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2020 (10) TMI 1223 - AT - Income TaxValidity of Reopening of assessment - invalidate sanction under section 151 - Addition u/s 68 - HELD THAT - Wrong Section have been mentioned in the reasons and some of the Columns material for re-assessment are left Blank and that Addl. CIT did not record how he was satisfied on wrong facts and wrong reasons would clearly show that reopening have been done in the matter without application of mind based on wrong facts and as such the reopening of the assessment cannot be justified. It may also be noted here that the Learned Addl. CIT, Range-12, Delhi while granting sanction under section 151 of the I.T. Act has mentioned in the reasons that Yes, I am satisfied that this is a fit case for reopening under section 147. Such a satisfaction was not found valid by ITAT, Delhi Benches in the cases of Shree Balkishan Agarwal Glass Industries Ltd., Delhi 2020 (9) TMI 1153 - ITAT DELHI and M/s. Behat Holdings Ltd., Delhi vs., ITO, Ward-4(3), New Delhi 2020 (1) TMI 1358 - ITAT DELHI based on several decisions of the Hon ble High Courts. Thus, the issue is covered against the Revenue by the above decisions of the Tribunal as well. The A.O. has thus no justification to assume jurisdiction under section 147 of the I.T. Act, 1961, in a Lawful manner and as such the same are liable to be quashed. - Decided in favour of assessee.
Issues Involved:
1. Reopening of Assessment under Section 147 of the Income Tax Act. 2. Validity of Sanction under Section 151 of the Income Tax Act. 3. Addition under Section 68 of the Income Tax Act. Detailed Analysis: 1. Reopening of Assessment under Section 147 of the Income Tax Act: The assessee challenged the initiation of re-assessment proceedings under Section 147 of the Income Tax Act. The primary contention was that the Assessing Officer (A.O.) mentioned Section 147(b) in the reasons for reopening, a section that ceased to exist from 01.04.1989. This, according to the assessee, indicated non-application of mind. The Tribunal noted that the A.O. failed to provide necessary details in Columns 8 and 9 of the reasons recorded, such as whether the assessee had filed any return voluntarily or was assessed. The Tribunal agreed with the assessee, emphasizing that the A.O. did not have sufficient material to conclude that there was an escapement of income. The Tribunal cited the Bombay High Court's ruling in Kalpana Shantilal Haria vs. ACIT, which invalidated re-assessment proceedings when the wrong section was mentioned. This was further supported by ITAT Delhi's judgments in similar cases, leading to the conclusion that the reopening was invalid. 2. Validity of Sanction under Section 151 of the Income Tax Act: The assessee argued that the sanction granted by the Additional Commissioner of Income Tax (Addl. CIT) was mechanical and without application of mind. The Tribunal noted that the Addl. CIT granted approval without pointing out mistakes in the reasons recorded by the A.O. The Tribunal emphasized that the sanction for reopening should be based on due application of mind, not mechanical approval. The Tribunal referred to the Bombay High Court's ruling in Kalpana Shantilal Haria, which held that non-application of mind by the sanctioning authority invalidates the re-assessment proceedings. The Tribunal also cited ITAT Delhi's judgments in Shree Balkishan Agarwal Glass Industries Ltd. and M/s. Behat Holdings Ltd., which quashed reopening based on mechanical approval. Thus, the Tribunal concluded that the sanction under Section 151 was invalid. 3. Addition under Section 68 of the Income Tax Act: The A.O. made an addition of ?80 lakhs under Section 68, based on information from the Investigation Wing that the assessee had taken accommodation entries from companies floated by Shri Tarun Goyal. The Tribunal, however, did not delve into the merits of this addition. Since the reopening of the assessment was quashed due to invalid reasons and sanction, the Tribunal held that all subsequent proceedings, including the addition under Section 68, were invalid. Therefore, the Tribunal did not need to address the merits of the addition. Conclusion: The Tribunal quashed the reopening of the assessment under Section 147 due to the A.O.'s non-application of mind and the invalid sanction under Section 151. Consequently, all additions made under Section 68 were also invalidated. The appeal of the assessee was allowed, and the re-assessment proceedings were set aside.
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