TaxTMI 
TaxTMI 
TaxTMI 
2022 (9) TMI 814
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....4) The learned CIT(A) ought to have held that the required satisfaction u/s 151 was absent, as even assuming the learned CIT, Salem had accorded such sanction, it was mechanical and not after due application of his mind as required in law, in the facts of the case. 5) The learned CIT (A) has failed to appreciate that the additions are based purely on surmises and guesswork in the facts and circumstances of the case and not on the basis of any tangible materials in the facts and circumstances of the case and in law. 6) The learned CIT(A) ought to have deleted the addition of Rs.8,56,55,947/- made as unwarranted, in the facts and circumstances." 3. Brief facts of the case are that the assessee is engaged in the business of Research & Development of hybrid cotton seeds filed its return of income for the assessment year 2006- 07 on 27.11.2006 declaring total income of Rs.11,88,99,130/- under normal computation and Rs.17,64,49,883/- u/s.115JB of the Income Tax Act, 1961. The assessment has been completed u/s.143(3) of the Income Tax Act, 1961 on 23.12.2008 and determined total income of Rs.11,92,02,577/-. A search & seizure operation u/s.132 of the Income Tax Act, 1961, was conduct....
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.... Tax, opined that the Assessing Officer has reopened assessment on the basis of reasonable belief of escapement of income and same has been approved by the Commissioner of Income Tax and thus, rejected legal ground taken by the assessee. The learned CIT(A) had also rejected arguments of the assessee that additions made by the Assessing Officer does not have support of necessary evidences by holding that information gathered during the course of search u/s.132 of the Act, coupled with statement of Executive Director clearly indicate suppression of income by booking bogus purchases and thus, opined that the Assessing Officer has rightly made additions towards bogus purchases and hence, confirmed additions made by the Assessing Officer. Aggrieved by the learned CIT(A) order, the assessee is in appeal before us. 6. The first issue that came up for our consideration from ground no. 1 to 4 of the assessee appeal is validity of reopening of assessment u/s.147 and consequent reassessment proceedings. The learned A.R. for the assessee submitted that the learned CIT(A) has grossly erred in sustaining validity of reopening of assessment u/s.147 of the Income Tax Act, 1961, even though, reaso....
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....so decision of the ITAT., Mumbai in the case of Astra Exim Pvt. Ltd Vs. ITO in ITA No.277/Mum/298 dated 31.08.2018. 7. The learned D.R., on the other hand, supporting order of the learned CIT(A) submitted that reasons recorded for reopening of assessment is self-explanatory. If you go through reasons given for reopening of assessment, the Assessing Officer has clearly arrived at reasonable belief of escapement of income on the basis of fresh tangible materials and hence, question of disclosure of all material facts necessary for assessment does not arise. Further, if you go through form for initiation of proceedings u/s. 147 of the Act, and for getting approval from the Commissioner of Income Tax, it is very clear that reasons are reproduced and after going through reasons, concerned authorities have accorded their approval. No doubt, there is no discussion on the reasons recorded by the Assessing Officer on the issue for reopening of assessment by the Assessing Officer. However, on going through reasons, both the authorities have clearly expressed their satisfaction of escapement of income and in absence of any specified format for granting approval, it cannot be said that author....
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....ince, there is no allegation from the Assessing Officer in the reasons recorded for reopening of assessment on failure of the assessee, reopening of assessment on the basis of said reasons is invalid and consequently, reassessment proceeding becomes null and void. This legal principle is supported by the decision of the Hon'ble Bombay High Court in the case of Nirmal Bang Securities Pvt.Ltd. Vs. ACIT (supra) where the Hon'ble High Court has clearly held that in absence of allegation in the notice regarding non-disclosure of material facts, assessment cannot be reopened after a period of four years from end of the relevant assessment year, when the original assessment has been completed u/s.143(3) of the Income Tax Act, 1961. 10. Coming to another aspect of the issue. The learned A.R. for the assessee has also challenged validity of reassessment proceedings in light of provisions of section 151 of the Act in the context of approval required to be accorded from the CIT for initiating proceedings u/s.147 of the Income Tax Act, 1961. According to the learned counsel for the assessee, sanction accorded by the competent authority is mechanical and without any application of mind, becaus....
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....ruly all material facts necessary for assessment. From the reasons recorded by the Assessing Officer nothing is discernible whether is there any basis for formation of belief of escapement of income, because in the said reasons there is quantification of escapement of income and also there is no allegation on the part of the assessee to disclose fully and truly all material facts necessary for assessment. Therefore, we are of the considered view that while granting approval for issuance of notice u/s.148 of the Act, the Commissioner of Income Tax should have applied his mind to the reasons recorded by the Assessing Officer for reopening of assessment and then satisfy himself about reasons to ascertain whether it is a fit case for issuance of notice u/s.148 of the Act. In absence of such satisfaction, it can be safely held that approval accorded by the Commissioner of Income Tax in the given facts & circumstances of the case is mechanical and without application of mind. 11. It is well established principle of law by various decisions of courts and Tribunals that sanction for issue of notice prescribed u/s.151 is not mere procedure, but power conferred on the competent authority to....