2017 (10) TMI 1374

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....ndo Associates, a concern of Hiranandani Group towards purchase of flats from them, the Assessing Officer re-opened the assessment under section 147 of the Act by issuing notice under section 148 of the Act on 30th March 2014. In response to the said notice, the assessee requested the Assessing Officer to treat the return of income filed originally as return of income in response to notice issued under section 148 of the Act. During the assessment proceedings, the Assessing Officer called upon the assessee to explain whether any on-money was paid to the concerned party. In this context, the Assessing Officer also asked for the names and addresses of persons through whom the assessee came in contact with Crescendo Associates for purchase of flat and the name and address of persons who facilitated the purchase of flat by negotiating the deal. As alleged by the Assessing Officer, the assessee failed to furnish the details called for. He observed, in a search conducted in case of Hiranandani Group of builders and developers in March 2014, it was admitted by the directors of promoters of the said group that they have accepted on-money from buyers and various flats. The Assessing Officer....

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....Act, Assessing Officer has not taken approval from the competent authority as prescribed under section 151 of the Act. Learned Authorised Representative submitted, as per the provision contained under section 151 sub-section (2) of the Act in case of the assessee sanction for issuance of notice under section 148 of the Act has to be given by either Jt. CIT or Addl. CIT. Whereas, as per the notice issued under section 148 of the Act, the Assessing Officer has obtained sanction of the CIT. In this context, he drew our attention to a copy of the said notice as placed at Page-6 of the paper book. Learned Authorised Representative submitted, in the course of assessment proceedings, the assessee has also objected to the initiation of proceedings under section 147 of the Act. However, the Assessing Officer has not disposed off assessee's objection independently before completion of assessment. Therefore, the assessment order is invalid. 7. As far as merits of the issue is concerned, the learned Authorised Representative submitted, in the course of assessment proceedings, the assessee has furnished all necessary and relevant details before the Assessing Officer with regard to purchase....

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....The assessee having not raised any objection for initiation of proceedings within a reasonable time, the contention of the assessee that the Assessing Officer did not dispose off his objection independently before completion of assessment cannot be accepted. However, as far as the first contention of the assessee regarding lack of sanction / approval from competent authority for issuance of notice under section 148 of the Act is concerned, we find merit in the same. As could be seen from the notice dated 30th March 2014 issued under section 148 of the Act by the Assessing Officer, a copy of which is placed at Page-6 of the paper book, the Assessing Officer has categorically mentioned that the said notice was issued after obtaining satisfaction of the CIT-10, Mumbai. Keeping in view the aforesaid fact, it is imperative to know whether such satisfaction / sanction / approval by the CIT satisfies the conditions of section 151 of the Act. 9. Section 151 provides for sanction of competent authority for issuance of notice under section 148 of the Act. As per sub-section (1) of section 151 of the Act, in a case, where assessment was earlier completed under section 143(3) or 147 of the Ac....

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.... of approval from Joint CIT would not invalidate the assessment proceedings, since, the approval has been obtained from a higher authority is too specious an argument to be accepted. Obtaining of sanction from a higher authority does not satisfy the statutory mandate. That being the case, we hold that in absence of sanction / approval from the authority prescribed under section 151(2) of the Act, issue of notice under section 148 is invalid. Consequently, the assessment order passed in pursuance thereto is also invalid. In support of our aforesaid conclusion, we may refer to the decision of the Hon'ble Delhi High Court in case of CIT v/s Soyuz Industrial Resources Ltd., [2015] 232 taxman 414. 11. Even otherwise also, the assessee has a strong case on merit as well. As evident from the facts on record, the Assessing Officer has made the addition on account of alleged on-money paid by the assessee towards purchase of flat relying upon the information obtained from the search operation carried out in the case of Hiranandani Group. Further, he has relied upon the statements recorded from the directors and promoters of Hiranandani Group in course of search. However, though, the ass....