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TMI Blog2023 (3) TMI 94X X X X Extracts X X X X X X X X Extracts X X X X ..... the same was referred to and included in the relevant part of the order of the ITAT in the case of Omkam Developers Ltd. ( 2021 (5) TMI 414 - ITAT DELHI] . Therefore, we hold that the impugned reassessment proceedings and the impugned reassessment order deserves to be quashed and we hold so. Validity of initiation of reassessment proceedings u/s 147 - HELD THAT:- As per requirement of mandatory provisions i.e., proviso to section 147, the AO is required to make specific allegation to identify the particular facts not fully and truly disclosed by the assessee and compliance of the said mandatory provision solely depends on verification of facts/material disclosed by the assessee in the course of assessment proceedings and from perusal of the reasons recorded. In a case the AO did not disclose anything on the evidences furnished during the original assessment proceedings and failed to identify the particular facts or material which were not fully and truly disclosed by the assessee, then, the initiation of reassessment proceedings beyond the period of four years from end of relevant assessment year has to be held as void ab initio and bad in law as per various judgements includi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. It can be seen that in S.No.7, there is a question Whether the provisions of sec 147(a)/147(b)/147(c) is applicable or both sections are applicable. The answer recorded by the Ld AO against this query is sec 147(c) implying that the AO has invoked applicability of sec 147(c) of the Act. The reopening of assessment, satisfaction of the Ld AO and the approval granted by the Ld Pr CIT is based on the applicability of provision of sec 147(c) of IT Act and the validity of the each of the above actions need be tested on the availability of such section as supporting material. Here, it is relevant to note that there has never been any provisions of sec 147(c) right from inception of Income Tax Act 1922 and replaced Act of 1961 till today, The income tax Act 1961 prior to amendment through Direct Tax Laws Amendment Act 1987 applicable from 01.04.1989, had sections 147(a)/! 47(b) and in that era prior to amendment in 1987 too, there was no sec 147(c) in the Income Tax Act. Non-application of a non-existing section shows non-application of mind by all the authorities involved in initiation of action u/s 147 and the authorities are the _d AO recording reasons, Addl CIT recommending ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Delhi High Court in the case of Sonia Gandhi 407 ITR 594 (Del) has been distinguished. Reliance is also placed on the decision of M/s Synfonia Tradelinks P Ltd vs ITO W.P.(C) No.l2544/2018 dt: 26.03.2021 (Del) has quashed the reassessment proceeding based on mechanical approval granted by approving authority. Further, reliance is placed on the following authorities: a. Chhugamal Rajpal vs. S.P. Chaliha Ors. - 79 ITR 603 (SC); b. Arjun Singh vs Asstt. Director of Income Tax (M.P.) reported in (2000) 246 ITR 363 (MP); c. CIT vs M/s S.Goyanka Lime and Chemicals Ltd 231 Taxman 0073 Dated 15.10.2014 (MP) approved by Hon'ble Supreme Court in 64 taxmann.com 313 (SC). d. Pr. CIT vs. N. C. Cables Ltd 391 ITR 11 (Del) e. Maruti Clean Coal Power Ltd Vs ACIT WP(T) No.346 of 2017 Dated 03.01.2018 (Chattisgarh High Court); f. German Remedies Ltd. vs. Dy. CIT (2006) 287 ITR 494 (Bom); g. United Electrical Company PLtd. vs. CIT Ors[2002) 258 ITR 317(Del) ; h. Central India electric Supply Co. Ltd. Vs .ITO, 333 ITR 237 (Del). d. Non-Compliance of First Proviso to se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atory condition is introduced through proviso to put the AO under obligation to identify the particular facts not disclosed by the assessee. IV. In the case of Gateway Leasing P ltd vs ACIT W.P.(C) 2518 of 2019 dt: 11.03.2020 (Bom) held that the Dept's argument that though the assessee disclosed details of the transactions pertaining to purchase and sale of shares, it did not disclose the real colour / true character of the transactions and, therefore, did not make a full and true disclosure of all material facts which was also overlooked by the AO, is not correct. The assessee disclosed the primary facts to the AO also explained the queries put by the AO. It cannot be said that the assessee did not disclose fully and truly all material facts necessary for the assessment. Further, the Hon ble Apex Court in the case of NDTV vs DCIT 424 ITR 607 (2020) (SC) has been very categorical that the duty of the assessee is only to declare primary facts and the secondary facts needed be discovered by the AO through necessary enquiry. V. The co-ordinate Bench of Delhi ITAT, in the cases of Peethambra Buildcon Ltd vs ITO IT A No.637/Del/2018 dt: 23.10.2018, M/s AST Pipe P Ltd (su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supported the impugned reassessment order as well as first appellate order and submitted that the mention of non-existent provision of section 147(C) of the Act is a clerical mistake which is curable u/s 292B of the Act. 6. On careful consideration of the rival submissions, from the order of the coordinate Bench of ITAT in the case of Omkam Developers Ltd. (supra), I observe that in the similar set of facts and circumstances, similar legal contention was placed before the E Bench which was adjudicated as follows:- 10. We have heard rival submission of the parties on the issue in dispute raised in the cross appeals. As far as ground No. 1 of the appeal of the assessee is concerned, the assessee has challenged the validity of the reassessment proceeding on the ground that approval for issue of the notice under section 148 of the Act was granted by the Learned Pr.CIT in a mechanical manner and without application of mind and, therefore, reassessment proceeding must be quashed. For adjudicating this issue, the reasons recorded by the Assessing Officer and relevant proforma of approval granted by the Pr. CIT are reproduced as under: Reason for the belief that income has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accounts mentioned in the STR were requisitioned from the Bank and scrutinized. The 31 Bank accounts- were opened atdifferent, branches of the Development Credit Bank. The following, facts emerged from the scrutiny of Bank Accounts: I. There were 7 Bank Accounts belonging to 6 entities in which cash of Rs. 15.26 crore was deposited in the F.Y.-2008-09: The cash deposited were swiftly Transferred to other entities through Cheques/RTGS. These-6 entities are proprietorships. The detail is given as per Annexure-C. The funds from other entities through Cheques/RTGS were also received in these accounts. The details of another 21proprietorships given are STR is as per Annexure-C1. II. The find from the entities mentioned in Annexure-C and C1 were transferred to a number of entities which are mostly entities already identified as the companies controlled by the entry operators, few of them have been listed in Annexure-1. III. The fund was rotated among the entities detailed in Annexure-C, C1 and Annexure-1 IV. There were 6 Bank Accounts Belonging to 6 Companies in which funds were received from mostly entities discussed in Annexure-C, C1 and Annexure-1 and the same was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assesses was increased to Rs.81,28,52,000/- in the relevant year from Rs. 17,69,50,000/-in the preceding year. As discussed in earlier paras, the assessee has obtained such entries through above mentioned modus-operandi, it is actually assessee's own money (cash) which was rotated through such channel. This cash was out of his unaccounted income. I have reasons to believe that an amount of Rs.1.93 crores has escaped from the Assessment for the A.Y. 2009-10 which was chargeable to tax. I am also satisfied that on account of failure on the part of the assessee to I disclose truly and fully all the material facts necessary for assessment for the j above assessment year, the income chargeable to tax to the tune of Rs.193.00 Lakh as escaped assessment with the meaning of Section 147 of the IT Act 1961 I have perused the information received from the Investigation Wing, Kolkata The Investigation Wing of the Department has sent comprehensive detail comprising inter alia the beneficiary's name, value of entry taken etc. In the aforesaid case as per record from ITD, return of income was filed on declaring Rs.2,389/- income, it is noticed that the assessee company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction has to be recorded of the given case, which can be reflected in the briefest possible manner. The Hon'ble High Court further observed that in that case the exercise appeared to have been the ritualistic and formal rather than meaningful, which is the rationale for safeguard of an approval by a high-ranking officer. Thus, in the instant case, mere mentioning of yes' for approval, without any other evidence of application of the mind, amounts to mechanical approval by the LearnedPr.CIT. 10.2 Further in Column No. 7 of the proforma, the section for invoking reassessment has been recorded as 147(b) of the Act. During the relevant period, section 147(b) was no longer in existence. This shows that the Ld. AO has filed the Proforma in mechanically manner and Ld. CIT has also approved the same mechanically. In the case of Madhu Apartment Private Limited vs. ITO, ITA.Nos.3869 3870/Del./2018 wherein the Tribunal, Delhi Bench, vide order dated 01/02/2021 held as under: 7. After considering the rival submissions, we are of the view that the issue is covered by the Order of ITAT, Delhi G-Bench, Delhi in the case of VRC Township Pvt. Ltd., Delhi (supra) in which reope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... venue is dismissed. 7. In the present case, the copy of the form for recording the reason for initiation of proceedings u/s 147 of the Act and for obtaining the approval u/s 151 of the Act, which was obtained by the assessee through RTI on 09.12.2022 submitted along with written submission of assessee, the ld. Sr. DR did not dispute that in the column No.7, the AO mentioned that the provision of section 147(C) of the Act is applicable. For the sake of completeness, the said format is being reproduced below:- 8. Therefore, it is clear that the AO, in the first page of reasons (supra) mentioned in column 7 that provisions of section 147(C) is applicable which is non-existent in the statute book for AY 2010-11. This apparently shows nonapplication of mind by the AO while filling proforma in a mechanical manner and the ld. ACIT and Ld. PCIT also approved the same in a mechanical manner. So far as the contention of the ld. Sr. DR that this defect is curable u/s 292B of the Act is concerned, this contention was decided by the ITAT Delhi Bench in the case of Madhu Apartments India Pvt. Ltd., ITA No.3869 3870/Del/2018, order dated 01.02.2021, the relevant part of which h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the verification of facts/material disclosed in the course of assessment proceedings and without complying with this mandatory condition introduced, through the proviso to section 147 of the Act, to put the AO under obligation to identify the facts not fully and truly disclosed by the assessee. The ld. AR, placing reliance on the various judgements including the judgement of the Hon ble Supreme Court in the case of NDTV vs. DCIT, 424 ITR 607, judgements of the Hon ble High Court of Delhi in the case of Dushyant Kumar Jain vs. DCIT, 381 ITR 428 (Del) (para 16) and CIT vs. Usha International ltd., 348 ITR 485 (Del) (FB) and the order of the coordinate Bench of ITAT Delhi in the case of M/s AST Pipes Pvt. Ltd., order dated 27.10.2020 in ITA No.8312/Del/2019, submitted that in such a situation, when the AO has not complied with the mandatory provisions of proviso to section 147, the initiation of reassessment proceedings has to be quashed. 11. Replying to the above, the ld. Sr. DR supported the action of the AO. 12. First of all, we may point out that at page 15 of the reasons recorded, in paras 22 and 23, and at the concluding para, the AO has made the following observations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reassessment proceedings u/s 147 by issuing notice by recording reasons and issuing notice u/s 148 of the Act on 26.03.2017 i.e., beyond four years from the end of relevant assessment year. Therefore, as per requirement of mandatory provisions i.e., proviso to section 147, the AO is required to make specific allegation to identify the particular facts not fully and truly disclosed by the assessee and compliance of the said mandatory provision solely depends on verification of facts/material disclosed by the assessee in the course of assessment proceedings and from perusal of the reasons recorded. In a case the AO did not disclose anything on the evidences furnished during the original assessment proceedings and failed to identify the particular facts or material which were not fully and truly disclosed by the assessee, then, the initiation of reassessment proceedings beyond the period of four years from end of relevant assessment year has to be held as void ab initio and bad in law as per various judgements including the judgement of the Hon ble jurisdictional High Court of Delhi in the case of Dushyant Kumar Jain (supra) and in the case of CIT vs. Usha International Ltd. (supra). ..... X X X X Extracts X X X X X X X X Extracts X X X X
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