TMI Blog2018 (7) TMI 371X X X X Extracts X X X X X X X X Extracts X X X X ..... provided in section 151 were lightly treated. Thus the approval granted by the Pr. CIT in the present case, is also found to be unsustainable in law and the same is quashed alongwith all proceedings pursuant thereto - Decided in favour of assessee. - I.T.A No. 441/Agra/2017 - - - Dated:- 5-7-2018 - SHRI A. D. JAIN, JUDICIAL MEMBER For The Assessee : Shri M. M. Agarwal, AR. For The Revenue : Shri Waseem Arshad, Sr. DR. ORDER This is assessee s appeal for A.Y. 2009-10, taking the following effective grounds: 1. Because on due consideration of the facts, circumstances of the case, submissions made before him and cited precedents, learned CIT (Appeals) has grossly erred in upholding the validity of initiation of proceedings under section 148 of the Act. Date of Hearing 28.05.2018 Date of Pronouncement 05.07.2018 2. Because learned 'CIT (Appeals)' failed to appreciate that there was no valid reason assigned by the AO in the purported 'reasons to believe' and the reasons recorded by the AO were based on conjectures, surmises and in bad faith. In doing so, learned CIT (Appeals) has wrongly distinguished the binding precedents re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 1402 of 2004 (All. H.C.) v. Sushrut Institute of Plastic Surgery vs. Dy. CIT , Misc. Bench No 219 of 2014 (All. H.C.) vi. Sanjay Kumar Agarwal, HUF vs. DCIT , ITA No.290/Agra/2010 (ITAT-Agra). vii. ITO vs. Purushottam Das Bangur , 224 ITR 362 (SC). viii. Anil Kumar Singhal vs. ITO , 33 taxman. Com 434 (Agra Trib.) (SMC Bench). ix. Abdul Majid vs. CIT , 281 ITR 366 (All). 7. Heard. The approval has been granted by observing thus: Yes 8. Question is whether this approval is in accordance with law. 9. The matter in dispute is directly covered by my decision in ITA No. 238/Agra/2018, for A.Y.2008-09, in Shri Ghanshyam , order dated 19/06/2018, wherein, having considered all the respective decisions now cited before me, I have held as follows: 5. The ld. Counsel for the assessee has contended that the approval is no approval in the eye of the law having been granted without application of mind, the following decision have been relied on: 1. Sunil Agrawal vs. ITO , in ITA No. 988/Del/2018. 2. Virat Credit Holdings (P) Ltd. Vs. ITO , in CO No. 57/Del/2012 in ITA No.89/Del/2012. 3. Hari Ram ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of the assessee, we are of the considered view that the reopening in the case of the assessee for the asstt. Year in dispute is bad in law and deserves to be quashed. Our aforesaid view is fortified by the following decisions:- ( A) Hon ble Delhi High Court in the case of Pr. CIT vs. M/s NC Cables Ltd. in ITA No. 335/2015 has held as under:- 11. Section 151 of the Act clearly stipulates that the CIT(A), who is the competent authority to authorize the reassessment notice, has to apply his mind and form an opinion. The mere appending of the expression approved says nothing. It is not as if the CIT(A) has to record elaborate reasons for agreeing with the noting put up. At the same time, satisfaction has to be recorded of the given case which can be reflected in the briefest possible manner. In the present case, the exercise appears to have been ritualistic and formal rather than meaningful, which is the rationale for the safeguard of an approval by a higher ranking officer, For these reasons, the Court is satisfied that the findings by the ITAT cannot be disturbed. ( B). Hon ble High Court of Madhya Pradesh in the case of CIT vs. S. Goyanka Li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-assessment is quashed. Since we have already quashed the re-assessment, the other grounds have become academic and are therefore not adjudicated and accordingly, the assessee s appeal is allowed. 10. In the case of Virat Credit Holdings (P) Ltd. vs. ITO , (CO No. 57/Del/2012 in ITA No. 89/Del/2012), the ITAT, Delhi vide its order dated 09.02.2018 (PBP - 50-62) has held that:- 11. In response to aforesaid question no.13 in the prescribed proforma, Addl. CIT has written Yes. I am satisfied. No doubt, columns of reasons recorded was there and it is also mentioned in column no.12 that reasons for belief that income has escaped assessment are as per annexure enclosed but such annexure has not been produced before the Bench for perusal. 12. Apparently, from the approval recorded and words used that Yes. I am satisfied. , it has proved on record that the sanction is merely mechanical and Addl. CIT has not applied independent mind while according sanction as there is not an iota of material on record as to what documents he had perused and what were the reasons for his being satisfied to accord the sanction to initiate the reopening of assessment u/s 148 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich reads Whether the Commissioner is satisfied that it is a fit case for the issue of notice under section 148 , he just noted the word Yes and affixed his signature there-under. We are of the opinion that if only he had read the report carefully, he could never have come to the conclusion on the material before him that this is a fit case to issue notice under section 148. The important safeguards provided in sections 147 and 151 were lightly treated by the Income-tax Officer as well as by the Commissioner. Both of them appear to have taken the duty imposed on them under these provisions as of little importance. They have substituted the form for the substance . 17. In CIT vs. M/s G.S. Tiwari and Co. , 38 taxman.com 259 (All), it was held by the Hon ble jurisdictional High Court that under the garb of review, completed assessment cannot be reopened. No re-hearing is permissible on merit. Scope of review is very limited. 18. In M/s Ginni Filaments vs. CIT , Writ Tax No. 1402 of 2004 (All), the assessee had not valued its closing stock as per the provisions of Section 145A of the IT Act. Notice under section 148 was issued, which was challenged before the Hon b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the Directorate of Investigation, giving detailed particulars collected from the Bombay Stock Exchange, which revealed that the quotation appearing at Calcutta Stock Exchange was a result of manipulated transaction. On the very next day of receipt of the letter, the ITO issued notice under section 147(b). The Hon ble Supreme Court found that the letter from the Directorate contained definite information derived from the Bombay Stock Exchange Directory about the financial condition of Maharaja Shree Umaid Mills Ltd. during the period 1965-70, which indicated that during this period, the company had prospered and that the book value per equity share had risen from ₹ 318.55 for the year ending 31-12-1965 to ₹ 401 for the year ending 31-12-1970, that the earning per share rose from ₹ 8.37 per share to ₹ 44 per share and that the dividend percentage had also risen from 2 per cent to 10 per cent for the same period, which falsified the claim of the assessee and accordingly Notice under section 148 was upheld. These facts are absent herein. 22. In Anil Kumar Singhal vs. ITO , 33 taxman.com434 (Agra Trib) (SMC Bench), ITAT upheld the initiation of procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e administrative in character and are not quasi-judicial . However, in Chhugamal Rajpal vs. S.P. Chaliha , 79 ITR 603 (SC) (supra), it has been held that where the Commissioner, while granting the sanction just noted the word Yes and affixed his signature thereunder, he had only mechanically accorded permission, and that the important safe-guards provided in section 151 were lightly treated. 27. Narayanappa (supra) is dated 27.09.1966, whereas Chhugamal (supra) was handed down on 21.01.1971. Both these judgments have been rendered by co-equal Benches of the Hon ble Apex Court. Now, it is well settled that in such a situation, the judgment of the Hon ble Supreme Court, which is later in point of time has to be followed. 28. Thus, in keeping with the position of law on the issue, as discussed hereinabove, the approval in the case at hand is clearly an approval granted without application of mind, and therefore, it is not at all a legally tenable approval. 29. Accordingly, the said approval and all proceedings pursuant thereto, culminating in the impugned order are quashed. Nothing further survives for adjudication, nor was anything else argued. 30 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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