TaxTMI 
TaxTMI 
2014 (12) TMI 90
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....cts and in the circumstances of the case and in law, the ld.CIT(A) has erred in deleting the addition of Rs. 30,738/- made u/s 69C of the Act being the uncounted cash paid for obtaining the accommodation entries. 3.1. The Ld.CIT(A) ignored the finding recorded by the AO and the fact that the assessee is involved in the business of obtaining accommodation entries. 4. On the facts and in the circumstances of the case and in law, the ld.CIT(A) has erred in deleting the addition of Rs. 17,72,395/- made by AO disallowing the expenses. 4.1. The Ld.CIT(A) ignored the finding recorded by the AO and the fact that the assessee did not file any necessary details to substantiate its claim. 5. The Ld.CIT(A) erred in accepting the additional evidences without following the procedure laid down by law. 6. The appellant craves leave to add, alter, or amend any grounds of appeal raised above at the time of hearing." 2. The assessee has filed Cross Objection on the following grounds. "1. That the grounds of appeal raised by the AO are misconceived and incorrect. &n....
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....the Ld.CIT(A). We do not feel it necessary to refer to this correspondence as in our view it is not necessary for adjudication of the issue on hand. 4. We first take up the C.O. filed by the assessee, as the jurisdiction of the AO in reopening the assessment is challenged therein. 5. We have heard Shri Rakesh Kumar Khiwani, the Ld.Counsel for the assessee and Shri Sunil Kumar Sharma, the Ld.Sr.D.R. on behalf of the Revenue. 6. On a careful consideration of the facts and circumstances of the case, on perusal of orders of lower authorities, material on record and case laws cited, we hold as follows. 7. Ground no.1 is general in nature. Ground nos. 2 and 3(c ) are not pressed. Ground no.5 is general in nature. 7.1. This leaves us with ground no.3(a), 3(b) and 4. 7.2. Ground nos. 3(a) and 3(b) challenge the reopening of the assessment. The reasons of reopening are extracted for ready reference. "M/s MB Jewellers P.Ltd. AY 2000-2001 In this case, information has been received from the CIT, Delhi II, New Delhi vide endorsement no.CIT II/06-07/687 dt. 18.7.2006 to CCIT, Delhi II's letter no. CCIT-II/ITO(Hqrs)/2005-06/158 dt. 20....
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....ate that the reasons recorded by the AO are not reasons acceptable to law. There is no independent application of mind. The AO had mechanically issued notices u/s 148 of the Act, on the basis of information allegedly received by him from the CIT, New Delhi 2. From the proforma for approval of notice, which is extracted above, it is clear that the AO was also not aware that the assessee had filed a return of income for the said AY. The ACIT has also not applied his mind. No satisfaction has been recorded by the Ld.ACIT. Only an approval is given. Thus in our view the reopening is bad in law. 7.6. (a) In coming to this conclusion we draw strength from the judgement of the Hon'ble Delhi High Court in the case of Signature Hotels (P) Ltd. Vs. ITO and another, reported in 338 ITR 51 (Delhi) has under similar circumstances held as follows. "For the A.Y. 2003-04, the return of income of the assessee company was accepted u/s.143(1) of the Income-tax Act, 1961 and was not selected for scrutiny. Subsequently, the Assessing Officer issued notice u/s.148 which was objected by the assessee. The Assessing Officer rejected the objections. The assessee company filed writ p....
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...."Held, dismissing the appeals, that the only information was that the assessee had taken a bogus entry of capital gains by paying cash along with some premium for taking a cheque for that amount. The information did not indicate the source of the capital gains which in this case were shares. There was no information which shares had been transferred and with whom the transaction had taken place. The AO did not verify the correctness of information received by him but merely accepted the truth of the vague information in a mechanical manner. The AO had not even recorded his satisfaction about the correctness or otherwise of the information for issuing a notice u/s 148. What had been recorded by the AO as his "reasons to believe"was nothing more than a report given by him to the Commissioner. The submission of the report was not the same as recording of reasons to believe for issuing a notice. The AO had clearly substituted form for substance and therefore the action of the AO was not sustainable." 7.7. Applying the propositions laid down in the above cited judgements to the facts of the case, we have to necessarily quash the reopening of the assessment as bad in law. 7.7.1. Ev....
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....ssue such notice himself.} " 6. A simple reading of the provisions of Sec. 151(1) with the proviso clearly show that no such notice shall be issued unless the Commissioner is satisfied on the reasons recorded by the AO that it is a fit case for the issue of notice which means that the satisfaction of the Commissioner is paramount for which the least that is expected from the Commissioner is application of mind and due diligence before according sanction to the reasons recorded by the AO. In the present case, the order sheet which is placed on record show that the Commissioner has simply affixed "approved" at the bottom of the note sheet prepared by the ITO technical. Nowhere the CIT has recorded his satisfaction. In the case before the Hon'ble Supreme Court (supra) that on AO's report the Commissioner against the question "whether the Commissioner IS satisfied that it is a fit case for the issue of notice under section 148 merely noted 11 Yes 11 and affixed his signature there under. On these facts, the Hon'bIe Supreme Court observed that the important safeguards provided in sections 147 and 151 were lightly treated by the officer and the Commissio....