TMI Blog2024 (1) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... on (1) and (2) of section 151. Sanctioning authority for issuance of notice under section 151(2) of the Act continues to be the Joint Commissioner of Income Tax. Vide Finance Act, 2015, with effect from 01/06/2015, section 151 of the Act was amended and Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner of Income Tax was empowered to grant the sanction for issuance of notice under section 148 of the Act after the expiry of four years from the end of the relevant assessment year. As per Circular No. 19 of 2015 issued by the CBDT on 27/11/2015, the said amendment was made in order to provide simplicity, as prior to the amendment section 151 of the Act specified different sanctioning authorities based on various scenarios. Whether the manner of granting sanction under section 151 of the Act is in the nature of procedural law? - We find that similar issue came up for consideration in Navketan Enterprises v/s CIT, [ 2001 (5) TMI 46 - JHARKHAND HIGH COURT] wherein as held that section 151 of the Act is in the nature of procedural law and therefore for the purpose of obtaining the approval, the Assessing Officer has to apply the law as it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levant details about the alleged bogus transaction of the assessee were identified. In the last paragraph, the AO has clearly identified the escapement of income, and the satisfaction of the AO is recorded. Thus, there was a tangible material on the basis of which the AO applied his mind independently. Hence, it is not correct to state that reopening has been made without independent application of mind by the AO. Thus, when new and tangible material in the form of a report from the DGIT (Investigation), Mumbai was received, we are of the view that the reassessment proceedings were validly initiated. Accordingly, revised ground no. 2 raised by the assessee is dismissed. Addition u/s 69C - bogus purchases made - From the material available on record it is evident that the assessee has failed to prove the genuineness of the purchases made from the supplier. However, at the same time, the Revenue has not doubted the sales declared by the assessee. Further, it cannot be doubted that without the purchase of material, the assessee cannot carry out the sales. Therefore, it appears to be a case of bogus bills arranged from the aforesaid entity and material purchased from somewhere e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was done and therefore case is covered u/s 151(2) and therefore the appropriate authority for obtaining the satisfaction was Joint Commissioner of Income Tax. In view of Judgment rendered by Hon'ble Jurisdictional Bombay High Court in case of Aquatic Remedies (P) Ltd. 406 ITR 545 the notice issued U/s 148 is bad in law and consequently assessment mace pursuant to the same needs to be quashed. 2. On the facts and circumstances of the case, the Commissioner of Income Tax Appeals) ought to have appreciated that the reason to believe is formed based on information received from the office of DDIT (Investigation). There is no independent application of the mind, which is not in conformity with the requirement of provisions of section 147 and therefore the order passed pursuant to the same needs to be quashed 3. On the facts and circumstances of the case and in law, the Commissioner of Income Tax (Appeals), NFAC erred in confirming the addition u's 69C of Rs 10.29 788 ora Purchases made from M/s International Trade Agency without appreciating that said purchases are genuine purchases beyond doubt and supported by sufficient materials, full quantitative stock records hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on between them. During the hearing, the learned Authorised Representative ( learned AR ) by referring to the reasons recorded for reopening the assessment submitted that the sanction under section 151 for issuing notice under section 148 of the Act was granted by the Principal Commissioner of Income Tax ( PCIT )-20, Mumbai instead of Joint Commissioner of Income Tax, who was the appropriate authority under the Act. Accordingly, it was submitted that since the sanction to issue notice under section 148 of the Act has not been granted by the appropriate authority, therefore reopening of assessment is unsustainable. On the contrary, the learned Departmental Representative ( learned DR ) by referring to the provisions of section 151 of the Act, as applicable at the time of issuance of notice under section 148 on 29/03/2018, submitted that PCIT, inter-alia, was the appropriate authority for the grant of sanction for issuance of notice under section 148 of the Act. 6. We have considered the submissions of both sides and perused the material available on record regarding the revised ground no. 1 raised by the assessee. In the present case, it is evident from the record that the origin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the Principal Commissioner or the Commissioner or the Joint Commissioner, as the case may be, being satisfied on the reasons recorded by the Assessing Officer about fitness of a case for the issue of notice under section 148, need not issue such notice himself. 8. Therefore, from the perusal of aforesaid provisions of section 151(1) of the Act, it is evident that in cases where four years have lapsed from the end of the relevant assessment year, Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner of Income Tax are empowered to grant the sanction if they are satisfied on the reasons recorded by the AO that it is a fit case for issuance of notice under section 148 of the Act. Whereas, sub-section (2) of section 151 of the Act deals with cases where notice under section 148 of the Act is to be issued prior to the expiry of the period of four years from the end of the relevant assessment year. Since, in the present case, notice under section 148 of the Act was issued after the expiry of four years from the end of the relevant assessment year, therefore we are only concerned with sub-section (1) of section 151 of the Act, according to whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O 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 the AO that it is a fit case for the issue of such notice under section 148 of the Act. 11. Therefore, from the comparative reading of section 151 of the Act, as existed during the relevant assessment year, i.e. 2011-12, and as existed at the time of issuance of notice under section 148 of the Act, i.e. assessment year 2017-18, we find that the sanctioning authority under section 151 of the Act for issuance of notice under section 148 of the Act has been amended from Joint Commissioner of Income Tax to PCIT. It, thus, means that whereas under the old section 151, the approval by Joint Commissioner of Income Tax was required, whereas under the provisions of section 151, as stood at the time of issuance of notice under section 148 of the Act, approval of PCIT is required for issuance of notice under section 148 by the AO after the expiry of four years from the end of the relevant assessment year. Therefore, insofar as the requirement of granting sanction under section 151 prior to issuance of noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion, are reproduced as under:- 6. Section 151 is in the nature of procedural law. Power to invoke section 147 undoubtedly is subject to issuance of notice under section 148. The manner of issuing such a notice and the requirements to be complied with, with regard thereto, are contained in section 151. If, therefore, an Assessing Officer contemplates initiating proceedings under section 147 and before he does so since he has to issue a notice under section 148, the requirements as contained in section 151 have to be complied with. These procedural requirements are relatable either to the nature of the original assessment order [whether it was passed under section 143(3) or section 147 or whether it was passed otherwise] and how much period has elapsed between the passing of the original assessment order and initiation of reassessment proceedings under section 147. The law as it presently stands, therefore, has to be pressed into aid to apply the aforesaid procedural requirements for invoking section 147 and, thus, for issuing notice under section 148, the Assessing Officer is supposed to look at the law as it presently stands and apply the same. He has not to go back to a law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eopening the assessment and notice under section 148 of the Act was issued, will be applicable and thus, we find no infirmity in the sanction granted by PCIT under section 151 of the Act in the present case. Before concluding, we may note that from the perusal of the decisions relied upon by the learned AR, we find that the sanction granted under section 151 of the Act was found to be improper as the sanction was not granted by the appropriate authority under the provisions of the Act, which is not so in the present case since PCIT had the authority under section 151 to grant the sanction for issuance of notice under section 148 of the Act after the expiry of four years from the end of the relevant assessment year. Hence, the decisions relied upon by the learned AR are factually distinguishable. Accordingly, revised ground no. 1 raised by the assessee is dismissed. 15. The grievance of the assessee vide revised ground No. 2 is that there is no independent application of mind by the AO while recording the reasons for reopening the assessment and the same is formed based on the information received from the office of DGIT (Investigation), Mumbai. As is evident from the record, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecorded the reasons for reopening that income chargeable to tax as indicated by the accommodation bills for purchase to the tune of Rs. 10,29,788 has escaped assessment within the meaning of section 147 of the Act. 17. It is the plea of the assessee that the reassessment proceedings have been initiated without independent application of mind by the AO to come to the aforesaid conclusion. In the present case, it is pertinent to note that no scrutiny assessment was conducted in the case of the assessee and therefore the only data available with the AO was the data provided along with the income tax return and the information received subsequently from the office of DGIT (Investigation), Mumbai. The said information constitutes new and tangible material for initiating the reassessment proceedings in the case of the assessee. 18. It is also to be noted that the AO in the reasons recorded has categorically mentioned that the assessee has obtained bogus purchase bills amounting to Rs. 10,29,788 from International Trade Agency during the financial year. Though this information was received from DGIT (Investigation), Mumbai but the AO applying his mind extracted the relevant details ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso asked to show cause as to why the purchases made from the aforesaid entity should not be treated as bogus and added to the total income of the assessee. However, in the absence of any response from the assessee, the AO vide order dated 30/11/2018 passed under section 143(3) read with section 147 of the Act held that the assessee has taken accommodation entries in the form of bogus purchases. Accordingly, the AO made the addition of Rs. 10,29,788 under section 69C of the Act. The learned CIT(A), vide impugned order, dismissed the appeal filed by the assessee and upheld the addition made by the AO under section 69C of the Act. 21. We have considered the submissions of both sides and perused the material available on record. In the present case, on the basis of the information received from the DGIT (Investigation), Mumbai that the assessee is the beneficiary of bogus purchases, reassessment proceedings in the case of the assessee were initiated. Further, notice issued under section 133(6) by the AO to the entity was also returned unserved. The AO made an addition of the entire amount of the alleged bogus purchases made from the said supplier. In support of his claim that the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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