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TMI Blog2021 (4) TMI 1002X X X X Extracts X X X X X X X X Extracts X X X X ..... e courier record, the samw as served upon the A.O., we are of the view that the findings of the Ld. CIT(A) are unjustified and also not in accordance with the law as well as various judicial pronouncements. CIT(A) had not considered the evidences submitted by the assessee during the course of hearing. The assessee submitted the proof of receipt of the letter sent in by placing on record the copy of receipts provided by the courier company, but the Ld. CIT(A) has completely brushed aside the evidences so submitted by the assessee and ld. CIT(A) also approved the act of the A.O., which is unjustified and contrary to the law. A.O. has failed to provide the reasons despite the specific request of the assessee made to the A.O. twice, first just after filing of return u/s 148 and again during the course of assessment. It is needless to mention that without supply of reasons the entire assessment proceedings should be liable to be declared as illegal and bad in the eyes of law. Mandate of Section 151 - As the sanction was accorded by the ld. CIT in a purely mechanical manner without application of judicious mind, therefore, the sanction so accorded cannot be held to be a proper a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 4,24,205/- on account of difference in cost of construction because the copy of valuation report was not provided to verify the alleged difference and addition made without confronting the valuation report to the assessee. (vi) Sustaining the addition of ₹ 445000/- on account of payment given for purchase of land. (vii) Sustaining the addition of ₹ 16,53,383/- on account of bogus creditors. (viii) Sustaining the Addition of ₹ 26,87,000/- on account of difference in advertisement expenses. (ix) Sustaining the act of Ld. Assessing Officer about the disallowance of exemption u/s 10(23C)(iiiad) as the assessee is eligible for the exemption. . 2. That the assessee reserves the rights to add, amend/alter any of the grounds of appeal during the course of hearing of the appeal. 4. The brief facts of the case are that the assessee is a Registered Society engaged in educational activities at Village Bhadhadhar, Distt. Sikar. The assessee had not filed its original return of income for the A.Y. 2012-13. Assessment was reopened u/s 147 of the Income Tax Act, 1961 (in short, the Act). As per information, assessee deposited ₹ 92,41,500/- w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ought the reasons for reassessment, but the A.O. not supplied the reasons recorded for issue of notice u/s 148. In this connection it is worthwhile to submit that it is law of land that the reasons recorded for issue of notice u/s 148 are required to be supplied suo-moto to the assessee or he demands and if the same are not supplied then entire reassessment proceedings are bad in eye of law even after completion of assessment. On this issue I would like to rely on the Judgment of Hon ble Supreme Court delivered in case of GKN Driveshafts (India) Ltd. v/s Income Tax Officer reported in 125 Taxman 963 (SC). In this judgment the Hon ble Court is of the view that the A.O. is bound to furnish the reasons recorded for issue of notice u/s 148, within reasonable time. Therefore, the A.O. is under legal obligation to supply the copy of reasons recorded for issue of notice u/s 148 to the assessee. The issue about when the reasons have to be provided has been settled by the Judgment of Hon ble Delhi High Court as well as the Judgment of Hon ble Supreme Court. The Ld. A.O. in his remand report admitted that the assessee has demanded the reasons for issue of notice u/s 148 vide l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Judgment of the Hon ble Supreme Court and the other higher courts are having binding nature on all the subordinate authorities. But here in this case this principle is also completely disobeyed. The Ld. CIT(A) not considered the evidences submitted by the assessee during the course of hearing. The assessee submitted the proof of receipt of the letter sent in the shape of the copy of receipts provided by the courier company, but the Ld. CIT(A) has completely brushed aside the evidences so submitted by the assessee and approved the act of the Ld. A.O., which is unjustified and contrary to the law. Here in this case the A.O. has failed to provide the reasons despite of request of the assessee made to her twice, first just after filing of return u/s 148 and again during the course of assessment. It is needless to submit that without supply of reasons the entire assessment proceedings should be liable to be declared as illegal and bad in the eye of law. Therefore, it is humbly submitted that looking to the above mentioned judgments as well as the submission, facts and circumstances of the case, the assessment so completed by the A.O. may kindly be declared illegal and aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner of Income Tax (Exemption), Jaipur Addl. Commissioner of Income Tax (Exemption), Jaipur Received on 26.03.2019 Conveying the approval 26.03.2019 No. 1093 Addl. Commissioner of Income Tax (Exemption), Jaipur Income Tax Officer (exemption),Ward-2, Jaipur Received on 27.03.2019 Giving the approval to the A.O. Therefore, this is very well established that the notice u/s 148 was issued on 25.03.2019 was without the approval/sanction of Commissioner of Income Tax, which is mandatory as per the provisions of section 151 of the Income Tax Act. Here in this case the Commissioner of Income Tax (Exemption) granted the approval on 26.03.2019 and communicated the same to the ITO on 27.03.2019 through proper channel. Therefore the notice was issued on 25.03.2019 was without jurisdiction as well as without any sanction as required u/s 151. For acquiring the jurisdiction to issue notice u/s 148 the prior sanction / approval of the Commissioner of Income Tax is mandatory. The Ld. A.O. in his remand report submitted that the approval given by the Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as it is a mandatory word of the section 151 of the Act. In other words it can safely be understood that the whole proceedings which are said to be carried out by the Ld. A.O. are in mechanical manner without there being any application or independent application of judicious mind by the concerned authority. The approval so given by the CIT (Exemption) for issue of notice u/s 148 is not in proper manner. The approval so given is purely a mechanical approval, without stating any reasoning behind that. The copy of the approval is being enclosed herewith for ready reference, from the perusal of the same, the Hon ble Bench will observe that the higher authority not uttered a single word as reason for approval, only put one word i.e. APPROVED . Therefore, the approval so granted is not proper in any way. The requirement for issue of notice is not complied with in proper way, so the notice is required to be declared as void in absence of proper approval. Even only mention the word Yes or Yes I am satisfied , is not sufficient for according the approval/sanction for issue of notice u/s 148, as held by the Hon ble Supreme Court, other High Courts as well as Income Tax Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 143(2) and 142(1) were issued and replied by the assessee time to time. The A. O. also invoked the provisions of Section 145(3) of the Act and rejected the books of account of the assessee. After rejection of the books of account the A.O. made following additions and out of them some has been deleted by the Ld. CIT(A) tabulated as under :- S. No. Head of additions Addition by A.O. Amount Deleted by CIT(A) amount Sustained by CIT(A) Amount 1. anonymous donation shown as Corpus Donation. 6,17,900.00 - 6,17,900.00 2. difference in cash deposited into bank account. 57,000.00 57,000.00 - 3. difference in bus fee 6,11,893.00 5,11,893.00 1,00,000.00 4. difference in construction value of Building 4,24,205.00 - 4,24,205.00 5. advance given for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is under legal obligation to supply the copy of reasons recorded for issue of notice u/s 148 to the assessee. The issue about when the reasons have to be provided has been settled by the Judgment of Hon ble Delhi High Court as well as the Judgment of Hon ble Supreme Court. The Hon ble Supreme Court in case of Pr Commissioner of Income Tax V/s V. Ramaiah reported in 103 Taxmann.com 202 (SC) dismissed the SLP filed by the department against the Judgment of Hon ble High Court. The Hon ble High Court held that supply of reasons is mandatory and without supply of reasons the reassessment proceedings are liable to be quashed. The Hon ble High Court upheld the order of the ITAT. The relevant Para of the Judgment of Hon ble High Court are being reproduced here under :- 9. In the present case, admittedly, such reasons were not supplied to the assessee during the contemporary period before going ahead with the reassessment proceedings. Therefore, the Tribunal in our opinion was perfectly justified in quashing such reassessment order. 10. We do not find any substantial question of law arising in the matter. Therefore, the appeal of the Revenue stands dismissed. No costs. The Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) and held as under :- 5. A plain reading of the above exposition of law at the end of Hon ble Jurisdictional High Court make it clear that issuance of the notice and the communication and furnishing of reasons would go hand in hand. The reasons are to be supplied to the assessee before the expiry of period of 6 years. If it has not been done then validity u/s 148 could not be upheld. It is not in the income tax proceeding alone. In any proceedings say, civil or criminal, if a summon is issued to the defendant/ respondent, is not accompanied with the copy of plaint or complaint then it is to be construed that no valid service of notice has been effected upon the defendant or the respondents whichever may be the case. The notice could be served at any point of time before the expiry of 6 years, if AO has reasons to believe that income has escaped assessment but, such reasons are also to be communicated to the assessee before the expiry of the limitation otherwise validity of such notice could not be sustainable. Being a subordinate authority to the Hon ble High Court, we are bound to follow the authoritative exposition of law at the end of Hon ble High Court. In view of the ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rusal of the courier record, the samw as served upon the A.O., we are of the view that the findings of the Ld. CIT(A) are unjustified and also not in accordance with the law as well as various judicial pronouncements. It is need less to submit that the Judgment of the Hon ble Supreme Court and the other higher courts are having binding nature on all the subordinate authorities. But here in this case this principle has also been completely disobeyed. The Ld. CIT(A) had not considered the evidences submitted by the assessee during the course of hearing. The assessee submitted the proof of receipt of the letter sent in by placing on record the copy of receipts provided by the courier company, but the Ld. CIT(A) has completely brushed aside the evidences so submitted by the assessee and ld. CIT(A) also approved the act of the A.O., which is unjustified and contrary to the law. 12. We also observe that the A.O. has failed to provide the reasons despite the specific request of the assessee made to the A.O. twice, first just after filing of return u/s 148 and again during the course of assessment. It is needless to mention that without supply of reasons the entire assessment proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of Income Tax (Exemption), Jaipur Addl. Commissioner of Income Tax (Exemption), Jaipur Received on 26.03.2019 Conveying the approval 26.03.2019 No. 1093 Addl. Commissioner of Income Tax (Exemption), Jaipur Income Tax Officer (exemption),Ward-2, Jaipur Received on 27.03.2019 Giving the approval to the A.O. It was submitted that the notice u/s 148 issued on 25.03.2019 was without the approval/sanction of Commissioner of Income Tax, which is mandatory as per the provisions of section 151 of the Act. Here as per facts and documents in this case the Commissioner of Income Tax (Exemption) granted the approval on 26.03.2019 and communicated the same to the ITO on 27.03.2019 through proper channel. Therefore in this way, the notice issued on 25.03.2019 was without jurisdiction as well as without any sanction as required u/s 151. For acquiring the jurisdiction to issue notice u/s 148 the prior sanction / approval of the Commissioner of Income Tax is mandatory. 14. We observe from perusal of the record that the A.O. in his remand report submitted that the approval given by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ired sanction was obtained/accorded U/s 151 of the Act on 25/03/2019 before issuance of notice U/s 148 of the Act. Therefore, considering the totality of facts and circumstances of the case, we reject this particular contention raised by the assessee. 15. We have also observed from perusal of the record that the mandate of Section 151 of the Act was, however, not followed in letter and spirit for the reason that prior to initiation of proceedings U/s 148 of the Act, necessary satisfaction of PCIT/CCIT/CIT was mandatorily required to the effect that it is a fit case for issuance of such notice. In the present case, impugned computer generated print out submitted by the A.O. lacks with the mandatory condition, in our view, by merely pointing out Approved cannot be termed as satisfaction which is a mandatory requirement of Section 151 of the Act. In other words, it can safely be understood that the whole proceedings which are said to be carried out by the A.O., were carried out in mechanical manner without there being any application or independent application of judicious mind by the concerned authorities. The approval so given by the ld. CIT (Exemption) for issuance of noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut applying judicious mind to the fact of the case and thus the same cannot be considered to be a proper and valid sanction. The Coordinate Bench of Delhi ITAT in the case of Sunil Agarwal Vs ITO in ITA No. 988/Del/2018 order dated 24/05/2018 while relying upon the decision of the Hon ble Delhi High Court in the case of Pr.CIT Vs M/s NC Cables Ltd. in ITA No. 335/2015 has held as under: 11. Section 151 of the Act clearly stipulates that the CIT(a), who is the competent authority 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. (B). Hon ble High Court of Madhya Pradesh in the case of CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce U/s 148 of the Act falls to the ground and proceedings for reopening of the assessee in absence of valid sanction of CIT cannot be initiated, therefore, in the background of the aforesaid discussions and respectfully following the precedents, as aforesaid, we are of the considered view that proceedings initiated by invoking the provisions of Section 147 of the Act by the AO and upheld by the Ld. CIT(A) are nonest in law and without jurisdiction, hence, the re-assessment is quashed. The judgments/decisions relied upon by the ld DR are also considered but the same are not found applicable in the facts of the present case. Since we have already quashed the re-assessment, the other grounds have become academic and are therefore not adjudicated and accordingly, the assessee s appeal is partly allowed. 18. Now we take appeal being ITA No. 310/JP/2020 for the A.Y. 2013-14. In this appeal, the grounds and facts are identical to the facts and grounds of appeal for the A.Y. 2012-13. The submissions of both the parties are same, therefore, the findings given in ITA No. 309/JP/2020 for the A.Y. 2012-13 shall apply mutatis mutandis in this year also and we quash the reassessment proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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