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Bharat Ramjibhai Patel Versus The ITO Ward Ward-1, Mehsana

2017 (9) TMI 657 - ITAT AHMEDABAD

Reopening of assessment - non applying the provisions of section 147 r.w.s.151 - non approval from competent authority - Held that:- In the absence of approval of the competent authority designated under s.151 of the Act, the notice issued under s.148 of the Act for assumption of jurisdiction under s.147 is vitiated and non-est. The entire reassessment proceedings is accordingly a non-starter. Consequently, the orders of the AO & CIT(A) are required to be quashed - Decided in favour of assessee. .....

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3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) dated 29/12/2011. 2. The assessee has filed grounds of appeal wherein the assessee has inter-alia challenged the assumption of jurisdiction under s.147 of the Income Tax Act, 1961 (hereinafter referred to as the Act ) without applying with the provisions of section 147 r.w.s.151 of the Act. 3. The Ld.AR for the assessee Ms.Grishma Soni to begin with, has vehemently challenged the jurisdiction assumed by the Assessing Officer (A .....

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,540/- by making an addition of ₹ 4,23,900/- on account of long term capital gains treated as income from other sources. The Ld.AR adverted our attention to the reasons recorded under s.148(2) and submitted that the reasons so recorded smacks of empty formality and without application of mind, apparently presuming that an assessment under s.143(3) of the Act was carried out earlier. The Ld.AR thereafter referred to reason recorded and reassessment order to demonstrate for approval from the .....

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the Commissioner even while he commands superior authority. Thus, in view of the wrong approval, the notice under s.148 of the Act is vitiated and consequently the entire re-assessment order is null and void. 4.1. The Ld.AR submitted that the accord of wrong approval will vitiate the assumption of jurisdiction under s.147 of the Act notwithstanding the fact that authorities superior to the competent authority designated for such approval has actually endorsed the action of the AO. It was stated .....

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he orders of the authorities below. The objection on the assumption of the jurisdiction has been dealt with in great length by the Coordinate Bench in Arvindbhai Ramjibhai Patel (supra) where one of us is a party to the decision. The relevant para of the order of the ITAT in the aforesaid case is reproduced hereunder:- 5. As the objection of the assessee goes to the root of the matter, we consider it appropriate to examine the preliminary issue of lack of jurisdiction under s.147 of the Act firs .....

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ural. income of ₹ 46,950/- which is claimed to be exempted from Income-tax. The return of income filed has been processed u/s. 143(1) of the I.T. Act on 29.12.2005. An intimation dt. 16/03/2011 was received from Investigation Wing, Ahmedabad on 21/03/2011 giving details of information regarding beneficiaries of Mahasagar Securities Pvt. Ltd. (now known as Alang Securities Pvt. Ltd.) wherein details of group share scam was elaborated. From the details received, it is observed that search an .....

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aged in fraudulent billing activities and indulge in the business of providing bogus speculation profit/ loss, short term/ long term capital gain/loss, share application money, commodity profit/ loss on commodity trading (through MCX) since many years. On verification of the list of clients, who have taken accommodation entries from the above group companies, it is observed by the undersigned that the present assessee Shri Patel Arvindbhai Ramjibhai (HUF), Prop: of Auto Enterprise, is one of the .....

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. In view of the above facts, I have reason to believe that there is failure on the part of the assessee to disclose full and truly all material facts necessary for his assessment and accordingly no opinion was formed in this regard in the original assessment. Accordingly, I have reason to believe that income has escaped assessment to the extent stated above. Proposal was sent for reopening of the assessment and the CIT, Gandhinagar vide letter No.CIT/GNR/148/HBS/2010-11 dated 30-3-2011 approved .....

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of the Act for the purposes of issuance of notice under s.148 of the Act. We have perused the form of approval obtained by AO from the superior authority and find that although Addl.CIT has noted that he is satisfied with the reasons for reopening the assessment, the satisfaction note was further sent to the Commissioner for its ultimate approval. Clearly the entire procedure of obtaining approval culminated with the Commissioner. Section 151 provides that where the notice under s.148 of the Act .....

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y is structured and the approval of the Commissioner although higher in pedestal to the Addl.CIT cannot be a substitute of the statutory approval required from the Jt.CIT/Addl.CIT. The approval by the Commissioner also implies that the sanction given by the CIT is unmindful of the facts and thus unfounded. Likewise, the so-called approval by the Addl.CIT as an intermediator also reflects that both the superior authority have acted mechanically or perfunctorily. Needless to say, the reopening cas .....

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