> v. Income Tax Officer, Ward 24(3

$~127 *IN THE HIGH COURT OF DELHI AT NEW DELHI+ITA 741/2023 & CM APPL. 19588/2025SUKHBIR S. DAGAR .....Appellant Through:Mr Ved Jain, Mr Nischay Kantoor,Ms Soniya Dodeja, and Mr SarthakAbrol, Advocates. versus INCOME TAX OFFICER, WARD 24(3) .....RespondentThrough:Mr Sunil Kumar Agarwal, SSC, MrShivanshBPandya,MrViplavAcharya,JSCsandMrUtkarshTiwari, Advocate. CORAM:HON'BLE MR. JUSTICE VIBHU BAKHRUHON'BLE MR. JUSTICE TEJAS KARIAO R D E R21.04.2025 % 1.The appellant [Assessee] has filed the present appeal under Section260A of the Income Tax Act, 1961 [the Act], inter alia, impugning an orderdated 10.08.2023 [the impugned order] passed by the learned Income TaxAppellate Tribunal in ITA No.2757/Del/2019 captioned ITO v.Sukhbir Singh Dagar, in respect of the Assessment Year 2006-07. 2.The Revenue had preferred the aforementioned appeal before thelearnedITATagainstanorderdated14.09.2018passedbytheCommissioner of Income Tax (Appeal) [CIT(A)] whereby the Assessee’sappeal in respect of an order dated 24.03.2014 passed under Section 147/144of the Act was allowed. 3.The Assessee had filed its return of income for AY 2006-07 on30.10.2006. Thereafter, the Assessee filed its revised return for the said AY 2006-07 on 21.09.2007. 4.The Assessee’s return was selected for scrutiny and a notice underSection 143(2) of the Act was issued by the Assessing Officer on19.07.2007. One of the issues examined during the assessment proceedingsrelated to the capital gains disclosed by the Assessee from the sale of theagricultural land. The Assessee had disclosed that it had sold certainagricultural land belonging to him and his brother and had declared theconsideration received for his fifty per cent share at ₹21,87,500/-. It was also submitted that a valuation report dated 23.12.2008 was furnished from aregistered valuer in respect of the cost of the acquisition. 5.The AO examined the documents furnished by the Assessee andpassed the assessment order dated 30.12.2008 under Section 143(3) of theAct accepting the Assessee’s returned income. 6.On 22.03.2013 the AO issued the notice under Section 148 of the Actseeking to reopen the assessment of the Assessee’s income for AY 2006-07on the basis of certain incriminating information that was revealed during asearch conducted under Section 132 of the Act, in respect of a ‘third party’.The notice was issued with the prior approval of the Joint Commissioner ofIncome Tax under Section 151 of the Act. 7.The Assessee filed his response to the notice under Section 148 of theAct and also furnished his computation of income. He requested that hisreturn filed under Section 139 of the Act be treated as return filed pursuantto the notice under Section 148 of the Act. Thereafter, the AO furnished thereasons for issuance of the notice under Section 148 of the Act and theAssessee filed his objection to the said reasons. 8.The proceedings culminated in the assessment order dated 24.03.2014 Page 2 of 6 whereby the AO had made an addition of ₹5,18,27,005/- on account of long term capital gain. The AO had substituted the consideration received by theAssessee from the sale of the agricultural land at ₹5,46,23,012/- as against ₹21,87,500/- as declared by the Assessee. This was premised on an excel sheet, which was recovered from the device of the searched personreflecting part payment in cash for the acquisition of the agricultural land inquestion. 9.The Assessee appealed the said assessment order before the CIT(A)raising several grounds. The CIT(A) accepted the Assessee’s contention anddeleted the additions made by the AO principally on the ground that theAssessee was not confronted with the material and evidence on the basis ofwhich the additions were made. The CIT(A) also noted that no statementwas recorded by the Directorate of Revenue Intelligence to the effectthat part consideration of the agricultural land had been paid in cash. 9.The Assessee appealed the said assessment order before the CIT(A)raising several grounds. The CIT(A) accepted the Assessee’s contention anddeleted the additions made by the AO principally on the ground that theAssessee was not confronted with the material and evidence on the basis ofwhich the additions were made. The CIT(A) also noted that no statementwas recorded by the Directorate of Revenue Intelligence to the effectthat part consideration of the agricultural land had been paid in cash. 10.The Revenue appealed the decision before the learned ITAT, whichwas disposed of by the impugned order. The learned ITAT has set aside theorder passed by the CIT(A) and upheld the decisions made by the AO. 11.The present appeal was listed before this court on 11.12.2023 and wasadmitted on the following questions of law: - (i) Whether the Income Tax Appellate Tribunal [in short, “Tribunal”] misdirected itself on facts and inlaw in reversing the order of the Commissioner ofIncomeTax(Appeals)[inshort,“CIT(A)”]sustaining the addition of Rs.5,18,27,005/- onaccount of capital gains under Section 45 of theIncome Tax Act, 1961 [in short, “Act”]? (ii) Whether the order of the Tribunal suffers fromperversity?perversity? (iii) Whether the reassessment proceedings were without jurisdiction as it did not have the approvalof the statutory authorities, as mandated underSection 151 of the Act?” 12.One of the principal questions that arises for consideration iswhether the initiation of the reassessment proceedings is invalid for want ofnecessary approval. 13.It is relevant to refer to Section 151(1) of the Act as was in force atthe material time. The same is set out below: - “Sanction for issue of notice. 151. (1) In a case where an assessment under sub-section (3) of section 143 or section 147 has beenmade for the relevant assessment year, no noticeshall be issued under section 148 [by an AssessingOfficer, who is below the rank of AssistantCommissioner [or Deputy Commissioner], unlessthe [Joint] Commissioner is satisfied on thereasons recorded by such Assessing Officer that itis a fit case for the issue of such notice] :Provided that, after the expiry of four years fromthe end of the relevant assessment year, no suchnoticeshallbeissuedunlesstheChiefCommissioner or Commissioner is satisfied, on thereasonsrecordedbytheAssessingOfficeraforesaid, that it is a fit case for the issue of suchnotice. (2) In a case other than a case felling under sub-section (1), no notice shall be issued under section148 by an Assessing Officer, who is below therank of [Joint] Commissioner, after the expiry offour years from the end of the relevant assessmentyear, 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.]Explanation. For the removal of doubts, it ishereby declared that the Joint Commissioner, the Commissioner or the Chief Commissioner, as thecase may be, being satisfied on the reasonsrecorded by the Assessing Officer about fitness ofa case for the issue of notice under section 148,need not issue such notice himself]” 14.In the present case, there is no dispute that the original assessmentproceedings had culminated into the assessment order dated 30.12.2008passed under Section 143(3) of the Act. Therefore, in terms of the proviso(1) to Sub-section (1) of Section 151 of the Act, no notice under Section 148of the Act could be issued unless, the Commissioner of Income Tax or the Chief Commissioner of Income Tax was satisfied on thereasons recorded by the AO that it was a fit case for issuance of such notice. 15.Admittedly, in the present case, no approval was obtained from theCIT or the CCIT. The notice under Section 148 of the Act was issued withthe approval of the JCIT and not CCIT or CIT. 14.In the present case, there is no dispute that the original assessmentproceedings had culminated into the assessment order dated 30.12.2008passed under Section 143(3) of the Act. Therefore, in terms of the proviso(1) to Sub-section (1) of Section 151 of the Act, no notice under Section 148of the Act could be issued unless, the Commissioner of Income Tax or the Chief Commissioner of Income Tax was satisfied on thereasons recorded by the AO that it was a fit case for issuance of such notice. 15.Admittedly, in the present case, no approval was obtained from theCIT or the CCIT. The notice under Section 148 of the Act was issued withthe approval of the JCIT and not CCIT or CIT. 16.Clearly, the notice under Section 148 of the Act was invalid as issuedcontrary to the provisions of Section 151(1) of the Act. Any proceedingscontinued pursuant to said notice including the assessment order passedunder Section 147 of the Act cannot be sustained. 17.In view of the above, question number (iii) – whether thereassessment proceedings are without the jurisdiction as it did not have theapproval of the statutory authority as mandated under Section 151 of the Act– is answered in favour of the Assessee and against the Revenue. 18.Since the assessment order is not sustainable for the aforesaid reason,it is not necessary to address other questions of law, on which the presentappeal was admitted. 19.The impugned order as well as the assessment order are set aside. Page 5 of 6 20.The appeal is allowed in the aforesaid terms. The pending applicationis also disposed of. VIBHU BAKHRU, J APRIL 21, 2025M TEJAS KARIA, J Click here to check corrigendum, if any