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2020 (2) TMI 1336 - AT - Income TaxReopening of assessment u/s 147 - Misusing Client Code Modification facility - fictitious profit or loss entries received - information from the Asstt. Director of Income Tax (Investigation), (Unit)1(3), Ahmedabad through CD - HELD THAT:- AO has blindly relied upon the Investigation Wing which itself is not based on any material against the assessee. The mere recording of reasons on the basis of information from Investigation Wing and issuing notice for initiation of reassessment proceedings does not constitute application of mind much less independent application of mind. Therefore, the proceeding is without jurisdiction. It is noted that AO has not investigated the matter himself and has not made any enquiry to corroborate the Information of the Investigation Wing on which basis the case of the assessee has been reopened, meaning thereby the AO has not applied his mind and only issued notice u/s. 148 of the Act. Thus, the AO has acted mechanically and without any independent application of mind. Initiation of proceedings is based on non application of mind much less independent application of mind but is a case of borrowed satisfaction. Nothing is independently examined or considered by the AO which can demonstrate application of mind by him. See RMG POLYVINYL (I) LTD. [2017 (7) TMI 371 - DELHI HIGH COURT] and DHARIYA CONSTRUCTION CO. [2010 (2) TMI 612 - SC ORDER] Hon’ble Bombay High Court in the case of Coronation Agro Industries Ltd. [2017 (1) TMI 904 - BOMBAY HIGH COURT] has held that mere client code modification by broker does not mean that any income has escaped assessment. Proceedings initiated by invoking the provisions of section 147 of the Act by the AO and upheld by the Ld. CIT(A) are nonest in law and without jurisdiction and needs to be quashed. Reasons recorded and its approval, wherein the ITO has recorded the reasons undated and Ld. Pr. CIT, Delhi-1 has granted the approval by mentioning that “I am satisfied”, which shows that Ld. Pr. CIT-1, New Delhi has not recorded proper satisfaction and without application of mind gave the approval in a mechanical manner - no application of mind by the Addl. CIT before granting the approval. - Decided in favour of assessee.
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