TMI Blog2017 (3) TMI 1789X X X X Extracts X X X X X X X X Extracts X X X X ..... e reopening is held to be bad in law. As in M/S N.C. CABLES LTD. [ 2017 (1) TMI 1036 - DELHI HIGH COURT] held that the mere appending of the expression approved say nothing. Applying the propositions laid down in these case laws to the facts of the case we have to necessarily quash the assessments on the ground that re-opening is bad in law. - Decided in favour of assessee. - ITA No. 1835/Del/2014 - - - Dated:- 21-3-2017 - SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND MS. SUCHITRA KAMBLE, JUDICIAL MEMBER For the Appellant : Sh. Deepak Ostwal, C.A. and Sh. Rishabh Ostwal, Adv. For the Respondent : Sh. Rajesh Kumar, Sr. D.R. ORDER PER J. SUDHAKAR REDDY, ACCOUNTANT MEMBER This is an appeal filed by the Assessee directed against the order dated 23.01.2014 of Ld.CIT(A)-IX, New Delhi pertaining to the Assessment year (A.Y.) 2003-04. 2. Facts in brief:- The assessee in this case argues that the reopening of the assessment is bad in law for the reason that: (a) there is total non application of mind by the assessing officer (AO) to the information received by him from the Director of Income Tax, Inves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken Name of account holder of entry giving account Bank from which entry given Branch of entry giving bank A/c no . entry giving account HC Jain and Co.Pvt.Ltd. Syndicate Bank Punjab i Bagh 10,00,000 13894 11.6.02 ESS Square Travels P.Ltd. Syndicate Bank Punjabi Bagh 4728 HC Jain and Co.Pvt.Ltd. Syndicate Bank Punjabi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Punjabi Bagh 7,50,000 246017 1.15.03 KVF Securities P.Ltd. Syndicate Bank Punjabi Bagh 4820 HC Jain and Co.Pvt.Ltd. Syndicate Bank Punjabi Bagh 8,00,000 246019 1.15.03 KVF Securities P.Ltd. Syndicate Bank Punjabi Bagh 4820 HC Jain and Co.Pvt.Ltd. Syndicate Bank Punjabi Bagh 9,50,000 246018 1.15.03 KVF Securities P.Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Syndicate Bank Punjabi Bagh 4743 HC Jain and Co.Pvt.Ltd. Syndicate Bank Punjabi Bagh 5,00,000 2.14.03 KVF Securities P.Ltd. Syndicate Bank Punjabi Bagh 4820 HC Jain and Co.Pvt.Ltd. Syndicate Bank Punjabi Bagh 5,00,000 2.14.03 KVF Securities P.Ltd. Syndicate Bank Punjabi Bagh 4820 HC Jain and Co.Pvt.Ltd. Syndicate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... HC Jain and Co.Pvt.Ltd Syndicate Bank Punjabi Bagh 1,00,000 316606 3.21.03 Prateek Securities P.Ltd. Syndicate Bank Punjabi Bagh 4726 HC Jain and Co.Pvt.Ltd. Syndicate Bank Punjabi Bagh 1,00,000 245475 3.21.03 Chemiex India P.Ltd. Syndicate Bank Punjabi Bagh 4811 HC Jain and Co.Pvt.Ltd. Syndicate Bank Punjabi Bagh 1,00,000 238823 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bagh 3,00,000 3.29.03 ESS Square T ravels P.Ltd. Syndicate Bank Punjabi Bagh 4728 The above said instruments are in the n ature of accommodation entry, which the assessee has taken after paying unaccounted cash to the accommodation entry giver, who is a known entry operator as per the report of the Investigation Wing. In view of these facts, the alleged transaction is not the bonafide one. Therefore, I have reason to believe that an Income of ₹ 1,28,00,000/- has escaped assessment in the assessment year 2003-01 due to the failure in the part of the assessee to disclose and truly all material fact necessary for its assessment so far as this amount is concerned. Therefore, this case is fit for issuing notice u/s 148 of the Income Tax Act. 1961. In this case the assessment was made u/s 143(1), not u/s 1-+3(3) of the 1. T. Act, 1961. I am therefore, satisfied that the said income. on a count of accommodation entry worth ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee company has introduced its own unaccounted money in its bank by way of accommodation entries . In the considered view of the Court, in light of the law explained with sufficient clarity by the Supreme Court in the decision discussed, the basic requirement that the AO must apply his mind to the materials in order to have reasons to believe that the income of the assessee escaped assessment is missing in the present case. 13. A perusal of the reasons recorded demonstrate total non application of mind by the AO. Thus applying the proposition laid down by the Jurisdictional High Court in G G Pharma India (supra) we hold that the reopening of assessment is bad in law. 3.3. The Hon ble Delhi High Court in the case of Signature Hotels (P) Ltd. Vs. ITO and another, reported in 338 ITR 51 (Delhi) has under similar circumstances held as follows. For the A.Y. 2003-04, the return of income of the assessee company was accepted u/s.143(1) of the Income-tax Act, 1961 and was not selected for scrutiny. Subsequently, the Assessing Officer issued notice u/s.148 which was objected by the assessee. The Assessing Officer rejected the objections. The assessee company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that amount. The information did not indicate the source of the capital gains which in this case were shares. There was no information which shares had been transferred and with whom the transaction had taken place. The AO did not verify the correctness of information received by him but merely accepted the truth of the vague information in a mechanical manner. The AO had not even recorded his satisfaction about the correctness or otherwise of the information for issuing a notice u/s 148. What had been recorded by the AO as his reasons to believe was nothing more than a report given by him to the Commissioner. The submission of the report was not the same as recording of reasons to believe for issuing a notice. The AO had clearly substituted form for substance and therefore the action of the AO was not sustainable. 4. Applying the propositions laid down in the above cited judgements to the facts of the case, we have to necessarily quash the reopening of the assessment as bad in law as the A.O. has not applied his mind to the information received by him. 5. Even otherwise, the ACIT in the case on hand has not recorded his satisfaction and accorded approval as r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 148,need not issue such notice himself.} 6. A simple reading of the provisions of Sec. 151(1) with the proviso clearly show that no such notice shall be issued unless the Commissioner is satisfied on the reasons recorded by the AO that it is a fit case for the issue of notice which means that the satisfaction of the Commissioner is paramount for which the least that is expected from the Commissioner is application of mind and due diligence before according sanction to the reasons recorded by the AO. In the present case, the order sheet which is placed on record show that the Commissioner has simply affixed approved at the bottom of the note sheet prepared by the ITO technical. Nowhere the CIT has recorded his satisfaction. In the case before the Hon'ble Supreme Court (supra) that on AO's report the Commissioner against the question whether the Commissioner IS satisfied that it is a fit case for the issue of notice under section 148 merely noted 11 Yes 11 and affixed his signature there under. On these facts, the Hon'bIe Supreme Court observed that the important safeguards provided in sections 147 and 151 were lightly treated by the officer and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rior authority has to examine the reasons, material or grounds and to judge whether they are sufficient and adequate to the formation of the necessary belief on the part of the assessing officer. If, after applying his mind and also recording his reasons, howsoever briefly, the Commissioner is of the opinion that the AO's belief is well reasoned and bonafide, he is to accord his sanction to the issue of notice u/s. 148 of the Act. In the instant case, we find from the perusal of the order sheet which is on record, the Commissioner has simply put approved and signed the report thereby giving sanction to the AO. Nowhere the Commissioner has recorded a satisfaction note not even in brief. Therefore, it cannot be said that the Commissioner has accorded sanction after applying his mind and after recording his satisfaction 7.8. Applying the propositions laid down in the above case to the facts of the case on hand, we uphold the contentions of the assessee that the reopening is bad in law. 5.2. Recently the Hon ble Delhi High Court in the case of Pr.CIT vs. C.Cables Ltd. in ITA no.335/2015, judgement dt. 11.01.2017 has upheld the order of the ITAT Delhi Benches o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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