ELITE COUNTRY DEVELOPERS PVT LTD,NEW DELHI V. ITO WARD - 8(2), NEW DELHI

ITA 1422/DEL/2020

AI Insights

The case involves M/s Elite County Developers Pvt. Ltd., which appealed against the order of the Commissioner of Income Tax (Appeals) - 3, New Delhi, for the Assessment Year 2010-11. The primary contention was regarding the validity of the reassessment under section 147 of the Income Tax Act, 1961, based on a mechanical approval for reopening the assessment. The Assessing Officer (AO) had added a substantial amount to the assessee's income, suspecting unaccounted payments for land purchases. The Tribunal, referencing decisions from the Madhya Pradesh High Court and the Delhi High Court, found the approval process under section 151 to be ritualistic and formal rather than meaningful, leading to the quashing of the reassessment proceedings.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 360945 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2010-2011
• Other Referred Cases: CIT Vs. S. Goyenka Lime and Chemicals Ltd, PCIT Vs. NC Cables Ltd
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR DHANESTA
• Assessee Lawyers: APOORVA BHARDWAJ
• Keywords: Reassessment proceedings; Competent authority
• Section: 147

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI (DELHI BENCH ‘B’ NEW DELHI) BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SH. YOGESH KUMAR U.S., JUDICIAL MEMBER ITA No. 1422/Del/2020 (A.Y. 2010-11) M/s Elite County Developers Pvt. Ltd. Sandhu Farm House, Vrindavan Garden, Fatehgarh, Churian Road, Amritsar, Punjab-143008 PAN:AACFE1489P Vs. ITO, Ward-8(2), C.R. Building, I.P. Estate, New Delhi-110002 Appellant Respondent Assessee by Ms. Apoorva Bhardwaj, CA Revenue by Sh. Rajesh Kumar Dhanesta, Sr. DR Date of Hearing 14/05/2025 Date of Pronouncement 22/05/2025 ORDER PER YOGESH KUMAR, U.S. JM: This appeal is filed by the Assessee against the order of Commissioner of Income Tax (Appeal) (‘Ld. CIT(A)’ for short)- 3, New Delhi, dated 06.03.2020 for the Assessment Year 2010-11. 2. Facts in brief: The Assessee has filed its return of income declaring total income at Rs.21,70,269/-. Office of the DIT(I & CI) Chandigarh, stated that cash of Rs.1,54,64,000/- has been deposited in the bank account of Shri Mangal Singh during the FY 2009-10. Consequent to the examination of documents, the AO was of the opinion that the Assessee company has made payment of 2 ITA No.1422/Del/2020 M/s Elite County Developers Pvt. Ltd. Rs.4,69,21,625/- for the purchase of agriculture land over and above the cost of land declared in the books of the company. The assessment order came to be passed u/s 143(3)/147 of the Act on 30.12.2017 by making an addition of Rs.4,69,21,625/- u/s 68 of the Income tax Act 1961(‘Act’ for short). Aggrieved by the assessment order, the Assessee preferred an appeal before the Ld. CIT(A) and the Ld. CIT(A) order dated 06.03.2020 dismissed the appeal of the Assessee. As against the order of the Ld. CIT(A), the Assessee has preferred the present appeal. 3. The Assessee has raised several (revised) grounds challenging the validity of assumption of jurisdiction u/s 147 of the Act together with merits.the ld. Counsel submitted that the AO obtained the approval of PCIT as required u/s 151 of the Act on 29.03.2017, which has been issued in a mechanical manner, wherein, ld. PCIT granted approval without application of mind by writing ‘yes I am satisfied’. Thus, submitted that the assessment framed in consequence to such mechanical approval deserves to be set-a-side. Therefore, sought for allowing the Appeal. 4. Per contra, the ld. DR relying on the orders of the lower authorities, submitted that the ld. PCIT has indeed applied his mind and after application of mind, granted sanctioned as required u/s 151 of the Act. Thus, sought for dismissal of the appeal of the Assessee. 3 ITA No.1422/Del/2020 M/s Elite County Developers Pvt. Ltd. 5. We have heard the rival submissions and perused the material available on record.The reasons recorded for reopening the assessment together with the approval granted by the Pr. Commissioner of Income Tax, Delhi-3 in terms of section 151 of the Act are enclosed in pages 31 to 32 of the Paper Book. On perusal of the Proforma seeking approval u/s 151 of the Act, we find that the ld.PCIT had merely stated that ‘I am satisfied’. This sort of approval granted u/s 151 of the Act was held to be approval granted without application of mind and construed as mechanical by the Hon’ble Madhya Pradesh High Court in the case of CIT Vs. S. Goyenka Lime and Chemicals Ltd reported in 56 taxmann.com 390 (MP HC). The Special Leave Petition (SLP) filed by the revenue against this decision was dismissed by the Hon'ble Supreme Court reported in 64 taxmann.com 313. Further, we find that the Hon’ble Jurisdictional High court in the case of PCIT Vs. NC Cables Ltd reported in 391 ITR 11 (Del) had also held the same, wherein, the approving authority had merely stated “approved” in the Proforma while granting approval in terms of section 151 of the Act. This approval was held by the Hon’ble Jurisdictional High Court to be a mechanical approval. The relevant observation of the Hon’ble Jurisdictional High Court in this regard are reproduced herein:- 11. Section 151 of the Act clearly stipulates that the CIT (A), who is the competent authority to authorize the reassessment notice, has to apply his mind and form an opinion. The mere appending of the expression 'approved' 4 ITA No.1422/Del/2020 M/s Elite County Developers Pvt. Ltd. says nothing. It is not as if the CIT (A) has to record elaborate reasons for agreeing with the noting put up. At the same time, satisfaction has to be recorded of the given case which can be reflected in the briefest possible manner. In the present case, the exercise appears to have been ritualistic and formal rather than meaningful, which is the rationale for the safeguard of an approval by a higher ranking officer. For these reasons, the Court is satisfied that the findings by the ITAT cannot be disturbed. 12. The substantial questions of law framed are answered in favour of the assessee and against the Revenue. The appeal is dismissed.” 6. Respectfully following the aforesaid decisions, we hold that the reopening has been made in the instant case by not taking approval u/s 151 of the Act from the competent authority in the manner known to law. Accordingly, the entire reassessment proceedings are hereby quashed. Hence, one of the legal grounds challenging the validity of assumption of jurisdiction u/s 147 of the Act is allowed in the above mentioned terms by quashing the reassessment, the other grounds raised by the Assesseerequires no adjudication and they are left open. 7. In the result, the appeal of the Assesseeis allowed. Order pronounced in the open court on 22nd May, 2025 Sd/- Sd/- (M. BALAGANESH) (YOGESH KUMAR U.S.) ACCOUNTANT MEMBER JUDICIAL MEMBER Date:-.05.2025 f{x~{tÜ f{x~{tÜ f{x~{tÜ f{x~{tÜB B B Be e e eA A A A a a a a? ? ? ? fÜAcA fÜAcA fÜAcA fÜAcAf f f f* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI "