TMI Blog2020 (8) TMI 797X X X X Extracts X X X X X X X X Extracts X X X X ..... on. Re-opening based on incorrect, incomplete and vague facts is bad in law - Appeal of the Revenue is dismissed. - I.T.A. No. 181/Kol/2019 - - - Dated:- 14-8-2020 - Sri J. Sudhakar Reddy, Accountant Member And Sri Aby T. Varkey, Judicial Member Sh. Vijay Shankar, CIT ( DR), appeared on behalf of the Revenue Sh. S. K. Tulsiyan, Adv. , appeared on behalf of the Assessee ORDER Per J. Sudhakar Reddy, AM : This is an appeal filed by the Revenue directed against the order of the Commissioner of Income Tax (Appeals)-2, Kolkata dated 30.11.2018 ( CIT(A) for short) passed u/s 250 of the Income Tax Act, 1961 ( the Act for short) on the following grounds: 1. Whether on the facts and circumstances of the case, the Ld. CIT(A) has erred in quashing the reassessment order u/s. 147/143(3) passed by the AO without disposing of the objection raised by the appellant is contrary to binding principal of law laid down in judgement of Hon.ble Supreme Court whereby it has been held that non-compliance of procedure would not make an order void or non est. 2. That the appellant craves for leave to add, delete or modify any of the grounds of appeal before or at the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement of Hon ble Supreme Court in the case of GKN Driveshafts (India) Ltd. vs. Income-tax Officer reported in [2003] 259 ITR 19 (SC), the Revenue challenges all the other conclusions drawn by the ld. CIT(A) for arriving at the conclusion that re-opening of assessment is bad in law. He took this Bench to the reasons recorded by the AO for coming to a conclusion that income subject to tax has escaped assessment, a copy of which is at page 45, 46 47 of the paper book and submitted that this is a case where the assessee company was an ultimate beneficiary of share capital which was received after being layered through multiple entities. He submitted that the Investigation Wing of the Income Tax Department has found the cash trail and the same was informed to the AO who considered this information and formed a reasonable belief that income of the assessee company for relevant assessment year has escaped assessment within the meaning of Section 147 of the Act. He relied on the decision of the Hon ble Delhi High Court in the case of Aravali Infrapower Ltd. vs. DCIT reported in [2017] 390 ITR 456 (Delhi) and submitted that under same circumstances the Hon ble Delhi High Court upheld the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he approval for re-opening of the assessment. He relied on a number of case laws to the propositions that the re-opening is bad in law on such facts. 8. He further drew the attention of the Bench to the notice issued u/s 148 of the Act and submitted that it is not mentioned therein as which authority has granted the approval for re-opening of assessment u/s 151 of the Act. He relied on the decision of the Hon ble Delhi High Court in the case of SABH Infrastructure Ltd. vs. ACIT reported in [2017] 398 ITR 198 (Delhi) and submitted that the guidelines laid down for the Hon ble Court in such cases were not followed. 9. He further submitted that the objections to the re-opening assessment were for not disposed off prior to framing of the assessment order, which makes the assessment bad in law. He also argued that the AO did not apply his mind independently to the information received from the Investigation Wing of the Department and had in a mechanical manner recorded reasons on borrowed satisfaction and re-opened the assessment. He relied on the order of the ld. CIT(A) and submitted that the same be upheld. He relied on a number of case laws and also filed written submissions. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted to obtain cheques by the beneficiary companies. The trail of transactions suggests that there is a deposit of cash in the accounts of individuals followed by transfer of funds to various private companies i.e. in 2nd or 3rd layer or even 4th layer. It is further revealed from the investigation conducted by ITO(Inv.), Unit-1 AIU, Kolkata that MZs. Sambhudha Tracon Private Limited is the ultimate beneficiary company and has routed its unaccounted money through various parties in lieu of commission, which are only the paper/jamakharchi companies. From the submission bank statements following observations have been made in regard to the fund transfer of the companies. A/C. No Name of the A/c. holder Bank name branch Cash deposited Beneficiary 000605017752 M/s. Suhhalaxmi Vanijya Pvt. Ltd. ICICI, Kolkata - 700001 ₹ 75,00.000/- M/s. Sambhudha Tracon Private Limited 000605004447 Tapan Trading Pvt. Ltd. ICICI. Kolkata - 700001 ₹ 6,00,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f approval by both, the JCIT, Range-5, Kolkata as well as the PCIT-2, Kolkata. These discrepancies could not be explained by the ld. DR. 15. Be it as it may it is absolutely clear that the objections raised by the assessee to the reasons recorded for re-opening and the re-opening itself vide its letter dated 22.11.2017 and 24.11.2017 were not disposed off by the AO. Thus the completion of assessment without disposal of these objections, makes the assessment bad in law as held in the case of Rabo India Finance Ltd. vs. DCIT [2012] 346 ITR 528 (Bombay) and in the case of Vishwanath Engineers vs. ACIT [2013] 352 ITR 549 (Gujarat). Thus this finding of the ld. CIT(A) has to be upheld. 16. Even otherwise Section 151 of the Act mandates recording of satisfaction by the approving authority. In this case the satisfaction was mechanical and in fact a rubber stamp was used to state Yes I am satisfied . Thus the assessment is bad in law for want of recording proper sanction u/s 151 of the Act as held in the following case laws: i. Hon ble Apex Court in the case of Chhugamal Rajpal reported in [1971] 79 ITR 603 (SC). ii. Hon'ble High Court of Madhya Pradesh in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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