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Commissioner of Income Tax Delhi IV Versus GEE KAY Finance & Leasing Co. Ltd.

2018 (2) TMI 768 - DELHI HIGH COURT

Validity of reopening of assessment - notice issued by AO u/s 148 beyond the 04 years - necessary approval of Chief Commissioner or CIT as per the provisions of Section 151(1) had not been obtained by the Assessing Officer -scope of amendment - Held that:- As quite obvious from a reading of the Board’s circular, issued on 31.10.1989 hat the Revenue authorities at a higher level existed and interpreted the amendments in the manner that the Calcutta High Court in East India Hotels Ltd. v. Deputy C .....

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elow the rank of Assistant Commissioner and Deputy Commissioner but also all Assessing Officers. The latter interpretation has been clearly followed by the Calcutta High Court – as well as the Revenue authorities. - Yet one more reason which persuades us to reject the Revenue’s submission to disagree with the Calcutta High Court’s judgment which is that in the case of a non-assessment (i.e. when the assessment is framed under Section 143(1), a higher standard of approval of the Joint Commis .....

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d:- 8-2-2018 - MR. S. RAVINDRA BHAT AND MR. VINOD GOEL JJ. Appellant Through: Mr. Raghvendra Singh, Adv. Respondent Through: Dr. Rakesh Gupta with Ms. Somil Agarwal, Ms. Monika Ghai & Mr. Rohit Kumar Gupta, Advs. S. RAVINDRA BHAT, J.(ORAL) 1. The question of law framed for this appeal - on 09.10.2009 is as follows: 1. Whether ITAT was correct in law in holding that the notice issued by the Assessing Officer u/s 148 of the Act beyond the 04 years after the end of relevant assessment year was .....

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) on 26.03.2003 leading to re-assessment. After rejecting the assessee s challenge to the re-opening, the AO proceeded to complete the re-assessment and added back substantial amounts under Section 68 of the Act (to the tune of ₹ 2,71,62,000/-) and completed the assessment. The CIT(A) affirmed the order of the Assessing Officer. The assessee appealed contending that the issuance of notice under Section 148 of the Act, was without jurisdiction as the concerned Assessing Officer (the Deputy .....

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atio in the judgments of the two High Courts, the ITAT allowed the assessee s appeal. 3. Counsel for the Revenue relies upon various amendments effected to Section 151 of the Act - through the Direct Tax Laws (Amendment) Act, 1987 (with effect from 01.04.1989); Finance Act, 1990 (with effect from 01.04.1990); and Finance (No.2) Act, 1998 (with effect from 01.10.1998). It is pointed out that before the 1989 amendment, the structure of the provision (Section 151 of the Act) was entirely different. .....

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tant Commissioner or Deputy Commissioner, suo moto, without the approval of a higher official provided it was within the period of four years from the end of the assessment year. It was urged that in cases of assessments completed by Assistant Commissioners/Deputy Commissioners, there was no need for obtaining approval of the Chief Commissioner/Commissioner. Emphasis was placed upon the expressions no such notice and Assessing Officer aforesaid to say that it was only in the event of completed a .....

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r. Raghvendra Singh, learned counsel who argued for the Revenue submitted that the interpretation placed by the Calcutta High Court in East India Hotels Ltd. (supra) renders the two expressions concurrent in the proviso and virtually results in the proviso becoming an independent sub-section or provision by itself, beyond the Parliamentary contemplation. 5. Dr. Rakesh Gupta, learned counsel who appeared on behalf of the assessee urged that the view of the Calcutta High Court is sound and does no .....

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n the event the Joint Commissioner completed the assessment, no approval was essential but in all other cases approval was essential. Learned counsel also highlighted that in other cases i.e. where assessments were merely framed under Section 153(1), the Parliamentary intent was to ensure that the approval of the higher authorities was always necessary, by reason of Section 151(2). The Calcutta High Court after noticing, the provision which existed when it decided the case (i.e. on 13.02.1992), .....

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f Commissioner or the Commissioner is a pre-condition. In that view of the matter, I am of the view that the notice issued under section 148 of the Income-tax Act beyond four years after the end of the relevant assessment year is bad in law inasmuch as the sanction of the Chief Commissioner or the Commissioner was not obtained before issuance of the notice. 6. The changes brought about by the amendments, particularly, the amendment brought into force with effect from 01.04.1989, constituted the .....

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od after which the case is being opened or re-opened. Thus, a scrutiny assessment will not be re-opened by an Assessing Officer of the rank below the rank of an Assistant Commissioner. After the expiry of 4 years from the end of the relevant assessment year, a scrutiny assessment can be re-opened only with the approval of the Chief Commissioner or Commissioner. A non-scrutiny case can be opened or re-opened by any Assessing Officer and after the expiry of 4 years from the end of the relevant ass .....

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years but upto 7 years Beyond 7 years but upto 10 years 1 2 3 4 1.Scrutiny cases {i.e., where an assessment order has been passed under section 143(3) or 147} Assessment can be reopened only by an Assessing Officer of the rank of an Assistant Commissioner or Deputy Commissioner (ii) Assessment can be re-opened whatever be the amount of income which has escaped assessment (i) Same as (1) in Col.(2) (ii) Assessment can be re-opened only if the income which has escaped assessment is ₹ 50,000 .....

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er be the amount of income which has escaped assessment. (i) Same as (i) in Col.(2). (ii) Assessment can be re-opened only if the income which has escaped assessment is ₹ 25,000 or more for that year. (iii) Assessment can be re-opened by Assessing Officer below the rank of Deputy Commissioner only with the approval of the Deputy Commissioner. (i) Same as (i) in Col.(2) (ii) Assessment can be re-opened only if the income which has escaped assessment is ₹ 50,000 or more for that year. .....

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