TMI Blog2020 (2) TMI 1036X X X X Extracts X X X X X X X X Extracts X X X X ..... h less independent application of mind but is a case of borrowed satisfaction. Nothing is independently examined or considered by the AO which can demonstrate application of mind by him. Proceedings initiated by invoking the provisions of section 147 of the Act by the AO and upheld by the Ld. CIT(A) are nonest in law and without jurisdiction and needs to be quashed. Reasons recorded by the AO and approval granted by the Addl. CIT, Range-45, New Delhi, wherein the Addl. CIT, Range-45, New Delhi has granted the approval by mentioning that After perusing the reasons given above I am satisfied that it is a fit case for issue of notice u/s. 148 of the I. Tax Act, 1961. , which shows that Ld. Addl. CIT, Range-45, New Delhi has not recorded proper satisfaction and without application of mind gave the approval in a mechanical manner - Reopening in the case of the assessee for the asstt. Year in dispute is bad in law and deserves to be quashed - Decided in favour of assessee. - ITA No. 9316/Del/2019 - - - Dated:- 20-2-2020 - Shri H.S. Sidhu, Judicial Member For the Assessee : Sh. Rohit Tiwari, Advocate Sh. Vinay Verma, Advocate For the Department : Sh. Pra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t para no. 4.1 at page no. 4 5 of the assessment order stating therein that the said agreement to sell dated 12.9.2017 is merely a fabricated document and had no bearing on the transaction of purchase of said property on account of that agreement of sale is not registered agreement as well as not signed by the witnesses. Assessee further replied that the CBI during their investigation did not find any cash transaction in the bank account of the seller Mr. Kulwant Singh nor in the bank account of the purchaser Mrs. Arina Grover/Assessee. In view of the reply filed by the assessee, the assessee requested that the said agreement was a fabricated/forged document not having the assessee signature on page no. 1 2 and page no. 3 of some other agreement. The submission of the assessee was considered and rejected by the Assessing Officer by holding that this agreement is signed by both the parties and the witnesses as well as duly notorized and CFSL in its support opined that Kulwant Singh had signed the original agreement dated 12.9.2007 for sale and purchase of the property with assessee. Therefore, the contention of the assessee that the agreement for sale and purchase dated 12.9.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has remained no more and subsequent notice u/s. 147 of the Act is invalid. To support the aforesaid contention, he draw my attention towards the order of the Hon ble Supreme Court of India in the case of ACIT vs. Dhariya Construction Co. (2011) 197 Taxman 202 (SC); Hon ble Delhi High Court decisions in the case of Pr. CIT vs. RMG Polyvinyls (I) Ltd. (2017) 83 taxmann.com 348 (Delhi); Pr. CIT vs. Meenakshi Overseas P Ltd. vs. ITO 395 ITR 677 (Del.) and Pr. CIT vs. G G Pharma India Ltd. 384 ITR 147 (Del.). 3.1 Secondly, he drew my attention towards Page No. 40-42 of Assessee s Paper Book which is a copy of the reasons recorded by the AO and approval granted by the Addl. CIT, Range-45, New Delhi, wherein he has granted the approval by mentioning that After perusing the reasons given above I am satisfied that it is a fit case for issue of notice u/s. 148 of the I. Tax Act, 1961. , which shows that Ld. Addl. CIT, Range- 45, New Delhi has not recorded proper satisfaction and without application of mind gave the approval in a mechanical manner. He further stated that this issue is squarely covered by the decision of the Hon ble Delhi High Court in the case of United Electrical C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ITR filed by the assessee. All such observations find mention in the reasons recorded by the AO. 4. Ld. CIT(A) ha also perused the assessment records and then observed as per paragraph 4.2 of his order that approval was taken from the competent authority on 27.03.2015. Following case laws also squarely cover the issues raised by the assessee in favour of revenue:- 1. PCIT Vs Paramount Communication (p.) Ltd. (2017 - TIOL-253-SC-IT) (Copy enclosed) where Hon'ble Supreme Court dismissed SLP of assessee. Information regarding bogus purchase by assessee received by DRI from CCE which was passed on to revenue authorities was 'tangible material outside record' to initiate valid reassessment proceedings. PCIT Vs Paramount Communication (P.) Ltd. [2017] 79 taxmann.com 409 (Delhi)/[2017] 392 ITR 444 (Delhi) where Hon'ble Delhi High Court held that Information regarding bogus purchase by assessee received by DRI from CCE which was passed on to revenue authorities was 'tangible material outside record' to initiate valid reassessment proceedings. 2. Ankit Financial Services Ltd. Vs DCIT [2017] 78 taxmann.com 58 (Gujarat( (copy en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer that it is a fit case for the issue of such notice . In the present case, the Court is satisfied that by recording in his own writing the words: Yes, I am satisfied , the mandate of Section 151 (1) of the Act as far as the approval of the Additional CIT was concerned, stood fulfilled. . 5. I have heard both the parties and carefully considered the rival submissions and perused the orders of the authorities below alongwith Ppaer Book filed by the assessee and the case laws relied upon. I note that in this case the AO while recording the reasons for the belief that income has escaped assessment has recorded the reasons as under:- 5.1 After perusing the aforesaid reasons recorded, I find that it is a case where action for reopening is taken mechanically on the information from the Asstt. Director of Income Tax (Investigation), Unit I(2), New Delhi dated 10.03.2015 stating therein that during the course of search of office premises of the assessee, an agreement was found which was signed on 12.09.2007 between Sh. Kulwant Singh, S/o Sh. Natha Singh, R/o 2/27, Subhash Nagar, New Delhi and Mrs. Arina Grover wife of Sh. J.K. Grover for sale/purchase o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of mind by him. To support my aforesaid view, I draw support from the following decisions:- i)ACIT vs. Dhariya Construction Co. (2011) 198 taxman 202 (SC) wherein the Hon ble Court has held that : Section 147 of the Income Tax Act, 1961 Income escaping assessment Non-disclosure of primary facts Whether opinion of District Valuation Officer (DVO) per se is not an information for purposes of reopening of an assessment under section 147; Assessing Officer has to apply his mind to information, if any, collected and must form a belief thereon Held, yes. ii) Pr CIT v. RMG Plyvinyl (I) Ltd. (2017) 83 taxmann.com 348 (Hon ble Delhi High Court has observed as under:- 11. There can be no manner of doubt that in the instant there was a failure of application of mind by the AO to the facts. In fact he proceeded on two wrong premises - one regarding alleged non-filing of the return and the other regarding the extent of the so-called accommodation entries. 12. Recently, in its decision dated 26th May, 2017 in ITA NO.692/20l6 (Principal Commissioner of Income Tax-6 v. Meenakshi Overseas Pvt. Ltd.), this Court discussed the legal position regarding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment. 37. For the aforementioned reasons, the Court is satisfied that in the facts and circumstances of the case, no error has been committed by the ITAT in the impugned order in concluding that the initiation of the proceedings under Section 147/148 of the Act to reopen the assessments for the AYs in question does not satisfy the requirement of law. 38. The question framed is answered in the negative, i.e., in favour of the Assessee and against the Revenue. The appeal is, accordingly, dismissed but with no orders as to costs. 5.1.1 I have perused the orders of the revenue authorities, written submissions filed by both the parties and the case laws relied therein as well as the Paper Book filed by the Ld. Counsel for the Assessee, I am of the considered view that the issue in dispute has already been adjudicated and decided in favour of the Assessee by the various decisions of the Hon ble Supreme Court and the Hon ble High Courts, as relied upon by the Ld. Counsel for the assessee, which have been respectfully followed by the Tribunal. Therefore, I have no other alternative except to respectfully follow the same case laws, because no contrary decision has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT vs. S. Goyanka Lime Chemical Ltd. reported in (2015) 64 taxmann.com 313 (SC) arising out of order of Hon ble High Court of Madhya Pradesh in CIT vs. S. Goyanka Lime Chemicals Ltd. (2015) 56 taxmann.com 390 (MP). Section 151, read with section 148 of Income Tax Act, 1961 Income escaping assessment Sanction for issue of notice (Recording of satisfaction) High Court by impugned order held that where Joint Commissioner recorded satisfaction in mechanical manner and without application of mind to accord sanction for issuing notice under section 148, reopening of assessment was invalid Whether Special Leave Petition filed against impugned order was to be dismissed Held, Yes (in favour of the Assessee). 5.4 In the background of the aforesaid discussions and respectfully following the precedents, as aforesaid, I am of the considered view that the proceedings initiated by invoking the provisions of section 147 of the Act by the AO and upheld by the Ld. CIT(A) are nonest in law and without jurisdiction and also the approval granted by the Addl. CIT, Range-45, New Delhi is a mechanical and without application of mind, which is not valid for initiating the reas ..... 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