TaxTMI 
TaxTMI 
2019 (2) TMI 154
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....satisfaction u/s 151 o f the IT Act and the assessment order passed consequent to culmination o f such reassessment proceedings need be set aside. 3. The Ld. CIT(A) has erred both on facts and in law and in the circumstances of the case in confirming addition o f R s.10,00,000/- u/s 68 o f IT act on account o f share application money accepted by it having held the same as unexplained cash credits within the meaning o f above deeming provisions. 4. The Ld. CIT(A) has erred both on facts and in law and in the circumstances o f the case in confirming addition of Rs. 18,000/- u/s 69 o f IT Act on account o f commission paid on the cash credit in ground no. 3 as such addition are based on mere conjectures and surmises and there is no material before the Assessing Officer on which this addition can be supported. 5. The appellant craves leave to add, delete, modify / amend the above grounds of appeal with the permission o f the Hon'ble appellate authority. " 2. Apropos, ground no. 2, the assessee has challenged the validity of the reassessment proceedings on the ground of non application of mind by the competent authority while recording satisfaction u/s 151 of the IT Act. Since, ....
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....section 151 is require competent authority u/s 151 to satisfy itself about sufficient reason for invoking the provisions of reopening as to whether it is a fit case for reassessment. Hon'ble Delhi High Court in Pr. Commissioner o f Income Tax-06 Vs. M/s. N. C. Cables Ltd. ITA No. 335/2015 vide order dated 11.01.2017 given relief to the appellant on the same issue. The same is not a ratio decidendi as it is based on case specific facts. The supervisory officer has recorded clear and conspicuous satisfaction in this case, hence the ruling does not help the appellant. " 6. The Id. Counsel for the assessee has reiterated the submissions made before the CIT(A) and filed brief synopsis in of support the legal issue alongwith a paper book, APB 1- 125. The Ld. AR has filed a copy of notice dated 11.03.2015 issued u/s 148 of the IT Act (APB page 250), copy of reasons recorded for reopening of the case (APB 26 to 27), copy of letter dated 27.1.2016 raising objections to assumption of jurisdiction by the Assessing Officer (APB page 28 to 29), copy of letter dated 26.08.2016 disposing of the objection of the appellant (APB 30 to 35), a copy of show cause notice dated 07.03.2016 issued by the ....
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.... 395 ITR 677 (Del) if the reasons failed to demonstrate the link between the tangible material and formation of the reasons to believe that the income has escaped assessment then, it would amount to borrowed satisfaction and it has to be presumed that there is no independent application of mind by the AO to the tangible material which forms the basis of the reason to believe that income has escaped assessment. 9. The Id. AR vehemently contended that in the reasons recorded, the AO, made a short note without applying mind to the information received from the Investigation Wing, and recorded that he has reason to believe that an income of Rs. 10,00,000/- has escaped assessment which clearly shows that the AO proceeded to initiate assessment proceedings and reopening of assessment without having any valid satisfaction on the basis of borrowed satisfaction as there was no independent application of mind to the tangible material received from Investigation Wing, which could form the basis for reason to believe that income has escaped assessment. 10. Again, placing reliance on the decision of Hon'ble High Court of Delhi in the case of PCIT vs. G&G Pharma India Ltd. (Supra), the Ld. AR ....
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....s not a valid sanction as per ratio of the various decisions including decision of Hon'ble High Court of Madhya Pradesh in the case of S. Goyanka Lime and chemicals Ltd. (supra), which has been upheld by Hon'ble Supreme Court by dismissing SLP of the Revenue reported in 237 Taxman 378 (SC) and therefore, initiation of reassessment proceedings u/s. 147 of the Act, notice u/s. 148 of the Act, reassessment proceedings and all consequent orders may kindly be quashed. The decisions relied by the Ld. Sr. DR are distinguished on peculiar facts as those are on prima face belief. 14. Heard. After careful consideration of above rival submissions, we may point out that from the proforma of approval u/s. 151 of the Act placed at pgs. 26-27 of the assessee paper book, it is clear that the ACIT was granted approval for the issue of notice u/s. 148 of the Act, in column 12 by writing that "Yes, I am satisfied", fit for issue of notice u/s 148 of IT Act which is not sufficient to comply with the requirement of s. 151 of the Act. 15. It is evident that such approval or satisfaction recorded in the standard printed format is too mechanical and without any application of mind. In the case of "CIT ....
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...." then, it has to be held that the approving authority has recorded satisfaction in a mechanical manner and without application of mind to accord sanction for issuing notice u/s. 148 of the Act for reopening of assessment and in this situation initiation of reassessment proceedings and reopening of assessment has to be held as invalid and bad in law. Therefore, we are hold that the reopening of assessment and notice u/s. 148 of the Act are bad in law and consequently all subsequent proceedings in pursuant thereto are also bad in law and the same cannot be held as valid and sustainable. 19. In view of decisions of Hon'ble High Court of Delhi in the cases of PCIT vs. Meenakshi Oversaes (supra), PCIT vs. G&G Pharma (I) Ltd. (supra) and decision in the case of PCIT vs. RMG Polyviny (I) Ltd. (supra), where information was received from investigation wing that assessee was beneficiary of accommodation entries but no further inquiry was undertaken by AO, said information could not be said to be tangible material per se and, thus, reassessment on said basis was not justified. In the case of Meenakshi Overseas (supra), their lordship speaking for the Hon'ble Jurisdictional High Court held ....