As per section 151, notice u/s 148 can be issued by assessing officer below the rank of assistant commissioner or deputy commissioner only after satisfaction of joint commissioner on the reasons recorded by such AO that it is the fit case for issue of such notice. Provided that in the case of reassessment after 4 years satisfaction of chief commissioner or commissioner is required instead of joint commissioner as stated above.

Requirements to be satisfied by Assessing Officer considering section 151:

1.Satisfaction has to be received by assessing officer before issue of notice:

The AO issued a notice for reopening on 30 March 2011 when as a matter of fact approval was received with reference to the provisions of Section151 from the Commissioner of Income Tax on 31 March 2011. As on the date on which the notice of reopening was issued, the Assessing Officer was not in receipt of the approval which is required under Section 151, the reopening was quashed in  WRIT PETITION NO.1246 OF 2012 (BOMBAY HC), Shri. Ghanshyam K. Khabrani Vs. ACIT.

2. Satisfaction required and not merely approval:

Merely sign and stamp of approving authority will not amount to satisfaction.

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In the case of The Central India Electric Supply Co. Ltd V/s ITO, reported vide 333 ITR 237 (2011), Honourable Delhi HC has held that,

Where a mere stamp is affixed and signed by a Under Secretary underneath a stamped “Yes‟ against the column which queried as to whether the approval of the Board had been taken. Rubber stamping of underlying material is hardly a process which can get the imprimatur of this Court as it suggests that the decision has been taken in a mechanical manner. Even if the reasoning set out by the ITO was to be agreed upon, the least, which is expected, is that an appropriate endorsement is made in this behalf setting out brief reasons. Reasons are the link between the material placed on record and the conclusion reached by an authority in respect of an issue, since they help in discerning the manner in which conclusion is reached by the concerned authority. Thus, we find force in the contention of learned counsel for the appellant that there has not been proper application of mind by the Board.

3. Approval should be of the authority, as required in the section and not of the higher authority:

In the reassessment within 4 years, act requires approval of DCIT. If in that case approval of CIT or CCIT was taken instead of DCIT, entire reassessment proceedings will be invalid and liable to be quashed.

The Apex Court in the case of Anirudh Sinhji Karan Sinhji Jadeja Vs. State of Gujarat, (1995) 5 SCC 302 has held that if a statutory authority has been vested with jurisdiction, he has to exercise it according to its own discretion. If discretion is exercised under the direction or in compliance with some higher authorities instruction, then it will be a case of failure to exercise discretion altogether.

Honourable Bombay High Court in the case of DSJ Communication Ltd V/s. DCIT, Circle-2(1) & Anr. Held that, there is merit in the contention raised on behalf of the Assessee that the requirement of Section 151(2) could have only been fulfilled by the satisfaction of the Joint Commissioner that this is a fit case for the issuance of a notice under Section 148. Section 151(2) mandates that the satisfaction has to be of the Joint Commissioner. That expression has a distinct meaning by virtue of the definition in Section 2(28C). The Commissioner of Income Tax is not a Joint Commissioner within the meaning of Section 2(28C). In the present case, the Additional Commissioner of Income Tax forwarded the proposal submitted by the Assessing Officer to the Commissioner of Income Tax. The approval which has been granted is not by the Additional Commissioner of Income Tax but by the Commissioner of Income Tax. There is no statutory provision here under which a power to be exercised by an officer can be exercised by a superior officer. When the statute mandates the satisfaction of a particular functionary for the exercise of a power, the satisfaction must be of that authority. Where a statute requires something to be done in a particular manner, it has to be done in that manner.

CA hardik voraHardik Vora,  

B Com, LLB, CA,

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