TaxTMI 
TaxTMI 
2021 (9) TMI 801
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....rred by limitation and various other reasons and hence the same may kindly be quashed. 1.2 The action taken u/s 147 is bad in law and on facts of the case, for want of jurisdiction and various other reasons and hence the same may kindly be quashed. 1.3 The ld. AO has grossly erred in law as well as on the facts of the case in passing the Exparty Assessment order in gross breach of law without providing adequate and reasonable opportunity of being heard to the assessee. Hence the assessment so made and consequent addition so made may kindly be quashed and delete. 3.1 Rs. 50,65,000/- : The ld. CIT(A) has grossly erred in law as well as on the facts of the case in sustaining the addition of Rs. 50,65,000/- u/s 69A on account of cash deposit in the saving bank account. Hence the addition so made by the AO and confirmed by the ld. CIT(A) is being totally contrary to the provisions of law and facts on the record and hence the addition may kindly be deleted in full. 3.2: The ld. CIT(A) has also grossly erred in law as well as on the facts of the case in passing the order in gross breach of law without providing further adequate and reasonable opportunit....
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....ing F.Y. 2007-08 (A.Y. 2008-09) and the assessee has not filed his ITR for A.Y. 2008-09. The source of above cash deposit made by the assessee was not verifiable. Thereafter the AO has issued notices u/s 142(1) of the Act. The AO issued the notices time to time which have also not been complied with by the assessee. However the Assessing Officer has passed assessment order U/s 144 of the Act on 01/03/2016, wherein he made addition of Rs. 50,65,000/- U/s 69A of the Act on account of cash deposit in the bank. 7. Being aggrieved by the order of the A.O., the assessee carried the matter before the ld. CIT(A) and stated the fact that the appeal had been decided by the A.O. ex parte and a reply dated 19.01.2018 has also been submitted before the ld. CIT(A) and the ld. CIT(A) has mentioned the contents of the reply of the assessee in his order at page No. 3 para No. 5, as under. "In this connection it is submitted that the above matter was decided exparty u/s 144 and to bring the correct facts and information before your honor inspection of the assessment record was necessary and the ld. AO has allowed the inspection of the assessment record just on 18.01.2019. On inspection o....
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....ncements: i. Dhadha Exports V/s ITO 377 ITR 347(Raj.) ii. Delhi High Court in CIT Vs. SPL's Siddhartha Limited iii. Ghanshyam K. Khabrani v/s ACIT 346 ITR 443(Bom.) iv. CIT V/s SPL's Siddhartha Ltd 345 ITR 223(Del). v. CIT vs. Soyuz Industrial Resources Ltd.(2015) 232 TAXMAN 0414 (Delhi HC) vi. Pr. CIT vs. N.C. CABLES LTD.(2017) 98 CCH 0018 Del HC 2. No Satisfaction or application of mind by the Pr. CIT: Further on perusal of the reason recorded and approval u/s 151 by the without competent authority it is clearly proved that they have not applied the mind on the reasons recorded they have only expressed or mentioned yes I am satisfied by the Add. CIT not by Pr. CIT on the reason forwarded. While as per decision of Pr. CIT vs. N. C. Cables Ltd.(2017) 98 CCH 0010 Del HC it has been held that Section 151 of the Act clearly stipulates that the CIT, 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 has to record elaborate reasons for agreeing with the noting put up. At the s....
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.... the proceedings are illegal, invalid, void-ab-initio and liable to be quashed. 4. Hence in view of the above submissions the action taken u/s 148 and consequent proceedings may kindly be quashed." 9. On the other hand, the ld. DR has vehemently supported the orders of the Revenue authorities. 10. We have heard the ld. Counsels of both the parties and have perused the material placed on record. We have also deliberated upon the decisions cited in the orders passed by the authorities below as well as cited before us and we have also gone through the orders passed by the revenue authorities. From perusal of the record, we noticed that this is the case of A.Y. 2008-09 and the notice u/s 148 of the Act has been issued on 24.03.2015 which is admittedly after expiry four years. In this case, four years has expired on 31.03.2013 and the notice u/s 148 of the Act has been issued on 24.03.2015. It is important to mention here that Section 151 of the Act provides that no notice shall be issued U/s 148 of the Act by an A.O. after expiry of a period of four years unless the PCIT or CCIT or CIT is satisfied. For ready reference, we reproduce Section 151 of the Act as under: ....
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.... lapse of four years from the relevant assessment years and the approval for the year under consideration was accorded by the Addl.CIT, Range-2, Jaipur and not from the Pr.CIT/CIT. Admittedly, the competent authorities to accord the approval as per Section 151 of the Act was Pr.CIT/CIT and not the Addl.CIT, therefore, issuance of notice U/s 148 and consequent assessment order passed are invalid, illegal and are liable to be quashed on the ground that same were not issued by the competent authority and thus stands quashed. While reaching this conclusion, we draw strength from the decision in the case of Pr. CIT vs. N.C. CABLES LTD.(2017) 98 CCH 0018 Del HC, wherein it has been held as under: "that Reassessment-Issuance of Notice-Sanction for issue of Notice-Assessee had in its return for AY 2001-02 claimed that sum of Rs. 1 Crore was received towards share application amounts and a further sum of Thirty Five Lakhs was credited to it as an advance towards loan-Original assessment was completed u/s 143(3)-However, pursuant to reassessment notice, which was dropped due to technical reasons, and later notice was issued and assessments were taken up afresh-After considering subm....
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....s. 1,15,00,500/- : The ld. CIT(A) has grossly erred in law as well as on the facts of the case in sustaining the addition of Rs. 1,15,00,500/- u/s 69A on account of cash deposit in the saving bank account. Hence the addition so made by the AO and confirmed by the ld. CIT(A) is being totally contrary to the provisions of law and facts on the record and hence the addition may kindly be deleted in full. 3.2 The ld. CIT(A) has also grossly erred in law as well as on the facts of the case in passing the order in gross breach of law without providing further adequate and reasonable opportunity of being heard to the assessee despite the admitted facts that an application was made to the ld. AO for obtaining documents from the assessment record, which have not been provided till date. Hence the assessment so made and consequent addition so made by the ld. AO and confirmed by the ld. CIT(A) may kindly be quashed and delete. 4. The ld. AO has grossly erred in law as well as on the facts of the case in charging interest u/s 234A,234B&234C,. The appellant totally denies it liability of charging of any such interest. The interest, so charged, being contrary to the provisions o....
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....as deposited cash of Rs. 1,15,00,500/- in his SB a/c for the F.Y. 2008-09 relevant to A.Y. 2009-10 and the assessee has not filed his ITR for A.Y. 2009-10. The source of above cash deposit made by the assessee not verifiable"(PB10). In want of notices in the knowledge of the assessee, he could not make the compliances and the ld. AO in want of reply passed the assessment. While making the addition the ld. AO has stated that in the assessee's case AIR data showed that the assessee had cash deposits to the tune of Rs. 1,15,00,500/- in his SB account Vaishali Urban Co-op Bank Ltd Branch Shyam Nagar, Jaipur during the F.Y. 2008-09- relevant to A.Y. 2009-10. The assessee has not furnished any explanation with regard to the cash deposited in his bank account the same is treated as unexplained cash deposit within the meaning of Sec. 69A and made addition of Rs. 1,15,00,500/-. And he has passed the assessment order u/s144/147 by assessing the income of the assessee at Rs. 1,15,00,500/-. In first appeal we have filed a letter to the ld. CIT(A) by praying that "In this connection it is submitted that the above matter was decided exparty u/s 144 and to brin....
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.... hence liable to be quashed. Because the power and jurisdiction to issue the notice u/s 148 is given after obtaining the approval u/s 151 of the Act is provided under sec. 151 the said section which reads as under. 151(1): No notice shall be issued under section 148 by the AO , after the expiry of a period of four years from the end of the relevant assessment year unless the Pr. Chief CIT or Chief CIT or Pr. CIT or CIT is satisfied on the reasons recorded by the Assessing Officer, that it is a fit case for the issue of such notice. 1.2Thus for initiation of proceedings to issue the notice u/s 148 is the approval and satisfaction u/s 151 by the competent authority are the mandatory pre-condition. Undisputedly here the prescribed authority is the Hon'ble Pr. CIT and the satisfaction of the prescribed authority is a must before issuing the notice u/s 148 of the Act. Therefore, what is material and mandatory condition is the approval and satisfaction of the prescribed authority and non-else. In the case of assessee the impugned approval u/s 151 dated 29-03-2016 was signed by the ITO (T&J) and issued as per directions of the Hon'ble Pr.CIT (E). The same can be ....
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....fer direct decision of the Honble Raj. High Court judgments in case of Dhadha Exports V/s ITO 377 ITR 347(Raj.) wherein it has been held "Dispute pertains to assessment year 2007-08. The notice under Section 148 of the IT Act has been issued to the petitioner-assessee beyond expiry of four years after the end of the relevant assessment year. Proviso to Section 151 (1) of the IT Act in this connection stipulated at the relevant time that no such notice itself be issued after the of four years from the end of the relevant assessment year 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. Subsequently by amendment inserted by the Finance (NO.2) Act, 2014 with effect from 01.06.2013 the Principal Chief Commissioner and Principal Commissioner, apart from Chief Commissioner and Commissioner, have also been inserted as the competent authority to grant such sanction. However, sanction letter dated 27.03.2014, which Income Tax Officer has relied and supplied to the petitioner-assessee, vide communication dated 02.01.2015, has been issued by Joint Commissioner, Income Tax, ....
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....instruction, then it will be case of failure to exercise discretion altogether-Therefore, the Tribunal has rightly decided the legal aspect. 1.8.4In the case of CIT vs. Soyuz Industrial Resources Ltd.(2015) 232 TAXMAN 0414 (Delhi HC)held Reassessment-Sanction for issuance of notice-Assessee had filed its returns in a normal course and assessment was framed u/s 143(1)-Based upon information received by AO, a satisfaction note was recorded and a notice was issued beyond four years from the end of the assessment year, under proviso to s 147(1)- Reassessment proceedings were completed-Assessee claimed that the notice u/s 147 was unsustainable because it was not approved by the competent authority in accordance with Section 151-CIT(A) sanctioned re-assessment proceedings through issuance of notice u/s 148-ITAT's allowed assessee's appeal by holding that the CIT lacked the authority to sanction re-assessment proceedings through issuance of notice u/s 148- Held, Privy Council in Nazir Ahmad V. Emperor had laid down that if the statute mandates that something be done in a particular manner, it should be in that manner or not at all-Thus, it was not court's job to render, in the pr....
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....ion had to be recorded of given case which could be reflected in briefest possible manner-In present case, exercise appears to have been ritualistic and formal rather than meaningful, which was rationale for safeguard of approval by higher ranking officer-Revenue's appeal dismissed. 2. Approval of 56 assessee;s in one letter illegal: Further the ld. Pr. CIT has given one consolidated approval of 56 assessee's through one letter dt. 29.03.2016 (PB7-8) and this show how the PR. CIT has act in formal way. On inspection of the assessment record it has also been come to know that there was no approval in original letter or documents. The document of approval was in the photocopy. And no tick on the name of the assessee. And it is also appear that the approval has been given or reach in the office of the ld. AO after the 31.03.2021. Because the approval letter was not attached or with the reasons recorded, the same was much after the reasons recorded. How the approval can be given of all the assessee in one documents, all are the independent or separate assessee and reason are different. Thus it all shows how the wrong and illegal manner have been adopted. 3. No Satisfa....
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....r PAC AIR SYSTEMS P. LTD. vs. ITO (2020) 58 CCH 0001 Del Trib it has been held that Reassessment-Income escaping assessment- Assessee filed present appeal challenging order of CIT(A) wherein, AO's action was accepted-Assessee contended that AO had erred in assumption of jurisdiction u/s 147/148 based on invalid and mechanical approval granted by Addl. CIT-Held, approval granted by Addl. CIT was a mechanical and without application of mind, which was not valid for initiating re-assessment proceedings, because from said remarks, it was not coming out as to which material; information; documents and which other aspects went gone through and examined by Addl. CIT for reaching to satisfaction for granting approval-Thereafter, AO had mechanically issued notice u/s 148-Reopening in assessee's case for AY in dispute was bad in law and deserved to be quashed-Approval granted by Addl. CIT was a mechanical and without application of mind, which was not valid for initiating reassessment proceedings issue of notice u/s 148 and was not in accordance with s. 151 thus, notice issued u/s 148 was invalid and accordingly, reopening in this was bad in law and therefore, same was hereby quashed-Assesse....
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....re should be link between reasons and evidence/material available with AO-Commissioner had simply affixed "approved" at bottom of note sheet prepared by ITO technical-ITO could not have had reason to believe that income had escaped assessment by reasons of assessee 's failure to disclose material facts and if Commissioner had read report carefully he could not have come to conclusion that this was fit case for issuing notice u/s 148- Commissioner had simply put "approved" and signed report thereby giving sanction to AO-Nowhere Commissioner had recorded satisfaction note, not even in brief after applying his mind-After expiry of four years from end of relevant assessment year, notice u/s 148 should not be issued unless Commissioner was satisfied that it was fit case for issue of such notice-Reassessment proceedings and notice being bad in law were quashed-Assessee's appeal allowed. And the ld. CIT(A) kept mum on this very legal plea, despite deciding the case on legal issue also, which shows his contradictory approach. Therefore the notice, reasons recorded, assessment all are the illegal bad void ab-initio and barred by limitation and liable to be quashed. ....
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....that the same contains conclusions and is bereft of reasons.(para 12) Notices issued to Assessee by AO under Section 147/148 were not satisfying the pre-requisites for same. There was no whisper in the notice, or iota of proof that while issuing same. AO had reason to believe that any income chargeable to tax had escaped assessment for the assessment year. Notice issued by AO simply for his own verification and to clear his doubts and suspicions to re-examine the material which were already available on record at time of passing of t earlier assessment orders. The legislature under Section 147 has not clothed AO with such jurisdiction therefore the action could not be upheld in the background of facts of instant case. One more redeeming fact which had direct nexus with the subsequent re-assessment proceedings and ramification of the same had culminated into re-assessment orders was the impugned order where AO rejected the objections submitted by Assessees pursuant to notice under Section 147/148. Order passed by AO in this behalf was not a speaking order which could not be sustained. In view of legal infirmity in the notice under Section 147/148 and laconic order of AO whi....
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....the help of documentary evidences and he has not doubted in any manner or type. Then how the addition can be made blindly in the hands of assessee. 3.Alternatively and without prejudice to the above and at the worst although not required may direct to the ld. AO to make further inquiry and opportunity to the assessee to explain the same. As the ld. AO despite having details in his hand not tried to bring proper evidences on record. 4. However the ld. AO has not rebutted these evidence with the help of any documentary evidences or material rather proceeds his own presumption, assumption and suspicion. Whether any addition can be made without any basis or material. Without proving the same no addition can be made only on the assumptions, presumptions or guess work. And looking to the record and assessment order it is very clear that the ld. AO has proceeded only suspicion, without any cogent material evidence. It is settled principle of law that an allegation remains a mere allegation unless proved. Suspicion cannot take the place of reality, are the settled principles kindly refer Dhakeshwari Cotton Mills 26 ITR 775 (SC) also refer R.B.N.J. Naidu v/s CIT 29 ITR 194....
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....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." We also draw strength from the decision in the case of CIT vs. S. Goyanka Lime & Chemicals Ltd. (2015) 231 TAXMAN 0073 (MP) wherein it has been held that While according sanction, the Joint Commissioner, Income Tax has only recorded so "Yes, I am satisfied" If the case in hand is analysed on the basis of the aforesaid principle, the mechanical way of recording satisfaction by the Joint Commissioner, which accords sanction for issuing notice under section 147, is clearly unsustainable and we find that on such consideration both the appellate authorities have interfered into the matter. In doing so, no error has been committed warranting reconsideration. 20. The ld. A/R has also drawn our attention on the approval of the Pr. CIT placed at page Nos. 7-8 of the pa....