2015 (9) TMI 121

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.... is illegal, bad in law and without jurisdiction and the re-assessment order passed is illegal, bad in law and without jurisdiction. 2. That the notice issued u/s 148 has been issued without any approval of the higher authority and the approval, if any, is given without any application of mind. 3. The CIT(A) has erred on facts & in law in upholding the initiation of reassessment proceedings u/s 147 and upholding the validity of notice u/s 148." 3. At the time of hearing, before us, it was pointed out by the ld. counsel for the assessee that the AO has reopened the case simply as per the direction of the CIT(A) for A.Y. 2003-04, without any independent application of mind. Therefore, reopening is bad in law. In support of this conte....

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....ed a loan from three private limited companies but that by itself does not make it deemed dividend leading to reason to believe that income chargeable to tax has escaped assessment. Moreover, we also notice that the Assessing Officer in issuing the notice dated 7 March 2000 has acted at the directions of the CIT(A). This seems to be an admitted position. This is more than evident from Question 1 as formulated by the revenue hereinabove which states that the assessing officer was required to carry out the reassessment in view of the Section 150 of the Act i.e. in pursuance of the direction by the CIT(A). This itself an indication of the assessing officer as per the direction of the CIT(A) in issuing the impugned notice. 10. So far as the ....

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....thorities must be acted upon by the AO with utter satisfaction. Taking initiation of reassessment proceeding without satisfaction of the AO, simply on the basis of the blanket direction, will not justify the action of initiation of reopening proceeding. In this particular case as has been rightly pointed out by the learned Authorized Representative from p. 13 of the paper book filed, the AO has simply acted upon, i.e., initiated reopening proceeding on the basis of the direction of the CIT(A) and has totally ignored his part of the job i.e., his satisfaction, as is evident from p. 13 of the paper book filed by the learned counsel which is quoted below for better appraisal of facts :" 5.2. The ITAT Ahmedabad Bench in the case of M/s Hotel....

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....is bad in law and accordingly quashed." 5.3. From the above, it is evident that when there is any observation/ direction by the CIT(A), in regard to consideration of some matter for other year, the AO has to apply his mind to the issue and then arrive at his own satisfaction, whether the reopening of completed assessment of any year is required or not. He cannot reopen the completed assessment simply on the basis of some direction or observation of the CIT(A), without recording his own satisfaction with regard to escapement of income. 5.4. Let us now see the facts of the assessee's case. The copy of the reasons recorded for reopening of assessment is placed at page 27 of the assessee's paper book, which reads as under: "To, Sh. ....

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....hat there is a credit balance in the account of Bansal Polyvin (P) Ltd.; and M/s Ek Onkar Foundry, amounting to Rs. 5,40,175/-, which was created for the first time during the FY 2001-02 relevant to AY 2002-03. Thereafter, he recorded the finding that- "Therefore, on the basis of above referred observations made, I have reason to believe that income to the extent of Rs. 5,40,175/- had escaped assessment". Thus, it is evident that the assessment had been reopened on the basis of observations of the ld. CIT(A) and the claim of the ld. DR that the AO had applied his mind independently, is not correct. The AO has simply found that there is credit balance in the account of two parties during the financial year, relevant to AY 2002-03. The credit....