TaxTMI 
TaxTMI 
2021 (5) TMI 400
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....e the assessee has not filed his/her ITR for the A.Y. 2010-11, the source of cash deposit in saving bank account amounting to Rs. 14,52,000/- remained unexplained. Therefore I have reason to believe that the income of the assessee to the extent of Rs. 14,52,000/- for Asstt. Year 2010-11 has escaped assessment and hence it is a fit case for initiation of proceedings in terms of section 147 of the Income Tax Act, 1961. It is pertinent to mention that in the case of Raymond Woollen Mills Ltd. 236 ITR 34 (SC), the Hon'ble Apex court has held that in determining whether commencement of reassessment proceedings was valid it has only to be seen whether there was prima facie some material on the basis of which the department could reopen the case. The sufficiency or correctness of the material is not a thing to be considered at this stage." 3. Accordingly, notice u/s 148 of the Act dated 31.03.2017 was issued and served upon the assessee. Notice u/s 142(1) of the IT Act dated 7th June, 2017 was also issued but the same was returned unserved with the postal remarks 'No such person.' Again, notice u/s 142(1) dated 11th July, 2017 was issued and served upon the assessee fixing the....
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.... been made on ad hoc disallowance of expenses to the extent of 25%. 4. That the Assessing Officer and Ld, CIT(A) failed to appreciate while passing the orders, that the appellant was in possession of proper books of accounts alongwith the supporting bills / vouchers in respect of the expenditure claimed, for which the ledger copies were also filed and placed upon records, therefore, ad hoc disallowances thereof (a) 25% was not justified under the law and to the facts of the case as without the support of any material having nexus to the extent of its disallowance thereof @ 25%. 5. That the appellate order passed by the Ld. CIT (A) was farther not correct under the law and to the facts of the case, because of not appreciating and taking into consideration that the appellant has produced the complete books of accounts and also filed copies of bank statement, detail of expense vouchers, detail of purchase etc. alongwith the Written Submission filed on 08.09.2018. 6. That the net profit assessed at Rs, 9,03,360/- after disallowing Rs. 7,57,728/- which is ad hoc @ 25% of total expenses of Rs. 30,30,911/- was not correct under the law and to the facts of the ca....
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.... not filed the return of income whereas the AO in the assessment order himself has noted that the assessee has filed the return of income, since he has made the addition to the returned income of Rs. 1,58,905/- as income from business declared by the assessee and Rs. 137/- as 'Income from other sources' declared by the assessee. Referring to the copy of the permission taken u/s 151, copy of which is placed at pages 2 and 3 of the paper book, he submitted that such permission granted by the higher authorities are also not in accordance with the law. Relying on various decisions, he submitted that when the approval was given on wrong facts and the approval has been given in a mechanical manner, such reassessment is bad in law because the very foundation of such reopening was on the basis of wrong appreciation of facts. 5.1 So far as the merit of the case is concerned, the ld. counsel submitted that the assesseee is a contractor and although proper bills and vouchers were maintained, but, no due opportunity was granted to the assessee by the AO for producing the details. In any case, the disallowance @ 25% under the facts and circumstances of the case is on the higher side. He acco....
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....not applied their mind and had given approval in a mechanical manner. 9.1 It has been held in various decisions that reopening of the assessment on wrong set of facts makes such reopening a nullity. The Hon'ble Delhi High Court in the case of PCIT vs. RMG Polyvinyl (I) Ltd., 396 ITR 5, has held that reopening of the assessment on wrong set of facts makes the assessment a nullity. Similar view has been taken by the coordinate Benches of the Tribunal in the case of Shri Dheeraj Yadav vs. ITO vide ITA No.6701/Del/2019, order dated 01.01.2021, M/s Bull Riders Financial Services (P) Ltd. vs. ITO, vide ITA No.1891/Del/2017, order dated 10th February, 2020. 10. Even otherwise also, the approval in the instant case has been given in a mechanical manner on wrong facts that the assessee has not filed his return of income as contained in column No. 8(a) and 11 of the said proforma. The Hon'ble Delhi High Court in the case of Yum! Restaurants Asia Pvt. Ltd. vs. DDIT(2), reported in (2008) 99 taxmann.com. 457, has held as under:- "Section 151 of the Income Tax Act 1961 - Income escaping assessment - sanction for issue of notice - Assessment Year 2006-07 - Where both Additional Di....
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....nt of those items. However, the legislature could not be presumed to have intended to give blanket powers to the Assessing Officer that on assuming jurisdiction under Section 147 regarding assessment or reassessment of escaped income, he would keep on making roving inquiry and thereby including different items of income not connected or related with the reasons to believe, on the basis of which he assumed jurisdiction. For every new issue coming before Assessing Officer during the course of proceedings of assessment or reassessment of escaped income, and which he intends to take into account, he would be required to issue a fresh notice under Section 148. 19. In the present case, as is noted above, the Assessing Officer was satisfied with the justifications given by the assessee regarding the items viz., club fees, gifts and presents and provision for leave encashment, but, however, during the assessment proceedings, he found the deduction under Section 80 HH and 80-I as claimed by the assessee to be not admissible. He consequently while not making additions on those items of club fees, gifts and presents, etc., proceeded to make deductions under Section 80HH and ....