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TMI Blog2021 (9) TMI 801X X X X Extracts X X X X X X X X Extracts X X X X ..... the same may kindly be quashed. 1.2 The action taken u/s 147 is bad in law and on facts of the case, for want of jurisdiction and various other reasons and hence the same may kindly be quashed. 1.3 The ld. AO has grossly erred in law as well as on the facts of the case in passing the Exparty Assessment order in gross breach of law without providing adequate and reasonable opportunity of being heard to the assessee. Hence the assessment so made and consequent addition so made may kindly be quashed and delete. 3.1 Rs. 50,65,000/- : The ld. CIT(A) has grossly erred in law as well as on the facts of the case in sustaining the addition of Rs. 50,65,000/- u/s 69A on account of cash deposit in the saving bank account. Hence the addition so made by the AO and confirmed by the ld. CIT(A) is being totally contrary to the provisions of law and facts on the record and hence the addition may kindly be deleted in full. 3.2: The ld. CIT(A) has also grossly erred in law as well as on the facts of the case in passing the order in gross breach of law without providing further adequate and reasonable opportunity of being heard to the assessee despite the admitted facts that an application was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ash deposit made by the assessee was not verifiable. Thereafter the AO has issued notices u/s 142(1) of the Act. The AO issued the notices time to time which have also not been complied with by the assessee. However the Assessing Officer has passed assessment order U/s 144 of the Act on 01/03/2016, wherein he made addition of Rs. 50,65,000/- U/s 69A of the Act on account of cash deposit in the bank. 7. Being aggrieved by the order of the A.O., the assessee carried the matter before the ld. CIT(A) and stated the fact that the appeal had been decided by the A.O. ex parte and a reply dated 19.01.2018 has also been submitted before the ld. CIT(A) and the ld. CIT(A) has mentioned the contents of the reply of the assessee in his order at page No. 3 para No. 5, as under. "In this connection it is submitted that the above matter was decided exparty u/s 144 and to bring the correct facts and information before your honor inspection of the 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shyam K. Khabrani v/s ACIT 346 ITR 443(Bom.) iv. CIT V/s SPL's Siddhartha Ltd 345 ITR 223(Del). v. CIT vs. Soyuz Industrial Resources Ltd.(2015) 232 TAXMAN 0414 (Delhi HC) vi. Pr. CIT vs. N.C. CABLES LTD.(2017) 98 CCH 0018 Del HC 2. No Satisfaction or application of mind by the Pr. CIT: Further on perusal of the reason recorded and approval u/s 151 by the without competent authority it is clearly proved that they have not applied the mind on the reasons recorded they have only expressed or mentioned yes I am satisfied by the Add. CIT not by Pr. CIT 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 ritualis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mently supported the orders of the Revenue authorities. 10. We have heard the ld. Counsels of both the parties and have perused the material placed on record. We have also deliberated upon the decisions cited in the orders passed by the authorities below as well as cited before us and we have also gone through the orders passed by the revenue authorities. From perusal of the record, we noticed that this is the case of A.Y. 2008-09 and the notice u/s 148 of the Act has been issued on 24.03.2015 which is admittedly after expiry four years. In this case, four years has expired on 31.03.2013 and the notice u/s 148 of the Act has been issued on 24.03.2015. It is important to mention here that Section 151 of the Act provides that no notice shall be issued U/s 148 of the Act by an A.O. after expiry of a period of four years unless the PCIT or CCIT or CIT is satisfied. For ready reference, we reproduce Section 151 of the Act as under: "151(1) No notice shall be issued under section 148 by an 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Addl.CIT, therefore, issuance of notice U/s 148 and consequent assessment order passed are invalid, illegal and are liable to be quashed on the ground that same were not issued by the competent authority and thus stands quashed. While reaching this conclusion, we draw strength from the decision in the case of Pr. CIT vs. N.C. CABLES LTD.(2017) 98 CCH 0018 Del HC, wherein it has been held as under: "that Reassessment-Issuance of Notice-Sanction for issue of Notice-Assessee had in its return for AY 2001-02 claimed that sum of Rs. 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 were taken up afresh-After considering submissions of assessee and documents produced in reassessment proceedings, AO added back a sum of Rs. 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 ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he record and hence the addition may kindly be deleted in full. 3.2 The ld. CIT(A) has also grossly erred in law as well as on the facts of the case in passing the order in gross breach of law without providing further adequate and reasonable opportunity of being heard to the assessee despite the 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 we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddition the ld. AO has stated that in the assessee's case AIR data showed that the assessee had cash deposits to the tune of Rs. 1,15,00,500/- in his SB account Vaishali Urban Co-op Bank Ltd Branch Shyam Nagar, Jaipur during the F.Y. 2008-09- relevant to A.Y. 2009-10. The assessee has not furnished any explanation with regard to the cash deposited in his bank account the same is treated as unexplained cash deposit within the meaning of Sec. 69A and made addition of Rs. 1,15,00,500/-. And he has passed the assessment order u/s144/147 by assessing the income of the assessee at Rs. 1,15,00,500/-. In first appeal we have filed a letter to the ld. CIT(A) by praying that "In this connection it is submitted that the above matter was decided exparty u/s 144 and to bring the correct facts and information before your honor inspection of the 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recorded by the Assessing Officer, that it is a fit case for the issue of such notice. 1.2Thus for initiation of proceedings to issue the notice u/s 148 is the approval and satisfaction u/s 151 by the competent authority are the mandatory pre-condition. Undisputedly here the prescribed authority is the Hon'ble Pr. CIT and the satisfaction of the prescribed authority is a must before issuing the notice u/s 148 of the Act. Therefore, what is material and mandatory condition is the approval and satisfaction of the prescribed authority and non-else. In the case of assessee the impugned approval u/s 151 dated 29-03-2016 was signed by the ITO (T&J) and issued as per directions of the Hon'ble Pr.CIT (E). The same can be proved by the approval letter (PB7-8) to the issue and the same are reproduced as 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 O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment year unless the Chief Commissioner or Commissioner is satisfied, on the reasons recorded by the Assessing Officer aforesaid that it is a fit case for the issue of such notice. Subsequently by amendment inserted by the Finance (NO.2) Act, 2014 with effect from 01.06.2013 the Principal Chief Commissioner and Principal Commissioner, apart from Chief Commissioner and Commissioner, have also been inserted as the competent authority to grant such sanction. However, sanction letter dated 27.03.2014, which Income Tax Officer has relied and supplied to the petitioner-assessee, vide communication dated 02.01.2015, has been issued by Joint Commissioner, Income Tax, Range-I, Jaipur.(para 9) Delhi High Court in CIT Vs. SPL's Siddhartha Limited, has while 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment proceedings were completed-Assessee claimed that the notice u/s 147 was unsustainable because it was not approved by the competent authority in accordance with Section 151-CIT(A) sanctioned re-assessment proceedings through issuance of notice u/s 148-ITAT's allowed assessee's appeal by holding that the CIT lacked the authority to sanction re-assessment proceedings through issuance of notice u/s 148- Held, Privy Council in Nazir Ahmad V. Emperor had laid down that if the statute mandates that something be done in a particular manner, it should be in that manner or not at all-Thus, it was not court's job to render, in the process of interpretation, an entire provision academic or inoperative-As per Section 151, in case the original 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 e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o know that there was no approval in original letter or documents. The document of approval was in the photocopy. And no tick on the name of the assessee. And it is also appear that the approval has been given or reach in the office of the ld. AO after the 31.03.2021. Because the approval letter was not attached or with the reasons recorded, the same was much after the reasons recorded. How the approval can be given of all the assessee in one documents, all are the independent or separate assessee and reason are different. Thus it all shows how the wrong and illegal manner have been adopted. 3. No Satisfaction or application of mind by the Add. CIT and Pr. CIT: Further on perusal of the reason recorded and approval 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 appendin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts went gone through and examined by Addl. CIT for reaching to satisfaction for granting approval-Thereafter, AO had mechanically issued notice u/s 148-Reopening in assessee's case for AY in dispute was bad in law and deserved to be quashed-Approval granted by Addl. CIT was a mechanical and without application of mind, which was not valid for initiating reassessment proceedings issue of notice u/s 148 and was not in accordance with s. 151 thus, notice issued u/s 148 was invalid and accordingly, reopening in this was bad in law and therefore, same was hereby quashed-Assessee's appeal partly allowed. In the case of GORIKA INVESTMENT AND EXPORT (P) LTD. vs. ITO (2018) 53 CCH 0168 Del 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 expre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... four years from end of relevant assessment year, notice u/s 148 should not be issued unless Commissioner was satisfied that it was fit case for issue of such notice-Reassessment proceedings and notice being bad in law were quashed-Assessee's appeal allowed. And the ld. CIT(A) kept mum on this very legal plea, despite deciding the case on legal issue also, which shows his contradictory approach. Therefore the notice, reasons recorded, assessment all are the illegal bad void ab-initio and barred by limitation and liable to be quashed. 4. No income escaped: It is submitted that the notice u/s 148 can be issued only when there is any escape of income because S. 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the background of facts of instant case. One more redeeming fact which had direct nexus with the subsequent re-assessment proceedings and ramification of the same had culminated into re-assessment orders was the impugned order where AO rejected the objections submitted by Assessees pursuant to notice under Section 147/148. Order passed by AO in this behalf was not a speaking order which could not be sustained. In view of legal infirmity in the notice under Section 147/148 and laconic order of AO while rejecting objections Assessee the consequential assessment Orders were liable to be annulled.(para16). Therefore all the proceedings 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 Rs. 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s or guess work. And looking to the record and assessment order it is very clear that the ld. AO has proceeded only suspicion, without any cogent material evidence. It is settled principle of law that an allegation remains a mere allegation unless proved. Suspicion cannot take the place of reality, are the settled principles kindly refer Dhakeshwari Cotton Mills 26 ITR 775 (SC) also refer R.B.N.J. Naidu v/s CIT 29 ITR 194 (Nag), Kanpur Steel Co. Ltd. v/s CIT 32 ITR 56 (All).Also refer CIT v/s KulwantRai 291 ITR 36( Del). In CIT v/s Shalimar BuildwellPvt Ltd 86 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Joint Commissioner, which accords sanction for issuing notice under section 147, is clearly unsustainable and we find that on such consideration both the appellate authorities have interfered into the matter. In doing so, no error has been committed warranting reconsideration. 20. The ld. A/R has also drawn our attention on the approval of the Pr. CIT placed at page Nos. 7-8 of the paper book and also from the assessment record placed before us, we found that he has given one consolidated approval of 56 different 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 a ..... 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