TaxTMI 
TaxTMI 
2025 (10) TMI 478
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.... Income Tax Act, 1961 ('the Act', hereafter). 3. The Appellant in their assessment order dated 28.11.2016 had recorded that the Respondent/Assessee was incorporated on 28.08.1995. The business of the Assessee for the Assessment Year ('AY', hereafter) 2009-10 was not mentioned and when the Respondent/Assessee filed its return of income on 22.09.2009 for the AY 2009-10, it had declared its income as Rs. 40,720/-, which was then processed under Section 143(1) of the Act. This Income was not selected for regular scrutiny. After the return of income was processed, on 30.10.2010 the Appellant received information from the office of the Director of Income Tax (Investigation-II) vide letter dated 12.03.2013 that a search operation was carried out wherein seized documents revealed that the Respondent/Assessee was involved as a beneficiary of accommodation entries. The Respondent/Assessee had claimed that it declared in its return of income that it had received share capital along with share premium of Rs. 25,00,000/-. 4. As per the Appellant, prior to 1989, Section 147 enumerated two grounds for reopening concluded assessments; one being on the basis of information received by the Ass....
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....ies' funds were sufficiently enhanced accommodation entries were made through RTGS/Cheque in the shape of the share capital, share application money, share premium, sale/purchase of shares, unsecured loans, bogus expenses, etc., as per the specific requirements of the beneficiaries, which were provided to them in lieu of the cash receipt. As per the Appellant, in this way the chain for providing accommodation entries was completed although these transactions were layered through three to four companies. Pursuant to the aforementioned a notice dated 19.10.2016 under Section 148 of the Act was issued to the Assessee, relevant portion of which reads as follows: "7. "As per the report of Investigation Wing, name of various companies/persons being beneficiaries were identified after extensive verification of documents seized as a result of search operation conducted against Sh. S.K. Jain Group (Entry Operator). The incriminating document seized during search (date of search 14.09.2010) included the companies/ persons identified as be beneficiaries who have obtained the accommodation entries generally in the form of share capital/share premium/loans. The details like the amount ....
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....creditworthiness and genuineness of transactions. The Respondent/Assessee in its reply dated 26.10.2016 stated as under: "A. Appraisal report of S.K. Jain group Vide Para - 8 of SCN, reliance has been placed on the appraisal report of SK Jain Group of cases. IN this regard, the copy of appraisal report (relevant portion) of S.K. Jain group of cases be please supplied for our perusal and comments, in the absence of which it cannot be used against us. Hence, any adverse inference on the basis of said appraisal report, as on date, cannot be taken. The assessee clearly denies any allegation as made out in the said appraisal report. B. Analysis of information received and collected by the Inv. Wing etc. It has been done vide Para - 11 to 18 of SCN. In this regard, this exercise has been done by the Inv. Wing/Dept. On the back of the assessee and without confronting any such material to the assessee by the Inv. Wing or otherwise. The assessee is not a party to this working. The assessee had no occasion to comment upon these observations of the Inv. Wing as he was never provided the material mentioned in these Para's and he was als....
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....e said conclusion is not based on cognizable material so far as the assessee is concerned. F Preposition to add Rs. 10 lacs u/s 68 as un- explained credit It has been discussed in Para - 26 of the SCN. In this regard, kindly refer to three submissions made during Asstt. Vide letter dtd. 28.06.2016, 11.08.2016, 22.08.2016 and 19.09.2016. It is also submitted that a large no. of relevant documents has been filed along with letter dated 19.09.2016 to prove the genuineness of the receipts w.r.t. Sec. 68. All these documents remains un-rebutted, un- controverted. There is no evidence which conclusively proves that assessee has given cash and in turn received the payment under consideration. In view of these documents, it is submitted that no addition should be made." 7. The assessment order dated 28.11.2016 found that the Respondent/Assessee was unsuccessful in proving the genuineness of the sum of Rs. 25,00,000/- which was found credited in the books of account. Along with an unexplained investment in the form of an expenditure at the rate of 1.8% of the accommodation entry which amounts to Rs. 45,000/-, and the addition of Rs.40,720/- which was the income....
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.... Cables Ltd., (2017) 391 ITR 11. The ITAT on this ground quashed the entire proceedings in favour of the Respondent/Assessee. The relevant portions of the impugned order is as follows: "6. On perusal of the copy of approval available at page 14 of the assessee's paper book I note the facts of the present case and satisfaction recorded by the PCIT in the present case is similar worded was recorded in assessee's case for A Y 201 0-11. Therefore, respectfully following the conclusion drown by the coordinate bench of the Tribunal in several order including the order in assessee's own appeal in A Y 20l0- 11 (supra) wherein, it has been held that merely giving approval by mentioning "Yes, I am convinced it is fit case for re-opening of assessment u/s 147 by issuing notice u/s l 48." Is not comply mandatory requirement of granting approval u/s 151 of he Act. Thus, the valid approval granted reassessment proceedings notice u/s 148 of the Act and impugned reassessment order 28.11.2016 for A Y 2009-10 deserves to be quashed. As I have noted above noted above that in the instant case also both the approving authority have merely given a ritual approval in a mechanical man....
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....nakshi Overseas Pvt. Ltd., ITA 651/2015, dated 11.01.2016; ii. N.C. Cables (supra); iii. PCIT V. Pioneer Town Planners Pvt. Ltd., (2024) 465 ITR 356; iv. SBC Minerals Pvt. Ltd. vs. ACIT W.P. (C) 7885/2023, dated 20.08.2024. 11. On the other hand, Mr Arvind Kumar, learned Counsel appearing on behalf of the Respondent/Assessee has justified the order of the ITAT, by stating that the approval granted in this case does not satisfy the requirements of a considered approval by the authority. He stated the Tribunal has rightly relied upon N.C. Cables Ltd. (supra). He seeks dismissal of the appeal. 12. Having heard the learned counsel for the parties and perused the records, the short issue, which arises is in terms of the substantial question of law framed by this Court vide order dated 24.01.2024, in the following manner:- "A. Whether on the facts and circumstances of the case and in law, the Income Tax Appellate Tribunal ["ITAT"] has erred in quashing the reassessment proceedings by holding the approval granted by the Principal Commissioner of Income Tax under Section 151 of the Income Tax Act, 1961 to be invalid? 13. The said order dated 24.....
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....concerned with the word "approved". It was in that context, this Court has in paragraph 11 stated that merely appending the expression "approved" says nothing. 18. This Court has said that the satisfaction has to be recorded, which can be reflected in the briefest possible manner. So the judgment of this Court in N.C. Cables Ltd (supra) is clearly distinguishable. 19. We may at this stage refer to a judgment of this Court titled PCIT v. Meenakshi Overseas Pvt. Ltd. (supra) wherein this Court had considered "Yes, I am satisfied" to mean that it satisfies the mandate of Section 151(1) of the Act. The relevant paragraph is reproduced as under:- "16. Having carefully examined the aforesaid decisions, the Court finds that they are distinguishable in their application to the facts of the present case. It is not as if the Additional CIT here has merely appended his signature without specifically noting his approval. This is also not a case where a "Yes" rubber stamp has been used as was in the case of Central India Electric Supply Co. (supra). For the purpose of Section 151(1) of the Act, what the Court should be satisfied about is that the Additional CIT has recorded his s....