TMI Blog2019 (9) TMI 811X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s. 148 of the Act. In the instant case, find from the perusal of the order sheet which is on record, the Jt. CIT has simply put Yes and signed the report thereby giving sanction to the AO. Nowhere the Jt. CIT has recorded a satisfaction note not even in brief. Therefore, it cannot be said that the Jt. CIT has accorded sanction after applying his mind and after recording his satisfaction - no hesitation to hold that the reopening proceedings vis- -vis provisions of Sec. 151 of the Act are bad in law and the assessment has to be declared as void ab initio. - Decided in favour of assessee - ITA No.107/PAT/2018 - - - Dated:- 17-9-2019 - Shri Chandra Mohan Garg, Judicial Member For the Assessee : Shri K.N.Prasad, Advocate For the Revenue : Shri Supriya Biswas, JCIT-DR ORDER This appeal is filed by the assessee against the order passed by learned CIT(A), Bhagalpur, dated 30.03.2015 for the assessment year 2009-2010 on the following grounds of appeal :- 1. For that the grounds of appeal hereto are without prejudice to each other. 2. For that in the facts and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. For that the charge of interest u/s 234B at ₹ 4,38,148/- and 234C at ₹ 1,221/- is arbitrary and unjust. The case of CIT vs Anjum Ghaswala reported in 252 ITR 1 (SC) is not applicable in the case of the assessee. 5. For that the appellant reserves his right to file detailed submission at the time of hearing. 6. For that the appellant craves leave to urge, add or alter any other ground or grounds at the time of hearing. 2. From the grounds of appeal raised above by the assessee, it is clear that the sole issue agitated by the assessee is to quash the impugned order passed by the CIT(A) whereby confirming the reassessment proceedings initiated by the Assessing Officer. 3. Brief facts of the case are that the assessee is an individual engaged in the business of trading in mobile phone instruments, telephone instruments etc. Assessment u/s. 143(3) of the Act was completed in this case on 28.11.2010 on an income of ₹ 448440/-. The AO observed during the assessment proceedings that the sales disclosed by the assessee were not supported by proper bills. The assessee could not produce all th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case. Therefore, he requested that the reassessment proceedings initiated by the AO may be quashed. It was also averred by ld.AR that no proceeding u/s 147 of the Act could be initiated on the Audit objection. It is a settled position in law that an opinion of an internal audit party of the Income-tax Department on a point of law cannot be regarded as information within the meaning of section 147 of the Act and the same cannot lead to proper and valid initiation of reassessment proceedings under section 147 of the Act. In this regard, ld. AR submitted that the case laws relied upon by the learned CIT(A) are not applicable in the case of the assessee considering the facts and circumstances of the assessee s case. It was further contended by ld.AR that in the original assessment the Assessing Officer applied the Gross Profit rate of 7.85% and made the addition of ₹ 45,705/- representing the additional profit. Purchases are expenditure and purchases are part and parcel of the trading account. When the income was computed by applying the gross profit rate and when no deduction was allowed with regard to the purchases made by the assessee there is no question of any addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ranted mechanically or without application of mind. Moreover, on the merits of the case, ld. DR submitted that the AO observed that at least on 3 occasions, the assessee made payments to his suppliers through demand drafts obtained from the banks, therefore, it is not the case that the banking facilities were not available for making payments to the suppliers. If the assessee could obtain drafts on some occasions, he could have very well made payment through drafts on other occasions too. Further, it was observed that the assessee s case did not fall in any of the exceptions mentioned in the Rules pertaining to the exceptions for the operation of section 40A(3) of the Act. Therefore, it is beyond doubt that the provisions of section 40A(3) of the Act have been violated and that the assessee was well aware of it. Further ld. DR argued that from a perusal of the original assessment order, it is seen that the AO did not dispute the entire trading account of the assessee, nor did he reject the books of accounts and then proceeded to estimate the profits of the business. He merely observed that the assessee could not produce all the cash memos/sale invoices and expresse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) that no proceedings u/s.147 of the Act can be initiated for disallowing the expenditure claimed by the assessee. However, the CIT(A) dismissed the objection of the assessee. 10. I have also gone through the reasons recorded by the Assessing Officer/ITO, Ward-Katihar for reopening and the approval thereof by the Ld. Jt.. CIT, Range-1, Bhagalpur and found that the AO has not applied his mind so as to come to an independent conclusion that he has reason to believe that income has escaped during the year. I also found that the AO has mechanically issued notice u/s. 148 of the Act, on the basis of audit objection. Keeping in view of the facts and circumstances of the present case and the case law applicable in the case of the assessee, I am 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. 11. For completeness of the order, I would like to reproduce the provisions of Section 151 of the Act as under :- 151. Sanction for issue of notice.-(1) No notice shall be issued under section 148 by an Assessing Officer, after the expi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court of Madhya Pradesh in the case of CIT vs. S. Goyanka Lime Chemical Ltd. reported in (2015) 56 taxmann.com 390 (Madhya Pradesh), wherein the Hon ble High Court has observed as under :- 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.' 8. If the case in hand is analysed on the basis of the aforesaid principle, the mechanical ..... X X X X Extracts X X X X X X X X Extracts X X X X
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