TaxTMI 
TaxTMI 
2022 (10) TMI 1154
X X X X Extracts X X X X
X X X X Extracts X X X X
....c issues: I. Invocation of reassessment proceedings based on Non-existing provision of law and also errors contained in the performa: Non application of mind is discernable from the performa (PB 18) filed by the AO to take approval from the appropriate authority u/s 151. In question in item No.7 which says "Whether the provisions of sec. 147(a) or 147(b) are applicable or both the sections are applicableThe AO in the reply mentions section 147(b) applicable. Here it may be appreciated that the sections 147(a)/147(b) have ceased to be in the statute book from 01.04.1989. The mentioning of these incorrect and non-existing sections is a clear case of nonapplication of mind by the AO and also by the authorities providing satisfaction u/s 151. Reliance is placed in the decisions of Smt Kalpana Shantilal Haria Vs ACIT W.P.(L) No.3063/2017 dated 22.12.2017 (Bom), Best Cybercity India P Ltd vs ITO (2019) 414 ITR 0385 (Del), Omkam Developers Ltd vs ITO ITA No.6862/Del/2018 dt. 11.05.2021, M/s VRC Township P Ltd vs ITO ITA No.l503/Del/2017 dt: 14.10.2020, M/s Maheshwari Roller Flour Mills P Ltd vs ITO ITA No.4257/Del/2019 dt: 17.12.2020 and Madhu Apartments P Ltd vs ITO ITA....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ft of the powers under other sections of the Act including sec 147/148 of the Act. Recently, on the exactly identical facts where reassessment proceedings, based on the seized material from Sh S.K. Jain Group initiated u/s 147/148 of IT Act, were quashed in view of Section 153C being independent code in the decisions of M/s City Life Projects P Ltd ITA No.2668/Del/2019, M/s. Saurashtra Color Tones Pvt. Ltd. v. ITO ITA No 6276/Del/2018 dt 22.01.2020 (SMC) relying on Shri Adarsh Agrawal v. ITO 2020 ITA NO.777/DEL/2019 dt: 14.01.2020 (DB) and also the decision in Nawal Oils & Containers P Ltd v ITO ITA No852/Del/2019 dated04.03.2020 (SMC). In view of these, the action taken by the u/s 147/148 is in clear violation of sec 153C of the Act. 6. The appellant has raised the above objection before Ld AO in objection to assumption to jurisdiction u/s 147 on 29.08.2017 (PB 6570) in para 4 (PB 67-69) and same is rejected by the Ld AO vide order dt: 26.09.2017 (PB 48-54) with the observation on page 49 wherein action u/s 148 is justified on the ground that it is not a case of search on the assessee. III. Initiation of proceedings at the behest of other authority: ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion to jurisdiction: The appellant vide letter dt: 05.04.2017 (PB 15) requested the AO to provide certified copy of the reason and the Ld AO provided the reasons along with notice dt: 23.06.2017 issued u/s 142(1)/143(2) of IT Act (PB 34). The fact of issue of notice u/s 143(2) on 23.06.2017 is mentioned in assessment order in para 2 at page 2 therein. From above facts, it is evident that the AO assumed jurisdiction by issuing notice u/s 143(2) of the Act on 23.06.2017 at the time of supplying reason which means that the AO assumed jurisdiction to make reassessment before allowing appellant to file objection to assumption to jurisdiction. Hence, assuming jurisdiction by issuing notice 143(2) before allowing appellant to file objection and subsequent disposal off the same is nothing but non-application of mind by the AO to the legal requirements of the law. It may be noted that the Hon'ble Gujarat High Court has provided guidance to tax authorities in case of Sahkari Khand udyog Mandal Ltd vs ACIT 370 ITR 107 (Guj) held that AO must provide suo moto reason to the assessee within 30 days of filling of return of income and the assessee must file objections within 60 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....(Del) has been distinguished. Reliance is also placed on the decision of M/s Synfonia Trade/inks P Ltd vs ITO W.P.(C) No. 12544/2018 dt: 26.03.2021 (Del) has quashed the reassessment proceeding based on mechanical approval granted by approving authority Further, reliance is placed on the following authorities: a. Chhugamal Rajpal vs. S.P. Chaliha & Ors. - 79 ITR 603 (SC); b. Arjun Singh vs Asstt. Director of Income Tax (M.P.) reported in (2000) 246 ITR 363 (MP); c. CIT vs M/s S.Goyanka Lime and Chemicals Ltd 231 Taxman 0073 Dated 15.10.2014 (MP) approved by Hon'ble Supreme Court in 64 taxmann.com 313 (SC). d. Pr. CITvs. N. C. Cables Ltd 391 ITR 11 (Del) e. Maruti Clean Coal& Power Ltd Vs ACIT WP(T) No.346 of 2017 Dated 03.01.2018 (Chattisgarh High Court); f. German Remedies Ltd. vs. Dy. CIT (2006) 287 ITR 494 (Bom); g. United Electrical Company PLtd. vs. CIT & Ors(2002) 258 ITR 317(Del)"; h. Central India electric Supply Co. Ltd. Vs .ITO, 333 ITR 237 (Del); VI. Assumption of jurisdiction based on invalid issue of notice u/s 148: From perusal of notice u/s 148 (PB 14), it can be se....
X X X X Extracts X X X X
X X X X Extracts X X X X
....12.08.2021 has quashed the reassessment proceedings on similar grounds. Therefore, the reassessment proceedings and impugned reassessment order may kindly be quashed. The ld. Counsel also submitted that the Hon'ble High Court of Gujarat in the case of Sahkari Khand Udyog Mandal Ltd. vs. ACIT, 370 ITR 107 (Guj) held that the AO must provide suo moto reason to the assessee within 30 days of filing of return of income and the assessee must file objections within 60 days and, thereafter, the AO can take four months time in disposing of objections. He further informed that the SLP filed by the Department has been dismissed by the Hon'ble Supreme Court against the said order of the Hon'ble Gujarat High Court. 6. The ld. AR submitted that in view of the above, the issue of notice u/s 143(2) of the Act at the time of supply of reasons amounts to denial of opportunity to the appellant to take legal remedy available under the Act of filing of objection on assumption of jurisdiction for initiation of proceedings and passing reassessment order. The ld. AR has also placed reliance on the decision of the Hon'ble Delhi High Court in the case of Mastech Technologies Pvt. Ltd. vs. DCIT in WP(C) ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the said report. Bank Statements of various entities have been obtained and on investigation, it has been noticed that Omkam Developers Pvt. Ltd (Pan AAACO5036B] was one of the beneficiaries during the F.Y 2008-09 relevant A.Y.2009-10 and the amount brought through I accommodation entries by the above mentioned company is Rs. 193.00 Lakhs. Copy of the Status Report in the case of Manohar Jay kishan Shah in connection with FIU-IND-STR No.1000010583 is reproduced below:- A. Background: * One Suspicious Transaction Report was received in the month November, 2009 from FIU-IND. In the said report, 31 related accounts were reported out of which 12 accounts were found to be associated, with business of Metal Trading Wherein Mr. ManoharJaykishan Shah is a Proprietor/Signatory. There are other 19 outstation Branch Accounts which are linked/connected to main 12 accounts and having non-related business/not in the same line of business accounts. During the financial year 2008-09, high, value cheques totaling around Rs. 2030 crore are deposit at outstation branches in these accounts. Subsequent to which on realisation of high value credit amount, debit internal transf....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ll as non-existence of real business of most of the entities mentioned in Annexure-C, C1 and l and S. Flow Chart of Cash Flow Cash deposit in proprietorship concerns / Layering of funds through dummy Proprietorships and Shell companies / Fund transfer to Shell/Paper Company / Fund to the Beneficiaries Conclusion (i) In retrospect it can be rightly conceded that, the beneficiary companies have introduced n cash in primary accounts discussed in Annexure-C and s symbolized by various companies (created for the purpose re-1, Annexure-S) operated by entry operators by entry operators, the unaccounted funds have been entered In the regular books of accounts of the beneficiary companies. (ii) in view of the above, the total amount which has been transferred to the beneficiaries or the recipient companies from the bank accounts of paper companies during F.Y. 2008-09 is details in Annexure-8. The A.O. of the all beneficiary (Annexure-B) companies is being appraised of ] regarding accommodation entry accepted by the companies in F.Y. 2008-09. Further, A.O. of V concerns listed in Annexure-C, C-l and S is also being intim....
X X X X Extracts X X X X
X X X X Extracts X X X X
....said assessment year, it is therefore I/requested that the reasons recorded above for the purpose of reopening of assessment is put up for kind satisfaction of Pr.CIT, Delhi-7, New Delhi in terms of proviso, to Section 151 of the Income Tax and approval for issue of notice u/s 147 may kindly be accorded." 10.1 On perusal of the proforma for the approval granted by the PCIT, it is evident that in the relevant column No.13 for satisfaction of the Pr.CIT, he has only mentioned "yes". No other information is available on record or provided by the ld. DR, which could establish application of mind by the CIT, while granting sanction/approval for issue of notice u/s 148 of the Act. No other evidence was produced as to substantiate that matter was ever discussed between the Assessing Officer or Addl. CIT and the Learned Pr.CIT for arriving at satisfaction of Learned Pr.CIT on the reasons recorded by the Assessing Officer. Even no evidences whether Ld PCIT examined the material relied upon by the Ld AO for reopening, was produced before us. In similar circumstances, Hon'ble Delhi High Court in the case of NC Cable Ltd (supra) held that section 151 of the Act clearly stipulates ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the authorities below and quash the reopening of the assessment in both the assessment years under appeals. All additions stand deleted. Accordingly, appeals of the Assessee are allowed." 10.3 In the instant case before us, also the Learned DR has argued that the mistake of noting section under section 147(b) of the Act for reassessment proceeding is a clerical mistake, however, the Tribunal in the above decision has rejected the said contention and quashed reassessment proceeding on the ground of non-application of mind while granting approval for reopening of the assessment under section 151 of the Act. 10.4 Respectfully, following the decision of the Hon'ble Delhi High Court in the case of NC Cable Ltd (supra) and decision of the Tribunal in the case of Madhu Apartment Pvt. Ltd (supra), we quash the reassessment proceeding in the case of the assessee. 10.5 Since we have quashed the reassessment proceeding while adjudicating ground No.1 of the appeal of the assessee, no additions made by the Assessing Officer could be sustained. As far as other grounds of appeal of the assessee challenging validity of reassessment proceeding are concerned, same are rendered ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ating upon those legal contentions of the assessee. The ld. Sr. DR has filed written submissions on merits. So far as the grounds of the assessee on merits are concerned, the same are rendered infructuous since the reassessment proceedings have already been quashed in the earlier part of this order. 12. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 11.10.2022. ============= Document 1 617116 M/s Omkam Developers Ltd. A.Y. 2009-10 FORM OF RECORDING THE REASONS FOR INTIATING PROCEEDINGS U/S 147 OF THE IT. ACT AND FOR OBTAINING THE APPROVAL OF ADDL.CIT./CIT Name & address of the assessee Permanent Account No. 3. Status 4. 5. Circle/Ward Assessment year in respect of which is it proposal to issue notice u/s 148. Quantum of income which has escaped assessment Whether the provision of Section 147(a) or 147(b) applicable or both the sections are applicable whether the assessment is proposed to be made for the first time. If the reply is in affirmative, M/s OMKAM DEVELOPERS LTD., 702, ARUNACHAL BUILDING, 19, BARAKHAMBA ROAD, CONNAUGHT PLACE, NEW DELHI-110001 A....