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TMI Blog2015 (5) TMI 757X X X X Extracts X X X X X X X X Extracts X X X X ..... om other sources. In the computation of income Long Term Capital Gain has been worked at Rs. 63,52,972/- which included Short Term Capital Gain earned by the minor children of the assessee and clubbed with the income of the assessee u/s. 64 of the Act. 3.1. The case was reopened by invoking the provisions of Sec. 147 of the Act. Accordingly notice u/s. 148 was issued on 26.3.2010 for which the assessee stated that return filed on 16.10.2003 may be treated as return filed in response to the notice u/s. 148. The assessee also asked for the reasons. The reasons were supplied to the assessee. The main reason for the reopening of the assessment was specific information was received from the Dy. Director (Inv.) Mumbai that a search action u/s. 132 of the I.T. Act was carried out in the case of M/s. Mahanagar Securities Pvt. Ltd. and its group concerns on 25.11.2009. During the course of search action, it was found that M/s. Mahanagar Securities Pvt. Ltd. and its group concern were engaged in fraudulent billing activities and in the business of providing bogus speculation profit/loss, Short Term /Long term capital gain/loss, commodities profit/loss on commodity trading and had been conti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Sarthak Securities Co. P. Ltd. 329 ITR 110. 6.1. The second proposition put forth by the Ld. Counsel is that there is no proper sanction/approval as per the provisions of Sec. 151(2) of the Act. In support of this contention, reliance was placed on the decision of the Tribunal Mumbai Bench in the case of Shri Amarlal Bajaj in ITA No. 611/M/04. 6.2. The last proposition made by the Ld. Counsel is that the assessment has been framed in haste without allowing the time after rejection of objection. It is the say of the Ld. Counsel that once the AO rejects the objection filed by the assessee, then in such a case the AO should not proceed further in the matter for a period of 4 weeks. Reliance was placed on the decision of the Hon'ble Jurisdictional High Court in the case of Asian Paints Ltd. 296 ITR 90 and Aroni Commercials Ltd. 362 ITR 403. 7. Per contra, the Ld. Departmental Representative strongly supported the orders of the authorities below. It is the say of the Ld. DR that the assessment was reopened on the basis of tangible material evidence in the form of report received from the Investigation Wing, Mumbai and therefore it cannot be said that there is no application of mind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Sarthak Securities Co. P. Ltd (supra) wherein also the original return was processed and intimation was sent u/s. 143(1) of the Act accepting the return. The notice u/s. 148 of the Act was issued by the AO alleging that he has reason to believe income chargeable to tax for the assessment was 2003-04 has escaped assessment within the meaning of Sec. 147 of the Act and accordingly required the assessee to file the return for the assessment year in consideration. The assessee submitted the return of income as filed earlier should be treated as the return in compliance with the notice under reference. The assessee also requested to provide a copy of the reasons recorded u/s. 148(2) and the approval for issuance of notice. While furnishing the reasons, the ITO also initiated reassessment proceedings by issuing formal notice. On a writ petition, the Hon'ble High Court held as under: "Held, allowing the petition, that the formation of belief was a condition precedent as regards the escapement of the tax pertaining to the assessment year by the Assessing Officer. The Assessing Officer was required to form an opinion before he proceeded to issue a notice. The validity of reasons, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eg. Ref: Statement dated 11/12/2009 u/s 131 of Shri M.C. Chowksi by DDIT, Mumbai. -------------------------------------------------------------------------- Please refer to the above. On perusal of the proposals for initiating proceedings u/s 147, you are hereby directed to issue notice u/ 148. The proposals in the following cases are approved: (1) Mr. Gaütamchand M. Kanunga (2) Mr. Gautamchand M. Kanunga (HUF) (3) Mr. Hirachand M. Kanunga (HUF) (4) Mr. Hirachand M. Kanunga (5) Miss Sonam G. Kanunga (Minor) through Shri Gautamchand M. Kanunga (6) Miss Lavina V. Kanunga (Minor) through Shri Vimalchand M. Kanunga (7) Master Kenil G. Kanunga (Minor) through Shri Gautamchand M. KanUnga (8) Master Nilesh H. Kanunga (Minor) through Shri Hirachand M. JKanunga (9) Smt. Manjula H. Kanunga (10) Miss. Deepika H. Kanunga (Minor) through Shri Hirachand M. Kanunga (11) Miss. Simran H. Kanunga (Minor) through Shri Hirachand M.Kanunga (12) Smt Damayanti Ramesh Gada (13) Shri. Ramesh Premchand Gada (14) Shri. Alhad P. Kashikar (15) Smt. Nilima A. Kashikar (16) Shri Abhay P. Kashikar (17) Smt. Geeta A. Kashikar (18) Smt. Neelam M. Goyal (19) Vimal Jain (20) Naresh Jain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed his dissatisfaction. The Hon'ble Supreme Court in the case of Chhugamal Rajpal Vs S.P. Chaliha & Others 79 ITR 603 observed that the important safeguards provided in Sec. 147 and 151 were lightly treated by the Income-Tax Officer as well as the Commissioner. 11. In the light of the above mentioned reasons, in our considerate view, Section 147 and 148 are charter to the Revenue to reopen earlier assessments and are, therefore protected by safeguards against unnecessary harassment of the assessee. They are sword for the Revenue and shield for the assessee. Section 151 guards that the sword of Sec. 147 may not be used unless a superior officer is satisfied that the AO has good and adequate reasons to invoke the provisions of Sec. 147. The superior authority has to examine the reasons, material or grounds and to judge whether they are sufficient and adequate to the formation of the necessary belief on the part of the assessing officer. If, after applying his mind and also recording his reasons, howsoever briefly, the Commissioner is of the opinion that the AO's belief is well reasoned and bonafide, he is to accord his sanction to the issue of notice u/s. 148 of the Act. In the inst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings vis-à-vis provisions of Sec. 151 are bad in law and the assessment has to be declared as void ab initio. 14. Proceeding further, a perusal of the assessment order show that the AO has supplied the reasons recorded on 15.11.2010. The assessee filed his objection on 25.11.2010. The objections filed by the assessee were rejected on 14.12.2010 and the assessment order was made on 24.12.2010. Thus the AO did not wait for four weeks from the date of the rejection of the objections and thereby violated the principles enunciated by the Hon'ble Jurisdictional High Court in the case of Asian Paint Ltd. (supra) wherein the Hon'ble High Court has observed as under: "Reassessment-Notice u/s. 148- Objections by assessee-If the AO does not accept the objections filed by the assessee against reopening of assessment, he is not to proceed further in the matter for a period of four weeks from the date of service of order rejecting the objections on the assessee -Above procedure is to be followed strictly in all such cases of reopening of assessment." 15. The Hon'ble Jurisdictional High Court in the case of Aroni Commercials Ltd. (supra) has made the following observations: "It ..... X X X X Extracts X X X X X X X X Extracts X X X X
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