Agroha Fincap Ltd., New Delhi V. ITO, Ward- 1(4), New Delhi

ITA 1063/DEL/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 6946 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 11-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S L ANURAGI
• Keywords: Reopening of assessment; Unexplained expenditure; Search and seizure; Principle of natural justice; Accommodation entries; Reassessment proceedings; Borrowed satisfaction
• Section: 69C; 68; 148; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : SMC : NEW DELHI BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.1063/DEL/2019 ASSESSMENT YEAR: 2010-11 AGROHA FINCAP LTD., RAJ KUMAR & ASSOCIATES, CAS, L-7A (LGF), SOUTH EXTENSION PART-II, NEW DELHI. PAN: AAACA8075G VS. ITO, WARD-1(4), NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RAJ KUMAR, CA REVENUE BY : SHRI S.L. ANURAGI, SR.DR DATE OF HEARING : 13.08.2019 DATE OF PRONOUNCEMENT : 17.10.2019 ORDER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 19 TH DECEMBER, 2018 OF THE CIT(A)-1, NEW DELHI, RELATING TO ASSESS MENT YEAR 2010-11. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A COMPANY AND HAD FILED ITS RETURN OF INCOME ON 12 TH OCTOBER, 2010 DECLARING THE TOTAL INCOME AT RS.9,9 12/-. THE ASSESSING OFFICER RECEIVED INFORMATION BASED ON THE SEARCH AND SEIZURE OPERATION CONDUCTED U/S 132 OF THE IT ACT, 1961 IN THE CASE O F SHRI SURENDRA KUMAR JAIN GROUP OF CASES ON 14 TH SEPTEMBER, 2010 THAT SHRI SURENDRA KUMAR JAIN, THR OUGH A LARGE NUMBER OF DUMMY COMPANIES FLOATED BY HIM PROVIDED A CCOMMODATION ENTRIES TO ITA NO.1063/DEL/2019 2 VARIOUS BENEFICIARIES. IN THE LIST OF BENEFICIARIE S SO OBTAINED, THE NAME OF THE ASSESSEE ALSO APPEARS. HE NOTICED THE MODUS OPERANDI OF THE JAIN BROTHERS WAS THAT THEY HAVE RECEIVED CASH FROM THE VARIOUS BENEFICIARIES WHICH WERE DEPOSITED IN THE BANK ACCOUNTS OF VARIOUS ENTITIES AS CASH RECEIVED AGAIN ST SALES AND WERE IMMEDIATELY TRANSFERRED TO VARIOUS DUMMY COMPANIES OF JAIN BROT HERS. THE MONEY IS THEN ROUTED THROUGH A MAZE OF TRANSACTIONS THROUGH A WEB OF DUM MY CONCERNS MANAGED BY JAIN BROTHERS. SUBSEQUENTLY, CHEQUES WERE GIVEN TO THE B ENEFICIARIES IN LIEU OF CASH GIVEN INITIALLY FROM THE ACCOUNT OF THE CONCERNS WHICH IS AT THE LAST STEP OF MONEY TRAIL AND IN THIS PROCESS, JAIN BROTHERS USED TO EARN A CERTAIN PERCENTAGE OF COMMISSION. HE ALSO REFERRED TO THE ASSESSMENT ORDER IN CASE OF S.K. JA IN WHEREIN THE ASSESSING OFFICER HAD APPLIED THE COMMISSION @ 1.8% ON ACCOUNT OF ACCOMMO DATION ENTRIES PROVIDED BY THEM. THE ORDER OF THE ASSESSING OFFICER WAS CONFI RMED BY THE CIT(A) AND THE TRIBUNAL HAD ALSO APPROVED THE FACT THAT SHRI S.K. JAIN AND SHRI V.K. JAIN ARE INVOLVED IN PROVIDING ACCOMMODATION ENTRIES. IN VIEW OF THE ABOVE, THE ASSESSING OFFICER REOPENED THE CASE OF THE ASSESSEE U/S 147/148 OF TH E ACT AFTER RECORDING SATISFACTION AND PRIOR APPROVAL U/S 151(1) OF THE ACT BY THE PCI T, DELHI-1. IN RESPONSE TO NOTICE U/S 148, THE ASSESSEE FILED ITS RETURN OF INCOME ON 30 TH MARCH, 2017 DECLARING AN INCOME OF RS.9,912/-. DURING THE COURSE OF ASSESSM ENT PROCEEDINGS, THE ASSESSING OFFICER ASKED THE ASSESSEE TO SUBSTANTIATE THE AMOU NT OF RS.20 LAKHS RECEIVED BY HIM TOWARDS 20000 SHARES OF RS.10/- EACH AT A PREMIUM O F RS.90/- PER SHARE. REJECTING VARIOUS EXPLANATIONS GIVEN BY THE ASSESSEE, THE ASS ESSING OFFICER HELD THAT THE ASSESSEE FAILED TO DISCHARGE THE ONUS CAST ON IT TO PROVE THE IDENTITY AND CAPACITY OF THE ITA NO.1063/DEL/2019 3 CREDITOR AND THE GENUINENESS OF THE TRANSACTION AND MADE AN ADDITION OF RS.20 LACS TO THE TOTAL INCOME U/S 68 OF THE IT ACT. SIMILARLY, THE ASSESSING OFFICER ALSO MADE ADDITION OF RS.36,000/- BEING COMMISSION @ 1.8% FOR ARRANGING THE ACCOMMODATION ENTRIES. THUS, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT AT A TOTAL INCOME OF RS.20,45,912/- AS AGAINST THE RETURNED INCOME OF RS .9,912/-. 3. BEFORE THE CIT(A), THE ASSESSEE, APART FROM CHAL LENGING THE ADDITION ON MERIT, CHALLENGED THE VALIDITY OF THE REASSESSMENT PROCEED INGS. HOWEVER, THE LD.CIT(A) WAS NOT SATISFIED WITH THE ARGUMENTS ADVANCED BY THE AS SESSEE AND UPHELD THE ACTION OF THE ASSESSING OFFICER IN MAKING THE ADDITION OF RS.20,3 6,000/- AND ALSO UPHELD THE VALIDITY OF THE REASSESSMENT PROCEEDINGS. 4. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE ASS ESSEE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS:- 1. THAT UNDER THE FACTS AND CIRCUMSTANCES INITIATI ON OF PROCEEDINGS UNDER SECTION L47/148 ARE WITHOUT JURISDICTION, ON BORROW ED SATISFACTION, WITHOUT APPLICATION OF MIND, UNWARRANTED, MECHANICAL AND UN SUSTAINABLE IN LAW AND ON MERITS. I 2. THAT THE LD. A.O., SINCE FAILED IN ADJUDICATING ALL OBJECTIONS AGAINST REOPENING PROCEEDINGS, PROPERLY, AS PER LAW AND IN TOTALITY AND AS PER THE DIRECTIONS OF HONBLE SUPREME COURT IN THE CASE OF G.K.N. DRIV E SHAFTS, HENCE CONSEQUENTIAL PROCEEDINGS AND IMPUGNED ASSTT. IS ILLEGAL AND WITH OUT JURISDICTION. 3. THAT UNDER THE FACTS AND CIRCUMSTANCES, THE APPR OVAL UNDER SECTION L51 IS FATALLY DEFECTIVE, MECHANICAL AND WITHOUT APPLICATI ON OF MIND WHICH MAKES THE WHOLE PROCEEDINGS WITHOUT JURISDICTION, ILLEGAL AND UNWARRANTED. 4. THAT UNDER THE FACTS AND CIRCUMSTANCES, THE LD. A.O, ERRED IN LAW AND ON MERITS IN MAKING ADDITION OF RS,20,00,000 UNDER SEC TION 68 OF THE I.T. ACT. 4.1 THAT UNDER THE FACTS AND CIRCUMSTANCES, ADDITI ON OF RS. 20,00,000 UNDER SECTION 68 FOR THE SHARE CAPITAL / SHARE PREMIUM RE CEIVED FROM UTSAV SECURITIES (P) ITA NO.1063/DEL/2019 4 LTD. BY HOLDING THE SAME AS RECEIVED FROM ALLEGED E NTRY OPERATOR IS ILLEGAL AND UNSUSTAINABLE IN LAW AS WELL AS ON MERITS. 4.2 THAT THE FINDINGS OF A.O. ARE UNSUSTAINABLE FO R ADDITION OF RS.20,00,000 IN THE ABSENCE OF PROVIDING THE COPIES OF ALL MATERIAL S USED AGAINST THE ASSESSEE AND BY NOT PROVIDING CROSS-EXAMINATION OF PERSONS WHOSE ST ATEMENTS HAVE BEEN RELIED UPON, THUS NO PROPER AND REASONABLE OPPORTUNITY OF HEARING HAS BEEN ALLOWED AND PRINCIPLES OF NATURAL JUSTICE IS GROSSLY VIOLATED W HICH MAKES THE IMPUGNED ASSTT. UNSUSTAINABLE IN LAW. 5. THAT THE LD. A.O. ERRED IN MAKING ADDITION OF R S.36,000 AS UNEXPLAINED EXPENDITURE UNDER SECTION 69C FOR ALLEGED COMMISSIO N EXPENSES @1.8 PERCENT OF RS.20,00,000, THE AMT. OF TOTAL SALE CONSIDERATION RECEIVED OF BOTH THE SHARES, ALTHOUGH THERE IS NO MATERIAL AND EVIDENCE FOR THE SAME. 5. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE INITIATION OF REASSESSMENT PROCEEDINGS WAS MADE IN A MECHANICAL MANNER, ON BOR ROWED SATISFACTION AND WITHOUT APPLICATION OF MIND. REFERRING TO THE COPY OF THE REASONS SUPPLIED BY THE ASSESSING OFFICER, COPY OF WHICH IS PLACED AT PAGE 225 OF THE PAPER BOOK, HE SUBMITTED THAT THE INITIATION IS PURELY ON THE BASIS OF THE REPORT REC EIVED FROM THE INVESTIGATION WING AND THE ASSESSING OFFICER BEFORE INITIATING THE REASSES SMENT PROCEEDINGS HAD NOT CONDUCTED ANY INQUIRY EVEN TO KNOW AND UNDERSTAND T HAT THE INFORMATION AS PER THE INVESTIGATION REPORT IS PRIMA FACIE CORRECT. HE SUBMITTED THAT AT THE TIME OF INITIATI ON OF PROCEEDINGS, THE ASSESSING OFFICER WAS NOT HAVIN G EVEN THE MATERIAL BEFORE HIM ON THE BASIS OF WHICH THE INVESTIGATION WING HAD SENT ITS REPORT. THE ASSESSING OFFICER ASSUMED AND WORKED ONLY ON THE SATISFACTION OF THE INVESTIGATION WING. RELYING ON THE FOLLOWING DECISIONS, HE SUBMITTED THAT WHEN THE PROCEEDINGS WERE INITIATED MECHANICALLY AND ON BORROWED SATISFACTION AND WITHO UT APPLICATION OF MIND, SUCH REASSESSMENT PROCEEDINGS ARE A NULLITY:- ITA NO.1063/DEL/2019 5 I) PR. CIT VS. RMG POLYVINYL (I) LTD., 396 ITR 5 (DEL) ; II) PR. CIT VS. MEENAKSHI OVERSEAS (P) LTD., 395 ITR 67 7 (DEL); III) PR. CIT VS. G AND G PHARMA INDIA LTD., 384 ITR (201 6) (DELHI) 147; AND IV) SARTHAK SECURITIES CO. (P) LTD., 329 ITR 110 (DEL). 6. THE LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITT ED THAT THE ASSESSEE FILED OBJECTIONS AGAINST THE REOPENING VIDE LETTER DATED 16 TH AUGUST, 2017, COPY OF WHICH IS PLACED AT PAGE 6 TO 7 OF THE PAPER BOOK. REFERRING TO PAGE 8 TO 10, HE DREW THE ATTENTION OF THE BENCH TO THE DISPOSAL OF THE OBJEC TIONS BY THE ASSESSING OFFICER. HE SUBMITTED THAT VIDE PARA 2 OF THE OBJECTION LETTER DATED 16 TH AUGUST, 2017, IT WAS REQUESTED THAT TO FILE COMPLETE OBJECTIONS, THE MAT ERIALS RELIED UPON BY THE INVESTIGATION WING FOR SENDING THE REPORT TO THE AS SESSING OFFICER AND SUCH OTHER MATERIAL INCLUDING THE STATEMENT OF PERSONS RECORDE D AT THE BACK OF THE ASSESSEE SHOULD BE SUPPLIED. HOWEVER, THE ASSESSING OFFICER HAD NO T PROVIDED ANY OF THESE DOCUMENTS ON THE GROUND THAT THE RELEVANT MATERIAL IS INTERNA L DOCUMENTS OF THE DEPARTMENT AND CANNOT BE SHARED. HE ACCORDINGLY SUBMITTED THAT THE ASSESSING OFFICER BY NOT PROVIDING THE ABOVE DOCUMENTS HAS NOT DISPOSED OF THE OBJECTIONS FULLY AS PER THE LAW LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF GKN DRIVESHAFT. REFERRING TO THE FOLLOWING DECISIONS, HE SUBMITTED THAT INCOMPLE TE DISPOSAL OF OBJECTIONS MAKES THE ASSESSMENT INVALID. I) SABH INFRASTRUCTURE LTD. VS. ACIT, 398 ITR 198; II) PR. CIT VS. TUPPERWARE INDIA (P) LTD., 127 DTR 161 (DEL); ITA NO.1063/DEL/2019 6 III) SCAN HOLDING (P) LTD. VS. ACIT, 402 ITR 290 (DEL); & IV) GOA STATE COPR. BANK LTD. VS. ACIT 7 ORS., (2017) 2 95 CTR (BOM) 369. 7. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE APPROVAL U/S 151 IS IN A MECHANICAL MANNER AND WITHOUT APPLICATION OF MIND. THEREFORE, IT IS FATALLY DEFECTIVE. HE SUBMITTED THAT THE PCIT WHILE GIVING APPROVAL HA S SIMPLY MENTIONED: I AM SATISFIED THAT IT IS A FIT CASE FOR ISSUE OF NOTICE U/S 148 OF THE IT ACT. REFERRING TO THE DECISIONS OF THE HON'BLE DELHI HIGH COURT IN THE CA SE OF PCIT VS. NC CABLES LTD., 391 ITR 11 (DEL) AND UNITED ELECTRICAL COMPANY PVT. LTD . VS. CIT & ORS, 258 ITR 317 AND THE DECISION OF THE HON'BLE M.P. HIGH COURT IN THE CASE OF CIT VS. S. GOYANKA LIME & CHEMICAL LTD. (2015) 56 TAXMANN.COM 390, HE SUBMITTED THAT THE COURTS HAVE UNEQUIVOCALLY HELD THAT WHERE THE SATISFACTION HAS BEEN GIVEN IN A MECHANICAL MANNER AND WITHOUT APPLICATION OF MIND FOR ISSUING NOTICE U/S 148, SUCH REOPENING OF ASSESSMENT IS INVALID. HE SUBMITTED THAT THE HON'B LE SUPREME COURT HAS DISMISSED THE SLP FILED BY THE REVENUE AGAINST THE DECISION OF TH E HON'BLE MP HIGH COURT IN THE CASE OF GOYANKA LIME & CHEMICAL LTD. (SUPRA). 8. SO FAR AS THE MERIT OF THE CASE IS CONCERNED, HE SUBMITTED THAT TO SUBSTANTIATE THE IDENTITY AND CREDIT WORTHINESS OF THE SHARE APPLICA NT AND THE GENUINENESS OF THE TRANSACTION, THE ASSESSEE HAS FILED THE AUDITED FIN ANCIAL STATEMENT, INCOME-TAX RETURN, COPY OF BANK STATEMENT, COPY AND CONFIRMATION OF UT SAV SECURITIES PVT. LTD. THE ASSESSEE ALSO FILED FORM NO.2 FILED WITH ROC DATED 29 TH JUNE, 2010, A COPY OF FORM NO.2 FILED BEFORE ROC INTIMATING THE ISSUE OF 20000 SHARES TO UTSAV SECURITIES PVT. ITA NO.1063/DEL/2019 7 LTD. AT A PREMIUM OF RS.90/- PER SHARE. HE SUBMITT ED THAT THE BALANCE SHEET OF UTSAV SECURITIES PVT. LTD. SHOWS ITS SHARE CAPITAL AT RS. 1.26 CRORES AND THE RESERVES AND SURPLUS AT RS.8.66 CRORE. HE SUBMITTED THAT UTSAV SECURITIES PVT. LTD. HAS AN INVESTMENT OF RS.8.92 CRORE AND CURRENT ASSETS, LOA NS AND ADVANCES OF RS.1.14 CRORE. HE SUBMITTED THAT THE SMALLNESS OF THE INCOME CANNO T BE A REASON FOR NOT ACCEPTING THE CREDIT WORTHINESS OF THE SAID COMPANY. RELYING ON VARIOUS DECISIONS, HE SUBMITTED THAT WHEN THE ASSESSEE HAS DISCHARGED ITS ONUS BY P ROVING THE IDENTITY AND CREDIT WORTHINESS OF THE INVESTOR AND THE GENUINENESS OF T HE TRANSACTION, NO ADDITION U/S 68 CAN BE MADE. THE LD. COUNSEL FURTHER SUBMITTED THA T THE ASSESSEE WAS NEVER PROVIDED WITH THE PHOTO COPY OF PAGE NO.2 OF DIARY OF SHRI S .K. JAIN AND SHRI V.K. JAIN CLAIMED TO HAVE BEEN SEIZED ON SEARCH AT THE RESIDENCE OF S HRI JAIN. DESPITE SPECIFICALLY ASKING THE ASSESSING OFFICER TO PROVIDE THE DOCUMENTS RELI ED BY THE DEPARTMENT FOR MAKING THE ADDITION AND ASKING TO GIVE OPPORTUNITY TO CROS S EXAMINE, THE SAME WERE NEVER PROVIDED. RELYING ON VARIOUS DECISIONS, HE SUBMITT ED THAT SINCE THE ADDITION IS BASED PURELY ON PRESUMPTIONS AND SURMISES AND THE RELEVAN T MATERIALS WERE NOT PROVIDED TO THE ASSESSEE, THEREFORE, THE ADDITION SO MADE IS NO T SUSTAINABLE. SO FAR AS THE ADDITION OF RS.36,000/- BEING THE COMMISSION FOR GETTING THE ACCOMMODATION ENTRY IS CONCERNED, HE SUBMITTED THAT IT IS AN ESTIMATED ADD ITION AND THERE IS NO BASIS OR MATERIAL OR INFORMATION BASED ON WHICH SUCH ADDITIO N COULD HAVE BEEN MADE. HE ACCORDINGLY SUBMITTED THAT THE ADDITION MADE BY THE ASSESSING OFFICER AND UPHELD BY THE CIT(A) SHOULD BE DELETED. ITA NO.1063/DEL/2019 8 9. THE LD. DR, ON THE OTHER HAND, SUBMITTED THAT TH E ASSESSING OFFICER, IN THE INSTANT CASE, HAS DULY APPLIED HIS MIND AND HAS MAD E A THOROUGH ANALYSIS OF THE DOCUMENTS AND AFTER ANALYZING THE DOCUMENTS HAS REC ORDED HIS SATISFACTION AND REOPENED THE ASSESSMENT. THE LD. ADDL. CIT HAD PER USED THE NOTE AND HAD RECORDED HIS SATISFACTION THAT INCOME PERTAINING TO ASSESSMENT Y EAR 2010-11 HAS ESCAPED ASSESSMENT AND, HENCE, THE CASE IS REQUIRED TO BE REOPENED U/S 147. THE PR. CIT HAD GIVEN HIS SATISFACTION U/S 151 SEPARATELY AS MENTIONED AT PAG E 5 OF THE PAPER BOOK FILED BY THE LD. COUNSEL FOR THE ASSESSEE. THE ASSESSING OFFICER, I N THE INSTANT CASE, HAS DISPOSED OF THE OBJECTIONS BY PASSING A SPEAKING ORDER, THEREFO RE, IT IS WRONG TO SAY THAT THE ASSESSMENT WAS REOPENED IN A MECHANICAL MANNER AND THE APPROVING AUTHORITIES HAVE GIVEN THE APPROVAL IN A MECHANICAL MANNER WITHOUT D UE APPLICATION OF MIND. HE SUBMITTED THAT THE REASSESSMENT PROCEEDINGS WERE NO T INITIATED IN A MECHANICAL MANNER OR ON BORROWED SATISFACTION AND WITHOUT APPLICATION OF MIND SINCE THE PERUSAL OF THE REASONS RECORDED CLEARLY SHOW THAT THERE IS A THORO UGH APPLICATION OF MIND BY THE ASSESSING OFFICER AND THE APPROVING AUTHORITIES HAV E ALSO GIVEN VALID REASONS FOR REOPENING OF THE CASE. SO FAR AS THE MERIT OF THE CASE IS CONCERNED, THE LD. DR SUBMITTED THAT S.K. JAIN GROUP OF CASES ARE KNOWN T O BE ACCOMMODATION ENTRY PROVIDERS AND THE ASSESSEE, IN THE INSTANT CASE, HA S OBTAINED THE ACCOMMODATION ENTRY OF RS.20 LACS AND HAS FAILED TO DISCHARGE THE ONUS CAST ON IT BY PROVING THE IDENTITY AND CAPACITY OF THE LOAN CREDITOR AND THE GENUINENESS O F THE LOAN TRANSACTION. THEREFORE, THE LD.CIT(A) WAS FULLY JUSTIFIED IN SUSTAINING THE ADDITION OF RS.20 LACS MADE BY THE ASSESSING OFFICER AND ALSO THE ADDITION OF RS.36,00 0/- ADDED BY THE ASSESSING OFFICER ITA NO.1063/DEL/2019 9 BEING COMMISSION FOR THE ACCOMMODATION ENTRIES. HE ACCORDINGLY SUBMITTED THAT BOTH FACTUALLY AND LEGALLY THE LD.CIT(A) HAS PASSED A RE ASONED ORDER AND, THEREFORE, THE SAME SHOULD BE UPHELD AND THE GROUNDS RAISED BY THE ASSESSEE SHOULD BE DISMISSED. 10. I HAVE CONSIDERED THE ARGUMENTS OF BOTH THE SID ES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. I HAVE ALSO CONSIDERED VARIOUS DECISIONS CITED BEFORE US. AT THE OUTSET, I DEEM IT PROPER TO ADJUDICATE THE LEGAL GROUND RAISED BY THE ASSESS EE CHALLENGING THE VALIDITY OF THE REASSESSMENT PROCEEDINGS IN ABSENCE OF PROPER APPRO VAL GIVEN U/S 151 OF THE IT ACT. A PERUSAL OF THE COPY OF APPROVAL GIVEN U/S 151, CO PY OF WHICH IS PLACED AT PAGE 13 OF THE PAPER BOOK, SHOWS THAT THE ADDL. CIT, WHILE GIV ING APPROVAL HAS SIMPLY MENTIONED: YES. I AM SATISFIED THAT IT IS A FIT CA SE FOR REOPENING OF ASSESSMENT U/S 148. SIMILARLY, THE PCIT, WHILE GIVING APPROVAL HA S ALSO SIMPLY MENTIONED: I AM SATISFIED THAT IT IS A FIT CASE FOR ISSUE OF NOTICE U/S 148 OF THE IT ACT. FROM THE ABOVE, IT IS CLEAR THAT NONE OF THE SUPERVISORY AUTHORITIE S HAVE APPLIED THEIR MIND. I FIND, THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. N.C. CABLES LTD., 391 ITR 11(DEL) , HAS OBSERVED AS UNDER:- ' REASSESSMENT-ISSUANCE OF NOTICE-SANCTION FOR ISSU E OF NOTICE-ASSESSEE HAD IN ITS RETURN FOR A Y 2001-02 CLAIMED THAT SUM OF RS. 1 CRORE WAS RECEIVED TOWARDS SHARE APPLICATION AMOUNTS AND A FURTHER SUM OF THIR TY FIVE LAKHS WAS CREDITED TO IT AS AN ADVANCE TOWARDS LOAN-ORIGINAL ASSESSMENT W AS COMPLETED U/S 143(3)- HOWEVER, PURSUANT TO REASSESSMENT NOTICE, WHICH WAS DROPPED DUE TO TECHNICAL REASONS, AND LATER NOTICE WAS ISSUED AND ASSESSMENT S WERE TAKEN UP AFRESH-AFTER CONSIDERING SUBMISSIONS OF ASSESSEE AND DOCUMENTS P RODUCED IN REASSESSMENT PROCEEDINGS, AO ADDED BACK A SUM OF RS.1,35,00,000- CIT(A) HELD AGAINST ASSESSEE ON LEGALITY OF REASSESSMENT NOTICE BUT ALL OWED ASSESSEE'S APPEAL ON MERITS HOLDING THAT AO DID NOT CONDUCT APPROPRIATE ENQUIRY TO CONCLUDE THAT SHARE INCLUSION AND ADVANCES RECEIVED WERE FROM BOG US ENTITIES-TRIBUNAL ALLOWED ITA NO.1063/DEL/2019 10 ASSESSEE'S APPEAL ON MERITS-REVENUE APPEALED AGAINS T APPELLATE ORDER ON MERITS- ASSESSEE'S CROSS APPEAL WAS ON CORRECTNESS OF REOPE NING OF ASSESSMENT- TRIBUNAL UPHELD ASSESSEE'S CROSS-OBJECTIONS AND DISMISSED RE VENUE'S APPEAL HOLDING THAT THERE WAS NO PROPER APPLICATION OF MIND BY CONCERNE D SANCTIONING AUTHORITY U/S SECTION 151 AS A PRE- CONDITION FOR ISSUING NOTICE U/S 147/148 -HELD, SECTION 151 STIPULATES THAT CIT (A), WHO WAS COMPETENT AUTHORI TY TO AUTHORIZE REASSESSMENT NOTICE, HAD TO APPLY HIS MIND AND FORM OPINION- MERE APPENDING OF EXPRESSION 'APPROVED' SAYS NOTHING-IT WAS NOT AS IF CIT (A) HAD TO RECORD ELABORATE REASONS FOR AGREEING WITH NOTING PUT UP-A T SAME TIME, SATISFACTION HAD TO BE RECORDED OF GIVEN CASE WHICH COULD BE REFLECT ED IN BRIEFEST POSSIBLE MANNER- IN PRESENT CASE, EXERCISE APPEARS TO HAVE B EEN RITUALISTIC AND FORMAL RATHER THAN MEANINGFUL, WHICH WAS RATIONALE FOR SAF EGUARD OF APPROVAL BY HIGHER RANKING OFFICER-REVENUE'S APPEAL DISMISSED.' 11. SIMILAR VIEW HAS BEEN TAKEN BY THE COORDINATE B ENCHES OF THE TRIBUNAL IN A NUMBER OF CASES WHERE IT HAS BEEN HELD THAT MERELY GIVING APPROVAL BY MENTIONING, YES. I AM SATISFIED THAT IT IS A FIT CASE FOR REOP ENING OF ASSESSMENT IS NOT A VALID APPROVAL. ACCORDINGLY THE REASSESSMENT PROCEEDINGS HAVE BEEN QUASHED. SINCE, IN THE INSTANT CASE, BOTH THE SUPERIOR AUTHORITIES HAVE ME RELY GIVEN THEIR APPROVAL IN A MECHANICAL MANNER WITHOUT INDEPENDENT APPLICATION O F MIND, THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE JURISDICTIONAL HIGH C OURT IN THE CASE OF N.C. CABLES (SUPRA), I HOLD THAT THE REASSESSMENT PROCEEDINGS A RE BAD IN LAW. ACCORDINGLY, THE SAME IS QUASHED. SINCE THE REASSESSMENT PROCEEDING S HAVE BEEN QUASHED, THE SUBSEQUENT ORDER PASSED BY THE ASSESSING OFFICER BE COMES BAD IN LAW AND ACCORDINGLY THE SAME IS QUASHED. SINCE THE ASSESSEE SUCCEEDS O N THE LEGAL GROUNDS, THE GROUNDS RAISED BY THE ASSESSEE BECOME ACADEMIC AND, THEREFO RE, ARE NOT BEING ADJUDICATED. ITA NO.1063/DEL/2019 11 12. IN THE RESULT, THE APPEAL FILED BY THE AS SESSEE IS ALLOWED. THE DECISION WAS PRONOUNCED IN THE OPEN COURT ON 1 7.10.2019. SD/- ( R.K. PANDA) ACCOUNTANT MEMBER DATED: 17 TH OCTOBER, 2019 DK COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASSTT. REGISTRAR, ITAT, NEW DELHI