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2021 (6) TMI 1060 - AT - Income TaxReopening of assessment u/s 147 - addition on account of cash deposit in bank account - assessee challenged reopening on non-complying with mandatory requirement and conditions envisaged under section 151 - HELD THAT - JCIT, Range-1, Jalandhar recorded the satisfaction in a mechanical manner without application of mind reopening under section 148 of the Act on the basis of mechanical approval without applying the mind by the Ld. Pr.CIT was not valid. Therefore, in the present case, the reopening of the assessment on the basis of notice under section 148 of the Act is quashed. Since the A.O. reopened the assessment under section 147 of the Act by issuing the notice under section 148 of the Act, on the basis of mechanical approval, without applying his mind, therefore the said approval was not valid and consequently the reopening of the assessment on the basis of said approval was not valid. We therefore quash the same - Decided in favour of assessee.
Issues Involved:
1. Validity of the assessment order passed under section 143(3) read with section 147 of the Income Tax Act, 1961. 2. Compliance with mandatory conditions under sections 147, 148, and 151 of the Income Tax Act, 1961. 3. Addition of ?50,95,670/- on account of unexplained cash deposits. Detailed Analysis: 1. Validity of the Assessment Order under Section 143(3) read with Section 147: The assessee challenged the order passed by the CIT(A) confirming the action of the Assessing Officer (A.O.) in framing the assessment under section 143(3) read with section 147. The assessee argued that the mandatory conditions under sections 147 and 148 were not complied with. The Tribunal admitted the additional ground raised by the assessee, which questioned the jurisdiction assumed by the A.O. under section 147 read with section 148, citing the Supreme Court decision in NTPC Limited (229 ITR 383). 2. Compliance with Mandatory Conditions under Sections 147, 148, and 151: The assessee contended that the approval for reopening the assessment was granted in a mechanical manner without proper satisfaction as required under section 151. The A.O. initiated proceedings based on AIR information about cash deposits of ?25,00,000/- and issued a notice under section 148. The CIT(A) upheld the A.O.'s action, stating that the source of cash deposits remained unexplained. The Tribunal examined the approval process and found that the JCIT merely recorded "Yes it is a fit case for 148 action" without proper application of mind. The Tribunal referred to several judicial precedents, including the decisions of the Hon'ble Guwahati High Court in Ladhuram Laxmi Narayan Vs. ITO (102 ITR 595) and the ITAT Chandigarh Bench in Shri Tek Chand Vs. ITO (ITA No. 255/Chd/2020), which held that mechanical approval without application of mind renders the reopening invalid. 3. Addition of ?50,95,670/- on Account of Unexplained Cash Deposits: The assessee argued that the addition made by the A.O. was arbitrary and ignored the facts and submissions provided. However, since the Tribunal quashed the reopening of the assessment on legal grounds, it did not provide a finding on the merits of the addition. Conclusion: The Tribunal concluded that the reopening of the assessment under section 148 based on mechanical approval without proper application of mind was invalid. Consequently, the assessment order was quashed, and the appeal of the assessee was allowed. The Tribunal did not address the other grounds on merit due to the decision on the legal issue. Order Pronounced on 29/06/2021.
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