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TMI Blog2019 (12) TMI 756X X X X Extracts X X X X X X X X Extracts X X X X ..... hri H.S. Sidhu, Judicial Member For the Assessee : Shri Raj Kumar, CA & Sh. Sumit Goel, CA For the Revenue : Shri Pradeep Singh Gautam, Sr. DR. ORDER The Assessee has filed this appeal against the impugned order dated 26.5.2014 passed by the Ld. CIT(A)-XI, New Delhi on the following grounds:- 1. That the order of the Ld. CIT(A) is against law and facts. 2. That the Ld. CIT(A) erred in conforming the addition of ₹ 1035000/- made by the AO on account of cash deposit in the bank account, by ignoring all the submissions and documents filed by the appellant. 3. That the Ld. CIT(A) erred in enhancing the addition by 1224000 on account of cash deposit in the bank account of the appellant. 4. That the AO erred in issuing the notice u/s. 148 of the Act to the appellant, although there was no reason to believe for him to issue notice to the appellant and thus the notice issued is without jurisdiction. 5. That the AO never supplied the copy of reason recorded u/s. 148 of the Act to the appellant, which is in clear violation of provisions of law and of various judicial pronouncements. 6. That the Ld. CIT(A) erred in not following the proper procedure in enhancing the addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. CIT(A), hence, the same may not be admitted and appeal of the assessee may be dismissed. He further relied upon the orders of the authorities below. 5. I have heard both the parties and perused the records, especially the Additional grounds filed by the assessee and the case laws supporting the case for admission of additional grounds on which the Ld. Sr. DR relied upon for not admitting the additional grounds. In my considered view, the additional grounds are in legal and jurisdictional nature and needs to be admitted in the interest of justice. Hence, I admit the same and only deciding the additional ground no. 2 as argued by the ld. Counsel for the assessee. For the sake of convenience, the additional ground no. 2 is again reproduced as under:- Additional Ground No. 2 That the approval of the Additional CIT u/s. 151 of the I.T. Act is not as per law and not competent so as to provide a legally valid jurisdiction to AO to initiate the re-assessment proceedings, more so the approval / satisfaction is mechanical, without application of mind and in stereo typed manner." 5.1 I have also perused the page no. 1 placed in Paper Book which is a copy of RECORDING THE REASONS FO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s under:- "Yes. I am satisfied." 20. I find the coordinate Bench of the Tribunal in the case of M/s Virat Credit & Holdings Pvt. Ltd. (supra) while deciding an identical issue has quashed the reassessment proceedings where the approving authorities while giving approval has simply mentioned "Yes. I am satisfied." The relevant observations of the Tribunal from para 10 onwards read as under:- "10. First of all, ld. AR for the assessee company drew our attention towards sanction accorded by the Addl.CIT for reopening of the assessment obtained by moving an application under Right to Information Act, 2005, available on file as Annexure 'A'. Perusal of the sanction accorded by Addl. CIT in the prescribed proforma shows that there is a question no.13 viz. : "13. Whether the Addl. CIT is satisfied on the reasons recorded under section 147 that it is a fit case for issue of notice under section 148 of the IT Act. 11. In response to aforesaid question no.13 in the prescribed proforma, Addl. CIT has written "Yes. I am satisfied." No doubt, columns of reasons recorded was there and it is also mentioned in column no.12 that reasons for belief that income has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - Whether Special Leave Petition filed against impugned order was to be dismissed - Held, yes [In favour of assessee] Search and Seizure-Procedure for black Assessment- Search was conducted at residential and business premises of Assessee and notice for block assessment u/s. 158-BC was issued- For block period, returns were filed that were processed u/s. 143 (1)- However, notice u/s. 148 was issued by AO, on basis of certain reasons recorded-Assessee objected to same before AO, that was rejected and assessment was completed u/ss. 143(3) and CO No.57/Del/2012 147- CIT(A) found that reason recorded by Joint Commissioner of Income Tax, for according sanction, was merely recording 'I am Satisfied'- Action for sanction was alleged to be without application of mind and to be done in mechanical manner-Held, while according sanction, Joint Commissioner, Income Tax only recorded "Yes, I am satisfied"- Mechanical way of recording satisfaction by Joint Commissioner, that accorded sanction for issuing notice u/s. 147, was clearly unsustainable-On such• consideration, both Appellate authorities interfered into matter- No error was committed warranting reconsideration-As f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " 16. Furthermore, perusal of the noting sheet dated 09.03.2010 to 30.12.2010 made available to the Bench for perusal shows that only AO has recorded that Addl.CIT has considered the reasons recorded before according the sanction, however even no prima facie material is there, if Addl.CIT has applied his mind by considering the reasons recorded before according the sanction. We are of the considered view that the AO who has recorded the reasons cannot enter into the mind of the sanctioning authority (Addl.CIT) discharging the quasi-judicial function for according valid sanction for reopening the assessment. 17. Moreover, according sanction is not a supervisory role rather it is a quasi-judicial function to be performed by the Addl.CIT as required u/s 151 of the Act. When the Revenue Department is manned by highly qualified officers they are to evolve legally sustainable standard operating procedure for discharging quasi- judicial function. 16. Hon'ble High Court of Delhi in case cited as SABH Infrastructure Ltd. vs. ACIT in WP (C) 1357/2016 order dated 25.09.2017 has issued guidelines to the Revenue authorities while deciding the issue of reopening u/s 147/148 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under similar circumstances by observing as under:- "8. I have considered the rival arguments made by both the sides and perused the material available on record. It is an admitted fact that the case of the assessee was reopened by the Assessing Officer after recording reasons and issue of notice u/s 148 as per the provisions of section 147 and 148 of the Act on the basis of the information received from the Investigation Wing that the assessee is a beneficiary of accommodation entry obtained from Surendra Kumar Jain group of cases towards introduction of share capital of ₹ 35 lacs. I find, the assessee has taken a specific ground before the CIT(A) challenging the validity of reassessment proceedings on the ground that approval u/s 151 of the Act of the superior authorities is not in accordance with law. The relevant ground of appeal No.2 taken before the CIT(A) reads as under:- "2. That under the facts and circumstances, approval u/s 151 of the superior authorities is not accordance with law and otherwise also mechanical and without application of mind, making the reasstt. Proceedings unsustainable in law." 9. I find the above ground has been extracted by the CIT(A) i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the paper book also support his case. Since, in the instant case, admittedly, the ld. PCIT while granting approval has simply mentioned 'Yes. I am satisfied' therefore, following the decisions of the jurisdictional High Court (cited supra) on this issue which are binding on the Tribunal, the reassessment proceedings are to be treated as not in accordance with the law since the approval has been given in a mechanical manner without due application of mind by the approving authority. I, therefore, allow ground of appeal No.2 by the assessee challenging the validity of reassessment proceedings. Since the assessee succeeds on this legal ground, the various other grounds raised by the assessee are not being adjudicated being academic in nature." 22. Since, in the instant case, both the approving authorities have given approval in a mechanical manner without due application of mind, therefore, such reassessment proceedings have to be treated as not in accordance with law and has to be quashed. 23. Even otherwise also, a perusal of the reasons recorded show that the notice has been issued in a mechanical manner without independent application of mind by the Assessing Officer and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found when he went through the information. In other words, what in such information led him to form the belief that income escaped assessment. But this is absent. He straightaway records the conclusion that "the abovesaid instruments are in the nature of accommodation entry which the Assessee had taken after paying unaccounted cash to the accommodation entry given (sic giver)". The AO adds that the said accommodation was "a known entry operator" the source being "the report of the Investigation Wing". 21. The third and last part contains the conclusion drawn by the AO that in view of these facts, "the alleged transaction is not the bonafide one. Therefore, I have reason to be believe that an income of ₹ 5,00,000 has escaped assessment in the AY 2004-05 due to the failure on the part of the Assessee to disclose fully and truly all material facts necessary for its assessment... " 22. As rightly pointed out by the ITAT, the 'reasons to believe' are not in fact reasons but only conclusions, one after the other. The expression 'accommodation entry' is used to describe the information set out without explaining the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer and such reopening is made on the basis of borrowed satisfaction, therefore, such reopening is not in accordance with law and ha to be quashed. Accordingly, such reassessment proceedings have to be treated as not in accordance with law and has to be quashed. 26. Since the assessee succeeds on this legal ground challenging the validity of reassessment proceedings, the addition on merit is not being adjudicated being academic in nature. The appeal filed by the assessee is accordingly allowed. ITA Nos. 1375/Del/2019 (Gopal Chand Mundhra and Sons); 1721/Del/2019 (Damyanti Mundhra); 1722/Del/2019 (Ramdev Mundhra); 1524/Del/2019 (Gopal Chand Mundhra). 27. In these appeals also identical grounds have been taken by the respective assessees and in all these cases the approving authorities have given approval to the reopening of assessment in a mechanical manner without due application of mind. Therefore, following the reasons given in the preceding paragraphs, the reassessment proceedings initiated in the case of these assessees are also held to be not in accordance with the law and are accordingly quashed. 28. In the result, all the five appeals filed by the respective ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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