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Hi Gain Investment Pvt. Ltd. Versus Income Tax Officer, Ward-12 (4) , New Delhi

2017 (5) TMI 835 - ITAT DELHI

Validity of reopening of assessment - reopening after the expiry of four years - approval from competent authority - non independent application of mind - Held that:- As per the provision contained in Section 151 of the Act, the reopening after the expiry of four years from the end of the relevant assessment year can be done only after the satisfaction of the Commissioner or Pr. Commissioner or Chief Commissioner or Pr. Chief Commissioner but not on the approval of the Addl. Commissioner as has .....

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see. - ITA No. 4520/Del/2014 - Dated:- 15-5-2017 - Sh. N. K. Saini, AM and Ms. Suchitra Kamble, JM For The Assessee : Sh. Ved Jain & Ashish Goel, CAs For The Revenue : Sh. Amrit Lal, Sr. DR ORDER Per N. K. Saini, AM: This is an appeal by the assessee against the order dated 30.05.2014 of ld. CIT(A)-XXVII, New Delhi. 2. Following grounds have been raised in this appeal: 1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals) [CIT(A)] .....

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s and in law in rejecting the contention of the assessee that the reassessment proceedings initiated by the learned A.O. are bad in the eye of law as the reasons recorded for the issue of notice under Section 148 are bad in the eye of law and are contrary to the facts. 4. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts & in law in rejecting the contention of the assessee that initiation of the proceedings under Section 147 read with Section 148 is bad i .....

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ecting the contention of the assessee that the order passed by learned A.O. is bad both in the eye of law and on facts as the same has been reopened on the basis of reasons without there being any whisper that the income has escaped due to the failure on part of the assessee to disclose fully and truly all material facts necessary for assessment, as the same has been reopened after a period of four years from the end of relevant assessment year and the assessment has already been made under Sect .....

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ssessee that the order passed by learned A.O. under Section 147 is bad both in the eye of law and on facts, as the same has been passed without service of statutory notice under section 148. 8. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the order passed by AO is bad both in the eye of law and on facts as the same has been passed without receiving statutory notices under section 143(2) and sect .....

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that the same has been made on the basis of the material collected at the back of the assessee without providing copy of the same & providing opportunity to rebut the same. 11. The appellant craves leave to add, amend or alter any of the grounds of appeal. 3. From the above grounds, it is gathered that the assessee had challenged the jurisdiction for initiation of the proceedings u/s 147 r.w.s. 148 of the Income-tax Act, 1961 (hereinafter referred to as the Act). 4. Facts of the case in bri .....

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was filed. The AO issued the notice u/s 142(1) of the Act asking the assessee to furnish certain information in regard to proceedings for the assessment year 2001-02. The AO framed the assessment ex-parte u/s 147/144 of the Act at an income of ₹ 73,11,000/-. 5. Being aggrieved the assessee carried the matter to the ld. CIT(A) and challenged the jurisdiction for reopening the assessment. The ld. CIT(A), however did not find merit in the submissions of the assessee and sustained the action o .....

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e no. 14 of the assessee s paper book. It was contended that the AO made the proper inquiries relating to the share application money received by the assessee, a reference was made to page nos. 52 to 73 of the assessee s paper book which are the copies of the various letters written by the AO u/s 133(6) of the Act to the different share applicants and replies given by them alongwith relevant documents. The ld. Counsel for the assessee submitted that the assessment was framed by the AO u/s 143(3) .....

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page no. 259 of the assessee s paper book which is the copy of the said notice. The ld. Counsel for the assessee submitted that the competent authority to issue the notice u/s 151 of the Act was the Commissioner or the Pr. Commissioner and not the Addl. Commissioner. Therefore, the initiation of proceedings by issuing the notice u/s 148 of the Act was bad in law. The reliance was placed on the decision of the ITAT SMC Bench, New Delhi in the case of ITO, Ward-2, Mohindergarh Vs Smt. Sarti Devi .....

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f Income Tax-4 Vs G & G Pharma Ltd. 384 ITR 147 (Del.) 7. In his rival submissions the ld. DR strongly supported the orders of the authorities below and further submitted that the AO reopened the assessment after recording the reasons and getting the information from the Investigation Wing. Therefore, the reopening was justified. 8. We have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case, it is noticed from t .....

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r or Chief Commissioner or Pr. Chief Commissioner but not on the approval of the Addl. Commissioner as has been done in this case. 9. A similar issue has been adjudicated by the ITAT SMC Bench, New Delhi in the case of ITO, Ward-2, Mohindergarh Vs Smt. Sarti Devi and Sh. Rati Ram (supra) wherein the relevant findings have been given in para 8 of the order dated 27.10.2015 which read as under: 8 I have gone through the aforesaid order passed by the Ld. CIT(A) on the issue in dispute and I am of t .....

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ses other than the case fallen under sub-section (1) of Section 151, no notice shall be issued u/s. 148 by the AO, who is below the rank of JCIT, unless the JCIT is satisfied on the reasons recorded by such AO, that is a fit case for the issuance of such notices. Keeping in view of the facts and circumstances explained above, I am of the view that the case is fallen u/s. 151(1) of the I.T. Act. In the present case, the case of the assessee has been reopened after the expiry of 4 years and in the .....

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s from the end of the assessment year. This Notice has not been issued with the approval of the Chief Commissioner or Commissioner upon his satisfaction. Therefore, the Ld. CIT(A) has rightly held that the notice in dispute is invalid and has rightly quashed the same by allowing the appeal of the Assessee. This view has been supported by the various Hon'ble High Courts decisions which includes Ghanshyam K. Khabrani Versus Assistant Commissioner of Income Tax and other Division Bench 346 ITR .....

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d in the impugned order, which does not need any interference on my part, hence, I uphold the impugned order of the Ld. CIT(A) on the issue in dispute and decide the issue against the Revenue. 10. In the present case also the reopening beyond 4 years has been done by getting the approval of Addl. Commissioner and not from the Commissioner or Pr. Commissioner or Pr. Chief Commissioner. Therefore, the initiation of the proceedings u/s 148 of the Act was invalid. 11. Furthermore, this case has been .....

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