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TMI Blog2024 (2) TMI 108X X X X Extracts X X X X X X X X Extracts X X X X ..... crores but the matter of valuation of the property constructed was referred to Valuation Officer who ultimately valued the property at Rs. 58,93,050/-. All these goes to show that absolutely there is no application of mind by the AO before recording reasons to believe that the income of the assessee had escaped assessment more than 15 crores for the assessment year under consideration. The Hon ble Delhi High Court in the case of Pr. CIT vs. RMG Polyvinyl (I) Ltd. ( 2017 (7) TMI 371 - DELHI HIGH COURT ) held that the information received from the Investigation Wing cannot be said to be tangible material per se without a further enquiry being undertaken by the AO and the AO deprived himself of that opportunity by proceeding on the erroneous premise that assessee had not filed a return when in fact it had. AO is not disputing that the assessee filed return of income. If this is the fact, there is certainly a factual inconsistency in reopening the assessment that the assessee has not filed any return of income. Secondly, in the reasons stated the AO believed that the income escaped assessment only based on the report of the DDIT(Inv.) that the income had escaped more than 15 cror ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation of mind on the part of the Assessing Officer. (ii) That the reassessment order passed by the A.O. is bad and liable to be quashed as the same has been reopened on the basis of the reasons which are vague and has been recorded only on borrowed satisfaction. 5. On the fact and circumstances of the case, Id. CIT(A) has erred both on facts and in law in confirming the order despite the fact that the reopening u/s 147 of the income tax Act, 1961 is bad in law having been made without obtaining valid approval from the prescribed authority as required u/s 151 of the Income Tax Act, 1961. 6. On the fact and circumstances of the case, Id. CIT(A) has erred both on facts and in law in confirming the order passed by the A.O. despite the fact that the initiation of proceedings under section 148 is bad in law as the approval given by the approving authority is too mechanical and without application of mind, in as much as the recording of reasons, approval and issue of notice under section 148 of the Act, all having been made on the same it day, which is humanly impossible. 7. (i) On the facts and circumstances of the case, Id. CIT(A) has erred both on facts and in law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letter dated 21.03.2016, wherein it has been stated that assessee has invested more than 15 crores in construction of house in Rohtak. Ld. Counsel submits that these are two reasons recorded for ratio of notice u/s 148 for reopening of the assessment of the assessee. Ld. Counsel submits that there are factual inconsistencies in the reasons recorded u/s 148 in as much as it is stated in the reasons that no return has been filed which is contrary to record as the assessee in fact filed return of income. Ld. Counsel further submitted that in the reasons recorded it is stated that information was received from DDIT(Inv.) that the assessee invested more than 15 crores in construction of house property. The Ld. Counsel submits that except stating that the assessee has invested more than 15 crores nothing has been stated in the reasons to co-relate the statement. The reasons do not specify in which property the assessee has invested more than 15 crores in the reasons specified. The Ld. Counsel submits that the AO has no material evidence except report of the DDIT and the AO has initiated the proceedings on the basis of that report and assessment was framed by referring the matter to the V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he income more than 15 crores which is chargeable to tax has escaped assessment for the AY 2009-10. 9. On careful perusal of the reasons, we noticed that the statement in the reasons that assessee had not filed return of income for the AY 2009-10 is factually incorrect, as the assessee filed return of income on 31.10.2010 declaring taxable income of Rs. 1,96,190/-. The AO is of the belief that income of more than 15 crores has escaped assessment based on an information of DDIT(Inv.) that the assessee had invested more than 15 crores in construction of house in Rohtak. In the reasons recorded the AO has not given any details as to how the income more than 15 crores has escaped assessment. Nothing in the reasons specified as to how the escapement of income has been arrived at more than 15 crores. There is no live link between the reasons recorded and the materials on record when the reasons were recorded. The only basis on which the reasons recorded by the AO was based on the DDIT(Inv.) report and the AO has not even given the details of report which is the basis for reopening of assessment to believe that there is escapement of income of more than 15 crores. Apparent from factual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lerical error as certain single transactions were appearing in multiple and this resulted in working of the escaped income to the extent of Rs. 1,56,00,000/-. However, the same has now been considered and stands corrected for the purposes of completion of proceedings. 7. In para 3.1 of the above assessment order, the AO has set out the information received from the Investigation Wing regarding the alleged bogus accommodation entries pertaining to 16 entities which sum in the aggregate works out to Rs. 78 lakhs. 8. Mr. Ruchir Bhatia, learned Senior Standing Counsel for the Revenue, relied on the decisions in Income-Tax Officer v. Selected Dalurband Coal Co. Pvt. Ltd. (1996) 217 ITR 597 and ITO v. Purushottam Das Bangur (1997) 224 ITR 362 to urge that at the stage of reopening of the assessment, the AO is not expected to undertake any detailed inquiry; it was sufficient if on the basis of the information received he was prima facie satisfied that a case was made out for reopening the assessment as income had escaped assessment. 9. However, in neither of the above cases are the facts similar to those in the present case. The two glaring errors in the reasons in the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e reasons were, in fact, in the form of conclusions one after the other and that the satisfaction arrived at by the AO was a borrowed satisfaction and at best a reproduction of the conclusion in the investigation report. 13. As in the above case, even in the present case, the Court is unable to discern the link between the tangible material and the formation of the reasons to believe that income had escaped assessment. In the present case too, the information received from the Investigation Wing cannot be said to be tangible material per se without a further inquiry being undertaken by the AO. In the present case the AO deprived himself of that opportunity by proceeding on the erroneous premise that Assessee had not filed a return when in fact it had. 14. To compound matters further the in the assessment order the AO has, instead of adding a sum of Rs. 78 lakh, even going by the reasons for reopening of the assessment, added a sum of Rs. 1.13 crore. On what basis such an addition was made has not been explained. 15. For the aforementioned reasons, the Court is satisfied that no error was committed by the ITAT in holding that reopening of the assessment under Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was based on the premise that the assessee has not filed his return of income as per database of the Department, but, the assessee has actually filed the return of income, then, such reopening is not in accordance with the law and has to be quashed since such reopening was based on wrong facts. We, therefore, quash the reassessment proceedings initiated by the AO and subsequent proceedings are accordingly quashed. Since the assessee succeeds on this legal ground, the various other grounds challenging the reopening of the assessment as well as addition on merit become academic in nature and, therefore, are not being adjudicated. 12. The ratio of this decision applies to the facts of the assessee s case. In the case of Shri Jagat Singh vs. ITO (supra) the coordinate bench of the Tribunal held as under: - 7.1. In this reasons, A.O. has not mentioned PAN of the assessee and noted that as per AIR information, the assessee has sold immovable property for a sale consideration of Rs. 65,84,000/- on 02.11.2007. The assessee filed copy of the sale deed at page-34 of the paper book which shows that assessee had sold the property for a total consideration of Rs. 20 lakhs only. Howev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of the A.O. based on incorrect and non-existing facts. There were no basis to record reasons for reopening of the assessment. The reasons recorded failed to demonstrate the link between the tangible material and the formation of the reason to believe that income chargeable to tax has escaped assessment. The A.O. had not independently considered and verified the AIR information which formed the basis for the reasons to believe that income chargeable to tax has escaped assessment. Therefore, on this reason alone, the reopening of the assessment is illegal and bad in law. We rely upon the decision of Hon'ble Delhi High Court in the case of Pr. CIT vs. GANDG Pharma India Ltd., 384 ITR 147 and Pr. CIT vs. Meenakshi Overseas Pvt. Ltd., 395 ITR 677. The A.O. had based his belief on the fact that assessee had not filed any return, due to which, there were escapement of income on account of sale of immovable property. The assessee, however, filed original return within time and produced the Certificate from Tehsildar to show that it was not a capital asset liable for capital gain. The A.O. instead of dropping the re-assessment proceedings, rejected the claim of assessee without bri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s for reopening of the assessment was unjustified and the assumption of jurisdiction under section 147 by the Assessing Officer by issuing a notice under section 148 was without authority of law and could not be sustained. The Assessing Officer had sought to reopen the assessment to once again examine the very aspect which had been gone into by his predecessor-Assessing Officer in the first round of proceedings under section 147. When an Assessing Officer had applied his mind to an issue in the assessment proceedings, the successor- Assessing Officer could not have sought to reopen the proceedings on the same ground as it amounted to a mere change of opinion. In the reasons recorded, the Assessing Officer had based his belief on the fact that the assessee had not filed any return due to which there was an escapement of income on account of sale of an immovable property. The Assessing Officer, instead of dropping the assessment proceedings, by an order rejecting the objections filed by the assessee, had sought to proceed with the reassessment proceedings on afresh ground which was not found in the recorded. When the original ground for reopening the assessment did not survive, the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ITS dated 10.03.2018 which is very much available with the AO when the reasons were recorded and notice was issued u/s 148 dated 31.03.2018. Therefore, it is abundantly clear that based on wrong assumption of facts the AO believed that the income of the assessee had escaped assessment. Firstly as per AIR information AO was of the view that there is a deposit of Rs. 28,83,000/- in ICICI bank which is factually wrong since there were deposits in two bank accounts one is ICICI and the other is HDFC Bank. Secondly, the assessee even though filed return of income the AO records that no return was filed by the assessee and, therefore, income had escaped assessment. It is also observed that the reasons recorded are undated and, therefore, it is doubtful as to whether these reasons recorded were before issue of the notice u/s 148 or thereafter. The AO in the reasons also records that he has demonstrated the live link between the materials available on ITD System and the reasons for belief that income had escaped assessment. However, the facts as recorded above suggest that there is no live link between the material available and the reasons for belief that income had escaped assessment. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and relevant material to form a reason to believe that cash deposits represented income of the assessee. The reasons recorded in the present case at best can be treated to be reasons to suspect which is not sufficient for reopening the assessment u/s 148 of the Act. The requirement of application of mind is missing in the present ease on the face of it in the reasons recorded. 15. In the case of PCIT vs. Meenakshi Overseas Pvt. Ltd. (supra) it has been held that if there was no independent applicable of mind by AO to tangible material and reasons, failed to demonstrate link between tangible material and formation of reason to believe that income had escaped assessment and, therefore, reassessment was not justified. 16. The Delhi High Court in the case of Northern Exim Pvt. Ltd. vs. DCIT (supra) held that if reasons recorded for issue of notice u/s 148 are factually incorrect that cannot therefore, form the basis for the belief that income had escaped assessment. Similar view has been taken by the Hon ble Gujarat High Court in the case of Sagar Enterprises vs. ACIT (supra). 17. In the case of PCIT vs. G.G. Pharma India Ltd. [384 ITR 147] the Hon ble High Court held th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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