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AJAI VERMA versus COMMISSIONER OF INCOME TAX

High Court of Judicature at Allahabad

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Ajai Verma v. Commissioner Of Income Tax-I & Another - WRIT TAX No. - 1753 of 2007 [2007] RD-AH 18881 (17 December 2007)

This is an UNCERTIFIED copy for information/reference. For authentic copy please refer to certified copy only. In case of any mistake, please bring it to the notice of Joint Registrar(Copying).

HIGH COURT OF JUDICATURE AT ALLAHABAD

A.F R.

Court No. 2

Civil Misc. Writ Petition (Tax) No. 1753 of 2007

Ajai Verma

Versus

Commissioner of Income Tax - I, Kanpur and another

_________

Hon'ble Sushil Harkauli, J.

Hon'ble Rakesh Sharma, J.

We have heard Sri S.K. Garg for the petitioner and Sri R.K. Upadhaya for the Income Tax Department.

The petitioner was assessed by an assessment order dated 29th January 2004 (wrongly mentioned as 29th January 2003) by the respondent No. 2 under section 144 of the Income Tax Act, 1961 (hereinafter referred to as the Act in short), for the assessment year 2001-02. A copy of the assessment order has been enclosed as Annexure III to this writ petition.

The petitioner is challenging a notice issued to him under section 148 of the Act, a copy of which has been enclosed as Annexure VI to this writ petition.

The main ground of challenge is that the notice under section 148 dated 10.1.2007 and has been issued by the Income Tax Officer. According to the petitioner, this notice has been issued after the expiry of four years from the end of the relevant assessment year and, therefore, the said notice could not have been issued by the Income Tax Officer. It could have been issued by an assessing officer not below the rank of Joint Commissioner.

In support of the above proposition, reliance has been placed upon a decision of a Division Bench of this Court in the case of Dr. Shashi Kant Garg Versus C.I.T. (2006) 285 I.T.R. 158. The relevant portion of the said decision is extracted below, with the crucial portion underlined by us in the extract:

"From a perusal of Section 151 of the Act the following propositions emerge:-

(i) if an assessment has been made under sub-section (3) of Section 143 or Section 147 of the Act and four years have not expired from the end of the relevant assessment year, a notice under Section 148 of the Act has to be issued by the Assessing Officer who is not below the rank of Assistant Commissioner or Joint Commissioner but before issuing any such notice, the Joint Commissioner is to be satisfied on the reasons recorded by such Assessing Officer that it is a fit case for issue of such notice. Here "Joint Commissioner", who also include an Additional Commissioner, in view of the definition of the phrase "Joint Commissioner" as contained in Section 2(28C) of the Act. The satisfaction has to be necessarily recorded by the Additional Commissioner or the Joint Commissioner, as the case may be. However, if the Assessing Officer is the Additional Commissioner or the Joint Commissioner, then in that case, prior approval of any higher officer is not required in case he has recorded the reasons for issuing notice in view of the provisions of sub-sections (4) and (5) of Section 120 of the Act;

(ii) if, however, the period of four years has expired and the assessment order has been made under sub-section (3) of Section 143 or Section 147 of the Act, the notice is to be issued only after the satisfaction has been recorded by either the Chief Commissioner or the Commissioner on the reasons recorded by the Assessing Officer that it is a fit case for issue of such notice. Thus, the Assessing Officer not below the rank of the Assistant Commissioner can issue a notice but before issuing the notice, the satisfaction of the Commissioner or the Chief Commissioner of the Income Tax is necessarily to be obtained. This would be the position after April 1, 1988, in view of the omission of the words "Additional Commissioner" in Section 2(16) of the Act by the Direct Tax Laws (Amendment) Act, 1987; and

(iii) where an assessment has not been made under sub-section (3) of Section 143 or Section 147 of the Act and the period of four years from the end of the relevant assessment year had expired, notice under Section 148 of the Act can be issued only by an Officer of the rank of Joint Commissioner after being satisfied on the reasons recorded by the Assessing Officer that it is a fit case for issue of such notice. Here, the term "Joint Commissioner is inter-changeable with the words "Additional Commissioner" in view of the definition of the term "Joint Commissioner", as given in Section 2(28C) of the Act."

For ready reference, we are quoting below the provisions of section 151 of the Income Tax Act, 1961.

"Sanction for issue of notice.

151. (1) In a case where an assessment under sub-section (3) of section 143 or section 147 has been made for the relevant assessment year, no notice shall be issued under section 148 by an Assessing Officer, who is below the rank of Assistant Commissioner or Deputy Commissioner, unless the Joint Commissioner is satisfied on the reasons recorded by such Assessing Officer that it is a fit case for the issue of such notice:

Provided that, after the expiry of four years from the end of the relevant assessment year, no such notice shall be issued unless the Chief Commissioner or Commissioner is satisfied, on the reasons recorded by the Assessing Officer aforesaid, 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 under section 148 by an Assessing Officer, who is below the rank of Joint Commissioner, after the expiry of four years from the end of the relevant assessment year, unless the Joint Commissioner is satisfied, on the reasons recorded by such Assessing officer, that it is a fit case for the issue of such notice." (emphasis ours)

It is obvious that sub-section (2) of section 151, which was actually not in issue in the said decision before the Division Bench inasmuch as the Division Bench was examining a case clearly covered by section 151(1), the obiter observation in the underlined portion of the judgment extracted above was made apparently because of the confusion created by the complex language in which section 151(2) has been drafted.

We have no doubt that the said provision simply means that where assessment has not been made under section 143(2) or 147 of the Act, notice under section 148 can be issued:

1.either by an assessing officer of the rank of Joint Commissioner or above, or;

2.an officer below that rank provided the Joint Commissioner is satisfied that it is a fit case for the issue of such notice.

Because, as stated above, the observation in the underlined portion of the Division Bench is only an obiter observation, therefore, there is no need to refer the matter to a larger Bench.

In the case before us, the Income Tax Officer, who is below the rank of Joint Commissioner and who is an assessing officer according to the definition given in the Income Tax Act, 1961, was empowered to issue the notice under section 148 of the Act in the light of the sanction accorded for such issuance of notice by the Commissioner of Income Tax.

Learned counsel for the petitioner has argued that the Commissioner could not have given the sanction and only the Joint Commissioner could have given the sanction.

We are unable to accept the submission, considering the basic purpose for which such sanction has been provided for. The obvious purpose is to exercise proper supervision by a superior officer of the department.

The other submission from the side of the petitioner is that the assessment order under section 144 of the Act was annulled in appeal and the department has gone up in further appeal and, thus, the assessment should be deemed to be pending. The submission proceeds to say that when an assessment proceeding is pending, there is no question of issue of notice under section 148 of the Act.

Merely going in second appeal does not mean that the assessment is pending. Moreover, if the second appeal is dismissed, the assessment under section144 of the Act will stand annulled. On the other hand, if the second appeal is allowed, the assessment under section 144 of the Act will stand. In either of the two cases, there would be no assessment of the petitioner either under section143(3) or under section 147 of the Act, which is the precondition for applicability of section 151(2) of the Act. Therefore, filing of the second appeal is not relevant for the purposes of this case.

In the circumstances, we do not find any merit in this writ petition, which is accordingly dismissed.

Dated: December 17, 2007

AM/-


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