TMI Blog2018 (10) TMI 1584X X X X Extracts X X X X X X X X Extracts X X X X ..... established by documentary evidences and statements of the recipient, it was incumbent upon the assessee to explain and establish by cogent evidence that no such payment was made by it. However, there is no evidence to this effect on record. In presence of such a specific information and tangible material in possession of the Assessing Officer, in our considered view, the Assessing Officer was justified to form a prima facie belief or opinion that income chargeable to tax in the hands of the assessee had escaped assessment. Thus, the contention of the assessee that there was no application of mind, does not sound good. Assessing Officer has tried its best to justify the impugned addition. The assessee in his statements, side tracking the explanation to explain the source an nature of payment stated that the payments towards fee etc. for his son’s admission was made by his father-inlaw, Shri Jile Singh Bhati and Shri Jile Singh Bhati in his statements stated that he did not remember payment of capitation fee, but admitted payment of only ₹ 4.18 lacs. The statements of both the assessee and his father-in-law nowhere go to belie the factum of payment of capitation fee. Ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 148 are bad in law as the conditions and procedure prescribed under the statute have not been satisfied and complied with. 3.(i) 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 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 23,00,000/-. The Assessing Officer also observed from the above information that out of total payment of ₹ 30.18 lacs, ₹ 7.18 lakhs was the Regular fees and remaining ₹ 23 lakhs was the capitation fee paid by the assessee. Therefore, the Assessing 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 ₹ 7,18,000/- to Santosh Medical College for Dr. Jatin Bansal s admission in MBBS Course, but he does not remember anything about th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereafter states that the notice was issued to him and the same were sent to a wrong address and was not received by hm. In fact he attended the proceedings only in compliance to summons issued again at the wrong address but which was give to him by tenant staying in that premises. He further states 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 admitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Account Number after the same were intimated to the AO. This ground is also rejected. 10. Ground No. 4 is in respect of non application of mind. It is necessary to see whether all the conditions described u/s 147 existed for the Assessing Officer to initiate reassessment proceedings. To resolve the controversy, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow the rank of Assistant Commissioner or Deputy Commissioner, 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. Provided that, after the expiry of four years from the end of the relevant assessment year, no such notice shall be issued 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 there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court decision in Rajesh Jhaveri Stock Brokers referred to herein above, have not been considered by the jurisdictional High Court, in the matters before the High Court in the afore stated cases, the reasons recorded by the A.O in those particular cases were found to be totally silent with regard to the amount and nature of the bogus 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 35.1 The upshot of the above discussion is that where the return initially filed is processed under Section 143 (1) of the Act, and an intimation is sent to an Assessee, it is not an 'assessment' in the strict sense of the term for the purposes of Section 147 of the Act. In other words, in such event, there is no occasion for the AO 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 fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other Courts to the extent inconsistent with the above decisions of the Supreme Court cannot be said to reflect the correct legal position. 15. Moreover, in the case of Chhugamal Rajpal vs. S P Chaliha 79 ITR 603 the information was indeed vague, since neither the amount nor the particular transaction which was alleged to be bogus was pointed out by the Assessing Officer. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been established between the material and the escapement of income. 6. In the instant case, the reasons recorded do not show any application of mind nor the same show any belief independently arrived at by the AO, which is the basic prerequisite for issuing notice u/s 148. 7. The law postulates the AO (and not the Investigation Wing) to have reason to believe. 8. It is a settled law that blind acceptance of the information 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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as, on that basis, arrived at his reasons to believe. The process of thinking of the officer must be discernible. The reasons have to be made explicit. It is only the reasons that can enable the reviewing authority to discern how the officer formed his reasons to believe. As explained in Oriental Insurance Company v. Commissioner of Income Tax [2015] 378 ITR 421 (Delhi), the prima facie formation of belief should be rational, coherent and not ex facie 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. 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 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning a particular case. 15. It is to be appreciated that approval from the prescribed authority is a statutory requirement provided under section 151 of the Act and no assessment without proper sanction can be reopened. 16. Further, on a request made by the assessee dt. 10.07.2018 (PB Pg. 30-31) for providing the certified copies of reasons together with the approval, the A.O. replied vide letter dt. 20.07.2018 (PB Pg. 32), after quoting the reasons for reopening, he states in 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in this regard was in possession of the Assessing Officer, it was imperative on the part of the assessee to explain the source thereof. It was submitted that the Assessing Officer having tangible material in his possession, had prima facie reason to believe escapement of income and complete powers to reopen the case u/s. 147 of the Act. It was also submitted that the decisions relied by the assessee are not applicable to the peculiar facts and circumstances of the present case. 6. We have considered the rival submissions and have gone 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 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to form only a prima facie belief or opinion that income chargeable to tax has escaped assessment. Hon ble Supreme Court in ACIT vs. Rajesh Jhaveri Stock Brokers (P) Ltd. (2007) 161 Taxman 316 (SC) has also propounded following principle of law : 16. Section 147 authorises and permits the Assessing Officer to assess or reassess income chargeable to tax if he has reason to believe that income for any assessment year has escaped assessment. The word reason in the phrase reason to believe would mean cause or justification. If the Assessing 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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opening balance in his bank account, had filed returns to the turn of ₹ 69,74,191/-, i.e., far in excess of the amount donated. No such situation is there in the instant case. The assessee in the present case even did not file any return of income nor is there any such explanation on behalf of the assessee or evidence to prove that he had substantial amount in his bank account or opening balance to cover up the capitation fee paid. Therefore, this decision also does not render any help to the assessee. 11. As far as the contention of assessee regarding reopening 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, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner or Chief Commissioner or Principal 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 falling 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. 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 d ..... 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