TMI Blog2019 (12) TMI 816X X X X Extracts X X X X X X X X Extracts X X X X ..... h Gautam, Sr. DR. ORDER The Assessee has filed this appeal against the impugned order dated 15.11.2018 passed by the Ld. CIT(A), Rohtak on the following grounds:- That the appellant humbly reiterates all the facts and grounds of appeal raised before the Ld CIT (Appeals). 2. That the CIT(A) has blindly confirmed the Assessment Order. That the appellant hereby raises the following grounds of appeal from the said order as follows: a. That the Dahruhera (Rewari) situated in District Rewari is not covered by any entry mentioned in the Government of India Gazette dated 6th Jan 1994. b. The CIT(A) has committed a mistake by holding that Agricultural Land sold by the appellant is a capital asset. That neither Village Maheshwari nor Dahruhera (Rewari) has not population exceeding Ten thousands during Year: 1991, 2001. That the Village Maheshwari is outside of Municipal Limit of Dharuhera (Rewari). c. The CIT (A) has committed a mistake by dismissing the appeal even after holding finding of fact that Municipal Committee, Dah ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to reasons format (enclosed herewith) as mere endorsement in column no 12 in YES is made ergo reopening proceedings, resultant assessment order uls 147/143(3) and CIT-A order may please be quashed as void ab initio. To support admission of our legal Jurisdictional ground, we rely on following case laws i. Recent Apex court decision in Singhad Technical Society (order dated 29/08/2017) 397 ITR 344 ii. Hon'ble Delhi high Court decision in case of Fast Booking (D Pvt. Ltd., order dated 02.09.2015 (ITA no. 334/2015) (378 ITR 693) iii. Hon'ble Delhi high. Court decision in case of Silver Line, order dated 04.1l.2015 (ITA no. 578/2015) (383 ITR 455) iv. Hon'ble Punjab and Haryana High Court decision in case of M/s VMT Spinning Co. Ltd., order dated 16.09.2016 (ITA no. 445/2015) (389 ITR 326) v. Hon'ble Guiarat high court in case of Jolly Fantasy World Ltd 373 ITR 530 vi. decision of the Hon'ble Bombay High Court in CIT Vs. Lalit Kumar Bardia (2017) 84 taxmann.com 213 (Bom), decision of the Hon'ble Bombay High Court in CIT Vs. Lalit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be claimed in respect of the escaped income. Applying the principles laid down in the aforesaid cases to the facts of the present case, we find that in the first round of proceedings before the Commissioner of Income Tax (Appeals), the appellant had specifically questioned the validity of the proceedings initiated under section 148 of the Act. That issue was not decided by the Commissioner (Appeals) who had remanded the matter for fresh assessment after providing opportunity of hearing. The question relating to the jurisdiction assumed under section 147/148 of the Act goes to the very root of the matter and it can be raised in appeal for the first time. The appellant had raised this question again in appeal and, therefore, it was incumbent upon the Commissioner of Income Tax (Appeals) to adjudicate upon the grounds taken before him. In fact, he had casually observed that the proceedings under section 148 of the Act had been validly initiated but, wrongly applied the principles laid down by the Apex Court in the case of Sun Engineering Works P. Ltd. (supra). In the case of P. V. Doshi [1978J 113 ITR 22 this High Court in almost identical fact situation held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Court is satisfied that the findings by the ITAT cannot be distributed. On basis of above discussion we make a humble prayer for i) admission of our legal and jurisdictional additional ground and ii) allowing our appeal by accepting our additional ground in toto and iii) quash the orders passed by Ld AO and Ld CIT-A. Submitted 3. At the time of hearing, Ld. Counsel for the assessee only argued the additional ground no. 2 and stated that the additional ground being legal and jurisdictional and needs to be admitted. He further drew my attention towards Column No. 12 placed at page no. 6 of the Paper Book, which is a copy of reasons recorded by the AO and approval granted by the JCIT, wherein the AO has erred in assumption of jurisdiction u/s. 147/148 of the Act on the basis of invalid and mechanical approval as evident from cursory look to reasons format as mere endorsement in column no. 12 in Yes is made, which shows that Ld. JCIT has not recorded proper satisfaction after due application of mind and gave the approval in a mechanical manner. He further stated that similar this legal/jurisdictional ground is squarely covered by the decision of the ITAT, SMC, Be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessees share in the said sale consideration comes to ₹ 1,16,18,750/-. The query letter in this regard was issued and / he assessee wasas asked to furnish the copy of return of income, PAN, Calculation of Capital Coin on said land. The assessee did not furnish his reply. On enquiries, it is noticed that the hand in question is situated within 5 KM front municipality's limit of Rewari/Dharuhera Municipality. Thus the land sold by the assessee is covered in the definition of Capital Assets in view of the notification issued by the CBDT on 6.1.1994 (F.No. 16H03/87 ITAI dated 06.01. 94) I, therefore, have reason LO believe that the assessee has not disclosed its/ his/her income from Long Term Capital Gain amounting to ₹ 1,16,18,750/- and any other income which subsequently comes to the notice of the undersigned has escaped assessment within the meaning of section 147 of the I.T. Act, 1961. Issue notice u/s 148 of the I.T. Act, 1961 for the assessment year 2007-08 Therefore, being the malafide intention of the AR of the assessee, his/her contention is not acceptable. Further, the. AR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eyes of law and needs to be quashed. 5.2 I have also perused the decision referred by the Ld. Counsel for the assessee of the ITAT, SMC, Bench, New Delhi dated 21.8.2019 in the case of Gopal Chand Manudhra and Sons; Damyanti Mundhra; Ramdev Mundhra; Shriya Devi Mundhra and Gopal Chand Mundhra vs. ITO, Wards 55(5), New Delhi decided in ITA No. 1375; 1721; 1722; 1523-1524/Del/2019 respectively relevant to assessment year 2011-12 wherein, the similar and identical legal/ jurisdictional issue has been adjudicated and decided in favour of the assessee. For the sake of convenience, the relevant portion of the findings of the Tribunal are reproduced as under:- 18. I have considered the rival arguments made by both the sides and perused the orders of the Assessing Officer and CIT(A) and the paper book filed on behalf of the assessee. I have also considered the various decisions cited before me. I find the case of the assessee was reopened u/s 147 by recording the reasons and after obtaining approval from the JCIT and the PCIT on the basis of the information received from the Investigation Wing of the Department that the assessee is a beneficiary of accom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to what documents he had perused and what were the reasons for his being satisfied to accord the sanction to initiate the reopening of assessment u/s 148 of the Act. 13. Even AO while recording the reasons for initiating the reopening of assessment has not applied his mind independently. When we peruse the reasons recorded, available at pages 31-32 of the paper book, the entire reasons have been based on the statement of one Shri P.K. Jindal, who has furnished the list of companies stated to be not doing any business activities but engaged in providing accommodation entries. Before issuing the notice AO appeared to have not examined the profile of the said companies to arrive at a logical conclusion so as to issue the notice u/s 148 of the Act. When this fact is examined in the light of the completed assessment of the assessee u/s 143 (3), all the documents concerning share application money, now available at pages 1 to 30 of the paper book, were supplied to the AO. This fact has not been taken into consideration by the AO before initiating the proceedings u/s 147/148 of the Act. However, since reopening of assessment in this case is otherwise not sustainable, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt has also decided this legal issue in case cited as Pr. CIT vs. N.C. Cables Ltd. in ITA 335/2015 order dated 11.01.2017 by returning following findings :- Reassessment-Issuance of Notice- Sanction for issue of Notice- Assessee had in its return for A Y 2001-02 claimed that sum of ₹ 1 Crore was received towards share application amounts and a further sum of Thirty Five Lakhs was credited to it as an advance towards loan-Original assessment was completed u/s 143(3)-However, pursuant to reassessment notice, which was dropped due to technical reasons, and later notice was issued and assessments were taken up afresh-After considering submissions of assessee and documents produced in reassessment proceedings, AO added back a sum of ₹ 1,35,00,000-CIT(A) held against assessee on legality of reassessment notice but allowed assessee's appeal on merits holding that AO did not conduct appropriate enquiry to conclude that share inclusion and advances received were from bogus entities-Tribunal allowed assessee's appeal on merits- Revenue appealed against appellate order on merits-Assessee's cross appeal was on correctness of reopening of assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... despite numerous judgments on this issue, the same errors are repeated by the concerned Revenue authorities. In this background, the Court would like the Revenue to adhere to the following guidelines in matters of reopening of assessments: (i) while communicating the reasons for reopening the assessment, the copy of the standard form used by the AO for obtaining the approval of the Superior Officer should itself be provided to the Assessee. This would contain the comment or endorsement of the Superior Officer with his name, designation and date. In other words, merely stating the reasons in a letter addressed by the AO to the Assessee is to be avoided; (ii) the reasons to believe ought to spell out all the reasons and grounds available with the AO for re- opening the assessment - especially in those cases where the first proviso to Section 147 is attracted. The reasons to believe ought to also paraphrase any investigation report which may form the basis of the reasons and any enquiry conducted by the AO on the same and if so, the conclusions thereof; (iii) where the reasons make a reference to another docum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pliance of the provisions of section 151 of the IT Act, 1961. However, her finding on this issue is missing in the entire order. A perusal of the approval given u/s 151, copy of which is placed at pages 20 and 21 of the paper book shows that the Pr. CIT while giving approval has simply mentioned as under:- Yes. I am satisfied. 10. I find, the Hon'ble Delhi High Court in the case of United Electrical Company Pvt. Ltd. (supra) while deciding an identical issue has held that the power vested in the commissioner u/s 151 to grant or not to grant approval to the Assessing Officer to reopen an assessment is coupled with a duty. The commissioner is required to apply his mind to the proposal put up to him for approval in the light of the material relied upon by the Assessing Officer. That power cannot be exercised casually and in a routine manner. Accordingly, the Hon'ble High Court quashed the notice, since there was no proper application of mind by the Addl.CIT. 11. I find the Hon'ble Delhi High Court in the case of Pr. CIT vs. N.C. Cables Ltd., while deciding an identical issue ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer and the satisfaction by the Assessing Officer is based on borrowed satisfaction of the Investigation Wing. The Assessing Officer, without applying his mind, has simply, on the basis of the information of the Investigation Wing, jumped to the conclusion that there is escapement of income. The reasons so recorded do not show that there is any application of mind by the Assessing Officer for reaching the conclusion that there was escapement of income except the information from the Investigation Wing. The Hon'ble Delhi High Court in a number of decisions has held that reopening of assessment on the basis of report of the Investigation Wing without independent application of mind by the Assessing Officer is not in accordance with law and accordingly the reassessment proceedings have been quashed. The Hon'ble Delhi High Court recently in the case of South Yarra Holdings vs. ITO, vide Writ Petition No.3398 of 2018, order dated 1st March, 2019, at para 7 of the order has observed as under:- 7. It is a settled position in law that reopening of an assessment has to be done by an Assessing Officer on his own satisfaction. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons, one after the other. The expression 'accommodation entry' is used to describe the information set out without explaining the basis for arriving at such a conclusion. The statement that the said entry was given to the Assessee on his paying unaccounted cash is another conclusion the basis for which is not disclosed. Who is the accommodation entry giver is not mentioned. How he can be said to be a known entry operator is even more mysterious. Clearly the source for all these conclusions, one after the other, is the Investigation report of the DIT. Nothing from that report is set out to enable the reader to appreciate how the conclusions flow therefrom. 23. Thus, the crucial link between the information made available to the AO and the formation of belief is absent. The reasons must be self evident, they must speak for themselves. The tangible material which forms the basis for the belief that income has escaped assessment must be evident from a reading of the reasons. The entire material need not be set out. However, something therein which is critical to the formation of the belief must be referred to. Otherwise the link goes mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e preceding paragraphs, the reassessment proceedings initiated in the case of these assessees are also held to be not in accordance with the law and are accordingly quashed. 28. In the result, all the five appeals filed by the respective assesses are allowed. 5.3 Since in the present case the approving authority has given approval to the reopening of assessment in a mechanical manner without due application of mind by mentioning only Yes in Column No. 12 of the Format for Recording the Reasons for Initiating Proceedings u/s. 147 and For obtaining the Approval of the Addl./JCIT Commissioner of Income Tax and therefore, the legal issue in dispute is squarely covered by the aforesaid finding of the Tribunal, hence, respectfully following the aforesaid precedent i.e. ITAT, SMC, Bench, New Delhi decision dated 21.8.2019 in the case of Gopal Chand Manudhra and Sons; Damyanti Mundhra; Ramdev Mundhra; Shriya Devi Mundhra and Gopal Chand Mundhra vs. ITO, Wards 55(5), New Delhi decided in ITA No. 1375; 1721; 1722; 1523-1524/Del/2019 respectively relevant to assessment year 2011-12, the reassessment is hereby quashed and accordingly the additional gro ..... 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