TMI Blog2022 (8) TMI 127X X X X Extracts X X X X X X X X Extracts X X X X ..... cumstances, the order passed by the ld. CIT(A) is quashed. Penalty u/s 271(1)(c) - HELD THAT:- When the quantum appeal as to issuance of Notice u/s 148 of the Act and confirming the addition by ld. CIT(A) is quashed then the penalty order passed u/s 271E by the ld. CIT(A) has become infructuous. Thus appeal of the assessee is allowed. - ITA No. 321/JP/2021 & 152/JP/2022 - - - Dated:- 27-7-2022 - SHRI SANDEEP GOSAIN, JM And SHRI RATHOD KAMLESH JAYANTBHAI, AM Assessee by : Shri G.M. Mehta, CA Revenue by : Smt. Monisha Choudhary, JCIT ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM Both these appeals are filed by the assessee against two different orders of CIT(A) dated 30-10-2021 and 15-03-2022, National Faceless Appeal Centre, New Delhi [ hereinafter referred to as (NFAC) ] for the assessment year 2010-11 under section 144/147 of the I.T. Act and penalty order u/s 271E of the I.T. Act. Since both these appeals pertain to an assessee mentioned hereinabove, therefore, for the sake of convenience and brevity of the case the Bench decides to pass a consolidated order. 2.1 First of all, we take up the grounds of appeal of the assessee for adjudication in IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t point No. 1 and 2 of his order. The AO mentioned in the assessment order that on plain reading of the Power of Attorney, he found that all the rights had been given by the Executor to Shri Mukesh Agrwal who sold this property on 3-02-2010 after a period of 34 months. The AO asked the assessee to produce proof of payment of sale consideration to the power attorney executor i.e. Shri Prahlad Sing but the assessee failed to explain the same. The details of the property sold was through following mode of payment. Rs.1,21,000 received in cash Rs 7,00,000 received through cheque no 959132 dated 02-02-2010 of HDFC Bank Ltd. The AO observed during the assessment proceedings that the assessee submitted the copy of bank statement of Punjab National Bank, Johri Bazar vide account No. 3553000100164792 but on perusal of bank statement no such cheque was received, however, some cash was deposited on various dates of F.Y. 2009-10 in this bank account. The AO further noted that the assessee vehemently denied for having bank account except Punjab National Bank, Johari Bazar, Jaipur and this statement was also mentioned in his letter dated 01-12-2017. The AO thus noted that the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of Section 269SS and 269T of the Act by receiving unsecured loans in cash and payment thereof in cash. According to the AO, the assesse failed to explain the sources of cash deposit of Rs.2,60,000/- because before taking unsecured loans the income of the borrower should be considered whether he has income for repayment of unsecured loans. According to the AO, the income of the assessee during the F.Y. 2009-10 was to the tune of Rs.1,58,540/- after deduction u/s 80C of Rs.1,00,000/- and assessee also paid some payments during F.Y. 2009-10 through PNB Bank to LIC, Max etc. at Rs.84,889/-. The AO further noted that the assessee stated that cash balance of Rs.1,47,000/- was paid out of his brokerage income already shown in ITR then as to how it is possible that assessee paid Rs.2,60,000/- as unsecured loans and also deposited Rs.1,47,000/- cash in Punjab National Bank, Johari Bazar, Jaipur out of income declared at Rs.1,58,540/-. The AO observed that the assessee explained the sources of cash amounting to Rs.4,07,000/- which the AO treated as bogus and added the same to the total income of the assessee as unexplained money u/s 69A of the Act for which the AO initiated the penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee in response to notice u/s 148 of the I.T. Act had not filed Return of Income. At least, the assessee should have filed a letter mentioning to consider the original return as return filed in response to the notice u/s 148 of the I.T. Act. However, the assessee had not done the same. Further, there must be a return of income filed in response to notice u/s 148 of the Act for issue of Notice u/s 143(2) of the Act. Thus, the AO had rightly passed the order ex-parte u/s 144 of the Act. Therefore, the Ground No. 2 is dismissed. 2.5 During the course of hearing, the ld. AR of the assessee filed the written submission praying therein as under:- original return of income for the year under consideration was submitted on 26-06-2010 with the jurisdictional ITO, Ward 1(2), Jaipur. On the basis of information received from DDI Wing, Jaipur notice u/s 148 of I.T. Act was issued by non-jurisdictional AO. The ITO, ward 5(2), Jaipur after recording the reasons and obtaining sanction u/s 151 of the Act from Pr. CIT (as yes ) which was also from non-jurisdictional Pr. CIT-2, Jaipur. The reasons recorded by non-jurisdictional AO were (1) non-filing the return of income and (2) non ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- was made by ignoring the different judicial pronouncements when: (a) Reasons recorded and notice u/s. 148 of IT Act was issued by the Assessing Officer, having no jurisdiction over the case of the assessee; (b) Without prejudice to sub-ground (a), no proper satisfaction as required u/s. 151 was obtained even by said non-jurisdictional Assessing Officer; (a)notice issue by non-jurisdictional AO) Assessee had submitted his Return of income on 26.06.2010 with the Id. LT.O. Ward 1(2), Jaipur (P.B. page 15) having jurisdiction over his case whereas action u/d. 147 of IT Act was initiated after recording reasons. by a non-jurisdictional Assessing Office- IT.O. Ward 5(2), Jaipur who had also obtained sanction u/s. 151 of IT Act from non-jurisdictional Pr.CIT (P.B. page 16 17) and issued notice u/s. 148 of IT Act on 08.03.2017 (P.B. page 18). After realizing jurisdictional error, the reopened case was transferred by ITO Ward 5(2), Jaipur to I.T.O. Ward 1(2), Jaipur. At the initial part of the assessment order. the jurisdictional AO had confirmed as under: The case was received on transfer from ITO, Ward-5(2), Jaipur on 24.10.2017 as the jurisdiction over the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -notes): (1) Dy. CIT Vs. Dharampal Satyapal Ltd. (2016) 175 TTJ (Del) 663: According the satisfaction under section 151 of IT Act by Addl. CIT and CIT by simply writing yes I am satisfied does not in any manner shed any light as to whether there was any application of mind at all by two senior officers, Therefore, the sanction granted by the CIT is invalid and consequently, the notice issued by the AO is bad in law. (2) Pr. CIT Vs. N.C. Cables Ltd. (2017) 391 ITR (Del) 11: Noticevalidity. Condition precedent. No proper application of mind by sanctioning authority for issuing notice u/s 147/148 observing approved Reassessment is not valid. (3) Pioneer Town Planners (P) Ltd. Vs. Dy. CIT (2018) 195 TTJ (Del 'F) 388 Sanction u/s.151. Recording of satisfaction. Endorsement by Approving Authority merely by writing yes I am satisfied is not sufficient to comply with requirement of section 151. (4) Ghanshyam Vs. ITO (2018) 194 TTJ (Agra SMC)(UO) 25: Sanction under section 151.Validity - approval granted by Addl. CIT under section 151 by merely observing that he was satisfied is clearly an approval without application of mind and therefore, it is notlegall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of mind by the AO and Pr. CIT. Notice: under sec. 148 is therefore, liable to be quashed. (9) Sagar Bullion (P) Ltd. Vs. Union of India Ors (2022) 440 ITR 485 (Guj): Sanction under section 151- validity vis a vis nonapplication of mind. Satisfaction under sec. 151 has been endorsed mechanically, without even reading the reasons, mechanically. It cannot be termed as typographical error. Even the AO has not applied his mind after drafting the reasons and perhaps not even the reasons before forwarding it to the CIT for consideration. Notice under sec. 148 is liable to be quashed. Therefore, when the reopening of the case is by a non jurisdictional Assessing officer who had obtained sanction u/s.151 of Income tax Act from Pr. CIT who accorded the sanction without application of mind for the property sold by Power of Attorney holder and not by the owner, the whole assessment proceedings and the consequential demand and other notices against the P.A. Holder are ab-initio void. The ld. AR of the assessee further filed the decision of Hon ble Madras High Court in the case of CIT vs C. Sugumaranl, (2015) 281 CTR 115 (Mad) wherein it was held that Assessee was merely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s consequent to notice issued by non-jurisdictional Assessing Officer is ab-initio void.. The Bench feels that there are lapses on the part of the Assessing Authority to decide the jurisdiction of the case. When the case of the assessee falls under the jurisdiction of the ITO, Ward 1(2), Jaipur then as to how the other Assessing Officer, (ITO, Ward 5(2), Jaipur having no jurisdiction can issue the notice u/s 148 of the Act. An order passed by an officer without recording reasons has no relevance which is void ab initio and deserves to be annulled. The defect in the order is not curable and it cannot be rectified even by sending the matter back to the concerned officer. Further since the notice u/s 148 is issued solely on the basis of information received from DDI, Wing, Jaipur without making any further enquiry and without referring the matter to the Jurisdictional Officer and nonjurisdictional officer has issued notice u/s 148 of the Act, therefore, reopening of the assessment is not valid. Hence, the reassessment proceedings consequent to notice issued by non-jurisdictional Assessing Officer is ab-inito void. Taking into consideration the above facts and circumstances, the o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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