TMI Blog2022 (10) TMI 1154X X X X Extracts X X X X X X X X Extracts X X X X ..... order of the ITAT in the case of Omkam Developers Ltd. ( 2021 (5) TMI 414 - ITAT DELHI ). Therefore, we hold that the impugned reassessment proceedings and the impugned reassessment order deserves to be quashed and hold so. - Decided in favour of assessee. - ITA No.1932/Del/2019 - - - Dated:- 11-10-2022 - SHRI C.M. GARG, JUDICIAL MEMBER For the Assessee : Shri Suresh Kumar Gupta, CA For the Revenue : Shri Mithalesh Kr. Pandey, Sr. DR ORDER This appeal filed by the assessee is directed against the order dated 15.01.2019 of the CIT(A)-8, New Delhi, relating to Assessment Year 2010-11. 2. First of all, I have heard the arguments of both the representatives on legal ground No.3 of the assessee which reads as under:- 3. The Id. CIT(A) has erred on facts and in law in upholding the impugned order of the learned assessing officer which is contrary to law, passed without application of mind and without complying with the procedure and rules, is against equity and justice and facts of the assessee and material on record. 3. The written submissions of the assessee on this ground reads as follows:- Ground No.3 In this ground, the appellant is challen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In para 10 sub para vi (PB 22), there is mention of daily cash book, cheque books seized from Sh S.K. Jain whereby details of cash received from various beneficiaries companies/person through various middleman/agents in lieu of accommodation entries provided to them on various dates have been recorded. 4. There is reference to the seized records elsewhere in the reason particularly in para 18 and 18.1 page 27 and para 21 at page 31 also which led the AO to form a prima facie view of escapement of income chargeable to tax. 5. From these discussions, it is evident that the AO had no material to initiate action u/s 147 except for the material relating to the appellant found in the course of search on above named individuals. Under section 153C(1) (b) of IT Act, the power to take cognizance of the material seized from third party, need be exercised under this section only ruling out action under other provisions of the Act. With effect from scope of sec 153C was enlarged to bring in its ambit the cases where the material seized pertains to or any information contained therein relates to the person other than the person searched. Due to non-obstante clause in sec 153C(1), the auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hose satisfaction is sine qua none for valid initiation of reassessment proceedings. In Green World Corporation (supra) (SC) held that Notices issued pursuant to the direction by the Pr. CIT thereto would be bad in law. Further In CIT v. SPL's Siddhartha Ltd. [2012] 345 ITR 223 (Del), relying on Sheo Narain Jaiswal Ors. Vs. ITO, 176 ITR 35 (Pat.), held: Where the Assessing Officer does not himself exercise his jurisdiction under Section 147 but merely acts at the behest of any superior authority, it must be held that assumption of jurisdiction was bad for non- satisfaction of the condition precedent. In the case of Munjal Showa Ltd vs Dy CIT Anr WP.(C) 1707/2014 DT: 22.02.2016, the Hon ble Delhi High Court has quashed the reassessment proceeding relying the decision on Lahmeyer Holding GMBH v. Deputy Director of Income Tax 375 UR 70 [Del) where the AO was acting on the direction of the CIT in terms of the instructions of the CBDT. IV. Assuming jurisdiction to complete assessment u/s 143f3V147 bv issue of notice u/s 143(21 of IT Act on the date of supply of reasons thereby debarring appellant to appellant to file objection to assumption to jurisdiction: The ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The exercise of approval u/s 151(1) of IT Act by the Ld Pr CIT, Delhi8, New Delhi appears to have been ritualistic and formal rather than meaningful, which goes against the rationale of the safeguard of approval by a higher- ranking officer provided in the Act. Inconsistencies and omissions pointed in preceding para's in support of ground on non-application of mind are the glaring mistakes committed by the AO and non-pointing out such omissions by the approving authority and resulting non-correction of the same, before the approval was accorded, shows that the said authority have acted mechanically in granting sanction u/s 151 of the Act. Such mechanical approval was found to be fatal for validity of the reassessment proceedings as decided by the co-ordinate Hon'ble Delhi Bench in the RMP Holdings P Ltd ITA No.7243/Del/2019 dt: 31.07.2020 wherein it was held that both AO and approving authorities have acted mechanically ignoring the glaring mistakes in the reason recorded showing non application of mind by the reason recording authority where the decision of Delhi High Court in the case of Sonia Gandhi 407 ITR 594 (Del) has been distinguished. Reliance is also placed on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O, ITA No.6862/Del/2018, order dated 11.05.2021; M/s VRC Township P. Ltd. vs. ITO, ITA No.1503/Del/2017 dated 14.10.2020; M/s Maheshwari Roller Flour Mills P. Ltd. vs. ITO, ITA No.4257/Del/2019 dated 17.12.2020; and Madhu Apartments P. Ltd. vs. ITO, ITA Nos.38693870/Del/2018, order dated 01.02.2021. Therefore, the ld. AR submitted that impugned reassessment proceedings and reassessment order may kindly be quashed as proposition rendered by above noted orders including order of coordinate Bench of ITAT Delhi in the case of Omkam Developers Ltd. (supra). 5. The ld counsel also pointed out that the AO has not assumed valid jurisdiction to pass reassessment order u/s 143(3) r.w. section 147 as the notice u/s 143(2) of the Act was issued on the very same date when the copy of the reason was supplied to the assessee, thereby debarring the assessee to file objections to assumption of jurisdiction. The ld. Counsel submitted that recently, the coordinate Bench of the ITAT in the case of M/s R.N. Khemka Enterprises P. Ltd. vs. ITO in ITA No.7244/Del/2019, order dated 12.08.2021 has quashed the reassessment proceedings on similar grounds. Therefore, the reassessment proceedings and impugne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and relevant proforma of approval granted by the Pr. CIT are reproduced as under: Reason for the belief that income has escaped assessment in the case of M/s, Omkam Developers Pvt. Ltd. A.Y. 2009-10 (Pan:AAACQ5036B) 1. Name Address of the M/s Omkam Developers Ltd, 702, Aruachal Assessee Building, 19, Barakhamba, Road, Connaught Place, New Delhi 2. Assessment Year 2009-10 3. Financial Year 2008-09 4. PAN AAACO05036B PUC is a proposal for reopening the case u/s 147 of the Act for the A.Y 2009- 10 in the prescribed Performa. The information received from ADIT (Inv ), Unit-3{4), Kolkata vide his letter dated ADIT/U-3(4)/FIU-IND/MJS/15-16/4l1 dated 22.06.2015.wherein it is mentioned that; in the suspicion transaction report of 1000010583 in the name of Manohar Jaykishan Shah was received and it was reported in the I said FIU-IND-STR No. 1000010583 that there were 311 linked entities amongst whom fund transfers were made and in few accounts there were deposits also. In pursuance to the said report. Bank Statements of various entities have been obtained and on investigation, it has been noticed that Omkam Developers Pvt. Ltd (Pan AAACO5036B] was one of the benef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceived from mostly entities discussed in Annexure-C, C1 and Annexure-1 and the same was swiftly transferred to the other entities (Mostly Companies). The details of 6 such companies are given in Annexure -5 V. The fund was transferred to the entities which are the real beneficiary of the funds from the companies mentioned in Annexure-S. The details of such, companies are given in Annexure -B. Modus operandi of providing accommodaton entry The summons u/s 131 were issued to the individuals and entities mentioned in the STR. The field verification from the inspector was also done. In most of the cases either the summons could not he served or there was no compliance, The facts of immediate source of the beneficiaries being shell companies have already been established and recorded u/s 131 of the Income Tax Act-1961 during the investigation in other cases. The fact as also corroborated by the noncompliance to the summons as well as non-existence of real business of most of the entities mentioned in Annexure-C, C1 and l and S. Flow Chart of Cash Flow Cash deposit in proprietorship concerns / Layering of funds through dummy Proprietorships and Shell companies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income, it is noticed that the assessee company M/s Omkam Developers Ltd, received accommodation entries to the tune of Rs.1.93,crores during the F.Y. 2008-09 relevant to assessment year 2009-10 from the entry operators as mentioned in the chart above and same was not offered for taxation. Having perused and considered the information, I have reason to believe that income of the assessment company to the extent of Rs.193 Lakh has escaped assessment for the A.Y. 2009-10. Therefore, proceedings u/s 147 i.e. clause (b) of Explanation 2 of the provisions of section 147 of the I.T. Act, 1961 is proposed to be initiated for the A.Y. 2009-10. As per ITD record, Return of Income has filed on 30.03.2010 at an income of'Rs.2,389/- for the A.Y. 2009-10. Since four years has been expired from the end of the relevant assessment year in this case for the said assessment year, it is therefore I/requested that the reasons recorded above for the purpose of reopening of assessment is put up for kind satisfaction of Pr.CIT, Delhi-7, New Delhi in terms of proviso, to Section 151 of the Income Tax and approval for issue of notice u/s 147 may kindly be accorded. 10.1 On perusal of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ., Delhi (supra) in which reopening of the assessment in identical circumstances was held to be bad in law and sanction accorded by the Sanctioning Authority was also found invalid, therefore, reopening of the assessment was quashed. In the present case, the Learned Counsel for the Assessee has pointed-out that assessee has raised this issue before the Ld. CIT(A), but, he has rejected the submissions of the assessee holding that Section 147(b) as mentioned in the reason and Format is a typographical human error which is curable under section 292B of the I.T. Act, 1961. This issue is also considered in the Order of VRC Township Pvt. Ltd., (supra) following the decision of Hon'ble Bombay High Court in the case of Kalpana Shantilal Haria vs. ACIT [2017] 100 CCH 165 (Bom.). Following the same reasons for decision, we set aside the Orders of the authorities below and quash the reopening of the assessment in both the assessment years under appeals. All additions stand deleted. Accordingly, appeals of the Assessee are allowed. 10.3 In the instant case before us, also the Learned DR has argued that the mistake of noting section under section 147(b) of the Act for reassessment proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt of this order since the same was referred to and included in the relevant part of the order of the ITAT in the case of Omkam Developers Ltd. (supra). Therefore, respectfully following the order of ITAT Delhi Bench in the case of Omkam Developers Ltd. vs. ITO (supra) and Madhu Apartments P. Ltd. vs. ITO (supra), I hold that the impugned reassessment proceedings and the impugned reassessment order deserves to be quashed and I hold so. 11. Since, by the earlier part of this order, I have quashed the reassessment proceedings and reassessment order while adjudicating the legal ground No.3 of the assessee, no additions made by the AO could be held as sustainable. Therefore, other grounds of appeal of the assessee challenging the validity of reassessment proceedings are rendered academic in nature and, therefore, I am not adjudicating upon those legal contentions of the assessee. The ld. Sr. DR has filed written submissions on merits. So far as the grounds of the assessee on merits are concerned, the same are rendered infructuous since the reassessment proceedings have already been quashed in the earlier part of this order. 12. In the result, the appeal filed by the assessee is a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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