TaxTMI 
TaxTMI 
2018 (3) TMI 1767
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....served to be quashed as such. 1.1 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that appellant was a minor in the instant year and therefore no income could have escaped assessment and as such notice U/S 148 issued was illegal, invalid and unsustainable. 1.2 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that reasons recorded mechanically without application of mind do not constitute valid reasons to believe for assumption of jurisdiction U/S 147 of the Act. 1.3 That the learned Commissioner of Income Tax (Appeals) having admitted that Rs. 14,00,000/- was paid by the father of the appellant had no material much less tangible and relevant material to form an opinion even prima-facie that further sum of Rs. 21,00,000/- was incurred as expenditure by the appellant and therefore action U/S 147 of the Act was illegal, invalid and untenable. 2. That the learned Commissioner of Income Tax (Appeals) has further erred both in law and on facts in upholding an addition of Rs. 21,00,000/- representing the alleged donation paid by the father of appellant for admission in the course of MBBS to Sa....
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....u/s 142(1) was issued on 22.07.2014 and duly served upon the assessee, fixing the case for 1.08.2014. On the date fixed, the assessee vide letter dated 01.08.2014 again filed the objection against reopening the case. The AO has removed/ disposed off the objection filed by the assessee. On 29.09.2014 the AR of the assessee has filed assessment order dated 28.08.2014 for the A.Y. 2007-08 of father of the assessee namely Shri Parveen Kumar Gupta and submitted that as the AO has considered the donation of Rs. 21,00,000/- as alleged to have been paid to Santosh Medical College at the time of admission of his daughter Megha Gupta in July 2006 and requested to drop the proceedings initiated U/s 147/148. Further, notice u/s 142(1) was issued on 20.11.2014 and duly served upon the assessee fixing the case on 8.12.2014. Further, the assessee vide letter dated 30.12.2014 once again requested to kindly drop the proceedings initiated u/s 147/148 of the I.T. Act. Show cause notice was issued on 18.02.2015 fixing the case for 25.02.2015. Written reply dated 25.02.2015 was filed by the A.R., of the assessee which are placed on record. Further, all the objections raised by the assessee meet out vid....
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....gs and assessment framed u/s. 147/143(3) of the Act is wrong and deserved to be quashed. It was further submitted that lower authorities have not considered the fact that assessee was a minor in the instant year and therefore no income could have escaped assessment and as such notice u/s. 148 of the Act issued was illegal, invalid and unsustainable. It was further stated that reasons recorded by the AO mechanical and without application of mind and do not constitute valid reasons to believe for assumption of jurisdiction u/s. 147 of the Act having admitted that Rs. 14,00,000/- was paid by the father of the assessee had no material much less tangible and relevant material to form an opinion even prima-facie that further sum of Rs. 21,00,000/- was incurred as expenditure by the assessee and therefore action u/s. 147 of the Act was illegal, invalid and untenable. It was further stated that lower authorities wrongly made/upheld the addition of Rs. 21,00,000/- representing the alleged donation paid by the father of assessee for admission in the course of MBBS to Santosh Group of Institution and also failed to appreciate that addition had been made on arbitrary assumptions and, presumpti....
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.... Since, the Assessee not filed her return of income for the relevant Assessment Year, the cash payment of Rs. 21,00,000/- was from undisclosed sources having escaped the assessment. Such reasoning recorded by the Assessing Officer was after due application of mind. He 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. In so far as approval of the Joint Commissioner for issuing the notice u/s 148 is concerned, he stated that AO has clearly mentioned this fact in the first line of the assessment order. He further stated that the total deposit was Rs. 35 lacs out of which Rs. 14 lacs was paid by way of TR and the balance amount of Rs. 21 lacs was paid in cash, hence, it was requested that the orders of the authorities below may be upheld on the legal issue as well as on the merits of the case. 6. I have heard both the parties and carefully considered the same. I note that in this case the AO while recording the reasons for the belief that ....
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....zed during the course of search/survey action u/s 132/133A of the Act does not reflect any figure of Rs. 21 lacs and in the absence of any independent enquiry or examination of facts on record or noticing the content of alleged documents in the reasons recorded and, reasons being silent as to the specific facts, the vague allegation shows that action has been taken mechanically on the basis of alleged report of investigation wing, and, not on independent application of mind and therefore on this ground too, the proceedings are without jurisdiction. It is also noted that there is no live link or direct nexus between alleged material and, inference. It is a case of investigation in the garb of action u/s 148 of the Act on the basis that proceedings have been initiated on the basis of no material much less any tangible and, relevant material and as such reasons record do not constitute valid reason to believe for initiating proceedings uls 147 of the Act. In this regard, I draw support from the decision of the Hon'ble Supreme Court 320 ITR 561 (SC) CIT vs Kelvinator of India Ltd. It is further noted that initiation of proceedings is also based on non application of mind much less inde....
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.... the materials in order to have reasons to believe that the income of the Assessee escaped assessment is missing in the present case." ii) 395 ITR 677 (Del) Pr. CIT v. Meenakshi Overseas (P) Ltd. v. ITO "36. In the present case, as already noticed, the reasons to believe contain not the reasons but the conclusions of the AO one after the other. There is no independent application of mind by the AO to the tangible material which forms the basis of the reasons to believe that income has escaped assessment. The conclusions of the AO are at best a reproduction of the conclusion in the investigation report. Indeed it is a 'borrowed satisfaction'. The reasons fail to demonstrate the link between the tangible material and the formation of the reason to believe that income has escaped assessment. 37. For the aforementioned reasons, the Court is satisfied that in the facts and circumstances of the case, no error has been committed by the ITAT in the impugned order in concluding that the initiation of the proceedings under Section 147/148 of the Act to reopen the assessments for the AYs in question does not satisfy the requirement of law. 38. The quest....