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TMI Blog2023 (2) TMI 263X X X X Extracts X X X X X X X X Extracts X X X X ..... e at hand relates AY 2012-13. PCIT while according to approval for reopening the assessment has either not perused these reasons and merely given a mechanical approval by stating in Item no. 13 of the approval granted dated 30.03.2019 that Yes, I am satisfied case may be reopened . In our opinion such a casual approach on the part of the authorities cannot be appreciated and encouraged because by reopening the assessment, the settled assessment are being unsettled and authorities are supposed to exercise utmost care and caution while recording the reasons and also while granting the approval. On this count also, the reassessment proceeding as well as reassessment framed cannot be sustained. The case of the assessee find supports from the decision of Hon bleCalcutta High Court in the case of Harish GangjiDedhiya [ 2022 (4) TMI 1391 - BOMBAY HIGH COURT ] Thus reassessment proceedings as well as reassessment framed us/ 147 are liable to be quashed. On the issue reopening assessment beyond the period of four years where assessment is framed u/s 143(3), we are mindful of the condition as laid down by the first proviso to Section 147 of the Act which are required to be satisfied b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been rejected on extraneous grounds only, the same is bad in law and consequently, the impugned order is liable to be quashed. 7. That CIT(A) ought to have held that addition of Rs. 74,50,000/- being a part of money received from M/s. Rahul Enterprises by invoking provisions of section 68 is self-contradictory, unjustified, without jurisdiction and bad in law and hence, the same is liable to be deleted and consequently, the impugned order is liable to be cancelled. 3. First of all, we would like to decide the issues raised in ground no. 1, 4 5 as stated above. Vide ground no. 1, the assessee has prayed before the Bench to quash the reassessment proceedings and consequent assessment order on the ground of invalid approval u/s 151 of the Act and the common issue raised in ground no. 4 5 is against the reopening of assessment on borrowed satisfaction without recording reason to believe by the AO on his own and also in view of the several error and mistakes being crept in the reasons recorded which showed complete non application of mind by the AO as well as by the approving authority. 4. Facts in brief are that the assessee filed return of income on 26.09.2012 u/s 139 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng stress on the date of the opening of the bank account in August, 2017, submitted that instant assessment year involved in this case was AY 2012-13 whereas the AO has referred to the account opened by M/s Rahul Enterprises a sole proprietorship in August, 2017 which is totally and factually incorrect and wrong and can not have any bearing on the instant assessment year. Thereafter the ld. A.R. submitted that as stated hereinabove that M/s Rahul Enterprises, a sole proprietary concern has opened an account in Faizabad Branch of UP, however in para 4 at page 5 of the reasons recorded, the AO stated that M/s Rahul Enterprises s account No. 029003254 maintained with ICICI Bank, Kolkata which is again a contradiction when compared with Para 2 of the reasons recorded at para 4. Again on this page no. 5 in the table, the bank account was stated as 029005003254 maintained with ICICI Bank, Kolkata which is again in contradiction to what is mentioned above. The Ld. A.R therefore prayed that there is a complete non application of mind and casual approach on the part of the AO while recording the reasons as is apparent from the fact that even the bank account no. was wrongly mentioned and so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lcutta High Court in the case of Harish Gangji Dedhiya vs. Union of India Ors. In Writ Petition NO. 1065 of 2022 dated 29.03.2022 ii) Decision of Hon ble Delhi High Court in the case of PCIT vs. M/s N.C. Cable Ltd. in ITA 335/1015 dated 11.01.2017 iii) Decision of Co-ordinate Bench of Gauhati in the case of M/s Royal Heritage Tripura Castle vs. ITO in ITA Nos. 470 471/Gau/2019 for AY 2014-15 2015-16 dated 15.12.2021. The Ld. A.R finally prayed that in view of the above , the reassessment proceedings as well as reassessment order passed u/s 147 may kindly be quashed in view of the ratio laid down in the aforesaid decisions as the reasons recorded were containing apparent mistakes which showed a complete non-application of mind by the AO as well as by the Ld. PCIT. The Ld. A.R. argued that that AO has made merely acted on the borrowed satisfaction as there was no live link between the information received / material before the AO and the reasons recorded. The ld. A.R also argued that the case of the assessee was reopened after a period of four year from the end of relevant assessment year. The ld AR argued that in order to reopen the case u/s 147 of the Act afte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that approval is granted by stating Yes, I am satisfied, case may be reopened . The Ld. D.R. submitted that such approval showed the satisfaction arrived at by the Ld. PCIT before according the permission to re-open the assessment and only thereafter the said approval was granted. Therefore there is no merit in the contentions of Ld. A.R that the Ld. PCIT has not applied his mind and recorded satisfaction before granting approval of the case for re-opening. On the plea of the assessee, the Ld. D.R submitted that it has been stated by the AO in the reasons recorded that the income has escaped because of failure on the part of assessee to disclose fully and truly all material facts necessary for its assessment which satisfied the conditions as envisaged by proviso to Section 147 of the Act. 8. After hearing the rival contentions and perusing the material on record including the reasons recorded by the AO u/s 148 of the Act and approval granted by the Ld. PCIT to such reopening , we observe that there are several mistakes/ infirmities /contradictions in the reasons recorded. For the sake of ready reference the reasons recorded are reproduced below: 29.03.2019 In the ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Trading Company is one of the beneficiaries which received funds amounting to Rs. 42,00,000/- Source Bank A/c. Details: 029005003254, ICICI Bank, Kolkata(Rahul Enterprises) Si. No. Beneficiary PAN Jurisdiction F.Y Amount(In Rs. lakh) 1 M/s. Ajay Trading Company AAEFA5369A Central Circle- 3(2), Kolkata 2011 -12 42 Therefore I have reason to believe that total income of Rs.42,00,000/- has escaped assessment in the hand of the assessee for A.Y. 2012-13. In this reopening u/s 147, there is no escapement of income chargeable to tax in relation to any assets (including financial interest in any entity) located outside India. The facts narrated herein above , clearly indicates that the assessee M/s Ajay Trading Company had not disclosed full and truly all material facts necessary for its assessment It is evident that from the above discussion that in this case, the issues under consideration were never examined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. PCIT while according to approval for reopening the assessment has either not perused these reasons and merely given a mechanical approval by stating in Item no. 13 of the approval granted dated 30.03.2019 that Yes, I am satisfied case may be reopened . In our opinion such a casual approach on the part of the authorities cannot be appreciated and encouraged because by reopening the assessment, the settled assessment are being unsettled and authorities are supposed to exercise utmost care and caution while recording the reasons and also while granting the approval. On this count also, the reassessment proceeding as well as reassessment framed cannot be sustained. The case of the assessee find supports from the decision of Hon bleCalcutta High Court in the case of Harish GangjiDedhiya (supra)wherein the relevant portion held as under: 7. In the reasons recorded, a copy whereof is at Exhibit B to the petition, the proposed re-opening is set out to be for A.Y.2014-15. The information based on which respondent no.2 has formed an opinion that there is reason to believe escapement of income, in the reasons it is stated, relates to A.Y.2015-16. In the conclusion given in the reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted his unaccounted income as long term capital gain and accounted in books of account. Accordingly, given colour of genuine transaction. Thus, I am at the opinion that assessee has escaped assessment exceeding Rs. One Lakh. 10. Reading this, nobody can make out or atleast we are unable to make out any demonstrable link between the information and the formation of belief. This paragraph does not even indicate what was the trading activity during the year that the petitioner was involved in or from what shares or derivatives the petitioner is alleged to have made huge profit. How can someone be expected to respond to such vague charges ? 11. In Income Tax Office, I Ward, District VI Calcutta and Others vs. Lakhmani Mewal Das, it is held as under : As stated earlier, the reasons for the formation of the belief must have a rational connection with or relevant bearing on the formation of the belief. Rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the Income-tax Officer and the formation of his belief that there has been escapement of the income of the assessee from assessment in the particular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tance to respondents. 13. In the circumstances, we hereby allow the petition in terms of Prayer Clause (a) which reads as under : That this Hon ble Court be pleased to issue a writ of Certiorari or a writ in the nature of Certiorari or any other appropriate writ under Article 226 of the Constitution of India, calling for records pertaining to the impugned reopening notice dated 31.03.2021 issued by the Respondent No.2 (being Exhibit A hereto) and after going into the validity and legality thereof to quash and set aside the same. 14. Petition disposed. Similarly the case of assessee squarely covered by the decision of Hon ble Delhi High Court in the case of N.C. Cables Ltd. (supra) wherein the Hon ble Court has held that while the competent authority while authorizing the reassessment notice has to apply his mind and form an opinion and mere appending of the expression approved says nothing. The operative part is reproduced as under: 11. Section 151 of the Act clearly stipulates that the Ld. 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 appr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner. Merely by scribbling approved or for argument sake even if the Ld. Addl. CIT has written I am satisfied with the reason so approval given . This standard of approval cannot satisfy the test as to whether the Addl. CIT has applied his mind or not before approval was granted. It is noted that even this kind of approvals given by the higher authorities as contended by the Ld DR has been found not to satisfy the test as to whether the approving authority has applied its mind to the information received by the AO and to the reason recorded by the AO justifying the re-opening as held by the Hon ble Delhi High Court and Madhya Pradesh High Court in the cases cited by the Ld. AR (supra). Therefore, in my opinion, approval granted by the Addl. CIT, Sillong Range has been done in a ritualistic manner mechanically without application of mind. Therefore, the approval granted by the Addl. CIT is bad in law for non-application of mind. Therefore, the issuance of notice u/s 148 of the Act by the AO without getting proper approval from the Addl. CIT as per section 151 of the Act being invalid, the action of the AO issuing notice u/s 148 of the Act is without jurisdiction and, therefore, co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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