2022 (11) TMI 1490 - HC - Income Tax

Validity of reopening of assessment - Non disposal of objections of the assessee - also satisfaction by the approving authority as mandates u/s 151 was mechanical and in fact rubber stamped - HELD THAT - The objections raised by the assessee to the reasons recorded for re-opening and the re-opening itself were not disposed off by the AO. Thus the completion of assessment without disposal of these objections makes the assessment bad in law as held in the case of Rabo India Finance Ltd. 2012 (7) TMI 519 - BOMBAY HIGH COURT and Vishwanath Engineers 2012 (5) TMI 146 - GUJARAT HIGH COURT . Thus this finding of the ld. CIT(A) has to be upheld. Even otherwise Section 151 of the Act mandates recording of satisfaction by the approving authority. In this case the satisfaction was mechanical and in fact a rubber stamp was used to state Yes I am satisfied . The revenue could not and cannot controvert the above factual finding recorded by the Tribunal. It is clear from the finding recorded by the Tribunal that the assessing officer abdicated the statutory responsibility in not disposing of the two objections raised by the assessee for the re-opening proceedings. Decided against revenue.

Summary

Issues involved: Appeal against order quashing reassessment u/s 147/143(1) of Income Tax Act for assessment year 2010-11. Substantial questions of law raised regarding non-compliance of procedure and mechanical satisfaction u/s 151.

Issue 1 - Non-compliance of procedure:
The appeal was filed by the revenue challenging the order of the Income Tax Appellate Tribunal quashing the reassessment order u/s 147/143(1) of the Income Tax Act. The substantial question of law raised was whether the Tribunal erred in quashing the reassessment order without disposing of the objection raised by the appellant. The Court noted that the Tribunal was justified in granting relief to the assessee as the assessing officer failed to dispose of the objections raised by the assessee, rendering the assessment bad in law. The Court referred to previous judgments to support this conclusion, emphasizing the importance of complying with procedural requirements.

Issue 2 - Mechanical satisfaction u/s 151:
Another substantial question of law raised was whether the satisfaction by the approving authority u/s 151 of the Income Tax Act was mechanical and thus rendered the assessment bad in law. The Court found that the satisfaction was indeed mechanical, as evidenced by the approving authority merely stating "Yes I am satisfied." This mechanical satisfaction was deemed insufficient to meet the requirements of the law. The Court upheld the Tribunal's finding that the assessing officer had failed to fulfill the statutory responsibility by not addressing the objections raised by the assessee during the reassessment proceedings. Consequently, the Court dismissed the appeal, stating that no substantial question of law arose for consideration.

Separate Judgment:
The High Court of Calcutta, comprising Justice T.S. Sivagnanam and Justice Hiranmay Bhattacharyya, dismissed the appeal filed by the revenue under Section 260A of the Income Tax Act against the order of the Income Tax Appellate Tribunal. The Court found in favor of the assessee, highlighting the importance of procedural compliance and proper satisfaction under Section 151 of the Income Tax Act in conducting reassessment proceedings.