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TMI Blog2018 (12) TMI 747X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. CIT (A) erred in ignoring that none of the 16 shareholders have responded to the summons and that six of the sixteen shareholders have accepted that these are accommodation entries. 3. On the facts and in the circumstances of the cases and in laws, the Ld. CIT(A) grossly erred in concluding that the conf irmation given by the three cur rent shareholders in AY 2012-13 would substantiate the genuineness of the investors in A.Y.2007-08. 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ignored the f inding of the A.O that the shares were subsequently repurchased at a miniscule amount which is nothing but a colorable device to introduce unaccounted money. 5. For these and other grounds that may be urged at the time of hearing, the decision of the CIT(A) may be set aside and that of the A.O restored." 2. Briefly stated, the assessee company which had during the year under consideration earned income by way of interest on fixed deposits and dividend on listed equity shares had e-filed its return of income for A.Y. 2007-08 on 24.10.2007, declaring income of Rs. 82,691/-. The return of income filed by the assessee was processed as such under Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07.03.2007 12. Lexus Infotech Ltd. 5000 5,00,000/- 07.03.2007 13. Mihir Agencies P. Ltd. 5,000 5,00,000/- 07.03.2007 14. Olive Overseas P. Ltd. (Realgold Trdg. Co. P. Ltd.) 5,000 5,00,000/- 07.03.2007 15. Talent Infoway Ltd. 15,000 15,00,000/- 07.03.2007 16. Tradelink Finvest & Prop. Pvt. Ltd. 5,000 5,00,000/- 07.03.2007 1,00,000/- 1,00,00,000 The A.O in order to verify the genuineness and veracity of the introduction of share capital issued notices under Sec.133(6) to the aforementioned 16 share allottee parties. However, five of the notices were returned back by the postal authorities with the remarks "unclaimed"/"left". Insofar the remaining eleven notices were concerned, the same were served but the parties failed to comply with the same. In the backdrop of the aforesaid facts the A.O called upon the assessee to show cause as to why the aforementioned amount of Rs. 1,00,00,000/- may not be treated as an unexplained cash credit under Sec.68 of the Act. However, the assessee failed to comply with the aforesaid notice and did not submit any reply. The A.O deliberating on the facts of the case observed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he aforesaid sixteen companies. On the basis of the aforesaid deliberations the A.O treated the amount of Rs. 1,00,00,000/- as an unexplained cash credit under Sec.68 in the hands of the assessee. 5. Aggrieved, the assessee carried the matter in appeal before the CIT(A). The CIT(A) after deliberating on the facts of the case observed that the A.O had simply doubted the genuineness of share capital subscriptions received by the assessee from corporate entities without placing on record any cogent evidence. Rather, it was observed by the CIT(A) that the A.O had admitted that notices issued under Sec.133(6) of the IT Act were duly served on 11 parties. It was further observed by the CIT(A) that the A.O had also admitted that the summons issued to three major shareholders viz. (i) M/s Chamatkar Properties and Investment Pvt. Ltd; (ii) M/s Swapnasundari Holding & Estate Development Pvt. Ltd; and (iii) M/s Aashees Properties Pvt. Ltd were duly served upon them and they had confirmed of having made investments in the shares of the assessee company. Further, it was noticed by the CIT(A) that the information regarding purchase of shares by the aforementioned three major shareholders from s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim of the assessee that as assessment in its case was earlier framed vide order passed under Sec.143(3), dated 18.12.2009, therefore, the A.O had erroneously reopened its case and issued notice under Sec.148 on 21.03.2014 without obtaining the prior approval of the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner as required under Sec.151(1) of the Act. It was submitted by the ld. A.R that as the notice under Sec. 148 was issued by the A.O after expiry of a period of 4 years from the end of the relevant assessment year, therefore, as per the mandate of law contemplated in Sec. 151 of the I.T Act, it was obligatory on his part to have obtained the sanction of the appropriate authority as envisaged in Sec. 151(1) prior to issue of such notice. It was submitted by the ld. A.R that the fact that assessment had earlier been framed in the case of the assessee under Sec.143(3) on 18.12.2009 was brought to the notice of the A.O by the assessee in its objections filed with him as regards the validity of the reassessment proceedings. The ld. A.R in order to fortify his aforesaid contention drew our attention to the 'Objections', dated 16.02.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment proceedings. 10. We have deliberated at length on the issue under consideration and find substantial force in the objection raised by the ld. A.R as regards the validity of the notice issued by the A.O under Sec. 148 of the I.T Act, without obtaining the approval of the appropriate authority as envisaged under Sec. 151(1). We find that it is a matter of fact that original assessment was framed in the case of the assessee vide order passed under Sec.143(3), dated 18.12.2009 by the Income Tax Officer- 2(1)(4), Mumbai (Page 26-28 of 'APB'). Further, the fact that the original assessment under Sec. 143(3) already stood framed in hands of the assessee was brought to the notice of the A.O by the assessee in its objections filed with him as regards the validity of the reassessment proceedings, vide letter dated 16.02.2015 (Page 38-50 of 'APB'). Rather, on a perusal of the aforesaid objections it stands revealed that the assessee in his aforesaid letter dated 16.02.2015 had furnished with the A.O the complete details as regards the framing of the assessment in its case under Sec.143(3), as under: Return filed-Ack No. 2486790241007 27/10/2007 143(1) 25.10.2008 Notice U/s 143( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e after the expiry of a period of four years from the end of the relevant assessment year i.e A.Y. 2007-08 under Sec. 147 of the I.T Act. In our considered view no notice under Sec.148 could have been issued by the A.O to the assessee after 31.03.2012, unless the appropriate authority contemplated in Sec. 151(1) was satisfied on the reasons recorded by the A.O that it was a fit case for the issue of such notice. However, as emerges from the record the A.O in the present case had issued the notice under Sec.148 without obtaining the sanction of the appropriate authority, and had rather proceeded with on the basis of the approval of the Addl. CIT- Range-2(1), Mumbai. In our considered view as the A.O had issued notice under Sec. 148 without obtaining the approval of the appropriate authority, therefore, it can safely be concluded that as he had proceeded with the reassessment proceedings without valid assumption of jurisdiction, hence the notice issued by him under Sec.148 of the I.T Act cannot be upheld and is liable to be vacated. Our aforesaid view that a notice issued under Sec. 148 without obtaining the approval of the appropriate authority as contemplated under Sec.151 of the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the satisf action has to be of the Joint Commissioner. That expression has a distinct meaning by virtue of the definition in Section 2(28C). The Commissioner of Income Tax is not a Joint Commissioner within the meaning of Section 2(28C). In the present case, the Additional Commissioner of Income Tax forwarded the proposal submitted by the Assessing Officer to the Commissioner of Income Tax. The approval which has been granted is not by the Additional Commissioner of Income Tax but by the Commissioner of Income Tax. There is no statutory provision here under which a power to be exercised by an officer can be exercised by a superior officer. When the statute mandates the satisfaction of a particular functionary for the exercise of a power, the satisfaction must be of that authority. Where a statute requires something to be done in a particular manner, it has to be done in that manner. In a similar situation the Delhi High Court in Commissioner of Income Tax Vs. SPL'S Siddhartha Ltd. (ITA No.836 of 2011 decided on 14 September 2011) held that powers which are conferred upon a particular authority have to be exercised by that authority and the satisfaction which the statute ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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