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TMI Blog2015 (5) TMI 757X X X X Extracts X X X X X X X X Extracts X X X X ..... he is to accord his sanction to the issue of notice u/s. 148 of the Act. In the instant case, we find from the perusal of the order sheet which is on record, 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. Therefore, it cannot be said that the Commissioner has accorded sanction after applying his mind and after recording his satisfaction. - Decided in favour of assessee. - I.T.A. Nos. 4261 & 4262/Mum/2012 - - - Dated:- 27-2-2015 - SHRI VIJAY PAL RAO AND SHRI N.K. BILLAIYA, JJ. For The Appellant : Dr. P. Daniel Shri M.P, Makhija For The Respondent: Shri Vijay Kumar Bora ORDER PER N.K. BILLAIYA, AM: These are appeals by the assessee as an individual and as HUF preferred against two separate orders of Ld. CIT(A)-1, Thane dt. 9.3.2012 pertaining to assessment year 2003-04. As the facts in the case of individual and the HUF are identical, these appeals were heard together and disposed of by this common order for the sake of convenience. We are proceeding with the facts in the case of individual in ITA No. 4261/M/12. 2. The main ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplication of mind by any Assessing Officer involved in processing of return. The AO further observed that the information from the Investigation Wing was a definite information on the basis of which the assessment was reopened. The AO proceeded by completing the assessment by treating the entire sale consideration of shares as income from other sources. 4. Aggrieved, assessee carried the matter before the Ld. CIT(A) and strongly objected to the reopening of the assessment. After considering the facts and the submissions, the Ld. CIT(A) was convinced that there is no merit in assessee s contention and upheld the reopening of the assessment. On merit of the case, the Ld. CIT(A) observed that the purchase and sale transaction of the shares carried out by the assessee was bogus and entire receipts received by the assessee on sale of such bogus shares at ₹ 64,42,266/- is income from undisclosed source and hence the same has been rightly assessed by the AO as income from other sources. 5. Aggrieved by this, the assessee is before us. 6. Before us, the Ld. Counsel for the assessee once again strongly challenged the validity of the reassessment proceedings. The first propos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see had filed return of income for A.Y. 2003-04 on 16.10.2003 declaring total income of ₹ 5,95,080/-. 2. A search action was conducted in the case of M/s. Mahasagar Securities Pvt. Ltd (now Alag Securities Pvt. Ltd.) on 25.11.2009 by the DDIT (Inv) Unit-1(4), Mumbai. 3. During the course of search it was found that M/s. Mahasagar Securities Pvt. Ltd., and its group concerns were engaged in fraudulent billing activities and in the business of providing bogus speculation profits or loss on commodity trading, long term and short term gains or/loss introducing share application money. 4. During the course of search from the seized computer data, a list of clients/beneficiaries who have taken entries from the above company have been extracted. 5. The name of the assessee is found to be appearing in the said transactions in the list mentioned in the computer data extracted from the above company during search. 6. In view of the above and considering the findings and modus operandi found during search operation, there is a reason to believe that the income to the extent as relevant to be worked out has escaped assessment within the meaning of Sec. 147 of the I.T. Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stage the formation of belief must be on the base or foundation or platform of prudence which a reasonable person was required to apply. From the perusal of the reasons recorded and the order of rejection of objections, the names of the companies were available with the authority and their existence was not disputed. The assessee in its objections had stated that the companies had bank accounts and payments were made to the assessee through banking channel. The identity of the companies was not disputed. Under these circumstances, the initiation of proceedings under section 147 and issuance of notice under section 148 of the Act were to be quashed. 8.2. As mentioned elsewhere, the facts of the case in hand so far as the issue of notice and the reasons for the issue of notice u/s. 148 are concerned are identical to the facts of Sarthak Securities (supra), therefore, in the light of the judicial decision discussed hereinabove, the issuance of notice u/s. 148 of the Act has to be quashed. 8.3. Proceeding further in so far as approval u/s. 151(2) of the Act is concerned, following has been placed before us which needs to be mentioned specifically. OFFICE OF THE ADDL. COMMIS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 such notice himself.] 9. A simple reading of the provisions of Sec. 151(1) with the proviso clearly show that no such notice shall be issued unless the Addl. Commissioner is satisfied on the reasons recorded by the AO that it is a fit case for the issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess the Chief Commissioner or the Commissioner, as the case may be, is satisfied, on the reasons recorded by the Assessing Officer concerned, that it is a fit case for the issue of such notice. These are some in-builts safeguards to prevent arbitrary exercise of power by an Assessing Officer to fiddle with the completed assessment . The Hon ble High Court further observed that what disturbs us more is that even the Additional Commissioner has accorded his approval for action under section 147 mechanically. We feel that if the Additional Commissioner had cared to go through the statement of the said parties, perhaps he would not have granted his approval, which was mandatory in terms of the proviso to sub-section (1) of section 151 of the Act as the action under section 147 was being initiated after the expiry of four years from the end of the relevant assessment year. The power vested in the Commissioner to grant or not to grant approval is coupled with a duty. The Commissioner is required to apply his mind to the proposal put up to him for approval in the light of the material relied upon by the Assessing Officer. The said power cannot be exercised casually and in a routine manne ..... X X X X Extracts X X X X X X X X Extracts X X X X
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