TaxTMI 
TaxTMI 
2018 (7) TMI 231
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....sessing Officer that income of the appellant had escaped assessment and, in view thereof, the proceedings initiated were illegal, untenable and therefore, unsustainable. 1.2 That the learned Commissioner of Income Tax (Appeals) has further failed to appreciate that since there was no allegation in the reasons recorded that there is failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment uls 147 of the Act, the notice issued u/s 148 of the Act after a period of four years from the end of assessment year in a case where original assessment has been framed uls 143(3) of the Act was illegal and invalid. 1.3 That the learned Commissioner of Income Tax (Appeals) has also failed to appreciate that approval granted was a mechanical approval and hence initiation of proceedings uls 147 of the Act on this ground is invalid. 2 That the learned Commissioner of Income Tax (Appeals) has further erred-both in law and on facts in upholding an addition of Rs. 95,25,000/- representing alleged undisclosed/unexplained investment made by the appellant and brought to tax by invoking section 69B of the Act. 2.1 That th....
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....ary to record, legally misconceived and untenable. 3. That both the authorities below have framed the impugned order without granting sufficient proper opportunity to the appellant and therefore the same are contrary to principle of natural justice and hence vitiated. 4. That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in upholding the levy of interest under section 234 B of the Act which is not leviable on the facts and circumstances of the case of the appellant. It is therefore, prayed that it be held that assessment made by the learned Assessing Officer and sustained by the learned Commissioner of Income Tax (Appeals) deserves to be quashed as such. It be further held addition made and upheld by the learned Commissioner of Income Tax (Appeals) alongwith interest levied be deleted and appeal of the appellant be allowed. 2. The facts in brief are that the assessee filed his return of income electronically on 28.6.2008 declaring income of Rs. 13,14,870/-. The case of the assessee was processed under section 143(1) of the Income Tax Act, 1961 (hereinafter referred as the Act) on 19.01.2010 on returned income. After recordi....
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....nnexurised as A-11 pg. 143. Sh. Deepak Mittal and Sh. Ashwani Kumar Mittal in their statements recorded u/s. 132(4) on 23.9.2011 have stated that the farm house land situated at Jwalapur, Haridwar was sold for total consideration of Rs. 2.06 crores in AY 2008-09 including cash received from the purchasers over and above the amount mentioned in the registered deed dated 11.4.2007. from these facts, it is clelary evidence that the assessee has jointly purchased half share of land measuring 0.5480 hectares at Jwalapur, Haridwar for Rs. 2,06,00,000/-, whereas as per sale deed dated 11.4.2007, purchase amount has been shown at Rs. 15,50,000/- only. This way, half share of the assessee comes to Rs. 1,03,00,000/- as against Rs. 7,75,000/- shown in the registered sale deed. AO observed that prima facie, it is clearly evident that the assessee has paid Rs. 95,25,000/- on and above the registered amount. On this basis, reasons to believe that an income to the extent of Rs. 92,25,000/- has escaped assessment and accordingly, notice u/s. 142(1) dated 17.8.2015 was issued, to explain that on the basis of seized documents from Sh. Deepak Mittal during the course of search and seizure operation o....
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....ic and reliable material on record on the basis of which, it could be held that, there was any reason to believe with the Assessing Officer that income of the assessee had escaped assessment and, in view thereof, the proceedings initiated were illegal, untenable and therefore, unsustainable. He draw our attention towards page no. 26-PB which is copy of reasons recorded in the first round and page no. 32-PB which is a copy of reasons recorded in the second round and stated that learned Commissioner of Income Tax (Appeals) has further failed to appreciate that since there was no allegation in the reasons recorded that there is failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment uls 147 of the Act, the notice issued u/s 148 of the Act after a period of four years from the end of assessment year in a case where original assessment has been framed uls 143(3) of the Act was illegal and invalid. It was further contended that learned Commissioner of Income Tax (Appeals) has also failed to appreciate that approval granted was a mechanical approval and hence initiation of proceedings uls 147 of the Act on this ground is invalid. In view....
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....Delhi High Court in the case of CIT vs. Living Media India Ltd. reported in 359 ITR 106. 15. Copy of order of Hon'ble Delhi High court in the case of Pr. CIT vs. NC Cables Ltd. in ITA No. 335/2015. 16. Copy of judgment of Hon'ble Chhattisgarh High Court in the case of Maruti Clean Coal and Power Ltd. vs. ACIT reported 400 ITR 397. 17. Copy of judgment of Hon'ble Bombay High Court in the case of Hindustan Lever Ltd. vs. ACIT reported in 268 ITR 332 and 18. Copy of order of Tribunal in the case of Bhikam Singh. Vs. ACIT in ITA No. 1081/Del/2017. 5. On the contrary, Ld. DR relied upon the orders of the authorities below and stated that Assessing Officer issued the notice u/s. 148 after due application of mind. Hhe further stated that the AO has followed due procedure before issuing the notice u/s 148 of the I.T. Act, 1961. The Assessing Officer had tangible material in the form of information received from the Investigation Wing. The Assessing Officer did not proceed to any hearsay, conjecture or surmises. He stated that following decisions may be kindly considered with regard to reopening of case beyond 4 years u/s. 147 of the I.T. Act: ....
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....2013] 39 taxmann.com 116 (Gujarat)/[2014] 221 Taxman 19 (Gujarat)(MAG.) where Hon'ble Gujarat High Court held that Assessment without scrutiny would mandate reassessment beyond 4 years even if assessee made true disclosure. 6. Dishman Pharmaceuticals & Chemicals Ltd. Vs CIT [2012] 346 ITR 228 (Gun The assessee had shown an amount as loan from company. The assessee had not disclosed that it had substantial interest in the company. Reassessment proceedings after four years to assess amount as deemed dividend was held to be valid." 6. We have heard both the parties and carefully considered the case laws and the relevant documents available on record. We note that in this case return of income declaring income at Rs. 13,14,870/- was filed by the assessee on 26.8.2008 and which was processed on 19.1.2010 u/s. 143(1) of the Act (Page 1-5 of Paper Book). It is noted that in the 1st round of proceedings u/s. 147 of the Act, a notice dated 6.8.2009 u/s. 148 (Pg. 6-PB) of the Act and further questionnaire dated 8.11.2010 was issued and reply thereof was furnished by the assessee on 18.11.2010. After considering the same, the AO passed the order dated 30.12.2010 u/s. 143(3)/14....
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....s to Rs. 2.06 crore. Sunil Agarwal's share comes to Rs. 1.03 crore. Sale deed of this land was made for Rs. 15.50 lacs in which his share comes to Rs. 7.75 lacs. Rs. 95.25 lacs was paid over and above the amount shown in the sale / purchase deed made on 5.4.2007. I have therefore, reasons to believe that Rs. 95.25 lacs escaped assessment. Dated: 23.03.2015 Sd/- (Dileep Kumar) Income Tax Officer, Ward 3, Haridwar 12. Whether the Addl./ JCIT CIT is satisfied on the reasons recorded by the AO that it is a fit case for issue of notice u/s. 148 of the I.T. Act, 1961 Yes, in view of reasons recorded by AO I am satisfied that this is a fit case for issue of notice u/s. 148. Dated: 24.03.2015 Sd/- (Gaya Prasad) Joint Commissioner of Income Tax, Haridwar Range, Hardiwar" 6.1 Thereafter, in the 3rd round of proceedings u/s. 147 of the Act again notice dated 31.3.2015 u/s. 148 of the Act was issued (Page. 29-PB) wherein it was stated that notice is being issued with the prior approval of the JCIT, Haridwar Range, Haridwar. We note that the AO while recording the reasons for the belief that income has escaped assessment has....
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....- (Dileep Kumar) Income Tax Officer, Ward 3, Haridwar 12. Whether the Addl./ JCIT CIT is satisfied on the reasons recorded by the AO that it is a fit case for issue of notice u/s. 148 of the I.T. Act, 1961 Yes, in view of reasons recorded by AO I am satisfied that this is a fit case for issue of notice u/s. 148. Dated: 31.03.2015 Sd/- (Gaya Prasad) Joint Commissioner of Income Tax, Haridwar Range, Hardiwar" 13. Whether the CIT is satisfied on the reasons recorded by the AO that it is a fit case for issue of notice u/s. 148 of the I.T. Act, 1961 I am satisfied that is a fit case for initiating proceedings u/s. 147 of the I.T. Act. Yes, I am satisfied. Dated: 31.03.2015 Sd/- Commissioner of Income Tax, Dehradun" 6.1 After perusing the aforesaid reasons recorded, we find that there is no allegation in the reasons recorded that there is failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment u/s 147 of the Act, the notice issued u/s. 148 of the Act after a period of four years from end of assessment year in case where assessment has been framed u/s. 147....
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....s where the return filed at the initial stage was processed under Section 143(1) of the Act awl not under Section 143(3) of the Act. The reasons for the reopening of the assessment in that case were more or less similar to the reasons in the present case, viz., information was received from the Investigation Wing regarding accommodation entries provided by a 'known' accommodation entry provider. There, on facts, the Court came to the conclusion that the reasons were, in fact, in the form of conclusions "one after the other" and that the satisfaction arrived at by the AO was a "borrowed satisfaction" and at best "a reproduction of the conclusion in the investigation report." 13. As in the above case, even in the present case, the Court is unable to discern the link between the tangible material and the formation of the reasons to believe that income had escaped assessment. In the present case too, the information received from the Investigation Wing cannot be said to be tangible material per se without a further inquiry being undertaken by the AO. In the present case the AO deprived himself of that opportunity by proceeding on the erroneous premise that Assessee had....
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.... satisfied" which establishes that both the authorities have not recorded proper satisfaction / approval, before issue of notice u/s. 148 of the I.T. Act. Thereafter, the AO has mechanically issued notice u/s. 148 of the Act, on the basis of information allegedly received by him from the DCIT, Central Circle, Dehradun. Keeping in view of the facts and circumstances of the present case and the case law applicable in the case of the assessee, we are of the considered view that the reopening in the case of the assessee for the asstt. Year in dispute is bad in law and deserves to be quashed. Our aforesaid view is fortified by the following decisions:- (A) Hon'ble Delhi High Court in the case of Pr. CIT vs. M/s NC Cables Ltd. in ITA No. 335/2015 has held as under:- 11. Section 151 of the Act clearly stipulates that the CIT(a), who is the competent authority to authorize the reassessment notice, has to apply his mind and form an opinion. The mere appending of the expression 'approved' says nothing. It is not as if the CIT(A) has to record elaborate reasons for agreeing with the noting put up. At the same time, satisfaction has to be recorded of the given case which can ....