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TMI Blog2014 (12) TMI 90X X X X Extracts X X X X X X X X Extracts X X X X ..... come to the conclusion that this was a fit case for issuing a notice u/s 148 - The notice issued u/s 148 was invalid. Section 147 and 148 are charter to the Revenue to reopen earlier assessments and are protected by safeguards against unnecessary harassment of the assessee - They are sword for the Revenue and shield for the assessee. Section 151 guards that the sword of Sec. 147 may not be used unless a superior officer is satisfied that the AO has good and adequate reasons to invoke the provisions of Sec. 147 - The superior authority has to examine the reasons, material or grounds and to judge whether they are sufficient and adequate to the formation of the necessary belief on the part of the assessing officer - the Commissioner has simply put "approved" and signed the report thereby giving sanction to the AO - Nowhere the Commissioner has recorded a satisfaction note not even in brief - it cannot be said that the Commissioner has accorded sanction after applying his mind and after recording his satisfaction – thus, the contention of the assessee that the reopening is bad in law is upheld – Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... e alone fresh material or even the circular in record on the basis of which the reasons to believe have been formed to initiate the reassessment proceedings despite a clear finding given by the Ld.CIT(A). b. That the AO has wrongly assumed jurisdiction u/s 148 on the basis of 'reasons to believe' which are (1) vague, (2) based on the general circular (3) unsupported with any evidence, (4) to make roving and fishing inquiries, thus the initiation of proceedings is bad in law. c. Non specification of purpose of issuing the notice to assess/reassess/compute the income/loss/depreciation (1) renders the notice bad with an incurable defect, further (2) shows non-clarity in recording the reasons to believe, and thus the assessment framed on such illegal notice is void ab initio. 4. That the Ld.CIT(A) has erred in holding the assessment valid despite giving a clear finding that the assessment has been framed by not confronting the information material or any statement to the assessee, thus violating the fundamental principles of natural justice, as also the provisions of s.142(3), which is fatal and hence the assessment so framed in violation needs to be annulled. 5. That the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nk Kamla Nagar 14569 As per the information received, the assessee paid cash of ₹ 1,00,000/- to receive cheque of the same amount plus some more money ranging from 0.5% to 1% to receive this accommodation entry. Since the cash has been paid out of unaccounted money, I have reason to believe that income amounting to ₹ 1,00,750/- (Rs.1,00,000 + commission ₹ 4,750 estimated at 0.75%) has escaped assessment. Sd/- (Rajesh Dhingra) ITO Ward 6(1), New Delhi" 7.3. In response to the letter addressed by the Income Tax Officer, Ward- 6(1), New Delhi, the ACIT, Range 6, New Delhi replied as follows. "ACIT/R 6/06-07 Office of the ACIT, Range 6, New Delhi 110 002 Dt. 28.3.2007 To: The ITO, Ward 6(1), New Delhi Sub: Proposal for issuing notice u/s 148 of the Act in the case of M/s MB Jewellers Pvt.Ltd. - reg. Your proposal for issuance of notice u/s 148 of the Act in the case of M/s MB Jewellers P.Ltd. for the AY 2000-2001 is hereby approved. Sd/- (Pirthi Lal) ACIT, Range 6, New Delhi" 7.4. A perusal of the above demonstrates that the AO has not applied his mind so as to come to an independent conclusion that he has reason to believe that the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... formation received from the Director of Income-tax (Investigation) that the petitioner had introduced money amounting to ₹ 5 lakhs during F.Y. 2002-03 as stated in the annexure. According to the information, the amount received from a company, S, was nothing but an accommodation entry and the assessee was the beneficiary. The reasons did not satisfy the requirements of section 147 of the Act. There was no reference to any document or statement, except the annexure. The annexure could not be regarded as a material or evidence that prima facie showed or established nexus or link which disclosed escapement of income. The annexure was not a pointer and did not indicate escapement of income. (iv) Further, the Assessing Officer did not apply his own mind to the information and examine the basis and material of the information. There was no dispute that the company, S, had a paid up capital of ₹ 90 lakhs and was incorporated on January 4, 1989, and was also allotted a permanent account number in September 2001. Thus, it could not be held to be a fictitious person. The reassessment proceedings were not valid and were liable to the quashed." (b). In the case of CIT vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner [or Deputy Commissioner}, 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} : Provided that, after the expiry of four years from the end of the relevant assessment year, no such notice shall be issued unless the Chief Commissioner or Commissioner is satisfied, on the reasons recorded by the Assessing Officer aforesaid, that it is a fit case for the issue of such notice. (2) In a case other than a case falling under sub-section (1), no notice shall be issued under section 148 by an Assessing 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.} [Explanation.- For the removal of doubts, it is hereby declared that the Joint Commissioner, the Commissioner or the Chief Commissioner, as the case may be, being satisfied on the reasons recorded by the Assessing Officer about fitness of a case for the issue of notice under section 148, need not issue suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parties. The assessee Shri Amar G. Bajaj had taken benefit of such entries of loans, commission ad bill discounting of ₹ 8,00,000/-, 11,21,243/- and 9,64,739/- respectively. The assessment was completed u/s. 143(3) of the 1. T. Act on 3Ft March, 1998 by DCIT-Spl. Rg. 40, Mumbai. It is seen from records that the aforesaid points have not been verified in the assessment. I have therefore reason to believe that by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment, income has escaped assessment within the meaning of proviso to Sec. 147 and explanation 2 (c)(i) of the income-tax Act, 1961." 7. In the light of the above mentioned reasons, in our considerate view, Section 147 and 148 are charter to the Revenue to reopen earlier assessments and are, therefore protected by safeguards against unnecessary harassment of the assessee. They are sword for the Revenue and shield for the assessee. Section 151 guards that the sword of Sec. 147 may not be used unless a superior officer is satisfied that the AO has good and adequate reasons to invoke the provisions of Sec. 147. The superior authority has to examin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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