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TMI Blog2023 (7) TMI 787X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 which cannot be cured as it goes to the foundation of the whole of the assessment proceedings u/s 147 and therefore, the consequent assessment proceedings deserve to be set-aside on this ground itself. Decided in favour of assessee. - ITA No. 435/Chd/2021 - - - Dated:- 12-6-2023 - SHRI. VIKRAM SINGH YADAV, AM For the Assessee : Shri Sarabjit Garg, CA For the Revenue : Smt. Tarundeep Kaur, Sr. DR ORDER Per Vikram Singh Yadav, AM This is an appeal filed by the Assessee against the order of the Ld. CIT(A), NFAC, Delhi passed under section 250(6) of the Income Tax Act, 1961 (in short 'the Act') dt. 28/10/2021 pertaining to A.Y. 2011-12 wherein the assessee has taken the following grounds of appeal: 1. Ground 1. That on the facts and in the circumstances of the case and in law, Ld. CIT-A erred in sustaining the order passed by Ld. AO u/s 147/143(3) without appreciating that assumption of jurisdiction u/s 148 was by Ld. AO was bad in law. 2. Ground 2. That on the facts and in the circumstances of the case and in law, Ld. CIT-A erred in sustaining the order passed by Ld. AO u/s 147/143(3) without appreciating that reassessment proceedings h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ). 6. Per contra, the Ld. DR submitted that the notice under section 148 has been validly issued after seeking necessary approval from the Ld. Pr. CIT. In this regard, a copy of the letter received from the AO, ITO W-4(1), Ludhiana dt. 19/09/2022 has been submitted wherein the AO has stated that the online approval has been granted by the Competent authority on 28/03/2018 and a copy of the screenshot from the IT system was attached alongwith said report and it was submitted that the notice under section 148 has thereafter been issued on the same date after receiving online approval. 7. It has been further contended by the Ld. AR that the basic requirement of Section 147 is that the jurisdictional AO must have reason to believe that any income chargeable to tax has escaped assessment and such believe must be of the jurisdictional AO and not of any other AO. It was submitted that in the instant case, the notice under section 148 was issued by the ITO W-6(5) Ludhiana wherein the assessment has been completed by the ITO W-4(3), Ludhiana which cannot be sustained in the eyes of law and in support reliance was placed on the decisions in case of ACIT Vs. Resham Petrotech Ltd. (2012) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was submitted that it is not open to the AO to improve upon the reasons recorded at the time of issuance of the notice either by adding an/or substituting the reasons by affidavit or otherwise as held by the Bombay High Court in case of GKN Sinter Metals Ltd. Vs. Ramapriya Raghavan (Ms.), ACIT (2015) 371 ITR 225. 11. It was further submitted that even the Ld. Pr. CIT while granting the approval has not noticed such a glaring mistake and hence even the approval so granted has been granted mechanically without application of mind and which cannot be sustained in the eyes of law. 12. Per contra, the Ld. DR submitted that the assessment in this case was reopened under section 147 on the basis of specific findings of the DIT(Investigation), Kolkata that the assessee had obtained accommodation entry from Twenty First Century (India) Ltd. to the tune of Rs. 12,28,920/- and basis such tangible material and after due consideration, the AO has recorded reasons that the income has escaped assessment within the meaning of Section 147of the Act. It was submitted that the assessee has not been disputed the fact that the transaction from Twenty First Century (India) Ltd. to the tune of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preme Court in case of Rajiv Arora Vs. Union of India and Ors. AIR 2009 SC 1100 (SC) and Andaman Tiber Industries Vs. Commissioner of C. Ex., Kolkata-II. 14. Per contra, the ld DR submitted that in the report of the DDIT(Inv), Unit 4(1), Kolkata, it is clearly reported that M/s. Twenty First Century (India) Ltd is a paper company which was used to provide entries of bogus long term capital gains. It was also reported that Shri Anil Kumar Khemka who was managing and controlling the company admitted in his statement recorded on 14/04/2017 that all the transactions including the merger of Sarathi Dealer Pvt Ltd and other companies with M/s. Twenty First Century (India) Ltd were pre-arranged to provide accommodation entries to the beneficiaries. It was submitted that the assessment in the present case was reopened on the basis of above report of DDIT(Inv) and reliance was placed on the Hon'ble Supreme Court decision in case of M/s. Larsen Turbo Ltd vs. State of Jharkhand and others (Civil Appeal No. 5390/2007). 15. It is also relevant to note that each of the aforesaid contentions have been raised by the assessee before the ld CIT(A) which have not been accepted by the ld C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... challenge. 19. In order to resolve the controversy at hand, during the course of hearing, a report from the Assessing officer was called for and the relevant contents of the report submitted by ITO Ward 4(1), Ludhiana read as under: 3(i) In ground No. 1, the assessee has argued that the notice u/s 148 of the act was issued before the date of approval by the Pr. CIT and, therefore, the notice is null and void. The issuance of notice u/s 148 is valid, as online approval has been accorded by the competent authority on 28.03.2018 (screenshot of system attached) for issue of notice and the notice has been issued on the same date after receiving online approval 20. Whereas the ld AR has submitted a physical copy of the approval granted by the ld PCIT available at APB Page 26 and the contents thereof read as under : 21. On review of the screen shot of the online approval as submitted by the AO as part of his report, it is observed that both the recommending authority i.e, JCIT, the Range head as well as the approving authority, i.e, the PCIT have recommended and granted the approval on the same day i.e, 28.03.2018 whereas on review of the hard copy of the approval und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nate Surat Benches in case of ITO vs. Ashok Jain (supra) wherein it has been held that even though the AO has applied for approval but where the approval which forms the foundation for issuance of such notice has been granted subsequent to issuance of notice u/s 148, such notice is void ab initio and the relevant findings read as under: 4. With the assistance of the learned representatives, we have gone through the record carefully. Section 151 of the Income Tax Act, 1961 contemplates that no notice under section 148 shall be issued by the assessing officer, after the expiry of a period of four years from the end of the relevant assessment year, unless necessary approval from the Commissioner or competent authority is obtained. No doubt in the present case, the learned assessing officer has applied for such approval which was granted on 29-3-2017, but before grant of approval, the learned assessing officer has already issued notice on 28-3-2014 which is without any jurisdiction. He can issue notice only after getting approval. Thus, the learned Commissioner (Appeals) has rightly quashed the assessment because the very foundation for issuance of notice under section 148 is the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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