Income Tax Act | Multiple Presentations Of Proposal For Reopening U/S 148 After Rejection Not Permissible: Uttarakhand High Court

Chief Justice G. Narendar and Justice Subhash Upadhyay examined whether the multiple presentations / repeated re-presentation of the proposal for initiation of proceedings under Section 148 to the Competent Authority under Section 151, is permissible under the Income Tax Act, 1961.

Section 148 of the Indian Income Tax Act, 1961, empowers the Assessing Officer (AO) to issue a notice for reassessment of income that has “escaped assessment”.

Section 151 of the Income Tax Act, 1961, acts as a procedural safeguard, requiring a higher authority to review and approve an Assessing Officer's (AO) decision before they can issue a reassessment notice under Section 148.

In this case, a survey & search operation was conducted under Section 133A & 132 of the Income Tax Act against one Sri Amit Sharma. It is the case of the revenue that said Amit Sharma is a contractor of Uttar Pradesh Rajkiya Nirman Nigam Limited ('UPRNN').

The said Amit Sharma was a beneficiary of largesse in the form of award of contracts by the assessee, who abused his position as MD of the State Infrastructure and Industrial Development Corporation of Uttarakhand Ltd ('SIDCUL').

During the search, two loose sheets were found, and the entries therein revealed transactions in bullion, silver, and cash to the tune of approximately sixteen crores, favouring the assessee.

The Competent Authority under Section 151 refused to grant sanction, on the premise that the reasons/grounds recorded by the A.O. fail to corroborate the contents of page Nos. 186 & 187, nor are other materials/documents placed to demonstrate the same.

The action was initiated by the A.O. under Section 147 of the Act on the basis of the documents impounded during the course of the search & survey operations conducted against Amit Sharma and Ram Assay Sharma

Before the Tribunal, the assessee argued that loose sheets are not an admissible form of evidence. There was non-compliance with the mandatory provisions of Sections 148, 149 and 151 of the Income Tax Act, 1961. The Tribunal allowed the appeal filed by the assessee.

The department argued that neither Section 148 nor Section 151 of the Act of 1961 bars multiple presentations or re-presentation of the proposal. In the absence of a bar, it is open for the Assessing Officer to seek approval any number of times.

The bench noted that the proceedings seeking initiation under Section 148 or 148A are not orders, as sought to be contended by the department. Thus, a close examination of Chapter-XX of the Act of 1961 would reveal and clarify that the order of the Competent Authority granting sanction or approval or refusing to grant sanction or approval u/s 151 of the Act of 1961 is neither a revisable order, nor an appealable order.

The nomenclature of Section 151, or the heading of Section 151 reads as “sanction for issue of notice”, implying thereby the mandatory nature of the said provision. If it was the opinion of the law-makers that the proposal is capable of being re-presented or re-visited multiple times and if it was the opinion of the law-makers that it is merely and a sheer administrative action, the law-makers would have certainly provided for the same, added the bench.

The bench opined that the law of interpretation, insofar as taxing statutes are concerned, is one of strict interpretation. In that view, the contention that in the absence of a bar, the proposal can be presented and re-presented or re-visited any number of times is without substance.

The bench stated that the multiple presentation and re-presentation of the proposal by the A.O. was without jurisdiction and the act of the Competent Authority granting approval after the same had been rejected at the very initial stage itself was also an act without jurisdiction and the proceedings of the Competent Authority impugned for granting sanction under Section 151 of the Act of 1961 dated 08.01.2021 are wholly without jurisdiction.

In view of the above, the bench dismissed the revenue's appeal.

Case Title: Principal Commissioner of Income Tax (Central), Kanpur v. Rajan Rajesh Kumar

Case Number: INCOME TAX APPEAL No. 12 OF 2024

Counsel for Appellant/Department: Hari Mohan Bhatia

Counsel for Respondent/Assessee: Sivaraman, C.S. Rawat and Vivek Kumar