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TMI Blog2018 (12) TMI 571X X X X Extracts X X X X X X X X Extracts X X X X ..... erial and as such reasons record do not constitute valid reason to believe for initiating proceedings u/s 147 of the Act. It is a case of ‘reason to suspect' and not ‘reason to believe.’ After perusing the aforesaid extracts from the assessment order, it is evident that the assessee has raised objection to initiation of assessment proceedings u/s. 147 of the Act vide letter dated 24.11.2017 and the aforesaid objections were disposed of by the AO vide order dated 27.11.2017, which shows that the AO did not accept the objections so filed, he shall not proceed further in the matter with in a very short period of service of order disposing off objection, however, he has made the order of assessment u/s. 147/143(3) on 8.12.2017, which is not in accordance with law and not permissible. - Decided in favour of assessee. - ITA No. 4542/Del/2018 - - - Dated:- 29-11-2018 - SHRI H.S. SIDHU, JUDICIAL MEMBER For The Assessee : Sh. Gautam Jain, Adv. Sh. Lalit Mohan, CA For The Department : Sh. S.L. Anuragi, Sr. DR. ORDER This appeal filed by the assessee is directed against the order passed by the Ld. CIT(A)-7, New Delhi on 01.06.2018 in relation to the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oth in law and on facts in recording various adverse inferences which are contrary to the facts on record, material placed on record and, are otherwise unsustainable in law and therefore, addition so confirmed is absolutely unwarranted. 3. That on the facts and circumstances of the case, the learned Commissioner of Income Tax (Appeals) has erred both on facts and on law, in sustaining addition of ₹ 3,702/- on account of 2% of long term capital gain earned from sale of share in an envisaged manner without considering the documents/ submitted by the appellant and enhanced the income without any basis and cogent evidence. 4. That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that all transaction of appellant were supported by documentary evidence in the shape of contract notes, account payee transactions and therefore addition made on surmises, conjectures and suspicion and without bringing on record any specific evidence establishing that claim made is not genuine or incorrect is highly arbitrary, unjustified and untenable. 5. That the learned Commissioner bf Income Tax (Appeals) has erred both in law and on facts in upholding the levy of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly without application of mind do not constitute valid reasons to believe for assumption of jurisdiction u/s 147 of the Act and that approval granted is a mechanical approval and hence initiation of proceedings u/s 147 of the Act on this ground also is invalid. In view of above, he requested to quash the reassessment. To support his contention, Ld. Counsel of the assessee has filed Paper Books in which records at the stage of assessment as well as appellate were available and having the copy of decisions of the Hon ble Supreme Court, Hon ble High Courts and the Tribunal by which the legal issues raised by the assessee in ground no. 1 to 1.3 are squarely covered in favour of the assessee. The following are the case laws on which the Assessee s counsel has relied upon. 1. Judgment of Hon ble Bombay High Court in the case of Coronation Agro Industries Ltd. vs. DCIT reported in 390 ITR 464. 2. ITAT, Delhi Bench decision in the case of Prabhu Dayal Aggarwal vs. ACIT in ITA No. 1662/Del/2018 dated 29.6.2018. 3. ITAT, Jaipur Bench decision in the case of DCIT vs. Gyandeep Khemka in ITA No. 695/JP/2018. 4. CIT vs. Kelvinator of India Ltd. reported in 320 ITR 561 (SC) 5. ACIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Del) R.P. Foam Home (P) Ltd. v. ITO 42. CIT vs. S. Goyanka Lime Chemical Ltd. reported in 237 Taxman 378 (MP) 43. CIT vs. S. Goyanka Lime Chemical Ltd. reported in 64 taxmann.com 313 (SC). 44. Central India Electricity Supply Co. Ltd. vs. ITO 333 ITR 237 (Del.) 45. Pr. CIT vs. NC Cables Ltd. in ITA No. 335/2015 (DHC) 5. On the contrary, Ld. DR relied upon the orders of the authorities below and stated that Assessing Officer issued the notice u/s. 148 after due application of mind. He stated that the AO has followed due procedure before issuing the notice u/s 148 of the I.T. Act, 1961. The Assessing Officer had tangible material in the form of information received from the Investigation Wing. The Assessing Officer did not proceed to any hearsay, conjecture or surmises. He relied upon the ITAT, Delhi B Bench decision dated 24.10.2018 in the case of DCIT vs. M/s Erawat Infotech Pvt. Ltd. 6. I have heard both the parties and carefully considered the case laws and the relevant documents available on record, especially the impugned order, Paper Book and the case laws cited by both the parties. From the assessment order. I find that assessee had filed its return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) Whether it is a case of under assessment, assessment at too low a rate which has been made the subject of excessive relied or allowing excessive loss or depreciation NA 10 Whether the provisions of section 150(1) are applying. If the rely is in the affirmative, the relevant facts may be stated against item no. 11 and it may also be brought out that the provisions of section 150(2) would not stand in the way of initiating proceedings u/s. 147. No. 11. Reasons for the belief that income has escaped assessment. The assessee is a company filed its return of income for AY 2010-11. As per return for AY 2010-11, the details of the Directors of the assessee company obtained from records are hereunder:- (a) Suresh Arora, 581, Ward No. 16, Street Dr. Inderjit Singh, Arya Samaj Road, Sirsa, Haryana-125055. (b) Anjali Arora, 581, Ward No. 16, Street Dr. Inderjit Singh, Arya Samaj Road, Sirsa, Haryana-125055 2. In this case, information was received on 21./03/2016 from Asstt. Director of Income Tax (Investigation), Unit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with an intention to impact the tax liabilities of the pair of clients whose codes are modified. On the basis of information received, the assessee company in respect of FY 2009-10 relevant to AY 2010-11 and the following facts are noted that : a) During the year it has undertaken transactions in sale / purchase of shares, securities in cash segment as well as Future and Options Segment and its turnover could have included the transactions contrived by way of CCM. As per the information received for the period of 01.4.2009 to 31.3.2010, it has undertaken loss worth ₹ 6,02,335/-. b) The transactions which involved CCM, as per information received under the report of the Investigation Wing are as under:- Name of the beneficiar y client Address of beneficiary Name of broker When OC (Ascertaine d Profit Shifted out) When MC (Ascertaine d losses shifted in) Net reduction in income due to CCM Radiance Stock Traders Pvt. Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Whether the Pr. Commissioner of Income Tax is satisfied on the reasons recorded by the DCIT, that it is a fit case for the issue of notice u/s. 148. Yes. I am satisfied. Sd/- Pr. Commissioner of Income Tax, Delhi -7, New Delhi 6.1 After perusing the aforesaid reasons recorded, I find that information was received on 21.3.2016 from Asstt. Director of Income Tax (Investigation) Unit- 1(3), Ahmedabad without conducting any enquiry on the same by Assessing officer and without considering the fact of the case of assessee in light of the issue is not a tangible and relevant material to form opinion that income has escaped assessment. It is noted that the proceedings u/s. 147 of the Act can be initiated only on the basis of the tangible material and not on the basis of assumptions and presumptions. The precondition u/s. 147 of the Act is reason to believe and, the expression is stronger than the word satisfied . The belief entertained by the AO must not be arbitrary or irrational, however, it must be reasonable. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion entries, which information was given to him by the Directorate of Investigation, the AO stated: I have also perused various materials and report from Investigation Wing and on that basis it is evident that the assessee company has introduced its own unaccounted money in its bank account by way of above accommodation entries. The above conclusion is unhelpful in understanding whether the AO applied his mind to the materials that he talks about particularly since he did not describe what those materials were. Once the date on which the so called accommodation entries were provided is known, it would not have been difficult for the AO, if he had in fact undertaken the exercise, to make a reference to the manner in which those very entries were provided in the accounts of the Assessee, which must have been tendered along with the return, which was filed on 14th November 2004 and was processed under Section 143(3) of the Act. Without forming a prima facie opinion, on the basis of such material, it was not possible for the AO to have simply concluded: it is evident that the assessee company has introduced its own unaccounted money in its bank by way of accommodation entries . In t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tipulates that the CIT(a), who is the competent authority to authorize the reassessment notice, has to apply his mind and form an opinion. The mere appending of the expression approved says nothing. It is not as if the CIT(A) has to record elaborate reasons for agreeing with the noting put up. At the same time, satisfaction has to be recorded of the given case which can be reflected in the briefest possible manner. In the present case, the exercise appears to have been ritualistic and formal rather than meaningful, which is the rationale for the safeguard of an approval by a higher ranking officer, For these reasons, the Court is satisfied that the findings by the ITAT cannot be disturbed. ( B). Hon ble High Court of Madhya Pradesh in the case of CIT vs. S. Goyanka Lime Chemicals Ltd. reported in (2015) 56 taxmann.com 390 (MP) has held as under:- 7. We have considered the rival contentions and we find that while according sanction, the Joint Commissioner, Income Tax has only recorded so Yes, I am Satisfied . In the case of ARjun Singh vs. Asstt. DIT (2000) 246 ITR 363 (MP), the same question has been considered by a Coordinate Bench of this Court and the following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .11.2017 and the aforesaid objections were disposed of by the AO vide order dated 27.11.2017, which shows that the AO did not accept the objections so filed, he shall not proceed further in the matter with in a very short period of service of order disposing off objection, however, he has made the order of assessment u/s. 147/143(3) of the Act on 8.12.2017, which is not in accordance with law and not permissible. This view is fortified by the following decisions:- i) ITA NO. 5780/D/2014 DATED 6.4.2018 Meta Plast Engineering (P) Ltd. v. ITO 9. Further, in view of the decision of the Hon'ble Bombay High Court in the case of Bharat Jayant Patel (supra), learned AO held should have allowed four weeks time to the assessee to seek their legal remedies after rejection of the objections of the assessee. In view of the fact that the AO has disposed of the objections of the assessee on 22.11.11 and passed the assessment order on 19.12.2011, it is clear that no such time was granted to the assessee. Further, the reasons recorded at the time of assumption of jurisdiction by the AO that the assessee has received an accommodation entry of ₹ 15 lacs whereas at the time of fra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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