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Yum! Restaurants Asia Pte. Ltd Vs. Deputy Director Of Income Tax And Ors
September, 05th 2017
+                            W.P. (C) 1353/2013
        YUM! RESTAURANTS ASIA PTE. LTD                       ..... Petitioner
                        Through:      Mr. Salil Kapoor, Ms. Ananya Kapoor,
                                      Mr. Sumit Lalchandani & Mr. Sanat
                                      Kapoor, Advocates.


                                                 ..... Respondents
                 Through: Mr. Rahul Chaudhary, Senior Standing
%                                       31.08.2017
Dr. S. Muralidhar, J:
1. This writ petition by Yum! Restaurants Asia PTE Ltd. under Articles 226
and 227 of the Constitution, seeks the quashing of a notice dated 28th March
2012 issued by the Deputy Director of Income Tax (hereinafter the
Assessing Officer or `AO') under Section 148 of the Income Tax Act, 1961
(hereinafter `the Act') seeking to reopen the assessment for Assessment
Year (AY) 2005-06. The writ petition also challenges an order dated 25th
January, 2013 passed by the AO rejecting the objections raised by the
Petitioner to the reopening of the assessment.

2. On 5th March 2013, while issuing notice in this petition, the Court

W.P. (C) 1353 of 2013                                                Page 1 of 6
directed that the proceedings pursuant to the impugned order shall remain

3. One of the grounds urged in the present petition is that since the original
assessment was processed under Section 143 (1) of the Act, and since the
reopening was after the expiry of four years from the end of the relevant
AY, the approval for the reopening of the assessment had to be granted, in
terms of Section 151 (2) of the Act, by an officer of the rank of Joint
Commissioner, which in this case was the Additional Director of Income
Tax (Addl. DIT). However, in the present case the approval was granted
under Section 151 (2) by the DIT who was an officer superior to the Addl.
DIT. It is accordingly contended by the Petitioner that the impugned notice
under Section 148 of the Act and all proceedings pursuant thereto are bad in

4. On the previous date, i.e. 30th August 2017, this court noted that the
Petitioner was placing reliance on the decision of the court in Commissioner
of Income Tax v. SPL's Siddhartha Ltd. 2012 (345) ITR 223 (Del) and
urged that even if such approval had been granted, as in the present case, by
the officer superior i.e. the DIT, it would not cure the defect. The learned
counsel for the Department sought time to produce the relevant file.

5. The relevant file has been produced before the Court. There is a single
note sheet in the file and it is dated 26th March 2012. The note prepared by
Mr. Mazhar Akram, the AO, reads: "No records for AY 2005-06 are
traceable. ITD is showing the ROI processed for AY 2005-06. In the light of
the reasons recorded in Annexure A, approval for issue of notice u/s Section

W.P. (C) 1353 of 2013                                            Page 2 of 6
148 of IT Act, 1961 is sought." The said note was put up to the Addl. DIT
who recorded "put up for approval" with his signature and put up the file to
the DIT. The next signature on the file is that of the DIT who states in a
single word "Approved".

6. From the above noting on the file it is seen that the Addl. DIT merely "put
up for approval" the file and did not himself accord approval of the AO's
proposal for reopening the assessment for AY 2005-06.

7. It is contended by Mr. Rahul Chaudhary, learned Senior Standing counsel
for the Department, that when the Addl. DIT recorded the words "put up for
approval" he, in fact, should be understood to have applied his mind,
approved the note of the AO, and only thereafter put up the note for further
approval to the DIT. He further sought to explain that it is only because the
original records were not traceable that this course was adopted by the Addl.

8. The above submission cannot be accepted. Where the original assessment
is processed under Section 143 (1) of the Act, and the reopening is sought to
be done after the expiry of four years from the end of the relevant AY, the
mandatory requirement under Section 151 (2) of the Act is that the approval
for the reopening of the assessment should be by an officer of the rank of the
Joint Commissioner (in this case, the Addl. DIT) and not other officer
including a superior officer. Section 151 (2) of the Act as it stood at the
relevant time read:
                "(2) In a case other than a case falling under sub-section (1), no
                notice shall be issued under section 148 by an Assessing

W.P. (C) 1353 of 2013                                                Page 3 of 6
                Officer, who is below the rank of Joint Commissioner, after the
                expiry of four years from the end of the relevant assessment
                year, 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."

9. The argument that the approval by an officer superior to the Joint
Commissioner will satisfy the requirement of Section 151 (2) of the Act,
was categorically negated by this court in the aforementioned decision in
SPL's Siddhartha Ltd. (supra) which has been followed in Commissioner
of Income Tax-8 v. Soyuz Industrial Resources Ltd. (2015) 58 336 (Del). In SPL's Siddhartha Ltd. (supra), under similar
circumstances after noting that the approval had been granted on the file by
a superior officer whose approval had been sought, the court observed as
                "4. The aforesaid noting in the file does not reflect what
                learned counsel for the Revenue argued. In the first
                instance, it would be seen that the AO had specifically
                sought the approval of the Commissioner only.
                Therefore, it cannot be said that the Joint
                Commissioner/Additional Commissioner had granted the
                approval. Further, no doubt, the file was routed through
                Additional Commissioner. However, he also, in turn
                forwarded the same to the Commissioner by giving the
                following endorsement:

                "CIT may kindly accord sanction."

                5. It is clear that the Additional CIT did not apply his
                mind or gave any sanction. Instead, he requested
                Commissioner to accord the approval. It, thus, cannot be
                said that it is an irregularity curable under Section
                292B of the Act."

W.P. (C) 1353 of 2013                                               Page 4 of 6
10. In Commissioner of Income Tax-8 v. Soyuz Industrial Resources Ltd.
(supra), the Court explained:
                "8. The Revenue's argument seems plausible and even logical
                because the Commissioner or a Chief Commissioner is
                unarguably ranked higher in authority than a Joint
                Commissioner. Yet at the same time, this Court has to give
                effect to plain words of the statute which unambiguously states
                that the competent authority in such cases is the Joint
                Commissioner (and not the Chief Commissioner or the
                Principal Commissioner). The Revenue's submissions that all
                such cases, are covered under proviso to Section 147(1), the
                competent authority for prior approval would be four superior
                officers, renders Section 151 (2) superfluous. If anything the
                Court is clear that it is not its job to render, in the process of
                interpretation, an entire provision academic or Certified True
                Copy inoperative. This court is of the opinion that accepting the
                Revenue's position would result in that consequence. The Court
                also invokes the principle enunciated by the Privy Council in
                Nazir Ahmad v. Emperor AIR 1936 PC 253: that if the statute
                mandates that something be done in a particular manner, should
                be in that manner or not at all. In this case, since the original
                assessment was completed "other than'' the eventualities
                contemplated in Section 151(1), i.e. it was processed under
                Section 143(1). Thus, clearly Section 151(2) applied."

11. In view of the clear position in law, the Court has no hesitation in
concluding that in the present case, the mandatory requirement under
Section 151 (2) of the Act, as it stood at the relevant time, has not been
fulfilled and therefore, the reopening of the assessment for the AY 2005-06
by the impugned notice is bad in law.

12.     For the aforementioned reasons, the notice dated 28th March 2012
issued by the AO to the petitioner under Section 148 of the Act and the order

W.P. (C) 1353 of 2013                                                Page 5 of 6
dated 25th January 2013 passed by the AO rejecting the Petitioner's
objections thereto are hereby quashed.

13. The petition is allowed in the above terms. No costs.

                                                      S. MURALIDHAR, J.

                                                 PRATHIBA M. SINGH, J.
AUGUST 31, 2017

W.P. (C) 1353 of 2013                                         Page 6 of 6
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