M/S Amrit Trading Company v. Commissioner Of Income Tax & Another

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH. I.T.A. No.337 of 2005 (O&M)Date of decision: 19.1.2011 M/s Amrit Trading Company. Vs. Commissioner of Income Tax & another. -----Appellant. -----Respondents. CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOELHON'BLE MR. JUSTICE AJAY KUMAR MITTAL Present:-Mr. Akshay Bhan, Advocate andMr. Animesh Sharma, Advocatefor the appellant.Mr. Animesh Sharma, Advocatefor the appellant. Mr. K.K. Mehta, Sr. Standing Counselfor the respondents. --- ADARSH KUMAR GOEL, J. 1.This appeal has been preferred by the assesseeunder Section 260-A of the Income Tax Act, 1961 (for short, “theAct”) against the order of the Income Tax Appellate Tribunal,Chandigarh dated 30.11.2004 in I.T.A. No.958/Chandi/96claiming following substantial question of law:- “i)Whether in the facts and circumstances of the casethe action of the authorities below in initiating thereassessment proceedings merely on the basis ofcommunication dated 12.12.1992 without anyreasonable ground having rational connection, islegally sustainable in the eyes of law?the action of the authorities below in initiating thereassessment proceedings merely on the basis ofcommunication dated 12.12.1992 without anyreasonable ground having rational connection, islegally sustainable in the eyes of law? ii)Whether in the facts and circumstances of the casethe action of the authorities below ininitiatingproceedings under section 147 of the Act by ignoringthe sanction provided under section 151 of the Actwhich is mandatory, is legally sustainable in the eyesof law?the action of the authorities below ininitiatingproceedings under section 147 of the Act by ignoringthe sanction provided under section 151 of the Actwhich is mandatory, is legally sustainable in the eyesof law? iii)Whether in the facts and circumstances of the casethe action of the authorities below in holding theconsignment sales to be the sales on account oftrading without investigating the same appropriatelyand acting on its own presumption is legallysustainable in the eyes of law?the action of the authorities below in holding theconsignment sales to be the sales on account oftrading without investigating the same appropriatelyand acting on its own presumption is legallysustainable in the eyes of law? iv)Whether in the facts and circumstances of the casethe action of the authorities below in acting on its ownpresumption is legally sustainable in the eyes of law?”the action of the authorities below in acting on its ownpresumption is legally sustainable in the eyes of law?” 2. The Assessing Officer made assessment in respect ofthe assessee under Section 143(3) of the Act on 28.2.1991.Thereafter, notice dated 15.2.1993 was issued under Section 148of the Act for reassessment and accordingly, reassessment wasmade. On appeal, the CIT(A) set aside the reassessment on theground that no sanction under Section 151 of the Act had beenobtained. On further appeal, the Tribunal set aside the viewtaken by the CIT(A) on the ground that sanction under Section 151 of the Act was not required where earlier assessment wasunder Section 143(1)(a) of the Act. Accordingly, reassessmentproceedings were restored. The appeal of the assessee inrespect of the assessment years where assessment had beenmade under Section 143(1)(a) and not 143(3) of the Act weredismissed vide order dated 5.1.2011 being I.T.A. No.338 of 2005M/s Amrit Trading Companyv. Commissioner of Income Tax(Appeals) & anotherand connected matters. However, thepresent case was separated. 151 of the Act was not required where earlier assessment wasunder Section 143(1)(a) of the Act. Accordingly, reassessmentproceedings were restored. The appeal of the assessee inrespect of the assessment years where assessment had beenmade under Section 143(1)(a) and not 143(3) of the Act weredismissed vide order dated 5.1.2011 being I.T.A. No.338 of 2005M/s Amrit Trading Companyv. Commissioner of Income Tax(Appeals) & anotherand connected matters. However, thepresent case was separated. 3. We have heard learned counsel for the parties. 4. It is not disputed by learned counsel for the revenuethat in the present case, assessment had already been madeunder Section 143(3) of the Act and reassessment was initiatedwithout sanction under Section 151 of the Act, which was notpermissible. The Tribunal itself upheld the view of the CIT(A) incases where assessment was made under Section 143(3) of theAct and reassessment was initiated without following section 151of the Act with the following observations:- 10............Therefore, in that view of the matter, byrespectfully following the earlier order of the Tribunaldated 29.10.2004, we dismiss the departmentalappeals on this issue in the aforesaid two cases byholding that notices under section 148 had beenissued to the assessees in contravention of section151.....” 5. Without noticing the fact that in the present caseassessment under section 143(3) of the Act had been made,appeal of the department was allowed, on the ground that section151 of the Act was not applicable, under an erroneousassumption that assessment had been made under Section 143(1)(a) and not under Section 143 of the Act. This being theundisputed position, we hold that the Tribunal was not justified inupholding reassessment proceedings in violation of Section 151of the Act. The questions are answered accordingly. The appeal is allowed. (ADARSH KUMAR GOEL) JUDGE January 19, 2011ashwani ( AJAY KUMAR MITTAL ) JUDGE