TaxTMI 
TaxTMI 
2024 (12) TMI 1338
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....ment proceedings are required to be set aside. 3. The Ld. AO has erred both in law and circumstances of the case in initiating action u/s 147 of IT Act ignoring the fact that the proceedings have been initiated by mechanical approval accorded by the Pr CIT, Rohtak and such approval vitiates the assessment." 2. The Ld. Counsel for the assessee, at the outset, submits that the assessee in ground nos. 1 to 3 challenged the very validity of the reassessment proceedings initiated by the Assessing Officer (AO) u/s 147 of the Income Tax Act, 1961 as the impugned reassessment order passed by the AO is contrary to law, passed without application of mind. Ld. Counsel submits that the above three grounds i.e. 1 to 3 of grounds of appeal are additional grounds filed for the first time before the Tribunal being legal grounds and the assessee also filed a petition for admission to these additional grounds. Referring to the application for admission of additional grounds Ld. Counsel submits that failure to adopt these grounds as main grounds of appeal was neither willful nor deliver it and since these grounds are purely legal grounds and its adjudication does not requires any fresh investigati....
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.... income on 29.04.2019 (PB 11) and intimated the Ld. AO vide letter dated 30.04.2019 (PB 43). In the above letter, the reasons for reopening were requested to be provided. The Ld. AO vide notice u/s 142(1) dated 28.08.2019 in item No.10(2) therein informed the appellant assessee that reason for reopening was enclosed. However, from the screenshot (PB 48), there was no such attachment enclosed with the above notice. The assessee vide letter dated 09.09.2019 (PB 50) informed the Ld AO that the reasons were not enclosed with the above referred notice and fresh request was made for supply of reasons recorded. Till the time of completion of assessment, the reason was not provided by the Ld. AO. The above fact can be verified from the digital order sheet available on page 98-100 and also from the notices u/s 142(1) of IT Act dated 16.10.2019 (PB 51-52) and 18.11.2019 (PB 53-55). The perusal of above will show that nowhere the Ld AO has provided the reason for reopening which were ultimately obtained from the Ld AO after completion of assessment vide letter dated 03.10.2023 (PB 34). 5. Ld. Counsel for Assessee further submits that the assessment in the present case was completed without p....
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....t these grounds are purely legal grounds and, therefore, the same are admitted following the above decision of the Hon'ble Supreme Court in the case of National Thermal Power Company Ltd. Vs. CIT (187 ITR 688). 8. Heard rival submissions, perused the orders of the authorities below. Undisputedly in this case there is non-application of mind by the AO in taking approval from the appropriate authority u/s 151 of the Act. Perusal of Form for recording the reasons for initiating proceedings u/s 148 and for obtaining approval of the Pr. CIT, Delhi-8, New Delhi which is placed at Paper Book page 38 suggests that the AO mentioned the provisions under which the assessment was reopened as 147(b) of the Act. It is observed that the provisions of section 147(a)/147(b) have seized to be in the statute book from 1.4.1989. Therefore, mentioning all these incorrect and non-existent sections for obtaining approval for recording the reasons for initiating proceedings u/s 148 is a clear case of non-application of mind by the AO and also by the authorities providing satisfaction u/s 151 of the Act. 9. I find that on identical fact situation the Tribunal in the case of Shyam Products P. Ltd. Vs. ITO....
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....1989. The mentioning of these incorrect and non-existing sections is a clear case of non-application of mind by the Assessing Officer and also by the authorities providing satisfaction under section 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 Income Tax Officer ITA Nos. 3869- 3870/Del/2018 dated: 01.02.2021. II. On applicability of invocation of sec 153C of IT Act The jurisdiction u/s 147 was assumed on the basis of various incriminating documents found and seized in the course of search on Sh S.K. Jain and his brothers (PB 19- 33) as per observations in the reason recorded. It is also mentioned in reason that from verification of documents seized in above search it clearly appears that assessee has taken accommodation entries from the entities of Sh S.K. Jain group in lieu of cash. This fact is....
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....ners 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 65-70) 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: From the copy of the information provided by the AO at page 37-46, it can be seen that DDIT Investigation has given a dictate to the CIT, Delhi-Ill, New Delhi to issue notice u/s 148 in the cases reported by the Investigation wing where jurisdiction lies in the charge of CIT. From the subject given in the above information, there is a clear direction to the AO which is also emphatically repeated till para 2 also. In addition to the above dictate, the CIT vide its binding direction dt: 15.03.2013 directed the AO's working in his charge to take immediate action in respect ot AY 2006-07 getting time barre....
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....isdiction. 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 days and thereafter the AO can take 4 months time in disposing off objection. This guidance of the Hon'ble Gujarat High Court has been approved by the Hon'ble Supreme Court wherein the SLP of the department has been dismissed. Therefore, issue of notice u/s 143(2) at the time of supply of reasons amounts to denial of opportunity to the appellant to take legal remedy available under the Act of filling of objection on assumption of jurisdiction. To support the above proposition of law, reliance is placed in the decision of Mastech Technologies Pvt Ltd vs Dy CIT WP(c) 2858/2016 dt: 13.07.2017 (Del) where in para 30 of the judgment held that issuance....
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.... (Del) I.T.A. No. 4908/Del/2018 AND I.T.A. No. 4907/Del/2018 22 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 seen that notice u/s 148 has been issued in the name of the artificial juridical entity without addressing the name of incumbent compliant. Therefore, issuance of notice in the name of the company instead of the name of the principal officer of a company makes the notice bad in law as per the ratio of the decision of the Calcutta High Court in the case of Rama Devi Agrawal Vs. CIT reported at 117 ITR 256 [Calcutta] and the decision of the Hon'ble Allahabad High Court in the case of Madan Lai Agrawal Vs. CIT reported at 144 ITR 745 [All]. On similar facts, mentioned in the reason recorded, the Hon'ble ITAT in Shree Balkishan Aggarwal Glass Industries P Ltd in ITA No.1523/Del/....
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....le 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) 2858/2016, dated 13.07.2017 and submitted that the issuance of notice u/s 142(1)/143(2) before supplying the reasons and not considering petitioner's objection and passing reasoned order thereon does not meet requirement of law. 7. 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(b) of the Act is a clerical mistake which is curable under section 292B of the Act. 8. On careful consideration of the rival submissions, from the order of the coordinate Bench of ITAT in the case of Omkam Developers Ltd. (supra), I observe that in the similar set of facts and circumstances, ....
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....rein 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 transfer transaction 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 at different, branches of the Development Credit Bank. The following, facts emerged from the scrutiny of Bank Accounts: I. There were 7 Bank Accounts belonging to 6 entities in which cash of Rs. 15.26 crore was deposited in the F.Y.-2008-09: The cash deposited were swiftly Transferred to other entities through Cheques/RTGS. These-6 entit....
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....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. As discussed in earlier paras, the assessee has obtained such entries through above mentioned modus-operandi, it is actually assessee's own money (cash) which was rotated through such channel. This cash was out of his unaccounted income. I have reasons to believe that an amount of Rs. 1.93 crores has escaped from the Assessment for the A.Y. 2009-10 which was chargeable to tax. I am also satisfied that on account....
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....s 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 possible manner. The Hon'ble High Court further observed that in that case the exercise appeared to have been the ritualistic and formal rather than meaningful, which is the rationale for safeguard of an approval by a high-ranking officer. Thus, in the instant case, mere mentioning of "yes' for approval, without any other evidence of application of the mind, amounts to mechanical approval by the LearnedPr.CIT. 10.2 Further in Column ....
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....ssment 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." 9. In the present case, the copy of the form for recording the reason for initiation of proceedings u/s 147 of the Act and for obtaining the approval u/s 151 of the Act is available at page 18 of assessee's paper book, the ld. Sr. DR did not dispute that in the column No.7, the AO mentioned that the provision of section 147(b) of the Act is applicable. For the sake of completeness, the said format is being reproduced below:- 10. Therefore, it is clear that the AO, in the first page of reasons (supra) mentioned in c....