Evergain Securities (P), New Delhi V. ITO, Ward-8(4), New Delhi

ITA 1830/DEL/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 6908 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 05-03-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: EKTA VISHNOI
• Keywords: Reopening of assessment; Bogus purchase; Unexplained expenditure; Transactions in derivatives; Tangible material; Difference of opinion; Accommodation entries; Change of opinion; Reassessment proceedings; Borrowed satisfaction
• Section: 143(3); 14A; 133(6); 64; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHE :SMC : NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 1830/DEL/2019 ASSESSMENT YEAR : 2010-11 EVERGAIN SECURITIES (P) LTD., C/O RAJ KUMAR&ASSOCIATES,CA L-7A(LGF), SOUTH EXTENSION PART-II, NEW DELHI (PAN: AAACM8113H) VS. ITO, WARD 8(4), NEW DELHI (APPELLANT) ( RESPONDENT) ASSESSEE BY : SH. RAJ KUMAR, CA DEPARTMENT BY : MS. EKTA VISHNOI, SR. DR. ORDER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE O RDER PASSED BY THE LD. CIT(A)-3, NEW DELHI ON 15.02.2019 IN RE LATION TO THE ASSESSMENT YEAR 2010-11 ON THE FOLLOWING GROUNDS:- 1. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE INITIATION OF PROCEEDINGS U/S. 147 IS WITHOUT JURISDICTIO N, WITHOUT APPLICATION OF MIND, MECHANICAL, ON BORROWED SATISFACTION AND UNWARRANTED IN LAW AS WELL AS ON MERI TS. 2 2. THAT UNDER THE FACTS AND CIRCUMSTANCES, THE APPROVAL U /S. 151 OF PR. CIT IS MECHANICAL, NON SPEAKING AND WITHOUT APPLICATION OF MIND, WHICH APPROVAL CANNOT PROVIDE A VALID JURISDICTION TO PROCEED U/S. 147/148. 3. THAT UNDER THE FACTS AND CIRCUMSTANCES, BOTH THE LOWER AUTHORITIES ERRED IN LAW AND ON MERITS IN DISALLOWING THE F&O BUSINESS LOSS OF RS. 20,04,174/- ON SALE PURCHASE OF SHARES ON THE GROUND OF ALLEGED MANIPULATIVE CHANGE IN CLIE NT CODE (CCM) BY THE ASSESSEE. 3.1 THAT WITHOUT PREJUDICE, THE DISALLOWANCE OF RS. 20, 04,714/- MADE WITHOUT FULLY CONFRONTING THE ALLEGED ADVERSE MA TERIAL AND WITHOUT PROVIDING FOR THE CROSS EXAMINATION OF REQUIRE D PERSONS, IS UNWARRANTED. 4. THAT THERE IS NO LEGALITY, NO JUSTIFICATION AND NO BASIS FOR ADDITION OF RS. 60,125/- BY ESTIMATING AND ASSUMING ALL EGED UNEXPLAINED EXPENDITURE FOR OBTAINING ALLEGED BOGUS F&O LOSS, AT THE RATE OF 3 PERCENT OF RS. 20,04,174/-. 5. THAT THE AO EXCEEDED HIS JURISDICTION IN EXAMINING T HE ISSUE OF DISALLOWANCE U/S. 14A/RULE8-D AS THE ISSUE IS OUTSID E THE SCOPE OF THESE 147 PROCEEDINGS AND ALSO NOT A PART OF REASON AND ALSO SINCE NO SUCH MATERIAL AVAILABLE ON RECORD ON T HE BASIS 3 OF WHICH IT CAN BE SAID THAT IT IS AN ESCAPED INCOME WHICH HAS COME TO THE NOTICE OF AO SUBSEQUENTLY IN THE COURSE OF PROCEEDINGS U/S. 147. 6. THAT THERE IS ABSOLUTELY NO LEGALITY AND JUSTIFICAT ION FOR DISALLOWING RS. 3,981/- U/S. 14A R/W 8D, FURTHER MORE WITHOUT RECORDING ANY SATISFACTION FOR NOT ACCEPTING THE CLAIM OF APPELLANT OF NOT INCURRING ANY SUCH EXPENDITURE. 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE FILED ITS RE TURN OF INCOME AT RS. NIL ON 16.09.2010. THE AO HAD REOPENED THE CASE U/ S. 147 OF THE INCOME TAX ACT, 1961 (IN SHORT ACT) ON THE BASIS OF I NFORMATION RECEIVED BY HIM FROM ADIT (I&CI), MUMBAI ON THE BASIS OF AN EN QUIRY CONDUCTED IN THE CASE OF M/S INTEGRATED MASTER SECURITIES PVT. LTD. TH E ASSESSEE HAD RECEIVED LOSS OF RS. 20,04,174/- ON SALE OF SHARES/ SECURIT IES BY MISUSING THE FACILITY OF CLIENT CODE MODIFICATION. DURING THE ASSESSM ENT PROCEEDINGS, THE ASSESSEE WAS ASKED AS TO WHY THIS AMOUNT SHOULD NOT BE TREA TED AS ITS INCOME WHICH HAS BEEN SHIFTED OUT DUE TO CLIENT CODE MO DIFICATION (CCM) DONE BY THE BROKER IN THIS CASE. IT WAS SUBMITTED BY THE ASSESSEE THAT THE CCM WAS DONE TO RECTIFY THE ACTUAL ERRORS WHICH HAPPENED DUE TO WRONG PUNCHING OF CODES BY THE BROKER AT THE TIME OF TRANSACTI ON. THE AO WAS NOT SATISFIED BY THE REPLY FILED BY THE ASSESSEE AND HELD THA T THE ASSESSEE HAS NOT BEEN ABLE TO PROVE THAT THE ASSESSEE HAS NOT ABUSED THE FACILITY OF CCM TO EVADE TAXES. ACCORDINGLY, THE AO HAS TREATED A SUM O F RS. 20,04,174/- AS 4 INCOME OF THE ASSESSEE BY HOLDING THAT THE ASSESSEE HAS REDUCE D ITS INCOME BY SHIFTING IN A LOSS BY WAY OF CLIENT CODE MODIFICATIO N, WHICH WAS NOT GENUINE. THE AO FURTHER ADDED THE COMMISSION OF RS. 60, 125/- PAID FOR OBTAINING ACCOMMODATION ENTRY AND ASSESSED THE INCOME OF THE ASSESSEE AT RS.17,92,860/- U/S. 143(3)/147 OF THE ACT VIDE ORDER DATED 08.12.2017. AGAINST THE ASSESSMENT ORDER DATED 08.12.2017, ASSESSEE APP EALED BEFORE THE LD. CIT(A), WHO VIDE HIS IMPUGNED ORDER DATED 15 .2.2019 HAS DISMISSED THE APPEAL OF THE ASSESSEE. AGGRIEVED WITH THE APPELLA TE ORDER, ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. LD. COUNSEL FOR THE ASSESSEE ONLY ARGUED THE GROUND N O. 2 WHICH IS LEGAL IN NATURE AND HAS FILED THE PAPER BOOK CONTAIN ING PAGES 1 TO 72 IN WHICH HE HAS ATTACHED THE COPY OF REASONS; ASSESSEES OBJECTIO N LETTER DATED 11.5.2017; ASSESSEES OBJECTION LETTER DATED 15.5.2017; A OS OBJECTION DISPOSAL ORDER DATED 6.11.2017; COPY OF APPROVAL U/S. 1 51; CONTRACT NOTES ISSUED BY NSE BROKER INTEGRATED MASTER SECURITIES (P) LT D.; LEDGER A/C FOR F&O SHARE TRANSACTION AY 2010-11; RECONCILIATION OF RS. 20,04,174 VIS A VIS RS. 20,34,437/-; HDFC BANK STATEMENT REFLECTING CHE QUE ISSUED TO BROKER; REPLY TO AO U/S. 133(6) DATED 30.12.2015; NS E REPLY LETTER DATED 16.11.17 TO AO; LETTER TO AO DATED 23.11.2017; SUB. TO CIT(A) DATED 05.2.2019 AND NOTICE U/S. 148 DATED 24.3.2017 ESPECIAL LY THE PAGE NO. 15- 16 WHICH IS A COPY OF PERFORMA FOR RECORDING THE REASONS FOR INITIATING PROCEEDINGS U/S. 148 AND FOR OBTAINING APPROVAL OF PR. CIT, DELHI-3, NEW 5 DELHI IN WHICH PR. CIT, DELHI-3, NEW DELHI HAS GRA NTED THE APPROVAL IN A MECHANICAL MANNER, FOR ISSUING OF NOTICE U/S. 148 OF THE INCOME TAX ACT, 1961, HENCE, HE STATED THAT THE APPROVAL FOR ISSUE OF NOTICE US. 148 OF THE ACT IS NOT WITHIN THE MEANING OF SECTION 151 OF THE I. T. ACT, 1961 AND THEREFORE, THE REASSESSMENT NEEDS TO BE QUASHED. IN VIEW OF ABOVE, HE REQUESTED TO QUASH THE REASSESSMENT. TO SUPPORT HIS CONTEN TION, LD. COUNSEL OF THE ASSESSEE HAS RELIED UPON THE DECISION OF T HE HONBLE DELHI HIGH COURT IN THE CASE OF UNITED ELECTRICAL COMPANY (P) LTD. VS. CIT & ORS. 258 ITR 317 (DEL.) AND THE JUDGMENT OF THE HONBLE S UPREME COURT OF INDIA IN THE CASE OF CIT VS. S. GOYANKA LIME & CHEMICAL LTD. (2015) 64 TAXMANN.COM 313 (SC) BY WHICH THE GROUND NO. 2 RAI SED BY THE ASSESSEE IN THE PRESENT APPEAL IS SQUARELY COVERED. 4. ON THE CONTRARY, LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND STATED THAT THE REASONS RECORDED AND SATISFACTION/APP ROVAL ACCORDED IS WITHIN THE MEANING OF SECTION 151 OF THE ACT AND NEED NOT TO BE QUASHED. SHE STATED THAT APART FROM RELYING ON THE DECISION OF THE LD. CIT(A), THE FOLLOWING CASE LAWS MAY KINDLY BE CONSIDERED WITH REGA RD TO REOPENING OF CASES U/S 147 OF I.T. ACT : 1. YOGENDRA KUMAR GUPTA VS ITO (51 TAXMANN.COM 383 ) (SC)/F20141 227 TAXMAN 374 (SC) (COPY ENCLOSED) WHE RE HONBLE SUPREME COURT HELD THAT WHERE SUBSEQUENT TO COMPLETION OF ORIGINAL ASSESSMENT, ASSESSING OFFICE R, ON BASIS OF SEARCH CARRIED OUT IN CASE OF ANOTHER PERSON, CAME TO KNOW THAT LOAN TRANSACTIONS OF ASSESSEE WITH A FINANCE COMPAN Y WERE 6 BOGUS AS SAID COMPANY WAS ENGAGED IN PROVIDING ACCOMMODATION ENTRIES, IT BEING A FRESH INFORMATION , HE WAS JUSTIFIED IN INITIATING REASSESSMENT PROCEEDING IN CASE OF ASSESSEE. 2. RAYMOND WOOLLEN MILLS LTD. V. ITO AND OTHERS [2 36 ITR 341 (COPY ENCLOSED) WHERE HONBLE SUPREME COURT HELD THAT IN DETERMINING WHETHER COMMENCEMENT OF REASSESSMENT PROCEEDINGS WAS VALID IT HAS ONLY TO BE SEEN WHETHE R THERE WAS PRIMA FACIE SOME MATERIAL ON THE BASIS OF WHICH THE DEPARTMENT COULD REOPEN THE CASE. THE SUFFICIENCY OR CORRECTNE SS OF THE MATERIAL IS NOT A THING TO BE CONSIDERED AT THIS ST AGE. 3. YUVRAJ V. UNION OF INDIA BOMBAY HIGH COURT [2009 1 315 ITR 84 (BOMBAY)/R20091 225 CTR 283 (BOMBAY) POINTS NOT DECIDED WHILE PASSING ASSESSMENT ORDER UNDER SECTIO N 143(3) NOT A CASE OF CHANGE OF OPINION. ASSESSMENT REOPENE D VALIDLY. 4. ACIT VS RAJESH JHAVERI STOCK BROKERS (P.) LTD ( 2007) 161 TAXMAN 316 (SC)/R20071 291 ITR 500 (SC)/[2007] 210 CTR 30 (SC) SO LONG AS THE CONDITIONS OF SECTION 147 ARE FULFIL LED, THE ASSESSING OFFICER IS FREE TO INITIATE PROCEEDINGS U NDER SECTION 147 AND FAILURE TO TAKE STEPS UNDER SECTION 143(3) WILL NOT RENDER THE ASSESSING OFFICER POWERLESS TO INITIATE REASSESSMENT PROCEEDINGS, EVEN WHEN INTIMATION UNDER SECTION 143 (1) HAS BEEN ISSUED ADANI EXPORTS V. DCIT[1999] 240 ITR 224 (GUJ) DISTINGUISHED. 5. DEVI ELECTRONICS PVT LTD VS ITO BOMBAY HIGH COUR T 2017- TIQL-92-HC-MUM- II THE LIKELIHOOD OF A DIFFERENT VIEW WHEN MATERIALS E XIST OF FORMING A REASONABLE BELIEF OF ESCAPED INCOME, WILL NOT DEBAR THE AO FROM EXERCISING HIS JURISDICTION TO ASSESS T HE ASSESSEE ON REOPENING NOTICE. 6. PRANAWA LEAFIN (P.) LTD. VS DCIT BOMBAY HIGH COU RT T20131 33 TAXMANN.COM 454 (BOMBAY)/R20131 215 TAXMA N 109 (BOMBAY)(MAG.) WHERE THERE WAS FAILURE ON PART OF ASSESSEE TO MAKE TRUE AND COMPLETE DISCLOSURE IN RESPECT OF SHARE TRANSAC TIONS ENTERED INTO BY IT, IN VIEW OF PROVISO TO SECTION 1 47, 7 ASSESSING OFFICER WAS JUSTIFIED IN INITIATING REASS ESSMENT PROCEEDINGS EVEN AFTER EXPIRY OF FOUR YEARS FROM EN D OF RELEVANT ASSESSMENT YEAR. 7. ACORUS UNITECH WIRELESS (P.) LTD. VS ACIT DELHI HIGH COURT T20141 43 TAXMANN.COM 62 (DELHI)/R20141 223 T AXMAN 181 (DELHI)(MAG)/R20141 362 ITR 417 (DELHI) IN TERMS OF SECTION 148, LAW ONLY REQUIRES THAT INFORMATION OR MATERIAL ON WHICH ASSESSING OFFICER RECORDS HIS OR HER SATISFACTION HAS TO BE COMMUNICATED TO ASSESSEE, WITHOUT MANDATING DISCLOSURE OF ANY SPECIFIC DOCUMENT. 8. PCIT, VS PARAMOUNT COMMUNICATION (P.) LTD. DELH I HIGH COURT [20171 79 TAXMANN.COM 409 (DELHI)/R20171 392 ITR 444 (DELHI) INFORMATION REGARDING BOGUS PURCHASE BY ASSESSEE RECEIVED BY DRI FROM CCE WHICH WAS PASSED ON TO REVENUE AUTHORITIES WAS 'TANGIBLE MATERIAL OUTSIDE RECORD TO INITIATE VALID REASSESSMENT PROCEEDINGS. 9. PARAMOUNT COMMUNICATION (P.) LTD. VS PCIT SUPREME COURT 2017-TIQL-253- SC-IT SLP OF ASSESSEE DISMISSED. INFORMATION REGARDING BO GUS PURCHASE BY ASSESSEE RECEIVED BY DRI FROM CCE WHICH WAS PASSED ON TO REVENUE AUTHORITIES WAS TANGIBLE MATERIAL OUTSIDE RECORD TO INITIATE VALID REASSESS MENT PROCEEDINGS. 10. AMIT POLYPRINTS (P.) LTD. VS PCIT GUJARAT HIGH COURT T2018L 94 TAXMANN.COM 393 (GUJARAT) WHERE REASSESSMENT PROCEEDINGS WERE INITIATED ON BASIS OF INFORMATION RECEIVED FROM INVESTIGATION WI NG THAT ASSESSEE HAD RECEIVED CERTAIN AMOUNT FROM SHELL COMPANIES WORKING AS AN ACCOMMODATION ENTRY PROVIDE R, REASSESSMENT COULD NOT BE HELD UNJUSTIFIED. 11. AASPAS MULTIMEDIA LTD. VS PCIT GUJARAT HIGH COU RT T20171 83 TAXMANN.COM 82 (GUJARAT) 8 WHERE REASSESSMENT WAS MADE ON BASIS OF INFORMATION RECEIVED FROM PRINCIPAL DIT (INVESTIGAT ION) THAT ASSESSEE WAS BENEFICIARY OF ACCOMMODATION ENTR IES BY WAY OF SHARE APPLICATION PROVIDED BY A THIRD PAR TY, SAME WAS JUSTIFIED. 12. MURLIBHAI FATANDAS SAWLANI VS ITO GUJARAT HIGH COURT 2016-TIQL-370-HC- AHM-IT IT IS NOT OPEN TO THE ASSESSEE TO OBJECT TO THE REOPENING BY ASKING THE AO TO PRODUCE THE SOURCE FR OM WHERE THE AO HAS GATHERED THE INFORMATION FOR FORMI NG A BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. 13. ANKIT AQROCHEM (P.) LTD. VS JCIT RAJASTHAN HIGH COURT T20181 89 TAXMANN.COM 45 (RAJASTHAN) WHERE DIT INFORMED THAT ASSESSEE-COMPANY HAD RECEIVED SHARE APPLICATION MONEY FROM SEVERAL ENTIT IES WHICH WERE ONLY ENGAGED IN BUSINESS OF PROVIDING BO GUS ACCOMMODATION ENTRIES TO BENEFICIARY CONCERNS, REASSESSMENT ON BASIS OF SAID INFORMATION WAS JUSTI FIED. 14. RAKESH GUPTA VS CIT P&H HIGH COURT F20181 93 TAXMANN.COM 271 (PUNJAB & HARYANA) WHERE ASSESSING OFFICER RECEIVED INFORMATION FROM PRINCIPLE DIRECTOR OF INCOME TAX (INVESTIGATION) TH AT ASSESSEE HAD RECEIVED BOGUS LOSS FROM HIS BROKER BY CLIENT CODE MODIFICATION, REASSESSMENT ON BASIS OF SAID INFORMATION WAS JUSTIFIED. 15. ABHISHEK JAIN VS ITO DELHI HIGH COURT (2018) 94 TAXMANN.COM 355 (DELHI), 2018-TIQL-1059-HC-DEL-IT DATE OF ORDER 01.06.20181 IN TERMS OF SECTION 124(3)(B) JURISDICTION OF AN ASSESSING OFFICER CANNOT BE CALLED IN QUESTION BY A N ASSESSEE AFTER EXPIRY OF ONE MONTH FROM DATE ON WHI CH HE WAS SERVED WITH A NOTICE FOR REOPENING ASSESSMENT U NDER SECTION 148. 16. HOME FINDERS HOUSING LTD. VS. ITO (2018) 94 TAXMANN.COM 84 (SC) 9 SLP DISMISSED AGAINST HIGH COURTS ORDER THAT NON- COMPLIANCE OF DIRECTION OF SUPREME COURT IN GKN DRIVESHAFTS (INDIA) LTD. VS. ITO (2002) 125 TAXMAN 963 THAT ON RECEIPT OF OBJECTION GIVEN BY ASSESSEE TO N OTICE UNDER SECTION 148, ASSESSING OFFICER IS BOUND TO DI SPOSE OBJECTIONS BY PASSING A SPEAKING ORDER, WOULD NOT M AKE REASSESSMENT ORDER VOID AB INITIO. 17. BALDEVBAHI BHIKHABHAI PATEL VS. DCIT (GUJARAT HI GH COURT) (2018) 94 TAXMANN.CO, 428(GUJARAT) WHERE REVENUE PRODUCED BUNCH OF DOCUMENTS TO SUGGES T THAT ENTIRE PROPOSAL OF REOPENING OF ASSESSMENT ALO NGWITH REASONS RECORDED BY THE ASSESSING OFFICER FOR SAME WERE PLACED BEFORE ADDITIONAL COMMISSIONER WHO, UPON PERUSAL OF SAME, RECORDED HIS SATISFACTION THAT IT WAS A FIT CASE FO R ISSUANCE OF NOTICE FOR REOPENING ASSESSMENT, REASSESSMENT NOTI CE ISSUED AGAINST ASSESSEE WAS JUSTIFIED. 5. I HAVE HEARD BOTH THE PARTIES AND CAREFULLY CON SIDERED THE CASE LAWS AND THE RELEVANT DOCUMENTS AVAILABLE ON RECORD ESPECIALL Y THE ASSESSMENT ORDER, IMPUGNED ORDER, REASONS/SATISFACTION/APPROVAL R ECORDED FOR ISSUE OF NOTICE U/S. 148 OF THE ACT AS WELL AS THE PAPER BOOK F ILED BY THE ASSESSEE CONTAINING PAGES 1 TO 72 IN WHICH HE HAS ATTACHED THE CO PY OF REASONS; ASSESSEES OBJECTION LETTER DATED 11.5.2017; ASSESSEES OBJECT ION LETTER DATED 15.5.2017; AOS OBJECTION DISPOSAL ORDER DATED 6 .11.2017; COPY OF APPROVAL U/S. 151; CONTRACT NOTES ISSUED BY NSE BROKER I NTEGRATED MASTER SECURITIES (P) LTD.; LEDGER A/C FOR F&O SHARE TRANSACTION AY 2010-11; RECONCILIATION OF RS. 20,04,174 VIS A VIS RS. 20,34,437/- ; HDFC BANK STATEMENT REFLECTING CHEQUE ISSUED TO BROKER; REPLY TO AO U/S. 133(6) OF THE 10 ACT DATED 30.12.2015; NSE REPLY LETTER DATED 16.11. 17 TO AO; LETTER TO AO DATED 23.11.2017; SUB. TO CIT(A) DATED 05.2.2019 AN D NOTICE U/S. 148 OF THE ACT DATED 24.3.2017 ESPECIALLY THE PAGE NO. 15-16 WHICH IS A COPY OF PERFORMA FOR RECORDING THE REASONS FOR INITIATING PROCE EDINGS U/S. 148 OF THE ACT AND FOR OBTAINING APPROVAL OF PR. CIT, DELHI-3, NEW DELHI IN WHICH PR. CIT, DELHI-3, NEW DELHI HAS GRANTED THE APPROVAL IN A MECHANICAL MANNER, FOR ISSUING NOTICE U/S. 148 OF THE INCOME TAX ACT, 1961 . IT IS NOTED THAT THAT REOPENING WAS DONE AFTER 04 YEARS, THEREFORE, APPROVAL U/S. 151 OF THE ACT WAS REQUIRED FROM THE PR. CIT, WHO GAVE THE A PPROVAL IN COLUMN NO. 12 BY MENTIONING AS UNDER:- I AM SATISFIED THAT IT IS A FIT CASE FOR ISSUE OF NOTICE U/S. 148 OF THE ACT. 5.1 AFTER PERUSING THE AFORESAID REMARKS OF THE PR. CI T-3, DELHI, NEW DELHI, I FIND THAT THE APPROVAL GRANTED BY THE LD. PR. CIT-3, DELHI, N EW DELHI IS A MECHANICAL AND WITHOUT APPLICATION OF MIND, WHICH IS NOT VALID FOR INITIATING THE REASSESSMENT PROCEEDINGS, BECAUSE FROM THE AFORESAID REMARKS, IT IS NOT COMING OUT AS TO WHICH MATERIAL; INF ORMATION; DOCUMENTS AND WHICH OTHER ASPECTS HAVE BEEN GONE THROUGH AND EXAM INED BY THE PR. CIT-3, DELHI FOR REACHING TO THE SATISFACTION FOR GRAN TING APPROVAL. THEREAFTER, THE AO HAS MECHANICALLY ISSUED NOTICE U/S. 14 8 OF THE ACT. KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND THE CASE LAWS APPLICABLE IN THE CASE OF THE ASSESSEE, I AM OF THE CONSIDERED 11 VIEW THAT THE REOPENING IN THE CASE OF THE ASSESSEE FOR T HE ASSTT. YEAR IN DISPUTE IS BAD IN LAW AND DESERVES TO BE QUASHED. MY AF ORESAID VIEW IS FORTIFIED BY THE FOLLOWING DECISIONS:- A) UNITED ELECTRICAL COMPANY (P) LTD. VS. CIT & OR S. 258 ITR 317 (DEL.) IN THIS CASE, APPROVAL BY THE ADDL. CIT U/S. 151 WAS GIVEN IN THE FOLLOWING TERMS:- YES, I AM SATISFIED THAT IT IS A FIT CASE FOR ISSUE OF NOTICE U/S. 148 OF THE INCOME TAX ACT. ANALYZING, THE ABOVE SATISFACTION/APPROVAL, IT HAS BEEN HELD THAT THE CIT IS REQUIRED TO APPLY HIS MIND TO THE PROPOSAL PUT UP TO HIM FOR APPROVAL IN THE LIGHT TO EH MATERIAL RELIED UPON BY THE AO. THE SA ID POWER CANNOT BE EXERCISED CASUALLY AND IN A ROUTINE MANNER. WE ARE CONSTRAINED TO OBSERVE THAT IN THE PRESENT CASE, THERE HAS BEEN NO APPLICATION OF MIND BY THE ADDL. CIT BEFORE GRANTING THE APPROVAL. (PA RA 19). (B) HONBLE SUPREME COURT OF INDIA IN THE CASE OF CI T VS. S. GOYANKA LIME & CHEMICAL LTD. REPORTED IN (2015) 6 4 12 TAXMANN.COM 313 (SC) ARISING OUT OF ORDER OF HONBLE HI GH COURT OF MADHYA PRADESH IN CIT VS. S. GOYANKA LIME & CHEMICALS LTD. (2015) 56 TAXMANN.COM 390 (MP). SECTION 151, READ WITH SECTION 148 OF INCOME TAX ACT, 1961 INCOME ESCAPING ASSESSMENT SANCTION FOR ISSUE OF NOTICE (RECORDING OF SATISFACTION) HIGH COURT BY IMPUGNED ORDER HELD THAT WHERE JOINT COMMISSIONER RECORDED SATISFACTION IN MECHANICAL MANNER AND WITHOUT APPLICATION OF MIND TO ACCORD SANCTION FOR ISSUING NOTICE UNDER SECTION 148, REOPENING OF ASSESSMENT WAS INVALID WHETHER SPECIAL LEAVE PETITION FILED AGAINST IMPUGNED ORDER WAS TO BE DISMISSED HELD, YES (IN FAVOUR OF THE ASSESSEE). 5.2 IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS AND RESP ECTFULLY FOLLOWING THE PRECEDENTS, AS AFORESAID, I AM OF THE CONSI DERED VIEW THAT APPROVAL GRANTED BY THE LD. PR. CIT-3, DELHI, NEW DELHI IS A MECHANICAL AND WITHOUT APPLICATION OF MIND, WHICH IS NOT VALID FOR INITIATING THE REASSESSMENT PROCEEDINGS ISSUE OF NOTICE U/S. 148 OF THE I.T. ACT, 1961 AND IS NOT IN ACCORDANCE WITH SECTION 151 OF THE I.T. ACT, 196 1, THUS, THE NOTICE ISSUED U/S. 148 OF THE ACT IS INVALID AND ACCORDINGLY TH E REOPENING IN THIS IS BAD IN LAW AND THEREFORE, THE SAME IS HEREBY QUASHED . ACCORDINGLY, THE GROUND NO. 2 RAISED BY THE ASSESSEE IS ALLOWED. SINCE T HE OTHER GROUNDS 13 WERE NOT RAISED BY THE ASSESSEE, THE SAME ARE DISMISSED AS SUC H. ACCORDINGLY, THE ASSESSEES APPEAL IS PARTLY ALLOWED. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STAND S PARTLY ALLOWED ORDER PRONOUNCED ON 16-10-2019. SD/- [H.S. SIDHU] JUDICIAL MEMBER DATED: 16-10-2019 SRB COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.