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TMI Blog2019 (12) TMI 816X X X X Extracts X X X X X X X X Extracts X X X X ..... era (Rewari). c. The CIT (A) has committed a mistake by dismissing the appeal even after holding finding of fact that Municipal Committee, Dahruhera (Rewari) did not exist on the date of Gazette notification on 6th Jan 1994 and was created on 12th May 2007. That, therefore, it is hit by the explanation attached to the Government Gazette notification (supra). The CIT (A) has ignore the explanation mentioned in the Government Gazette Notification. d. That CIT (A) order violates legal pre-condition as to existence of Municipal Committee at Dahruhera during previous year (FY 2006-07). That therefore when the Municipal Committee, Dharuhera was not in existence on book of Statue during Financial Year : 2006-07, then therefore agricultural land sold by the appellant is not a capital asset. 3. The CIT (A) has disallowed deduction claimed under Section 54F in respect of the flat purchased by the appellant. That as per law applicable to assessment year, the appellant is entitled to the claim deduction under Section 54F for two houses. The appellant craves for permission to add, delete or amend the grounds of appeal before or at the time of hearing of appeal. Under the circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n proceedings or acquiescence would not confer jurisdiction. Reliance was placed on the ratio laid down by the Apex Court in Kanwar Singh Saini Vs. High Court of Delhi (2012) 4 SCC 307, wherein it was observed as under:- "18. It is settled position in law that mere participation in proceedings or acquiescence will not confer jurisdiction. The Apex Court in Kanwar Singh Saini (supra) made observations, which are apposite to the issue at hand and which read as under:- "22. There can be no dispute regarding the settled legal proposition that conferment of jurisdiction is a legislative function and it can neither be conferred with the consent of the parties nor by a superior court, and if the court passes rder/decree having no jurisdiction over the matter, it would amount to a nullity as the matter goes to the roots of the cause. Such as issue can be raised at any belated stage of the proceedings including in appeal or execution. The finding of a court or tribunal becomes irrelevant and unenforceable/inexecutable once the forum is found to have no jurisdiction. Acquiescence of a party equally should not be permitted to defeat the legislative animation. The court cannot derive juris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. If the jurisdiction could not be conferred by consent, there would be no question of waiver, acquiescence or estoppels or the bar of res judicata being attracted because the order in such a case would lack inherent jurisdiction and would be a void order or a nullity. Therefore, in the facts of the present case the Tribunal had wrongly come to the conclusion that the assessee had waived its right to challenge reassessment proceedings before the Commissioner (Appeals), and was thus not entitled to raise the said challenge before the Tribunal" Our plea that reopening is invalid is supported by recent Delhi ITAT decision in case of Shri Mohd Yameen Munna in ITA 7134/Del/2018 order dated 02.05.2019 (enclosed herewith) apart from following other decisions. i) Bombay high court decision In case of Mohanlal Champala. Jain (31/01/2019) ii) Gujarat high court decision in case of Gunvantbhai Somabhai Patel (06/02/2018) On approval point we wish to place reliance on Delhi bench ITA T recent decision in case of Kashi Ram (ITA 64511De1l2018) order dated 16.04.2019 Held as: After considering the rival submissions and perusing the orders of the lower authorities and materials availabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowed accordingly by quashing the reassessment proceedings. 4. On the contrary, Ld. DR stated that since this additional ground was not taken before the Ld. CIT(A), hence, the same may not be admitted and appeal of the assessee may be dismissed. In support of his contention he also relied upon the comments on the additional grounds of appeal under Rule 11 of ITAT, which read as under:- "Sub: -Furnishing of Comments on Additional Ground of appeal under rule 11 of ITAT in ITA no 375/Dc)120I9 for A.Y. 2007-08 in the case of Sh. Hukum Singh -Reg- Kindly refer to your office letter no 44 dated 03.06.2019 on the subject cited above. In this regard, it is submitted that your office seek comments on raising of additional ground of appeal with respect to assumption of jurisdiction u/s 147/148 of the Act in case of Sh. Hukum Singh by the learned AR of the assessee. In this regard, the AR has stated that the reasons recorded in said case are based on vague grounds and the sale proceeds not the capital gain were treated as income escaping assessment. In this regard, it is stated that the AR of the assessee mere emphasized only on the Reasons recorciing format and seeking approval, in w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id case are submitted to your good office for necessary action." 5. I have heard both the parties and perused the records, especially the Additional grounds filed by the assessee and the case laws supporting the case for admission of additional grounds and the comments of the department on which the Ld. Sr. DR relied upon for not admitting the additional grounds. In my considered view, the additional grounds are in legal and jurisdictional and needs to be admitted in the interest of justice. Hence, I admit the same and only deciding the additional ground no. 2 as argued by the ld. Counsel for the assessee. For the sake of convenience, the additional ground no. 2 is again reproduced as under:- 2. That on the facts and in the circumstances of the case and in law, Ld AO erred in assumption of jurisdiction uls 147/148 of the Act on basis of invalid and mechanical approval as evident from cursory look to reasons format (enclosed herewith) as mere endorsement in column no 12 in YES is made ergo reopening proceedings, resultant assessment order uls 147/143(3) and CIT-A order may please be quashed as void ab initio. 5.1 I have also perused the page no. 6 placed in Paper Book which is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... satisfied." 20. I find the coordinate Bench of the Tribunal in the case of M/s Virat Credit & Holdings Pvt. Ltd. (supra) while deciding an identical issue has quashed the reassessment proceedings where the approving authorities while giving approval has simply mentioned "Yes. I am satisfied." The relevant observations of the Tribunal from para 10 onwards read as under:- "10. First of all, ld. AR for the assessee company drew our attention towards sanction accorded by the Addl.CIT for reopening of the assessment obtained by moving an application under Right to Information Act, 2005, available on file as Annexure 'A'. Perusal of the sanction accorded by Addl. CIT in the prescribed proforma shows that there is a question no.13 viz. : "13. Whether the Addl. CIT is satisfied on the reasons recorded under section 147 that it is a fit case for issue of notice under section 148 of the IT Act. 11. In response to aforesaid question no.13 in the prescribed proforma, Addl. CIT has written "Yes. I am satisfied." No doubt, columns of reasons recorded was there and it is also mentioned in column no.12 that reasons for belief that income has escaped assessment are as per annexur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was to be dismissed - Held, yes [In favour of assessee] Search and Seizure-Procedure for black Assessment- Search was conducted at residential and business premises of Assessee and notice for block assessment u/s. 158-BC was issued- For block period, returns were filed that were processed u/s. 143 (1)- However, notice u/s. 148 was issued by AO, on basis of certain reasons recorded-Assessee objected to same before AO, that was rejected and assessment was completed u/ss. 143(3) and CO No.57/Del/2012 147- CIT(A) found that reason recorded by Joint Commissioner of Income Tax, for according sanction, was merely recording 'I am Satisfied'- Action for sanction was alleged to be without application of mind and to be done in mechanical manner-Held, while according sanction, Joint Commissioner, Income Tax only recorded "Yes, I am satisfied"- Mechanical way of recording satisfaction by Joint Commissioner, that accorded sanction for issuing notice u/s. 147, was clearly unsustainable-On such* consideration, both Appellate authorities interfered into matter- No error was committed warranting reconsideration-As far as explanation to S. 151, brought into force by Finance Act, 2008 was conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Bench for perusal shows that only AO has recorded that Addl.CIT has considered the reasons recorded before according the sanction, however even no prima facie material is there, if Addl.CIT has applied his mind by considering the reasons recorded before according the sanction. We are of the considered view that the AO who has recorded the reasons cannot enter into the mind of the sanctioning authority (Addl.CIT) discharging the quasi-judicial function for according valid sanction for reopening the assessment. 17. Moreover, according sanction is not a supervisory role rather it is a quasi-judicial function to be performed by the Addl.CIT as required u/s 151 of the Act. When the Revenue Department is manned by highly qualified officers they are to evolve legally sustainable standard operating procedure for discharging quasi- judicial function. 16. Hon'ble High Court of Delhi in case cited as SABH Infrastructure Ltd. vs. ACIT in WP (C) 1357/2016 order dated 25.09.2017 has issued guidelines to the Revenue authorities while deciding the issue of reopening u/s 147/148 of the Act. Operative part of which is reproduced as under:- "19. Before parting with the case, the Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sides and perused the material available on record. It is an admitted fact that the case of the assessee was reopened by the Assessing Officer after recording reasons and issue of notice u/s 148 as per the provisions of section 147 and 148 of the Act on the basis of the information received from the Investigation Wing that the assessee is a beneficiary of accommodation entry obtained from Surendra Kumar Jain group of cases towards introduction of share capital of Rs. 35 lacs. I find, the assessee has taken a specific ground before the CIT(A) challenging the validity of reassessment proceedings on the ground that approval u/s 151 of the Act of the superior authorities is not in accordance with law. The relevant ground of appeal No.2 taken before the CIT(A) reads as under:- "2. That under the facts and circumstances, approval u/s 151 of the superior authorities is not accordance with law and otherwise also mechanical and without application of mind, making the reasstt. Proceedings unsustainable in law." 9. I find the above ground has been extracted by the CIT(A) in the body of the order. She has also mentioned at para 3.2 of the order that the assessee contended that there w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pproval has simply mentioned 'Yes. I am satisfied' therefore, following the decisions of the jurisdictional High Court (cited supra) on this issue which are binding on the Tribunal, the reassessment proceedings are to be treated as not in accordance with the law since the approval has been given in a mechanical manner without due application of mind by the approving authority. I, therefore, allow ground of appeal No.2 by the assessee challenging the validity of reassessment proceedings. Since the assessee succeeds on this legal ground, the various other grounds raised by the assessee are not being adjudicated being academic in nature." 22. Since, in the instant case, both the approving authorities have given approval in a mechanical manner without due application of mind, therefore, such reassessment proceedings have to be treated as not in accordance with law and has to be quashed. 23. Even otherwise also, a perusal of the reasons recorded show that the notice has been issued in a mechanical manner without independent application of mind by the Assessing Officer and the satisfaction by the Assessing Officer is based on borrowed satisfaction of the Investigation Wing. The Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... escaped assessment. But this is absent. He straightaway records the conclusion that "the abovesaid instruments are in the nature of accommodation entry which the Assessee had taken after paying unaccounted cash to the accommodation entry given (sic giver)". The AO adds that the said accommodation was "a known entry operator" the source being "the report of the Investigation Wing". 21. The third and last part contains the conclusion drawn by the AO that in view of these facts, "the alleged transaction is not the bonafide one. Therefore, I have reason to be believe that an income of Rs. 5,00,000 has escaped assessment in the AY 2004-05 due to the failure on the part of the Assessee to disclose fully and truly all material facts necessary for its assessment... " 22. As rightly pointed out by the ITAT, the 'reasons to believe' are not in fact reasons but only conclusions, one after the other. The expression 'accommodation entry' is used to describe the information set out without explaining the basis for arriving at such a conclusion. The statement that the said entry was given to the Assessee on his paying "unaccounted cash" is another conclusion the basis for whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings have to be treated as not in accordance with law and has to be quashed. 26. Since the assessee succeeds on this legal ground challenging the validity of reassessment proceedings, the addition on merit is not being adjudicated being academic in nature. The appeal filed by the assessee is accordingly allowed. ITA Nos. 1375/Del/2019 (Gopal Chand Mundhra and Sons); 1721/Del/2019 (Damyanti Mundhra); 1722/Del/2019 (Ramdev Mundhra); 1524/Del/2019 (Gopal Chand Mundhra). 27. In these appeals also identical grounds have been taken by the respective assessees and in all these cases the approving authorities have given approval to the reopening of assessment in a mechanical manner without due application of mind. Therefore, following the reasons given in the preceding paragraphs, the reassessment proceedings initiated in the case of these assessees are also held to be not in accordance with the law and are accordingly quashed. 28. In the result, all the five appeals filed by the respective assesses are allowed." 5.3 Since in the present case the approving authority has given approval to the reopening of assessment in a mechanical manner without due application of mind by ment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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