Notice issued u/s 148 with approval of CIT in place of JCIT has no validity

Issue before court:

Whether CIT can give approval for initiating proceeding u/s 147 in place of JCIT who is prescribed authority to give such approval u/s 151 (2) of the Income-tax Act.

Brief facts:

• For AY2002-03, assessment was framed under Section 143(1).
• Based upon information received by the AO, a satisfaction note was recorded sometime in early 2009 and a notice was issued in 25.03.2009 i.e. four years beyond the end of the assessment year. Since the case was reopened after expiry of four years approval for initiating proceedings u/s 147 was taken from jurisdictional CIT.
• The re-assessment proceedings were completed on 31.12.2009.

Contention of the revenue:

• Section 292B of the Act precluded the assessee to take objection of jurisdictional infirmity of the notice. Reliance was taken upon a Division Bench ruling in Commissioner of Income Tax V. S.P.L’s Siddhartha Ltd. (2012) 345 ITR 223.
• ITAT fell into error and relies upon the proviso to Section 151(1) to say that in all cases where re-assessment is proposed, the approval of the highest authorities such as the Principal Chief Commissioner, Principal Commissioner or the Commissioner, is essential and that in the facts of this case such authorization had, in fact, been secured prior to issuance of notice.

Contention of the assessee:

• The notice under Section 147 was unsustainable for the reason it was not approved by the competent authority in accordance with Section 151 of the Act.
• The notice u/s 148 was issued without proper approval from higher authority. CIT has no authority to give approval as JCIT is the authority prescribed in the act.

Held by the court:

• Where a jurisdictional infirmity strikes at the root, invalidating the issuance of notice, Section 292B cannot rescue it.
• Since the original assessment was completed “other than” the eventualities contemplated in Section 151(1), i.e. it was processed under Section 143(1). Thus, clearly Section 151(2) applied.
• When the legislature has specifically assigned jurisdiction to a particular authority under the Act to grant sanction then, if all other conditions are fulfilled, the sanction has to be granted by that very authority.

Conclusion:

The Court invokes the principle enunciated by the Privy Council in Nazir Ahmad V. Emperor, AIR 1936 PC 253 : AIR 193 that if the statute mandates that something be done in a particular manner, it should be in that manner or not at all.