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TMI Blog2023 (12) TMI 872X X X X Extracts X X X X X X X X Extracts X X X X ..... 30.03.2015 is therefore, not as per the provisions of the Act and cannot be sustained. The case of the assessee finds support from the decision of Ajay Trading Company [ 2023 (2) TMI 263 - ITAT KOLKATA] Thus approval granted without application of mind and in a mechanical manner would render the reopening of assessment as void and invalid. Accordingly, we quash the reopening of assessment. Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... y application of mind. The said re-opening of assessment on the basis of the approval granted by Addl. CIT, Range-4, Kolkata vide approval dated 30.03.2015 is therefore, not as per the provisions of the Act and cannot be sustained. The case of the assessee finds support from the decision of the Coordinate Bench in the case of Ajay Trading Company vs. ACIT in ITA No. 120/KOL/2022 order dated 02.02.2023 wherein a similar issue has been decided in favour of the assessee by holding and observing as under: "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 instant case, the asses see filed Income Tax Return u/s 139 of the Income- Tax Act, 1961 on 26.09.2012, showing total income of Rs, 1,44,44,160/-. Assessment u/s 153A/143(3) was completed on 28.12.2016 as per return. An Information was received from ITO (Inv), Unit-1, Kolkata on 04/08.03.2019 in respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ircle- 312), Kolkata 20 JI-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 by the AO during the course of assessment this fact is corroborated from the contents of notices issued by the A.O. u/s 143(2) /142(1) during proceedings u/s!53A/143(3) of the IT Act. It is important to highlight here that materials facts relevant for the assessment on the issue(s) under consideration were not filed during the course of assessment proceedings. For the forestated reasons, it is not a case of change of opinion by the AO.in this case, since more than four years have lapsed from the end of assessment year under consideration, a proposa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pproval. 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'ble Calcutta High Court in the case of Harish Gangji Dedhiya (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 reasons recorded for reopening, respondent no.2 states ...I have reason to believe that the amount exceeding Rs. One Lakh chargeable to tax has escaped assessment for the assessment year 2016-17 within the meaning of Section 147 of the I. T. Act, 1961... Therefore, respondent no.2 himself is not clear for which year or based on information for which year that he proposed to re-open, as he had reasons to believe that income had escaped assessment. In the Affidavit-in-Reply respondent no.2 casually states that it was a typographical error. In our view, respondent no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de 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 year because of his failure to disclose fully and truly all material facts. It is no doubt true that the court cannot go into the sufficiency or adequacy of the material and substitute its own opinion for that of the Income- tax Officer on the point as to whether action should be initiated for reopening assessment. At the same time we have to bear in mind that it is not any and every material, howsoever vague and indefinite or distant, remote and far- fetched, which would warrant the formation of the belief relating to escapement of the income of the assessee from assessment. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 'approved' says nothing. It is not as if the Ld. C1T(A) 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 IT AT cannot be disturbed. 12. The substantial questions of law framed are answered in favour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, consequently framing of assessment order dated 07.08.2018 is bad in law and accordingly quashed." In view of the facts of the case and in the light of the ratio laid down in the decisions as discussed above, the 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 before reopening the assessment. The proviso states that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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