TMI Blog2021 (9) TMI 801X X X X Extracts X X X X X X X X Extracts X X X X ..... in his bank account - A.Y. 2009-10 - assessee has not filed his return of income and issued notice u/s. 148 and after recording reasons that income of assessee had escaped assessment in the meaning u/s 147 of the Act - HELD THAT:- Approval u/s 151 cannot be given of all the 56 assessee's in a single documents, as all assessee's are the independent and separate also the reason recorded are different in each case and it is not possible that there shall be same reasons. Looking to these facts and record it is also held that the procedures and way of approval and satisfaction is not proper. Here AO initiated proceedings u/s. 147 r.w.s. 148 on basis of information furnished and CIT gave approval without applying his mind in slipshod manner. As approval/sanction given by CIT was without recording his own independent satisfaction as noted above, therefore the reopening was not sustainable as per above judicial pronouncements and irregularities noted. There were clear irregularities and violation of the provision of Sec. 151 of the Act and very foundation of the issuance of the notice u/s 148 was not as per law. Then in that eventuality, we are of the view that the issuance notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... admitted facts that an application was made to the ld. AO for obtaining documents from the assessment record, which have not been provided till date. Hence the assessment so made and consequent addition so made by the ld. AO and confirmed by the ld. CIT(A) may kindly be quashed and delete. 4. The ld. AO has grossly erred in law as well as on the facts of the case in charging interest u/s 234A, 234B 234C. The appellant totally denies it liability of charging of any such interest. The interest, so charged, being contrary to the provisions of law and facts, may kindly be deleted in full. 5. The appellant prays your honour indulgences to add, amend or alter of or any of the grounds of the appeal on or before the date of hearing. The assessee has also raised revised or modified grounds of appeal and the same is as under: 1.1 1.2. The impugned order u/s 147/144 dated 01/03/2016,as well as the action taken u/s 147/148 are bad in law, illegal, invalid, void ab initio on facts of the case, for want of jurisdiction, without proper approval and satisfaction of higher authorities u/s 151 of the Act and also barred by limitation and various other reasons and hence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to know about some vital facts and technicalities. Hence we have applied for the certified copies of documents and record to the ld.AO on 19.01.2019 copy of the same are enclosed. The assessee has not received those documents till date. And for the justice and to decide the matter on merit and on legal issue those documents are very necessary, because those documents are in the assessment record not with the assessee. But after considering the submissions of parties and material placed on record, confirmed the action of the AO. Against the said order of the ld. CIT(A), the assessee has preferred the present appeal before the ITAT on the grounds mentioned above. 8. The grounds No. 1.1 and 1.2 raised by the assessee in the revised grounds of appeal relate to challenging the order of the ld. CIT(A) in confirming the action taken U/s 147 of the Act on the ground that the order U/s 147/144 dated 01/3/2016 as well as action taken U/s 147/148 of the Act are bad in law, illegal, invalid and void ab initio on facts of the case for want of jurisdiction, as no prior approval and satisfaction of the higher authorities U/s 151 of the Act was sought or taken and also action U/s 147 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Here is also the same position copy of reason recorded is enclosed(PB1- 3) because no satisfaction by the ld. Pr. CIT, the satisfaction if any was of the ld. Add. CIT, who is not competent in the present case. He has relied on the following case laws: i. Maruti Clean Coal And Power Ltd. vs. ACIT (2018) 400 ITR 0397 (Chhattisgarh) ii. CIT vs. S. Goyanka Lime Chemicals Ltd. (2015) 231 TAXMAN 0073 (MP) iii. PAC AIR SYSTEMS P. LTD. vs. ITO (2020) 58 CCH 0001 Del Trib iv. GORIKA INVESTMENT AND EXPORT (P) LTD. vs. ITO (2018) 53 CCH 0168 Del Trib. v. TARA ALLOYS LTD. vs. ITO (2018) 63 ITR (Trib) 0484 (Delhi) And the ld. CIT(A) kept mum on this very legal plea, which shows his contradictory approach. Therefore the notice, reasons recorded assessment all are the illegal bad void ab-initio and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer, after the expiry of a period of four years from the end of the relevant assessment year, unless the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner is satisfied, on the reasons recorded by the Assessing Officer, that it is a fit case for the issue of such notice. 151(2) In a case other than a case falling under section 151(1), no notice shall be issued under section 148 by an Assessing Officer, who is below the rank of Joint Commissioner, unless the Joint Commissioner is satisfied, on the reasons recorded by such Assessing Officer, that it is a fit case for the issue of such notice. 151(3) For the purposes of sub-section (1) and sub-section (2), the Principal Commissioner or the Chief Commissioner or the Principal Commissioner or the Commissioner or the Joint Commissioner, as the case may be, being satisfied on the reasons recorded by the Assessing officer about fitness or a case for the issue of notice under section 148, need not issue such notice himself. From perusal of provisions of Section 151 of the Act, we observed that notice u/s 148 of the Act after four years can be issued only afte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... back a sum of ₹ 1,35,00,000-CIT(A) held against assessee on legality of reassessment notice but allowed assessee s appeal on merits holding that AO did not conduct appropriate enquiry to conclude that share inclusion and advances received were from bogus entities-Tribunal allowed assessee s appeal on merits-Revenue appealed against appellate order on merits-Assessee s cross appeal was on correctness of reopening of assessment- Tribunal upheld assessee s cross-objections and dismissed Revenue s appeal holding that there was no proper application of mind by concerned sanctioning authority u/s Section 151 as a pre-condition for issuing notice u/s 147/148-Held, Section 151 stipulates that CIT (A), who was competent authority to authorize reassessment notice, had to apply his mind and form opinion-Mere appending of expression approved says nothing-It was not as if CIT (A) had to record elaborate reasons for agreeing with noting put up-At same time, satisfaction had to be recorded of given case which could be reflected in briefest possible manner-In present case, exercise appears to have been ritualistic and formal rather than meaningful, which was rationale for safeguard of appr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ys your honour indulgences to add, amend or alter of or any of the grounds of the appeal on or before the date of hearing. The assessee has also raised revised or modified grounds of appeal and the same is as under: 1.1 1.2. The impugned order u/s 147/144 dated 01/03/2016,as well as the action taken u/s 147/148 are bad in law, illegal, invalid, void ab initio on facts of the case, for want of jurisdiction, without proper approval and satisfaction of higher authorities u/s 151 of the Act and also barred by limitation and various other reasons and hence the same may kindly be quashed. 15. All the grounds and he revised/modified grounds No. 1.1. and 1.2 of the appeal raised by the assessee are interrelated and interconnected and relates to challenging the order of the ld. CIT(A) on the ground that impugned order u/s 147/144 dated 01/03/2016,as well as the action taken u/s 147/148 are bad in law, illegal, invalid, void ab initio on facts of the case, for want of jurisdiction, without proper approval and satisfaction of higher authorities u/s 151 of the Act and also barred by limitation, therefore, we thought it fit to dispose off by this consolidated order. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessment record was necessary and the ld. AO has allowed the inspection of the assessment record just on 18.01.2019. On inspection of the assessment record we have come to know about some vital facts and technicalities. Hence we have applied for the certified copies of documents and record to the ld.AO on on 19.01.2019 copy of the same are enclosed. The assessee has not received those documents till date. And for the justice and to decided the matter on merit and on legal issue those documents are very necessary, because those documents are in the assessment record not with the assessee. Also vide page3 para 5 of CIT(A) order. However the ld. CIT(A) has not accepted our pray and passed the order without any material. And confirmed the action of the ld. AO and also confirmed the additions made by the ld. AO. vide the observations of CIT(A) at page 5 and 10. 1. No approval from CIT or Pr. CIT u/s 151: As in the above case the notice u/s 148 issued after expiry four years and as per provisions of Sec. 151 notice after four years can be issued only after obtaining the sanction or approval u/s 151(1) from the CIT or Pr. CIT. And in the present case no approval has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under. I am directed to convey the Pr. CIT s approval u/s 151(1) of the IT Act for issue of notice u/s 1487 in the above named cases. Even there is no full signature nor date at the last page of approval, hence it is not clear when the approval was signed by the ITO(T J). Further even no signature in-front of copy to :The AO concerned (ITO, Ward-2(4), Jaipur vide PB10 1.3 Our above contention is directly covered and fully supported by the recent decision of this Honble ITAT Jaipur Bench in the case of Modern School Society, Delhi vs CIT (Exemption), Jaipur in ITA no. 1118/JP/2016 dated 20.12.2017 vide para 10 page 12 to 21 of order (PB6 to 11 of case laws index). Where under the exactly same facts and circumstance the Honble Bench has quashed the order of CIT(E). And the same is also part of our WS and consider the same. 1.4 Further the department has also filled the MA in this case and the MA filed by the department has also been rejected by the Honble Bench on dt 24.07.2018 (MA no. 53/JP/2018). 1.5 Against the order of the Honble ITAT the department had filled appeal before the Honble Raj. High Court and the Honble Raj. High Court has dismis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... holding that when a particular authority has been designated to record his/her satisfaction on any particular issue, then it is that authority alone who should apply his/her independent mind to record his/her satisfaction and satisfaction so recorded should be 'independent' and not 'borrowed' or 'dictated' satisfaction, rejected contention of the revenue that obtaining approval from the authority other than the one who was competent to grant such approval, was mere irregularity committed by the Income Tax Officer. And that it was rectifiable under Section 292B of the IT Act cannot be accepted as such irregularity is not curable under Section 292B. para 11) Resort to Section 292B of the IT Act cannot be made to validate an action, which has been rendered illegal due to breach of mandatory condition of the sanction on satisfaction of Chief Commissioner or Commissioner under proviso to sub-section (1) of Section 151. This is an inherent lacunae affecting the very correctness of the notice under Section 148 and is such which is not curable by recourse to Section 292B of the IT Act. 1.8.2 Also refer Ghanshyam K. Khabrani v/s ACIT 346 ITR 443(Bom.) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment was completed other than i.e. otherwise than u/s 143(3) or during the course of re-assessment proceedings, competent authority would be the Joint Commissioner-Instant Court had to give effect to plain words of the statute which unambiguously stated that the competent authority in such cases was the Joint Commissioner and not the Chief Commissioner or the Principal Commissioner-Since the original assessment was completed other than the eventualities contemplated in Section 151(1), i.e. it was processed u/s 143(1), thus, clearly Section 151(2) would be applicable- No infirmity was found in the order of the ITAT-Revenue s appeal dismissed. 1.8.5In the case of Pr. CIT vs. N.C. CABLES LTD.(2017) 98 CCH 0018 DelHC held that Reassessment-Issuance of Notice-Sanction for issue of Notice-Assessee had in its return for AY 2001-02 claimed that sum of ₹ 1 Crore was received towards share application amounts and a further sum of Thirty Five Lakhs was credited to it as an advance towards loan- Original assessment was completed u/s 143(3)-However, pursuant to reassessment notice, which was dropped due to technical reasons, and later notice was issued and assessments we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roval u/s 151 by the competent authority it is clearly proved that they have not applied their mind on the reasons recorded they have only expressed or mentioned yes on the reason forwarded while as per decision of Pr. CIT vs. N. C. Cables Ltd.(2017) 98 CCH 0010 Del HC it has been held that Section 151 of the Act clearly stipulates that the CIT, 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 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. Here is also the same position copy of reason recorded is enclosed(PB10- 11) because no satisfaction by the ld. Pr. CIT or ld. Add. CIT. Also refer Maruti Clean Coal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Trib Reopening-Income escaping assessment- Validity thereof-Assessee filed return of income declaring income which was processed u/s. 143(1)-AO issued notice u/s. 148 after recording reasons that income of assessee had escaped assessment-AO framed assessment u/s. 143(3) r.w.s. 147 by making addition-CIT(A) upheld order of AO-Held, in CIT Vs N.C. Cables Ltd., it was held that CIT(A) who was competent authority to authorize reassessment notice had to apply his mind and form opinion-Mere appending of expression approved says nothing-Satisfaction had to be recorded of given case which could be reflected in briefest possible manner-Exercise appears to had been ritualistic and formal rather than meaningful, which was rationale for safeguard of approval by higher ranking officer-AO initiated proceedings u/s. 147 r.w.s. 148 on basis of information furnished by Directorate of Investigation Unit and CIT gave approval without applying his mind in slip-shod manner-As approval/sanction given by CIT was without recording satisfaction, reopening was not sustainable-Assessee s appeal allowed. TARA ALLOYS LTD. vs. ITO (2018) 63 ITR (Trib) 0484 (Delhi)Reassessment-Income escaping assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 147 provides that If the Assessing Officer has reason to believe that an income chargeable to tax has escaped assessment for any assessment year, here the assessee has not escaped any income because the assessee has deposited cash in the bank account out of income received on the sale agreement of agriculture land in the year of 2005. Which shows that there was no escapement of income by the assessee. Hence if there is neither the escapement of income by the assessee nor proved then the notice issued u/s 148 is invalid. 5. Reason to believe and not reason to suspect: 5.1It is further submitted that even under the amended law by the finance act 1989 the condition precedent or words, which continues right since inception till date, are reason to believe and not reason to suspect . The word believe has to be understood in contradistinction of suspicion or opinion. Belief indicates something concrete or reliable. Kindly refer Gangasharan Sons Pvt. Ltd. 130 ITR 1 (SC), and ITO v. Lakhmani Mewal Das, (1976) 103 ITR 437 (SC). 5.2The belief of the Officer should be as to escapement of income and the belief should not be a product of imagination or speculation. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings are illegal invalid void ab initio and liable to be quashed. 6. Hence in view of the above submissions the action taken u/s 148 and consequent proceedings may kindly be quashed. GOA-2: Addition of ₹ 1,15,00,500/- on account of cash deposits in the bank account FACTS: The brief facts kindly refer facts of GOA-1 In first appeal the ld. CIT(A) has confirmed the order and finding of the ld.. Hence this appeal. SUBMISSIONS : 1. Atthe very outset it is submitted that admittedly the ld. AO has made the addition on account of cash deposits of ₹ 1,15,00,500/- in the bank Vaishali Urban Co-op bank Ltd Shyam Nagar Jaipur in the F.Y. 2008-09 relevant to A.Y. 2009-10 vide page 2 para 1 of the assessment order. 2. Source of cash deposits in the bank account established: As the assessee has deposited cash of ₹ 1,15,00,500/- during the year in the Bank (PB3) on various dates. As the ld. AO himself has made inquiry u/s 133 from the bank and M/s Rangroop Builders Pt. Ltd.. On inquiry it has been proved that the assessee was having agriculture land. On 25.03.2005 he has made an agreement to sale of his agriculture land for ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CCH 250(All) it has been held that the AO made the addition merely on suspicion which was not desirable in the eye of law. 5. Hence in view of the above facts, circumstances and legal position entire addition may kindly be deleted in full. GOA-3 Charging of Interest u/s 234B: FACTS AND SUBMISSIONS: The ld. AO has grossly erred in law as well as on the facts of the case in charging the interest u/s 234 and as per law and settled legal position in this case no interest can be charged u/s 234B and liable to be deleted. 18. On the other hand, the ld. DR has vehemently supported the orders of the authorities below and also relied upon decisions in the case of CIT Vs Uttam Chand Nahar 295 ITR 403 (Raj) and ITO Vs Mahadeo Lal Tulsian, 110 ITR 786 (Kol). 19. We have considered the rival contentions of both the parties and perused the material available on record. From perusal of the record, we observed that the A.O. has reopened the case of the assessee for escaping the income of ₹ 1,15,00,500/- on account of cash deposit in his bank account and assessee has not filed his return of income and issued notice u/s. 148 of the Act on 29.03.2016 after recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t assessee s in one shot through one letter dated 29.03.2016 which is even not signed by him but signed by ITO (T J), who is not a competent authority to give and signed the approval letter, which shows how the PR. CIT has acted in very formal way. When we examined of the assessment record, it is gathered that the approval was in photocopy and not in original or there was no original letter or documents of approval. Further the name of the assessee was at Sr. 46 out of 56 assessee's and even there was no tick on the name of the assessee in the approval list, which creates a doubt that the approval has been received before the issue of notice u/s 148 of the Act as the approval letter lying on the file after issuance of the notice u/s 148 or not before or attached with the notice u/s 148 and may reach in the office of the AO after 31.03.2016. Thus, in our view, approval u/s 151 cannot be given of all the 56 assessee's in a single documents, as all assessee's are the independent and separate also the reason recorded are different in each case and it is not possible that there shall be same reasons. Looking to these facts and record it is also held that the procedures and w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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