Shri Ghanshyam Vs ITO (ITAT Agra)
In present case, the ld. Additional CIT granted the approval by observing merely that he was satisfied.
Sections 147 and 148 of the IT Act, it is trite, are charter to the Revenue to reopen completed assessments. Section 151 of the Act provides a safe-guard that the sword of section 147 of the Act may not be used unless the competent statutory officer is satisfied that the AO has good and adequate reasons to invoke the reopening provisions. As per the mandate of section 151 (2) of the Act, the Competent Authority has to examine the reasons, material or grounds on which the reopening is sought to be based and to judge as to whether they are sufficient and adequate to the formation of the necessary belief of escapement of income from taxation on the part of the AO. It is if and only if the Competent Authority, after applying his mind, is of the opinion that the AO’s belief is well reasoned and bonfide, that he will accord his sanction thereon.
In ‘Narayanappa’ (supra), it has been held that the stage for obtaining the sanction of the Competent Authority is administrative in character and not quasi-judicial . However, in ‘Chhugamal Rajpal vs. S.P. Chaliha’, 79 ITR 603 (SC) (supra), it has been held that where the Commissioner, while granting the sanction just noted the word “Yes” and affixed his signature thereunder, he had only mechanically accorded permission, and that the important safe-guards provided in section 151 were lightly treated.
‘Narayanappa’ (supra) is dated 27.09.1966, whereas ‘Chhugamal’ (supra) was handed down on 21.01.1971. Both these judgments have been rendered by co-equal Benches of the Hon’ble Apex Court. Now, it is well settled that in such a situation, the judgment of the Hon’ble Supreme Court, which is later in point of time has to be followed.
Thus, in keeping with the position of law on the issue, as discussed hereinabove, the approval in the case at hand is clearly an approval granted without application of mind, and therefore, it is not at all a legally tenable approval.
FULL TEXT OF THE ITAT JUDGMENT
This is assessee’s appeal for assessment year 2008-09, taking the following
“1. BECAUSE, upon due consideration of facts and in the overall circumstances of the case ‘appellant’ denies its liability to be assessed in terms of Notice dated 26.03.2015 said to be issued under section 148 of the ‘Act’.
2. BECAUSE, the Ld CIT(A) has not appreciated the fact that the purported ‘Reasons’ are No ‘Reasons’ in the eyes of Law. The so called ‘Reasons’ do not show any application of mind on part of the ‘AO’ to show that any Income liable for Tax has escaped Assessment warranting recourse to Notice under section 148 of the Act.
WITHOUT PREJUDICE TO THE ABOVE
3. BECAUSE, while making the addition of Rs. 22,65,000/- the authorities below failed to consider that ‘appellant’ being an Agriculturist having no other source of Income liable for Tax and therefore, no addition was called for in peculiar facts of the case.
4. BECAUSE, while making the addition of Rs. 22,65,000/- the authorities below failed to consider that ‘appellant’ has entered into an agreement with Ghasi Ram another Agriculturist who has provided funds to the ‘appellant’ from which Agriculture Land was purchased.
5. BECAUSE, in any case and in any view of the matter impugned additions/disallowances and impugned assessment order is bad in law, illegal, unjustified barred by limitation, contrary to facts and law based upon incorrect assumption of facts and further without allowing adequate opportunity of hearing in violation of principals of natural justice and therefore, the additions made deserves to be quashed.”
2. An additional ground has also been taken, as follows:
“Because the mechanical approval, without application of mind granted by the Additional Commissioner of Income Tax, Range-3, Mathura under section 151 for issuing notice dated 27.03.2015 under section 148 of the ‘Act’ has vitiated the assessment order dated 30.03.2016 and the said assessment is liable to be declared illegal and void ab-initio.”
3. The additional ground is a legal issue going to the root of the matter, not requiring any further material to be gone into. Accordingly, it is admitted.
4. Apropos the merits of the additional ground, the following is the approval granted by the Addl. CIT for initiation of proceedings u/s 147 of the IT Act:
