TMI Blog2016 (1) TMI 1442X X X X Extracts X X X X X X X X Extracts X X X X ..... tels (P) Ltd. vs. ITO [ 2011 (7) TMI 361 - DELHI HIGH COURT ] - Decided in favour of assessee. - I.T.A. No. 2490/DEL/2013, I.T.A. No. 2999/DEL/2013 - - - Dated:- 4-1-2016 - SHRI H.S. SIDHU AND SHRI O.P. KANT, JJ. APPELLANT by : Sh. Tarun Kumar, Adv. Sh. Abhishek Anand, Adv. RESPONDENT by : S h. T. Vasanthan, Sr. DR ORDER H.S. SIDHU, J. These are the Cross Appeals filed by the Assessee and Revenue against the impugned Order dated 27.2.2013 passed by the Ld. CIT(A)-XXVI, New Delhi relevant to assessment year 2004-05. 2. The grounds raised in the Assessee s Appeal No. 2490/Del/2013 read as under:- 1. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in framing the impugned order u/s 147/143(3) and that too without communicating the reasons recorded as per law and without obtaining the valid sanction as per law and without complying with other mandatory conditions as envisaged u/s 147 to 151 of Income Tax Act, 1961. 2. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BOR New Rohtak Road - 25,00,000 5.8.2003 Satish Kumar Sharma 4.1 On the basis of the above information, proceedings u/s 147 were initiated and notice dated 29.3.2011 u/s 148 was issued and served upon the assessee. In response, the AR of the assessee filed letter dated 21.4.2011 stating as under: With reference to your above mentioned notice, we hereby submit that the return filed by the assessee for the assessment year 2004-05, u/s 139 of Income-tax Act vide receipt no. 0030401325 dated 31.10.2004 may be treated as return filed in response to your above mentioned notice. However, these proceedings are bad in law, we are filing this return under protest. The notice is also invalid. It is further requested to please provide the copy of the reasons recorded along with adverse material relied upon in the reasons if any. The photocopy of the acknowledgment of the return filed by the assessee for the same is enclosed for your perusal. We are enclosing herewith power of attorney duly signed by the assessee. Assuring you of our best co-operation and services always. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of Pr. CIT-4 vs. G G Pharma India Ltd., wherein the Tribunal decision dated 9.1.2015 has been followed. In this behalf, he filed the copy of the order dated 8.10.2015 of the Hon ble High Court of Delhi in Pr. CIT vs. G G Pharma India Ltd. Therefore, he requested that by following the decision in the case of Pr. CIT vs. G G Pharma India Ltd., the ground no. 1 raised by the Assessee in the present appeal may be allowed. 8. On the contrary, Ld. DR relied upon the order passed by the CIT(A) on issue of validity of reopening and stated that Ld. CIT(A) has rightly upheld the action of the AO of reopening. He further stated that the case law relied upon by the Ld. Counsel for the assessee in the case of Pr. CIT vs. G G Pharma India Pvt. Ltd. is distinguishable on the facts of the case in hand. He further stated that in the case of G G Pharma (Supra), assessment was completed u/s. 143(3) of the I.T. Act whereas in the assessee s own case it was processed u/s. 143(1) of the I.T. Act and therefore, the AO has rightly reopened the case of the assessee by issuing the notice u/s. 148 of the I.T. Act without making any inquiry of the material supplied to him. In support of his con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed over the cash (plus commission) and took cheques/ DDs/IPOs. The cash was being deposited by the entry operator in a bank account either in his own name or/in the name of relatives/ friends or other persons hired by him for the purpose of opening bank account. In most of these bank accounts, the introducer was the main entry operator and the cash deposit slips and other instruments were filled by him. The other persons (in which the cash is deposited) or another account in which funds were transferred through clearing in two more stages. The beneficiary in turn deposited these instruments in his bank. accounts and the money came to his regular books of account in the form of gift, share . application money, loan etc. through banking channels. The operators gave the account holders amounts ranging from ₹ 1000 to 2000 per month. These account holders were masons, plumbers, electricians, peons, drivers etc., whose earnings are not sufficient for a living. They earned normally 3 to 5 thousands per month from their normal work and by working for the entry operators tamed extra income of 2 to 4 thousands per month. Their signatures were taken on blank gift deeds, cheque boo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment. Thus, the same is to be brought to tax under section 147/148 of the I.T. Act, 1961. 9.1 On going through the above reasons recorded by the AO, we are of the view that 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. In our view the reasons are vague and are not based on any tangible material as well as are not acceptable in the eyes of law. The AO has mechanically issued notice u/s. 148 of the Act, on the basis of information allegedly received by him from the Directorate of Income Tax (Investigation), New Delhi. Keeping in view of the facts and circumstances of the present case and the case law applicable in the case of the assessee, we are 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. Our view is supported by the following judgments/decisions:- (a) Pr. CIT vs. G G Pharma India Ltd. in ITA No. 545/2015 dated 8.10.2015 of the Delhi High Court wherein the Hon ble Court has adjudicated the issue as under:- 12. In the present case, after setting out four entries, stated to h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rials produced subsequent to the reopening will not rescue an inherently defective reopening order from invalidity . 14. In the circumstances, the conclusion reached by the ITAT cannot be said to be erroneous. No substantial question of law arises. 15. The appeal is dismissed. (b) Signature Hotels (P)_ Ltd. vs. ITO and another reported in 338 ITR 51 (Del) has under similar circumstances as follows:- For the A.Y. 2003-04, the return of income of the assessee company was accepted u/s.143(1) of the Incometax 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 filed writ petition and challenged the notice and the order on objections. The Delhi High Court allowed the writ petition and held as under: (i) Section 147 of the Income-tax Act, 1961, is wide but not plenary. The Assessing Officer must have reason to believe that income chargeable to tax has escaped assessment. This is mandatory and the reason to believe are required to be recorded in writing by the Assessing Officer. (ii) A no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Assessee in its Appeal. Since we have quashed the reassessment proceedings, as aforesaid, the other issues are not being dealt with. REVENUE S APPEAL NO. 2999/DEL/2013 11. As the reassessment proceedings has been quashed by us as aforesaid, there is no need to adjudicate the Appeal of the Revenue. Otherwise, also, we find that the tax effect in this appeal is less than ₹ 10,00,000/-, therefore, the Department s Appeal is not maintainable, in view of the Circular No. 21/2015 dated 10th December, 2015 issued vide F.No. 279/Misc. 142/2007-ITJ (Pt.) by the CBDT. In the above-said Circular the following conditions has been prescribed:- 3. Henceforth, appeals/ SLPs shall not be filed in cases where the tax effect does not exceed the monetary limits given hereunder: S No Appeals in Income-tax matters Monetary Limit (in Rs) 1 Before Appellate Tribunal 10,00,000/- 2 Before High Court 20,00,000/- 3 Before Supreme Court 25,00,000/- I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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