9911796707
TMI Blog2021 (9) TMI 801X X X X Extracts X X X X X X X X Extracts X X X X ..... OURT] - Thus we quash the proceeding U/s 147. Reopening of assessment on account of cash deposit in his bank account - A.Y. 2009-10 - assessee has not filed his return of income and issued notice u/s. 148 and after recording reasons that income of assessee had escaped assessment in the meaning u/s 147 of the Act - HELD THAT:- Approval u/s 151 cannot be given of all the 56 assessee s in a single documents, as all assessee s are the independent and separate also the reason recorded are different in each case and it is not possible that there shall be same reasons. Looking to these facts and record it is also held that the procedures and way of approval and satisfaction is not proper. Here AO initiated proceedings u/s. 147 r.w.s. 148 on basis of information furnished and CIT gave approval without applying his mind in slipshod manner. As approval/sanction given by CIT was without recording his own independent satisfaction as noted above, therefore the reopening was not sustainable as per above judicial pronouncements and irregularities noted. There were clear irregularities and violation of the provision of Sec. 151 of the Act and very foundation of the issuance of the notice u/s 148 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as made to the ld. AO for obtaining documents from the assessment record, which have not been provided till date. Hence the assessment so made and consequent addition so made by the ld. AO and confirmed by the ld. CIT(A) may kindly be quashed and delete. 4. The ld. AO has grossly erred in law as well as on the facts of the case in charging interest u/s 234A, 234B & 234C. The appellant totally denies it liability of charging of any such interest. The interest, so charged, being contrary to the provisions of law and facts, may kindly be deleted in full. 5. The appellant prays your honour indulgences to add, amend or alter of or any of the grounds of the appeal on or before the date of hearing. The assessee has also raised revised or modified grounds of appeal and the same is as under: "1.1 & 1.2. The impugned order u/s 147/144 dated 01/03/2016,as well as the action taken u/s 147/148 are bad in law, illegal, invalid, void ab initio on facts of the case, for want of jurisdiction, without proper approval and satisfaction of higher authorities u/s 151 of the Act and also barred by limitation and various other reasons and hence the same may kindly be quashed." 5. All the grounds a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the certified copies of documents and record to the ld.AO on 19.01.2019 copy of the same are enclosed. The assessee has not received those documents till date. And for the justice and to decide the matter on merit and on legal issue those documents are very necessary, because those documents are in the assessment record not with the assessee." But after considering the submissions of parties and material placed on record, confirmed the action of the AO. Against the said order of the ld. CIT(A), the assessee has preferred the present appeal before the ITAT on the grounds mentioned above. 8. The grounds No. 1.1 and 1.2 raised by the assessee in the revised grounds of appeal relate to challenging the order of the ld. CIT(A) in confirming the action taken U/s 147 of the Act on the ground that the order U/s 147/144 dated 01/3/2016 as well as action taken U/s 147/148 of the Act are bad in law, illegal, invalid and void ab initio on facts of the case for want of jurisdiction, as no prior approval and satisfaction of the higher authorities U/s 151 of the Act was sought or taken and also action U/s 147 of the Acdt is barred by limitation. The ld AR appearing on behalf of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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. Here is also the same position copy of reason recorded is enclosed(PB1- 3) because no satisfaction by the ld. Pr. CIT, the satisfaction if any was of the ld. Add. CIT, who is not competent in the present case. He has relied on the following case laws: i. Maruti Clean Coal And Power Ltd. vs. ACIT (2018) 400 ITR 0397 (Chhattisgarh) ii. CIT vs. S. Goyanka Lime & Chemicals Ltd. (2015) 231 TAXMAN 0073 (MP) iii. PAC AIR SYSTEMS P. LTD. vs. ITO (2020) 58 CCH 0001 Del Trib iv. GORIKA INVESTMENT AND EXPORT (P) LTD. vs. ITO (2018) 53 CCH 0168 Del Trib. v. TARA ALLOYS LTD. vs. ITO (2018) 63 ITR (Trib) 0484 (Delhi) And the ld. CIT(A) kept mum on this very legal plea, which shows his contradictory approach. Therefore the notice, reasons recorded assessment all are the illegal bad void ab-initio and barred by limitation and liable to be quashed. 3. Approval of 70 assessee's in one letter illegal: Further the ld. Add. CIT has given one consolidated approva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner or Commissioner is satisfied, on the reasons recorded by the Assessing Officer, that it is a fit case for the issue of such notice. 151(2) In a case other than a case falling under section 151(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. 151(3) For the purposes of sub-section (1) and sub-section (2), the Principal 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 or a case for the issue of notice under section 148, need not issue such notice himself." From perusal of provisions of Section 151 of the Act, we observed that notice u/s 148 of the Act after four years can be issued only after obtaining satisfaction, sanction or approval u/s 151(1) from the CIT or Pr. CIT. However in the present case approval has not been taken from the Pr. CIT/CIT but the same has been taken from the Add.CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e inclusion and advances received were from bogus entities-Tribunal allowed assessee's appeal on merits-Revenue 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." 12. Once, we quash the proceeding U/s 147 of the Act, therefore, there is no need to adjudicate the other grounds raised in this appeal. 13. In the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 144 dated 01/03/2016,as well as the action taken u/s 147/148 are bad in law, illegal, invalid, void ab initio on facts of the case, for want of jurisdiction, without proper approval and satisfaction of higher authorities u/s 151 of the Act and also barred by limitation and various other reasons and hence the same may kindly be quashed." 15. All the grounds and he revised/modified grounds No. 1.1. and 1.2 of the appeal raised by the assessee are interrelated and interconnected and relates to challenging the order of the ld. CIT(A) on the ground that impugned order u/s 147/144 dated 01/03/2016,as well as the action taken u/s 147/148 are bad in law, illegal, invalid, void ab initio on facts of the case, for want of jurisdiction, without proper approval and satisfaction of higher authorities u/s 151 of the Act and also barred by limitation, therefore, we thought it fit to dispose off by this consolidated order. 16. Facts, action of the A.O. as well as upholding the action of the A.O. by the ld. CIT(A) are identical to the facts and circumstances of the appeal for the A.Y. 2008-09. 17. The ld. AR appearing on behalf of the assessee has reiterated the same arguments as were raised bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19.01.2019 copy of the same are enclosed. The assessee has not received those documents till date. And for the justice and to decided the matter on merit and on legal issue those documents are very necessary, because those documents are in the assessment record not with the assessee." Also vide page3 para 5 of CIT(A) order. However the ld. CIT(A) has not accepted our pray and passed the order without any material. And confirmed the action of the ld. AO and also confirmed the additions made by the ld. AO. vide the observations of CIT(A) at page 5 and 10. 1. No approval from CIT or Pr. CIT u/s 151: As in the above case the notice u/s 148 issued after expiry four years and as per provisions of Sec. 151 notice after four years can be issued only after obtaining the sanction or approval u/s 151(1) from the CIT or Pr. CIT. And in the present case no approval has been given by the Pr. CIT . Because kindly see PB 7-8 where the ITO (T&J) has sent a letter to the Add. CIT Range-2, Jaipur, in this letter the ITO(T&J) has stated that" I am directed to convey the Pr. CIT's approval u/s 151(1) of the IT Act for issue of notice u/s 1487 in the above named cases." Thus the approval is not giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ITO, Ward-2(4), Jaipur vide PB10 1.3 Our above contention is directly covered and fully supported by the recent decision of this Honble ITAT Jaipur Bench in the case of Modern School Society, Delhi vs CIT (Exemption), Jaipur in ITA no. 1118/JP/2016 dated 20.12.2017 vide para 10 page 12 to 21 of order (PB6 to 11 of case laws index). Where under the exactly same facts and circumstance the Honble Bench has quashed the order of CIT(E). And the same is also part of our WS and consider the same. 1.4 Further the department has also filled the MA in this case and the MA filed by the department has also been rejected by the Honble Bench on dt 24.07.2018 (MA no. 53/JP/2018). 1.5 Against the order of the Honble ITAT the department had filled appeal before the Honble Raj. High Court and the Honble Raj. High Court has dismissed the appeal of the Revenue vide order in CIT(E) v/s Modern School Society in DBIT No.172/2018 dated 31.07.2018. 1.6 Thereafter, against the order of the Honble Raj. High Court the department had also filled SLP before the Honble Supreme Court and the Honble Supreme Court has also dismissed the SLP of the Revenue vide order in CIT(E) v/s Modern School Society in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng approval from the authority other than the one who was competent to grant such approval, was mere irregularity committed by the Income Tax Officer. And that it was rectifiable under Section 292B of the IT Act cannot be accepted as such irregularity is not curable under Section 292B. para 11) Resort to Section 292B of the IT Act cannot be made to validate an action, which has been rendered illegal due to breach of mandatory condition of the sanction on satisfaction of Chief Commissioner or Commissioner under proviso to sub-section (1) of Section 151. This is an inherent lacunae affecting the very correctness of the notice under Section 148 and is such which is not curable by recourse to Section 292B of the IT Act. 1.8.2 Also refer Ghanshyam K. Khabrani v/s ACIT 346 ITR 443(Bom.) and 1.8.3 In the case of CIT V/s SPL's Siddhartha Ltd 345 ITR 223(Del). Reassessment-Sanction for issue of notice u/s 151(1)-AO issued notice u/s 147 read with S. 148 for reopening assessment after expiry of four years from end of relevant assessment year, which was subsequently set aside by ITAT on ground that requisite approval of Additional CIT, which is mandatorily required, was not taken-Held, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment was completed "other than" the eventualities contemplated in Section 151(1), i.e. it was processed u/s 143(1), thus, clearly Section 151(2) would be applicable- No infirmity was found in the order of the ITAT-Revenue's appeal dismissed. 1.8.5In the case of Pr. CIT vs. N.C. CABLES LTD.(2017) 98 CCH 0018 DelHC held that Reassessment-Issuance of Notice-Sanction for issue of Notice-Assessee had in its return for AY 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 assessee on legality of reassessment notice but allowed assessee's appeal on merits holding that AO did not conduct appropriate enquiry to conclude that share inclusion and advances received were from bogus entities-Tribunal allowed assessee' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly his mind and form an opinion. The mere appending of the expression 'approved' says nothing. It is not as if the CIT 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. Here is also the same position copy of reason recorded is enclosed(PB10- 11) because no satisfaction by the ld. Pr. CIT or ld. Add. CIT. Also refer Maruti Clean Coal And Power Ltd. vs. ACIT (2018) 400 ITR 0397 (Chhattisgarh) In the case of CIT vs. S. Goyanka Lime & Chemicals Ltd. (2015) 231 TAXMAN 0073 (MP) it has been held that While according sanction, the Joint Commissioner, Income Tax has only recorded so "Yes, I am satisfied" 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his mind and form opinion-Mere appending of expression 'approved' says nothing-Satisfaction had to be recorded of given case which could be reflected in briefest possible manner-Exercise appears to had been ritualistic and formal rather than meaningful, which was rationale for safeguard of approval by higher ranking officer-AO initiated proceedings u/s. 147 r.w.s. 148 on basis of information furnished by Directorate of Investigation Unit and CIT gave approval without applying his mind in slip-shod manner-As approval/sanction given by CIT was without recording satisfaction, reopening was not sustainable-Assessee's appeal allowed. TARA ALLOYS LTD. vs. ITO (2018) 63 ITR (Trib) 0484 (Delhi)Reassessment-Income escaping assessment-Validity thereof- Case of assessee was selected for scrutiny as per provisions of section 147 and 151 and accordingly notice u/s 148 was issued to assessee-Proceedings u/s 147/148 were initiated after recording reasons on basis of information received from Investigation Wing of Department on basis of search and seizure operation-During course of assessment proceedings, assessee was specifically asked to explain and justify transaction with G received as shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roved then the notice issued u/s 148 is invalid. 5. Reason to believe and not reason to suspect: 5.1It is further submitted that even under the amended law by the finance act 1989 the condition precedent or words, which continues right since inception till date, are "reason to believe" and not "reason to suspect". The word "believe" has to be understood in contradistinction of suspicion or opinion. Belief indicates something concrete or reliable. Kindly refer Gangasharan & Sons Pvt. Ltd. 130 ITR 1 (SC), and ITO v. Lakhmani Mewal Das, (1976) 103 ITR 437 (SC). 5.2The belief of the Officer should be as to escapement of income and the belief should not be a product of imagination or speculation. There must be reason to induce the belief. The Court can always examine this aspect though the declaration or sufficiency of the reasons for the belief cannot be investigated by the Court (Sheo Nath Singh v. AAC, (1971) 82 ITR 147 (SC). In the case of Mukesh Modi &Ors. vs. DCIT 366 ITR 418 (Raj) held that Evasion of tax was menace to society but Assessee contributing to the exchequer in form of tax could not be allowed to suffer on mere pretence that it had evaded payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that admittedly the ld. AO has made the addition on account of cash deposits of ₹ 1,15,00,500/- in the bank Vaishali Urban Co-op bank Ltd Shyam Nagar Jaipur in the F.Y. 2008-09 relevant to A.Y. 2009-10 vide page 2 para 1 of the assessment order. 2. Source of cash deposits in the bank account established: As the assessee has deposited cash of ₹ 1,15,00,500/- during the year in the Bank (PB3) on various dates. As the ld. AO himself has made inquiry u/s 133 from the bank and M/s Rangroop Builders Pt. Ltd.. On inquiry it has been proved that the assessee was having agriculture land. On 25.03.2005 he has made an agreement to sale of his agriculture land for ₹ 1,65,00,000/- to M/s Rangrup Builders Pvt. Ltd. vide sale agreement (PB17-20) out of the above amount he had received ₹ 1,15,00,000/- through various cheques vide details at (PB19-20). Thereafter he withdrawn the cash. As the sale agreement has been cancelled, hence assessee has to return the sale agreement amount to the M/s Rangroop Builders Pvt. Ltd. Hence he has again deposited that cash amount in his bank and issued the cehques to M/s Rangroop builders. Thus when the ld. AO himself made the inquiry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e other hand, the ld. DR has vehemently supported the orders of the authorities below and also relied upon decisions in the case of CIT Vs Uttam Chand Nahar 295 ITR 403 (Raj) and ITO Vs Mahadeo Lal Tulsian, 110 ITR 786 (Kol). 19. We have considered the rival contentions of both the parties and perused the material available on record. From perusal of the record, we observed that the A.O. has reopened the case of the assessee for escaping the income of ₹ 1,15,00,500/- on account of cash deposit in his bank account and assessee has not filed his return of income and issued notice u/s. 148 of the Act on 29.03.2016 after recording reasons that income of assessee had escaped assessment in the meaning u/s 147 of the Act. Thereafter the AO framed assessment u/s. 144 r.w.s. 147 of the Act by making addition of ₹ 1,15,00,000/- and the ld. CIT(A) upheld the order of AO. Before us the ld. A/R has drawn our attention to the reasons recorded and satisfaction of the Pr. CIT and Addl. CIT placed at page No. 10-11 of the assessee's paper book where the Addl. CIT has mentioned only "Recommended" and Pr. CIT has mentioned only "Yes", which shows no application of mind and proper satisfa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich creates a doubt that the approval has been received before the issue of notice u/s 148 of the Act as the approval letter lying on the file after issuance of the notice u/s 148 or not before or attached with the notice u/s 148 and may reach in the office of the AO after 31.03.2016. Thus, in our view, approval u/s 151 cannot be given of all the 56 assessee's in a single documents, as all assessee's are the independent and separate also the reason recorded are different in each case and it is not possible that there shall be same reasons. Looking to these facts and record it is also held that the procedures and way of approval and satisfaction is not proper. Here AO initiated proceedings u/s. 147 r.w.s. 148 on basis of information furnished and CIT gave approval without applying his mind in slipshod manner. As approval/sanction given by CIT was without recording his own independent satisfaction as noted above, therefore the reopening was not sustainable as per above judicial pronouncements and irregularities noted. There were clear irregularities and violation of the provision of Sec. 151 of the Act and very foundation of the issuance of the notice u/s 148 was not as per l ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
