Diya Infrastructure Pvt. Ltd., Delhi V. ITO, Ward- 7(3), New Delhi

ITA 1929/DEL/2019

• Counselvise Citation: [2023] 103 COUNSELVISE.COM (IT) 1243 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 14-02-2023
• Assessment Year: 2007-2008
• Appeal Filed On: 05-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Gift; Search and seizure; Principle of natural justice; Question of law; Accommodation entries; Procedural lapse; Competent authority; Assessment record; Reason to believe; Reassessment proceedings
• Section: 147; 68; 148; 143(3); 142(1); 250; 143(2); 139(1); 43; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI “SMC” BENCH: NEW DELHI BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER ITA No.1929/Del/2019 [Assessment Year : 2007-08] Diya Infrastructure Pvt.Ltd., 1373, Rani Bagh, Shakur Basti, Delhi-110034. PAN-AACCD3991L vs ITO, Ward-7(3), New Delhi. APPELLANT RESPONDENT Appellant by Ms. Rano Jain, Adv. & Ms. Mansi Jain, CA Respondent by Shri Sanjay Nargas, Sr.DR Date of Hearing 15.02.2023 Date of Pronouncement 16.03.2023 ORDER PER KUL BHARAT, JM : The present appeal filed by the assessee for the assessment year 2007-08 is directed against the order of Ld. CIT(A)-34, New Delhi dated 26.12.2018. 2. The assessee has raised following grounds of appeal:- 1. “The order of assessment is bad in law as the conditions for assumption of jurisdiction u/s 147 and framing of assessment u/s 148/143(3) of the Income Tax Act were not complied with by the AO and the Ld. CIT (A) erred in law and on facts in confirming the aforesaid action of the AO. 2. The Ld. AO erred in law and on facts in framing the assessment order u/s 148/ 143(3) without issuance of any mandatory valid notice u/s 143(2) of the Act and the Ld. CIT (A) erred in law and on facts in confirming the action of the AO and holding that issuance of notice u/s 143 (2) was not necessary. 3. The Ld. AO erred in law and on facts in not passing a separate speaking order rejecting the objections filed by the assessee to initiation of proceedings u/s 147 before proceeding to pass assessment order and the Ld. CIT(A) erred in law and on facts in confirming the action of Page | 2 the AO. The Ld. AO had passed a composite assessment order including the rejection of objections. 4. The Ld. AO erred in law and on facts in making an addition of Rs.1000000/- to the returned income u/s 68 of the I.T. Act and the Ld. CIT (A) erred in law and on facts in confirming the addition in the facts and circumstances of the case. 5. The Ld. AO erred in law and on facts in not appreciating that the assessee had discharged its initial onus u/s 68 of the Act by producing evidence to substantiate, identity, genuineness and creditworthiness of the share applicant and the onus shifted to the AO was not properly discharged and the Ld. CIT (A) erred in law and on facts in confirming the action of the AO in the facts and circumstances of the case. 6. The Ld. AO erred in law and on facts in passing the assessment order without following the principles of natural justice and the Ld. CIT (A) erred in law and on facts in confirming the action of the AO in the facts and circumstances of the case. 7. The appellant craves leave to amend or alter all or any of the aforesaid grounds of appeal and amend, alter or add any other ground of appeal.” 3. Facts giving rise to the present appeal are that the Assessing Officer (“AO”) was having information regarding accommodation entry amounting to Rs.10,00,000/- from, shell companies named M/s. S.R.Cable Pvt.Ltd. run by SHri Surendra Kumar Jain and Shri Virendra Kumar Jain, The AO re-opened the assessment u/s 147 of the Income Tax Act, 1961 (“the Act”) and framed the assessment vide order dated 13.03.2015. Thereby, the AO treated the amount of Rs.10,00,000/- as bogus transaction and made addition u/s 68 of the Act. 4. Aggrieved against the order of AO, the assessee preferred appeal before Ld.CIT(A), who after considering the submissions, sustained the addition and dismissed the appeal of the assessee. Page | 3 5. Aggrieved against the order of Ld.CIT(A), the assessee preferred appeal before the Tribunal. 6. Ground of appeal Nos. 1 to 3 raised by the assessee are against the validity of the re-opening of the assessment and non-issuance of notice u/s 143(2) of the Act. 7. Ld. Counsel for the assessee reiterated the submissions as made in synopsis. For the sake of clarity, the relevant contents of the synopsis are reproduced as under:- “The assessee is a company who had received an amount of Rs.10,00,000/- in the year under consideration as share application money from M/s. S.R. Cables Pvt. Ltd. The case of the assessee was reopened by issue of notice under Section 148 as on 06.03.2014 (PB Pg. 1-8). In the reasons recorded (PB Pg. 9-10) the Ld. Assessing Officer (AO) made an allegation on the basis of some report received from the Investigation Wing, that the assessee has received RS.10,00,000/- from M/s. S.R. Cables Pvt. Ltd. which was an accommodation entry. The assessee filed return in pursuance of notice under Section 148 (PB Pg. 12) as on 08.09.2014. Without issuing any notice under Section 143(2) the Ld. AO proceeded with the assessment proceedings by issuing notice under Section 142(1) as on 08.09.2014 (PB Pg. 14). After considering the submissions made by the assessee the Ld. AO completed the assessment at an amount of Rs.1 0,03,490/- after making an addition of Rs.10,00,000/- received by the assessee from M/s. S.R. Cables Pvt. Ltd. holding the same to be accommodation entry in nature. Before the Ld. Commissioner of Income Tax (Appeals) [CIT(A)], the assessee challenged the order of the Ld. AO on merits as well as legality of reopening. One of the main contentions raised by the assessee was that the assessment was framed without issuing statutory notice under Section 143(2). It was also Page | 4 contended that the reasons recorded were without due application of mind on the part of the Ld. AO. No issue of notice under Section 143(2) It can be seen from Paper Book filed by the assessee that there is no notice under Section 143(2) and there is no reference of notice under Section 143(2) in the assessment order also. The assessee made elaborate submissions before Ld. CIT(A) on account of absence of notice under Section 143(2). After considering the same and also calling for the assessment record, the Ld. CIT(A) dismissed the ground of the assessee. Relevant findings are at Page 6, Para 5.1 to 5.4 of the Ld. CIT(A) order. The Ld. CIT(A), after referring to the assessment record, gave a finding in Para 5.1 that the assessee had filed return in pursuance of notice under Section 142 as on 08.09.2014 while the Ld. AD has issued notice under Section 143(2) as on 01.07.2014. The contention of the assessee was that no notice under Section 143(2) was issued after filing the return of income. In Para 5.2, the Ld. CIT(A) dismissed the ground of the assessee relying on the judgment of the Hon'ble Delhi High Court in the case of CIT vs. Madhya Bharat Energy Corporation Ltd. 337 ITR 399 (Del). From the reading of Para 5.1 of the Ld. CIT(A) order it is confirmed that the Ld. CIT(A) herself has admitted that the notice Issued by the Ld. AO under Section 143(2) was on a date prior to the filing of return by the assessee. Further there is no mention of any notice under Section 143(2) issued by the Ld. AO after filing of the return. As per the provisions of Section 143(2) of the Act the notice has to be issued within six months from the end of the financial year in which the return of income is filed. The Section reads as under:- 143(2) "Where a return has been furnished under section 139, or in response to a notice under sub-section (1) of section 142, the Assessing Officer or the prescribed income-tax authority, as the case may be, if, considers it necessary or expedient to ensure that the assessee has not understated the income or has not computed excessive loss or has not Page | 5 under-paid the tax in any manner, shall serve on the assessee a notice requiring him, on a date to be specified therein, either to attend the office of the Assessing Officer or to produce, or cause to be produced before the Assessing Officer any evidence on which the assessee may rely in support of the return: Provided that no notice under this sub-section shall be served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished. " It is a fact on record that the assessment has been framed without issue of statutory notice under Section 143(2) of the Act which is invalid and bad in law. Reliance is placed on the following judgments:- • Indus Towers Limited v. Dy. CIT, W.P.(C) 1560/2014, dt. 29.05.2017, Delhi High Court SLP dismissed by Supreme Court, [SLP No. 34285/2018 dt. 21.1.2019] • Pro CIT v. Shri Jai Shiv Shankar Traders Pvt. Ltd., [2016] 383 ITR 448, Delhi High Court • Pro CIT v. Staunch Marketing Pvt. Ltd., ITA NO. 935/2015 dt. 28.04.2017 • CIT v. Delhi Kalyan Samiti, ITA No. 696, 697, 699/2015 dt. 22.03.2016 • Pro CIT v. Silver Line, [2016] 383 ITR 455, Delhi High Court • Alpine Electronics Asia PTE Ltd. v. Director General Of Income Tax & Others, [2012] 341 ITR 247, Delhi High Court • Pro CIT v. Paramount Biotech Industries Ltd., ITA No. 887/2017 & 888/2017 dt. 24.10.2017, Delhi High Court • Asst. CIT v. Mis. Hotel Blue Moon, [2010] 321 ITR 362 (SC) • Rajender Kumar Sehgal v. ITO, W.P. © 11255/2017, CM No. 46017/2017, dt. 19.11.2018 • Pro CIT V. Gravity Systems Pvt. Ltd., ITA No. 896/2017 & 899/2017 dt. 27.10.2017, Delhi High Court • CIT V. CPR Capital Services Ltd., [2011] 330 ITR 43, Delhi High Court Page | 6 • M/S. Supersonic Technologies Pvt. Ltd., M/S. SPJ Hotels Private Limited, M/S. Shiv Sai Infrastructure (P) Ltd. M/S. Superior Buildwell Private Limited V. PCIT ITA.No.2269/Del/2017, 2857/Del/2017, 2527/Del/2017, 3301/Del/2017, dt. 10.12.2018, ITAT Delhi • A.C.I.T. v. M/s. Dimension Promoters Pvt. Ltd., ITA No. 1105/De1/2011, C.O. 326/Del/2011 dt. 02.01.2018, ITAT Delhi • UKT Software Technologies Pvt. Ltd. v. ITO, ITA NO. 4719 & 4720/Del/2011 dt. 16.01.2013, ITAT Delhi The next reason given by the Ld. CIT(A) to dismiss this ground of appeal raised by the assessee is the judgment of the Hon'ble Delhi High Court in the case of Madhya Bharat (Supra). It is to be noted that this judgment of the Hon'ble Delhi High Court came in review whereby it was held by the Hon'ble Delhi High Court that in the first instance the issue of notice under Section 143(2) was not before the Hon'ble Delhi High Court in the case of Madhya Bharat (Supra). Therefore, all the discussions on this issue in the order were deleted. This issue has been discussed in the Delhi High Court decision in the case of Jai Shiv Shankar (supra) "9. Dr Rakesh Gupta, learned counsel appearing for the Assessee, at the outset drew the attention of this Court to an order passed by this Court on 17th August, 2011 in Review Petition No.44112011 in ITA NO.9501200B (CIT v. Madhya Bharat Energy Corporation) whereby this Court reviewed its main judgment in the matter rendered on 11th July 2011 on the ground that the said appeal had not been admitted on the question concerning the mandatory compliance with the requirement of issuance of notice under Section 143(2) of the Act. In its review order, this Court noted that at the time of admission of the appeal on 17th February, 2011 after noticing that in the said case that no notice under Section 143(2) had ever been issued, the Court held that no question of law arose on that aspect. The upshot of the above discussion is that the decision of this Court in CIT v. Madhya Bharat Energy Corporation (supra) is not of any assistance to the Revenue as far as the issue in the present case is concerned. " Page | 7 The issue has also been discussed by the Delhi ITAT in the case of ACIT vs. Dimension Promoters Pvt. Ltd. ITA 11 05/De1/2011, dt. 02.01.2018. Gross non-application of mind by the Ld. AO while recording reasons. A perusal of the reasons recorded placed at PB Pg. 9-10 it can be seen that the Ld. AO has relied upon the report received from the Investigation Wing and there is no independent application of mind of his own. He has merely incorporated the contents of the report of the Investigation Wring and has simply acted upon the said information. The contents of the reasons recorded by the Ld. AD for reopening the assessment are summarized as follows:- (a) In first Para the Ld. AD has made a reference to the report of some Investigation Wing, and also quoted the modus operandi of some bogus companies as discussed in the report. (b) In the second paragraph a table has been made where there is a reference of some accommodation entry received by the assessee from M/s. S.R. Cables Pvt. Ltd. (c) In the third paragraph only the facts of filing of return by the assessee has been stated and on the basis of that a conclusion has been derived that income to the extent of Rs.1 0,00,000/- has escaped assessment. On perusal of the above reasons shows that the Ld. AO straightaway concluded that the assessee has taken accommodation entry. The Ld. AO is not itself aware of the fact as to the nature of the entry taken by the assessee. The name of the lender is wrong therein. Further the Ld. AO has not mentioned in which manner the amount has come to the assessee, whether it is by way of loan, share capital or gift. It was only from the assessment proceedings the assessee made the Ld. AO aware of the fact that this amount was received from M/s. S.R. Cables Pvt. Ltd. in the form of share application money. The Ld. AO has not brought any record or material on the basis of which any nexus could have been established to prove the escapement of income . Page | 8 1. This issue is squarely covered by the judgment of Hon'ble Jurisdictional High Court in the case of Pro CIT V. G & G Pharma India Ltd. in ITA No. 545 of 2015 dated 08.10.2015. 2. Further reliance is placed on following judgments: • Hon'ble Jurisdictional High Court in the case of Pro CIT V. Meenakshi Overseas Pvt. Ltd. [2017] 395 ITR 677 • Hon'ble Jurisdictional High Court in the case of Pro CIT V. RMG Polyvinyl (I) Ltd. [2017] 396 ITR 5 • Hon'ble Jurisdictional High Court in the case of Sabh Infrastructure Ltd. V. ACIT in WP No. 1357/2016 dated 25.09.2017 • Hon'ble Apex Court in the case of ACIT V. Dharamvir Singh Rao in SLP No. 32400/2017. • Shiv Sai Infrastructure Pvt. Ltd. V. Dy. CIT, W.P.(C) 2158/2016 & 2383/2016 dt. 23.07.2018 (Delhi) • ITAT Delhi in the case of MRY Auto Components Ltd. V. ITO in ITA No. 2418/Del/2014 dated 15.09.2017 • ITAT Delhi in the case of Meditronics India Pvt. Ltd. V. ITO in ITA No. 6251/Del/2012 dated 12.09.2017 • M/s. Supersonic Technologies Pvt. Ltd. Vs. PCIT-8, New Delhi, ITA No. 2269/De1/2017, Dated 10.12.2018 • Madan Lal Chaudhary Vs. ITO, ITA No. 9011De1/2013, Dated 14.11.2017 3. The jurisdictional Delhi Court in the case of Dhawan Creative Prints Vs. UOI, dt.11.01.2018 had the occasion to deal with this issue. The case related to the constitutional validity of certain provisions of PMLA, however while dealing with reasons to believe' the High Court observed as under: "72. Reasons to believe cannot be a rubber stamping of the opinion already formed by someone else. The officer who is supposed to write down his reasons to believe has to independently apply his mind. Further, and more importantly, it Page | 9 cannot be a mechanical reproduction of the words in the statute. When an authority judicially reviewing such a decision peruses such reasons to believe, it must be apparent to the reviewing authority that the officer penning the reasons has applied his mind to the materials available on record and has, on that basis, arrived at his reasons to believe. The process of thinking of the officer must be discernible. The reasons have to be made explicit. It is only the reasons that can enable the reviewing authority to discern how the officer formed his reasons to believe. As explained in Oriental Insurance Company v. Commissioner of Income Tax [2015] 378 ITR 421 (Delhi), "the prima facie formation of belief should be rational, coherent and not exfacie incorrect and contrary to what is on record". A rubberstamp reason can never take the character of 'reasons to believe', as explained by the Supreme Court in Union of India v. Mohan Lal Kapoor (1973) 2 SCC 836. In Dilip N Shroff v. CIT (2007) 6 SCC 329, the Supreme Court decried the practice of issuing notices in a standard pro forma manner "without material particulars and without deleting inappropriate words or paragraphs". 4. Therefore, in view of the above circumstances and further considering the settled position of law in this regard, the reassessment proceedings initiated by the AO are without due application of mind, and thus, the reassessment proceedings should be quashed as such. On merits The assessee has received an amount of RS.10,00,000/- from MIs. S.R. Cables Pvt. Ltd. on account of share application money. To prove the source of the funds the assessee has filed the following documents before the lower authority:- (1) Bank account of the assessee Pg.28 (2) Share application filed by MIs. S.R. Cables Pvt. Ltd. Pg.29 (3) Confirmation from MIs. S.R. Cables Pvt. Ltd. Pg.30-31 (4) Bank statement of MIs. S.R. Cables Pvt. Ltd. Pg.32 Page | 10 Reflecting the outflow of money (5) Copy of audited Balance Sheet & Profit and Pg.33-43 Loss Account of MIs. S.R. Cables Pvt. Ltd. The reason given by the Ld. CIT(A) while confirming the addition is summarized at Pg. 12 of her order in Para 6.12whereby she has observed that since the Directors of the lender company could not be produced the addition had to be made. By filing the confirmation, bank account, etc. of the lender the assessee has discharged the primary onus put on it and the Ld. AD as well as the Ld. CIT(A) have nowhere been able to point at any deficiency in that document. Only because the directors of the company could not attend the proceedings the addition cannot be sustained. This proposition has been held by the jurisdictional Delhi High Court in many cases. Reliance is placed on the following judgments:- (i) Principal Commissioner of Income Tax-8 Vs. Softline Creations Pvt. Ltd., [2016] 387 ITR 636, DHC. (ii) Moti Adhesives Pvt. Ltd. Vs. ITO, ITAT Delhi, ITA No. 3133/Del/2018, ITAT Delhi dt. 25.06.2018. (iii) Gopal Forex Pvt. Ltd. Vs. ITa, Ward 10(2), New Delhi, ITA No. 902/Del/2018, ITAT Delhi, dt. 26.06.2018. (iv) Shri Ajay Sharma Vs. DCIT(Central circle), ITA No. 3555/DeIl2015, ITAT Delhi, Dt. 05.03.2019.” 8. Ld.Sr.DR opposed these submissions and supported the orders of the authorities below. He filed a brief written submission cum Argument Note. The relevant contents of the written submission are reproduced as under:- “In the above case, it is humbly submitted that the following material facts and relevant case laws may kindly be considered with regard to issue of accommodation having been taken by the assessee from non-descript entities Page | 11 being operated, managed and controlled by an accommodation entry provider Mr. S K Jain. Arguments by ARJ Appellant on 15.02.2023 mainly focused on the issue related to non issue of notice u/s 143(2) by the A.O. in response to the letter filed by the assessee company on 08.09.2014 wherein t was submitted that the assessee filed the ITR u/s 139(1) for the A Y under consideration on 03.11.2007 and the same be treated as returned filed in response to notice issued u/s 148 of the I.T. Act. It is humbly submitted that the decision of Coordinate Bench in ITA NO. 2461/Del/2019 (A.Y. 2010-11) in the case of Rakesh Aggarwal Vs. ITO, W- 48(1), New Delhi may kindly be considered by the Hon'ble Bench. Copy of this decision is enclosed Factual Matrix & Background: There was a search conducted at the premises of Mr. S K Jain resulting in the seizure of large number of incriminating documents. Inquires during the post search investigations established that Shri S K Jain was in the business of proving accommodation entries. He had floated and operated large number entities for the purpose of providing accommodation entries to various beneficiaries in the form share capital, share application money and loans etc. routing the cash received from them through non descript paper companies. He used to charge commission from beneficiaries for such accommodation entries. In the instant case entries of accommodation in the guise of share application money Rs.10 lac was provided to the assessee company from S R Cables P Ltd of his non descript entities, as described at Page 1 of AO. Accordingly, the AO after analyzing the facts, circumstances and evidences in details and relying on various case laws, concluded the assessment u/s.148/143[3] holding the credit of Rs.10,00,000/- as unexplained credit u/s 68. The AO has also discussed the modus operandi of the entry operator S K Jain and his associates in the assessment order. In spite of sufficient opportunities having been provided the assessee could submit mere a paper trail of the documents and failed to controvert the adverse findings confronted to it by the AO. Page | 12 The Ld. CIT[Appeal) has also concurred with the findings of the AO as per the following observations: a. On initiation of proceedings u/s 147, considering the facts material and submission of the assessee [Para 4.1 to 4.3 [Page 3] and following the related judgments i.e. Yogendra Kumar Gupta Vs ITO [taxmann.com 383][Sq[2014 227 Taxman 374 [SC, Raymond Wollen Mills Ltd Vs ITO [236 ITR 341][Sq, Ankit Financial Services Ltd Vs DCIT [2017] 78 taxmann.com 58 [Gujarat], and Thakorbhai Maganbhai Pael Vs ITO [2017] 79 taxmann.com 409 [Delhi]/[2017] 392 ITR 444 [Delhi] held that reopening u/s 147 read with section 148 is justified and AO has correctly assumed jurisdiction. b. The ground and contention related to the issue of notice uls 143[2] has been adjudicated vide para 5.1, 5.2 [Page 6]. In this regard reliance has been taken by the Ld CIT[A] on the decision of the Hon'ble Delhi High Court in the case of CIT Vs Madhya Bharat Energy Corporation Ltd [337 ITR 399] Delhi that issuance of notice u/s 143[2] subsequent to 148 notice is not mandatory. c. On merits appeal of the assessee was dismissed with detailed discussion of the facts material of the case and following the decision of the Hon 'ble Supreme Court in the case of Konarks Structural Engineers P Ltd Vs DCIT [2018] 96 taxmann.com 255 [SC], Pawan Kumar M. Sanghvi Vs ITO [2018] 97 taxmann.com 398 [SC], Pee Aar Securities Ltd DCIT [2018] taxmann.com 602 [Delhi], CIT Vs Nova Promoters & Finlease P Ltd [18 taxmann.com 602 [Delhi], 206 Taxman 207, 342 ITR 169, VIT Vs Ultra Modem Exports P Ltd [40 taxmann,com 458, 220 Taxman 165 [Delhi], vide para 6.1 to 6.13 [Page 7 onwards] NOTE: In the present case, in spite of several opportunities having been provided, during the assessment and appellate proceedings the assessee has failed to produce any evidence to prove that the money introduced in its books as share capital and share premium was genuine transaction in the fact and circumstances of the case. It could not produce any reliable evidence to controvert the findings of the Department which include AO's findings and Page | 13 evidences gathered as a result of Search and Seizure operation in S K Jain case. Hon ITAT Delhi in ITA Nos. 6991 to 6997/Del/2014 in the case of Virender Kumar Jain and ITA No.6998/ to 7004/Del/2014 in the case of Surender Kumar Jain held them as entry providers and that substantive amounts of accommodation entries provided by them are to be taxed in the hands of the beneficiaries. The present case is has a very different situation where live and pulsating evidence seized from Jain Brothers is linked to the credit entries recorded in the books of account, showing that credit entries could not stand the test of genuineness within the meaning of section 68. Not only that they also strongly support a conclusion of culpable mind attempting to bring black money into regular channels. On the validity of reassessment proceedings, I am further relying on the decision of Raymond Woollen Mills Ltd. Vs ITO 236 ITR 236 ITR4 (SC) wherein it was held that the AO is not to conclusively prove the escapement of income to assume jurisdiction u/s 147 of the Act. In the case of ITO Vs Purshottam Das Bangur 224 ITR 362 the Hon'ble Apex Court, on the issue of application of mind by the AO to information received while recording reasons, held that on the basis of facts and information contained in letter of Directorate of Investigation, the ITO could have formed opinion that there was reason to believe that income chargeable to tax had escaped assessment and he was justified in his action and merely because notice was issued on very next day of receipt of letter it did not mean that ITO did not apply his mind to the information. Further, the Hon'ble Jurisdictional Delhi High Court in the case of Paramount Communications Ltd. Vs Pro CIT 392 ITR 444(Del) has held that the information by the investigation or the other authority is valid material for initiating reassessment proceedings. This judgement of Delhi High Court has been approved in by Hon'ble Supreme Court in 250 Taxmann 100 (SC). Hon'ble Calcutta High Court in a recent decision delivered on 13.09.2022 in the case of PCIT 1 Kolkata Vs Arshia Global Tradecom P Ltd in ITAT/175/2021 [IA No:GAl02/2021] has categorically held that when Page | 14 sufficient material evidence has been passed on to the AO by Inv. Wing and reassessment having been done on new facts does not amount to change of opinion. The main proposition made by the Hon'ble Court was that crucial factual aspects which are relevant to the reopening of the assessment cannot be ignored in deciding the validity of reopening merely going on the basis as to what are the conditions to be fulfilled in order to reopen an assessment. The Hon'ble Supreme Court in its decision delivered on 28.03.2022 [SLP [C] No.22921 of 2019] in the case of DCIT Vs M R Shah Logistics P Ltd laid down the proposition that reopening of a case u/s 147 with an objective to verify some information regarding accommodation entry or share premium and share capital is valid and sufficiency of that material cannot dictate the validity of Notice u/s 148. Therefore, the AO had a prima-facie case on the basis of specific and credible information about the assessee to record reasons for reopening of the assessment [ to quote the case specific information] The important question is ........ Whether there was relevant material on which a reasonable person could have formed a belief which definitely was there in this case? Whether or not, the material would conclusively establish the escapement is not important. This aspect has to be examined subsequently in the reassessment proceedings. It is noted that the AO has applied his mind to the information available independently to arrive at the belief on the basis of material which was available with him. Hence, the AO had validly assumed jurisdiction u/s 148 of the Act by recording the reasons to believe in accordance with the provisions of the Act u/s 147 of the Act and, therefore, the ground of appeal on this is deserve to be dismissed. ON GRANTING SANCTION u/s 151 So far as the contention of the appellant assessee, raised as additional ground that the approval of the competent authority granted u/s 151[1] was Page | 15 in a mechanical manner without application of mind is concerned, the following submission may kindly be considered: 1. That there is no infirmity in the approval/sanction granted by the competent authority u/s 151[1] of the I. T. Act, 1961. 2. That the statute does not lay down any manner or format in which the approval is to be granted. 3. That the remarks of the competent authority may kindly be read with the first part of the column No.12 which reads" Whether the pro e1T, Hisar is satisfied on the reason recorded by the 1TO that it is a fit case for the issue of Notice u/s 148" along with the remarks "Yes 1 am satisfied" before the signatures are there in the approval form/column. 4. That once an authority puts his/her signature [in original] he or she actually is recording his concurrence to the whole proposal of the AO along with the reasons recorded and the approving comment or remarks should not be read in solitary. Then it is not material as to whether the approving remark is typed/stamped or hand written. 5. That the incident of typed/stamped approving remarks of the competent authority might have been occurred due to paucity of time when a large number of cases are to be approved by a single officer near the limitation date and writing of approving remarks by hand is practically and humanly difficult. 6. That the Hon'ble Calcutta High Court in Prem Chand Shaw [Jaiswal] Vs ACIT [2016] 67 taxmann.com 339 has categorically held that 'mere fact that the sanctioning authority did not record his satisfaction in so many words would not render invalid the sanction granted u/s 151[2] when the reasons on the basis of which sanction was sought could not be assailed. 7. That the Hon'ble Delhi Court in the case of Experion Developers (P.) Ltd. v. ACIT [2020] 115 taxmann.com 338 (Delhi) in WP (C) NOS. 11302, 11303 OF 2019 CM APPL NOS. 46536 TO 46539 & 46540 TO 46542 OF 2019 FEBRUARY 13,2020, Page | 16 While discussing Section 151 of the Income-tax Act, 1961 - Income escaping assessment - Sanction for issue of notice (Recording of reasons) - held that where necessary sanction to issue reopening notice under section 148 was obtained from Pro Commissioner as per provision of section 151, Pro Commissioner was not required to provide elaborate reasoning to arrive at a finding of approval when he was satisfied with reasons of reopening. [Ref. Para 42 and 43 of the said order] Hence, the AO had validly assumed jurisdiction u/s 148 of the Act by recording the reasons to believe in accordance with the provisions of the Act u/s 147 of the Act. On the issue of notice u/s 143[2]: It is to noted that the notice u/s 148 was issued on 6.3.2014 asking the assessee to file its return of income for the relevant A.Y. within 30 days time. However, assessee responded to the same vide letter dated 8.9.2014, much beyond 30 days, requesting the AO that the ITR filed u/s 139[1] on 3.11.2007 may be treated as filed uls 148. As such there was no valid return having being filed u/s 148 and no need to issue notice u/s 143[2]. The Hon'ble Friday Bench of ITAT Delhi in the case of Rakesh Aggarwal Vs ITO (ITAT Delhi), while disposing the MA No. 249 of 2020 vide order dated 15.12.2020, in respect of the Hon'ble Tribunal Order in ITA No.2462 of 2019 passed on 15.05.2020, rejecting the MA of the assessee laid down the following propositions: In the present case, the assessee did not file the original return of income as well as also not filed return of income in response to the notice uls 147 of the Act within the time allowed by the Assessing Officer of 30 days. Thus the issue is whether in case the return filed by the assessee as late as in the month of September, 2017 can be treated as valid return or not. The answer is clearly 'No' as even after 30 days any return of income filed by the assessee would not have been taken cognizance by the Assessing Officer. There is no requirement of the law that if the return is filed any time before Assessing Officer u/s 148 read with 143 (3) of the Act, the Assessing Officer should have been issued notice u/s 143(2). Page | 17 The question will arise then that if the assessee was issued a notice u/s 148 of the Act and he does not file any return of income till the date of framing of the assessment order or also filed a return before passing of the assessment order u/s 143(2) of the Act, then what is the stand Revenue should take? In such case, it is not at all possible that the assessee can contest that notice u/s 143(2) should have been issued, in all such cases where reassessment is required to be made. **** The onus of filing of return of income on the assessee is a responsibility which is cast upon him to be fulfilled by him, if he fails to take benefit of any of the provisions of law the assessee cannot plea that he will not comply with the law and not follow time limit before the Assessing Officer and the Assessing Officer he is duty bound to follow the law even in belated compliance by the assessee.” 9. I have heard the rival submissions and perused the material available on records. One of the objections of the assessee is regarding the assumption of jurisdiction by AO being bad in law on account of non-issuance of notice u/s 143(2) of the Act. The AO in para 3 of the assessment records the factum of request made by the assessee regarding original return filed u/s 139(1) may be treated as return filed in response to notice u/s 148 of the Act. Thereafter, there is no whisper regarding issuance of notice u/s 143(2) of the Act. The assessee has relied upon various judicial pronouncements to buttress the contention that the assessment so framed is invalid on account of non-issuance of notice u/s 143(2) of the Act. The assessee has placed reliance on the following case laws:- • Indus Towers Limited v. Dy. CIT, W.P.(C) 1560/2014, dt. 29.05.2017, Delhi High Court SLP dismissed by Supreme Court, [SLP No. 34285/2018 dt. 21.1.2019] • Pro CIT v. Shri Jai Shiv Shankar Traders Pvt. Ltd., [2016] 383 ITR 448, Delhi High Court Page | 18 • Pro CIT v. Staunch Marketing Pvt. Ltd., ITA NO. 935/2015 dt. 28.04.2017 • CIT v. Delhi Kalyan Samiti, ITA No. 696, 697, 699/2015 dt. 22.03.2016 • Pro CIT v. Silver Line, [2016] 383 ITR 455, Delhi High Court • Alpine Electronics Asia PTE Ltd. v. Director General Of Income Tax & Others, [2012] 341 ITR 247, Delhi High Court • Pro CIT v. Paramount Biotech Industries Ltd., ITA No. 887/2017 & 888/2017 dt. 24.10.2017, Delhi High Court • Asst. CIT v. Mis. Hotel Blue Moon, [2010] 321 ITR 362 (SC) • Rajender Kumar Sehgal v. ITO, W.P. © 11255/2017, CM No. 46017/2017, dt. 19.11.2018 • Pro CIT V. Gravity Systems Pvt. Ltd., ITA No. 896/2017 & 899/2017 dt. 27.10.2017, Delhi High Court • CIT V. CPR Capital Services Ltd., [2011] 330 ITR 43, Delhi High Court • M/S. Supersonic Technologies Pvt. Ltd., M/S. SPJ Hotels Private Limited, M/S. Shiv Sai Infrastructure (P) Ltd. M/S. Superior Buildwell Private Limited V. PCIT ITA.No.2269/Del/2017, 2857/Del/2017, 2527/Del/2017, 3301/Del/2017, dt. 10.12.2018, ITAT Delhi • A.C.I.T. v. M/s. Dimension Promoters Pvt. Ltd., ITA No. 1105/De1/2011, C.O. 326/Del/2011 dt. 02.01.2018, ITAT Delhi • UKT Software Technologies Pvt. Ltd. v. ITO, ITA NO. 4719 & 4720/Del/2011 dt. 16.01.2013, ITAT Delhi • Hon'ble Jurisdictional High Court in the case of Pro CIT V. Meenakshi Overseas Pvt. Ltd. [2017] 395 ITR 677 • Hon'ble Jurisdictional High Court in the case of Pro CIT V. RMG Polyvinyl (I) Ltd. [2017] 396 ITR 5 • Hon'ble Jurisdictional High Court in the case of Sabh Infrastructure Ltd. V. ACIT in WP No. 1357/2016 dated 25.09.2017 • Hon'ble Apex Court in the case of ACIT V. Dharamvir Singh Rao in SLP No. 32400/2017. Page | 19 • Shiv Sai Infrastructure Pvt. Ltd. V. Dy. CIT, W.P.(C) 2158/2016 & 2383/2016 dt. 23.07.2018 (Delhi) • ITAT Delhi in the case of MRY Auto Components Ltd. V. ITO in ITA No. 2418/Del/2014 dated 15.09.2017 • ITAT Delhi in the case of Meditronics India Pvt. Ltd. V. ITO in ITA No. 6251/Del/2012 dated 12.09.2017 • M/s. Supersonic Technologies Pvt. Ltd. Vs. PCIT-8, New Delhi, ITA No. 2269/De1/2017, Dated 10.12.2018 • Madan Lal Chaudhary Vs. ITO, ITA No. 9011De1/2013, Dated 14.11.2017. 10. The Hon’ble Supreme Court in the case of Asst. CIT vs M/s Hotel Blue Moon (supra) held as under:- 14. “..........Omission on the part of the assessing authority to issue notice under section 143(2) cannot be a procedural irregularity and the same is not curable and, therefore, the requirement of notice under section 143(2) cannot be dispensed with......” 11. Similar view has been expressed in other judicial pronouncements as well. The AO failed to bring on record notice issued u/s 143(2) of the Act. In the absence of such notice, it is presumed that AO did not issue any notice u/s 143(2) of the Act, hence the assessment was framed without meeting the requirement of law. I hold accordingly. The case laws relied by the Revenue would not help in view of the fact that AO failed to issue mandatory notice u/s 143(2) of the Act. This Tribunal is duly bound to follow ratio laid down by the Hon’ble Supreme Court and the Hon’ble Jurisdictional High Court. Therefore, respectfully following the binding precedents, I hereby quash assessment being bad in law. Since, I have quashed the impugned assessment order on the ground of legality, Page | 20 remaining grounds have become of academic nature hence, are not being adjudicated. 12. In the result, the appeal of the assessee is allowed in terms indicated herein above. Order pronounced in the open Court on 16 th March, 2023. Sd/- (KUL BHARAT) JUDICIAL MEMBER * Amit Kumar * Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI