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TMI Blog2019 (12) TMI 816X X X X Extracts X X X X X X X X Extracts X X X X ..... autam, Sr. DR. ORDER The Assessee has filed this appeal against the impugned order dated 15.11.2018 passed by the Ld. CIT(A), Rohtak on the following grounds:- "That the appellant humbly reiterates all the facts and grounds of appeal raised before the Ld CIT (Appeals). 2. That the CIT(A) has blindly confirmed the Assessment Order. That the appellant hereby raises the following grounds of appeal from the said order as follows: a. That the Dahruhera (Rewari) situated in District Rewari is not covered by any entry mentioned in the Government of India Gazette dated 6th Jan 1994. b. The CIT(A) has committed a mistake by holding that Agricultural Land sold by the appellant is a capital asset. That neither Village Maheshwari nor Dahruhera (Rewari) has not population exceeding Ten thousands during Year: 1991, 2001. That the Village Maheshwari is outside of Municipal Limit of Dharuhera (Rewari). c. The CIT (A) has committed a mistake by dismissing the appeal even after holding finding of fact that Municipal Committee, Dahruhera (Rewari) did not exist on the date of Gazette notification on 6th Jan 1994 and was created on 12th May 2007. That, therefore, it is hit by the explan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase laws i. Recent Apex court decision in Singhad Technical Society (order dated 29/08/2017) 397 ITR 344 ii. Hon'ble Delhi high Court decision in case of Fast Booking (D Pvt. Ltd., order dated 02.09.2015 (ITA no. 334/2015) (378 ITR 693) iii. Hon'ble Delhi high. Court decision in case of Silver Line, order dated 04.1l.2015 (ITA no. 578/2015) (383 ITR 455) iv. Hon'ble Punjab and Haryana High Court decision in case of M/s VMT Spinning Co. Ltd., order dated 16.09.2016 (ITA no. 445/2015) (389 ITR 326) v. Hon'ble Guiarat high court in case of Jolly Fantasy World Ltd 373 ITR 530 vi. decision of the Hon'ble Bombay High Court in CIT Vs. Lalit Kumar Bardia (2017) 84 taxmann.com 213 (Bom), decision of the Hon'ble Bombay High Court in CIT Vs. Lalit kumar Bardia (2017) 84 taxmann.com 213 (Bom), 404 ITR 63(Bom.) (HC): wherein it has been held that mere participation in proceedings or acquiescence would not confer jurisdiction. Reliance was placed on the ratio laid down by the Apex Court in Kanwar Singh Saini Vs. High Court of Delhi (2012) 4 SCC 307, wherein it was observed as under:- "18. It is settled position in law that mere participation in procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct goes to the very root of the matter and it can be raised in appeal for the first time. The appellant had raised this question again in appeal and, therefore, it was incumbent upon the Commissioner of Income Tax (Appeals) to adjudicate upon the grounds taken before him. In fact, he had casually observed that the proceedings under section 148 of the Act had been validly initiated but, wrongly applied the principles laid down by the Apex Court in the case of Sun Engineering Works P. Ltd. (supra). "In the case of P. V. Doshi [1978J 113 ITR 22 this High Court in almost identical fact situation held that the conditions prescribed for initiating reassessment proceedings are mandatory and, therefore, there could never be a waiver of a mandatory provision. That jurisdiction could not be conferred on the authority by mere consent, but only on fulfillment on the conditions precedent for the exercise of jurisdiction. If the jurisdiction could not be conferred by consent, there would be no question of waiver, acquiescence or estoppels or the bar of res judicata being attracted because the order in such a case would lack inherent jurisdiction and would be a void order or a nullity. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orded by the AO and approval granted by the JCIT, wherein the AO has erred in assumption of jurisdiction u/s. 147/148 of the Act on the basis of invalid and mechanical approval as evident from cursory look to reasons format as mere endorsement in column no. 12 in "Yes" is made, which shows that Ld. JCIT has not recorded proper satisfaction after due application of mind and gave the approval in a mechanical manner. He further stated that similar this legal/jurisdictional ground is squarely covered by the decision of the ITAT, SMC, Bench, New Delhi dated 21.8.2019 in the case of Gopal Chand Manudhra and Sons; Damyanti Mundhra; Ramdev Mundhra; Shriya Devi Mundhra and Gopal Chand Mundhra vs. ITO, Wards 55(5), New Delhi decided in ITA No. 1375; 1721; 1722; 1523-1524/Del/2019 respectively relevant to assessment year 2011-12 and therefore, he requested that the same ratio may be followed in the present case and appeal of the assessee may be allowed accordingly by quashing the reassessment proceedings. 4. On the contrary, Ld. DR stated that since this additional ground was not taken before the Ld. CIT(A), hence, the same may not be admitted and appeal of the assessee may be dismissed. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 1,16,18,750/- and any other income which subsequently comes to the notice of the undersigned has escaped assessment within the meaning of section 147 of the I.T. Act, 1961. Issue notice u/s 148 of the I.T. Act, 1961 for the assessment year 2007-08" Therefore, being the malafide intention of the AR of the assessee, his/her contention is not acceptable. Further, the. AR of the assessee has stated that the Ld AO erred in assumption of jurisdiction u/s 147/148 of the Act on basis of invalid and mechanical approval. But it is evident from the reasons format that the Joint Commissioner of Income Tax, Range Rewari had put clearly 'YES' against the column "Whether the Addl. Commissioner of Income Tax is satisfied on the reasons recorded by the ITO that it is a fit case for issue of notice" along with his signature and stamp. Hence, the notion of AR of the assessee regarding legal and jurisdictional additional ground has no force. The comments in the said case are submitted to your good office for necessary action." 5. I have heard both the parties and perused the records, especially the Additional grounds filed by the assessee and the case laws supporting t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsidered the various decisions cited before me. I find the case of the assessee was reopened u/s 147 by recording the reasons and after obtaining approval from the JCIT and the PCIT on the basis of the information received from the Investigation Wing of the Department that the assessee is a beneficiary of accommodation entry of bogus long-term capital gain. The reasons so recorded by the Assessing Officer has already been reproduced in the preceding paragraphs and, therefore, the same is not being reproduced here to avoid repetition. However, a perusal of the column No.12 and 13 of the form for recording the reasons for initiating the proceedings u/s 147 and for obtaining the approval of the Addl./Joint CIT, copy of which is placed at page 40 of the paper book, reveals that the JCIT while giving his approval has mentioned as under:- "Recommended for approval u/s 147 of the Act." 19. Similarly, the Pr. CIT, while giving his approval has mentioned as 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the AO before initiating the proceedings u/s 147/148 of the Act. However, since reopening of assessment in this case is otherwise not sustainable, we are not entering into any merits. 14. Hon'ble Supreme Court in case cited as CIT vs. S. Goyanka Lime & Chemical Ltd. - (2015) 64 taxmann.com 313 (SC) examined the identical issue as to according the sanction for reopening the assessment u/s 148 of the Act by merely recording "Yes. I am satisfied." And held that reopening on the basis of mechanical sanction is invalid by returning following findings :- " Section 151, read with section 148 of the Income-tax Act, 1961 - Income escaping assessment - Sanction for issue of notice (Recording of satisfaction) - High Court by impugned order held that where Joint Commissioner recorded satisfaction in mechanical manner and without application of mind to accord sanction for issuing notice under. section 148, reopening of assessment was invalid - 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 As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enue appealed against appellate order on merits-Assessee's cross appeal was on correctness of reopening of assessment- Tribunal upheld assessee's cross-objections and dismissed Revenue's appeal holding that there was no proper application of mind by concerned sanctioning authority u/s Section 151 as a pre- condition for issuing notice u/s 147/148-Held, Section 151 stipulates that CIT (A), who was competent authority to authorize reassessment notice, had to apply his mind and form opinion- Mere appending of expression 'approved' says nothing-It was not as if CIT (A) had to record elaborate reasons for agreeing with noting put up-At same time, satisfaction had to be recorded of given case which could be reflected in briefest possible manner- In present case, exercise appears to have been ritualistic and formal rather than meaningful, which was rationale for safeguard of approval by higher ranking officer- Revenue's appeal dismissed." 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 sanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether as a letter or report, such document and/ or relevant portions of such report should be enclosed along with the reasons; (iv) the exercise of considering the Assessee's objections to the reopening of assessment is not a mechanical ritual. It is a quasi-judicial function. The order disposing of the objections should deal with each objection and give proper reasons for the conclusion. No attempt should be made to add to the reasons for reopening of the assessment beyond what has already been disclosed." 17. In view of what has been discussed above, reassessment opened by the AO in this case is not sustainable in the eyes of law, hence hereby quashed. Consequently, cross objection filed by the assessee company stands allowed and the appeal filed by the Revenue has become infructuous. 21. I find the Tribunal in the case of Raghav Technology Pvt. Ltd. (supra) while deciding an identical issue has also quashed the reassessment proceedings 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ending of the expression 'approved' says nothing. It is not as if the commissioner has to record elaborate reasons for agreeing with the noting put up before him. At the same time, satisfaction has to be recorded of the given case which can be reflected in the briefest possible manner. When such 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 official, the finding of the Tribunal quashing the reassessment proceedings cannot be disturbed. 12. I find the Hon'ble Supreme Court in the case of Chhugamal Rajpal vs. S.P. Chaliha & Ors (supra) has held that where the commissioner had mechanically recorded permission and the important safeguards provided in the section 147 and 151 were lightly treated by the officer and the commissioner, the notice issued u/s 148 was held as invalid. The various other decisions relied on by the ld. counsel for the assessee 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case and only on satisfaction leading to a reasonable belief that income chargeable to tax has escaped assessment, that re-opening notice is to be issued." 24. The Hon'ble High Court in the case of PCIT vs. Meenakshi Overseas Pvt. Ltd., vide ITA 692/2016, order dated 26th May, 2017, has observed as under:- "19. A perusal of the reasons as recorded by the AO reveals that there are three parts to it. In the first part, the AO has reproduced the precise information he has received from the Investigation Wing of the Revenue. This information is in the form of details of the amount of credit received, the payer, the payee, their respective banks, and the cheque number. This information by itself cannot be said to be tangible material. 20. Coming to the second part, this tells us what the AO did with the information so received. He says: "The information so received has been gone through." One would have expected him to point out what he 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 ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be supplied subsequently either during the proceedings when objections to the reopening are considered or even during the assessment proceedings that follow. This is the bare minimum mandatory requirement of the first part of Section 147 (1) of the Act." 25. I find the coordinate Bench of the Tribunal in the case of M/s SBS Realtors (P) Ltd. vs. ITO, vide ITA No.7791/Del/2018, order dated 1st April, 2019, has also quashed the reassessment proceedings based on the information provided by the Investigation Wing without any independent application of mind. It was held that there was no tangible material which formed the basis for the belief that income has escaped assessment. The various other decisions relied by the ld. counsel also supports his case. Since, in the instant case, the reopening of the assessment has been made on the basis of information received from the Investigation Wing and there is no independent application of mind by the Assessing 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 accord ..... X X X X Extracts X X X X X X X X Extracts X X X X
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