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TMI Blog2024 (6) TMI 657X X X X Extracts X X X X X X X X Extracts X X X X ..... safeguards against the arbitrary and disproportionate exercise of powers u/s 147 by the AO. It ensures that powers under s. 147 are not exercised by the AO unless the designated superior officer is satisfied that the condition precedent for exercise of powers as provided under erstwhile Section 147 of the Act is fulfilled. As a corollary, to meet this avowed objective enshrined in enactment of s. 151 of the Act, it is incumbent upon the superior authority to apply its mind innately to the basis derived by AO for alleged escapement while granting sanction to the proposal for reopening. The sanctioning authority while exercising power under Section 151 of the Act, is thus expected to examine the reasons, material or grounds and to judge whether they are relevant to formation of necessary belief on the part of the AO and thereafter to record necessary satisfaction which should not be mechanical but as a result of application for the issuance of notice under Section 148 of the Act by the AO as held in Chhugamal Rajpal Vs. S.P. Chaliha [ 2015 (12) TMI 1334 - SC ORDER] The requirement of sanction u/s 151 is salutary as it ensures that reopening notices are not lightly issued and to shun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Advocate, Shri Aman Garg, Chartered Accountant And Ms. Bulbul Singhal, Chartered Accountant For the Department : Shri Vivek Vardhan, Sr.DR ORDER PER PRADIP KUMAR KEDIA, A.M.: The captioned appeal has been filed at the instance of the Revenue against the first appellate order passed by the Commissioner of Income Tax (Appeals)-VIII, New Delhi [ CIT(A) in short], dated 06.12.2019 under s. 250 of the Act arising from reassessment order dated 22.12.2018 passed by the Assessing Officer (AO) under Section 143(3) r.w. Section 147 of the Income Tax Act, 1961 (the Act) concerning AY 2011-12. The Assessee has also filed cross objection memo in the revenue appeal. 2. As per the Cross Objection, the assessee has raised grounds touching the assumption of jurisdiction under Section 147 of the Act. The challenge thus strikes to the root of the litigation and hence acquires primacy over other issues. The cross objection is thus taken up for adjudication at the first instance. 3. When the matter was called for hearing, the ld. Counsel for the assessee submitted at the outset that the assessee filed return of income for A.Y. 2011-12 on 30.07.2011 declaring total income at Rs. 20,53,602/-. The assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice u/s. 148 . Thereafter, as per row no. 12, the ultimate authority vested with powers u/s. 151 of the Act, i.e., Pr.CIT, granted approval stating action u/s. 148 approved 3.3 Delineating further, the ld. counsel vociferously asserted that the Pr.CIT while granting approval has adopted a completely nonchalant approach as evidenced from the casual assertions action u/s. 148 approved . The ld. counsel alleged that the Pr.CIT, apparently rubber stamped the attempt of the AO to reopen and disturb the concluded assessment while granting sanction to do so. While granting a ritualistic approval, the Pr.CIT has evidently not applied his mind to the crucial aspects forming basis of allegation of escapement of income towards cash received in land deals. Significantly, in the reasons recorded, the AO himself conceded that the assessee had furnished cash book showing entries towards purchase and sale of land in rural areas in cash. Thus, impliedly the cash transactions in question forming the basis for alleged escapement were already forming part of the books of account. The Pr.CIT was thus expected to look and offer some comment to justify his sanction to reopen the case in such circumstance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e satisfaction of the competent authority must be drawn with some degree of objectivity on some objective material. The ld. counsel thus submitted that on this ground alone, the issuance of notice under Section 148 based on a cryptic sanction is vitiated and consequently, the re-assessment order framed as a sequel thereto, is rendered bad in law. 4. The ld. DR for the Revenue, on the other hand, supported the action of the Revenue Authorities and contended that jurisdiction under Section 147 has been assumed on the basis of valid and proper sanction of the competent authority under Section 151 of the Act. The ld. DR contended that the approval of PCIT under s. 151 are administrative in nature and there is no requirement in law that competent authority needs to record its own reasons for sanction under Section 151 of the Act. Once, the approval is granted, the statutory presumption is to be drawn that the competent authority has acted with due application of mind. The ld. DR thus submitted that the sanction granted by the Pr.CIT cannot be faulted in law having regard to the plain language of the provisions of Section 151 of the Act. 5. We have carefully weighed the rival contentions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r issue of notice u/s. 148 Action u/s. 148 approved. It is hereby certify that approval for re-opening in the said case was obtained from PCIT-8 after due discussion with him on 09/03/2018. Note: You have been given approval and reasons for re-opening multiple times. Now given last opportunity. Henceforth, the compliances shall be made in this regard otherwise the office will be compelled to proceed in this given case as per law. 5.3 A bare glance of the approval memo shows that the AO has proceeded to initiate the action under Section 147 of the Act on the basis of satisfaction of the Pr.CIT towards escapement as forwarded to him by the AO through the office of the Additional Commissioner of Income Tax. In other words, the prior approval of the Pr.CIT under Section 151 of the Act in the instant case has set the proceedings under Section 147 of the Act into motion. As the law envisage, the permission of superior authority as statutorily designated is a sine qua non to prior to initiation of action under Section 147/148 of the Act. The Pr.CIT in the instant case was the competent authority statutorily designated for this purpose. It was thus on the basis of satisfaction and approval ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h book before the AO prior to initiation of action under Section 147 of the Act in which, the cash transactions alleged to be escaped income, were duly found recorded in the books. The Pr.CIT was thus expected to deal on this crucial aspect while endorsing allegation of escapement. Secondly, the AO claims that assessee has not disclosed the transactions in the return of income. The Pr.CIT should have examined the plausibility of such allegation having regard the Statutory Form (ITR) designed for filing ROI. The omnibus approval without any comment granted betrays the application of mind on such foundational points. The approval granted do not utter a word towards any reasons which induced him to do so. Under the circumstances, we are compelled to think that the approval under s. 151 suffers from the vice of non application of mind. The Hon ble Delhi High Court in the case of N.C. Cables (supra); Pioneer Town Planners (supra); Manujendra Shah (supra) have struck a balance and declined to endorse the rubber stamped approval granted by the Pr.CIT under Section 151 of the Act. 9. In the light of delineation made, we see palpable merit in the plea of the assessee that the sanction grant ..... X X X X Extracts X X X X X X X X Extracts X X X X
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