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TMI Blog2021 (3) TMI 682X X X X Extracts X X X X X X X X Extracts X X X X ..... t complying with legal requirements of the provisions of section 147/148 of the Income Tax Act therefore such assessment is void ab initio and liable to be quashed. 3. The Ld. CIT(A) has erred both in law and circumstances of the case in upholding the reassessment proceedings initiated u/s 147 of the IT Act without application, of mind on the material, if any, provided by the Inv. Wing of the department. In view of the above defects in the compliances the resultant reassessment proceedings are required to be set aside. 4. The Ld. CIT(A) has erred both in law and in facts of the case in upholding the impugned assessment order need to be set-aside as the satisfaction recorded by the Pr CIT-16, New Delhi is mechanical and without application of mind as such approval vitiates the assessment. 5. The Ld. CIT(A) has erred both in law and in facts of the case in upholding the impugned reassessment proceedings and the consequential reassessment order on the ground that the reassessment proceedings in the present case is covered by proviso to sec 147 and there is no allegation in the reason recorded reproduced in the assessment order by the assessing officer that there is failure of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... round raised by the assessee and such question arose from the facts which were already on the record of the assessment proceedings and since a decision upon the new ground raised by the assessee would only help in determining the assessee's correct tax liability, the matter could be remanded to the Tribunal for adjudicating upon the additional ground on its merits. [Matter remanded]." 5.1. We also find that the Ld. CIT(A) called for the remand report from the A.O. and decide the issues as well. Considering the above facts, we reject the contention of the Ld. D.R. and proceed to decide the appeal on the points raised/arguments advanced by the assessee on the above grounds of appeals. 6. Briefly the facts of the case are that original assessment in this case was completed under section 147/ 143(3) of the I.T. Act, 1961 on 24.02.2014 at an income of Rs. 1,37,43,790/-. Subsequently proceedings under section 147 of the I.T. Act, 1961 were again initiated and notice under section 148 of the I.T. Act, 1961 Dated 31.03.2017 was issued by 1T0, Ward 47(1), New Delhi. In response to which, the assessee filed return of income on 29.04.2017 declaring an income of Rs. 1,37,43,790/-. The A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nion that income chargeable to tax has escaped assessment'' 4. Further more, in the case of Jyoti GoyaI vs ITO ( ITA.No.1259/Del/2010), the Hon'ble ITAT Delhi held that : "As regards the order contentions of the assessee that the reopening was done in a mechanical manner without application of mind. We find there is nothing on record to support such a contention. There is a live link between the information which was available with the assessing officer and his formation of belief that income has escaped assessment, sufficiency of such information cannot be gone into while deciding the issue of validity of reopening. The assessing officer can also not make enquiries as no proceedings were pending before him for the relevant assessment year. In the above view of the matter, we are in agreement with finding of the Ld. CIT(A) that the reopening of assessment u/s 147 of the Act, was valid." 5. The live link between the material provided by the investigation Wing and the reasons for belief that income has escaped assessment has been sufficiently demonstrated. Since, no assessment has been completed u/s 143(3) of the Act, and period of 4 years has elapsed, hence, forwar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iding the above documents. The AO was under obligation to provide reasons in view of the decision of the Supreme Court in the case of GKN Driveshaft India Ltd. Vs. ITO 259 ITR 19, judgment of Delhi High Court in the case of M/s Sabh Infrastructure Ltd. vs. ACIT 398 ITR 198, M/s Haryana Acrylic Manufacturing Co. vs. CIT 308 ITR 38 and judgment of Bombay High Court in the case of M/s Allana Cold Storage Ltd. Vs. ITO 287 ITR 1. The Ld. CIT(A) required the AO to give comments on this ground and AO in the remand report dated 28.11.2018 (PB 40) dealt with the above objection on the premises that the assessee had attended the assessment proceedings on various dates but has not mentioned anything that he was not provided copy of the reason and hence the AO remained under the apparent illusion that copy of the reason was provided to the assessee by the earlier incumbent before whom request was made by the assessee prior to the transfer of the jurisdiction. The Ld. CIT(A) based on the above remand report was of the view that the assessee was in possession of the information of the investigation wing and, therefore, it was apparent that the assessee was aware of the reasons recorded. Ld. Coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bjections to the reopening and pass orders thereon. No reason could be discerned why the Assessing Officer had failed to furnish to the assessee the reasons for reopening the assessments. It was not disputed that the assessee had made requests in writing for the reasons in respect of each of the assessment years in question. Merely because the assessee did not repeat the requests did not mean that it had waived its right to be provided with the reasons for reopening the assessments. According to the proviso to section 292BB(1) there was no estoppel against an assessee, on account of participating in the proceedings, as long as it had raised an objection in writing regarding the failure by the Assessing officer to follow the prescribed procedure. No question of law arose." 10. It is not in dispute that assessee made a written request on 01.05.2017 (PB 1) to the AO to supply copy of the reasons recorded u/s 147/148 of the Act and Performa and sanction u/s 151 of the Act which is received by the AO on 03.05.2017 which fact is also admitted by the AO in the remand report dated 28.11.2018 (PB 40). The AO in the remand report did not mention as to how the copy of the reasons and sanctio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the reasons recorded for reopening of the assessment and, as such, did not apply his mind? 12.1 Ld. Counsel for assessee submitted that AO has recorded wrong, incorrect and non-existing reasons in the reasons recorded for reopening of the assessment. AO has mentioned incorrect amount of Rs. 58,40,171/- in HSB Bank account at Noida. The AO, however, later on made a request to the Bank u/s 133(6) of the Act and called for the bank statement and found that actual amount deposited was of Rs. 30,74,006/-. The AO without applying his mind to the information received from Investigation Wing recorded wrong and incorrect facts in the reasons for reopening of the assessment. The AO also recorded wrong facts in the reasons that no assessment has been completed u/s 143(3) of the Act prior to the reasons because in the reasons itself AO has mentioned that earlier also reassessment order has been passed u/s 147/148 read with section 143(3) and income was determined at Rs. 1,37,43,790/-. He has further submitted that AO has also recorded incorrectly the provisions of law for obtaining the sanction from the Pr. CIT by mentioning proviso to section 151(1) of the Act which does not exist in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sthan High Court has held that "reasons must be based on new and tangible materials. Notice based on documents already on record, 148 not valid." In the instant case under appeal, the A.O. has reproduced the information received from Investigation Wing and reproduced the same in the reasons recorded under section 148 of the I.T. Act. This information shows that assessee has received the amount of credit from 06 parties, but, one of the party i.e., M/s. Management Services Pvt. Ltd., do not exist and that M/s. Shubh Propbuild Pvt. Ltd., do not belong to Shri Himanshu Verma. It, therefore, appears that A.O. has not gone through the details of the information and has not even applied his mind and merely concluded that he has reason to believe that income chargeable to tax has escaped assessment. In the reasons A.O. has recorded that assessee has received accommodation entry of Rs. 2.45 crores, but, ultimately made an addition of Rs. 11.05 crores without bringing any material against the assessee. The reasons to believe are, therefore, not in fact reasons, but, only conclusion of the A.O. In the case of Meenakshi Overseas Pvt. Ltd., (supra), the A.O. in the reasons has even mentioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been produced for the inspection of the Bench. Therefore, satisfaction recorded by the Pr. Commissioner of Income Tax is invalid and without application of mind. Therefore, the reopening of the assessment is invalid and bad in Law and cannot be sustained in Law. We, accordingly, set aside the Orders of the authorities below and quash the reopening of the assessment under section 147/148 of the I.T. Act, 1961. Resultantly, all additions stands deleted. Since we have quashed the reopening of the assessment, therefore, there is no need to decide the addition on merit which is left with academic discussion only. 9. In the result, appeal of Assessee allowed." 14. In support of the same proposition, he has also relied upon order of the ITAT Delhi Bench in the case of M/s Key Components (P) Ltd. vs. ITO ITA No. 366/Del/2016 dated 12.02.2019 in which the reassessment proceedings have been quashed because the reopening was based on incorrect facts. The findings of Tribunal in para 6.3 to 7 are reproduced as under: "6.3 Considering the above discussion, it is clear that there is a total non-application of mind on the part of the AO while recording the reasons for reopening of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id not get jurisdiction to make the reassessment." 17. Hon'ble Delhi High Court in the case of Pr. CIT Vs. SNG Developers Ltd., [2018] 404 ITR 312 (Del.) held as under: "Held, dismissing the appeal, that the reasons recorded by the Assessing Officer for reopening the assessment under section 147, issuing a notice under section 148 did not meet the statutory conditions. As already held by the Appellate Tribunal, there was a repetition of at least five accommodation entries and the total amount constituting the so-called accommodation entries would therefore, not work out to Rs. 95,65,510. It was unacceptable that the Assessing Officer persisted with his "belief" that the amount had escaped assessment not only at the stage of rejecting the assessee's objections but also in the reassessment proceedings, where he proceeded to add the entire amount to the income of the assessee. Therefore there was non-application of mind on the part of the Assessing Officer. The Appellate Tribunal was justified in confirming the order of the Commissioner (Appeals) and holding that the reopening of the assessment was bad in law." 18. Hon'ble Delhi High Court in the case of Shamshad Khan Vs. ACIT [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... staken belief about the correct position of law. However, opportunity to show cause was given to the petitioner as to why the loss claimed should not be disallowed to be carried forward. On a writ petition : Held, allowing the petition, (i) that it would be clear from the reasons given that the authority proceeded on the presumption that the law applicable was the law after the amendment and not the law in respect of which the petitioner had filed the return for the year 1999-2000. This by itself clearly demonstrated that there was total non-application of mind on the part of the authority and consequently, the notice based on that reason would amount to non-application of mind. (ii) That the income derived by the assessee from an industrial undertaking to which section 10A applies could not be included in the total income of the assessee. Therefore, the petitioner was right in filing the return by excluding the income in terms of section 10A." 19.1 The crux of the above judgments and the judgment of the Tribunal relied on the above had been that in case, incorrect, wrong and non-existing reasons are recorded by the AO for reopening of the assessment and that AO failed to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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