TaxTMI 
TaxTMI 
2025 (6) TMI 1521
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.... and material on record; 4. The Ld.CIT(A) has erred on facts and in law in upholding addition irrespective of the fact that assessee has discharged onus u/s 68 and no opportunity of cross examination of Jain Brothers & directors of subscriber companies, intermediaries was provided to the assessee; 5. The Ld.CIT(A) has erred on facts and in law in upholding the validity of reassessment proceedings ignoring the fact that initiation of the proceedings u/s 148, the procedure followed and the consequent order u/s 148, the procedure followed and the consequent order u/s 147 are bad in law; 6. The Ld.CIT(A) has erred on facts and in law by not adjudicating ground of initiation of penalty proceedings u/s 271(1)(c) without any material on record." 2. The Ld. Counsel for the assessee, at the outset, submits that the assessee in ground nos. 3 & 5 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 for the assessee referring to page 20 of the Paper Book which is the Form for record....
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....ssioner under section 151 of the Act and the ld. CIT also has granted approval in a mechanical manner. The Tribunal observed that in the Form for recording the reasons for initiating proceedings under section 148 for obtaining approval of the Pr. CIT, column 7 i.e. the provisions under which the re-opening was sought for are applicable has been mentioned as section 147(b) and the provisions of section 147(b) are non-existent in the statute book for the assessment year 2010-11. Therefore, the co-ordinate bench of the Tribunal came to the conclusion that there is complete non-application of mind by in obtaining the approval from Pr. CIT and in similar manner the approval was granted by Pr. CIT. While coming to such conclusion the Tribunal referred to various decisions and held as under:- 2. First of all, I have heard the arguments of both the representatives on legal ground No.3 of the assessee which reads as under:- "3. The Id. CIT(A) has erred on facts and in law in upholding the impugned order of the learned assessing officer which is contrary to law, passed without application of mind and without complying with the procedure and rules, is against equity and justice and fact....
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....ra 14-15 (PB 25-26) various seized material has been discussed which includes Annexure A-150 pages 1- 13 (PB 26) and other details showing amount of commission and payments to various middlemen in consideration of accommodation entries by them. 3. In para 10 sub para vi (PB 22), there is mention of daily cash book, cheque books seized from Sh S.K. Jain whereby details of cash received from various beneficiaries companies/person through various middleman/agents in lieu of accommodation entries provided to them on various dates have been recorded. 4. There is reference to the seized records elsewhere in the reason particularly in para 18 and 18.1 page 27 and para 21 at page 31 also which led the AO to form a prima facie view of escapement of income chargeable to tax. 5. From these discussions, it is evident that the AO had no material to initiate action u/s 147 except for the material relating to the appellant found in the course of search on above named individuals. Under section 153C(1) (b) of IT Act, the power to take cognizance of the material seized from third party, need be exercised under this section only ruling out action under other provisions of the Act. With effe....
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....trigger point for initiating action u/s 148 and therefore it can be inferred that there is a satisfaction of authority other than the AO resulting into reopening of the case. This is against the provisions of sec 147 which lay down that it is the AO whose satisfaction is sine qua none for valid initiation of reassessment proceedings. In Green World Corporation (supra) (SC) held that Notices issued pursuant to the direction by the Pr. CIT thereto would be bad in law. Further In CIT v. SPL's Siddhartha Ltd. [2012] 345 ITR 223 (Del), relying on Sheo Narain Jaiswal & Ors. Vs. ITO, 176 ITR 35 (Pat.), held: 'Where the Assessing Officer does not himself exercise his jurisdiction under Section 147 but merely acts at the behest of any superior authority, it must be held that assumption of jurisdiction was bad for non- satisfaction of the condition precedent.' In the case of Munjal Showa Ltd vs Dy CIT & Anr WP.(C) 1707/2014 DT: 22.02.2016, the Hon'ble Delhi High Court has quashed the reassessment proceeding relying the decision on Lahmeyer Holding GMBH v. Deputy Director of Income Tax 375 UR 70 [Del) where the AO was acting on the direction of the CIT in terms of the instructions o....
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....of M/s R N Khemka Enterprises P Ltd vs ITO in ITA No. 7244/Del/2019 dt: 12.08.2021 has quashed the reassessment proceedings on similar grounds. Kindly refer para's 33 to 35 at internal page 51-53 therein. V. Mechanical Approval Granted by Pr CIT The exercise of approval u/s 151(1) of IT Act by the Ld Pr CIT, Delhi-8, New Delhi appears to have been ritualistic and formal rather than meaningful, which goes against the rationale of the safeguard of approval by a higher- ranking officer provided in the Act. Inconsistencies and omissions pointed in preceding para's in support of ground on non application of mind are the glaring mistakes committed 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....
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....o 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 counsel also pointed out that the AO has not assumed valid jurisdiction to pass reassessment order u/s 143(3) r.w. section 147 as the notice u/s 143(2) of the Act was issued on the very same date when the copy of the reason was supplied to the assessee, thereby debarring the assessee to file objections to assumption of ju....
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....t proceeding on the ground that approval for issue of the notice under section 148 of the Act was granted by the LearnedPr.CIT in a mechanical manner and without application of mind and, therefore, reassessment proceeding must be quashed. For adjudicating this issue, the reasons recorded by the Assessing Officer and relevant proforma of approval granted by the Pr. CIT are reproduced as under: "Reason for the belief that income has escaped assessment in the case of M/s, Omkam Developers Pvt. Ltd. A.Y. 2009-10 (Pan:AAACQ5036B) 1. Name & Address of the Assessee : M/s Omkam Developers Ltd, 702, Arunachal Building, 19, Barakhamba, Road, Connaught Place, New Delhi 2. Assessment Year 2009-10 3. Financial Year 2008-09 4. PAN AAACO05036B PUC is a proposal for reopening the case under section 147 of the Act for the A.Y 2009-10 in the prescribed Performa. The information received from ADIT (Inv), Unit-3(4), Kolkata vide his letter dated ADIT/U-3(4)/FIUIND/MJS/15-16/4l1 dated 22.06.2015. wherein it is mentioned that; in the suspicion transaction report of 1000010583 in the name of Manohar Jaykishan Shah was received and it was reported in the I said FIUIND-STR No. 10000105....
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....ferred to a number of entities which are mostly entities already identified as the companies controlled by the entry operators, few of them have been listed in Annexure-1. III. The fund was rotated among the entities detailed in Annexure-C, C1 and Annexure-1] IV. There were 6 Bank Accounts Belonging to 6 Companies in which funds were received from mostly entities discussed in Annexure-C, C1 and Annexure-1 and the same was swiftly transferred to the other entities (Mostly Companies). The details of 6 such companies are given in Annexure -5 V. The fund was transferred to the entities which are the real beneficiary of the funds from the companies mentioned in Annexure-S. The details of such, companies are given in Annexure -B. Modus operandi of providing accommodation entry The summons u/s 131 were issued to the individuals and entities mentioned in the STR. The field verification from the inspector was also done. In most of the cases either the summons could not he served or there was no compliance, The facts of immediate source of the beneficiaries being shell companies have already been established and recorded u/s 131 of the Income Tax Act-1961 during the investigat....
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....ed the information received from the Investigation Wing, Kolkata The Investigation Wing of the Department has sent comprehensive detail comprising inter alia the beneficiary's name, value of entry taken etc. In the aforesaid case as per record from ITD, return of income was filed on declaring Rs. 2,389/- income, it is noticed that the assessee company M/s Omkam Developers Ltd, received accommodation entries to the tune of Rs. 1.93, crores during the F.Y. 2008-09 relevant to assessment year 2009-10 from the entry operators as mentioned in the chart above and same was not offered for taxation. Having perused and considered the information, I have reason to believe that income of the assessment company to the extent of Rs. 193 Lakh has escaped assessment for the Assessment Year 2009-10. Therefore, proceedings under section 147 i.e. clause (b) of Explanation 2 of the provisions of section 147 of the I.T. Act, 1961 is proposed to be initiated for the Assessment Year 2009-10. As per ITD record, Return of Income has filed on 30.03.2010 at an income of Rs. 2,389/- for the A.Y. 2009-10. Since four years has been expired from the end of the relevant assessment year in this ca....
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....ly. In the case of Madhu Apartment Private Limited vs. ITO, ITA.Nos.3869 & 3870/Del./2018 wherein the Tribunal, Delhi Bench, vide order dated 01/02/2021 held as under: "7. After considering the rival submissions, we are of the view that the issue is covered by the Order of ITAT, Delhi G-Bench, Delhi in the case of VRC Township Pvt. Ltd., Delhi (supra) in which reopening of the assessment in identical circumstances was held to be bad in law and sanction accorded by the Sanctioning Authority was also found invalid, therefore, reopening of the assessment was quashed. In the present case, the Learned Counsel for the Assessee has pointed-out that assessee has raised this issue before the Ld. CIT(A), but, he has rejected the submissions of the assessee holding that Section 147(b) as mentioned in the reason and Format is a typographical human error which is curable under section 292B of the I.T. Act, 1961. This issue is also considered in the Order of VRC Township Pvt. Ltd., (supra) following the decision of Hon'ble Bombay High Court in the case of Kalpana Shantilal Haria vs. ACIT [2017] 100 CCH 165 (Bom.). Following the same reasons for decision, we set aside the Orders of the aut....