TaxTMI 
TaxTMI 
TaxTMI 
2024 (9) TMI 1053
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....the validity of reassessment proceedings could not be upheld as it was required to dispose of the ground of appeal of the assessee that there exists no proper sanction by the appropriate authority as required under the provisions of section 151 of the Act. Ld. CIT(A) has plenary powers to do so. 3. That under the facts and in circumstances of the case the Ld. CIT(A) erred in law us much as in fact in upholding the initiation of reassessment proceedings in as much as he has failed to appreciate that the initiation of reassessment proceedings was invalid as there was no proper service of notice issued u/s 148 of the Act. 4. That under the facts and in circumstances of the case the Ld. CIT(A) erred in law as much as in fact in upholding the initiation of reassessment proceedings in as much as he has failed to appreciate that non-disposal of objections filed by the assessee has rendered the reassessment proceedings as invalid in the eyes of law. 5. That under the fact and in circumstances of the case the Ld. CIT(A) erred in law as much as in fact in upholding the initiation of reassessment proceedings in as much as he has failed to follow the mandate given in the decision of Hon&....
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....income arises in the hands of the assessee. 12. That the present appeal is being belatedly filed. The application for condonation of delay is being filed separately and is prayed to be admitted. 13. That each of the above ground is independent and without prejudice to the other grounds of appeal preferred by the Appellant. 14. The Appellant craves leave to add, after, vary, omit, substitute or amend the above grounds of appeal, at any time before or at the time of hearing of the appeal." 2. The Ld. Counsel for the assessee, at the outset, submits that the appeal has been filed with the delay of 100 days and the assessee has filed petition for condonation of delay explaining the reasons for the delay in filing the appeal. Referring to the condonation petition the Ld. Counsel submits that the assessee was not aware of the order having been passed by the Ld.CIT(A)-NFAC as the registered e-mail address at the portal of the assessee is of the company in which the assessee is a Director and the e-mail, if any, received on such e-mail from the Ld.CIT(A) never came to the knowledge of the assessee. The assessee has been diligent in pursuing the matter which is apparent from the asse....
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....ich are the objections filed against reasons recorded u/s 147 of the Act submits that these objections were uploaded on 08.12.2019 by the assessee and the AO has not disposed of these objections which is in violation of the decision of the Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd. Vs. ITO [259 ITR 19] and therefore the reassessment order passed u/s 143(3) r.w.s. 147 of the Act is invalid and void ab initio. 6. On the other hand, the Ld. DR strongly supported the orders of the authorities below. 7. Heard rival submissions, perused the orders of the authorities below. In the ground no.1 of grounds of appeal the assessee has challenged the reopening of assessment and it is stated that the reasons recorded are vague, therefore, the reopening of assessment is bad in law. The reasons recorded for reopening of assessment by the AO are as under: "In this case, an Information has been received from the office of the I.T.O, Ward-33(1) in this case assessee has deposited cash of Rs. 10,00,000/- or more in saving bank during the F.Y.2011-12 pertaining to assessment year 2012-13. 2. On physical verification as well as from the ITD database it is gathered that the r....
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....07) 291 ITR 500/161 Taxman 316 (Supreme Court). The Hon'ble Apex Court has held that: "All that is required for the Revenue to assume valid jurisdiction u/s 148 is the existence of cogent material that would lead a person of normal prudence, acting reasonably, to an honest belief as to the escapement of income from assessment." Also, in the case of Phoolchand Bajrang Lai vs. 1TO 203 ITR 456 (SC), the Hon'ble Apex Court has held that: "An assessment completed u/s 143(3) but later on Information received which was indefinite, specific and reliable and the AO duly recorded the reasons for his belief that the assessee had not fully and truly disclosed particulars of his income and hence there was escapement of income. Held that the reopening of the case was valid." Also, in the case of Raymond Woollen Mills Ltd. 236 ITR 34 (SC), the Hon'ble Apex Court has held that: "Assessee did not include certain direct manufacturing costs and fiscal duties in the valuation of closing stock. This came to light in the subsequent years assessment proceedings. We have only to see whether there was prima facie some material on the basis of which the Department could reopen the case....
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....income had escaped assessment. 9. In the case of Nisha Goel Vs. ITO in ITA No.2767/Del/2023 dated 04.06.2024 the coordinate bench of the Tribunal almost on identical facts held that the assessment made u/s 147 of the Act is bad in law as there is complete non application of mind by the AO. The Tribunal while holding so observed as follows: - "11. On careful perusal of the reasons, it is noticed that the AO nowhere stated which branch of the HDFC Bank and the account number of bank account in which the cash deposits of Rs. 1,25,46,000/- is made. It is very much clear that while recording the reasons for reopening the AO is not in position of even the bank statement where he has alleged that the assessee made cash deposits to the tune of Rs. 1,25,46,000/-. Perusal of the assessment order also reveals that ultimately on verification of bank statement the AO could only find that the cash deposits were only to the tune of Rs. 64,67,000/-. This clearly shows that the AO has not applied his mind for recording reasons that the income had escaped assessment to the tune of Rs. 1,25,46,000/-. There is complete non-application of mind by the AO. It appears that AO has not cross verified the....
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....e find that Hon'ble Delhi High Court in the case of Pr. CIT vs Meenakshi Overseas Pvt. Ltd. reported in 395 ITR 677 (Del.) has quashed the reassessment proceedings on the ground that the reasons recorded by the AO failed to demonstrate link between tangible material and formation reason to believe that income had escaped assessment. 1 relevant observation of the Hon'ble Delhi High Court from paras 19 to 38 read as under:- "19. A perusal of the reasons as recorded by the AO reveals that there are three parts to it. In the first part, the AO has reproduced the precise information he has received from the Investigation Wing of the Revenue. This information is in the form of details of the amount of credit received, the payer, the payee, their respective banks, and the cheque number. This information by itself cannot be said to be tangible material. 20. Coming to the second part, this tells us what the AO did with the information so received. He says: "The information so received has been gone through." One would have expected him to point out what he found when he went through the information. In other words, what in such information led him to form the belief that income escaped ....
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....ent from reading the reasons. It cannot be supplied subsequently either during the proceedings when objections to the reopening are considered or even during the assessment proceedings that follow. This is the bare minimum mandatory requirement of the first part of Section 147 (1) of the Act. 25. At this stage it requires to be noted that since the original assessment was processed under Section 143 (1) of the Act, and not Section 143(3) of the Act, the proviso to Section 147 will not apply. In other words, even though the reopening in the present case was after the expiry of four years from the end of the relevant AY, it was not necessary for the AO to show that there was any failure to disclose fully or truly all material facts necessary for the assessment. 26. The first part of Section 147 (1) of the Act requires the AO to have "reasons to believe" that any income chargeable to tax has escaped assessment. It is thus formation of reason to believe that is subject matter of examination. The AO being a quasi judicial authority is expected to arrive at a subjective satisfaction independently on an objective criteria. While the report of the Investigation Wing might constitute th....
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..... The reasons and the information referred to is extremely scanty and vague. There is no reference to any document or statement, except Annexure, which has been quoted above. Annexure cannot be regarded as a material or evidence that prima facie shows or establishes nexus or link which discloses escapement of income. Annexure is not a pointer and does not indicate escapement of income. Further, it is apparent that the Assessing Officer did not apply his own mind to the information and examine the basis and material of the information. The Assessing Officer accepted the plea on the basis of vague information in a mechanical manner. The Commissioner also acted on the same basis by mechanically giving his approval The reasons recorded reflect that the Assessing Officer did not independently apply his mind to the information received from the Director of Income-Tax (Investigation) and arrive at a belief whether or not any income had escaped assessment." 28.4 The Court in Signature Hotels Pvt. Ltd. v. Income Tax Officer (supra) quashed the proceedings under Section 148 of the Act. The facts in the present case are more or less similar. The present case is therefore covered against the....
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....Importantly he notes that the information obtained was fresh' and had not been offered by the Assessee till its return pursuant to the notice issued to it was filed. This is a crucial factor that went into the formation of the belief In the present case, however, the AO has made no effort to set out the portion of the investigation report which contains the information specific to the Assessee. He does not also examine the return already filed to ascertain if the entry has been disclosed therein. 30.1 In Commissioner of Income Tax, New Delhi v. Highgain Finvest (P) Limited (2007) 164 Taxman 142 (Del) relied upon by Mr. Chaudhary, the reasons to believe read as under: "It has been informed by the Additional Director of Income Tax (Investigation), Unit VII, New Delhi vide letter No. 138 dated 8th April 2003 that this company was involved in the giving and taking bogus entries/ transactions during the financial year 1996- 1997, as per the deposition made before them by Shri Sanjay Rastogi, CA during a survey operation conducted at his office premises by the Investigation Wing. The particulars of some of the transaction of this nature are as under: Date Particulars of cheque Deb....
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....mmissioner of Income Tax 378 ITR 421 (Del) it was held that "therefore, even if it is assumed that, in fact, the Assessee's income has escaped assessment, the AO would have no jurisdiction to assess the same if his reasons to believe were not based on any cogent material. In absence of the jurisdictional pre-condition being met to reopen the assessment, the question of assessing or reassessing income under Section 147 of the Act would not arise." 33. In Rustagi Engineering Udyog (P) Limited (supra), it was held that "...the impugned notices must also be set aside as the AO had no reason to believe that the income of the Assessee for the relevant assessment years had escaped assessment. Concededly, the AO had no tangible material in regard to any of the transactions pertaining to the relevant assessment years. "Although the AO may have entertained a suspicion that the Assessee's income has escaped assessment, such suspicion could not form the basis of initiating proceedings under Section 147 of the Act A reason to believe - not reason to suspect - is the precondition for exercise of jurisdiction under Section 147 of the Act." 34. Recently in Agya Ram v. CIT (supra), it was emp....
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....f the deponents, non-mentioning of middleman if any, absence of details in the form of instrument number through which the cheques/RTGS was accepted by the assessee company, name of the bank from which the accommodation entries were provided, the name of the bank in which the accommodation entries were credited and the date of transaction etc. therefore, we are of the considered opinion that there is complete non-application Of mind by the AO to the information received from the Investigation Wing. Therefore, in view of the decision of the Hon'ble Delhi High court in the case of Pr. CIT vs Meenkashi Overseas Pvt. Ltd. (supra), the reassessment proceedings are not in accordance with law. 32. We further find the Hon'ble Delhi High Court in the case of Sh Rajiv Agarwal vs ACIT, reported in 395 ITR 0255 (Del) has held that even in cases where the AO comes across certain unverified information, it is necessary for him to take further steps, make inquiries and garner further material and if such material indicates that income of an Assessee has escaped assessment, form a belief that income of the Assessee has escaped assessment. There is non-application of mind by the AO could not be s....