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TMI Blog2020 (1) TMI 247X X X X Extracts X X X X X X X X Extracts X X X X ..... eal against the impugned order dated 20.11.2018 passed by the Ld. CIT(A)-12, New Delhi on the following grounds:- 1. That order passed by Ld AO dated 29/12/2017 and further order passed by ld CIT A dated 20/11/2018 are bad in law in as much as notice U/S 148 dated 31/3/2017 was issued by ITO Ward 68(2) New Delhi whereas impugned assessment is framed by ITO Ward 36(4) New Delhi who has admittedly neither recorded reasons uls 148 nor issued any notice uls 148 so impugned assessment framed by ITO Ward 36(4) New Delhi and consequential orders of CIT-A are void ab initio being passed without jurisdiction. 2. That order passed by Ld AO dated 29/12/2017 and further order passed by ld CIT A dated 20/11/2018 are bad in law in as much as notice uls 148 dated 31/03/2017 is apparently issued after time barring date as it is recd. by assessee only on 05/04/2017 so impugned assessment framed by ITO Ward 36(4) New Delhi and consequential orders of CIT-A are void ab initio being passed on basis of time barred notice uls 148 of the Act. 3. That order passed by LdAO dated 29/12/2017 and further order passed by ld CIT A dated 20/11/2018 are bad in la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not recorded proper satisfaction and without application of mind gave the approval in a mechanical manner. He further stated that 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. 3. On the contrary, Ld. Sr. DR relied upon the orders of the authorities below and stated that the reasons recorded and satisfaction / approval accorded is within the meaning of section 151 of the Act and need not to be quashed. He stated that apart from relying on the order of the Ld. CIT(A), the following cases laws may kindly be considered with regard to reopening of cases u/s. 147 of the I.T. Act:- 1. Sonia Gandhi vs. ACIT (Delhi High Court) 29018) 97 taxmann.com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n regarding bogus purchase by assessee received by DRI from CCE which was passed on to revenue authorities was tangible material outside record to initiate valid reassessment proceedings. 7. Amit Polyprints (P.) Ltd. Vs PCIT Gujarat High Court [2018] 94 taxmann.com 393 (Gujarat) Where reassessment proceedings were initiated on basis of information received from Investigation wing that assessee had received certain amount from shell companies working as an accommodation entry provider, reassessment could not be held unjustified. 8. Aaspas Multimedia Ltd. Vs PCIT Gujarat High Court [2017] 83 taxmann.com 82 (Gujarat) Where reassessment was made on basis of information received from Principal DIT (Investigation) that assessee was beneficiary of accommodation entries by way of share application provided by a third party, same was justified. 9. Murlibhai Fatandas Sawlani Vs ITO Gujarat High Court 2016-TIQL-370-HC- AHM-IT It is not open to the assessee to object to the reopening by asking the AO to produce the source from where the AO has gathered the information for forming ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given approval to the reopening of assessment in a mechanical manner without due application of mind and therefore, on this account the reassessment is not sustainable in the eyes of law and needs to be quashed. The judicial decisions relied upon by the Ld. Sr. DR, have been duly considered. In my considered view, I do not find any parity in the facts of the decisions relied upon with the peculiar facts of the case in hand. 4.1 I have also perused the decision referred by the Ld. Counsel for the assessee 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 wherein, the similar and identical legal/ jurisdictional issue has been adjudicated and decided in favour of the assessee. For the sake of convenience, the relevant portion of the findings of the Tribunal in the aforesaid case are reproduced as under:- 18. I have considered the rival arguments made by both the sides and perused the orders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment are as per annexure enclosed but such annexure has not been produced before the Bench for perusal. 12. Apparently, from the approval recorded and words used that Yes. I am satisfied. , it has proved on record that the sanction is merely mechanical and Addl.CIT has not applied independent mind while according sanction as there is not an iota of material on record as to what documents he had perused and what were the reasons for his being satisfied to accord the sanction to initiate the reopening of assessment u/s 148 of the Act. 13. Even AO while recording the reasons for initiating the reopening of assessment has not applied his mind independently. When we peruse the reasons recorded, available at pages 31-32 of the paper book, the entire reasons have been based on the statement of one Shri P.K. Jindal, who has furnished the list of companies stated to be not doing any business activities but engaged in providing accommodation entries. Before issuing the notice AO appeared to have not examined the profile of the said companies to arrive at a logical conclusion so as to issue the notice u/s 148 of the Act. When this fact is examined in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration-As far as explanation to S. 151, brought into force by Finance Act, 2008 was concerned, same only pertained to issuance of notice and not with regard to manner of recording satisfaction-Amended provision did not help Revenue-No question of law involved in matter, that warranted reconsideration-Revenue's Appeals dismissed. 15. The Hon'ble Delhi High Court has also decided this legal issue in case cited as Pr. CIT vs. N.C. Cables Ltd. in ITA 335/2015 order dated 11.01.2017 by returning following findings :- Reassessment-Issuance of Notice- Sanction for issue of Notice- Assessee had in its return for A Y 2001-02 claimed that sum of ₹ 1 Crore was received towards share application amounts and a further sum of Thirty Five Lakhs was credited to it as an advance towards loan-Original assessment was completed u/s 143(3)-However, pursuant to reassessment notice, which was dropped due to technical reasons, and later notice was issued and assessments were taken up afresh-After considering submissions of assessee and documents produced in reassessment proceedings, AO added back a sum of ₹ 1,35,00,000-CIT(A) held against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ines to the Revenue authorities while deciding the issue of reopening u/s 147/148 of the Act. Operative part of which is reproduced as under:- 19. Before parting with the case, the Court would like to observe that on a routine basis, a large number of writ petitions are filed challenging the reopening of assessments by the Revenue under Sections 147 and 148 of the Act and despite numerous judgments on this issue, the same errors are repeated by the concerned Revenue authorities. In this background, the Court would like the Revenue to adhere to the following guidelines in matters of reopening of assessments: (i) while communicating the reasons for reopening the assessment, the copy of the standard form used by the AO for obtaining the approval of the Superior Officer should itself be provided to the Assessee. This would contain the comment or endorsement of the Superior Officer with his name, designation and date. In other words, merely stating the reasons in a letter addressed by the AO to the Assessee is to be avoided; (ii) the reasons to believe ought to spell out all the reasons and grounds available wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... val 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) in the body of the order. She has also mentioned at para 3.2 of the order that the assessee contended that there was no proper compliance of the provisions of section 151 of the IT Act, 1961. However, her finding on this issue is missing in the entire order. A perusal of the approval given u/s 151, copy of which is placed at pages 20 and 21 of the paper book shows that the Pr. CIT while giving approval has simply mentioned as under:- Yes. I am satisfied. 10. I find, the Hon'ble Delhi High Court in the case of United Electrical Company Pvt. Ltd. (supra) while deciding an identical issue has held that the power vested in the commissioner u/s 151 to grant or not to grant approval to the Assessing Officer to reopen an assessment is coupled with a duty. The commissioner is required to apply his mind to the proposal put up to him for approval in the light of the mate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the satisfaction by the Assessing Officer is based on borrowed satisfaction of the Investigation Wing. The Assessing Officer, without applying his mind, has simply, on the basis of the information of the Investigation Wing, jumped to the conclusion that there is escapement of income. The reasons so recorded do not show that there is any application of mind by the Assessing Officer for reaching the conclusion that there was escapement of income except the information from the Investigation Wing. The Hon'ble Delhi High Court in a number of decisions has held that reopening of assessment on the basis of report of the Investigation Wing without independent application of mind by the Assessing Officer is not in accordance with law and accordingly the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 for arriving at such a conclusion. The statement that the said entry was given to the Assessee on his paying unaccounted cash is another conclusion the basis for which is not disclosed. Who is the accommodation entry giver is not mentioned. How he can be said to be a known entry operator is even more mysterious. Clearly the source for all these conclusions, one after the other, is the Investigation report of the DIT. Nothing from that report is set out to enable the reader to appreciate how the conclusions flow therefrom. 23. Thus, the crucial link between the information made available to the AO and the formatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amyanti 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 assesses are allowed. 4.2 Since in the present case the approving authority has given approval to the reopening of assessment in a mechanical manner without due application of mind by mentioning only that YES. I AM SATISFIED , in the Reasons for Initiating Proceedings u/s. 147 For obtaining the Approval of the Pr. CIT, Delhi- 23, New Delhi, and therefore, the legal issue no. 4 in dispute is squarely covered by the aforesaid finding of the Tribunal, hence, respectfully following the aforesaid precedent i.e. ITAT, SMC, Benc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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