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TMI Blog2018 (5) TMI 1326X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri S.M. Surana, AR, appeared on behalf of the assessee Shri G. Mallikarjuna, CIT, D/R. appearing on behalf of the revenue ORDER Per J. Sudhakar Reddy, AM This is an appeal filed by the assessee directed against the order of the ld. Commissioner of Income Tax (Appeals)-21, Kolkata, dt. 26/12/2017, passed u/s 250 of the Income Tax Act, 1961 (hereinafter the Act ), relating to Assessment Year 2008-09. 2. Though the assessee has raised grounds both on the issue of re-opening of the assessment as well as on merits of the addition, the ld. Counsel for the assessee Shri S.M. Surana, advanced arguments only on the issue of re-opening of the assessment. No arguments, whatsoever were advanced on the merits of the addition. Hence we restrict ourselves to the issue of the validity of the re-opening of the assessment. 2.1. The ld. Counsel for the assessee referred to the reasons of re-opening and challenged the validity of the same on the following grounds:- a) Notice was issued in the name of M/s. Navalco Commodities Pvt. Ltd., which had merged into the assessee company w.e.f. 01/04/2010 and hence notice was issued to a non-existing company, which is bad in law an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. After hearing rival contentions, perusing the papers on record and orders of the authorities below as well as the case-law cited, we hold as follows:- The reasons recorded for reopening of the assessment by the Assessing Officer are as follows:- 5. It can be seen that the reasons for reopening were recorded by the ITO Ward 7(3), Kolkata. The assessee had filed its return of income for the impugned Assessment Year 2008-09 on 27/09/2008. A notice u/s 148 of the Act, was issued to the assessee on 02/11/2009 by the Income Tax Officer, Ward 2(4), Kolkata. Further a notice u/s 143(2) of the Act was issued by the ITO Ward2(4), Kolkata, to the assessee on 02/12/2009. Thereafter, assessee was completed u/s 147 r.w.s. 143(3) of the Act, on 31/12/2009. This is a second reopening of the assessment. Admittedly, the reopening is beyond the period of four years from the end of the Assessment Year and the original assessment was completed u/s 143(3) of the Act. Under these circumstances, the proviso to Section 147 of the Act, comes into play. A perusal of the reasons recorded demonstrate that the Assessing Officer has not alleged that the assessee has failed to disclose fully and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Anor. reported in [2009] 308 ITR 38 (Delhi) has held as follows: 26 Viewed in this light, the proviso to section 147 of the said Act, carves out an exception from the main provisions of section 147. If a case were to fall within the proviso, whether or not it was covered under the main provisions of section 147 of the said Act would not be material. Once the exception carved out by the proviso came into play, the case would fall outside the ambit of section 147. 27 Examining the proviso [set out above], we find that no action can be taken under section 147 after the expiry of four years from the end of the relevant assessment year if the following conditions are satisfied: (a) an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year; and (b) unless any income chargeable to tax has escaped assessment forsuch assessment year by reason of the failure on the part of the assessee: (i) to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148; or (ii) to disclose fully and truly all material facts necessary for his assessment for that assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the absence of an allegation in the reasons recorded that the escapement of income had occurred by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment, any action taken by the Assessing officer under section 147 beyond the four year period would be wholly without jurisdiction. Reiterating our viewpoint, we hold that the notice dated 29.03.2004 under section 148 based on the recorded reasons as supplied to the petitioner as well as the consequent order dated 02.03.2005 are without jurisdiction as no action under section 147 could be taken beyond the four year period in the circumstances narrated above. 4.8. Applying the propositions laid down in the above case law to the facts to this case, we have to necessarily hold that the re-opening of the assessment proceedings is not valid that there is not even a whisper in the reasons recorded for the reopening of the assessment that there is a failure on the part of the assessee to disclose fully and truly all the necessary material facts required for assessment in view of the 1st proviso to Section 147 of the Act. In this case no tangible materials have come to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice can be issued under section 148 by an Assessing Officer who is below the rank of Joint Commissioner after the expiry of 4 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. The expression 'Joint Commissioner' is defined in section 2(28C) to mean a person appointed to be a Joint Commissioner of Income-tax or an Additional Commissioner of Income-tax under section 117(1). In the instant case, the record before the Court indicates that the Assessing Officer submitted a proposal on 28-3-2011 to the Commissioner (Appeals) through the Additional Commissioner. On 28-3-2011, the Additional Commissioner forwarded the proposal to the Commissioner. On this, a communication was issued on 29-3-2011 from the office of the Commissioner (1) conveying approval to the proposal submitted by the Assessing Officer. There is merit in the contention raised on behalf of the assessee that the requirement of section 151(2) could have only been fulfilled by the satisfaction of the Joint Commissioner that this is a fit case for the issuance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and hierarchy of administration will mean nothing. Satisfaction of one authority cannot be substituted by the satisfaction of the other authority. It is trite that when a statute requires, a thing to be done in a certain manner, it shall be done in that manner alone and the Court would not expect its being done in some other manner. [Para 7] Thus, if authority is given expressly by affirmative words upon a defined condition, the expression of that condition excludes the doing of the Act authorised under other circumstances than those as defined. It is also established principle of law that if a particular authority has been designated to record his/her satisfaction on any particular issue, then it is that authority alone who should apply his/her independent mind to record his/her satisfaction and further mandatory condition is that the satisfaction recorded should be independent and not borrowed or dictated satisfaction. Law in this regard is now wellsettled. [Para 8] The Apex Court in the case of Anirudh Sinhji Karan Sinhji Jadeja v. State of Gujarat [1995] 5 SCC 302 has held that if a statutory authority has been vested with jurisdiction, he has to exercise it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de letter dated 16.06.2006 that the above named company was involved in giving and taking bogus entries/transactions during the relevant year, which is actually unexplained income of the assessee company. The AO has further stated that the assessee company has failed to disclose fully and truly all material facts and source of these funds routed through bank account of the assessee company. In the reasons recorded, it is nowhere mentioned as to who had given bogus entries/transactions to the assessee or to whom the assessee had given bogus entries or transactions. It is also nowhere mentioned as to on which dates and through which mode the bogus entries and transactions were made by the assessee. What was the information given by the Director of Income-tax (Inv.), New Delhi, vide letter dated 16.06.2006 has also not been mentioned. In other words, the contents of the letter dated 16.06.2006 of the Director of Income-tax (Inv.), New Delhi have not been given. The AO has vaguely referred to certain communications that he had received from the DIT(Inv.), New Delhi; the AO did not mention the facts mentioned in the said communication except that from the informations gathered by the DI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d taken place. In this respect, we may rely upon the decision of Hon'ble jurisdictional Delhi High Court in the case of CIT v. Atul Jain [2000] 299 ITR 383, in which case the information relied upon by the AO for initiating proceedings u/s 147 of the Act did indicate the source of the capital gain and nobody knew which shares were transacted and with whom the transaction has taken place and in that case there were absolutely no details available and the information supplied was extremely scanty and vague and in that light of those facts, the Hon'ble Jurisdictional Delhi High Court held that initiation of proceedings u/s 147 of the Act by the AO was not valid and justified in the eyes of law. The recent decision of Hon'ble jurisdictional High Court of Delhi in the case of Signature Hotels (P.) Ltd. (supra) also supports the view we have taken above. 9. We do not see any reason to differ with the view expressed by the Tribunal. No substantial question of law arises for our consideration. The appeals are dismissed. There shall be no order as to costs. 7.2. The Jurisdictional High Court in the case of Principal CIT vs G G Pharma India Ltd. in ITA 545/2015 vide o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income-tax Act, 1961 and was not selected for scrutiny. Subsequently, the Assessing Officer issued notice u/s 148 which was objected by the assessee. The Assessing Officer rejected the objections. The assessee company filed writ petition and challenged the notice and the order on objections. The Delhi High Court allowed the writ petition and held as under: (i) Section 147 of the Income-tax Act, 1961, is wide but not plenary. The assessing Officer must have reasons to believe that income chargeable to tax has escaped assessment. This is mandatory and the reason to believe are required to be recorded in writing by the Assessing Officer. (ii) A notice u/s 148 can be quashed if the belief is not bona fide, or one based on vague, irrelevant and non-specific information. The basis of the belief should be discernible from the material on record, which was available with the Assessing Officer when he recorded the reasons. There should be a link between the reasons and the evidence material available with the Assessing Officer. (iii) The reassessment proceedings were initiated on the basis of information received from the Director of Income-tax (Investigation) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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