TaxTMI 
TaxTMI 
TaxTMI 
2021 (4) TMI 1002
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....Sustaining the proceedings of section 147/148 as the Notice issued u/s 148 is without the mandatory sanction / approval of the Commissioner of the Income Tax, therefore it is without jurisdiction and proper authority of law as such is ab-initio void and the assessment completed on the basis of this notice is also ab-initio void. (iii) Sustaining the addition so made are purely illegal and against the law as the assessing officer himself rejected the books of account and for making additions relying on the same set of books of accounts. (iv) Sustaining the additions of Rs. 6,17,900/- on account of anonymous donation as the assessee explained the same during the course of assessment. (v) Sustaining the addition of Rs. 4,24,205/- on account of difference in cost of construction because the copy of valuation report was not provided to verify the alleged difference and addition made without confronting the valuation report to the assessee. (vi) Sustaining the addition of Rs. 445000/- on account of payment given for purchase of land. (vii) Sustaining the addition of Rs. 16,53,383/- on account of bogus creditors. (viii) Sustaining the Addition of Rs. 26,87,000/- on account of ....
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....d. A.O. initiated the action u/s 147 and issued notice u/s 148 on 25.03.2019. The assessee specifically requested the A.O. to supply the reasons for issue of notice u/s 148 vide letter dated 24.05.2019 which is available in the file of A.O., the copy of the same is attached herewith for ready reference of the Hon'ble Bench. It is once again requested vide letter 17.10.2019 which was served on the office of the A.O. on 18.10.2019, the copy of the letter dated 17.10.2019 and the proof of service are also attached herewith for ready reference of the Hon'ble Bench. From the perusal of the same the Hon'ble Bench will observe that the assessee made specific request and sought the reasons for reassessment, but the A.O. not supplied the reasons recorded for issue of notice u/s 148. In this connection it is worthwhile to submit that it is law of land that the reasons recorded for issue of notice u/s 148 are required to be supplied suo-moto to the assessee or he demands and if the same are not supplied then entire reassessment proceedings are bad in eye of law even after completion of assessment. On this issue I would like to rely on the Judgment of Hon'ble Supreme Court delivered in cas....
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....ipt register. In this connection it is stated that the submission of the Ld. A.O. is not correct, this letter was served on to the Ld. A.O., which is very well evident from the proof of service provided by the Courier agency, the copy of the same were submitted to the Ld. CIT(A) but not appreciated, the same are attached herewith for ready reference of the Hon'ble Bench. From the perusal of the same the Hon'ble Bench will observe that the submission of the Ld. A.O. is not correct. The findings of the Ld. CIT(A) is unjustified and also not in accordance with the law as well as various judicial pronouncements. It is need less to submit that the Judgment of the Hon'ble Supreme Court and the other higher courts are having binding nature on all the subordinate authorities. But here in this case this principle is also completely disobeyed. The Ld. CIT(A) not considered the evidences submitted by the assessee during the course of hearing. The assessee submitted the proof of receipt of the letter sent in the shape of the copy of receipts provided by the courier company, but the Ld. CIT(A) has completely brushed aside the evidences so submitted by the assessee and approved the act of th....
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....x Officer (Exemption), Ward-2, Jaipur Addl. Commissioner of Income Tax (Exemption), Jaipur For approval for issue of notice u/s 148. 22.03.2019 No.1079 Addl. Commissioner of Income Tax (Exemption), Jaipur Commissioner of Income Tax (Exemption), Jaipur Received on 22.03.2019 For approval u/s 151 on the reasons recorded by the A.O. 26.03.2019 No. 9548 Commissioner of Income Tax (Exemption), Jaipur Addl. Commissioner of Income Tax (Exemption), Jaipur Received on 26.03.2019 Conveying the approval 26.03.2019 No. 1093 Addl. Commissioner of Income Tax (Exemption), Jaipur Income Tax Officer (exemption),Ward-2, Jaipur Received on 27.03.2019 Giving the approval to the A.O. Therefore, this is very well established that the notice u/s 148 was issued on 25.03.2019 was without the approval/sanction of Commissioner of Income Tax, which is mandatory as per the provisions of section 151 of the Income Tax Act. Here in this case the Commissioner of Income Tax (Exemption) granted the approval on 26.03.2019 and communicated the same to the ITO on 27.03.2019 through proper channel. Therefore the notice was issued on 25.03.2019 was without jurisdiction as well as without any sa....
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....tice and sanction of the notice is on the basis of satisfaction, the so impugned computer generated print out submitted by the Ld. A.O. lacks both these conditions. By merely pointing out "Approved" cannot be termed as satisfaction as it is a mandatory word of the section 151 of the Act. In other words it can safely be understood that the whole proceedings which are said to be carried out by the Ld. A.O. are in mechanical manner without there being any application or independent application of judicious mind by the concerned authority. The approval so given by the CIT (Exemption) for issue of notice u/s 148 is not in proper manner. The approval so given is purely a mechanical approval, without stating any reasoning behind that. The copy of the approval is being enclosed herewith for ready reference, from the perusal of the same, the Hon'ble Bench will observe that the higher authority not uttered a single word as reason for approval, only put one word i.e. "APPROVED". Therefore, the approval so granted is not proper in any way. The requirement for issue of notice is not complied with in proper way, so the notice is required to be declared as void in absence of proper approval....
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....ompany, as mentioned in the assessment order. The assessee filed its return of income declaring total income of Rs. 128680/- on 24.05.2019 in compliance to the notice u/s 148. Thereafter notices u/s 143(2) and 142(1) were issued and replied by the assessee time to time. The A. O. also invoked the provisions of Section 145(3) of the Act and rejected the books of account of the assessee. After rejection of the books of account the A.O. made following additions and out of them some has been deleted by the Ld. CIT(A) tabulated as under :- S. No. Head of additions Addition by A.O. Amount Deleted by CIT(A) amount Sustained by CIT(A) Amount 1. anonymous donation shown as Corpus Donation. 6,17,900.00 - 6,17,900.00 2. difference in cash deposited into bank account. 57,000.00 57,000.00 - 3. difference in bus fee 6,11,893.00 5,11,893.00 1,00,000.00 4. difference in construction value of Building 4,24,205.00 - 4,24,205.00 5. advance given for land purchase 4,45,000.00 - 4,45,000.00 6. bogus liabilities 16,53,383.00 - 16,53,383.00 7. Difference in advertisement exp 26,87,000.00 - 26,87,000.00 8. estimation of hostel receipts 1,86,72,000.00 1,86,72,000....
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....nt Para of the Judgment of Hon'ble High Court are being reproduced here under :- "9. In the present case, admittedly, such reasons were not supplied to the assessee during the contemporary period before going ahead with the reassessment proceedings. Therefore, the Tribunal in our opinion was perfectly justified in quashing such reassessment order. 10. We do not find any substantial question of law arising in the matter. Therefore, the appeal of the Revenue stands dismissed. No costs." The Hon'ble Allahabad High Count in case of Mithilesh Kumar Tripathi V/s Commissioner of Income Tax and others reported in 280 ITR Page 16 (All) has held and observed as under :- "79. In our considered opinion, if reasons are supplied along with the notice under s. 148(2) of the Act, it shall obviate unnecessary harassment to the assessee as well to the Revenue by avoiding unnecessary litigation which will save courts also from being involved in unproductive litigations. Above all it shall be in consonance with the principles of natural justice, as discussed above." The Hon'ble Delhi High Court held in the case of Haryana Acrylic Manufacturing Co V/s Commissioner of Income Tax reported in 308 ....
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....ts whichever may be the case. The notice could be served at any point of time before the expiry of 6 years, if AO has reasons to believe that income has escaped assessment but, such reasons are also to be communicated to the assessee before the expiry of the limitation otherwise validity of such notice could not be sustainable. Being a subordinate authority to the Hon'ble High Court, we are bound to follow the authoritative exposition of law at the end of Hon'ble High Court. In view of the above discussion, we allow ground No.2 of the assessee wherein he has pleaded that notice u/s 148 has not been served within the period of limitation upon the assessee. The assessment is not sustainable, it is quashed." The Hon'ble Supreme Court in case of GKN Driveshafts (India) Ltd V/s ITO reported in 259 ITR Page 19 (SC), in this Judgment the Hon'ble Court is of view that the copy of the reasons recorded has to be supplied within a reasonable time. The relevant portion of the Judgment is being reproduced here under: - "4 We see no justifiable reason to interfere with the order under challenge. However, we clarify that when a notice under s. 148 of the Income Tax Act is issued, the proper co....
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....T(A) has completely brushed aside the evidences so submitted by the assessee and ld. CIT(A) also approved the act of the A.O., which is unjustified and contrary to the law. 12. We also observe that the A.O. has failed to provide the reasons despite the specific request of the assessee made to the A.O. twice, first just after filing of return u/s 148 and again during the course of assessment. It is needless to mention that without supply of reasons the entire assessment proceedings should be liable to be declared as illegal and bad in the eyes of law. 13. It has been submitted by the ld. AR that the assessment file of the assessee was inspected along with Shri Rahul Sharma C.A. on 26.02.2020 about 4.00 P.M. and it was found during the course of inspection that the Notice issued u/s 148 was issued without getting the prior sanction/approval of the Commissioner of Income Tax (Exemption). The A.O. referred the proposal to the Addl. Commissioner of Income Tax (Exemption) on 22.03.2019 for getting the sanction to issue the notice u/s 148 to 10 persons including the assessee. The Additional Commissioner vide letter dated 22.03.2019 No. 1079 submitted the proposal of the Income Tax Offic....
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....oner of Income Tax is mandatory. 14. We observe from perusal of the record that the A.O. in his remand report submitted that the approval given by the Commissioner of Income Tax (Exemption), Jaipur before the date of issue of notice. In this respect, we have gone through the remand report dated 09/03/2020 submitted by the JCIT(Exemption) to the CIT(Appeal) and the contents of which are as under: "The assessee has also argued that notice u/s 148 was issued prior to receipt of sanction of competent authority u/s 151 of the Act. In this connection it may be stated that the AO submitted proposal to the Addl.CIT(Exemption), Jaipur online on 22/03/2019 which was forwarded to the CIT(Exemption) on the same day. The CIT(Exemption) accorded sanction u/s 151 online on 25/03/2019. Only thereafter notice u/s 148 of the Act was issued online on 25/03/2019. As a matter of fact, such notices cannot be generated without online approval of competent authority. Thus the objection raised by the assessee is not correct. Date of receipt of manual approval is not relevant. Proceedings initiated u/s 148 are valid. It may further be submitted that now certified copy of reasons recorded have been prov....
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....ependent application of judicious mind by the concerned authorities. The approval so given by the ld. CIT (Exemption) for issuance of notice u/s 148 is not in accordance with law and the approval so given by the ld. CIT(E) was a mechanical approval without stating any reason for reaching to that conclusion. Since, the requirement for issuance of notice was not complied with, therefore, notice in the present case is required to be declared as void ab initio in absence of proper approval. We are of the considered view that only mentioning the word "Yes" or "Yes I am satisfied", is not sufficient compliance for according the approval/sanction for issuance of notice u/s 148 of the Act. The Hon'ble Supreme Court in the case of Chhugamal Rajpal Vs S.P.Chaliha & Ors. 79 ITR 603 (SC) had categorically held that "No notice shall be issued under s. 148 after the expiry of four years from the end of the relevant assessment year, unless the CIT is satisfied on the reasons recorded by the ITO that it is a fit case for the issue of such notice." In case the CIT had mechanically accorded permission by himself not recording that he was satisfied that it was a fit case for issuance of notice then i....
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....rt is satisfied that the findings by the ITAT cannot be disturbed." (B). Hon'ble High Court of Madhya Pradesh in the case of CIT vs. S. Goyanka Lime & Chemicals Ltd. reported in (2015) 56 taxmann.com 390 (MP) has held as under:- "7. We have considered the rival contentions and we find that while according sanction, the Joint Commissioner, Income Tax has only recorded so "Yes, I am Satisfied". In the case of Arjun Singh vs. Asstt. DIT (2000) 246 ITR 363 (MP), the same question has been considered by a Coordinate Bench of this Court and the following principles are laid down:- "The Commissioner acted, of course, mechanically in order to discharge his statutory obligation properly in the matter of recording sanction as he merely wrote on the format "Yes, I am satisfied" which indicates as if he was to sign only on the dotted line. Even otherwise also, the exercise is shown to have been performed in less than 24 hours of time which also goes to indicate that the Commisisoner did not apply his mind at all while granting sanction. The satisfaction has to be with objectivity on objective material 8. If the case in hand is analysed on the basis of the aforesaid principle, the mecha....