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TaxTMI 
TaxTMI 
TaxTMI 
2021 (3) TMI 510
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....e basis of it was illegal, ab initio void and without jurisdiction. 2. The learned CIT(A) was not justified to uphold the addition of Rs. 69,42,652/- (34.7% of Rs. 2,00,07,645/-) to the income of the appellant and income from undisclosed sources. The addition of Rs. 69,42,652/- is unfounded and uncalled for. 3. The learned CIT(A) failed to appreciate that: (a) e books of account. (b) The appellant was not confronted with any evidence by the learned Assesssing officer that it had made any sale outside the books of account. 4. The various reasons given by the learned CIT(A) to uphold the addition of Rs. 69,42,652/- to the income of the appellant are misconceived and incorrect. (c) The appellant has not made any sale, which is not recorded in the books of account. All the sales affected by the appellant to M/s Margra Industries, Gharoli are duly accounted for in the books of account. There is no sale made to this party which has not been recorded in the books of account. 5. The appellate order is contrary to the facts and law of the case. 6. The appellant craves leave to add, amend or alter any of the foregoing grounds of appeal at the time of hearing. B. ITA No. 24....
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....the appellant as income from undisclosed source on account of short stock of marble profiles and marble mosaic found during the search made by the Customs & Central Excise Department. The addition of Rs. 11,48,057/- is arbitrary and uncalled for. 5. Without prejudice to the contention of the appellant that no sale outside the books of account was made by the appellant, the learned CIT(A) was not justified to allow deduction u/s 10B of the I.T. Act on such sales. 6. The learned CIT(A) failed to appreciate that: (a) No copies of documents/details relating to suppression of sales or removal of goods without payment of duty, cancelled invoices were supplied to the appellant firm. (b) No documents/details in respect of excess stock of Rs. 1,04,39,050/- stock short of Rs. 34,26,014/- and unaccounted sale of Rs. 2,44,73,246/- were supplied to the appellant firm. Infact, there was no difference in the stocks. (c) complete books of account, sale & purchase vouchers, bank statements, voucher of expenses etc were produced by the appellant. (d) the appellant has not made any sale which was not recorded in the books of account. 7. The various reasons given by the learned CIT(A) to....
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....lso, there is no reference to the said invoice except for presumption that based on this information assessee must have made sales outside the books of account. 2. Since the information and material in the form of report submitted by ADIT (Investigation), Ghaziabad is very crucial and goes to the very route of the issue involved not for deciding the issue on merits but also on the validity of reasons recorded, therefore it was felt necessary that Department should produce not only the said report from the investigation wing but also the alleged invoices referred in the reasons as well as assessment order upon which presumption has been drawn that such cancelled invoices has led to undisclosed sale on which GP addition has been made. 3. Ld. CIT-DR, Mr. S.S. Rana requested that since it is very crucial document having a bearing on the case, therefore, some time should be given to produce the records. 4. Accordingly, we direct the assessing officer through ld. CIT-DR that all the relevant records mentioned in the reasons recorded as well as the entire assessment record should be produced before the Bench with a copy to the assessee on or before 30th January, 2019. The department....
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....ayment of duty and therefore, requested to provide the copies of cancelled invoices. However, despite the request of the assessee, cancelled invoices were not supplied to the assessee. In respect of the communication dated 24.03.2009, addressed by the Addl. DIT( Inv.), Meerut to Addl. CIT, Range - 22, New Delhi, the assessee submitted that the Addl. DIT (Inv.) Meerut had recommended the cases of the assessee to be reopened, and the recommendation had been made without providing to the Assessing Officer any supporting material. It was submitted that since in the 'reasons recorded' the AO had not referred to either any communication dated 24.03.2009 by the Addl.DIT (Investigation) Meerut to Addl.CIT, Range - 22, New Delhi and to the order of Commissioner of Custom and Excise, Noida undated, the same cannot be considered to be any tangible material available at the time of reopening of the assessment. It was submitted that Addl. DIT (Inv.) Meerut who recommended the cases to be reopened, had no tangible material with him other than the intimation received that the Customs & Central Excise Authorities had conducted a search on assessee's business premises on 19.08.2003, during the cou....
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....pportunity should be given in order to ascertain, whether any such material or information was there in some separate folder available with the assessing officer. Ld. Senior Counsel further pointed out that from the perusal of the reason recorded, it can be seen that the Assessing Officer in view of the allegation given in the information from the Additional Director of income tax (Investigation) is trying to examine the claim of exemption u/s.10B, which is impermissible in law. Ld. CIT-DR is directed to produce any record which is available with the assessing officer at the time of issuance of notice and also given her statement on the objection raised by the ld. Senior Counsel. It is made clear that no further adjournment shall be given as already several round of hearing has taken place. Dasti be given to the parties." 9. Even after the aforesaid direction, the ld. CIT DR on 20.10.2020 merely furnished the copy of letter issued by Addl. Director of Income Tax (Inv.), Meerut, dated 24.03.2009, to Addl. CIT, Range - 22, New Delhi and copy of letter issued by Addl. Director of Income Tax (Inv.), Noida, dated 17.03.2009, to Addl. DIT (Inv.) Meerut which had already been filed on ....
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.... been specified which has allegedly escaped the precondition as envisaged u/s 149(1)(b) since remained unsatisfied, there was a lack of foundation for initiate the proceedings; e. Non furnishing of foundational material vitiates the proceeding for invoking section 147 of the Act has not been satisfied; f. That approval granted is a mechanical approval and hence initiation of proceedings u/s 147 of the Act; g. That once the basis or edifice on which proceedings have been initiated ceases to exist, the action is without jurisdiction. 12. For the AYs 2003-04 and 2004-05, since the assessment was originally made u/s 143(3) of the Act, and assessment was reopened beyond four years, it was also contended by the assessee that there was no failure on the part of the assessee to disclose fully and truly all material facts as such, action u/s 147 of the Act was in excess of jurisdiction. 13. During the course of the hearing, learned Senior Counsel, Shri. C.S. Aggarwal argued at length in respect of the aforesaid contentions. He submitted that proceedings u/s 147 of the Act had been initiated in the case of the assessee without any tangible material as in the reasons to believe, the l....
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....he Act is outside the scope of section 147 of the Act as reassessment proceedings can be initiated only in the case of tangible material that the income of the assessee has escaped assessment, and recourse of section 147 of the Act cannot be take to make roving and fishing enquiry. It was submitted that in the 'reasons to believe' for the AY 2002- 03, it has not even been mentioned what is the amount of income which has been escaped assessment as such, in view of section 149(1) of the Act, initiation of the reassessment proceedings is illegal. 13.2 Lastly, it was submitted that approval granted u/s 151 of the Act was not in accordance with law and was without application of mind and hence reassessment proceedings initiated is vitiated in law. It was submitted that in all the three assessment years i.e. AY 2002-03, 2003-04 and 2004-05, approval has been taken from Addl. CIT, Range 22, New Delhi who has merely stated "approved". It was submitted that firstly approval granted is not a sanction as mandated u/s 151of the Act and secondly in the case which falls under proviso to section 151(1) of the Act, approval has to be granted by the Chief Commissioner or Commissioner and since for....
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....tice shall be issued unless the Chief Commissioner or Commissioner is satisfied, on the reasons recorded by the Assessing Officer aforesaid, that it is a fit case for the issue of such notice. (2) In a case other than a case falling under sub-section (1), no notice shall be issued under section 148 by an Assessing Officer, who is below the rank of Joint Commissioner, after the expiry of four years from the end of the relevant assessment year, unless the Joint Commissioner is satisfied, on the reasons recorded by such Assessing Officer, that it is a fit case for the issue of such notice." 15.2 Ergo, provisions of sub section (1) of section 151 of the Act deals with the cases wherein assessment was earlier framed u/s 143(3) or section 147 of the Act, whereas subsection (2) provides for the cases, wherein no assessment was framed earlier. Under sub section (1) of section 151, if the proceedings are initiated within four years, no notice shall be issued under section 148 , unless the Joint Commissioner is satisfied on the reasons recorded by such Assessing Officer that it is a fit case for the issue of such notice. However, the proviso to the sub-section (1) provides for the approva....
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....1 Taxman 73 (MP) it was held that sanction granted by merely recording "Yes, I am satisfied" is mechanical and same is unsustainable. In fact, SLP filed against the aforesaid judgment of Madhya Pradesh High Court is also dismissed and same is reported in 237 Taxman 378 (SC). In fact, in the case of Pr. CIT vs M/s N.C. Cables Ltd. reported in [2017] 391 ITR 11 (Delhi) jurisdictional High Court has held 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 opinion. The mere appending of the expression 'approved' says nothing. It is not as if the CIT (A) has to record elaborate reasons for agreeing with the noting put up. At the same time, satisfaction has to be recorded of the given case which can be reflected in the briefest possible manner. In the present case, the exercise appears to have been ritualistic and formal rather than meaningful, which is the rationale for the safeguard of an approval by a higher ranking officer. For these reasons, the Court is satisfied that the findings by the ITAT cannot be disturbed." 15.4 When the facts of this case ....
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....opy of letter issued by Addl. Director of Income Tax (Inv.), Noida, dated 17.03.2009, to Addl. DIT(Inv.) Meerut. iii. A copy of an undated order passed by Sh. S.K. Goel, Commissioner, Central Excise, Noida. iv. A copy of letter dated 18.02.2019, addressed by Senior Investigating Officer of Customs, Central Excise & Service Tax Settlement Commission, Principal Bench, New Delhi to persons stated therein." 15.7 First of all, in the reasons there is no whisper regarding documents at Sl. No. (iii.) & (iv.) now filed by the department. Nowhere it has been brought on record what was the amount and goods which has been alleged to be removed without payment of duty and what are these cancelled invoices. The Revenue could not even produce the copies of alleged invoices referred in the reasons recorded upon which presumption had been drawn that such cancelled invoices has led to undisclosed sale of which GP addition has been made. From the communication dated 24.03.2009 addressed by Addl. DIT (Inv.), Meerut to Addl. CIT, Range-22 which reads as under: - "In this case Custom & Central Excise Authorities conducted a search on the business premises of M/s Marble Art, on 19.08.2003. During....
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....mply appears to have reopened to examine the claim of section 10B and what was the basis and premise before him as to how the claim on examine u/s 10B has incorrect is not coming fore. Mere intimation received from any authority cannot lead to immediate presumption but it needs to be verified by the AO and to apply his mind. Here in this case, even the documents pertaining to Custom & Central Excise Authorities was not available with the AO at the time of initiation of proceedings which fact has been surfaced before us. Thus, we hold that the reasons recorded by the AO do not give jurisdiction to reopen the assessment u/s 147 read with section 148. 16. Now in so far as other two years, that is, AYs 2003-4 & 2004-05, it is also seen that in the case of the assessee, not only approval was mechanical but approval was also not taken from competent authority. The relevant details in respect of the approval for these years are as under: Assessment Year Assessed under section Notice issued u/s 148 of the Act on Sanction u/s 151 was taken from Competent authority to grant sanction u/s 151 2002-03 143(1) 17.03.2009 Addl. CIT Addl. CIT/JCIT 2003-04 143(3) 31.03.2010 Addl. CIT....
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.... distinct authorities have to exercise their powers in accordance with law as per the powers given to them in specified circumstances. If powers conferred on a particular authority are arrogated by other authority without mandate of law, it will create chaos in the administration of law and hierarchy of administration will mean nothing. Satisfaction of one authority cannot be substituted by the satisfaction of the other authority. It is trite that when a statute requires, a thing to be done in a certain manner, it shall be done in that manner alone and the Court would not expect its being done in some other manner. It was so held in the following decisions: (i) CIT v. Naveen Khanna (dated 18.11.2009 in IT Appeal No. 21 of 2009 (DHC). (ii) State of Bihar v. J.A.C. Saldanna AIR 1980 SC 326. (iii) State of Gujarat v. ShantilalMangaldas AIR 1969 SCN 634. 8. Thus, if authority is given expressly by affirmative words upon a defined condition, the expression of that condition excludes the doing of the Act authorised under other circumstances than those as defined. It is also established principle of law that if a particular authority has been designated to record his/her satisfact....
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..... Emperor AIR 1936 PC 253 : that if the statute mandates that something be done in a particular manner, should be in that manner or not at all. In this case, since the original assessment was completed "other than" the eventualities contemplated in Section 151(1), i.e. it was processed under Section 143(1). Thus, clearly Section 151(2) applied." 16.4 Aforesaid two judgments were subsequently followed in the case of Yum Restaurants Asia Pte Ltd vs. DDIT reported in [2017] 397 ITR 639 (Delhi), wherein it was held as under: 8. The above submission cannot be accepted. Where the original assessment is processed under section 143(1) of the Act, and the reopening is sought to be done after the expiry of four years from the end of the relevant assessment year, the mandatory requirement under section 151(2) of the Act is that the approval for the reopening of the assessment should be by an officer of the rank of the Joint Commissioner (in this case, the Addl. DIT) and not other officer including a superior officer.... ----- 11. In view of the clear position in law, the court has no hesitation in concluding that in the present case, the mandatory requirement under section 151(2) of ....