COMMISSIONER OF INCOME TAX Vs. ATTRI DEVI

JUDGEMENT

(1.) ON an application filed by the CIT, Haryana, under s. 256(1) of the IT Act, 1961 (for short, "the Act"), the Income -tax Appellate Tribunal, Delhi Bench "D", Delhi (for short, "the Tribunal"), has referred the following question of law for the opinion of this Court : "Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in cancelling the reassessment proceedings on the ground that the Board has not given a valid sanction and there was no basis for forming satisfaction for issue of notice under s. 148 of the IT Act, 1961 -

(2.) A perusal of the record shows that after more than eight years of the completion of assessment proceedings in relation to the asst. yr. 1961 -62, the AO, on receipt of some complaint in the case of the assessee's husband - -Shri "the Board"), for obtaining its sanction for issuance of notice under s. 148 r/w s. 147(a) to the assessee. On receipt of sanction from the Board, the AO issued notice to the assessee and reassessed her income. On appeal, the AAC upheld appeal filed by the Revenue and confirmed the deletion made by the AAC, though on a different ground. It held that the notice issued by the AO under s. 148 r/w s. 147(a) of the Act was a nullity because the Board had granted sanction reasons assigned by the Tribunal for dismissing the appeal of the Revenue, read as under : "8. The basic ingredient for recording satisfaction under s. 151 of the Act is not as to what is on the ITO's file but what is in focus of the CIT or the Board, as the case may be, before recording satisfaction and giving sanction. If we are to accept the Revenue's proposition, we must accept and presume that recording of satisfaction, from which sanction flows, for issue of notice under s. 148 of the Act is a mere formality, which would be factually and legally incorrect. The following two Supreme Court judgments are the authorities for the proposition that it is not only the formation of the required belief by the ITO to take recourse to assessment or reassessment but he is further statutorily required to record his reasons and must necessarily obtain sanction of the CIT or the Board, as the case may be : Chhugamal Rajpal vs. S.P. Chaliha & Ors. (1971) 79 ITR 603 (SC) and Johri Lal (HUF) vs. CIT 1973 CTR (SC) 283 : (1973) 88 ITR 439 (SC). Though the latter authority is under the Indian IT Act, 1922, but the principle enunciated is unexceptional because of the parallel provisions held the two IT Acts reframing or framing of earlier years' assessments is concerned. 9. In this case, whatever may have been on file of the ITO but on the reasons recorded by him and which were forwarded to the Board, there simply could be no question of any valid sanction because there was no basis for forming any satisfaction in the first place. Therefore, we strike down the initiation of proceedings as also the consequent assessment order under s. 143(3) r/w s. 147(a) as illegal and void ab initio." had telephonically enquired from Shri A.L. Monga, ITO, posted in the office of Chief CIT, Panchkula, about the file in which the Board had recorded reasons for grant of sanction under s. 151 of the Act, but the same has not been made available to him. Shri Bindal further stated that as per the officers of the Department, the file containing the order of the Board is not available.

(3.) IN our opinion, without going through the relevant record, it is not possible to upset the finding recorded by the Tribunal that the Board had mechanically sanctioned initiation of the reassessment proceedings and on that ground, the order of reassessment was liable to be treated as nullity.