TaxTMI 
TaxTMI 
2019 (9) TMI 811
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.... The case law as mentioned by the learned CIT(A) is not applicable. It is pertinent to mention here that no proceeding u/s 147 could be initiated for disallowing any expenditure much less by resorting the provisions of section 40A(3) of the I. T. Act, 1961. It is submitted that initiation of proceeding u/s 147 and issue of notice u/s 148 is arbitrary, unjustified, void ab-initio and vitiated in law. The assessment as submitted u/s 143(3) / 147 is fit to be annulled/cancelled. WITHOUT PREJUDICE: - 3. For that in the facts and circumstances of the case, the learned CIT(A) has erred in confirming the disallowances of Rs. 16,75,358/- made by the Assessing Officer for impugned violation of section 40A(3) of the I. T. Act, 1961. Further, the learned CIT(A) is not justified in holding that a separate disallowance u/s 40A(3) could have been made even if there was application of gross profit rate. According to learned CIT(A) enhancement of G.P. by applying a gross profit rate should not be compared with a case where there is total and complete rejection of books of account and estimation of business profit. It is submitted that once the gross profit rate is applied, it tantamoun....
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.... u/s.148 of the Act was issued to the assessee. In the reassessment proceedings, the AO compiled the amounts for all the instances of violation to the said provision, which was at Rs. 16,75,358/-. Since such expenditure was in violation of the provisions of section 40A(3) of the Act, therefore, the Assessing Officer completed reassessment proceeding adding the said amount to the total income of the assessee and passed order u/s.143(3) r.w.s. 147 of the Act, dated 30.03.2015. 4. Aggrieved thereby, the assessee approached before the CIT(A), however, the CIT(A) dismissed the appeal of the assessee. 5. Now, the assessee is in further appeal before the Tribunal. 6. Ld. AR filed a paper book containing written submission, copy of ordersheet entry, copy of assessment order dated 28.11.2011 passed u/s.143(3) of the Act for A.Y.2009-2010 and copy of judgments of Hon'ble Allahabad High Court in the case of CIT Vs. Banwari Lal Banshidhar, 229 ITR 229. Ld.AR before us placed copy of reasons recorded by the Assessing Officer which has been granted approval for issuance of notice u/s.148 and submitted that neither any proper reasons were recorded nor any nexus between the materials reli....
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....hat initiation of proceeding u/s 147 and issue of notice u/s 148 is arbitrary, unjustified, void ab-initio and vitiated in law, hence, assessment as completed u/s 143(3) / 147 is fit to be annulled / cancelled. To support his contentions, ld. AR placed reliance on the following case laws:- i. Adani Exports v. DCIT (Assesments) [1999] 240 ITR 224 (Guj) ii. I.M.C.Ltd. & Anr. V. JCIT [2003] 261 ITR 731 (Cal) iii. Narang Overseas P. Ltd. v. ACIT [2008] 300 ITR (AT) 1 (Mumbai) (SB) iv. Amrit Feeds ltd. v. ACIT [2011] 196 Taxmann 244 (Cal) v. CIT,Delhi v. Kelvinator of India Ltd. [2010] 187 Taxman 312 (SC) vi. CIT, Delhi v. Indian Sugar & General Industry Export Import Corpn. Ltd. [2008] 170 Taxman 229 (Delhi) vii. CIT v. Kelvinator of India Ltd. [2002] 123 Taxman 433 (Delhi)(FB) viii. CIT v. Modipon Ltd., Delhi High Court judgment dated 21.3.2011 in ITANo.533 of 2011. It was also the argument of ld.AR that the interest charged u/s.234B & 234C of the Act may kindly be deleted. 7. Per Contra, ld.DR relied on the order of authorities below and stated that approval granted for reopening the case is not mechanical ....
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....once the income of the assessee was computed by applying the gross profit is not tenable, since it is not a case of rejection of the books and estimation of profits. Finally, the ld.DR submitted that the appeal of the assessee deserves to be dismissed. 8. I heard rival submissions of both the parties, perused the entire material available on the record of the Tribunal and order of both the authorities below along with the case laws and paper book filed by the assessee. Now, the legal issue raised by the assessee to be decided is as to whether reassessment proceedings initiated by the Assessing Officer by issuing notice u/s.148 of the Act vis-à-vis provisions of Section 150(1) of the Act on the basis of audit objection after getting approval is valid or not. 9. Initially, the original assessment u/s. 143(3) of the Act was completed in this case on 28.11.2010. Subsequently, on the objection of the internal audit team the case was reopened and a notice u/s.148 of the Act was issued to the assessee. Accordingly, the Assessing Officer completed reassessment proceeding after recording reasons to believe holding that the assessee has violated the provisions of section 40A(3) ....
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....a case for the issue of notice under section 148, need not issue such notice himself.". 12. From, the above provisions, it is vividly clear that the Revenue can reopen the earlier assessments u/s.147 & 148 of the Act, however, Section 151 of the Act prohibits the Revenue to use the provisions of Section 147 of the Act unless there is a satisfaction of the superior officer that the Assessing Officer has good and sufficient reasons to invoke the provisions of Section 147 of the Act. The superior authority has to examine the reasons, material or grounds and to judge whether they are sufficient and adequate to the formation of the necessary belief on the part of the assessing officer. If, after applying his mind and also recording his reasons, howsoever briefly, the Commissioner is of the opinion that the AO's belief is well reasoned and bonafide, he is to accord his sanction to the issue of notice u/s. 148 of the Act. In the instant case, I find from the perusal of the order sheet which is on record, the Jt. CIT has simply put "Yes" and signed the report thereby giving sanction to the AO. Nowhere the Jt. CIT has recorded a satisfaction note not even in brief. Therefore, i....