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2024 (2) TMI 541
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....ircumstances of the case the CIT (A) has erred on facts and in law in upholding the order of AO. 2. On the facts and circumstances of the case, the order of the AO as affirmed by CIT (A) is time barred in view of the then provisions of section 148 read with section 149. 3. On the facts and under the circumstances of the case the CIT(A) has erred in affirming the jurisdiction of the AO under section 147 ignoring that the AO has not followed the mandatory provisions of section 147 to 151 of the Act. 4. Without prejudice to the above, on the facts and circumstances of the case the order of AO as affirmed by CIT(A) is void-ab-initio as in view of the non-obstantive provision of section 153C the AO ought to have invoked section 153C instead of section 147. 5. Without prejudice to the above, the AO has erred in issuing the 142(1) questionnaire on the same date on which the reasons for reopening was recorded which is prior even to the issuance of notice of section 148, which clearly shows non-application of mind by AO before assuming jurisdiction under section 147. 6. On the facts and under the circumstances of the case the CIT(A) has erred in ....
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....se Papers found and inventoried as 'LP' during the course of survey operation conducted at the business premise of Shri Amit Sharma at 06, Shastri Nagar, Hardwar Road, Rishikesh, be considered as his income which has escaped assessment for the period under question. Further, as per AO, the assessee was asked to explain as to why receipts/payments amounting to Rs. 13,16,50,000/-as appearing in page no.188 & 187 of the LP may not be considered his income for the year under question. In response, the assessee submitted his reply wherein he vehemently opposed the view taken as above by the AO and submissions of the assessee were reproduced in the assessment order. The AO further mentioned that the replies of the assessee were carefully perused and on perusal it was contended that the cognizance of the "loose papers' as sufficient evidence can't be taken in view of the fact that they are inadmissible as evidences as per section 34 of the Evidence Act, 1872 in terms of the Hon'ble Apex Court's judgements in the cases of CBI vs. VC Shukla and Common Cause vs. UOI (Sahara Diaries) (SC). The AO further held that the loose papers under question i.e. ....
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....name of the assessee or his designation of that time as well as the payments/expenses that can be related directly to him for his name written on the top of the page no. 186 of the LP, can be termed as the assessee's income for the period under consideration. Therefore, in view of the above discussion, entries as mentioned on the page no. 186 & 187 of the LP were ascertained to be pertaining to the assessee and accordingly the amounts as mentioned against the said entries were treated as assessee's income for the period under consideration and the AO tabulated the dates, particulars of entry and amounts in the assessment order. Further, as per AO, the sum of tabulated entries were Rs. 11,40,50,000/- which was treated as assessee's income for the period the year under consideration." 4. Aggrieved by the assessment orders for A.Y 2015-16 & 2016- 17, the assessee preferred Appeals before the CIT(A). The Ld. CIT(A) vide orders dated 11/10/2023 dismissed the Appeal filed by the assessee. Aggrieved by the orders of the Ld. CIT(A) dated 11/10/2023, the Assessee preferred the present Appeals on the common grounds mentioned above. 5. The Ld. Counsel for the assessee at the....
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.... the PCIT and the PCIT has granted the sanction without raising any query from the ACIT. The Ld. Counsel further submitted that the same PCIT who had filed the Rule-9 report to the Settlement Commission, issued Approval u/s 151 of the Act contrary to the stand taken before the Settlement Commission. Thus, the PCIT granted approval for the reasons alleging income of Rs. 13.16 crore ignoring his own observations made before the Settlement commission. Further submitted that there were several factual mistakes in the reasons recorded there is no independent application of mind by the A.O. and the very same reasons which have been discarded by the Office of the JCIT has been approved and the said approval is nothing but mechanical approval, hence assumption of jurisdiction by the A.O. is bad in law. The Ld. Counsel for the assessee relied on following judicial pronouncements and sought for setting aside the assessment order and the order of the Ld. CIT(A): a. Central India Electric Supply Co. Ltd vs. ITO (2011) 333 ITR 237 (Del.): 51 DTR 51 (Del.):- b. CIT having mechanically granted approval for reopening of assessment without application of mind, the same is invalid ....
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....factorily. Shri V.K. Rajan, father of Shri R. Raejsh Kumar termed these entries to be friendly loans. But this claim is not corroborated from the books of accounts of Shri Amit Sharma and his concerns. As such, these entries are actually the payment by Shri Amit Sharma and his concerns to Shri R. Rajesh Kumar under the camouflage of bank transfer to Shri V.K. Rajan as Shri V.K. Rajan has received these payment for no visible reasons. It is evident from the above facts that the assessee had not truly and fully disclosed of his income for the year under consideration thereby necessitating reopening u/s 147 of the Act. In view of the above facts of this case and the assessment year under consideration I have reasons to believe that the income chargeable to tax to the extent of Rs. 16,72,73,160/- has escaped assessment. Therefore, it is proposed to initiate proceedings u/s 147/148 of the I.T. Act in this case." 11. On 18/03/2020, the CIT(A), Meerut refused to grant sanction u/s 151 of the Act on the ground that there is no reason to believe. Thereafter, on 23/06/2020 a second proposal was sent to PCIT, Kanpur by JCIT (OSD) Central Circle, Dehdradun for the approval u/s 151 ....
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....were actually received by Shri Rakesh Sharma. It is evident that the applicant has incurred cash expenditures in contravention to provisions of Sec.40A(3) of the Act and non-business expenditure as well. Under the circumstances, the income of the applicant cannot be 8% of the gross contractual receipts as offered in the return of income u/s. 153A rather it should be 20%." 14. Thus, the stand/figure mentioned by the Department before the Settlement Commission was entirely different than that of the amount mentioned in the reasons recorded by the A.O. Thus, the reasons were recorded with any basic material on record and the same is contrary to the fact and the approval has been given without application of mind. 15. The Jurisdictional High Court in the case of Central India Electric Supply co. Ltd. Vs. Income Tax Officer and Anr., ITA No. 17/1999 vide order dated 28/01/2011 held as under:- "19. respect of the first plea, if the judgments in Chhugamal Rajpal's case (supra), Chanchal Kumar Chatterjee's case (supra) and Govinda Choudhury & Sons's case (supra) are examined, the absence of reasons by the AO does not exist. This is so as along with the proforma, ....
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....ere would have been no reason to reopen the closed chapter in view of what we are setting out hereinafter." 15.1. The High Court of Bombay in the case of German Remedies Ltd. Vs. Deputy Commissioner of Income Tax in Writ Petitions No. 619 and 621/2005 vide order dated 28/10/2005 held as under:- "It is not in dispute that the AO on 15th Sept., 2003 had himself carried file to the CIT and on the very same day, rather same moment in the presence of the AO, the CIT granted approval. As a matter of fact, while granting approval it was obligatory on his part to verify whether there was any failure on the part of the assessee to disclose full and true relevant facts in the return of income filed for the assessment of income of that assessment year. It was also obligatory on the part of the CIT to consider whether or not power to reopen is being invoked within a period of 4 years from the end of the assessment year to which they relate. None of these aspects has been considered by him which is sufficient to justify the contention raised by the petitioner that the approval granted suffers from non application of mind. In the above view of the matter, the impugned notices and con....
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....ction. The satisfaction has to be with objectivity on objective material." 8. 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. 9. As far as explanation to Section 151, brought into force by Finance Act, 2008 is concerned, the same only pertains to issuance of notice and not with regard to the manner of recording satisfaction. That being so, the said amended provision does not help the revenue." The said Judgment of the Hon'ble High Court Madhya Pradesh in the case of S. Goyanka Lime (supra) has been affirmed by the Hon'ble Supreme Court by dismissing the Special Leave Petition filed by the Revenue, which is reported in (2015) 93 CCH 0426 ISCC. 15.4. The Jurisdictional High Court once again in the case of Principal Commissioner of Income Tax Vs. N. C. Cables Ltd. in ITA No. 335/2015 vide order dated 11/01/2017 h....
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.... to issue notice under s. 148. The important safeguards provided is ss. 147 and 151 were lightly treated by the ITO as well as by the CIT. Both of them appear to have taken the duty imposed on them under these provisions as of little importance. They have substituted the form for the substance." 16. In the present case, from the facts and circumstances, it can be safely construed that there were factual mistakes in the reasons recorded and there is no independent application of mind by the A.O. and the approval has been granted on the very same reasons which were earlier discarded by the Office of the JCIT. There is also contradiction with the claim made before the Settlement Commission by the very same PCIT and the reasons recorded. Thus, in our opinion, the approval granted by the Pr. CIT is a mechanical approval. 17. Further, the Ld. A.O. made addition on the ground that the assessee got the illegal gratification from Mr. Amit Sharma in lieu of the contracts awarded to him and the figure mentioned in the loose papers or the figures of illegal gratification and the same is taxable as unexplained cash credit in the hands of the assessee. The assessee during the year 2016 had....
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.... 148 of the Act, but no addition has been made on the said issue. From reading the above facts and circumstances it is clear that the A.O. has entertained a wrong belief and was not having tangible material on the basis of which a person having common prudence can entertain a belief that any income has escaped assessment. 20. In the case of Lakhmani Mewal Das 103 ITR 437(SC):- Hon'ble Apex Court held that expressions used in provisions of 147 are "reason to believe" and not "reason to suspect". It is held that vague feeling or suspicion of the Assessing Officer towards possible escapement would not permit to reopen a completed assessment in defiance of statutory requirement of substantial nature. 21. In the case of Ganga Prasad Maheswari Vs CIT-139 ITR 1043(All):- It is held that "Reason to believe" is a common feature in taxing statutes. It has been considered to be the most statutory safeguard on the exercise of power by the officer concerned. It is made of two words" reason: and" to believe". The word "reason" means cause or justification and the word "believe" means to accept as true or to have faith in it. Before the officer has faith or accepts a fact to exist there....