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TMI Blog2023 (12) TMI 872X X X X Extracts X X X X X X X X Extracts X X X X ..... oss of Rs. 6,207/- which was processed u/s 143(1) of the Act on 27.08.2009 accepting the returned income. Thereafter, the case of the assessee was reopened u/s 147 of the Act by issuing notice u/s 148 of the Act on 31.03.2015. The said notice was duly complied by the assessee by filing return of income dated 29.04.2015 by accompanying a copy of ITR 5 dated 28.04.2015 in compliance and also requested the AO to provide the copy of reasons recorded for the reopening of assessment which was duly supplied by the AO vide letter dated 26.05.2015. Finally, the assessment was made after making addition of Rs. 7 Lakh u/s 68 of the Act on the ground that the assessee has received the said sum from two parties which remained unexplained in the order passed u/s 147/143(3) of the Act dated 30.03.2016. 4. The appeal of the assessee was dismissed by Ld. CIT(A) ex-parte where the assessee failed to appear on the various dates given however, decided the issue after considering the facts on record and on merit. 5. After hearing the rival contentions and perusing the material on record including the copy of sanction accorded u/s 151 of the Act dated 30.03.2015 in which the Addl. CIT, Range-4, Kolkat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AGAPK6813D. Occupation status is business. Account nos. 019605001938 and 019605000653 are PAN linked. Account No. 000605004320 mentioned is transaction linked. The said amount was triggered under large Value D/W cash transactions in [CAA] ACCOUNTS. The transaction pattern observed in the account has been deposited mainly by cash followed by immediate withdrawals through transfers to the transaction linked account. During the period form 01.04.2011 to 05.01.2012, the total debits and credits in the account are Rs. 48.30 lacs and Rs. 48.25 lacs respectively. Out cash is Rs. 38.25 lacs. As per enhanced due diligence, it was found that the customer was not available at the given address at the time of visit. The neighbours informed that they are not aware of the customer. It is seen that the customer is getting cash deposits where the same is transferring to Ajay Trading and his own account. Based on the above mentioned facts, the account is being reported as suspicious". During the course of enquiry/investigation, requisition u/s 133(6) of the Income Tax Act, 1961 was issued to Branch Manager, ICICI bank, for the bank statements by the Investigation Department. The bank statements w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the I.T. Act,1961. Form ITNS-10 along with relevant enclosures is put up before the Addl. CIT, Central, Range-3, Kolkata for kind perusal and approval." The above reasons are placed at page no. 4 & 5 of the PB. A perusal of the para 2 in the above reasons states that M/s Rahul Enterprise is a proprietary concern from which the assessee has received money, has opened account no. 029005003254 on August, 2017 in Faizabad Branch, UP from ITO(Inv), Unit-1, Kolkata vide letter dated 4/8.3.2021. The instant assessment year before us is AY 2012-13 whereas the reasons state that account was opened in August, 2017 in Faizabad Branch, UP which is apparently wrong and contradictory and not practically possible. Similarly on the next page in para 4the AO has again mentioned that M/s Rahul Enterprise has opened account No. 029003254 with ICICI Bank, Kolkata while in the table prepared on page 5 of the PB, the AO stated the bank account no 029005003254 with ICICI Bank, Kolkata which showed that there was a total non-application of mind and mechanical recording of reasons by the AO. We note that there is a contradiction in the bank account no. as mentioned in para 1 at page 4 & 5 of the PB and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xcuse of typographical error. 8. Moreover, if only the Additional Commissioner, who has recommended the proposal of respondent no.2 to respondent no.3 or respondent no.3 himself, while expressing satisfaction that the case was fit for issue of notice under Section 148, had bothered to read the reasons recorded, certainly they would have found the errors and they would have directed respondent no.2 to correct the reasons or refused to grant approval on reasons fraught with errors. This also indicates non-application of mind by the recommending authority, who, Mr. Sharma says, must be an Additional Commissioner of Income Tax and respondent no. 3. On this ground alone, the notice issued under Section 148 gets vitiated. 9. Paragraph 2 of the reasons recorded reads as under: "2. The A.O. has information that the assessee has entered into certain financial transaction/activities during the financial year 2013-14 relevant to the A.Y.2015-16. On going through the information, it is noticed that the assessee has involved in the share trading activity' during the year and it involved an amount of Rs. 2,46,07,261/-. It came to noticed that during the year assessee has made of shares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion cannot be taken for reopening assessment even if the information is wholly vague, indefinite, far- fetched and remote. The reason for the formation of the belief must be held in good faith and should not be a mere pretence. (emphasis supplied) 12. Therefore, there must be live link or close nexus between the material before the ITO in the case at hand and the belief which he was to form recording the escapement of income. It is also no doubt true that Court cannot go into the sufficiency or adequacy of the material and substitute its own opinion for that of the Income Tax Officer on the point as to whether action should be initiated for re-opening assessment but at the same time, it is not any and every' material, however vague and indefinite or distant, remote and far-fetched which would warrant the formation of the belief relating to escapement of the income of the assessee from assessment. It is also settled law that the reasons for re-opening assessment has to be tested / examined only on the basis of the reasons recorded at the time of issuing a notice under Section 148 of the Act seeking to re-open the assessment. These reasons cannot be improved upon and/or suppl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application of mind is invalid and the notice issued by the AO is without jurisdiction. The operative part is reproduced as under: "6. Having heard both the parties and perused the records. It is an admitted position that the AO had put up a note before Addl. CIT wherein he has put up a note along with the information as well as reason for forming his belief to re-open the assessment of the assessee for A.Y. 2014-15 on 28.11.2017 which action of AO required the approval of Addl./Joint CIT u/s 151 for issuance of notice u/s 148 of the Act. It is noted that the AO had put up the note for approval for reopening on 28.11.2017 and on the same day approval has been written by hand by the Addl. CIT and on the same date notice has been issued u/s 148 by the AO. Even though the Ld. DR stated that he has got online approval wherein the Ld. Addl. CIT has written "I am satisfied with the reason so approval granted" still according to me the action of the Addl. CIT cannot satisfy the requirement of law which is expected from an authority while exercising approval before issuance of notice for re-opening. It should be kept in mind that approval u/s 151 of the Act is a power given to the higher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A and the assessee has provided details/information in the return of income as well as in the assessment proceedings. Therefore to draw inference that the assessee has failed to disclose truly and fully any material facts relating to assessment would be wrong. The case of the assessee finds support from the following decisions (z). New Delhi Television Ltd. vs DCIT (supra),(ii) CIT vs Multiplex Trading & Industries Company Ltd. (supra),(Ui). Hubtown Ltd. vs DCIT (supra).(iv). Dr. Rajivraj Ranbirsingh Choudhary vs ACIT (supra) and also Haldia Petrochemicals Ltd. vs. ACIT in ITA no. 2455/Kol/2019 for AY 2008-09 dated 24.03.2021 which has been passed by the Tribunal after following the decision of Kolkata Tribunal in the case of Beekay Steel Industries Ltd. vs. DCIT in ITA No. 105/Kol/2015 dated 31.05.2017 wherein the issue has been allowed by quashing the assessment as well as the reopening proceedings. On this count also, the reassessment proceedings as well as reassessment frame are liable to be quashed. Accordingly considering the facts and circumstances of the case and various judicial pronouncements as discussed above, we are inclined to set aside the order of Id CIT(A) and quas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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