(2) was time-barred, thus deciding in favor of the assessee on all grounds.

Order Pronouncement:
The order was pronounced in the open court on July 14, 2009.