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TMI Blog2020 (2) TMI 781X X X X Extracts X X X X X X X X Extracts X X X X ..... considered view that the reopening in the case of the assessee for the assessment year under consideration is bad in law and deserves to be quashed. In the instant case, we find from the perusal of the order sheets Jt. CIT has simply put yes satisfied and signed the report thereby giving sanction to the AO. JCIT has nowhere recorded his satisfaction note nor any brief of the satisfaction has been given therein. Therefore, it cannot be said that the Jt. CIT has accorded sanction after applying his mind and after recording his satisfaction. To support our view, reliance can be placed on the decision in the case of Pr.CIT Vs. N.C.Cables Ltd., [ 2017 (1) TMI 1036 - DELHI HIGH COURT] wherein has observed that the satisfaction has to be recorded of the given case which can be reflected in the briefest possible manner. - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... the legal issue as well as on merits as raised by the assessee in the form No.36. 3. Facts in brief are that the assessee filed her return of income for the A.Y.2011-12 on presumptive basis, u/s 44AD of the Income-Tax Act, 1961 declaring total income at ₹ 1,00,415/- and also agricultural income of ₹ 7,85,324/-. It was noticed by the AO that during the financial year 2010-11 relevant to assessment year 2011-12 the assessee had purchased half of the land 71 kanals 19 marlas costing ₹ 45,00,000/- stamp duty ₹ 2,25,000/- plus registration fee ₹ 30,000/- on 11.11.2010. The AO examined the fact and found that this transaction was not verifiable in the return of income for the assessment year 2011-12. In such a circumstance the A.O. was having reasons to believe that income to extent of ₹ 23,77,500/- has escaped assessment within the meaning of section 147 of the Income Tax Act, 1961. Accordingly, notice u/s 148 of Income Tax Act, 1961 with the approval of worthy Principal Commissioner of Income Tax vide dated 29.03.2016, was issued and was served upon the assessee. The approval u/s.151(2) of the Act was obtained by the AO in the prescribed form in wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision in the case of Smt. Prabha Rani Agarwal V. ITO. Copy at pages 1-7 of compendium. 6. From the reasons recorded it can be seen that just for the purpose of making roving and fishing inquiries in to the investment made by the assessee, the reassessment proceedings have been initiated. For this purpose the assessee is making reference to the explanation given by the assessee to the AO in reply dated 17-03-2018 furnished during the course of assessment proceedings for A.Y. 2012-13 page 46 and 47. Just to verify the said aspect the AO issued notice of reassessment proceedings which is equivalent to 'reason to suspect' and for his purpose the assessee is placing reliance on the decision of Hon'ble Supreme Court in the case of ITO Vs Lakhmani Mewal Das [1976] 103 ITR 437 (SC)( page 8 to 16) of the case law compendium. Reference is made to last para at page 15 and 16 of the case law compendium. 7. The reassessment proceedings is also invalid on the ground that satisfaction recorded by JCIT (page 66 as 'yes satisfied') Hon'ble Court have interpreted that the satisfaction to be recorded u/s 151 should not be in a ritualistic or mechanical manner and there should be more than writ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kaccha Aadtia and relevant evidence in the shape of J form and confirmed copies of account of sale of agricultural crop are attached at page 53 to 63. The total crop sold of the assessee through Kaccha Aadtia is a sum of ₹ 7,73,174.11 (₹ 6,77,663.77 through Varun and Company and ₹ 65,510.34 through Kewal Krishan Varun Kumar) page 62 and 63. The sale proceeds are received by cheques which were directly credited in the bank account of the assessee. Thus, there was evidence on record for earning agricultural income which has been totally ignored by the AO and CIT(A). It may be submitted that these evidences were filed before AO in subsequent reassessment proceedings and AO did not find any defect in the same. Reference in this regard is made to the reply filed by the assessee before AO on 03-12- 2018 which is placed at page 48 to 63 where all these evidences were filed. On the basis of this reply the AO has rendered assessment order dated 22-12-2018 at page 80 and 81 of the paper-book. 9. Thus, the disallowance is bad in law. Addition of ₹ 17,40,000/- 10. This addition is on account of unexplained investment in agricultural land. It is already submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 27-11-2010 were paid by cheques on 02-12-2010 for purchase of agricultural land to Sh. Sarabjit Singh. Copy of purchase deed is attached at page 67 to 75. ₹ 3,00,000/- deposited on 31-12-2020 is agricultural income received by the assessee from Varun and Company and ₹ 65,510.34 deposited on 08-02-2011 is agricultural income received by assessee from Kewal Krishan Varun Kumar. 14. ₹ 3,77,603.77 credited in Central Bank of Indian from 'Varun and Company' as sale proceeds of agricultural crops and ₹ 5,00,000/- deposited on 31-03-2011 is received from LMG for which the explanation was given to the AO as per page 48 and 33 of the paper- book. Therefore, there is no unexplained deposits in the bank account of the assessee. 15. It may also be mentioned here reference can also be made to the decision in the case of Jitnedra Kumar Yadav Vs ACIT (ITA no. 1808/Del/2016) dated 10-04-2019, where in it has been held that addition u/s 68 is not sustainable in a case where assessee is not maintaining books of account. 16. These synopsis are requested be read with written submissions and relevant documents filed in the paper-book. 17. In view of above submission, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y or correctness of the material is not a thing to be considered at this stage. It is for the assessee to prove during the proceedings that assumption made in the notice was erroneous. [Ramond wollen Mills vs ITO (1999) 236ITR 34 (SC)] (b) At the initiation stage, what is required is reason to believe, but not the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Whether the materials would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belief by the Assessing Officer is within the realm of subjective satisfaction. (ACIT vs Rajesh Jaweri stock brokers (P) ltd (2007) 291ITR 500(SC) lTO v. Selected Dalurband Coal Co. Pvt. Ltd. [1996 (217) ITR 597 (SC)] (1) Even reassessment is permissible even without any new material and on the basis of return .SEWAK RAM vs. INCOME TAX OFFICER 236 CTR 462(P&H) 2010- No doubt, mere change of opinion by itself is not a ground for reassessment as held in the judgments relied upon on behalf of the assessee but if there are reasons to believe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the shape of audit objection, came into existence after the completion of the original assessment and led to the initiation of reassessment, we hold this report of the internal audit party, formed a valid foundation for the initiation of reassessment proceedings, thereby pushing the case outside the ambit of 'change of opinion'. (iv) CIT PVS beedies (p) Itd vs 1999 237 ITR 13 Sc (7) It is also well settled that even if the information be such that it could have been obtained during the previous assessment from an investigation of the materials on the record, or the facts disclosed thereby or from other enquiry or research into facts or law, but was not in fact obtained, the jurisdiction of the Income-tax Officer is not affected. " (AlA firm vs CIT (1991) 189 ITR 285(sc) -The expression 'information' in the context in which it occurs must, in our judgment, mean instruction or knowledge derived from an external source concerning facts or particulars, or as to law relating to a matter bearing on the assessment.. .Jurisdiction of the Income-tax Officer to reassess income arises if he has in consequence of information in his possession reason to believe that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urisdiction in the Income-tax Officer to deal with the matter but it is a condition precedent to making of the order of assessment. The High Court in our opinion lost sight of the distinction and under a wrong basis felt bound by the judgment in 53 ITR 100. As the Income-tax Officer had issued notice within limitations, the appeal is allowed and the order of the High Court is vacated. The Income-tax Officer shall now proceed to complete the assessment after complying with the requirements of law. On Objection to notice u/s 148 Even in case of order not passed, directions are to be issued to AO to remove the defects and pass fresh assessment order disposing the objections. [( Allana Cold storage vs ITO (2006)287 ITR (Bombay) Rabo India Finance Ltd vs DCIT (2012) 23 taxmann .com 163(Bombay) Infrastructure and energy services Itd vs DCIT (2010)233 CTR I75 (Bombay) In support of his contentions, ld.DR also relied on the following case laws :- i) Bhagwat Prasad Vs. CIT, [1998] 97 TAXMAN 294 (All); ii) Jasbir Singh Vs. CIT, ITA No.84 of 2016 (O&M)(Punjab & Haryana High Court) order dated 11.04.2016; iii) Rakesh Gupta vs. CIT, CWP No.27068 of 2016, order dated 27.04.2018; and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) In a case other than a case falling under sub-section (1), no notice shall be issued under section 148 by an Assessing Officer, who is below the rank of Joint Commissioner, unless the Joint Commissioner is satisfied, on the reasons recorded by such Assessing Officer, that it is a fit case for the issue of such notice. (3) For the purposes of sub-section (1) and sub-section (2), the Principal Chief Commissioner or the Chief Commissioner or the Principal Commissioner or the Commissioner or the Joint Commissioner, as the case may be, being satisfied on the reasons recorded by the Assessing Officer about fitness of a case for the issue of notice under section 148, need not issue such notice himself.". 11. On careful perusal of the above provisions, it is clear that the Revenue can reopen the earlier assessments u/s.147 & 148 of the Act, however, Section 151 of the Act prohibits the Revenue to use the provisions of Section 147 of the Act unless there is a satisfaction of the superior officer that the Assessing Officer has good and sufficient reasons to invoke the provisions of Section 147 of the Act. The superior authority has to examine the reasons, material or grounds and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Accordingly, the Hon'ble High Court dismissed the appeal filed by the Revenue observing 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 (supra), the same question has been considered by a Coordinate Bench of this Court and the following principles are laid down:- 'The Commissioner acted, of course, mechanically in order to discharge his statutory obligation properly in the matter of recording sanction as he merely wrote on the format "Yes, I am satisfied" which indicates as if he was to sign only on the dotted line. Even otherwise also, the exercise is shown to have been performed in less than 24 hours of time which also goes to indicate that the Commissioner did not apply his mind at all while granting sanction. The satisfaction has to be with objectivity on objective material.' 8. If the case in hand is analysed on the basis of the aforesaid principle, the mechanical way of recording satisfaction by the Joint Commissioner, which accords sanction for issuing notice under section 148, is clea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the AO is not sustainable as has been held by the Hon'ble Supreme Court in the case of Lakhmani Mewal Das (supra), as under :- "The powers of the Income-tax Officer to reopen assessment, though wide, are not plenary. The words of the statute are "reason to believe" and not "reason to suspect". The reopening of the assessment after the lapse of many years is a serious matter. The Act, no doubt, contemplates the reopening of the assessment if grounds exist for believing that income of the assessee has escaped assessment. The underlying reason for that is that instances of concealed income or other income escaping assessment in a large number of cases come to the notice of the income-tax authorities after the assessment has been completed. The provisions of the Act in this respect depart from the normal rule that there should be, subject to right of appeal and revision, finality about orders made in judicial and quasi-judicial proceedings. It is, therefore, essential that before such action is taken the requirements of the law should be satisfied. The live link or close nexus which should be there between the material before the Income-tax Officer in the prese ..... X X X X Extracts X X X X X X X X Extracts X X X X
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