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TMI Blog2024 (12) TMI 252X X X X Extracts X X X X X X X X Extracts X X X X ..... ition to Rs. 41,47,382/-. The assessee had fully explained the source of investment made for purchase of residential house. Therefore, the basis taken by the Assessing Officer as well as the ld. CIT(A) to confirm the addition of Rs. 41,47,382/- u/s 69 is totally wrong and unjustified and same deserves to be deleted in full." 3. Briefly stated, the facts of the case are that the assessee filed return of income for the year under consideration on 25.07.2012 disclosing total income of Rs. 2,34,600/- and agriculture income of Rs. 49,500/-. 4. AIR information was received from the office of the sub-registrar u/s 285BA of the Income-tax Act, 1961 [the Act, for short] relating to purchase of immovable property by the assessee for Rs. 90,95,000/- including stamp duty on 16.02.2012. The sub-registrar later confirmed that this was a residential property situated at 8/63, Chiranjeev Vihar, Ghaziabad, purchased in joint name of Mr Gajendra Pal Sharma & Mrs Meena Sharma. 5. To verify the transaction as reported in the AIR information, the Assessing Officer issued and served notice u/s 133(6) of the Act to the assessee and in response no compliance was made by the assessee. Notice u/s 148 was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e proposition that where the re-opening of the assessment was based on incorrect facts, the notice for re-opening was unsustainable. Reliance in that regard was also placed on the decisions in Punia Capital Pvt. Ltd. Writ Petition No. 1091/2022 decided on 15/2/2023 and Ankita A. Choksey411 ITR 207. 13. The ld AR also referred to the Delhi High Court in the case of Northern Exim Pvt. Ltd. vs. DCIT (2013)357 ITR 586 which held that if reasons recorded for issue of notice u/s 148 are factually incorrect that cannot therefore, form the basis for the belief that income had escaped assessment. 14. On the issue of mechanical nature of PCIT's approval, the ld AR relied on CIT v. S. Goyanka Lines & Chemical Ltd. (2016) 237 Taxman 378 (SC) and Pr CIT vs M/s NC Cable Ltd, ITA No. 335/2015 (Del HC) Order dt. 11.01.2017 for the proposition that merely appending "yes, I am satisfied" or "approved" is not sufficient. 15. The ld. counsel for the assessee, on merits, submitted that the assessee during the year under consideration along with wife Mrs Meena Sharma has purchased residential property for Rs. 90,95,000/- (purchase cost 8500000+ stamp duty 550000) on 16.02.2012.That for purchase of re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her argued by the ld DR that at this point of proceedings, the AO considered the entire investment in the hands of the assessee as the purchase deed of the property does not mention that 50% of investment was made by his wife. 19. The ld DR submitted that the assessee did not comply with notice u/s 133(6) and as no explanation was forthcoming from the assessee, the AO formed his prima facie 'reason to believe' on the basis of materials on record that the investment remained unexplained, and therefore has escaped assessment. It was submitted that the AO had tangible materials in his possession in the form of information from AIR which he verified from the sub-registrar and the ITR of the assessee showing meagre income. 20. On the issue of PCIT giving approval u/s 151(2) mechanically, the ld DR forcefully submitted that the PCIT has clearly applied his mind before giving approval. The ld DR pointed to the proforma for recording reason for initiating proceedings u/s 148, which shows that the PCIT has examined the reasons recorded by the AO and agreed and was satisfied with the views of the AO for issuance of notice u/s 148. The ld DR vehemently contested that the approval was not gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, which strengthens my belief that the income chargeable to tax has escaped assessment. The assessee has also failed to disclose fully and truly all material facts necessary for his assessment in the ITR filed on 25.07.2012. Therefore, I have reason to believe that income chargeable to tax at Rs. 90,95,000/- being unexplained investment in purchase of immovable property under the head 'Income from other sources' and any other income has escaped assessment within the meaning of explanation 2 to section 147 of 1.T. Act, 1961. It is, therefore, requested to accord necessary approval under section 151 of 1.T. Act, 1961 to issue notice under section 148 of I.T. Act, 1961 for A.Y. 2012-13. Dated:25.03.2019 23. With regard to the approval of the PCIT, the same is reproduced below: "In View of the reasons recorded by the A.O, I am satisfied that this is a fit case for issue of notice u/s 148. 27/3/19 Pr. Commissioner of Income-tax, Ghaziabad." 24. From the examination of the reasons recorded as above, we find that the AO recorded his reasons on 25.03.2019 mentioning the reasons for reopening. On receipt of information relating to purchase of immovable property, the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the property. We are supported on this issue by the Hon'ble Supreme court which held in the case of Raymond Wollen Mills Pvt Ltd Vs ITO (1999) 236 ITR 34 (SC), that the sufficiency or correctness of the material is not a thing to be considered at this stage. 27. We also agree with the revenue contention that the AO formed a 'reason to believe' and not 'reason to suspect'. The AO had verified information in his possession that the assessee had made investment in the said property. Besides, the AO had in front of him the ITR of the assessee showing meager income not commensurate with the investment made. Following the principal of natural justice, the AO gave the opportunity to the assessee to explain the investment before taking recourse to section 148 of the IT Act. In absence of any explanation in response to the notice u/s 133(6), in respect of investment, the AO formed a 'reason to believe' and reopened the assessment u/s 148 of the I T Act. It does not lie in the mouth of the assessee now to say that the AO should have verified from the AO of the wife of the assessee whose name/PAN featured in the purchase deed when he himself failed to avail the opportunity to explain the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jectures and surmises. The recording of reasons must show application of mind to the relevant and germane facts, on the basis whereof the action initiated under Section 147 of the Act is to beadjudged. The question as to whether it is fair and just to nip reassessment proceedings at this stage, arises before us every now and then. There is aversion to reassessment, and that is predictable. No assessee would want the tax authority to reopen what has been closed. Even the Court would not countenance casual, mindless and unjustified original reopening, lest the original assessment proceedings lose their conclusiveness and certainty. Reopening of assessment is time consuming and burdensome for the assessee. Since discretionary power is vested with the AO, the assessees are entitled to challenge the reopening by way of a writ petition. This is a safety measure, to warrant that exercise of power is done with circumspect and with comprehension of facts. This is the precise reason that there is a plethora of judgments on this issue that are cited by both the parties, and we have to repeatedly navigate through the various views expressed by the court. 20. In light of the above judicial pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sufficiency of the "reasons to believe" cannot be investigated. 29. Coming to the issue of mechanical application of mind by the PCIT while granting approval u/ 151(2), we note that the PCIT recorded her approval as under: "In View of the reasons recorded by the A.O, I am satisfied that this is a fit case for issue of notice u/s 148." We find that the PCIT has recorded her satisfaction after clearly applying her mind on the reasons recorded by the AO before giving approval. The approval, reproduced as above, amply demonstrate that the PCIT has examined the reasons recorded by the AO, agreed and was satisfied with the views of the AO for issuance of notice u/s 148. We therefore hold that the approval u/s 151(2) was not granted mechanically but was accorded after careful thought. 30. We find that the case of N C Cables relied upon by the assessee, is factually distinguishable. In that case, the Delhi High court found that the CIT had merely appended the expression "approved". In fact, this decision supports the case of Revenue as it observed further as follows: "The mere appending of the expression 'approved' says nothing. It is not as if the CIT (A) has to record elaborate re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is the settled position in law that the sanctioning authority is required to apply his mind and the grant of approval must not be made in a mechanical manner, however, as noted by the Division Bench of the Calcutta High Court in Prem Chand Shaw (Jaiswal) v Assistant Commissioner, Circle-38, Kolkata [2016] 67 taxmann.com 339 (Calcutta), the mere fact that the sanctioning authority did not record his satisfaction in so many words would not render invalid the sanction granted under section 151(2) when the reasons on the basis on the basis of which sanction was sought could not be assailed and even an appellate authority is not required to give reasons when it agrees with the finding unless statute or rules so requires. The decision in United Electrical Co. Pvt. Ltd. (supra), as relied upon by the petitioner is distinguishable from the present case, as in the said case, there was no material on record to provide foundation for Assessing Officer's reasons to believe. Therefore, it was held that the recording of the satisfaction by the AO was unjustified and without independent application of mind. However, there is no requirement to provide elaborate reasoning to arrive at a findi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntial property. It is stated that the Assessee's share comes to Rs. 45,42,500/-but the Assessing Officer treated total purchase consideration as belonging to assessee only. 37. Regarding source of payment the ld. counsel for the assessee stated that the assessee submitted all necessary facts and documents before Assessing Officer as well as Ld. CIT(A).It was submitted that during the course of appellate proceedings, the assessee has filed application under rule 46A with documentary evidence in respect of unsecured loans taken by wife Mrs Meena Sharma. It was argued that the assessee had duly discharged onus as required by section 68 of the Act. 38. The ld. CIT(A) at Para 5 has discussed remand report received from Assessing Officer and there is no finding given in respect of unsecured loans taken by assessee's wife Mrs Meena Sharma. Further, the Assessing Officer has mentioned that sale proceeds of Rs. 37 lakhs were received in May 2012 but he ignored that out of such sale proceeds two cheque of Rs. 600000/- and Rs. 500000/- were given on 12.03.2012 and 15.03.2012 which were cleared on 01.06.2012. 39. It is submitted that in remand report the Assessing Officer has again trea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lance of Rs 356,789/- and she received unsecured loan of Rs 4,00,000/- on 23.06.2011 from Manoj Jain. Out of available bank balance, a sum of Rs 800000/- has been transferred to SBI account. ii) Payment Rs 500000+600000+800000+900000 were made to seller from a/c no. 1149101028730 maintained with Canara bank in the name of assessee's wife Meena Sharma. In said account assessee received unsecured loans of Rs. 18,55,000/-(100000+ 100000+ 100000+ 755000+ 150000+650000) and a part from unsecured loans in said account, Rs 2,25,000/- was transferred by assessee from a/c 31787921027 with SBI. The assessee wife also received Rs 499,881/- on 06.01.2012 on account of sale of jewellery.T he assessee produced the Jewellery bill, bank account before us which were filed before Ld. AO. as well as before CIT(A). In respect of unsecured loans taken by Mrs Meena Sharma, assessee had filed documentary evidence before the CIT(A) only. iii) Payment of Rs. 600000/- & Rs 500000/-, these cheques were cleared on 01.06.2012 from a/c no. 1149101028730 maintained with Canara Bank in the name of Mrs Meena Sharma. Before clearance of these cheque, in bank a/c a sum of Rs 14,00,000/- was received by Mrs M ..... X X X X Extracts X X X X X X X X Extracts X X X X
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