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TMI Blog2022 (9) TMI 814X X X X Extracts X X X X X X X X Extracts X X X X ..... easons recorded for reopening of assessment dated 18.03.2013 and consequent approval granted by the CIT, Salem is without any application of mind and thus, reopening of assessment on the basis of said approval is bad in law and liable to be quashed. Hence, we quash notice issued u/s.148 of the Income Tax Act, 1961 and consequent reassessment proceedings completed u/s.143(3) r.w.s 147 of the Act. - Decided in favour of assessee. - I.T.A.No.2134/Chny/2015 - - - Dated:- 29-7-2022 - Shri V. Durga Rao, Judicial Member And Shri G. Manjunatha, Accountant Member For the Appellant : Mr. B.Ramakrishnan, FCA For the Respondent : Ms. A.S. Bindu, CIT ORDER PER G. MANJUNATHA, AM: This appeal filed by assessee is directed against order of learned Commissioner of Income Tax (Appeals)-18, Chennai, dated 09.09.2015 and pertains to assessment year 2006-07. 2. The assessee has raised following grounds of appeal:- 1) The learned CIT(A), has grossly erred in confirming the impugned proceedings u/s 143(3) r.w.s. 147 of Income Tax Act, 1961 as valid in the facts and circumstances of the case and in law. 2) The learned CIT(A), ought have quashed the impugned pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... athered during the course of search, coupled with statement of Executive Director Mr. R.Rajendran made additions of Rs.8,56,55,947/- towards bogus purchases. 4. Being aggrieved by the assessment order, the assessee preferred an appeal before the learned CIT(A). Before the learned CIT(A), the assessee has challenged reopening of assessment on multiple grounds, including change of opinion, no proper satisfaction from approval authority and also questioning validity of notice. The sum substance of the arguments made by the assessee before the learned CIT(A) in respect of legality of reassessment was that in the reasons recorded for reopening of assessment, there is no allegation on the part of the assessee to disclose fully and truly all material facts necessary for assessment and further, notice u/s.148 has been issued without proper approval from the competent authority. The assessee had also challenged additions made by the Assessing Officer towards disallowance of bogus purchases on the ground that except statement from the Executive Director, there is no material with the Assessing Officer to suggest that the assessee has booked bogus expenses to reduce profit. 5. The lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... btaining approval of the Commissioner of Income Tax clearly shows non-application of mind from the JCIT, Range-1, Salem and Commissioner of Income Tax, Salem, for granting approval, because both authorities have simply stated that Yes, approval is granted , and Yes, I am satisfied , without any application of mind to reasons recorded by the Assessing Officer to form reasonable belief of escapement. The learned AR further submitted that it is well established principle of law by decisions of various courts, including decision of the Hon ble Bombay High Court in the case of Nirmal Bang Securities Pvt.Ltd. Vs. ACIT (2016) 382 ITR 93, unless there is an allegation from the Assessing Officer on failure of the assessee to disclose fully and truly all facts necessary for assessment, notice issued u/s.148 is invalid, when the assessment has been reopened after a period of four years from the end of relevant assessment year. The learned AR further referring to decision of the Hon'ble Supreme Court in the case of CIT Vs. Goyanka Lime Chemical Ltd. (2016) 237 taxman 378 submitted that where the JCIT or Commissioner of Income Tax recorded satisfaction in mechanical manner and without a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scaped assessment for such assessment year by reason of the failure on the part of the assessee to disclose fully and truly all facts necessary materials for assessment in that assessment year. In this case, main argument in light of reasons recorded for reopening of assessment dated 18.03.2013 is that there is no allegation from the Assessing Officer on failure of the assessee to disclose fully and truly all facts necessary for assessment. 9. We have gone through copy of reasons recorded for reopening of assessment, which is available in page 11 12 of paper book filed by the assessee and from the reasons recorded, there is no allegation from the Assessing Officer on the part of the assessee to disclose fully and truly all material facts necessary for assessment. Therefore, from the above it is very clear that when the assessment has been reopened after a period of four years from end of the relevant assessment year, there should be allegation from the Assessing Officer on the part of the assessee to disclose fully truly all material facts necessary for assessment. Unless there is an allegation from the Assessing Officer, assessment cannot be reopened, because as per proviso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Commissioner is satisfied on the reasons recorded by the Assessing Officer that it is a fit case for issue of such notice. The assessee has produced copy of form for recording reasons for initiating proceedings u/s.147 of the Income Tax Act, 1961, and for obtaining approval of the Commissioner dated 18.03.2013. We have gone through relevant form, which is available in the paper book filed by the assessee and we find that the Assessing Officer has recorded reasons for reopening of assessment on 18.03.2013 without any allegation on the part of the assessee to disclose fully and truly all material facts necessary for assessment of that assessment year and the JCIT, Range-1, Salem has approved on very same date i.e. 18.03.2013 by stating that 'Yes, approval may please be granted for issue of notice u/s.148 and on very same date, the Commissioner of Income Tax, Salem, has accorded approval by stating that Yes, I am satisfied . From the above, what we could understand is that authority concerned for according approval u/s.151 of the Income Tax Act, 1961, has mechanically granted approval without recording his satisfaction as to whether it is a fit case for issue of notice u/s.148 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction for issuing notice u/s.148 of the Act, reopening assessment was invalid. The ITAT., Mumbai Benches in the case of Astra Exim Pvt. Ltd. in ITA No.277/Mum/2018 vide order dated 31.08.2018 had considered an identical issue and held that mere mentioning Yes, I am satisfied is considered to be mechanical action, if learned CIT did not apply his mind on the issue of reopening of assessment without referring to reasons recorded by the Assessing Officer for reopening of assessment, contrary to provisions of section 151 of the Income Tax Act, 1961. The sum and substance of ratio laid down by various High Courts and Tribunals are that sanction for issue of notice as provided u/s.151 is not a mere procedural aspect, but proceedings which has to be carried out with due diligence and thus, in a case, where there is no proper approval or mechanical approval without any application of mind of the sanctioning authority to the reasons recorded for reopening of assessment, then, it can be safely concluded that the concerned authority has accorded approval in a mechanical manner, contrary to scheme of provisions of Section 151 of the Income Tax Act, 1961. 12. In this case, on perusal of fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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