TMI Blog2017 (10) TMI 1469X X X X Extracts X X X X X X X X Extracts X X X X ..... ORDER PER B.P. JAIN, A.M. This appeal of the assessee arises from the order of learned CIT(A), Muzaffarnagar, vide assessment order dated 24.01.2017 for the Assessment Year 2008-09. The assessee has raised as many eleven grounds of appeal and first four grounds being legal which have been pressed by the assessee are reproduced hereinbelow:- 1) That the notice issued u/s 148 and reassessment order passed u/s 147 r.w.s. 144 are illegal, bad in law and without jurisdiction. 2) That, in view of the facts and circumstances, no satisfaction is recorded by the assessing officer as required u/s 147/148 of the Act prior issuing the notice under section 147 of the Income Tax Act, 1961. 3) That, no satisfaction has been recorded by the assessing officer after application of mind on the basis of tangible material, which have live nexus to the income, which have escaped assessment and merely relied on the information received from AIR, which is vague, incorrect and baseless, hence, the proceedings initiated is illegal, and bad in law and without jurisdiction. 4) That, the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is placed upon the decision of ITAT Delhi Bench G New Delhi in the case of Suresh M. Bajaj vs. ITO in ITA No. 7/Del/2013 order dated 19.02.2016. For the sake of convenience, the said order is reproduced hereinbelow:- 5. On careful consideration of above rival submissions of both the sides at the outset, we find it appropriate to reproduced impugned reasons recorded by the AO, which reads as follows : INCOME TAX OFFICER WARD 33(4), NEW DELHI REASONS FOR REOPENING THE ASSESSMENT U/S147/148 OF THE I TACT, 1961 FOR A. Y. 2005-06 Name of the assessee Sh. Suresh M. Bajaj, A. Y. 2005-06 PAN AADPB7622G On the basis of information based on AIR data of2004-05 (A. Y. 2005-06) it has been noticed that the assessee Sh. Suresh M. Bajaj r/o R-898, New Rajinder Nagar, New Delhi incurred the expenditure through credit card, the details of which are given herebelow: Transaction Date Txn. Code Transaction amount 31.3.2015 Credit Card ₹ 2,47,468/- Since the expenditure of ₹ 2,47,468/- incurred by the assessee through credit card remained unexplained, I have, therefore, reasons to believe that income to the tune of ₹ 2,47,468 has escaped assessment because the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee company has introduced his own unaccounted money in its bank account by way of accommodation entries . 8. Mr. Kapil Goel, learned counsel for the Assessee, placed reliance on other decisions of this Court including CIT vs. Pradeep Kumar Gupta (2008) 303 ITR 95; the decision dated 27th March 2015 in W.P.(C) No. 5330 of 2014 (Krown Agro Foods Pvt. Ltd. vs. ACIT); the decision dated 4th August 2015 in ITA No. 486 of 2015 (CIT vs. Shri Govind Kripa Builders P.Ltd.) and the decision dated 24th August 2015 in ITA No. 226 of 2015 (CIT vs. Ashian Needles Pvt. Ltd.) 9. The Court at the outset proposes to recapitulate the jurisdictional requirement for reopening of the assessment under Section 147/148 of the Act by referring to two decisions of the Supreme Court. In Chhugamal Rajpal vs. SP Chaliha (1971) 79 ITR 603, the Supreme Court was dealing with a case where the AO had received certain communications from the Commissioner of Income Tax showing that the alleged creditors of the Assessee were name lenders and the transactions are bogus. The AO came to the conclusion that there were reasons to believe that income of the Assessee had escaped assessment. The Supreme C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer (supra) as well as the decision of this Court in M/s Haryana Acrylic Manufacturing Co. (P) Ltd. v. CIT 308 ITR 38 (Del). The Court noted that a material change had been brought about to Section 147 of the Act with effect from 1st April 1989 and observed: 29. It is at once seen that the Amendment in Section 147 of the Act brought about a material change in law w.e.f. 1st April, 1989. Section 147(a) as it stood prior to 1st April 1989 required the AO to have a reason to believe that (a) the income of the Assessee has escaped assessment and (b) that such escapement is by reason of omission or failure on the part of the Assessee to file a return or to disclose fully and truly all material facts necessary for his assessment for that year. After the Amendment, only one singular requirement is to be fulfilled under Section 147(a) and that is, that the AO has reason to believe that income of an Assessee has escaped assessment. However, the proviso to Section 147 of the Act provides a complete bar for reopening an assessment, which has been made under Section 143(3) of the Act, after the expiry of four years. However, this proscription is not applicable where the income of an Assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons to believe that the income of the Assessee escaped assessment is missing in the present case. 13. Mr. Sawhney took the Court through the order of the CIT(A) to show how the CIT (A) discussed the materials produced during the hearing of the appeal. The Court would like to observe that this is in the nature of a post mortem exercise after the event of reopening of the assessment has taken place. While the CIT may have proceeded on the basis that the reopening of the assessment was valid, this does not satisfy the requirement of law that prior to the reopening of the assessment, the AO has to, applying his mind to the materials, conclude that he has reason to believe that income of the Assessee has escaped assessment. Unless that basic jurisdictional requirement is satisfied a post mortem exercise of analyzing materials produced subsequent to the reopening will not rescue an inherently defective reopening order from invalidity. 8. At this stage, we also find it appropriate to consider preposition laid down by Hon ble High Court of Delhi in the case of CIT vs. Orient Craft Ltd. reported as 354 ITR 536 (Del), as relied by the Id. AR, wherein it was held thus : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to believe and thus it is safely presumed that the AO initiated reassessment proceedings u/s 147 of the Act and issued notice u/s 148 of the Act without application of mind working in a mechanical manner and thus the same are not sustainable in the facts and on law. 10. Respectfully following the dicta laid down by jurisdictional High Court in the case of CIT vs. G G Pharma (Supra) we are inclined to hold that the AO issued notice u/s 148 of Act on the wrong and invalid assumption of Jurisdictional and all subsequent proceedings is pursuance thereto can t be held as sustainable and valid hence, the same deserve to be quashed and we quash the same. It is ordered accordingly. Accordingly, legal ground no. 1 2 of the assessee are allowed. 11. Since, we have quashed notice u/s. 148 of the Act as well as reassessment order passed in pursuant thereto u/s 143(3) u/s 147 of the Act the ground no.3 of the assessee on merit becomes academic and infructuous and we dismiss the same being infructuous without any deliberation on merits. Accordingly in the facts and circumstances of the present case and following the decision in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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