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2019 (2) TMI 1846 - AT - Income TaxValidity of Reopening of assessment u/s 147 - non- application of mind by all the authorities involved in the process of recording reasons and providing satisfaction u/s 151 - addition u/s. 68 on account of unexplained cash credit - HELD THAT:- Conditions laid down in proviso to section 147 need be strictly full filled as this power is an exceptional power and in the absence of strict compliance of conditions of proviso, the exercise of power held to be unsustainable in law. The order is bad in law because the reason recorded are vague and without application of mind and are based on the information of the Enforcement Directorate with no incriminating material which is coming to the possession of the AO for the first time and which was not there with him at the time of original proceedings. In the reasons recorded in instant case the AO has not referred to any specific adversarial material (statement etc.) and also has not described exact nature of transaction in the reasons and has used share application / share capital / unsecured loans etc. In the reasons and has miserably failed to bring during entire reopening proceedings any specific tangible material which established assessee is beneficiary of accommodation entries, which all are sufficient to nullify the extant reopening action. Even there is no annexure/enclosure to reasons to corroborate the same. No reference and details of investigation wing information is available. There is no live nexus / rational connection between Investigation Wing information and belief that assessee's certain income has escaped assessment. The date of recording reason is also not mention and also the date of sanction u/s 151 and these material facts indicate that the sanction provided by the authorities is mechanical as recording of reason. approval granted by the competent authority is a mechanical approval and action has been taken mechanically because on perusing the reasons recorded, it demonstrates that Pr. CIT has written "Yes, it is a fit case for the issue of notice u/s. 148." which establishes that the competent authority has not recorded proper satisfaction / approval, before issue of notice u/s. 148 of the I.T. Act. Thereafter, the AO has mechanically issued notice u/s. 148 of the Act, on the basis of information allegedly received by him from the Directorate of Enforcement. We also note that the action of the AO has been taken mechanically on the basis of alleged report of Enforcement Department. The mere recording/ formulation of reasons on the basis of reproduction of information from Investigation Wing and, issuing notice for initiation of re-assessment proceedings does not constitute application of mind much less independent application of mind. Hence, the proceedings are without jurisdiction. Thus 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, hence, the re-assessment is quashed. - Decided in favour of assessee.
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