Income Tax Act, 1961, Sections 147, 148 & 148A

Reassessment--Order under section 148A(d)--Validity--Sanction/approval under section 151 obtained and granted without application of mind

Conclusion: Where sanction/approval under section 151 was obtained and granted without application of mind because in the approval, quantum of income, which had escaped assessment, was mentioned as Rs. 63,16,784, whereas, as per draft of order under section 148A(d), income that had escaped assessment was Rs. 97,06,911, order under section 148A(d) and consequent notice under section 148, were liable to be quashed.

Assessee-company challenged order under section 148A(d) and notice under section 148, contending that sanction/approval under section 151 was obtained and granted without application of mind because in the approval, quantum of income, which had escaped assessment, was mentioned as Rs. 63,16,784, whereas, draft of order under section 148A(d), stated that income of Rs. 97,06,911, had escaped assessment within the meaning of provision of section 147. Held: If AO, who had sought approval, ACIT/JCIT, who had recommended grant of approval and PCIT, who granted approval had only bothered to read request for approval along with draft of order under section 148A(d), they would have certainly noticed the discrepancy. It was therefore, clear that none of those officers, were even bothered to read the request for approval or draft of order. In affidavit in reply, it was mentioned as a typographical error. However, said explanation could not be accepted because a typographical error could have been committed by AO, who was seeking the approval, but if only ACIT/JCIT or PCIT had read the approval application and draft of order to be issued under section 148A(d), they would have certainly noticed the discrepancy and they should have either refused the approval or sent the application back AO for filing correct form for approval. Hence, order under section 148A(d) and consequent notice under section 148, were quashed and set aside.

Decision: In assessee s favour

IN THE BOMBAY HIGH COURT

K.R. SHRIRAM & NEELA GOKHALE, JJ.

Teleperformance Global Service (P) Ltd. v. Asstt. CIT

Writ Petition (L) No. 31772 of 2023

19 March, 2024

Petitioner by: J.D. Mistry, Senior Advocate, Madhur Agrawal, & Jitendra Singh.

Respondents-Revenue by: Vikas T. Khanchandani, & Eshaan Saroop.

PC

1. By this petition, Petitioner is challenging the impugned initial notice dated 21-3-2023 issued under section 148A(b) of the Income Tax Act, 1961 ( the IT Act ), the impugned Order dated 31-3-2023 passed under section 148A(d) of the Act for assessment year 2019-20, and the impugned notice dated 31-3-2023 issued under section 148 of the Act for assessment year 2019-20.

2. One Intelenet Global Services (P) Ltd. ( IGSPL ) amalgamated with Petitioner with effect from 7-7-2011 pursuant to an order dated 5-3-2013 passed by this Court. Petitioner was earlier called M/s. Serco BPO (P) Ltd.

3. Petitioner filed return of income on 29-11-2019 for assessment year 2019-20 disclosing total income of Rs. 193,91,30,100 under normal provisions of the Act and Rs. 2,47,10,34,147 as book profit under section 115JB of the Act. It is averred in the petition that all the transactions during the relevant year were done by Petitioner being the transferee company but certain third parties have inadvertently booked the transactions with Petitioner in the erstwhile PAN of IGSPL and the said transaction are reflected in the 26AS of IGSPL. Petitioner has, however, considered all the transactions entered into by Petitioner in its return of income ( ROI ) irrespective of whether the transactions have been booked in PAN of Petitioner or IGSPL and claimed credit of all Tax Deducted at Sources irrespective of whether tax has been deducted in the PAN of Petitioner or IGSPL.

4. Petitioner, thereafter, received notice dated 21-3-2023 under section 148A(b) of the Act from Respondent No. 1. In the notice it was stated, inter alia:

It is seen from the insight portal of the Income Tax Department that assessee company has transaction by the company by Intelenet Global Services (P) Ltd. (AACI7387P), now amalgamated with company M/s. Teleperformance Global Services (P) Ltd., the assessee has entered into the following transactions:

The Petitioner is given a show cause as to why in view of the above transactions, information, a notice under section 148 of the Act, should not be issued.

5. Petitioner replied vide its Letter dated 29-3-2023. Notwithstanding Petitioner s explanation, an Order dated 31-3-2023 is passed by Respondent No. 1 rejecting Petitioner s objections and holding that it was a fit case for issuance of notice under section 148 of the Act. A consequent notice under section 148 of the Act has also been issued. The order under section 148A(d) of the Act and the consequent notice under section 148 of the Act has the approval of the Principal Commissioner Devindra Kumar Gupta under section 151 of the Act.

6. Various grounds has been raised in the petition, but the most important ground is that the sanction/approval under section 151 of the Act has been obtained and granted without application of mind. We would agree with Petitioner. A copy of the approval and impugned order under section 148A(d) are annexed to the petition. In column 7 of the approval, the quantum of income which has escaped assessment is mentioned as Rs. 63,16,784. In column 18, reasons for the belief that income has escaped assessment is answered as,  Refer order under section 148A(d) for details . The Additional/Joint Commissioner Rameshwar Prasad Meena has recommended the issuance of notice under section 148 and in Column 22, reasons for according approval/rejection by the specified authority reads as under:

Remarks: I have carefully gone through the proposal submitted by the assessing officer (AO) through the jurisdictional Range Heard. After examining the details, I find that this is a fit case for issue of notice under section 148 of the Income Tax Act. The proposal submitted by the assessing officer is accordingly approved.

Name: Devinder Kumar Gupta

Designation: Principal Commissioner, Mumbai-5

Date: 31-3-2023.

7. The draft of the order under section 148A(d) of the Act in paragraph 7 states that income of Rs. 97,06,911 has escaped assessment within the meaning of provision of section 147 of the Act and the same is required to be examined. If the assessing officer who had sought the approval, the Additional/Joint Commissioner, who had recommended grant of approval and the Principal Commissioner, who granted the approval had only bothered to read the request for approval along with draft of the order under section 148A(d) of the Act, they would have certainly noticed the discrepancies. It is, therefore, clear that none of these officers have even bothered to read the request for approval or draft of the order. In the affidavit in reply, it is mentioned as a typographical error. We are not inclined to accept this explanation because a typographical error could have been committed by the assessing officer, who was seeking the approval, but if only the Additional/Joint Commissioner or the Principal Commissioner had read the approval application and the draft of the order to be issued under section 148A(d) of the Act, they would have certainly noticed the discrepancy and they should have either refused approval or sent the application back to the assessing officer for filing correct form for approval.

8. In the circumstances, in our view, this is a fit case for us to interfere. We hereby quash and set aside the Order dated 31-3-2023 under Clause (d) of section 148A of the Act. The consequent notice issued under section 148 of the Act also dated 31-3-2023 is also quashed and set aside.

9. Petition disposed. No order as to costs.