TMI Blog2018 (6) TMI 693X X X X Extracts X X X X X X X X Extracts X X X X ..... ORDER This is an appeal by the assessee against the order dated 15.02.2018 of ld. CIT(A)-35, New Delhi. 2. Following grounds have been raised in this appeal: 1 That the learned Commissioner of Income Tax (Appeals)-35, New Delhi has grossly erred both in law and on facts in upholding the initiation of proceedings under section 147 of the Act and, completion of assessment under section 147/143(3) of the Act without appreciating that the same were without jurisdiction and hence deserved to be quashed as such. 1.1 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that there was no specific relevant, reliable and tangible material on record to form a reason to believe' that income of the appellant had escaped assessment and in view thereof the proceedings initiated are illegal, untenable and therefore unsustainable. 1.2 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that reasons recorded mechanically without application of mind do not constitute valid reasons to believe for assumption of jurisdiction u/s 147 of the Act. 2 That the learned Commissioner of Income Tax (Appeals) has e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appreciate that alleged evidence gathered in the course of search of one Shri S. K. Jain without confronting the same to the appellant and, without affording any opportunity of cross-examination could not be made a basis to make an addition; particularly when even no nexus is established with the share capital subscribed by the shareholder in the appellant company. 3 That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in upholding an addition of ₹ 30,000/- on account of alleged commission paid to the entry provider in cash for obtaining accommodation entries and held as unexplained expenditure u/s 69C of the Act. 4 That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in upholding the levy of interest of ₹ 38,861/- u/s 234A of the Act and. interest of ₹ 4,51,791/- u/s 234B of the Act which are not leviable on the facts and circumstances of the case of the appellant company. It is therefore, prayed that, it be held that assessment made by the learned Assessing Officer and sustained by the learned Commissioner of Income Tax (Appeals) deserves to be quashed as such. It be furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It was further submitted that while giving the approval for initiating the proceedings u/s 147 of the Act, there was no application of mind by the Pr. CIT. Therefore, the reopening was not valid. The reliance was placed on the following case laws: Zurassic Properties (P) Ltd. Vs ITO in ITA No. 6398/Del/2016 order dated 28.04.2017 M/s Layak Fabrics (P) Ltd. Vs ITO in ITA No. 491/Del/2014 order dated 15.07.2016 Pragati Vanijya Ltd. Vs ACIT in ITA No. 5096/Del/2014 order dated 31.07.2017 Rajiv Aggarwal Vs ACIT 395 ITR 255 (Del.) CIT Vs Batra Bhatta CO. 321 ITR 526 (Del.) Ashok Kumar Sen Vs ITO 132 ITR 707 (Del.) Sabh Infrastructure Ltd. Vs ACIT 398 ITR 198 (Del.) CIT Vs G G Pharma India Ltd. 384 ITR 147 (Del.) Unique Metal Industries Vs ITO in ITA No. 1372/Del/2015 order dated 28.10.2015 Punjab Metal Store Vs ITO in ITA No. 512/Del/2015 order dated 02.12.2015 Jiten Gurnani Vs ITO in ITA No. 4908/Del/2012 order dated 31.03.2015 Banke Bihari Properties (P) Ltd. Vs ITO in ITA No. 5128/Del/2015 order dated 22.04.2016 R.K. Garg Developers (P) Ltd. Vs ITO in ITA No. 6558/Del/2014 order dated 31.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disclosed its income to the tune of ₹ 15,00,000/-. ITO, Ward-10(2) has sent the proposal with requisite Performa for initiating the proceedings u/s 147/148 through Addl. CIT, Range-10, Delhi. Reasons/satisfaction are properly recorded by ITO, Ward-10(2) and Addl. CIT, Range-10, Delhi on Performa citing that income of ₹ 15,00,000/- has escaped assessment and it appears that it is a fit case for initiating proceedings u/s 148 of the IT Act, 1961. If approved, permission may be granted for initiating the proceedings. 10. It is noticed that on the aforesaid proposal, the Pr. CIT-4, New Delhi gave the approval on 21.03.2016 by writing the word approved . He has not mentioned how and in what manner he was satisfied. In other words, it cannot be said that the Pr. CIT applied his mind while giving the approval for reopening the assessment or he was satisfied that it is a proper case where the proceedings u/s 147 may be initiated. 11. On a similar issue, the Hon ble Delhi High Court in the case of Pr. CIT Vs N.C. Cables Ltd. (supra) held as under: 11. Section 151 of the Act clearly stipulates that the CIT(A), who is the competent authority to authorize the reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accommodation entries received from certain established entry operators identified by the Wing during the period laundering for the beneficiaries and on the basis of investigation carried out and evidences collected, a report has been forwarded. I have perused the information contained in the report and the evidences gathered. The report provides details of the modus oparandi of the 'money laundering scam' and explain how the unaccounted money of the beneficiaries are ploughed back in its books of account in the form of bogus share capital/capital gains etc. after routing the same through the bank account (s) of the entry operators. Entry operators were identified after thorough investigation on the basis of definitive analysis of their identity, creditworthiness and the source of the money ultimately received by the beneficiaries. These entry operators are found to be mostly absconding after the unearthing of the 'Money Laundering Scam' leaving the said money at the disposal of the beneficiaries without any associated cost or liability. In the instant case, the assessee is found to be the beneficiary of accommodation entry from such entry operators as per the foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts necessary for assessment for above AY the income chargeable to tax to the extent of accommodation entry mentioned above, has escaped assessment within the meaning of S.147 of the Act. Since four years has been expired from the end of the relevant year, and assessment u/s 143(3) of the Act was made in the case of the assessee for the said A ~ the reasons recorded above for the purpose of reopening of assessment is put up for kind satisfaction of the CIT, Delhi t1, New Delhi in terms of the Proviso to Section 151 of the Act. Sd/- (ITO) Ward 13(1). The ACIT, Range 13, New Delhi For kind approval of CIT-V, New Delhi CIT-V, Delhi: Approved Sd/- 7. In the case on hand also the contention of the Revenue is that the assessee issued cash and received cheques from one Sh. Tarun Goyal, an entry operator. It is only on the basis of information furnished by the Directorate of Investigation Unit AO found the satisfaction that the income of ₹ 20,40,000/- had escaped the assessment due to the reason of failure on the part of the assessee to prove not only the identity of share applicants but also the capacity of such applicants and the genuineness ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. We have considered the rival contentions and we find that while according sanction, the Joint Commissioner, Income Tax has only recorded so Yes, I am satisfied . In the case of Arjun Singh (supra), the same question has been considered by a Coordinate Bench of this Court and the following principles are laid down The Commissioner acted, of course, mechanically in order to discharge his statutory obligation properly in the matter of recording sanction as he merely wrote on the format Yes, I am satisfied which indicates as if he was to sign only on the dotted line. Even otherwise also, the exercise is shown to have been performed in less than 24 hours of time which also goes to indicate that the Commissioner did not apply his mind at all while granting sanction. The satisfaction has to be with objectivity on objective material. 11. This decision of the Madhya Pradesh High Court was challenged by the Revenue before the Hon ble Supreme Court by way of the Special Leave Petition and the Hon ble Supreme Court was pleased to dismiss the Special Leave Petition vide order reported in (2015) 64 taxmann.com 313 (SC). 13. In the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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