AI Drafter - (New and Powerful) 
Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter. 
TaxTMI 
TaxTMI 
2023 (3) TMI 94
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd PCIT is bad in law and mechanical without application of mind and has been taken without bringing to their notice material facts of the case. e) The information has been collected behind the back of the assessee and the assessee was never confronted with the same nor an opportunity provided for cross-examination of Jain Brothers, alleged intermediary and the relevant seized material relied upon has not been provided to the assessee." 3. The written submissions of the assessee on this ground reads as follows:- "a. Reliance on non-existing provisions to support reopening of assessment: From the performa submitted by the AO for obtaining approval of Pr CIT, Delhi-8, New Delhi (Obtained through RTI on 09.12.2022), Copy enclosed. It can be seen that in S.No.7, there is a question "Whether the provisions of sec 147(a)/147(b)/147(c) is applicable or both sections are applicable. The answer recorded by the Ld AO against this query is sec 147(c) implying that the AO has invoked applicability of sec 147(c) of the Act. The reopening of assessment, satisfaction of the Ld AO and the approval granted by the Ld Pr CIT is based on the applicability of provision of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in support of ground on nonapplication of mind are the glaring mistakes committed as discussed in preceding para by the AO and non-pointing out such omissions by the approving authority and resulting non-correction of the same, before the approval was accorded, shows that the said authority have acted mechanically in granting sanction u/s 151 of the Act. Such mechanical approval was found to be fatal for validity of the reassessment proceedings as decided by the co-ordinate Hon'ble Delhi Bench in the RMP Holdings P Ltd ITA No.7243/Del/2019 dt: 31.07.2020 wherein it was held that both AO and approving authorities have acted mechanically ignoring the glaring mistakes in the reason recorded showing non application of mind by the reason recording authority where the decision of Delhi High Court in the case of Sonia Gandhi 407 ITR 594 (Del) has been distinguished. Reliance is also placed on the decision of M/s Synfonia Tradelinks P Ltd vs ITO W.P.(C) No.l2544/2018 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vs. ACIT (Bom) W P No. 17 of 2020 dt: 18.02.2020; * Best Cybercity (India) Pvt Ltd (2019) 414 ITR 0385 (Del); * M/s Swarovski India Pvt. Ltd v. Deputy Commissioner of Income Tax, W.P.(C) 1909/2013 decided on 08.08.2014 (Del); * Global Signal Cables (India) Pvt. Ltd. vs. Dy. CIT [2014] 368 ITR 609 (Del); * HCL Technologies Ltd. v. Dy CIT W.P.(C) 8164/2020 (Del); * M/s Sabh Infrastructure Ltd vs ACIT398 ITR 0198 (Del). III. The compliance of proviso solely depends on verification of facts/material disclosed in the course of assessment proceedings. From the perusal of reason recorded, the Ld AO did not discuss anything on the evidences furnished during original assessment proceedings. In absence of such exercise being undertaken, the AO could not have recorded satisfaction on such failure of the assessee. The purpose of proviso is to provide safeguard against the arbitrary misuse of provisions of reassessment and this mandatory condition is introduced through proviso to put the AO under obligation to identify the particular facts not disclosed by the assessee. IV. In the case of Gateway Leasing P ltd vs ACIT W.P.(C) 2518 o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he law, i.e., 147(C) of the Act clearly shows that it is a clear case of non-application of mind by the AO and also by the authorities provided the approval u/s 151 of the Act. Reliance in this regard has been placed on the decisions of Smt. Kalpana Shantilal Haria vs. ACIT W.P (L) No.3063/2017, order dated 22.12.2017 (Bom); Best Cybercity India P. Ltd. vs. ITO (2019) 414 ITR 385 (Del); Omkam Developers Ltd. vs. ITO, ITA No.6862/Del/2018, order dated 11.05.2021; M/s VRC Township P. Ltd. vs. ITO, ITA No.1503/Del/2017 dated 14.10.2020; M/s Maheshwari Roller Flour Mills P. Ltd. vs. ITO, ITA No.4257/Del/2019 dated 17.12.2020; and Madhu Apartments P. Ltd. vs. ITO, ITA Nos.3869-3870/Del/2018, order dated 01.02.2021. Therefore, the ld. AR submitted that impugned reassessment proceedings and reassessment order may kindly be quashed as proposition rendered by above noted orders including order of coordinate Bench of ITAT Delhi in the case of Omkam Developers Ltd. (supra). 5. The ld. Sr. DR supported the impugned reassessment order as well as first appellate order and submitted that the mention of non-existent provision of section 147(C) of the Act is a clerical mistake which is curable u....
X X X X Extracts X X X X
X X X X Extracts X X X X
....0010583 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 transfertransaction of large value and in round figures has been, transacted within connected group/linked accounts. The cumulative turnover In 31 accounts discussed was reported tobe 673 crores. B. VERIFICATION OF FACTS AND INVESTIGATIONS DONE: To verify in the STR, the Bank Accounts of all 31 accounts mentioned in the STR were requisitioned from the Bank and scrutinized. The 31 Bank accounts- were opened atdifferent, branches of the De....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed 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 intimated regarding, cash deposit and credit made in different bank controlled by them for taking necessary action. It appears that assessee M/s Omkam Developers Ltd. has received 'I bogus share capital/premium to the tune of Rs.1.93 Crores. The Income Tax | Returns of the assessee were also examined and noticed that the share premium; of assesses was increased to Rs.81,28,52,000/- in the relevant year from Rs. 17,69,50,000/-in the preceding year....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e 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 that Learned CIT, who is the competent authority to authorize the reassessment notice, has to apply his mind and form an opinion. The Hon'ble High Court further observed that 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 but at the same time, satisfaction has to be recorded of the given case, which can be reflected in the briefest pos....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on 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 merely academic in nature and, therefore, we are not adjudicating upon those grounds. As ITA No.6862/Del./2018 & 7507/Del./2018 far as grounds of the parties challenging merit of the addition are concerned, same are rendered infructuous in view of the reassessment proceeding already quashed by us. 11. In the result, the appeal of the assessee is allowed, whereas appeal of the Revenue is dismissed." 7. In the present case, the copy of the fo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....see's paper book page 15 para 23, which are the reasons recorded submitted that there is no identification of specific material facts not disclosed fully and truly by the assessee during the assessment proceedings. He further contended that the entire reasons is silent on the fact whether original assessment was completed u/s 143(3) or not and if yes, what was the material produced by the assessee yet or what was the material not produced by the assessee in those original assessment proceedings on the basis of which the allegation as per requirement of first proviso to section 147 of the Act could be established. 10. The ld. AR pointed out that at the very initial state, the assessee filed objection to the initiation of reassessment proceedings beyond four years, copy of which is placed at pages 63-64 of the paper book, but, the AO skipped to adjudicate the said legal issue while disposing of the objections and the assessee by order dated 04.10.2017, copy of which is placed at pages 55-62 of the assessment order. The ld. AR submitted that the compliance of proviso to section 147 of the Act solely depends on the verification of facts/material disclosed in the course of assessment....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of issue of notice, necessary sanction has to be obtained from Pr. Chief Commissioner of Income Tax or Pr, Commissioner of Income Tax or Commissioner of Income Tax, in view of the amended provision of section 151 w.e.f 01.06.2015. The necessary sanction in this regard is being obtained separately from Pr. Commissioner of Income Tax-08, Delhi before the issue of notice u/s 148 for reopening of assessment under section 147 in the case of assessee company" 13. From the above, it is clear that there is no observation or allegation by the AO that there was failure on the part of the assessee in disclosing fully and truly all material facts relevant for its assessment during the original assessment proceedings. Now, we proceed to adjudicate the legal ground of the assessee in this regard. 14. On careful consideration of the rival submissions, we are of the view that the ld. Sr. DR has not controverted some undisputable facts that the original assessment proceedings were completed u/s 143(3) of the Act and scrutiny assessment order was passed on 30.11.2012 for AY 2011-12. It is also not in dispute that the AO initiated reassessment proceedings u/s 147 by issuing notice by recording ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... not being adjudicated as having become academic only. 16. In the result, the appeal filed by the assessee is partly allowed. Order pronounced in the open court on 23.02.2023. ============= 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 I.T. ACT AND FOR OBTAINING THE APPROVAL OF ADDL.CIT/CIT 1. Name & address of the assessee 3. 4. 5. 8. Permanent Account No. Status 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, Please state: (a) Whether any voluntary has already been filed, and (b) If so. The date of filling the said return. If the answer to item No.8 in the negative, Please state (a) The income originally assessed (b) Whether it is case of under assessment, assessment at too low a rate, assessment which has been made the subjec....