May be Right Thing done in Wrong Manner

Background

It is a matter relating to validity of re-opening of assessment on a technical ground in the case of Mayurbhai Mangaldas Patel v ITO. The learned Ahemdabad ITAT Bench has noted all the facts and circumstances of the case and the law as applicable in very clear manner.

It has kept some issues open or ‘has not explained in sufficient detail.

Author’s opinion

The bare reading of

• legislative enactment even without referring to any judicial precedence or
• after perusal of judicial precedence,

the case is a covered matter and in favour of the assessee.

The bench was of the opinion that, for such hyper technical reasons, the expected end result of Income Tax Act, 1961 should not be missed. But the bench should have referred the case before a larger bench for settling the matter. 

Observations of higher judiciary about judges. 

      In this context, we may note the eloquent statement of Benjamin Cardozo who said:

      “The judge is not a knight errant, roaming at will in pursuit of his own ideal of beauty and good-ness.” 

      In this regard, the profound statement of Felix Frankfurter Clark, Tom C., “Mr. Justice Frankfurter :’A Heritage for all Who Love the Law”, 51 A.B.A.J. 330, 332 (1965) is apposite to reproduce:

      “For the highest exercise of judicial duty is to subordinate one’s personal pulls and one’s private views to the law of which we are all guardians those impersonal convictions that make a society a  civilized community, and not the victims of personal rule.” 

      The learned Judge has further stated in Foreword, to Memorial issue for Robert H. Jackson, 55 Columbia Law Review (April, 1955) p. 436

      “What becomes decisive to a Justice’s functioning on the Court in the large area within which his individuality moves is his general attitude toward law, the habits of the mind that he has formed or is capable of unforming, his capacity for detachment, his temperament or training for putting his passion behind his judgment instead of in front of it. The attitudes and qualities which I am groping to characterize are ingredients of what compendiously might be called dominating humility.” 

In Shiv Mohan Singh v. The State (Delhi Administration) (1977) 2 SCC 238, the Court has observed:

“… a Judge even when he is free, is still not wholly free; he is not to innovate at pleasure; he is not a knight-errant roaming at will in pursuit of his own ideal of beauty or of goodness; he is to draw inspi-ration from consecrated principles’…” 

Om Prakash Chautala v. Kanwar Bhan (2014) 5 SCC 417

“19. It needs no special emphasis to state that a Judge is not to be guided by any kind of notion. The decision-making process expects a Judge or an adjudicator to apply restraint, ostracise perceptual subjectivity, make one’s emotions subservient to one’s reasoning and think dispassionately. He is expected to be guided by the established norms of judicial process and decorum.” 

And again:

“20. A Judge should abandon his passion. He must constantly remind himself that he has a singular master “duty to truth” and such truth is to be arrived at within the legal parameters. No heroism, no rhetorics.”

Dwarikesh Sugar Industries Ltd. v. Prem Heavy Engineering Works (P) Ltd. and another (1997) 6 SCC 450

“32. When a position in law is well settled as a result of judicial pronouncement of this Court, it would amount to judicial impropriety to say the  least, for the subordinate courts including the High Courts to ignore the settled decisions and then to pass a judicial order which is clearly contrary to the settled legal position. Such judicial adventurism cannot be permitted and we strongly deprecate the tendency of the subordinate courts in not applying the settled principles and in passing whimsical orders which necessarily has the effect of granting wrongful and unwarranted relief to one of the parties. It is time that this tendency  stops.”

Author’s conclusion

The objective of bench is laudable that for some technicalities revenue should not be depreived from its case on merits but it should have chosen approipriate path.

Citation of the case

Mayurbhai Mangaldas Patel v ITO – ITAT – AHMEDABAD ‘A’ BENCH dated 30^th November 2017 [I.T.A. No.3451/Ahd/2014, Assessment Year : 2005-06] 

Question

1. On the facts and in circumstances of the case as well as law on the subject, the learned Commissioner of Income-tax (Appeals) has erred in confirming the action of Assessing Officer in reopening the assessment u/s 147 of the Act.

2. On the facts and in circumstances of the case as well as law on the subject, the learned Commissioner of Income-tax (Appeals) has erred in confirming the action of Assessing Officer in reopening the assessment u/s 147 of the Act even when conditions required to be fulfilled u/s 151 was not been complied by assessing officer.

3. The appellant says and submits that the AO forwarded the proposal for reopening of the assessment to CIT Gandhinagar for his approval through JCIT. The JCIT expressed satisfaction about the recording of reasons and forwarded to CIT. The CIT approved the proposal on 30-03-2011 and received by the AO on 04-04-2011. The Notice under Section 148 was issued on 30-03-2011. Since the notice issued is prior to the approval of the CIT, it is bad in law. Under Section 151(2) the AO is required to take approval of JCIT but he has not taken JCIT approval and has taken approval of CIT. None obtaining of permission of the authority as prescribed in the Act is bad in law [Ghanshyam K. Khabrani V/s. ACIT 346 ITR 443 [Mum] and CIT V/s. SPL’s Siddhartha Ltd. 345 ITR 223 (Del)].

Answer 

Ground nos. 1,2 and 3 are thus dismissed, and, as we have stated earlier as well, no other ground of appeal was pressed before us.

Facts of the case-:

For re-opening the case u/s 147 and to issue notice u/s 148, the AO sent the case for appropriate approval for AY 2005-06 around at the end of the month of March 2011. Thus period of 4 years had lapsed.

The AO issued the notice on 30-3-2011 whereas the approval was received on 4-4-2011.

Addl CIT – recorded satisfaction on 28-3-2011

CIT recorded satisfaction on 30-3-2011

Thus factually the AO issued the notice before receipt of approval from Addl CIT and / or CIT. 

Legislative Enactment

abbreviations used

PCIT CCIT	Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner
AO	Assessing Officer
JCIT	Joint  Commissioner

Provision for cases where assessment is in pursuance of an order on appeal, etc.

150. (1) Notwithstanding anything contained in sec 149, the notice u/s 148 may be issued at any time for the purpose of making an assessment or reassessment or recomputation in consequence of or to give effect to any finding or direction contained in an order passed by any authority in any proceeding under this Act by way of appeal, reference or revision or by a Court in any proceeding under any other law].

(2) The provisions of sub-section (1) shall not apply in any case where any such assessment, reassessment or recomputation as is referred to in that sub-section relates to an assessment year in respect of which an assessment, reassessment or recomputation could not have been made at the time the order which was the subject-matter of the appeal, reference or revision, as the case may be, was made by reason of any other provision limiting the time within which any action for assessment, reassessment or recomputation may be taken.

“151 – Sanction for issue of notice 

(1) No notice shall be issued u/s 148 by an Assessing Officer, after the expiry of a period of four years from the end of the relevant assessment year, unless the PCIT / CCIT is satisfied, on the reasons recorded by the AO, that it is a fit case for the issue of such notice.

(2) In a case other than a case falling under sub-section (1), no notice shall be issued u/s 148 by an Assessing Officer, who is below the rank of JCIT, unless the JCIT is satisfied, on the reasons recorded by such AO, that it is a fit case for the issue of such notice.

(3) For the purposes of sub-section (1) and sub-section (2), the  PCIT / CCIT / JCIT, as the case may be, being satisfied on the reasons recorded by the AO about fitness of a case for the issue of notice u/s 148, need not issue such notice himself.

A brief explanation 

The use of words that the reassessment is being done with the “approval” of the CIT is meaningless unless the actual satisfaction of the CIT is actually seen, and we see that actual processing sheet for so called approval of the CIT, it is plain on facts that the satisfaction “on the reasons recorded by the Assessing Officer that it is a fit case for issuance of notice under section 148” is not only of the CIT but also of the JCIT / Addl CIT concerned.

Return of income, etc., not to be invalid on certain grounds.

292B. No return of income, assessment, notice, summons or other proceeding, furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceeding if such return of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the intent and purpose of this Act.]

Notice deemed to be valid in certain circumstances.

292BB. Where an assessee has appeared in any proceeding or co-operated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was—

(a)		not served upon him; or
(b)		not served upon him in time; or
(c)		served upon him in an improper manner:

 Provided that nothing contained in this section shall apply where the assessee has raised such objection before the completion of such assessment or reassessment.]

Judicial Precedence

Arvindbhai R. Patel vs. ITO (ITA No.228/Ahd/2015; dt 24.07.2017

Bharat Ramjibhai Patel vs. ITO (ITANo.229/Ahd/2015; dt 04.09.2017

Arvindbhai Ramjibhai Patel HUF vs. ITO (ITA No.3448/Ahd/2015 dt  12.06.2017

DSJ Communications Pvt Ltd Vs DCIT – (2014) 41 taxmann.com 151 Bom HC

Ghanshyam K. Khabrani V/s. ACIT 346 ITR 443 [Mum] and

CIT V/s. SPL’s Siddhartha Ltd. 345 ITR 223 (Del)]