9911796707
TMI Blog2021 (3) TMI 510X X X X Extracts X X X X X X X X Extracts X X X X ..... lled but nowhere there is any whisper about the invoices nor they have been produced. AO simply appears to have reopened to examine the claim of section 10B and what was the basis and premise before him as to how the claim on examine u/s 10B has incorrect is not coming fore. Mere intimation received from any authority cannot lead to immediate presumption but it needs to be verified by the AO and to apply his mind. Here in this case, even the documents pertaining to Custom Central Excise Authorities was not available with the AO at the time of initiation of proceedings which fact has been surfaced before us. Thus, we hold that the reasons recorded by the AO do not give jurisdiction to reopen the assessment u/s 147 read with section 148. Sanction not been taken from the appropriate authority as provided u/s 151 - It is seen that in the case of CIT vs. SPL s Siddhartha Ltd [ 2011 (9) TMI 640 - DELHI HIGH COURT] wherein approval was taken by the AO from superior authority i.e. CIT, whereas the under the statutory provision, approval was to be taken from JCIT/Addl CIT, it was held that notice issued u/s 148 of the Act is invalid. The issue is squarely covered in favour of the assessee a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 69,42,652/- to the income of the appellant are misconceived and incorrect. (c) The appellant has not made any sale, which is not recorded in the books of account. All the sales affected by the appellant to M/s Margra Industries, Gharoli are duly accounted for in the books of account. There is no sale made to this party which has not been recorded in the books of account. 5. The appellate order is contrary to the facts and law of the case. 6. The appellant craves leave to add, amend or alter any of the foregoing grounds of appeal at the time of hearing. B. ITA No. 2480/Del/2013 for AY 2003-04: 1. The learned CIT(A) was not justified not to hold that the notice issued u/s 148 of the I.T. Act was illegal, ab initio void and without jurisdiction. 2. The learned CIT(A) was not justified to uphold the addition of ₹ 53,63,998/- (25.37% of ₹ 2,11,07,645/-) to the income of the appellant as income from undisclosed sources. The addition of ₹ 53,63,998/- is unfounded and uncalled for. 3. The observations of learned CIT(A) are incorrect that: (a) The appellant has failed to file any evidence to contradict the findings of Customs & Central Excise Author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to suppression of sales or removal of goods without payment of duty, cancelled invoices were supplied to the appellant firm. (b) No documents/details in respect of excess stock of ₹ 1,04,39,050/- stock short of ₹ 34,26,014/- and unaccounted sale of ₹ 2,44,73,246/- were supplied to the appellant firm. Infact, there was no difference in the stocks. (c) complete books of account, sale & purchase vouchers, bank statements, voucher of expenses etc were produced by the appellant. (d) the appellant has not made any sale which was not recorded in the books of account. 7. The various reasons given by the learned CIT(A) to uphold the aforesaid additions to the income of the appellant are misconceived and incorrect. 7. The appellate order is contrary to the facts and law of the case. 8. The appellant craves leave to add, amend or alter any of the foregoing grounds of appeal at the time of hearing. 3. All these three appeals are outcome of the reassessment proceedings initiated under section 147 of the Act on the basis of notices issued u/s 148. In these appeals filed, the assessee has challenged the validity and legality of the initiation of the reassessment p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... invoices referred in the reasons as well as assessment order upon which presumption has been drawn that such cancelled invoices has led to undisclosed sale on which GP addition has been made. 3. Ld. CIT-DR, Mr. S.S. Rana requested that since it is very crucial document having a bearing on the case, therefore, some time should be given to produce the records. 4. Accordingly, we direct the assessing officer through ld. CIT-DR that all the relevant records mentioned in the reasons recorded as well as the entire assessment record should be produced before the Bench with a copy to the assessee on or before 30th January, 2019. The department should ensure that these documents should be produced otherwise the Bench will proceed to here the matter available on record before us. Adj. to 30.01.2019. Parties informed in the open Court…" 5. Since the aforesaid direction of the Tribunal was not complied, as such, again on 25.04.2019, following order was made: "Order dated 04.12.2018 has not been complied by the ld. CIT DR. She stated that Assessment record is with her. However,, she will comply the order dated 04.12.2018 of the Bench. Hence requested two weeks time to do the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted that since in the 'reasons recorded' the AO had not referred to either any communication dated 24.03.2009 by the Addl.DIT (Investigation) Meerut to Addl.CIT, Range - 22, New Delhi and to the order of Commissioner of Custom and Excise, Noida undated, the same cannot be considered to be any tangible material available at the time of reopening of the assessment. It was submitted that Addl. DIT (Inv.) Meerut who recommended the cases to be reopened, had no tangible material with him other than the intimation received that the Customs & Central Excise Authorities had conducted a search on assessee's business premises on 19.08.2003, during the course of which certain 'discriminatory documents' (SIC) were found, however Ld. Counsel pointed out that none of the documents which is stated to be discriminatory were available with the AO at the time of initiation of proceedings so as to be satisfied that assessee's income had escaped assessment. 8. In view of the aforesaid submissions of the assessee, the Tribunal again on 30.09.2019 required the revenue to produce any record which was available with the AO at the time of issuance of notice by way of following order sheet entry: "T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailable with the assessing officer at the time of issuance of notice and also given her statement on the objection raised by the ld. Senior Counsel. It is made clear that no further adjournment shall be given as already several round of hearing has taken place. Dasti be given to the parties." 9. Even after the aforesaid direction, the ld. CIT DR on 20.10.2020 merely furnished the copy of letter issued by Addl. Director of Income Tax (Inv.), Meerut, dated 24.03.2009, to Addl. CIT, Range - 22, New Delhi and copy of letter issued by Addl. Director of Income Tax (Inv.), Noida, dated 17.03.2009, to Addl. DIT (Inv.) Meerut which had already been filed on earlier occasion and noted hereinabove and no other document was filed. In view of the aforesaid facts, since revenue could not produce any other document nor they could produce the cancelled invoices which made the basis to assume undisclosed sale on which GP addition has been made, as such, these appeals were finally heard on the basis of material/documents furnished by the assessee and produced by the revenue before us. 10. We have heard the rival submissions and perused the relevant finding given in the impugned orders and material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without jurisdiction. 12. For the AYs 2003-04 and 2004-05, since the assessment was originally made u/s 143(3) of the Act, and assessment was reopened beyond four years, it was also contended by the assessee that there was no failure on the part of the assessee to disclose fully and truly all material facts as such, action u/s 147 of the Act was in excess of jurisdiction. 13. During the course of the hearing, learned Senior Counsel, Shri. C.S. Aggarwal argued at length in respect of the aforesaid contentions. He submitted that proceedings u/s 147 of the Act had been initiated in the case of the assessee without any tangible material as in the reasons to believe, the learned AO on the basis of letter of Addl. DIT (Inv), Ghaziabad and report of ADIT (Inv), Noida has alleged that assessee is not keeping proper records of raw material and finished goods produced therefrom in collusion with Margra Industries. It was submitted that aforesaid allegation was based on the alleged fact that assessee has removed goods without payment of duty and certain invoices were though raised but these invoices were later shown cancelled though they contained details like the date and time of removal t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent proceedings is illegal. 13.2 Lastly, it was submitted that approval granted u/s 151 of the Act was not in accordance with law and was without application of mind and hence reassessment proceedings initiated is vitiated in law. It was submitted that in all the three assessment years i.e. AY 2002-03, 2003-04 and 2004-05, approval has been taken from Addl. CIT, Range 22, New Delhi who has merely stated "approved". It was submitted that firstly approval granted is not a sanction as mandated u/s 151of the Act and secondly in the case which falls under proviso to section 151(1) of the Act, approval has to be granted by the Chief Commissioner or Commissioner and since for the AY 2003-04 and 2004-05, approval has been granted by the Addl. CIT hence initiation of proceedings under section 147 of the Act is invalid. In respect of each of the contention, the appellant has cited number of judicial precedents, which shall be dealt with while adjudicating the issue. 14. The learned CIT- DR, Departmental Representative, on the other hand supported the order of the AO and CIT (A). It was submitted by her that proceedings have been initiated on the basis of material i.e. information received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch Assessing Officer, that it is a fit case for the issue of such notice." 15.2 Ergo, provisions of sub section (1) of section 151 of the Act deals with the cases wherein assessment was earlier framed u/s 143(3) or section 147 of the Act, whereas subsection (2) provides for the cases, wherein no assessment was framed earlier. Under sub section (1) of section 151, if the proceedings are initiated within four years, no notice shall be issued under section 148 , 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. However, the proviso to the sub-section (1) provides for the approval in the cases where notice is issued after the expiry of four years from the end of the relevant assessment year. The proviso provides that if the notice is issued beyond four years, such notice shall be issued after taking approval from the Chief Commissioner or Commissioner on the reasons recorded by the Assessing Officer. Further under sub-section (2), it was provided that if no assessment was framed earlier u/s 143(3)(147, no notice shall be issued under section 148 by an Assessing Officer, who is below the rank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to authorize the reassessment notice, has to apply his mind and form an opinion. The mere appending of the expression 'approved' says nothing. It is not as if the CIT (A) has to record elaborate reasons for agreeing with the noting put up. At the same time, satisfaction has to be recorded of the given case which can be reflected in the briefest possible manner. In the present case, the 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 officer. For these reasons, the Court is satisfied that the findings by the ITAT cannot be disturbed." 15.4 When the facts of this case are seen in the light of the aforesaid binding precedents, it is found that in this case also while according approval, the ld. Addl. CIT while granting approval has merely recorded "approved" and has not given any reason at all the reason for granting approval. In fact, this shows that while granting approval, he has not even examined whether the material referred in the reasons to believe is available with the AO and had he applied his mind, he would have found that even the material referred in the reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... now filed by the department. Nowhere it has been brought on record what was the amount and goods which has been alleged to be removed without payment of duty and what are these cancelled invoices. The Revenue could not even produce the copies of alleged invoices referred in the reasons recorded upon which presumption had been drawn that such cancelled invoices has led to undisclosed sale of which GP addition has been made. From the communication dated 24.03.2009 addressed by Addl. DIT (Inv.), Meerut to Addl. CIT, Range-22 which reads as under: - "In this case Custom & Central Excise Authorities conducted a search on the business premises of M/s Marble Art, on 19.08.2003. During the course of search, certain discriminatory documents were found and seized by Custom Authorities. A show cause notice dated 16.08.2004 was issued by the Commissioner of Custom & Central Excise Noida. Later on an order dated 21.11.2005 was passed by the Commissioner of Custom & Central Excise Noida by confirming almost all the allegation in the show cause notice. Against the order of the Custom & Central Excise Commissioner, the firm M/s Marble Art, has gone in Custom & Central Excise Settlement Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced before us. Thus, we hold that the reasons recorded by the AO do not give jurisdiction to reopen the assessment u/s 147 read with section 148. 16. Now in so far as other two years, that is, AYs 2003-4 & 2004-05, it is also seen that in the case of the assessee, not only approval was mechanical but approval was also not taken from competent authority. The relevant details in respect of the approval for these years are as under: Assessment Year Assessed under section Notice issued u/s 148 of the Act on Sanction u/s 151 was taken from Competent authority to grant sanction u/s 151 2002-03 143(1) 17.03.2009 Addl. CIT Addl. CIT/JCIT 2003-04 143(3) 31.03.2010 Addl. CIT Chief CIT/CIT 2004-05 143(3) 30.03.2011 Addl. CIT Chief CIT/CIT 16.1 From the above table, it is apparent that the learned assessing officer has obtained the sanction from the learned Addl. CIT for all the three assessment years, which is not in accordance with law, as for the AY 2003-04 and 2004-05, assessment was originally framed u/s 143(3) of the Act and notice u/s 148 of the Act was issued beyond the four years as such, the sanction for the AY 2003-04 and 2004-05 should have been obtained of Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... done in that manner alone and the Court would not expect its being done in some other manner. It was so held in the following decisions: (i) CIT v. Naveen Khanna (dated 18.11.2009 in IT Appeal No. 21 of 2009 (DHC). (ii) State of Bihar v. J.A.C. Saldanna AIR 1980 SC 326. (iii) State of Gujarat v. ShantilalMangaldas AIR 1969 SCN 634. 8. Thus, if authority is given expressly by affirmative words upon a defined condition, the expression of that condition excludes the doing of the Act authorised under other circumstances than those as defined. It is also established principle of law that if a particular authority has been designated to record his/her satisfaction on any particular issue, then it is that authority alone who should apply his/her independent mind to record his/her satisfaction and further mandatory condition is that the satisfaction recorded should be "independent" and not "borrowed" or "dictated" satisfaction. Law in this regard is now sell-settled. In SheoNarain Jaiswal v. ITO [1989] 176 ITR 352/45 Taxman 213 (Pat.), it was held: "Where the Assessing Officer does not himself exercise his jurisdiction under Section 147 but mer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 397 ITR 639 (Delhi), wherein it was held as under: 8. The above submission cannot be accepted. Where the original assessment is processed under section 143(1) of the Act, and the reopening is sought to be done after the expiry of four years from the end of the relevant assessment year, the mandatory requirement under section 151(2) of the Act is that the approval for the reopening of the assessment should be by an officer of the rank of the Joint Commissioner (in this case, the Addl. DIT) and not other officer including a superior officer…. ----- 11. In view of the clear position in law, the court has no hesitation in concluding that in the present case, the mandatory requirement under section 151(2) of the Act, as it stood at the relevant time, has not been fulfilled and therefore, the reopening of the assessment for the assessment year 2005-06 by the impugned notice is bad in law. 16.5 Therefore, now the issue is squarely covered in favour of the assessee as for reopening of the assessment for the AY 2003-04 and 2004-05 the sanction has been taken from the learned Addl. CIT instead of CIT, as such sanction granted for assumption of jurisdiction is not in accordance ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
