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2021 (3) TMI 670 - AT - Income TaxReopening of assessment u/s 147 - Assessee argued that PR. CIT had given a mechanical approval for reopening the assessment, he simply stated that he was satisfied, however no reasons were recorded for his satisfaction - HELD THAT - From the reading of approval, it is clear that the Ld. Pr. CIT recorded satisfaction in the mechanical manner, without application of mind to accord sanction for issuing notice under section 148 of the Act. As relying on M/S. S. GOYANKA LIME AND CHEMICAL LTD. 2015 (12) TMI 1334 - SC ORDER 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. Decided in favour of the assessee
Issues Involved:
1. Condonation of delay in filing the appeal. 2. Validity of reopening of assessment under Section 148 of the Income Tax Act, 1961. 3. Confirmation of addition of ?64,78,000/- in respect of deposits in the bank account. 4. Consideration of agricultural income and family savings in the assessment. Detailed Analysis: Condonation of Delay: The appeal by the Assessee was delayed by 35 days. The Assessee attributed the delay to the COVID-19 lockdown, which resulted in the closure of government offices. The Tribunal, after considering the submissions from both parties, found that the delay was due to circumstances beyond the Assessee's control and condoned the delay, admitting the appeal. Validity of Reopening of Assessment under Section 148: The Assessee challenged the jurisdiction of the Assessing Officer (A.O.) under Section 148 of the Income Tax Act, 1961, arguing that the A.O. acted on borrowed satisfaction and did not apply his own mind. The A.O. had initiated proceedings based on information about a cash deposit of ?1,25,00,000/- in the Assessee's bank account, suspecting it as income escaping assessment. The A.O. issued the notice after obtaining approval from the Principal Commissioner of Income Tax (Pr. CIT), who recorded a mechanical satisfaction without detailed reasoning. The Tribunal referred to the judgment of the Hon’ble Apex Court in the case of M/s National Thermal Power Co. Ltd. Vs. CIT, emphasizing that the Tribunal should consider questions of law arising from facts on record. The Tribunal also cited the case of CIT Vs. S. Goyanka Lime & Chemical Ltd., where it was held that mechanical approval without application of mind invalidates the reopening of assessment. The Tribunal found that the approval by the Pr. CIT was given in a mechanical manner, without proper application of mind, thus invalidating the reopening of the assessment. Consequently, the reopening of the assessment under Section 148 was quashed. Confirmation of Addition of ?64,78,000/-: The Assessee contended that the amount deposited in the bank account was given by his brother from the sale proceeds of agricultural land. The A.O. and the CIT(A) had rejected this claim, questioning why the money was kept at home for two years. The Tribunal, however, did not provide a finding on this issue as the legal issue regarding the reopening of the assessment was decided in favor of the Assessee. Consideration of Agricultural Income and Family Savings: The Assessee argued that the CIT(A) failed to consider agricultural income and family savings while confirming the addition of ?64,78,000/-. This issue was also not addressed by the Tribunal due to the quashing of the reopening of the assessment. Conclusion: The appeal of the Assessee was allowed, with the Tribunal quashing the reopening of the assessment under Section 148 due to the mechanical approval by the Pr. CIT. No findings were given on the merits of the other grounds raised by the Assessee.
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