BOMBAY HIGH COURT
CIT VS AQUATIC REMEDIES PVT. LTD.
25-07-2018


I TA No. 904 OF 2016
P.C:­

This Appeal under Section 260­A of the Income Tax Act, 1961 (the Act), challenges the order dated 25th March, 2015 passed by the Income Tax Appellate Tribunal (the Tribunal). The impugned order dated 25th March, 2015 is in respect of Assessment Year 2004-­05.

2 Revenue urges the following question of l aw, for our consideration:

“Whether on the Facts and in the circumstance of the case and in l AW, the Tribunal was Correct in quashing the order Made under Section 143(3) r.w.s. 147 holding that the Ame is out of jurisdiction without Appreciating the Fact that the sanction of the CIT was Based on the satisfaction/ report of the Addl. CIT and AS Such the requirement of section 151(2) of the IT Act which calls for the s anction of the Addl. CIT, is duly fulfilled?”

3 Respondent is engaged in the business of trading in pharmaceutical products. On 25th March, 2011, the Assessing Officer issued a notice under Section 148 of the Act, seeking to re­open the assessment for the Assessment Year 2004­-05. Respondent challenged the issuance of the re­opening notice dated 25th March, 2011 on the ground that, permission/ sanction for issuing of the notice h ad to be obtained from the Additional Commissioner of Income Tax under Section 151 (2) of the Act while the sanction in this case hs been obtained from the Commissioner of Income Tax. Thus, in breach of the Section 151 of the Act. Therefore, without jurisdiction. The Assessing Officer did not accept the above submission of the Respondent and proceeded to p as a reassessment order dated 16th December, 2011 under Section 143(3) re ad with Section 147 of the Act.

4 Being aggrieved with the order dated 16th December, 2011, the Respondent filed an Appeal to the Commissioner of Income Tax (Appeals) [CIT( A)]. By order dated 28th December, 2013, the CIT( A) dismissed the appeal. This, by holding that the Addition al Commissioner of Income Tax i.e. appropriate authority has applied his mind and was s satisfied with the reasons recorded by the Assessing Officer. It held that mere obtaining the approval from a higher authority i.e. CIT( A) will not vitiate the re­opening proceedings.

5 This led to the Respondent filing a further appeal from the order dated 28th December, 2013 to the Tribunal. This, appeal by the Respondent­ Assessee's was allowed by the impugned order dated 25th March, 2011. This, by following the decision of this Court in Ghanshyam K. Khabrani v/s. Assisasnt Commissioner of Income Tax 346 ITR 443 to hold that, the approval/ permission to issue the notice dated 25th March, 2011 h ad not been granted by the Addition al Commissioner of Income Tax, but by the Commissioner of Income Tax and, thus in breach of Section 151 of the Act.

6 Before considering the rival submissions, it is necessary to reproduce the relevant extracts from 'FORM FOR RECORDING REASONS FOR INITIATING PROCEEDINGS U/S. 148 OF THE ACT, AND FOR OBTAINING APPROVAL OF THE COMMISSIONER OF INCOME TAX, CENTR AL ­V, MUMBAI' tendered across the Bar. The Form itself indicates that the Assessing Office h ad submitted the proposal to obtain approval of the Commissioner of Income Tax before issuing the notice dated 25th March, 2011. The remark by Addition al Commissioner of Income Tax on the form, is as under:­

12. Remark of the Addl. CIT: Yes. I am s satisfied. It is a fit case to re­open the case u/s. 147 of the Act. The notice u/s. 148 M be issued subject to CIT approval.

Addl. Commissioner of Income Tax, Centr Al Range 10, MUMBAI.” It, there after, was examined by the Commissioner of Income Tax who expressed his approval in the following form:

“13. Remark of the CIT

Yes, I am Satisfied that in view of Facts, … AS indicated in the Annexure, it is A fit case for issue of notice u/s. 148 of the I.T. Act.

Sd/­ (H. C. J AIN)

Commissioner of Income TAX,

CENTRAL IV, MUMBAI.”

7 Further, the learned Counsel for the parties also produce before us a letter dated 24th March, 2011 addressed by the Additional Commissioner of Income Tax to the Commissioner of Income Tax and letter dated 25th March, 2011 from the office of the Commissioner of Income Tax to the Addition al Commissioner of Income Tax. The letter dated 24th March, 2011 records the view of Addition al Commissioner of Income Tax the agrees with the reasons given by the Assessing Officer to issue the re­opening notice and seeks permission of the Commissioner of Income Tax to enable the Assessing Officer to issue the re­opening notice for Assessment Year 2004­-05. While, letter dated 25th March, 2011 from the office of the Commissioner of Income Tax, addressed to the Addition al Commissioner of Income Tax states that he has granted approval to the Assessing Officer to issue a notice under Section 148 of the Act. All the three communications, referred to herein above in paragraphs 6 and in this paragraph, are taken on record and marked A, B & C for identification.

8 Mr. Tejveer Singh, learned Counsel appearing for the Revenue submits that the Addition al Commissioner of Income Tax is the jurisdiction al Officer to grant sanction under Section 151 (2) of the Act. This, Officer he, submits has recorded his s satisfaction with the reasons recorded by the Assessing Officer to issue the re­opening notice. Thus, the requirement of Section 151 (2) of the Act is s satisfied in as much as the Addition al Commissioner of Income Tax has found it to be a fit case for issuing of notice. It is further submitted that even though, the approval w as obtained from the Commissioner of Income Tax for issuance of the notice, it does not take away the f act that the Addition al Commissioner of Income Tax was s satisfied with reasons recorded by the Assessing Officer.

9 It is undisputed position before us that in terms of Section 151(2) of the Act, the sanctioning/ permission to issue notice under Section 148 of the Act has to be issued by the Addition al Commissioner of Income Tax. We find that the Assessing Officer had not sought the approval of the Design dated Officer but of the Commissioner of Income Tax. This is clear from the Form used to obtain the s action. In any case, the approval/s satisf Action recorded in the form submitted for sanction of the Commissioner of Income Tax by the Assessing Officer reproduced herein above, it is clear that the Addition al Commissioner of Income Tax ad not granted permission to interpenetrating proceedings against the Respondent­ Assessee. The view of the Addition al Commissioner of Income Tax was subject to the approval of his superior - the Commissioner of Income Tax. Thus, there w as no final sanction granted by the Addition al Commissioner of Income Tax for issuing the notice dated 25th March, 2011 to re­open the Assessment. Further, it is the Commissioner of Income Tax who directed the issuance of the notice under Section 148 of the Act to the Assessing Officer. Thus, it is very clear that the final sanction/ approval was that the Commissioner of Income Tax as indicated in the Form and also in the two letters dated 24th March, 2011 and 25th March, 2011.

10 This Court in Ghanshyam Khrani (supra) while dealing with almost similar/ identical situation has observed as under:­

“The approval which has been granted is not by the Addition Al 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 statue M and Ates the satisfaction of a particular Manner, it has to be done in that Manner. In A Similar situation, the Delhi High Court in CIT v/s. SPL's Siddharth A Ltd. (IT A No. 836 of 2011 decided on September 14, 2011) - since reported in [2012] 345 ITR 223 (Delhi) held that powers which Are conferred upon A particular Authority h AVE to be exercised by that Authority and the satisf Action which the statute M and Ates of A distinct Authority cannot be substituted by the Action of Another. We Are in respectful Agreement with the judgment of the Delhi High Court.”

(emphasis supplied).

11 In the aforesaid f acts, the view taken by the Tribunal, cannot be found fault with as it merely follows the decision of this Court in Ghanshyam Khabani (supra). Therefore, the question as framed does not give rise to any substantial question of law. Thus, not entertained.


12 Accordingly, Appeal dismissed. No order as to costs.

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