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2016 (2) TMI 838 - ITAT DELHI

2016 (2) TMI 838 - ITAT DELHI - TMI - Sanction u/s 151 - Validity of sanction by the ld. CIT/competent authority for initiation of proceedings and issuance of notice u/s 147/148 - Held that:- While granting sanction u/s 151 of the Act for issuance of notice u/s 148 of the Act. The Additional CIT, Range 13, New Delhi only put his signature alongwith date 27.02.2006 which is not suffice to show application of mind by sanctioning authority. Furthermore, from the copy of reasons recorded by the AO f .....

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iation of proceedings and passing impugned order in pursuance thereto and hence, notice u/s 148 of the Act and re assessment orders u/s 143(3) r.w.s 147 of the Act cannot be held as valid and sustainable and we quash the same. See CIT Vs. Amar Khosla [2016 (2) TMI 796 - DELHI HIGH COURT] - Decided in favour of assessee - ITA No. 1185 & 1186/Del /2009, CO No. 118 & 119/Del/2009 - Dated:- 24-2-2016 - Shri Chandra Mohan Garg, Judicial Member, And Shri L. P. Sahu, Accountant Member For the Petitione .....

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and 2002-03. Subsequently, on the basis of information received from the Investigation Directorate about the bogus accommodation entries, the case was reopened for both the years u/s 147 of the Income tax Act, 1961 [for short, 'the Act'] and notice was u/s 148 of the Act were issued on 27.2.2006. In response to the said notices, the assessee filed return of income on 18.9.2006 declaring the same income as was declared in the original return of income for both the years. Finally, in the .....

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rits and directed the AO to delete the additions of ₹ 24,75,000/- and ₹ 2,50,000/- and ₹ 4,30,000 for A.Y 2000-01 and also directed the AO to delete the entire addition of ₹ 23 lakhs for A.Y 202-03 which were made u/s 68 of the Act. Now the aggrieved Revenue is before this Tribunal challenging the said deletion made by the first appellate authority and the assessee has also filed the cross objection challenging the conclusion of the ld. CIT(A) wherein the legal objection .....

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he AO has erred in assuming jurisdiction u/s 147 that too without complying with the mandatory requirements as prescribed u/s 147 to 151. 2. That in any case and in any view of the matter the impugned assessment order is illegal and void ab initio and therefore, the CIT should have quashed the same as such. 4. We have heard the arguments of both the sides and carefully perused the relevant material placed on record before us. The ld. AR drew our attention towards the reasons recorded by the AO f .....

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dated 20.7.20106 in the case of CIT Vs. Amar Khosla in ITA No. 133/2014 , the ld. AR vehemently contended that when the ld. CIT(A) has merely affixed his signature on the note of the AO forwarded to him, then certainly this was not in confirmatory with the legal requirement explained by the Hon'ble Jurisdictional High Court of Delhi in various decisions including the decision in the case of United Electrical Co. Vs. CIT [2002] 258 ITR 317 [Del]. The ld. Counsel also placed copy of reasons re .....

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quirements as prescribed in the provisions of section 147 to 151 of the Act. 5. Replying to the above, the ld. DR strongly supported the action of the AO as well as the conclusion of the ld. CIT(A) dismissing the legal objection of the AO against the valid assumption of jurisdiction u/s 147/148 of the Act and submitted that after the perusal of the entire note and record, if sanctioning authority has put his signature alongwith date then the same is suffice to show application of mind and hence .....

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any word by the ld. CIT(A) or approval granting authority while affixing signature cannot be presumed that the ld. CIT(A) has approved the reasons recorded by the AO with application of mind and consciously reading not put up before him. Therefore, in the present case, when the AO has not applied his mind while granting approval for A.Y 2002-03 and there is no signature on the approval for A.Y 2002-03, then initiation of proceedings, issuance of notice and reassessment orders passed in pursuanc .....

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e Act which is respectfully being reproduced hereinbelow: 3. Mr. Sahni the ld. Counsel for the appellant, could not dispute that factually the ld. CIT had merely affixed his signature on the note of the ACIT forwarded to him. Certainly, this was not in conformity with the mandatory legal requirement explained by this court in several decisions including United Electrical Co. (P) Ltd. Vs. CIT [2002] 258 ITR 317. 4. Consequently, notwithstanding that the Respondent s father-in-law Tej Mohan Sachde .....

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Tribunal order in the case of Amar Khosla [supra] which reads as under: 19. We have already extracted the reasons recorded and the approval of the Ld. Commissioner of Income Tax (Appeals)-XI, New Delhi at page 2 and 3 of this order. The Ld. Commissioner of Income Tax (Appeals) has countersigned below the noting of the Addl.CIT without writing anything. Now the issue is whether such affixing of a mere signature with nothing else can be termed as mechanical action without application of mind. 20. .....

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ped yes against the column which queried as to whether the approval of the Board had been taken. Rubber stamping of underlying material suggested that the decision was taken in a mechanical manner. Thus, a proper application of mind had not taken place . 20.1. Even if the reasons set out by ITO were to be agreed upon, the least which is expected is that the appropriate authority as to the grant of approval by saying yes or any such word. 20.2. In the case of United Electric Co.P.Ltd. vs CIT and .....

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fter the expiry of four years from the end of the relevant Assessment Year. As highlighted above, the Legislature has provided certain safeguards to prevent arbitrary exercise of powers by an Assessing Officer, particularly after a lapse of substantial time from completion of assessment. The power vested in the Commissioner to grant or not to grant approval 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 materi .....

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: Yes, I am satisfied that it is a fit case for issue of notice u/s 148 of the Act . The Hon ble High Court in this case has came to a conclusion that there was information on record, which could provide a foundation to the Assessing Officer, that the petitioners transaction with Visa Fincap Ltd. was not genuine and that its income had escaped assessment on that count. The approval of the ADIT, in the context of this finding of the High Court on the reasons recorded, was held to be mechanical ex .....

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20.3. In the case of CIT vs. SPL s Sidhartha Ltd. 345 ITR 223 (Del) it is observed at page 227 as follows: It is trite that when a statute requires, a thing to be done in a certain manner, it shall be done in that manner alone and the Court would not except its being done in some other manner. It was so held in the following decisions : (i) CIT vs. Naveen Khanna (dt. Nov.18,2009 in ITA 21/Del/2009; (ii) State of Bihar vs JAC Saldanha, AIR 1980 SC 326; and (iii) State of Gujarat vs. Shantilal Man .....

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datory condition is that the satisfaction recorded should be independent and not borrowed or dictated satisfaction. Law in this regard is now well settled. In Sheo Narain Jaiswal vs ITO (1989) 176 ITR 352(Patna), it was held Where the Assessing Officer does not himself exercise his jurisdiction u/s 147 but merely acts at the behest of any superior authority, it must be held that assumption of jurisdiction was bad for non-satisfaction of the condition precedent. The Apex Court in the case of Anir .....

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ples of law laid down in a catena of judgements including that of the Supreme Court. 21. Applying the propositions laid down in these cases to the facts of this case, we hold that the Non mentioning of any word by the CIT, New Delhi XI while affixing his signature, in our view, cannot be presumed that the CIT has approved the reasons recorded with application of mind. 21.1. Though we appreciate the concern expressed by the Ld. D.R. in his written submissions, the statutory requirements cannot be .....

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for A.Y 2002-03, we are unable to see any sanction as required u/s 151 of the Act prior to issuance of notice showing the initiation of reassessment proceedings u/s 147 of the Act. In view of the above, we have no hesitation to hold that in the present case, mandatory sanction u/s 151 of the Act for issuance of notice has not been granted by the competent authority with full application of mind and thus, the AO could not assume valid jurisdiction for issuance of notice u/s 148 of the Act and ini .....

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