TMI Blog2017 (4) TMI 711X X X X Extracts X X X X X X X X Extracts X X X X ..... hereby giving sanction to the AO. Nowhere the Commissioner has recorded a satisfaction note not even in brief. Therefore, it cannot be-said that the Commissioner has accorded sanction after applying his mind and after recording his satisfaction. See Shri Gautamchand Kanuga Versus DCIT, Circle – 1, Kalyan [ 2016 (1) TMI 1274 - ITAT MUMBAI] As decided in SARTHAK SECURITIES CO. PVT. LTD. Versus INCOME TAX OFFICER-WARD 7 (3) [2010 (10) TMI 92 - DELHI HIGH COURT] neither the reasons in the initial notice nor the communication providing reasons remotely indicated independent application of mind. Though conclusive proof was not germane at this stage the formation of belief must be on the base or foundation or platform of prudence which a reasonable person was required to apply. From the perusal of the reasons recorded and the order of rejection of objections, the names of the companies were available with the authority and their existence was not disputed. The assessee in its objections had stated that the companies had bank accounts and payments were made to the assessee through banking channel. The identity of the companies was not disputed. Under these circumstances, the initiation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of this appeal. 3. The brief facts of the case are that the assessee filed her return of income on 15.09.2003 declaring total income to the tune of ₹ 3,38,257/-. The income comprises income from other sources. The income from Long Term Capital Gain has been worked out to the tune of ₹ 15,02,042/- and the said income was exempted u/s.54EC of the Income Tax Act, 1961( in short the Act ) and arrived at Long Term Capital Gain to the tune of Rs.Nil, Thereafter, the case was re- opened by invoking the provisions u/s.147 of the Act. Accordingly, notice u/s.148 of the Act was issued on 26.03.2010 which was duly served upon the assessee. The assessee also filed the reply for the same and stated that the return filed on 15.09.2003 to be treated as return filed in response to the notice u/s.148 of the Act. The assessee requested for the reasons and accordingly the reasons were provided to him on 15.11.2010 which are mentioned below:- (i) A search action was conducted in the case of M/s.Mahasagar Securities Pvt. Ltd. (Now Alag Securities Pvt. Ltd.) on 25.11.2009 by the DDIT(Inv.), Unit 1(4), Mumbai. (ii) During the course of search, it was found that M/s.Mahasagar Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Goldstar Finvest Pvt. Ltd. 12000 0.55,0.60 7,030.70 25/05/2001 Jaykaydee VRP Financial Services Pvt. Ltd. 6000 4.00,4.05,4.10 24,312.00 Total 31342.70 SALES DETAILS DATE NAME OF SCRIPT BROKER QUANTITY RATE AMOUNT 13/01/2003 Jaykaydee VRP Financial Services Pvt. Ltd. 3000 7.50 3,14,017.50 20/01/2003 Jaykaydee VRP Financial Services Pvt. Ltd. 3000 7.50 3,13,792.50 07/02/2003 Buniyad Mahasagar 12000 76.00,75.85, 9,07,119.25 Chemicals Securities Pvt. Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M. Kanunga been ordered to be set aside u/s.147 of the Act vide order dated 08.01.2016 passed in ITA No.4259 4260/Mum/2012. Therefore, in the said circumstances the proceedings against the assessee u/s.147/148 of the Act is not liable to be sustainable in the eyes of law. However on the other hand the learned representative of the department has relied upon the order passed by the CIT(A) in question. On appraisal of the above said order, it came into the notice that the Hon ble Income Tax Appellate Tribunal in case of Shri Hirachand M. Kanunga vide order dated 27.02.2015 passed in ITA No.4261 4262/Mum/2010 and in case of Shri Gautamchand M. Kanunga vide order dated 08.01.2016 passed in ITA No.4259 4260/Mum/2012 has held that the reopening u/s.147 of the Act is bad in law. The facts and circumstances of the present case is quite similar of the case mentioned above which are the part and parcel of the letter dated 26.03.2010 on record. The present case is duly covered by the above said orders. Before proceeding further, we find it necessary to advert the finding of the Shri Gautamchand M. Kanunga in ITA No.4259 4260/Mum/2012 on record:- 5. We have gone through the said decision. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rlal Bajaj in ITA No. 611/M/04. 6.2. 2 . The last proposition made by the Ld. Counsel i s 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. The Ld. DR continued by stating that proper approval was given by the Joint CIT/Addi. CIT and therefore it is incorrect to say that the reopening was without any sanction. Thirdly the DR stated that the assessee dragged the assessment proceedings to the fag-end of the period of limitation and therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 it/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 were supposed to sustain the for matio n of an opinion, was challengeable. The reasons to believe were required to be recordedby the Assessing Officer. Once the ingredients of section 147 were fulfilled, the Assessing Officer was competent in law to initiate t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aiitamchand M. Kanunga (2) Mr. Gautamchand M. Kanunga (HUF) (3) Mr. Hirachand M. Kanunga (HUF) (4) Mr. Hirachand M. Kanunga (5) Miss Sonamn G. Kanunga (Minor) through Shri Gautamnchand M. Kanunga (6) Miss Lavina V. Kanunga (Minor) through Shri Vimaichand M. Kanunga (7) Master Kenil G. Kanunga (Minor) through Shri Gautamnchand M. KanUnga (8) Master Nilesh H. Kanunga (Minor) through Shri Hirachand M. JKanunga (9) Sint. Manjula H. Kanunga (10) Miss. Deepika H. Kanunga (Minor) through Shri Hirachand M. Kcmnunga (11) Miss. Simnran H. Kanunga (Minor) through Shri Hirachand M. Kanunga (12) 5mm' Damayanti Ramesh Gada (13) Shri. Ram esh Premnchand Gada (14) Shri. Alliad P. Kashikar (15) 5mm'. Nilima A. Kashikar (16) Shri Abhay P. Kashikar (17) Sint. Geeta A. Kashikar (18) Sint. Nee/am M. Goyal (19) VimaiJain (20) Naresh fain (21)Milan Salot (22)Milan Salot (HUF) Sd/- (SUBHASH BAINS) Addl. Commissioner of Income Tax, Range 1, Kalyan. 8.4. Let us first consider the relevant part of the provisions of Sec. 151of the Act. (1)1n a case where an assessment under sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer 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. Inthe instant case, we find from the perusal of the order sheet which is on record, the Commissioner has simply put approved and signed the report thereby giving sanction to the AO. Nowhere the Commissioner has recorded a satisfact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplied 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 is axiomatic that the law declared by the High court is binding on all authorities functioning within the jurisdiction of the Court. It is not open to the AO to feign ignorance of the la ..... X X X X Extracts X X X X X X X X Extracts X X X X
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