Joint Commissioner sanctioned Re-open Notice u/s 148 after expiry of 4 yrs: ITAT quashes Assessment Order being Violative Sec 151

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By Taxscan Team – On December 14, 2022 5:37 pm

Joint Commissioner - Notice - ITAT - Assessment order - taxscan

The Income Tax Appellate Tribunal ( ITAT ) Ahmedabad Bench has held that Joint Commissioner sanctioned reopening notice under section 148 after the expiry of 4 years and quashes the assessment order being violative of section 151.

The assessees are individuals who belong to the same family and filed a return of income claimed Long Term Capital Gain on the sale of various shares at the conventional tax rate of 10%. In the subsequent assessment year 2006-07, the same pattern was adopted by the assessee.

The Revenue treated the same “income for business” and taxed at a higher rate and passed assessment order u/s. 143(3) r.w.s. 263 of the Income Tax Act, 1961. Accordingly, for the Assessment Year 2005-06, the case of the assessee was reopened and the share transactions of the assessee are treated as “income from business” and added to the total income of the assessee, and penalty proceedings are also initiated.

The aggrieved assessees filed an appeal before the CIT (A). The CIT (A) held that profits on the sale of shares held by the assessees are to be treated as “Long Term Capital Gain” and also liable to be taxed at 20% as per Section 112 of the I.T. Act. Aggrieved against the CIT(A) both the assessee and the revenue are in appeal before ITAT.

The counsel for the appellant submitted that the notice u/s. 148 was issued in 2012 which is beyond four years. The Sanctioning Authority u/s. 151 of the Act in case of reassessment proceedings after the expiry of four years is the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner is satisfied on the reasons recorded by the assessing officer that is a fit case for issuance of such notice. In the present case, Income Tax Officer issued the reopening notice and the Joint Commissioner has sanctioned for issuance of the 148 notice, which is against Section 151 of the I.T. Act.

The Coram of Mr. Waseem Ahmed, Accountant Member, and Mr. T.R. Senthil Kumar, Judicial Member observed, the sanctioning of the joint commissioner for the reopening proceedings, which is clearly against the provisions of Section 151 of the Act. Therefore, the entire reopening assessment itself is vitiated and against the provisions of Section 151 of the Act. The Tribunal quashed the entire assessment proceedings on the point of sanctioning authority u/s. 151 of the Act.

Mr. Bandish Soparkar and Mr. Ajai Pratap Singh appeared on behalf of the appellant and respondent respectively.To Read the full text of the Order CLICK HERE

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