TaxTMI 
TaxTMI 
2019 (12) TMI 816
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....2001. That the Village Maheshwari is outside of Municipal Limit of Dharuhera (Rewari). c. The CIT (A) has committed a mistake by dismissing the appeal even after holding finding of fact that Municipal Committee, Dahruhera (Rewari) did not exist on the date of Gazette notification on 6th Jan 1994 and was created on 12th May 2007. That, therefore, it is hit by the explanation attached to the Government Gazette notification (supra). The CIT (A) has ignore the explanation mentioned in the Government Gazette Notification. d. That CIT (A) order violates legal pre-condition as to existence of Municipal Committee at Dahruhera during previous year (FY 2006-07). That therefore when the Municipal Committee, Dharuhera was not in existence on book of Statue during Financial Year : 2006-07, then therefore agricultural land sold by the appellant is not a capital asset. 3. The CIT (A) has disallowed deduction claimed under Section 54F in respect of the flat purchased by the appellant. That as per law applicable to assessment year, the appellant is entitled to the claim deduction under Section 54F for two houses. The appellant craves for permission to ad....
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....om), decision of the Hon'ble Bombay High Court in CIT Vs. Lalit kumar Bardia (2017) 84 taxmann.com 213 (Bom), 404 ITR 63(Bom.) (HC): wherein it has been held that mere participation in proceedings or acquiescence would not confer jurisdiction. Reliance was placed on the ratio laid down by the Apex Court in Kanwar Singh Saini Vs. High Court of Delhi (2012) 4 SCC 307, wherein it was observed as under:- "18. It is settled position in law that mere participation in proceedings or acquiescence will not confer jurisdiction. The Apex Court in Kanwar Singh Saini (supra) made observations, which are apposite to the issue at hand and which read as under:- "22. There can be no dispute regarding the settled legal proposition that conferment of jurisdiction is a legislative function and it can neither be conferred with the consent of the parties nor by a superior court, and if the court passes rder/decree having no jurisdiction over the matter, it would amount to a nullity as the matter goes to the roots of the cause. Such as issue can be raised at any belated stage of the proceedings including in appeal or execution. The finding of a court or tribunal becomes irr....
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....eassessment proceedings are mandatory and, therefore, there could never be a waiver of a mandatory provision. That jurisdiction could not be conferred on the authority by mere consent, but only on fulfillment on the conditions precedent for the exercise of jurisdiction. If the jurisdiction could not be conferred by consent, there would be no question of waiver, acquiescence or estoppels or the bar of res judicata being attracted because the order in such a case would lack inherent jurisdiction and would be a void order or a nullity. Therefore, in the facts of the present case the Tribunal had wrongly come to the conclusion that the assessee had waived its right to challenge reassessment proceedings before the Commissioner (Appeals), and was thus not entitled to raise the said challenge before the Tribunal" Our plea that reopening is invalid is supported by recent Delhi ITAT decision in case of Shri Mohd Yameen Munna in ITA 7134/Del/2018 order dated 02.05.2019 (enclosed herewith) apart from following other decisions. i) Bombay high court decision In case of Mohanlal Champala. Jain (31/01/2019) ii) Gujarat high court decision in case of Gunvantbhai Somabhai Patel (0....
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....a; Shriya Devi Mundhra and Gopal Chand Mundhra vs. ITO, Wards 55(5), New Delhi decided in ITA No. 1375; 1721; 1722; 1523-1524/Del/2019 respectively relevant to assessment year 2011-12 and therefore, he requested that the same ratio may be followed in the present case and appeal of the assessee may be allowed accordingly by quashing the reassessment proceedings. 4. On the contrary, Ld. DR stated that since this additional ground was not taken before the Ld. CIT(A), hence, the same may not be admitted and appeal of the assessee may be dismissed. In support of his contention he also relied upon the comments on the additional grounds of appeal under Rule 11 of ITAT, which read as under:- "Sub: -Furnishing of Comments on Additional Ground of appeal under rule 11 of ITAT in ITA no 375/Dc)120I9 for A.Y. 2007-08 in the case of Sh. Hukum Singh -Reg- Kindly refer to your office letter no 44 dated 03.06.2019 on the subject cited above. In this regard, it is submitted that your office seek comments on raising of additional ground of appeal with respect to assumption of jurisdiction u/s 147/148 of the Act in case of Sh. Hukum Singh by the learned AR of the assessee....
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....ax, Range Rewari had put clearly 'YES' against the column "Whether the Addl. Commissioner of Income Tax is satisfied on the reasons recorded by the ITO that it is a fit case for issue of notice" along with his signature and stamp. Hence, the notion of AR of the assessee regarding legal and jurisdictional additional ground has no force. The comments in the said case are submitted to your good office for necessary action." 5. I have heard both the parties and perused the records, especially the Additional grounds filed by the assessee and the case laws supporting the case for admission of additional grounds and the comments of the department on which the Ld. Sr. DR relied upon for not admitting the additional grounds. In my considered view, the additional grounds are in legal and jurisdictional and needs to be admitted in the interest of justice. Hence, I admit the same and only deciding the additional ground no. 2 as argued by the ld. Counsel for the assessee. For the sake of convenience, the additional ground no. 2 is again reproduced as under:- 2. That on the facts and in the circumstances of the case and in law, Ld AO erred in assumption of jurisdiction uls 14....
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.... form for recording the reasons for initiating the proceedings u/s 147 and for obtaining the approval of the Addl./Joint CIT, copy of which is placed at page 40 of the paper book, reveals that the JCIT while giving his approval has mentioned as under:- "Recommended for approval u/s 147 of the Act." 19. Similarly, the Pr. CIT, while giving his approval has mentioned as under:- "Yes. I am satisfied." 20. I find the coordinate Bench of the Tribunal in the case of M/s Virat Credit & Holdings Pvt. Ltd. (supra) while deciding an identical issue has quashed the reassessment proceedings where the approving authorities while giving approval has simply mentioned "Yes. I am satisfied." The relevant observations of the Tribunal from para 10 onwards read as under:- "10. First of all, ld. AR for the assessee company drew our attention towards sanction accorded by the Addl.CIT for reopening of the assessment obtained by moving an application under Right to Information Act, 2005, available on file as Annexure 'A'. Perusal of the sanction accorded by Addl. CIT in the prescribed proforma shows that there is a question no.13 viz. : ....
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....llowing findings :- " Section 151, read with section 148 of the Income-tax Act, 1961 - Income escaping assessment - Sanction for issue of notice (Recording of satisfaction) - High Court by impugned order held that where Joint Commissioner recorded satisfaction in mechanical manner and without application of mind to accord sanction for issuing notice under. section 148, reopening of assessment was invalid - Whether Special Leave Petition filed against impugned order was to be dismissed - Held, yes [In favour of assessee] Search and Seizure-Procedure for black Assessment- Search was conducted at residential and business premises of Assessee and notice for block assessment u/s. 158-BC was issued- For block period, returns were filed that were processed u/s. 143 (1)- However, notice u/s. 148 was issued by AO, on basis of certain reasons recorded-Assessee objected to same before AO, that was rejected and assessment was completed u/ss. 143(3) and CO No.57/Del/2012 147- CIT(A) found that reason recorded by Joint Commissioner of Income Tax, for according sanction, was merely recording 'I am Satisfied'- Action for sanction was alleged to be without application of mind and t....
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....was not as if CIT (A) had to record elaborate reasons for agreeing with noting put up-At same time, satisfaction had to be recorded of given case which could be reflected in briefest possible manner- In present case, exercise appears to have been ritualistic and formal rather than meaningful, which was rationale for safeguard of approval by higher ranking officer- Revenue's appeal dismissed." 16. Furthermore, perusal of the noting sheet dated 09.03.2010 to 30.12.2010 made available to the Bench for perusal shows that only AO has recorded that Addl.CIT has considered the reasons recorded before according the sanction, however even no prima facie material is there, if Addl.CIT has applied his mind by considering the reasons recorded before according the sanction. We are of the considered view that the AO who has recorded the reasons cannot enter into the mind of the sanctioning authority (Addl.CIT) discharging the quasi-judicial function for according valid sanction for reopening the assessment. 17. Moreover, according sanction is not a supervisory role rather it is a quasi-judicial function to be performed by the Addl.CIT as required u/s 151 of the Act. When th....
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....d." 17. In view of what has been discussed above, reassessment opened by the AO in this case is not sustainable in the eyes of law, hence hereby quashed. Consequently, cross objection filed by the assessee company stands allowed and the appeal filed by the Revenue has become infructuous. 21. I find the Tribunal in the case of Raghav Technology Pvt. Ltd. (supra) while deciding an identical issue has also quashed the reassessment proceedings under similar circumstances by observing as under:- "8. I have considered the rival arguments made by both the sides and perused the material available on record. It is an admitted fact that the case of the assessee was reopened by the Assessing Officer after recording reasons and issue of notice u/s 148 as per the provisions of section 147 and 148 of the Act on the basis of the information received from the Investigation Wing that the assessee is a beneficiary of accommodation entry obtained from Surendra Kumar Jain group of cases towards introduction of share capital of Rs. 35 lacs. I find, the assessee has taken a specific ground before the CIT(A) challenging the validity of reassessment proceedings on the ground tha....
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....l, the finding of the Tribunal quashing the reassessment proceedings cannot be disturbed. 12. I find the Hon'ble Supreme Court in the case of Chhugamal Rajpal vs. S.P. Chaliha & Ors (supra) has held that where the commissioner had mechanically recorded permission and the important safeguards provided in the section 147 and 151 were lightly treated by the officer and the commissioner, the notice issued u/s 148 was held as invalid. The various other decisions relied on by the ld. counsel for the assessee in the paper book also support his case. Since, in the instant case, admittedly, the ld. PCIT while granting approval has simply mentioned 'Yes. I am satisfied' therefore, following the decisions of the jurisdictional High Court (cited supra) on this issue which are binding on the Tribunal, the reassessment proceedings are to be treated as not in accordance with the law since the approval has been given in a mechanical manner without due application of mind by the approving authority. I, therefore, allow ground of appeal No.2 by the assessee challenging the validity of reassessment proceedings. Since the assessee succeeds on this legal ground, the various other ....
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....e are three parts to it. In the first part, the AO has reproduced the precise information he has received from the Investigation Wing of the Revenue. This information is in the form of details of the amount of credit received, the payer, the payee, their respective banks, and the cheque number. This information by itself cannot be said to be tangible material. 20. Coming to the second part, this tells us what the AO did with the information so received. He says: "The information so received has been gone through." One would have expected him to point out what he found when he went through the information. In other words, what in such information led him to form the belief that income escaped assessment. But this is absent. He straightaway records the conclusion that "the abovesaid instruments are in the nature of accommodation entry which the Assessee had taken after paying unaccounted cash to the accommodation entry given (sic giver)". The AO adds that the said accommodation was "a known entry operator" the source being "the report of the Investigation Wing". 21. The third and last part contains the conclusion drawn by the AO that in view of these facts,....
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....ril, 2019, has also quashed the reassessment proceedings based on the information provided by the Investigation Wing without any independent application of mind. It was held that there was no tangible material which formed the basis for the belief that income has escaped assessment. The various other decisions relied by the ld. counsel also supports his case. Since, in the instant case, the reopening of the assessment has been made on the basis of information received from the Investigation Wing and there is no independent application of mind by the Assessing Officer and such reopening is made on the basis of borrowed satisfaction, therefore, such reopening is not in accordance with law and ha to be quashed. Accordingly, such reassessment proceedings have to be treated as not in accordance with law and has to be quashed. 26. Since the assessee succeeds on this legal ground challenging the validity of reassessment proceedings, the addition on merit is not being adjudicated being academic in nature. The appeal filed by the assessee is accordingly allowed. ITA Nos. 1375/Del/2019 (Gopal Chand Mundhra and Sons); 1721/Del/2019 (Damyanti Mundhra); 1722/Del/2019 (Ramdev M....