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TMI Blog2018 (10) TMI 1584X X X X Extracts X X X X X X X X Extracts X X X X ..... oth on facts and in law in rejecting the contention of the assessee that the reassessment proceedings initiated by the learned AO 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 vague. (ii) On the facts and circumstances of the case, Id. CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the reassessment proceedings initiated by the learned AO are bad in the eye of law as there is no live nexus between the reasons recorded and the belief formed by the Assessing Officer. 4. On the facts and circumstances of the case, the reasons recorded for reopening are bad in law, as the same have been recorded without independent application of mind on the part of the Assessing Officer. 5. On the facts and circumstances of the case, Id. CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the reassessment proceedings initiated by the learned AO are bad in the eye of law as no sanction as prescribed under section 151 of the Act having been taken, the reopening is illegal and liable to be quashed. 6. On the facts and circumstances o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer recorded the reason and issued notice under section 148 of the Act to the assessee on 23.03.2015, which was served upon the assessee. Notice u/s. 142(1) was also issued on 23.06.2015 and 09.07.2015, but none attended in response. Thereafter, in response to summon issued u/s. 131 dated 12.01.2016, the assessee Sh. Sushil Bansal attended and his statements were recorded, as reproduced in as assessment order. The Assessing Officer noticed that as per statements of assessee, the admission process for Dr. Jatin Bansal was undertaken by the assessee's father-in-law Sh. Jile Ram Bhati and he was not aware whether any capitation fee was paid or not. Summon u/s. 131 was also issued to Sh. Jile Ram Bhati, whose statements were recorded where he stated that he had given a total fees of Rs. 7,18,000/- to Santosh Medical College for Dr. Jatin Bansal's admission in MBBS Course, but he does not remember anything about the capitation fees. He also stated that out of Rs. 7.18 lakhs, Rs. 3 lakhs was given by Grandfather of Sushil Bansal and remaining amount of Rs. 4.18 lakhs was withdrawn from his bank account. For want of any evidence in support of these statements given, and the so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tes that initiation of proceedings is not valid and order therefore deserves to be quashed. 7. I have gone through the facts of the case and case records. The Investigation Wing of the Department during the course of search seized ledger account of the various students studying in the Santosh Medical College. The Chairman of the college confessed and provided a list of the students from whom capitation fees had been received. The ledger accounts seized show the name of the students and their guardian and also the address. As per the territorial jurisdiction the information was disseminated to the various Assessing Officers. In the present case address of the student as per ledger account is J-3/47, Jai Prakash Nagar, Ghonda, Delhi-110053. The Assessing Officer did not have any information about the PAN. The search of the Data Base reveals many Sushil Bansal. Further, as himself admitted by the assessee that he had not been filing his return of income for the last three years. As such the jurisdiction of the assessee could not have been ascertained in absence of PAN. The notices were therefore sent by name at the last reported address of the assessee as per record requisitioned f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntroversy, it is necessary to refer to the relevant provisions of sec. 147 as applicable to the year under appeal. Section 147 of the Act confers jurisdiction on the Assessing Officer to reopen assessment subject to the conditions laid down therein. The relevant provisions of section 147 of the Act are as under: "147. If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or re-compute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year). Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssued unless the Chief Commissioner or Commissioner is satisfied, on the reasons recorded by the Assessing Officer aforesaid, that it is a fit case for the issue of such notice. (2). In a case other than a case failing under sub-section (1), no notice shall be issued under section 148 by an Assessing Officer, who is below the rank of Joint Commissioner, after the expiry of four years from the end of the relevant assessment year, unless the Joint Commissioner is satisfied, on the reasons recorded by such Assessing Officer, that it is a fit case for the issue of such notice." 11.3. Thus, before initiation of any proceeding under section 147 of the Act for assessment or reassessment, the Assessing Officer is required to record his reasons in writing under section 148 and obtain necessary sanction in terms of section 151, wherever necessary and thereafter issue notice under section 148 of the Act. The facts of the present case are now tested vis-a-vis the aforesaid provisions of sec. 147 as applicable for the year under consideration. For a factual recapitulation of the sequence of events, the assessment records were called for and perused. The Assessee had not filed a return of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s entries, the dates on which the transactions were carried out and the persons with whom the transactions had taken place. Such is not the case here. Consequently these decisions are of no help to the appellant. The assessee has placed a great deal of reliance on the decision of the Pr. CIT-4 vs G&G Pharma India Ltd., 384 ITR 147. The facts of that case are again completely different. The assessment in that case was made u/s 143(3) of the Act and procedure and formality for reopening and assessee already completed u/s 143(3) are much different as compared to the present case which has been only process u/s 143(1). The Hon'ble Court in this case had mainly relied on the judgment in the case of Multiplex Trading & Industrial Co. Ltd. which dealt only with matter relating to initiation proceeding u/s 147 beyond 4 years where the original assessment was carried out u/s 143(3). The Hon'ble court thereafter relied upon the judgment of Supreme Court in the case of Chhugamal Rajpal vs. S P Chaliha 79 ITR 603. The Hon'ble Supreme Court at that time rendered its judgment on the basis of than prevailing provisions of section 147 which were much different from the present previsions. The Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O to form an opinion after examining the documents enclosed with the return whether in the form of balance sheet, audited accounts, tax audit report etc. 35.2. The first proviso to Section 147 of the Act applies only (i) where the initial assessment is under Section 143 (5) of the Act and (ii) where such reopening is sought to be done after the expiry of four years from the end of the relevant assessment year. In other words, the requirement in the first proviso to Section 147 of there having to be a failure on the part of the Assessee "to disclose fully and truly all material facts" does not at all apply where the initial return has been processed under Section 143 (1) of the Act. 35.3. As explained in Rajesh Jhaveri Stock Brokers (P) Ltd. (supra) "an intimation issued under Section 143 (1) can be subjected to proceedings for reopening", "so long as the ingredients of Section 147 are fulfilled". 35.4. Explanation 2 (b) below Section 147 states that for the purposes of Section 147, where a return of income has been furnished by the Assessee but no assessment has been made and it is noticed by the AO that the Assessee has understated the income and claimed excessive loss, d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer. In the present case, the specific name of the student his Batch No. and amount is clearly available. Many parents out of the list supplied by Mr. Mahalingam have accepted having paid the capitation money for getting their student admitted (to be discussed later in this order). In view of the discussion above the facts of the case in G&G Pharma India Ltd. are completely different from the facts of this case. Considering the decision of Rajcsh Jhaveri Stock Brokers (P) Ltd.,& Zuari Estates Development Industrial Co. Pvt. Ltd. 373 ITR 661 (SC)\, the Assessing Officer had a prima facie case and reason to believe that income has escaped assessment. The reasons were recorded after going through the various documents & record of students and corroborated statement of chairman of the Santosh Group. In fact clause " to Explanation 2 to section 147 creates a deeming fiction in respect of escapement of Income in cases where no return had been filed and the income exceeded the minimum amount which is not chargeable to tax. In the present case assessee had an income of Rs. 4,08,382/-and the case fall under the deeming provision as well. ''This ground of appeal is therefore rejected. 16. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... furnished by the Investigation Wing cannot form reasons leading to the belief by the AO of any escapement of income. 9. This issue is squarely covered by the decision of Hon'ble Delhi ITAT in the case of Shri Shiv Charan Goel vs. ITO, ITA 4035/Del/2017, dt. 13.06.2017, where in the background of exactly the same facts, hon'ble ITAT, observed as under: "9.1 On the same date the reasons were approved by the Addl. Commissioner of Income Tax, Range 56, New Delhi. While approving he has simply mentioned "Yes". Therefore, now the question arises that whether the re-opening has been correctly initiated by the learned Assessing Officer or he has simply acted on the information received from the Investigation Wing. On perusal of the reasons recorded it is apparent that the learned Assessing Officer referred to the letter dated 5.03.2015 received from the Dy. Director of Income Tax, Investigation, and based on that information he stated that he is satisfied that the fee paid of ? 70 lakhs in cash is assessee's unexplained income from undisclosed sources. According to the provisions of section 147 of the Income Tax Act if the Assessing Officer has reason to believe that income has esca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cie incorrect and contrary to what is on record". A rubberstamp reason can never take the character of 'reasons to believe', as explained by the Supreme Court in Union of India v. Mohan Lai Kapoor (1973) 2 SCC 836. In Dilip N Shroff v. CIT (2007) 6 SCC 329, the Supreme Court decried the practice of issuing notices in a standard pro forma manner "without material particulars and without deleting inappropriate words or paragraphs". 10. Further reliance is placed on following judgments: * Shri Sai Infrastructure vs. DCIT, W.P. (c) 2158/2016and W.P.(C) 2383/2016,dt.23.07.2018, Delhi High Court * Pr. CIT vs. Meenakshi Overseas Pvt. Ltd. , ITA 692/2016, dt.26.05.2017, Delhi High Court * Signature Hotels (P) Ltd. vs. ITO (2011) 338 ITR 51 (Del) * Pr. CIT vs. SNG Developers Limited, ITA 92/2017, dt. 12.07.2017, Delhi High Court, SLP dismissed dt. 09.02.2018 11 In the case of Shamshad khan vs. ACIT, W.P.(C) No.11504 of 2016, dt. 11.04.2017, Delhi High Court, on the similar fact situation, observed as under: "6. Having considered the aforesaid contentions, the Court is of the view that where a third party has been proceeded against as a recipient of the donation/capitati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the last paragraph as under: " The case was reopened u/s 147 of the I.T. Act, 1961, with the prior approval of Pr. CIT-19, New Delhi dated 18.03.2015. (Copy enclosed)" Paper book Page 33 is the copy of above said letter dt. 18.03.2015. it is a letter from the office of the Pr. CIT, written by ITO(Hqrs) Delhi-19 to the Addl. CIT, Range 55, Range 56 and Range-57, whereby a copy of letter of DDIT(lnv.), Unit 5(1) was forwarded to the Range heads and a request has been made to direct the A.O.s concerned to take appropriate action. By no stretch of imagination this communication can be considered as approval for reopening in terms of the provisions of section 151 of the Act. 17. Even if the contention of the A.O., vide his letter dt.20.07.2017 that the approval has been taken from the Pr.CIT, same is also not in consonance with the law laid down with regard to the approval to be taken for reopening. 18. Reliance is placed on the following judgements: * CIT vs. SPL's Siddhartha Ltd. (2012) 345 ITR 223 (Del) * Yum Restaurants vs. DDIT, W.P. (c) 1353/2013, dt. 31.08.2017 * CIT vs. Soyuz Industrial Resources ltd. ITA 158/2015, dt. 27.02.2015 * Pr. CIT vs. N.C. Cable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through the entire material available on record including the decisions relied by the assessee. As is evident from the revised grounds of appeal as well as the written synopsis filed by the assessee, we find that the assessee, though had challenged the jurisdiction of present Assessing Officer to issue the notice u/s. 148, but this issue has no where been challenged by the assessee either in the revised grounds of appeal or in the written synopsis of the assessee. However, the challenge thrown by the assessee to the validity of reopening of case centres round his manifold submissions like, reopening of case only on the basis of information from investigation wing without application of independent mind and recording of vague reasons having no live nexus of reasons with belief of escapement of income; reopening without seeking sanction of competent authority; and no proper service of notice u/s. 148. 7. As far as the contention regarding reopening of the case on the basis of information of Investigation wing without application of mind is concerned, we find that this contention of the assessee sounds hollow. It is significant to note that the information received by the Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion. The function of the Assessing Officer is to administer the statute with solicitude for the public exchequer with an inbuilt idea of fairness to taxpayers. As observed by the Supreme Court in Central Provinces Manganese Ore Co. Ltd. v. ITO [19911 191 ITR 662. for initiation of action under section 147(a) (as the provision stood at the relevant time) fulfilment of the two requisite conditions in that regard is essential. At that stage, the final outcome of the proceeding is not relevant. In other words, at the initiation stage, what is required is "reason to believe", but not the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Whether the materials would conclusively prove the escapement is not the concern at that stage. This is so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opening of case without proper service of notice u/s. 148 is concerned, we do not find any justification to discard the conclusion reached by the ld. CIT(A) that the notice was sent at the last available address of assessee as given by him while admitting his son in the medical college. Moreover, the notices, summons etc. so issued to the assessee at the given address admittedly stood served upon the assessee either through the tenant or through his brother. The assessee, when appeared before the Assessing Officer itself had shown copies of three letters issued by the Assessing Officer on 23.03.15, 26.03.15 and 09.07.15, which included the notice u/s. 148. We, therefore, find that this contention of the assessee does not stand proved nor does it render any help to the assessee. 12. Coming to the stand of assessee regarding reopening without seeking proper sanction, we feel it appropriate to reproduce the relevant provisions of section 151 of the Act as it stood then : Sanction for issue of notice. 151. (1) No notice shall be issued under section 148 by an Assessing Officer, after the expiry of a period of four years from the end of the relevant assessment year, unless the Princi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch notice. Explanation - For the removal of doubts, it is hereby declared that the joint Commissioner, the Principal Commissioner or Commissioner of the Principal Chief Commissioner or Chief Commission, as the case may be, being satisfied on the reasons recorded by the Assessing Officer about fitness of a case for the issue of notice under section 148, need not issue such notice himself." In the instant case, it is evident from record that no assessment of assessee was made u/s. 143(3). The assessee did not file even a return u/s. 139 for this year. Therefore, the case of assessee does not come within the reach of subsection (1). In Sub-sec. (2), there is restriction without sanction of competent authority for the issuance of notice beyond the period of four years from the end of relevant assessment year, which too is not applicable in the instant case, as the notice u/s. 148 has been issued within the period of four years. In presence of these facts, the decisions relied by the ld. AR on this issue are not applicable to the present case. 13. Keeping in view the fact that the assessee has not argued on merits of the addition and also considering what has been discussed above, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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