TaxTMI 
TaxTMI 
2020 (2) TMI 781
X X X X Extracts X X X X
X X X X Extracts X X X X
....s not acceded to and the case was decided, which is against the rules of natural justice. 3. The appellant craves leave to add/amend/argue any other question of law/fact at the time of hearing of this appeal 2. Subsequently, the assessee has filed paper book containing the additional evidences along with an application dated 16.05.2019 for taking additional ground on record, which read as under :- "1. That under the facts and circumstances of the case impugned assessment order dated 27-12-2016 is bad in law on account of invalid initiation of reassessment proceedings on following grounds: - a. That Ld. AO did not have 'reason to believe' as postulated in section 147 of the Act to draw an opinion that the income of the assessee for the year under consideration has escaped from assessment. b. That there was no application of own mind by the AO in recording the reasons that the income of the assessee has escaped from the assessment. c. That initiation of reassessment proceedings is bad in law on the ground that the satisfaction recorded by JCIT is not in accordance with mandate of law and the requirements of section 151 have not ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ieved from the assessment order, the assessee appealed before the CIT(A) and the CIT(A) partly allowed the appeal of the assessee. 5. Against the order of the CIT(A), the assessee is in further appeal before the Income Tax Appellate Tribunal. 6. Ld. AR before us filed written synopsis which read as under :- 1. The assessee is an individual and it is no account case. 2. Present proceedings are reassessment proceedings and AO has made following additions: a. Rs. 7,85,324/- by not admitting the agricultural income. b. Rs. 17,40,000/- on account of unexplained investment in purchase of agricultural land. c. Rs. 11,43,173/- on account of unexplained credit in the bank account. 3. The reassessment proceedings were initiated on the ground that during the course of assessment proceedings of the assessee for A.Y. 2012-13, it came to the notice of the AO that in A.Y. 2011-12 the assessee had purchased agricultural land for an amount of Rs. 23.77 lakh against shown by the assessee at Rs. 23,40,000/-, (copy of reason is placed at pages 64 to 66.) 4. Sanction u/s 151(2) obtained by the AO from JCIT. The sanction has been grant....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Tribunal had quashed the reassessment proceedings on the ground that the sanction was granted without application of mind in mechanical manner and the order of Tribunal was upheld on this ground. Pr . CIT Vs N.C. Cables Ltd f20171 391 ITR 11 (Delhi) In this case sanction u/s 151 was granted by commissioner that the expression' approved'. It was observed by Hon'ble High Court that the power was exercised in a ritualistic manner, therefore, reassessment proceedings were invalid. Para 11 of the judgment at page 30 of case law compendium. CIT Vs S. Goyanka Lime & Chemicals Ltd 120151 231 Taxman 73 (Madhya Pradesh) In this case the approval was granted with the expression 'yes, I am satisfied'. In the present case also, the approval has been granted by 'yes satisfied'. It was held that such sanction granted for issue of notice u/s 148 is unsustainable and thus, the assessment proceedings were invalid. Reference is made to para 7 and 8 of the decision at page 32 of the case law compendium. This decision of Hon'ble Madhya Pradesh High Court has been upheld by Hon'ble Supreme Court vide order dated 08-07-2018 in CIT Vs S. Goyanka Lime & Chemical Ltd [20....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tained from sales to make the investment and at the end of the year total income is computed and may be taken in to consideration for making the investment during the year under consideration. 11. So far as it relates to loan taken for LMG Timbers (LMG) of a sum of Rs. 7,69,000/-. It may be mentioned that AO himself has accepted Rs. 6,00,000/- received from LMG which is proprietary concern of Santosh Goyal (mother in law of the assessee). Her balance sheet is furnished at page 31 where in on the asset side the total amount of Rs. 7,69 lakh is outstanding ( Rs. 7,25,000/- in the name of Raghav Sales proprietary concern of the assessee and Rs. 44,000/- in the name of the assessee are outstanding). 12. Coming to Rs. 6.86 lakh investment from Stree-Dhan, it is submitted that assessee is being assessed from A. Y. 2004-05 and it was explained to the AO that total income returned from all these years is Rs. 7.08 lakh and apart from that the assessee was having the amount given by the relatives from time to time and also had saving in hand the details given in para 22. Therefore, the addition made by the AO on account of unexplained investment made in agricultural land is....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d for escapement of income. It was also the contention of ld.AR that the reasons have been recorded without application of mind and even no proper satisfaction was recorded before issuance of notice u/s. 148 of the Act. Ld. AR further submitted that the approval has been granted for reopening of the assessment in a mechanical manner and without due application of mind by writing the word "Yes satisfied" that it is a fit case for issuance of notice u/s.148 of the Act for reopening of the case. Therefore, the ld.AR submitted that initiation of proceeding u/s 147 and issue of notice u/s 148 of the Act is void ab-initio and, hence, assessment as completed u/s 143(3) / 147 of the Act deserves to be annulled/quashed. To support his contentions, apart from the case laws relied on by the ld. AR above, also placed reliance on the following case laws:- i. Smt. Prabha Rani Agrawal Vs. ITO [2013] 351 ITR 275 (Allahabad) ii. ITO Vs. Lakhmani Mewal Das [1976] 103 ITR 437 (SC) iii. Metal Import (P) Ltd. Vs. CIT 73 taxmann 375 iv. CIT Vs. Sun Engineering Works (P) Ltd. [1992] 198 ITR 297 (SC) v. Jitendra Kumar Yadav Vs. ACIT, New Delhi in ITA No.1808....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ial was available before the A.O on the basis of which he could form a belief or that the said belief was not at all bonafide or was based on wage ,arbitrary or non specific information. Thus exception to reason only when no material available with Assessing Officer- belief can be made on any material whatsoever (Grover nursing Home vs ITO -248ITR 493-2001(P&H)) (3) It is further held that - belief can be reached in any manner, and is not qualified by a precondition of faith and true disclosure of material facts by the assessee as contemplated in the pre amended Section 147(a) of the Act. (Jawand Sons vs CIT 18 November, 2009(P&H) (4) It is also held that satisfaction arrived at by any relevant material after following due procedure, it cannot be assailed.it may involve change of opinion but not at par with mere change of opinion. (Tilak Raj Bedi vs JCIT (2009) 319 ITR 385-P&H) (4) It is well settled that audit objection on the on the point of fact can be a valid ground for reopening of assessment. (i) Usha International Ltd, vs Assessee on 9 March, 2015 (ITAT delhi ) -As this tangible material, in the shape of audit ob....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he facts disclosed thereby or from other enquiry or research into facts or law, but was not in fact obtained, the jurisdiction of the Income-tax Officer is not affected. " (8 ) - it is also well settled that it is for the income tax officer to draw the proper inference of facts Calcutta Discount Company vs ITO November, 1960 Sc Burden could not be fully discharged by simply producing the Account books and other documents, but the assessee must also disclose such specific items or portions thereof as are relevant to the assessment. But once he has done so, it is for the Income-tax Officer to draw the proper inferences of fact and law therefrom and the assessee cannot further be called upon to do so for him. Power under s. 34(1 )(a) is asserted by the assessing authority and the record prima facie supports its existence, any enquiry as to whether the authority could reasonably hold the belief that the under assessment was due to non-disclosure by the assessee of material facts necessary for the assessment must, be barred. In view of the above the above the submission of the asssessee with case laws not justified. On issue of non issue of n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....using the entire material available on the record and orders of both the authorities below along with the case laws and paper book filed placed before us, we find that the issue before us raised by the assessee, being legal in nature, is as to whether the reassessment proceedings initiated by the Assessing Officer by recording the reasons u/s.147/148 of the Act and the satisfaction recorded by the JCIT u/s.151(2) of the Act, are sustainable or not. 10. In the instant case, the AO during the course of assessment proceedings found that the assessee has escaped assessment. Subsequently, the AO recorded the reasons and after getting approval from the JCIT, issued notice u/s.148 to the assessee. Accordingly, the Assessing Officer completed reassessment proceeding holding that the assessee could not substantiate the source of investment made by the assessee. We have also gone through the reasons recorded by the Assessing Officer/ITO, Ward-3(2), Ferozepur for reopening and the approval thereof by the Ld. Jt. CIT, Range-III, Ferozepur and found that the AO has not applied his mind so as to come to an independent conclusion that he has reason to believe that income has escaped assessm....
X X X X Extracts X X X X
X X X X Extracts X X X X
....JCIT/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, we find from the perusal of the order sheets filed at pages 64 to 66 in the paper book, the Jt. CIT has simply put "yes satisfied" and signed the report thereby giving sanction to the AO. The JCIT has nowhere recorded his satisfaction note nor any brief of the satisfaction has been given therein. Therefore, it cannot be said that the Jt. CIT has accorded sanction after applying his mind and after recording his satisfaction. To support our view, reliance can be placed on the decision of Hon'ble Delhi High Court in the case of Pr.CIT Vs. N.C.Cables Ltd., [2017] 88 taxmann.com 649 (Delhi), wherein the Hon'ble High Court has observed that the satisfaction has to be recorded of the given case which can be reflected in the briefest possible manner. The relevant observations of the Hon'ble High Court in para 11 read as under :- "11. Section 151 of the Act clearly stipulates that the CIT (A), who is the competent authority to authorize the reassessment notice, has to apply his mind and form an opin....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... far as explanation to Section 151, brought into force by Finance Act, 2008 is concerned, the same only pertains to issuance of notice and not with regard to the manner of recording satisfaction. That being so, the said amended provision does not help the revenue. 10. In view of the concurrent findings recorded by the learned appellate authorities and the law laid down in the case of Arjun Singh (supra), we see no question of law involved in the matter, warranting reconsideration. 11. The appeals are, therefore, dismissed." 13. The above decision of the Hon'ble High Court has been upheld by the Hon'ble Apex Court reported in (2015) 64 taxmann.com 313 (SC) dismissing the S.L.P filed by the Revenue. 14. Further in the case of Chhugamal Rajpal Vs.S.P.Chaliha & Ors, reported in 79 ITR 603 (SC), the Hon'ble Supreme Court has held that where the Commissioner, while granting the sanction just noted the word "Yes" and affixed his signature thereunder, he had only mechanically accorded permission, and that the important safe-guards provided in section 151 of the Act were lightly treated. 15. During the course of hearing ld. AR of the assessee drew our attention to....