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TMI Blog2018 (8) TMI 515X X X X Extracts X X X X X X X X Extracts X X X X ..... iation of reassessment proceedings u/s. 147, notice u/s. 148 reassessment proceedings and all consequent proceeding and orders, including impugned reassessment and first appellate order, are bad in law and thus, not sustainable and we hold so. - Decided in favour of assessee. - ITA No.132/Del/2018 - - - Dated:- 6-8-2018 - SHRI C.M.GARG, JUDICIAL MEMBER AND SHRI N.K.BILLAIYA, ACCOUNTANT MEMBER For The Assessee : Shri Suresh K. Gupta, C.A For The Revenue : Smt. Parmita Tripathy, CIT(DR) ORDER PER C.M.GARG, JUDICIAL MEMBER: This appeal has been filed by the Assessee against the order of Commissioner of Income Tax (Appeals)-38, New Delhi ( CIT(A) for short) dated 22.12.2016 for the Assessment Year (A.Y) 2009-10 passed under section 143(3) of the Income Tax Act, 1961 (for short the Act ). 2. The grounds raised by the Assessee read as follows: 1. That the impugned order of the Ld. Commissioner of Income Tax (Appeals) [hereinafter refer to Ld. CIT (A)] dated 18.09.2017 is bad in law and on facts. 2. The Impugned orders of authorities below need be set aside as the reassessment proceedings have been initiated without obtaining a subjectiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... That on facts and in law, the impugned order of assessment is invalid and unsustainable in law as the same has been passed by the AO without providing the reasonable time of four weeks for taking remedy against the order of disposal of preliminary objection against the incorrect assumption of jurisdiction by the AO u/s. 147 in violation of principles enunciated by Bombay High Court in the case of Asian Paints Ltd. 296 ITR 90. 4. On said application, we have heard the arguments of both sides and carefully perused the relevant material placed on the record of the Tribunal. The ld. Assessee s Representative (AR) submitted that the additional ground is a pure legal grounds and such ground can be raised by the assessee at any appellate stage. For this proposition, the reliance is also placed on the decision of the Hon'ble Supreme Court in the case of National Thermal Power Corporation Ltd. vs. CIT 229 ITR 383 (SC), which rendered a proposition that the assessee is entitled to urge additional ground at any stage provided the ground raised emanates from the order under appeal and for adjudicating the ground no fresh evidences are required to adduced. The ld. AR finally submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... below need be set aside as the reassessment proceedings have been initiated without obtaining a subjective satisfaction by the Pr. CIT Delhi-7, New Delhi as the approval u/s 151 is mechanical and without application of mind. 8. The ld. AR vehemently pointed out that the reassessment proceedings initiated by the Ld. AO is based on the information received from investigation wing and there was no material before him to substantiate the allegation contained in the information and therefore initiation of proceedings is bad in law. He also contended that the order under appeal is bad in law as the assessing officer has passed the order of assessment u/s 143(3) r/w. s. 147 of the Act without issuing notice u/s 143(2) of the IT Act. 9. The ld. AR drew our attention towards copy of proforma of obtaining approval u/s. 151 of the Act along with reasons recorded, which are placed at pgs. 16-18 of the assessee s paper book, submitted that in column 12 Addl. CIT has granted approval without application of mind by writing only Yes, I am satisfied . The ld. AR submitted that as per decision of Hon Madhya Pradesh High Court in the case of CIT vs. M/s. S. Goyanka Lime and Chemicals Ltd. 231 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isposed of/dismissed by the AO by the order dated 12.12.2016 and he passed impugned reassessment order u/s. 143(3) r/w s. 147 of the Act on 22.12.2016 which is clear violation of directions given by Hon'ble High Court in the case of Asian Paints (supra) and on this count also reassessment proceedings and consequent orders are void and thus, bad in law. This view was again approved by Hon'ble High Court of Bombay itself in the subsequent decision in the case of Aroni Commercials Ltd. vs. DCIT reported in 362 ITR 403 (Bom) and followed by ITAT, Bombay in the case of Shri Hirachand Kanuga vs. DCIT in ITA No.4261 4262/2012 dated 27.02.2015. 12. On these submissions, the ld. DR could not controvert the facts that the AO disposed of objections of the assessee by way of passing order on 12.12.2016 and impugned reassessment order u/s. 143(3) r/w s. 147 of the Act was passed only after 10 days of disposal of objections. These facts trigger the ratio of the decision of Hon'ble Bombay High Court in the case of Asian paints (supra), wherein their lordship directed that the AO to wait for four weeks to begin assessment after disposing of the objections of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vestigation Wing, which could form the basis reason to believe that income has escaped assessment. 14. Further placing reliance on the decision of Hon'ble High Court of Delhi in the case of PCIT vs. G G Pharma India Ltd. reported in 384 ITR 147 (Del), the ld. AR submitted that reopening of assessment by an AO based on the information received from the Director of Investigation without making any effort to discuss the materials on the basis on which he formed a prima facie opinion that income had escaped assessment. The Court held that the basic requirement of s. 147 of the Act that AO should apply independent mind in order to form reasons to believe that income had escaped assessment had not been fulfilled. 15. The ld. AR submitted that as per ratio of the decision of Hon'ble High Court of Delhi in the case of PCIT vs. RMG Polyvinyl (I) Ltd. reported in 396 ITR 5 (Del), where information was received from investigation wing that assessee was beneficiary of accommodation entries but no further inquiry was undertaken by AO, said information could not be said to be tangible material as per se and, thus, reassessment on said basis was not justified. Finally, the ld. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as Shri Himanshu Verma, Shri Praveen Aggarwal etc. who are engaged in providing accommodation entries through dummy companies with dummy directors. The ld. AR submitted that in the table given in para 3 is taken along with para 6 of the reasons recorded then, it is clear that the names of companies are 13 and above named two persons at serial No. 11 12 have been noted and there is no name of entry provider in the other 11 columns and there is no link in the reasons recorded with regard to these 11 companies. The ld. AR submitted that these facts clearly show that the AO has acted on suspicion only and not on any credible input available to him through DDIT (investigation) information or otherwise on the basis of any exercise or application of mind by himself. Therefore, the reassessment proceedings and all consequent orders are not sustainable and bad in law. Reiterating his earlier arguments, the ld. AR vehemently pointed out that the approval/sanction given in para 12 of the proforma is not a valid sanction as per ratio of the various decisions including decision of Hon'ble High Court of Madhya Pradesh in the case of S. Goyanka Lime and chemicals Ltd. (supra), which has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplying mind to the information received from the Investigation Wing states/writes that he has reason to believe that the income has escaped assessment. The text and words used by the AO in the reasons recorded for reopening of assessment clearly show that the AO proceeded to initiatory assessment proceedings and reopening of assessment without having any valid satisfaction and only on the basis of borrowed satisfaction as there was no independent application of mind by the AO to the tangible material received from Investigation Wing which could form the valid basis and reason to believe that income has escaped assessment. 21. In view of decisions of Hon ble High Court of Delhi in the cases of PCIT vs. Meenakshi Oversaes (supra), PCIT vs. G G Pharma (I) Ltd. (supra) and decision in the case of PCIT vs. RMG Polyviny (I) Ltd. (supra), where information was received from investigation wing that assessee was beneficiary of accommodation entries but no further inquiry was undertaken by AO, said information could not be said to be tangible material per se and, thus, reassessment on said basis was not justified. In the case of Meenakshi Overseas (supra), their lordship speaking for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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