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TMI Blog2017 (9) TMI 121X X X X Extracts X X X X X X X X Extracts X X X X ..... r the first time or not. That, at least, would have told the Court that the AO had applied his mind to the facts of the case. In any event, if such a note had been put up to the Addl. DIT and thereafter to the DIT, either of those officers could have applied their minds and ascertained if indeed the return was processed under Section 143 (1) of the Act or picked up for scrutiny. The explanation now offered in the counter affidavit only underscores the non-application of mind at all three levels in the Department. X X X X Extracts X X X X X X X X Extracts X X X X ..... It is not in dispute that in the present case, the return originally filed by the Assessee for AY 2006-07 was processed under Section 143 (1) of the Act and not under Section 143 (3) of the Act. Therefore, as far as the Petitioner is concerned, the Department ought to have proceeded in terms of Section 151 (2) of the Act. Since the re-opening of the assessment was after the expiry of 4 years from the end of the relevant AY, the proposal of the AO to reopen the assessment should have had the approval of an officer of the rank of Joint Commissioner which in this case was the Additional DIT. 5. The factual scenario, however, is that the note put up by the AO to the DIT read as under: "Form of recording the reasons for initiating proceedings under Section 148 and for obtaining the approval of the Director of Income-tax/Central Board of Direct Taxes 1 Name and Address of the assessee : M/s. Yum! Restaurants (Asia) PTE Limited 99, Bukit Timah Road # 04-01 02, Singapore - 999999 2 Permanent Account No. : AAACY2204M 3 Status : Non Resident 4 District/Circle/Range : Circle 2(2), Intl. Taxation, New Delhi 5 Assessment Year in respect of which it is proposed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent? If, as in the present case, the return was only processed under Section 143 (1) of the Act, then the answer to the question in Column 8 should have been in the affirmative i.e. "Yes". If the answer is in the affirmative, the AO then proceeds to fill up Columns 8 (a) and 8 (b). 7. As is evident from the above note prepared by the AO, he chose to answer the question in Column No. 8 in the negative. This meant that according to the AO, the return filed by the Assessee for AY 2006-07 had in fact been picked up for scrutiny and an assessment order was passed under Section 143 (3) of the Act. However, the factual position was to the contrary. The only conclusion, therefore, to be drawn is that when the AO filled up Column 8 with a negative answer, he did not himself peruse the file as that would have clearly shown him whether the return was subject to scrutiny or not. This was definitely, therefore, an instance of non-application of mind by the AO. 8. If in fact the AO had seen the record, then apart from answering the question at Column 8 in the affirmative, he would have, in response to the question in Column 8 (a), again answered in the affirmative and in Column 8 (b) given the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he level of Additional DIT there was nonapplication of mind. Had the DIT realized the mistake, he would have declined to make a noting and would have returned the file to the Additional DIT drawing his attention to Section 151 (2) of the Act which did not require any further approval by the DIT where the return originally filed is only processed under Section 143 (1) of the Act. On the contrary, the DIT again recorded his concurrence with the views of the AO and the Additional DIT. Therefore, at the second level also plainly there was non-application of mind. 13. Mr. Rahul Chaudhary, the learned Senior Standing Counsel for the Department, sought to characterise this whole exercise as an 'overapplication' of mind. According to him, it was out of anxiety that the reopening of the assessment might ultimately be invalidated, that these officers enthusiastically participated in the exercise by treating the return originally filed as having been subjected to scrutiny under Section 143 (3) of the Act. 14. What is evident to the Court is the non-application of mind by three officers of the Department - the AO, Additional DIT and the DIT. Plainly they did not bother to examine the record ..... X X X X Extracts X X X X X X X X Extracts X X X X
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