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TMI Blog2020 (2) TMI 781X X X X Extracts X X X X X X X X Extracts X X X X ..... nst the rules of natural justice. 3. The appellant craves leave to add/amend/argue any other question of law/fact at the time of hearing of this appeal 2. Subsequently, the assessee has filed paper book containing the additional evidences along with an application dated 16.05.2019 for taking additional ground on record, which read as under :- "1. That under the facts and circumstances of the case impugned assessment order dated 27-12-2016 is bad in law on account of invalid initiation of reassessment proceedings on following grounds: - a. That Ld. AO did not have 'reason to believe' as postulated in section 147 of the Act to draw an opinion that the income of the assessee for the year under consideration has escaped from assessment. b. That there was no application of own mind by the AO in recording the reasons that the income of the assessee has escaped from the assessment. c. That initiation of reassessment proceedings is bad in law on the ground that the satisfaction recorded by JCIT is not in accordance with mandate of law and the requirements of section 151 have not been fulfilled." Accordingly the ld. AR of the assessee submitted that the additional ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the appeal of the assessee. 5. Against the order of the CIT(A), the assessee is in further appeal before the Income Tax Appellate Tribunal. 6. Ld. AR before us filed written synopsis which read as under :- 1. The assessee is an individual and it is no account case. 2. Present proceedings are reassessment proceedings and AO has made following additions: a. Rs. 7,85,324/- by not admitting the agricultural income. b. Rs. 17,40,000/- on account of unexplained investment in purchase of agricultural land. c. Rs. 11,43,173/- on account of unexplained credit in the bank account. 3. The reassessment proceedings were initiated on the ground that during the course of assessment proceedings of the assessee for A.Y. 2012-13, it came to the notice of the AO that in A.Y. 2011-12 the assessee had purchased agricultural land for an amount of Rs. 23.77 lakh against shown by the assessee at Rs. 23,40,000/-, (copy of reason is placed at pages 64 to 66.) 4. Sanction u/s 151(2) obtained by the AO from JCIT. The sanction has been granted by writing the words ' yes, satisfied'. Page 66 of the paper-book. 5. The assessee did not raise the ground before CIT(A) agitating the validity of r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... N.C. Cables Ltd f20171 391 ITR 11 (Delhi) In this case sanction u/s 151 was granted by commissioner that the expression' approved'. It was observed by Hon'ble High Court that the power was exercised in a ritualistic manner, therefore, reassessment proceedings were invalid. Para 11 of the judgment at page 30 of case law compendium. CIT Vs S. Goyanka Lime & Chemicals Ltd 120151 231 Taxman 73 (Madhya Pradesh) In this case the approval was granted with the expression 'yes, I am satisfied'. In the present case also, the approval has been granted by 'yes satisfied'. It was held that such sanction granted for issue of notice u/s 148 is unsustainable and thus, the assessment proceedings were invalid. Reference is made to para 7 and 8 of the decision at page 32 of the case law compendium. This decision of Hon'ble Madhya Pradesh High Court has been upheld by Hon'ble Supreme Court vide order dated 08-07-2018 in CIT Vs S. Goyanka Lime & Chemical Ltd [2016] 237 Taxman 378 (SC), page 33 of the case law compendium. ON MERITS Addition of Rs. 7,85,324/- 8. This addition has been made by the AO on the basis of conjectures and surmises ignoring the evidence produced before him and CIT(A) h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,69,000/-. It may be mentioned that AO himself has accepted Rs. 6,00,000/- received from LMG which is proprietary concern of Santosh Goyal (mother in law of the assessee). Her balance sheet is furnished at page 31 where in on the asset side the total amount of Rs. 7,69 lakh is outstanding ( Rs. 7,25,000/- in the name of Raghav Sales proprietary concern of the assessee and Rs. 44,000/- in the name of the assessee are outstanding). 12. Coming to Rs. 6.86 lakh investment from Stree-Dhan, it is submitted that assessee is being assessed from A. Y. 2004-05 and it was explained to the AO that total income returned from all these years is Rs. 7.08 lakh and apart from that the assessee was having the amount given by the relatives from time to time and also had saving in hand the details given in para 22. Therefore, the addition made by the AO on account of unexplained investment made in agricultural land is not warranted on merits. Additions of Rs. 11,43,173/- 13. Copy of bank account are filed at pages 76 to 79. At page 76 copy of Oriental Bank of Commerce is attached. Rs. 6,00,000/- deposited on 10-11-2010 is from LMG which has been accepted by the AO. There are two cash deposited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d without due application of mind by writing the word "Yes satisfied" that it is a fit case for issuance of notice u/s.148 of the Act for reopening of the case. Therefore, the ld.AR submitted that initiation of proceeding u/s 147 and issue of notice u/s 148 of the Act is void ab-initio and, hence, assessment as completed u/s 143(3) / 147 of the Act deserves to be annulled/quashed. To support his contentions, apart from the case laws relied on by the ld. AR above, also placed reliance on the following case laws:- i. Smt. Prabha Rani Agrawal Vs. ITO [2013] 351 ITR 275 (Allahabad) ii. ITO Vs. Lakhmani Mewal Das [1976] 103 ITR 437 (SC) iii. Metal Import (P) Ltd. Vs. CIT 73 taxmann 375 iv. CIT Vs. Sun Engineering Works (P) Ltd. [1992] 198 ITR 297 (SC) v. Jitendra Kumar Yadav Vs. ACIT, New Delhi in ITA No.1808/Del/2016 8. On the other hand, ld. Departmental Representative(DR) relied on the orders of authorities below and vehemently submitted that the authority after due consideration of the facts has given a direction for reopening of the case by writing the word "Yes, satisfied" that it is a fit case for issuance of notice u/s.148 of the Act to reopen the case of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y manner, and is not qualified by a precondition of faith and true disclosure of material facts by the assessee as contemplated in the pre amended Section 147(a) of the Act. (Jawand Sons vs CIT 18 November, 2009(P&H) (4) It is also held that satisfaction arrived at by any relevant material after following due procedure, it cannot be assailed.it may involve change of opinion but not at par with mere change of opinion. (Tilak Raj Bedi vs JCIT (2009) 319 ITR 385-P&H) (4) It is well settled that audit objection on the on the point of fact can be a valid ground for reopening of assessment. (i) Usha International Ltd, vs Assessee on 9 March, 2015 (ITAT delhi ) -As this tangible material, in the shape of audit objection, came into existence after the completion of the original assessment and led to the initiation of reassessment, we hold this report of the internal audit party, formed a valid foundation for the initiation of reassessment proceedings, thereby pushing the case outside the ambit of 'change of opinion'. (ii) CIT PVS beedies (p) ltd vs 1999 237 ITR 13 Sc (b) It is also well settled that even if the information be such that it could have been obtained during t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vant to the assessment. But once he has done so, it is for the Income-tax Officer to draw the proper inferences of fact and law therefrom and the assessee cannot further be called upon to do so for him. Power under s. 34(1 )(a) is asserted by the assessing authority and the record prima facie supports its existence, any enquiry as to whether the authority could reasonably hold the belief that the under assessment was due to non-disclosure by the assessee of material facts necessary for the assessment must, be barred. In view of the above the above the submission of the asssessee with case laws not justified. On issue of non issue of notice u/s 143(2) There is no requirement under the act that notice uls 143(2) is mandatory for assessment u/s 147. Similar view held as under. (CIT vs Madhya bharat energy corporation 11-7-2011 (Delhi High court.) Tarsem Singla Vs CIT(Punjab & Haryana)/[2016] Punjab & Haryana) On service of notice u/s 148 R.K Upadhyaya vs Shanabhai P. Patel on 28 April, 1987- Once a notice is issued within the period of limitations, jurisdiction becomes vested in the Income-tax Officer to proceed to reassess. The mandate of section 148(1) is that reassessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and after getting approval from the JCIT, issued notice u/s.148 to the assessee. Accordingly, the Assessing Officer completed reassessment proceeding holding that the assessee could not substantiate the source of investment made by the assessee. We have also gone through the reasons recorded by the Assessing Officer/ITO, Ward-3(2), Ferozepur for reopening and the approval thereof by the Ld. Jt. CIT, Range-III, Ferozepur 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 assessment during the year under appeal. 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 assessment year under consideration is bad in law and deserves to be quashed. Further to fortify our view as to whether the approval given by the JCIT u/s.151(2) of the Act is sustainable or not, we would like to reproduce the provisions of Section 151 of the Income Tax Act, 1961, which read as under :- "151. Sanction for issue of notice.-(1) No notice shall be issued under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be placed on the decision of Hon'ble Delhi High Court in the case of Pr.CIT Vs. N.C.Cables Ltd., [2017] 88 taxmann.com 649 (Delhi), wherein the Hon'ble High Court has observed that the satisfaction has to be recorded of the given case which can be reflected in the briefest possible manner. The relevant observations of the Hon'ble High Court in para 11 read as under :- "11. Section 151 of the Act clearly stipulates that the CIT (A), who is the competent authority to authorize the reassessment notice, has to apply his mind and form an opinion. The mere appending of the expression 'approved' says nothing. It is not as if the CIT (A) has to record elaborate reasons for agreeing with the noting put up. At the same time, satisfaction has to be recorded of the given case which can be reflected in the briefest possible manner. In the present case, the exercise appears to have been ritualistic and formal rather than meaningful, which is the rationale for the safeguard of an approval by a higher ranking officer. For these reasons, the Court is satisfied that the findings by the ITAT cannot be disturbed." 12. The Hon'ble Madhya Pradesh High Curt in the case of CIT vs. S. Goyanka Lime & C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Revenue. 14. Further in the case of Chhugamal Rajpal Vs.S.P.Chaliha & Ors, reported in 79 ITR 603 (SC), the Hon'ble Supreme Court has held that where the Commissioner, while granting the sanction just noted the word "Yes" and affixed his signature thereunder, he had only mechanically accorded permission, and that the important safe-guards provided in section 151 of the Act were lightly treated. 15. During the course of hearing ld. AR of the assessee drew our attention to the pages 46 & 47 of the paper book and submitted that the assessee in reply dated 17.03.2015 has furnished her explanation with regard to investment made by the assessee, however, just to verify the said aspect the AO issued notice of reassessment proceedings which is equivalent to 'reason to suspect' and for this purpose, ld. AR of the assessee has placed reliance on the decision of Hon'ble Supreme Court in the case of ITO Vs. Lakhmani Mewal Das [1976] 103 ITR 437 (SC). We have also perused the reply filed by the assessee and found that the investment made by the assessee has been explained. No new information was available to the Assessing Officer for reopening the case u/s 147 of the Act. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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