TaxTMI 
TaxTMI 
2024 (12) TMI 1338
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....above defects in the compliances the resultant reassessment 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 grou....
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....see. Ld. Counsel submits that the assessee made compliance to notice issued u/s 148 by e-filling the return of 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)....
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....e. Further the case is well within period of limitation as per the Income Tax Act, 1961. 7. On hearing both the parties and after going through the additional grounds raised by the assessee, I am of the view that 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....
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....the provisions of section 147(a) or 147(b) are applicable or both the sections are applicable. The Assessing Officer 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 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 b....
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....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 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 cha....
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....f 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 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 ....
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....ance 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) 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 t....
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.... 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) 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 ....
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.... the beneficiaries during the F.Y 2008-09 relevant Assessment Year 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 FIUIND. 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 transfer transaction of large value and in round figures has been, transacted within connected group/linked accounts. The cumulative turnover In 31 accounts discussed....
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....Cash deposit in proprietorship 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 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 ....
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.... 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 that Learned CIT, who is the competent authority to authorize the reassessment notice, has to apply his mind and form an opinion. The Hon'b....
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....ingly, 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 merely academic in nature and, therefore, we are not adjudicating upon those grounds. As ITA No.6862/Del./2018 & 7507/Del./2018 far as....
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....Tribunal for assessment year 2010-11 squarely applies to the facts of the assessee's case for the assessment year 2007-08. Thus, respectfully following the said decision the re-assessment order passed under section 143(3) read with section 147 of the Act dated 20.03.2015 is quashed and ground No. 1 of grounds of appeal of the assessee is allowed." 10. Facts being identical. Respectfully following the said decision the reassessment order dated 09.12.2019 passed u/s 147/143(3) of the Act for the AY 2012-13 is quashed and the additional ground nos. 1 to 3 are allowed. 11. Since the appeal of the assessee is allowed on technical and legal grounds i.e. assumption of jurisdiction by the AO in reopening the assessment without application of mind and non supply of reasons for reopening the assessment all other grounds which are taken by the assessee on merits are not dealt with at this stage as the adjudication of these grounds becomes academic in nature. 12. In the result, appeal of the assessee is partly allowed as indicated above. Order pronounced in the open court on 18/12/2024 ============= Document 1 617146 Mys Oman Developert Dod se EQRMOFALCORDING THE REAS....