ARUN KUMAR MEGHANI, KATIHAR V. ITO, WARD-KATIHAR, KATIHAR

ITA 107/PAT/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0626 (ITAT-PATNA)
• Duration Of Justice: 1 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 10-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUPRIYA BISWAS
• Assessee Lawyers: K N PRASAD
• Keywords: Business income; Audit objection; Question of law; Reason to believe; Reassessment proceedings
• Section: 40A(3); 143(3); 234B; 150(1); 64; 147; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , SMC BENCH, PATNA BEFORE SHRI CHANDRA MOHAN GARG, J UDICIAL MEMBER ./ ITA NO. 107 / PAT /201 8 ( / ASSESSMENT YEAR : 20 09 - 20 1 0 ) ARUN KUMAR MEGHANI, PROP: M/ S MEGHANI TELECOM, BINODPUR, KATIHAR - 854105 VS. ITO, WARD - KATIHAR ./ PAN NO. : A BJPM 3418 Q ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI K.N.PRASAD, ADVOCATE /REVENUE BY : SHR I SUPRIYA BISWAS, JCIT - DR / DATE OF HEARING : 16 /0 9 /2019 / DATE OF PRONOUNCEMENT : 17 /0 9 /2019 / O R D E R THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER PASSED BY LEARNED CIT(A), BHAGALPUR , DATED 30.03.201 5 FOR THE ASSESSMENT YEAR 20 09 - 20 1 0 ON THE FOLLOWING GROUNDS OF APPEAL : - 1. FOR THAT THE GROUNDS OF APPEAL HERETO ARE WITHOUT PREJUDICE TO EACH OTHER. 2. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED IN OBSERVING / CON FIRMING THAT INITIATION OF PROCEEDING U/S 147 AND ISSUE OF NOTICE U/S 148 MUCH LESS ON THE BASIS OF AUDIT OBJECTION DID NOT VITIATE THE RE ASSESSMENT PROCEEDING. IT IS SUBMITTED THAT NO PROCEEDING U/S 147 COULD BE INITIATED ON THE BASIS OF AUDIT OBJECTION. IT IS FURTHER SUBMITTED THAT THERE WAS NO FRESH MATERIAL AVAILABLE TO THE DEPARTMENT AND THE MATERIAL WHICH WAS ALREADY ON THE RECORD HAS BEEN TAKEN FOR THE PURPOSE OF INITIATION OF PROCEEDING U/S 147 THE CASE LAW AS MENTIONED BY THE LEARNED CIT(A) IS NOT APPLICABLE. IT IS PERTINENT TO MENTION HERE THAT NO PROCEEDING U/S 147 COULD BE INITIATED FOR DISALLOWING ANY EXPENDITURE MUCH LESS BY RESORTING THE PROVISIONS OF SECTION 40A(3) OF THE I. T. ACT, 1961. IT IS SUBMITTED THAT INITIATION OF PROCEEDING U/S 147 AND ISSUE OF NOTICE U/S 148 IS ARBITRARY, UNJUSTIFIED, VOID AB - INITIO AND VITIATED IN LAW. THE ASSESSMENT AS SUBMITTED U/S 143(3) / 147 IS FIT TO BE ANNULLED / CANCELLED. ITA NO . 107 / PAT /201 8 2 W ITHOUT P REJUDICE : - 3. FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEA RNED CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCES OF RS. 16,75,358/ - MADE BY THE ASSESSING OFFICER FOR IMPUGNED VIOLATION OF SECTION 40A(3) OF THE I. T. ACT, 1961. FURTHER, THE LEARNED CIT(A) IS NOT JUSTIFIED IN HOLDING THAT A SEPARATE DISALLOWANCE U/S 40A(3) COULD HAVE BEEN MADE EVEN IF THERE WAS APPLICATION OF GROSS PROFIT RATE. ACCORDING TO LEARNED CIT(A) ENHANCEMENT OF G.P. BY APPLYING A GROSS PROFIT RATE SHOULD NOT BE COMPARED WITH A CASE WHERE THERE IS TOTAL AND COMPLETE REJECTION OF BOOKS OF ACCO UNT AND ESTIMATION OF BUSINESS PROFIT. IT IS SUBMITTED THAT ONCE THE GROSS PROFIT RATE IS APPLIED, IT TANTAMOUNT THAT THE BOOKS OF ACCOUNT HAS BEEN REJECTED. IT IS SUBMITTED THAT IN THIS CASE, THE DEPARTMENT HAS WRONGLY RESORTED THE PROVISIONS OF SECTION 4 0A(3) OF THE I. T. ACT, 1961 TO MAKE AN ADDITION OF RS. 16,75,358/ - . IT IS PERTINENT TO MENTION HERE THAT WHEN INCOME OF THE ASSESSEE WAS COMPUTED BY APPLYING THE GROSS PROFIT RATE, THERE WAS NO NEED TO LOOK INTO THE PROVISIONS OF SECTION 40A(3) / RULE 6DD (J). IT IS SUBMITTED THAT THE DISALLOWANCES OF RS. 16,75,358/ - AS MADE BY THE LOWER AUTHORITIES, IS ARBITRARY, UNJUSTIFIED, VOID AB - INITIO AND BAD IN LAW. IN ANY CASE, THE DISALLOWANCES AS MADE IS FIT TO BE DELETED. 4. FOR THAT THE CHARGE OF INTEREST U/S 234B AT RS. 4,38,148/ - AND 234C AT RS. 1,221/ - IS ARBITRARY AND UNJUST. THE CASE OF CIT VS ANJUM GHASWALA REPORTED IN 252 ITR 1 (SC) IS NOT APPLICABLE IN THE CASE OF THE ASSESSEE. 5. FOR THAT THE APPELLANT RESERVES HIS RIGHT TO FILE DETAILED SUBMISSION AT THE TIME OF HEARING. 6. FOR THAT THE APPELLANT CRAVES LEAVE TO URGE, ADD OR ALTER ANY OTHER GROUND OR GROUNDS AT THE TIME OF HEARING. 2. FROM THE GROUNDS OF APPEAL RAISED ABOVE BY THE ASSESSEE, IT IS CLEAR THAT THE SOLE ISSUE AGITATED BY THE ASSESSEE IS TO QUASH THE IMPUGNED ORDER PASSED BY THE CIT(A) WHEREBY CONFIRMING THE REASSESSMENT PROCEEDINGS INITIATED BY THE ASSESSING OFFICER. 3. BRIEF FACTS OF THE CASE ARE THAT T HE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF TRADING IN MOBILE PHONE INSTRU MENTS, TELEPHONE INSTRUMENTS ETC. ASSESSMENT U/S. 143(3) OF THE ACT WAS ITA NO . 107 / PAT /201 8 3 COMPLETED IN THIS CASE ON 28.11.2010 ON AN INCOME OF RS.448440/ - . THE AO OBSERVED DURING THE ASSESSMENT PROCEEDINGS THAT THE SALES DISCLOSED BY THE ASSESSEE WERE NOT SUPPORTED BY PROPE R BILLS. THE ASSESSEE COULD NOT PRODUCE ALL THE CASH MEMOS / SALE INVOICES FOR CROSS VERIFICATION WITH THE LEDGER. THE AO DID NOT RULE OUT THE POSSIBILITY OF ADJUSTMENT OF RATE AS PER THE WILL OF THE ASSESSEE AND OBSERVED THAT THE GP DISCLOSED WAS AT 7.49% , WHICH WAS REPLACED WITH 7.85% OF THE TOTAL SALES TO MAKE GOOD FOR THE POSSIBLE UNDERSTATEMENT OF SALES, RESULTING INTO AN ADDITION OF RS.45 , 705/ - TO THE TOTAL INCOME. SUBSEQUENTLY, THE INTERNAL AUDIT TEAM POINTED OUT THAT THE ASSESSEE HAD MADE CASH PAYME NTS EXCEEDING RS.20 , 000/ - IN CASH ON SEVERAL DATES, WHICH WAS IN THE VIOLATION OF THE PROVISIONS OF SECTION 40A(3) OF THE ACT. ACCORDINGLY, THE CASE WAS REOPENED AND A NOTICE U/S.148 OF THE ACT WAS ISSUED TO THE ASSESSEE. IN THE REASSESSMENT PROCEEDINGS, T HE AO COMPILED THE AMOUNTS FOR ALL THE INSTANCES OF VIOLATION TO THE SAID PROVISION, WHICH WAS AT RS.16 , 75 , 358/ - . SINCE SUCH EXPENDITURE WAS IN VIOLATION OF THE PROVISIONS OF SECTION 40A(3) OF THE ACT, THEREFORE, THE ASSESSING OFFICER COMPLETED REASSESSMEN T PROCEEDING ADDING THE SAID AMOUNT TO THE TOTAL INCOME OF THE ASSESSEE AND PASSED ORDER U/S. 143(3) R.W.S. 147 OF THE ACT, DATED 30.03.2015. 4. AGGRIEVED THEREBY, THE ASSESSEE APPROACHED BEFORE THE CIT(A), HOWEVER, THE CIT(A) DISMISSED THE APPEAL OF THE A SSESSEE. 5. NOW, THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. ITA NO . 107 / PAT /201 8 4 6. LD. AR FILED A PAPER BOOK CONTAINING WRITTEN SUBMISSION, COPY OF ORDERSHEET ENTRY, COPY OF ASSESSMENT ORDER DATED 28.11.2011 PASSED U/S.143(3) OF THE ACT FOR A.Y.2009 - 2010 AND COPY OF JUDGMENTS OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. BANWARI LAL BANSHIDHAR, 229 ITR 229 . LD.AR BEFORE US PLACED COPY OF REASONS RECORDED BY THE ASSESSING OFFICER WHICH HAS BEEN GRANTED APPROVAL FOR ISSUANCE OF NOTICE U/S.148 AND SUBMITTED T HAT NEITHER ANY PROPER REASONS WERE RECORDED NOR ANY NEXUS BETWEEN THE MATERIALS RELIED UPON AND THE BELIEF FORMED FOR ESCAPEMENT OF INCOME . IT WAS ALSO THE CONTENTION OF LD.AR THAT THE REASONS HAVE BEEN RECORDED WITHOUT APPLICATION AND MIND AND EVEN NO PR OPER SATISFACTION WAS RECORDED BEFORE ISSUE OF NOTICE U/S. 148 OF THE ACT. LD. AR FURTHER SUBMITTED THAT THE APPROVAL HAS BEEN GRANTED FOR REOPENING OF THE ASSESSMENT IN A MECHANICAL MANNER AND WITHOUT DUE APPLICATION OF MIND BY WRITING THE WORD 'YES THAT IT IS A FIT CASE FOR ISSUANCE OF NOTICE U/S.148 OF THE ACT FOR REOPENING OF THE CASE. THEREFORE, HE REQUESTED THAT THE REASSESSMENT PROCEEDINGS INITIATED BY THE AO MAY BE QUASHED . IT WAS ALSO AVERRED BY LD.AR THAT NO PROCEEDING U/S 147 OF THE ACT COULD B E INITIATED ON THE AUDIT OBJECTION. IT IS A SETTLED POSITION IN LAW THAT AN OPINION OF AN INTERNAL AUDIT PARTY OF THE INCOME - TAX DEPARTMENT ON A POINT OF LAW CANNOT BE REGARDED AS INFORMATION WITHIN THE MEANING OF SECTION 147 OF THE ACT AND THE SAME CANN OT LEAD TO PROPER AND VALID INITIATION OF REASSESSMENT PROCEEDINGS UNDER SECTION 147 OF THE ACT. IN THIS REGARD, LD. AR SUBMITTED THAT THE CASE LAWS RELIED UPON BY THE LEARNED CIT(A) ARE NOT APPLICABLE IN THE CASE OF THE ASSESSEE CONSIDERING ITA NO . 107 / PAT /201 8 5 THE FACTS AND CIRCUMSTANCES OF THE ASSESSEES CASE. IT WAS FURTHER CONTENDED BY LD.AR THAT IN THE ORIGINAL ASSESSMENT THE ASSESSING OFFICER APPLIED THE GROSS PROFIT RATE OF 7.85% AND MADE THE ADDITION OF RS. 45,705/ - REPRESENTING THE ADDITIONAL PROFIT. PURCHASES ARE EXP ENDITURE AND PURCHASES ARE PART AND PARCEL OF THE TRADING ACCOUNT. WHEN THE INCOME WAS COMPUTED BY APPLYING THE GROSS PROFIT RATE AND WHEN NO DEDUCTION WAS ALLOWED WITH REGARD TO THE PURCHASES MADE BY THE ASSESSEE THERE IS NO QUESTION OF ANY ADDITION BY IN VOKING PROVISION OF SECTION 40A(3). NO NEW INFORMATION WAS AVAILABLE TO THE ASSESSING OFFICER FOR REOPENING THE CASE U/S 147 OF THE ACT. IN VIEW OF THE FACTS OF THE APPELLANT CASE AS STATED ABOVE, INITIATION OF PROCEEDING U/S 147 ON THE BASIS OF AUDIT OBJE CTION IS NOT CALLED FOR. LD.AR FURTHER SUBMITTED THAT IN THE REASONS RECORDED FOR REOPENING THE ASSESSMENT, THE ASSESSING OFFICER NOWHERE STATED THAT QUANTUM OF INCOME OF THE ASSESSEE ESCAPED ASSESSMENT AND THE REOPENING HAD BEEN MADE ONLY ON THE BASIS OF OBJECTION OF THE AUDIT PARTY AND THE AO HAD NOT APPLIED HIS OWN MIND, THEREFORE REOPENING BY ISSUING NOTICE U/S. 148 OF THE ACT WAS NOT VALID. I N VIEW OF THE ABOVE, LD.AR SUBMITTED THAT INITIATION OF PROCEEDING U/S 147 AND ISSUE OF NOTICE U/S 148 IS ARBITR ARY, UNJUSTIFIED, VOID AB - INITIO AND VITIATED IN LAW , HENCE, ASSESSMENT AS COMPLETED U/S 143(3) / 147 IS FIT TO BE ANNULLED / CANCELLED . TO SUPPORT HIS CONTENTIONS, LD. AR PLACED RELIANCE ON THE FOLLOWING CASE LAWS: - I. ADANI EXPORTS V. DCIT (ASSESMENTS) [ 1999] 240 ITR 224 (GUJ) II. I.M.C.LTD. & ANR. V. JCIT [2003] 261 ITR 731 (CAL) III. NARANG OVERSEAS P. LTD. V. ACIT [2008] 300 ITR (AT) 1 (MUMBAI) (SB) ITA NO . 107 / PAT /201 8 6 IV. AMRIT FEEDS LTD. V. ACIT [2011] 196 TAXMANN 244 (CAL) V. CIT,DELHI V. KELVINATOR OF INDIA LTD. [2010 ] 187 TAXMAN 312 (SC) VI. CIT, DELHI V. INDIAN SUGAR & GENERAL INDUSTRY EXPORT IMPORT CORPN. LTD. [2008] 170 TAXMAN 229 (DELHI) VII. CIT V. KELVINATOR OF INDIA LTD. [2002] 123 TAXMAN 433 (DELHI)( F B) VIII . CIT V. MODIPON LTD., DELHI HIGH COURT JUDGMENT DA TED 21.3.2011 IN ITANO.533 OF 2011. IT WAS ALSO THE ARGUMENT OF LD.AR THAT THE INTEREST CHARGED U/S.234B & 234C OF THE ACT MAY KINDLY BE DELETED. 7. PER CONTRA , LD.DR RELIED ON THE ORDER OF AUTHORITIES BELOW AND STATED THAT APPROVAL GRANTED FOR REOPENING THE CASE IS NOT MECHANICAL ON THE CONTRARY THE AUTHORITY HAS FULLY CONSIDERED THE FACTS OF THE CASE AND AFTER DUE CONSIDERATION OF THE FACTS HAS GIVEN A DIRECTION FOR REOPENING OF THE CASE BY WRITING THE WORD 'YES, I AM SATISFIED THAT IT IS A FIT CASE FOR ISSUANCE OF NOTICE U/S.148 OF THE ACT TO REOPEN THE CASE OF THE ASSESSEE U/S. 147 OF THE ACT . THEREFORE, HE STATED THAT, IT CANNOT BE SAID THAT THE SANCTION WAS GRANTED MECHANICALLY OR WITHOUT APPLICATION OF MIND. MOREOVER, ON THE MERITS OF THE CASE , LD. DR SUB MITTED THAT TH E AO OBSERVED THAT AT LEAST ON 3 OCCASIONS, THE ASSESSEE MADE PAYMENTS TO HIS SUPPLIERS THROUGH DEMAND DRAFTS OBTAINED FROM THE BANKS , T HEREFORE, IT IS NOT THE CASE THAT THE BANKING FACILITIES WERE NOT AVAILABLE FOR MAKING PAYMENTS TO THE SUP PLIERS. IF THE ASSESSEE COULD OBTAIN DRAFTS ON SOME OCCASIONS, HE COULD HAVE VERY WELL MADE PAYMENT THROUGH DRAFTS ON OTHER OCCASIONS TOO. FURTHER, IT WAS OBSERVED THAT THE ASSESSEES CASE DID NOT FALL IN ANY OF THE EXCEPTIONS MENTIONED IN THE RULES PERTAI NING TO THE EXCEPTIONS FOR THE OPERATION OF SECTION 40A(3) OF THE ACT . THEREFORE, IT IS BEYOND DOUBT THAT THE PROVISIONS OF SECTION 40A(3) OF THE ACT HAVE BEEN ITA NO . 107 / PAT /201 8 7 VIOLATED AND THAT THE ASSESSEE WAS WELL AWARE OF IT. FURTHER LD. DR ARGUED THAT F ROM A PERUSAL O F THE ORIGINAL ASSESSMENT ORDER, IT IS SEEN THAT THE AO DID NOT DISPUTE THE ENTIRE TRADING ACCOUNT OF THE ASSESSEE , N OR DID HE REJECT THE BOOKS OF ACCOUNTS AND THEN PROCEEDED TO ESTIMATE THE PROFITS OF THE BUSINESS . HE MERELY OBSERVED THAT THE ASSESSEE COU LD NOT PRODUCE ALL THE CASH MEMOS/SALE INVOICES AND EXPRESSED HIS APPREHENSION THAT THE ADJUSTMENT OF THE RATE FOR EACH TRANSACTION AS PER THE WILL OF THE ASSESSEE COULD NOT BE RULED OUT. IN OTHER WORDS, THE DOUBTS OF THE AO WERE LIMITED TO THE SALE PROCEE DS DISCLOSED BY THE ASSESSEE. TO MAKE GOOD, THE POSSIBILITY OF ANY UNDERSTATEMENT OF SALE PROCEEDS, HE RESORTED TO THE AD - HOC ADDITION, BY REPLACING THE GP DISCLOSED OF 7.49% WITH THAT OF 7.85%. EVIDENTLY, THE PURCHASES OF THE ASSESSEE HAVE NOT BEEN VERIFI ED NOR WERE DOUBTED BY THE AO. THEREFORE, THE ASSESSEES OBJECTION THAT NO DEDUCTION WAS ALLOWED FOR THE PURCHASES MADE BY HIM, IS AN INCORRECT STATEMENT. THE AO ALLOWED THE PURCHASE EXPENSES AS CLAIMED. EVEN THE OTHER EXPENSES FORMING PART OF THE TRADING ACCOUNT WERE ALLOWED AS CLAIMED. THE PLEA THAT NO SEPARATE DISALLOWANCE U /S. 40A(3) COULD HAVE BEEN MADE ONCE THE INCOME OF THE ASSESSEE WAS COMPUTED BY APPLYING THE GROSS PROFIT IS NOT TENABLE, SINCE IT I S NOT A CASE OF REJECTION OF THE BOOKS AND ESTIMATI ON OF PROFITS. FINALLY, THE LD.DR SUBMITTED THAT THE APPEAL OF THE ASSESSEE DESERVES TO BE DISMISSED. 8. I HEARD RIVAL SUBMISSIONS OF BOTH THE PARTIES, PERUSED THE ENTIRE MATERIAL AVAILABLE ON THE RECORD OF THE TRIBUNAL AND ORDER OF BOTH THE AUTHORITIES BE LOW ALONG WITH THE CASE LAWS AND PAPER BOOK FILED BY THE ITA NO . 107 / PAT /201 8 8 ASSESSEE. NOW, THE LEGAL ISSUE RAISED BY THE ASSESSEE TO BE DECIDED IS AS TO WHETHER REASSESSMENT PROCEEDINGS INITIATED BY THE ASSESSING OFFICER BY ISSUING NOTICE U/S.148 OF THE ACT VIS - - VIS PROVISI ONS OF SECTION 150(1) OF THE ACT ON THE BASIS OF AUDIT OBJECTION AFTER GETTING APPROVAL IS VALID OR NOT. 9. INITIALLY, THE ORIGINAL ASSESSMENT U/S. 143(3) OF THE ACT WAS COMPLETED IN THIS CASE ON 28.11.2010. SUBSEQUENTLY, ON THE OBJECTION OF THE INTERNAL AUDIT TEAM THE CASE WAS REOPENED AND A NOTICE U/S.148 OF THE ACT WAS ISSUED TO THE ASSESSEE. ACCORDINGLY, THE ASSESSING OFFICER COMPLETED REASSESSMENT PROCEEDING AFTER RECORDING REASONS TO BELIEVE HOLDING THAT THE ASSESSEE HAS VIOLATED THE PROVISIONS OF SE CTION 40A(3) OF THE ACT. IN THE APPELLATE PROCEEDINGS, THE ASSESSEE HAS OBJECTED TO THE REASSESSMENT PROCEEDINGS INITIATED BY THE ASSESSING OFFICER U/S.147 OF THE ACT AS AT THE TIME OF ISSUE OF NOTICE U/S.148 OF THE ACT, THERE WAS NO FRESH MATERIAL AVAILAB LE WITH THE ASSESSING OFFICER. THE ASSESSEE ALSO SUBMITTED BEFORE THE CIT(A) THAT NO PROCEEDINGS U/S.147 OF THE ACT CAN BE INITIATED FOR DISALLOWING THE EXPENDITURE CLAIMED BY THE ASSESSEE. HOWEVER, THE CIT(A) DISMISSED THE OBJECTION OF THE ASSESSEE. 10. I HAVE ALSO GONE THROUGH THE REASONS RECORDED BY THE ASSESSING OFFICER/ITO, WARD - KATIHAR FOR REOPENING AND THE APPROVAL THEREOF BY THE LD. JT. . CIT, RANGE - 1, BHAGALPUR AND FOUND THAT THE AO HAS NOT APPLIED HIS MIND SO AS TO COME TO AN INDEPENDENT CONCLUSIO N THAT HE HAS REASON TO BELIEVE THAT INCOME HAS ESCAPED DURING THE YEAR. I ALSO FOUND THAT T HE AO HAS MECHANICALLY ISSUED NOTICE U/S. 148 OF THE ACT, ON THE BASIS OF ITA NO . 107 / PAT /201 8 9 AUDIT OBJECTION . KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND TH E CASE LAW APPLICABLE IN THE CASE OF THE ASSESSEE, I AM OF THE CONSIDERED VIEW THAT THE REOPENING IN THE CASE OF THE ASSESSEE FOR THE A SSTT. YEAR IN DISPUTE IS BAD IN LAW AND DESERVES TO BE QUASHED. 11 . FOR COMPLETENESS OF THE ORDER, I WOULD LIKE TO REPRO DUCE THE PROVISIONS OF SECTION 151 OF THE ACT AS UNDER : - '151. SANCTION FOR ISSUE OF NOTICE. (1) NO NOTICE SHALL BE ISSUED UNDER SECTION 148 BY AN ASSESSING OFFICER, AFTER THE EXPIRY OF A PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS THE PRINCIPAL CHIEF COMMISSIONER OR CHIEF COMMISSIONER OR PRINCIPAL COMMISSIONER OR COMMISSIONER IS SATISFIED, ON THE REASONS RECORDED BY THE ASSESSING OFFICER, THAT IT IS A FIT CASE FOR THE ISSUE OF SUCH NOTICE. (2) IN A CASE OTHER THAN A CASE FALL ING UNDER SUB - SECTION (1), NO NOTICE SHALL BE ISSUED UNDER SECTION 148 BY AN ASSESSING OFFICER, WHO IS BELOW THE RANK OF JOINT COMMISSIONER, UNLESS THE JOINT COMMISSIONER IS SATISFIED, ON THE REASONS RECORDED BY SUCH ASSESSING OFFICER, THAT IT IS A FIT CAS E FOR THE ISSUE OF SUCH NOTICE. (3) FOR THE PURPOSES OF SUB - SECTION (1) AND SUB - SECTION (2), THE PRINCIPAL CHIEF COMMISSIONER OR THE CHIEF COMMISSIONER OR THE PRINCIPAL COMMISSIONER OR THE COMMISSIONER OR THE JOINT COMMISSIONER, AS THE CASE MAY BE, BEING S ATISFIED ON THE REASONS RECORDED BY THE ASSESSING OFFICER ABOUT FITNESS OF A CASE FOR THE ISSUE OF NOTICE UNDER SECTION 148, NEED NOT ISSUE SUCH NOTICE HIMSELF.'. 12 . FROM, THE ABOVE PROVISIONS, IT IS VIVIDLY CLEAR THAT T HE REVENUE CAN REOPEN THE EARLIER ASSES SMENTS U/S.147 & 148 OF THE ACT, H OWEVER, SECTION 151 OF THE ACT PROHIBITS THE REVENUE TO USE THE PROVISIONS OF SECTION 147 OF THE ACT UNLESS THERE IS A SATISFACTION OF THE SUPERIOR OFFICER THAT THE ASSESSING OFFICER HAS GOOD AND SUFFICIENT REASONS T O I NVOKE THE PROVISIONS OF SECTION 147 OF THE ACT . THE SUPERIOR AUTHORITY HAS TO EXAMINE THE REASONS, MATERIAL OR GROUNDS AND TO JUDGE WHETHER THEY ARE ITA NO . 107 / PAT /201 8 10 SUFFICIENT AND ADEQUATE TO THE FORMATION OF THE NECESSARY BELIEF ON THE PART OF THE ASSESSING OFFICER. I F, AFTER APPLYING HIS MIND AND ALSO RECORDING HIS REASONS, HOWSOEVER BRIEFLY, THE COMMISSIONER IS OF THE OPINION THAT THE AO'S BELIEF IS WELL REASONED AND BONAFIDE, HE IS TO ACCORD HIS SANCTION TO THE ISSUE OF NOTICE U/S. 148 OF THE ACT. IN THE INSTANT CAS E, I FIND FROM THE PERUSAL OF THE ORDER SHEET WHICH IS ON RECORD, THE JT. CIT HAS SIMPLY PUT ' YES ' AND SIGNED THE REPORT THEREBY GIVING SANCTION TO THE AO. NOWHERE THE JT. CIT HAS RECORDED A SATISFACTION NOTE NOT EVEN IN BRIEF. THEREFORE, IT CANNOT BE SAID THAT THE JT. CIT HAS ACCORDED SANCTION AFTER APPLYING HIS MIND AND AFTER RECORDING HIS SATISFACTION . 13 . FURTHER, RELIANCE CAN BE PLACED ON THE DECISION OF HON'BLE HIGH COURT OF MADHYA PRADESH IN THE CASE OF CIT VS. S. GOYANKA LIME & CHEMICAL LTD . REPORTED IN (2015) 56 T AXMANN.COM 390 (MADHYA PRADESH), WHEREIN THE HONBLE HIGH COURT HAS OBSERVED AS UNDER : - 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND WE FIND THAT WHILE ACCORDING SANCTION, THE JOINT COMMISSIONER, INCOME TAX HAS ONLY RECORDED SO 'YES, I AM SATISFIED'. IN THE CASE OF ARJUN SINGH ( SUPRA ), THE SAME QUESTION HAS BEEN CONSIDERED BY A COORDINATE BENCH OF THIS COURT AND THE FOLLOWING PRINCIPLES ARE LAID DOWN: 'THE COMMISSIONER ACTED, OF COU RSE, MECHANICALLY IN ORDER TO DISCHARGE HIS STATUTORY OBLIGATION PROPERLY IN THE MATTER OF RECORDING SANCTION AS HE MERELY WROTE ON THE FORMAT 'YES, I AM SATISFIED' WHICH INDICATES AS IF HE WAS TO SIGN ONLY ON THE DOTTED LINE. EVEN OTHERWISE ALSO, THE EXER CISE IS SHOWN TO HAVE BEEN PERFORMED IN LESS THAN 24 HOURS OF TIME WHICH ALSO GOES TO INDICATE THAT THE COMMISSIONER DID NOT APPLY HIS MIND AT ALL WHILE GRANTING SANCTION. THE SATISFACTION HAS TO BE WITH OBJECTIVITY ON OBJECTIVE MATERIAL.' 8. IF THE CASE I N HAND IS ANALYSED ON THE BASIS OF THE AFORESAID PRINCIPLE, THE MECHANICAL WAY OF RECORDING SATISFACTION BY THE JOINT COMMISSIONER, WHICH ACCORDS SANCTION FOR ISSUING NOTICE UNDER SECTION 148, IS CLEARLY UNSUSTAINABLE AND WE FIND THAT ON SUCH CONSIDERATION BOTH THE APPELLATE AUTHORITIES HAVE INTERFERED INTO THE ITA NO . 107 / PAT /201 8 11 MATTER. IN DOING SO, NO ERROR HAS BEEN COMMITTED WARRANTING RECONSIDERATION. 9. AS FAR AS EXPLANATION TO SECTION 151, BROUGHT INTO FORCE BY FINANCE ACT, 2008 IS CONCERNED, THE SAME ONLY PERTAINS TO I SSUANCE OF NOTICE AND NOT WITH REGARD TO THE MANNER OF RECORDING SATISFACTION. THAT BEING SO, THE SAID AMENDED PROVISION DOES NOT HELP THE REVENUE. 10. IN VIEW OF THE CONCURRENT FINDINGS RECORDED BY THE LEARNED APPELLATE AUTHORITIES AND THE LAW LAID DOWN I N THE CASE OF ARJUN SINGH ( SUPRA ), WE SEE NO QUESTION OF LAW INVOLVED IN THE MATTER, WARRANTING RECONSIDERATION. 11. THE APPEALS ARE, THEREFORE, DISMISSED. 14 . THE ABOVE DECISION OF THE HONBLE HIGH COURT HAS BEEN UPHELD BY THE HONBLE APEX COURT REPORTED IN (2015) 64 TAXMANN.COM 313 (SC) DISMISSING THE S.L.P FILED BY THE REVENUE. 15 . FURTHER IN THE CASE OF CHHUGAMAL RAJPAL VS.S.P.CHALIHA & ORS, REPORTED IN 79 ITR 603 (SC), THE HONBLE SUPREME COURT HAS HELD THAT WHERE THE COMMISSIONER, WHILE GRANTING THE SANCTION JUST NOTED THE WORD 'YES' AND AFFIXED HIS SIGNATURE THEREUNDER, HE HAD ONLY MECHANICALLY ACCORDED PERMISSION, AND THAT THE IMPORTANT SAFE - GUARDS PROVIDED IN SECTION 151 OF THE ACT WERE LIGHTLY TREATED. 16 . THE OBSERVATIONS OF THE HON'BLE SUPREME COURT AND THE HONBLE HIGH COURT ARE VERY MUCH RELEVANT IN THE INSTANT CASE AS IN THE PRESENT CASE ALSO THE JT. CIT HAS SIMPLY MENTIONED ' YES ' TO THE REPORT SUBMITTED BY THE CONCERNED AO. IN THE LIGHT OF THE RATIOS/OBSERVATIONS OF THE HON'BLE SUPREME COURT AND THE HONBLE HIGH COURT MENTIONED HEREINABOVE, I HAVE NO HESITATION TO HOLD THAT THE REOPENING PROCEEDINGS VIS - - VIS PROVISIONS OF SEC. 151 OF THE ACT ARE BAD IN LAW AND THE ASSESSMENT HAS TO BE DECLARED AS VOID AB INITIO . IN THIS CASE ALSO, I FIND THA T THE ASSESSING OFFICER NOWHERE STATED THAT INCOME OF THE ASSESSEE HAS ESCAPED ITA NO . 107 / PAT /201 8 12 ASSESSMENT, HOWEVER, ONLY ON THE BASIS OF AUDIT OBJECTION REOPENING OF THE ASSESSMENT IS WITHOUT APPLICATION OF MIND BY THE ASSESSING OFFICER. THEREFORE, IN MY CONSIDERED OPINIO N, THE APPROVAL IN THE CASE AT HAND IS CLEARLY AN APPROVAL GRANTED WITHOUT APPLICATION OF MIND, AND HENCE , IT IS NOT AT ALL A LEGALLY TENABLE APPROVAL. AS I HAVE HELD THAT THE REASSESSMENT PROCEEDINGS IS NOT VALID, THEREFORE, OTHER GROUNDS RAISED BY THE AS SESSEE ON MERITS ARE NOT BEING ADJUDICATED UPON. 17 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED ON LEGAL ISSUE . ORDER PRONOUNCED IN THE OPEN COURT ON 17 /0 9 /201 9 . SD/ - ( C.M.GARG ) / JUDICIAL MEMBER /PAT NA ; DATED 17 / 0 9 /201 9 PRAKASH KUMAR MISHRA , S R.P.S. / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE S ECR ETARY ) , / ITAT, PATNA 1. / THE APPELLANT - 2. / THE RESPONDENT - 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, PATNA 6. / GUARD FILE. //TRUE COPY//