TaxTMI 
TaxTMI 
2020 (2) TMI 1336
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....passed by the AO u/s. 147 read with Section 143(3) of the Act. 4. The above grounds of appeals are independent and without prejudice to one another. 5. The appellant may be allowed to add / withdraw or amend any ground of appeal at the time of hearing. 2. The brief facts of the case are that assessee company is engaged in the business of sale and purchase of shares. The assessee filed its return of income on 30.9.2010 at NIL income. In this case, information was received from ADIT(Inv.), Unit-1(3), Ahmedabad through CD wherein it was informed that assessee company has claimed fictitious losses and profits by misusing the CCM facility in F&O segment amounting to Rs. 2,18,73,416/-. The assessment in this case was completed at an income of Rs. 2,18,73,416/- u/s. 147/143(3) of the Income Tax Act, 1961 (in short "Act") vide order dated 10.1.2017. Against the assessment order, assessee appealed before the Ld. CIT(A), who vide his impugned order dated 26.3.2019 has dismissed the appeal of the assessee. Aggrieved with the appellate order dated 26.3.2019, assessee is in appeal before the Tribunal. 3. Ld. Counsel for the assessee stated that assessee has challenged the reopening u/s.....
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....nd approval granted by the Pr. CIT, Delhi-1, New Delhi wherein, he has granted the approval by only mentioning that "I am satisfied", which shows that Ld. Pr. CIT, Delhi-1, New Delhi has not recorded proper satisfaction and without application of mind gave the approval in a mechanical manner. He further stated that this issue is squarely covered by the decision of the Hon'ble Delhi High Court in the case of United Electrical Company (P) Ltd. Vs. CIT & Ors. 258 ITR 317 (Del.). 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. 3.2 Thirdly, on the merits of the case, Ld. Counsel for the assessee stated that the orders of the authorities below cannot be accepted since the AO has not pointed out any basis or material or evidence to support his findings that the assessee has received entry of fictitious losses. The AO has not spelt out in the reasons recorded as well as the assessment order as to on which scrips the assessee has taken loss entries. He submitted that the addition has been made by the AO despite assertions by the assessee that the asseseee has no k....
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.... is not based on any material against the assessee. The mere recording of reasons on the basis of information from Investigation Wing and issuing notice for initiation of reassessment proceedings does not constitute application of mind much less independent application of mind. Therefore, the proceeding is without jurisdiction. It is noted that AO has not investigated the matter himself and has not made any enquiry to corroborate the Information of the Investigation Wing on which basis the case of the assessee has been reopened, meaning thereby the AO has not applied his mind and only issued notice u/s. 148 of the Act. Thus, the AO has acted mechanically and without any independent application of mind. It is further noted that initiation of proceedings is based on non application of mind much less independent application of mind but is a case of borrowed satisfaction. Nothing is independently examined or considered by the AO which can demonstrate application of mind by him. To support our aforesaid view, we draw support from the following decisions:- i)ACIT vs. Dhariya Construction Co. (2011) 198 taxman 202 (SC) wherein the Hon'ble Court has held that : "Section 147 of th....
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....crore. On what basis such an addition was made has not been explained. 15. For the aforementioned reasons, the Court is satisfied that no error was committed by the ITAT in holding that reopening of the assessment under Section 147 of the Act was bad in law." iii) 395 ITR 677 (Del) Pr. CIT v. Meenakshi Overseas (P) Ltd. "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....
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....I am satisfied that it is a fit case for issue of notice u/s. 148 of the Income Tax Act." Analyzing, the above satisfaction/approval, it has been held that the CIT is required to apply his mind to the proposal put up to him for approval in the light to eh material relied upon by the AO. The said power cannot be exercised casually and in a routine manner. We are constrained to observe that in the present case, there has been no application of mind by the Addl. CIT before granting the approval. (Para 19). (B) Hon'ble Supreme Court of India in the case of CIT vs. S. Goyanka Lime & Chemical Ltd. reported in (2015) 64 taxmann.com 313 (SC) arising out of order of Hon'ble High Court of Madhya Pradesh in CIT vs. S. Goyanka Lime & Chemicals Ltd. (2015) 56 taxmann.com 390 (MP). "Section 151, read with section 148 of 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 fi....