APOORVA SHARMA, JAIPUR V. ITO, WARD-6(4), JAIPUR

ITA 219/JPR/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4102 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-10-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 03-03-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Search and seizure; Question of law; Tangible material; Accommodation entries; Competent authority; Assessment record; Block assessment; Reason to believe; Reassessment proceedings; Borrowed satisfaction; TDS; Set aside; FORM 26AS
• Section: 143(3); 142(1); 133(6); 201; 139(1); 64; 13; 22; 147; 148; 144; 2; 11

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S,B JAIPUR JH LAANHI XKSLKBZ] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI VIKRAM SING H YADAV, AM VK;DJ VIHY LA-@ ITA. NO. 219/JP/2020 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2010-11 APOORVA SHARMA 57 1 PANCHOLI VIHAR, HEM MARG NEW SANGANER ROAD, JAIPUR CUKE VS. ITO WARD- 6(4) JAIPUR TOLFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: CWLPS8581F VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SH. VINOD KUMAR GUPTA (CA) & SH. DEEPAK S HARMA (CA) JKTLO DH VKSJ LS @ REVENUE BY : SMT. MONISHA CHOUDHARY (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 22/09/2021 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 06/10/2021 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT(A)-2, JAIPUR DATED 30.12.2019 WHEREIN THE ASSES SEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL. 1. THE IMPUGNED ORDER U/S 147 R.W.S 144 DATED 18. 12.2017 IS BAD IN LAW AND ON FACTS OF THE CASE, FOR WANT OF JURISDICTION AND FOR VARIOUS OTHER REASONS AND HENCE, THE SAME MAY K INDLY BE QUASHED AND IN ANY CASE, THE IMPUGNED ADDITION BE D ELETED. 2. THE LD. CIT(A) ERRED IN LAW AS WELL AS ON THE FA CTS OF THE CASE IN CONFIRMING THE ACTION OF THE AO BY FRAMING THE ITA NO. 219/JP/2020 APOORVA SHARMA VS. ITO 2 ASSESSMENT U/S 144 DESPITE THE ASSESSEE REGULARLY A TTENDED THE PROCEEDINGS. THE IMPUGNED ORDER HAVING BEEN FRAMED U/S 147 R.W.S. 144 DATED 18.12.2017 IN GROSS BREACH OF NATU RAL JUSTICE, KINDLY BE QUASHED. 3. THE VERY ACTION TAKEN U/S 147 R/W 148 IS BAD IN LAW WITHOUT JURISDICTION AND BEING VOID AB-INITIO, THE SAME KIN DLY BE QUASHED. CONSEQUENTLY THE IMPUGNED ASSESSMENT FRAMED U/S 144 /148 DATED 11.02.2014 ALSO KINDLY BE QUASHED. 4. THE LD. CIT(A) ERRED IN LAW AS WELL AS ON THE FA CTS OF THE CASE IN CONFIRMING THE ADDITION OF RS. 21,75,286/- ON ACCOUNT OF COMMISSION EARNED IN THE HANDS OF THE ASSESSEE AS A GAINST HER FATHER DESPITE THE FACTS THAT SHE WAS MINOR AND WAS STUDYING IN CLASS XII AT SANT ANSLAM SCHOOL, MANSAROVER, JAIPUR AT THE RELEVANT POINT OF TIME. THE ADDITION SO MADE AND CO NFIRMED BY THE LD. CIT(A) IS TOTALLY CONTRARY TO THE PROVISION S OF LAW AND FACTS ON THE RECORD AND HENCE THE SAME KINDLY BE DELETED IN FULL. 2. BRIEFLY STATED, FACTS OF THE CASE ARE THAT BASIS RECEIPT OF CERTAIN INFORMATION BY THE ASSESSING OFFICER, THE CASE OF T HE ASSESSEE WAS REOPENED BY ISSUING NOTICE U/S 148. IN RESPONSE TO THE NOTICE, IT WAS SUBMITTED BY THE ASSESSEE THAT SHE WAS MINOR DURING THE PREVIOUS YEAR RELEVANT TO IMPUGNED ASSESSMENT YEAR AND IT WAS REQ UESTED TO DROP THE REASSESSMENT PROCEEDINGS INITIATED AGAINST HER. IT IS ALSO NOTED THAT NO RETURN OF INCOME WAS FILED BY THE ASSESSEE IN RESPO NSE TO NOTICE U/S 148. THEREAFTER, NOTICES WERE ISSUED U/S 142(1) AND REPLIES WERE SUBMITTED BY THE ASSESSEE. HOWEVER, NOT ACCEPTING T HE REPLIES SUBMITTED BY THE ASSESSEE, COMMISSION INCOME OF RS. 21,60,840/- WAS ITA NO. 219/JP/2020 APOORVA SHARMA VS. ITO 3 BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE. BESIDE S, INTEREST INCOME OF RS. 14,446/- WAS ALSO BROUGHT TO TAX AND ASSESSMENT WAS COMPLETED AT RS. 21,75,290/- VIDE ORDER DATED 18.12.2017 PASSED U/S 144 READ WITH 147 OF THE ACT. 3. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE LD. CIT(A) WHEREIN THE LD. CIT(A) HAS CONFIRMED THE ACTION OF THE AO. AGAINST THE SAID FINDINGS AND THE ORDER OF LD. CIT( A), THE ASSESSEE IS IN APPEAL BEFORE US. 4. DURING THE COURSE OF HEARING, THE LD. AR SUBMIT TED THAT THE NOTICE U/S 148 WAS ISSUED BY ITO, WARD 6(2), JAIPUR AND THE CASE OF THE ASSESSEE FALLS UNDER ITO WARD 6(3), JAIPUR. THEREFO RE, THE VERY INITIATION OF PROCEEDINGS BY NON-JURISDICTIONAL ASS ESSING OFFICER CANNOT BE SUSTAINED IN EYES OF LAW. IT WAS FURTHER SUBMITT ED THAT THE REASONS HAVE BEEN RECORDED ON INCORRECT ASSUMPTION OF FACTS AND LAW, AND NON APPLICATION OF MIND BY THE ASSESSING OFFICER AT THE TIME OF RECORDING OF THE REASONS AND EVEN THE APPROVAL HAS BEEN MECHANIC ALLY GRANTED BY THE CONCERNED SANCTIONING AUTHORITY. IT WAS SUBMITT ED THAT THE ASSESSEE WAS A MINOR GIRL, STUDYING IN CLASS 12 TH DURING THE PREVIOUS YEAR RELEVANT TO IMPUGNED ASSESSMENT YEAR. IT WAS SUBMITTED THAT THE NATURE OF INCOME WHICH HAS BEEN BROUGHT TO TAX IS COMMISSION INCOME WHICH REQUIRES THE PERSON TO WORK AS AN AGENT OF THE PRIN CIPAL FOR WHICH EXISTENCE OF AN AGENCY CONTRACT IS A PRE-REQUISITE. THE ASSESSEE BEING A MINOR WAS NOT ELIGIBLE TO ENTER INTO ANY KIND OF AG REEMENT IN VIEW OF SECTION 11 OF INDIAN CONTRACT ACT, 1872. IT WAS FUR THER SUBMITTED THAT MERE DEDUCTION OF TDS DOES NOT IMPLIES THAT CERTAIN SERVICES HAVE BEEN ITA NO. 219/JP/2020 APOORVA SHARMA VS. ITO 4 PROVIDED BY THE MINOR ASSESSEE. IT WAS ACCORDINGLY SUBMITTED THAT THE ADDITION MADE BY THE AO AND SUSTAINED BY THE LD. CI T(A) APPLYING THE PROVISO TO SECTION 64(1A) OF THE ACT IS COMPLETELY UNJUSTIFIED BEING CONTRARY TO THE LAW AND FACTS. IT WAS ACCORDINGLY S UBMITTED THAT BOTH ON FACTUAL AND LEGAL BASIS, THE ADDITION MADE BY THE A SSESSING OFFICER AND CONFIRMED BY THE LD CIT(A) DESERVES TO BE DELETED. FURTHER, HE HAS RELIED ON THE WRITTEN SUBMISSIONS AND CONTENTS THER EOF READ AS UNDER:- 1. NOTICE U/S 148 ISSUED BY NON JURISDICTIONAL AO : 1.1 AT THE OUTSET IT IS SUBMITTED THAT THE PAN OF T HE ASSESSEE HAS BEEN FALLING UNDER THE JURISDICTION OF ITO WARD 6(3 ), JAIPUR. SAME IS EVIDENT FROM THE PAN JURISDICTION APPEARING ON INCO ME TAX PORTAL. AN IMAGE OF THE SAME IS PLACED HEREUNDER FOR YOUR KIND PERUSAL: ITA NO. 219/JP/2020 APOORVA SHARMA VS. ITO 5 AS JURISDICTION OF THE ASSESSEE WAS FALLING UNDER I TO WARD 6(3), THEREFORE NOTICE U/S 148 BEING THE JURISDICTIONAL N OTICE, WAS REQUIRED TO BE ISSUED BY THE JURISDICTIONAL ASSESSING OFFICER, HOWEVER, IN THE INSTANT CASE, NOTICE U/S 148 HAS BEEN ISSUED BY ITO WARD 6( 2) (PBP-1), AFTER RECORDING THE REASONS (PBP 2-3). 1.2 IN THE ASSESSMENT ORDER, AT PAGE-1, PARA-1, ASS ESSING OFFICER HAS MADE THE INCORRECT ASSUMPTION OF THE FACT THAT ASS ESSMENT WAS REOPENED BY ISSUING NOTICE U/S 148 OF THE INCOME TA X AFTER DULY RECORDING REASONS BY ITO W 6(3), WHEREAS FROM THE PERUSAL OF NOTICE U/S 148 (PBP-1) AND REASONS RECORDED (PBP 2-3), IT IS EVIDENT THAT NOTICE HAS BEEN ISSUED BY ITO WARD 6(2) AND REASONS HAVE ALSO BEEN RECORDED BY ITO WARD 6(2). MOREOVER, WE MADE THE IN SPECTION OF ASSESSMENT RECORDS AFTER MAKING THE OFFICIAL REQUES T BEFORE HONBLE ITAT DURING THE COURSE OF HEARING ON 04.03.2021, AN D IN THE ENTIRE ASSESSMENT RECORDS THERE IS NO SUCH NOTICE U/S 148 OR REASONS RECORDED BEING ISSUED BY ITO WARD 6(3). 1.3 THE SUBSEQUENT NOTICES (NOTICE U/S 133(6), 142( 1) ETC.) HAVE BEEN ISSUED BY ITO WARD 6(3) I.E. JURISDICTIONAL AS SESSING OFFICER. THEREAFTER, FOR THE PURPOSE OF COMPLETION OF ASSESS MENT, JURISDICTION WAS TRANSFERRED FROM ITO WARD 6(3) TO 6(4) VIDE ORD ER OF PCIT-2, JAIPUR DATED 03.11.2017. 1.4 THE BASIC REQUIREMENT OF SECTION 147 IS THAT TH E ASSESSING OFFICER MUST HAVE A REASON TO BELIEVE THAT INCOME CHARGEABL E TO TAX HAS ESCAPED ASSESSMENT AND SUCH BELIEF MUST BE OF JURIS DICTIONAL ASSESSING OFFICER AND NOT OF ANY OTHER ASSESSING OFFICER OR A UTHORITY OR DEPARTMENT AND VALID NOTICE U/S 148 SHALL BE ISSUED BY JURISDI CTIONAL AO. IN THE ITA NO. 219/JP/2020 APOORVA SHARMA VS. ITO 6 INSTANT CASE, THE FACTS AND CIRCUMSTANCES MENTIONED ABOVE MAKES IT EVIDENTLY CLEAR THAT NOTICE U/S 148 HAS NOT BEEN IS SUED BY JURISDICTIONAL ASSESSING OFFICER THEREFORE THE ENTIRE PROCEEDING T AKEN BY BECOME VOID FOR WANT OF JURISDICTION. 1.5 IN THIS REGARDS, WE PLACE OUR RELIANCE ON THE F OLLOWING CASE LAWS: PANKAJBHAI JAYSUKHLAL SHAH VS ACIT IN SCA 230/2019 VIDE ORDER DATED 09.04.2019. (CASE LAW#1) RESHAM PETROCHEM LTD VS ACIT IN ITA NO. 2777/AHD/20 11 VIDE ORDER DATED 10.02.2012 (PARA 15 TO 25) (CASE L AW#2) TEJPAL SINGH VS ITO IN ITA NO. 3087/DEL/2017 VIDE O RDER DATED 22.11.2017 (CASE LAW#3) 2. REASONS RECORDED ON INCORRECT ASSUMPTION OF FACT S: 2.1 A PERUSAL OF THE REASONS RECORDED REVEALS THAT THE AO WAS OF BELIEF THAT THE ASSESSEE HAS RECEIVED THE GROSS REC EIPTS AMOUNTING TO RS. 21,60,840/- AND ON THIS GROUND THE ACTION OF IN ITIATION U/S 148 WAS TAKEN, WHEREAS IN FACT, THE ASSESSEE RECEIVED THE A MOUNT OF RS. 14,28,318/- ONLY AS EVIDENT FROM THE BANK STATEMENT S SUBMITTED BY THE ASSESSEE AS WELL AS OBTAINED BY THE AO U/S 133(6). 2.2 AT PARA-6 OF ASSESSMENT ORDER, LD.AO HAS CATEGO RICALLY STATED THAT BANK STATEMENTS WERE OBTAINED AND EXAMINED. AT PAGE-2 OF ASSESSMENT ORDER, LD.AO PROCEEDED TO DETERMINE THE COMMISSION INCOME AT RS.21,60,840/- ON THE SOLE GROUND THAT LE DGER OR CONFIRMATION OF PARTY WAS NOT SUBMITTED, HOWEVER, THE FACTUAL PO SITION CLARIFIED BY THE ASSESSEE THAT COMMISSION OF RS.14,28,318/- ONLY WAS RECEIVED HAS ITA NO. 219/JP/2020 APOORVA SHARMA VS. ITO 7 BEEN ADMITTED AFTER DUE EXAMINATION OF BANK STATEME NTS, WITHOUT RECORDING ANYTHING CONTRARY. 2.3 THEREFORE, THE GROUND SO TAKEN BY THE AO TO FOR M BELIEF OF ESCAPEMENT IS FACTUALLY INCORRECT. THE REASONS WERE RECORDED ON WRONG PRESUMPTION AND WITHOUT LOOKING INTO THE CORRECT FA CTS OF THE CASE. IN SUPPORT OF OUR CONTENTION WE RELY UPON FOLLOWING CA SE LAWS: HONBLE JURISDICTIONAL ITAT IN THE CASE OF SMT. MEE NA BALDUA VS ITO IN ITA NO.872/JP/2018 VIDE ORDER DATED 08.03 .2019 BY HOLDING AS UNDER: (CASE LAW#4) HENCE, WE HOLD THAT THE REASONS RECORDED BY THE AO BASED ON INCORRECT FACT IS NOT SUSTAINABLE IN LAW AND LIA BLE TO BE QUASHED. SINCE, WE QUASHED THE REOPENING BEING INVA LID THEREFORE, WE DO NOT PROPOSE TO GO INTO GROUND NO. 2 OF THE ASSESSEES APPEAL ON THE MERITS OF THE ADDITION. RAM MOHAN RAWAT VS ITO IN ITA NO.1014/JPR/2018 (JAI PUR TRIB.) VIDE ORDER DATED 08.03.2019 (CASE LAW#5) BY HOLDING AS UNDER: THUS MAKING THE WRONG STATEMENT IN THE REASONS REC ORDED AND IGNORING THE RELEVANT AND CORRECT FACTS AVAILAB LE ON RECORD ESTABLISHED THAT THE AO HAS NOT APPLIED HIS INDEPENDENT MIND WHILE FORMING THE OPINION. THE CHANDIGARH BENCH OF THE TRIBUNAL IN CASE OF BABA KA RTAR SINGH DUKKI EDUCATIONAL TRUST VS. ITO (SUPRA) HAS A LSO CONSIDERED AN IDENTICAL ISSUE AND HELD THAT THE AO PROCEEDED FOR REOPENING OF THE ASSESSMENT FOR NON-EXISTENT AN D ITA NO. 219/JP/2020 APOORVA SHARMA VS. ITO 8 FACTUALLY INCORRECT REASONS AND HAS NOT APPLIED HIS MIND. THE TRIBUNAL HAS CONCLUDED IN PARA 19 AS UNDER :- 19. IN VIEW OF THE ABOVE DISCUSSION, I HOLD THAT THE AO HAD TAKEN AN IRRELEVANT FACT INTO CONSIDERATION AND REOPENED THE ASSESSMENTS ON THE BASIS OF SUSPICION. FURTHER MORE, THE ASSESSING OFFICER PROCEEDED FOR RE-OPENING OF THE ASSESSMENT ON NON- EXISTENT AND FACTUALLY INCORRECT BASIS/REASONS AND HAS NOT APPLIED HIS MIND AND DID NOT VERIFY THE ASSESSMENT RECORDS/RETURNS FILED BY THE ASSESSEE PRIOR TO RECORDING OF THE REASONS, THEREFORE, RE- OPENING OF THE ASSESSMENTS FOR ASSESSMENT YEAR 2001-02, 2002-03 AND 2003-04 IS INVALID AND LIABLE TO BE SET ASIDE/QUASHED. ACCORDINGLY, THE ORDERS OF TH E AUTHORITIES BELOW ARE NOT SUSTAINABLE AND HENCE DESERVE TO BE QUASHED. I ORDER ACCORDINGLY. ACCORDINGLY, IN VIEW OF THE ABOVE FACTS AND CIRCUMS TANCES OF THE CASE, WHEN THE AO HAS INITIATED THE PROCEEDINGS ON THE BASIS OF NON-EXISTENT AND FACTUALLY INCORRECT FACTS AND REASONS WITHOUT APPLICATION OF MIND AND WITHOUT VER IFICATION OF THE FACTS AVAILABLE ON RECORD, THEN THE PROCEEDI NGS INITIATED UNDER SECTION 147/148 ARE NOT SUSTAINABLE IN LAW. THE SAME ARE SET ASIDE AND CONSEQUENTIAL REASSESSME NT ORDER IS QUASHED. HARJEET SINGH VS ITO IN ITA NO.2013/DEL/2015 (DELHI TRIB.) VIDE ORDER DATED 12.11.2018 ITA NO. 219/JP/2020 APOORVA SHARMA VS. ITO 9 10. IT CAN BE SEEN FROM THE ABOVE THAT THERE IS NO MENTION OF ANY CHEQUE NUMBER AND AMOUNT SHOWS IS RS.10 LACS . AS PER BANK STATEMENT WHICH IS AT PAGE 36 OF THE PAPER BOOK ON 09.09.2004 THERE IS A CHEQUE ENTRY OF RS. 1 LACS CH EQUE NUMBER IS 00884535/-. IT CAN BE SEEN THAT THE ASSES SING OFFICER HAS PROCEEDED ON WRONG ASSUMPTION FACT. THE AMOUNT OF RS. 10 LACS IS NOT SUPPORTED BY ANY CHEQU E NUMBER WHEREAS THE ALLEGATION IS THAT THE ASSESSEE HAS RECEIVED ACCOMMODATION ENTRY FROM SH. GUPTA THROUGH DEPOSITS IN PROPRIETORS ACCOUNTS TRANSFER TO 1ST INTERMEDIATELY COMPANY DATE PARTICULARS AMOUNT BANK CH.NO. DATE INTERMEDIATE AMOUNT 18-09-04 CASH DEPOS IT 200)300 FEDERAL 763281 08/09/04 FENDERAL CHANDRABRA BHA FIN. 200000 TRANSFER BY CHEQUE TO ACTUAL BENEFICIAR Y MEDIATORY SOURCE OF EXTRA FUND IF INTERMIDIATORY COMPANY DATE AMOUNT ACTUAL BENEFICIARY ADDRESS PAN NO. MEDIATORY ADDRESS PAN 400000 CASH DEPOSIT MAHALAXMI FINANCE CO. 09/09/04 1000000 HARJEET 11/01, GURUDWA RA ROAD, JANGPURA, .BHOGAL, NEW DELHI110014. AARPS3442 H ANEJA JI 5C/13, NEW ROHTAK ROAD, KAROL BAGH, NEW DE LHI AAEPA5548H 400000 CASH DEPOSIT MAHALAXMI FINANCE CO . CHEQUE. IN MY CONSIDERED OPINION THE BASIS OF REOPE NING ITSELF IS BASED ON WRONG FACTS THEREFORE, THE SAME CANNOT BE UPHELD. I ACCORDINGLY SET ASIDE THE NOTICE U/S 148 OF THE ACT THE REASSESSMENT BASED ON SUCH NOTICE DESERVES TO B E QUASHED. SINCE THE ASSESSMENT ITSELF HAS BEEN QUASH ED THE OTHER AD-HOC DISALLOWANCE STAND DELETED. ITA NO. 219/JP/2020 APOORVA SHARMA VS. ITO 10 3. NON APPLICATION OF MIND BY AO AT THE TIME OF REC ORDING OF REASONS: 3.1 IT IS IMPORTANT TO NOTE THAT IN THE INSTANT CAS E THE REASONS WERE RECORDED BY THE AO ON 17.03.2017 ON THE BASIS OF IN DIVIDUAL TRANSACTION STATEMENT (ITS) SHOWING THE DETAILS OF FORM 26AS. IN WHICH CERTAIN ENTRIES WERE APPEARING SHOWING TOTAL PAYMENT OF RS. 21,60,840/- AND TDS DEDUCTED OF RS. 2,17,807/- AND ON THE BASIS OF SAID INFORMATION AND NON FILING OF RETURN, IT WAS C ONCLUDED THAT THE INCOME HAS ESCAPED THE ASSESSMENT. 3.2 AFTER RECORDING THE REASONS BY RECORDING A CATE GORICAL FINDING THAT ASSESSEE HAS RECEIVED GROSS RECEIPTS AMOUNTING TO R S.21,60,840/- A NOTICE U/S 133(6) DATED 22.08.2017 (PBP-17) WAS ISS UED TO PUNJAB NATIONAL BANK TO OBTAIN COPIES OF BANK STATEMENTS O F THE ACCOUNT IN WHICH SUCH ALLEGED RECEIPTS WERE CREDITED. 3.3 IT VIEW OF THE THESE FACTS, IT EMERGES THAT THE AO WAS HAVING INFORMATION FROM TWO SOURCES VIZ. INFORMATION RECEI VED IN THE FORM OF ITS REPORT AND INFORMATION (BANK STATEMENTS) OBTAIN ED FROM THE PUNJAB NATIONAL BANK BY WAY OF NOTICE U/S 133(6). I T IS IMPORTANT TO NOTE THAT THE BANK STATEMENTS WERE OBTAINED BY THE AO AFTER RECORDING THE REASONS, THUS, AT THE TIME OF RECORDING THE REA SONS, THERE WAS NOT ANY TANGIBLE MATERIAL IN THE HANDS OF THE AO TO HAV E A REASON TO BELIEVE THAT INCOME TO THE EXTENT OF RS.21,60,840/- HAS ESC APED THE ASSESSMENT AND THE AO WAS HAVING THE ITS INFORMATIO N ONLY. 3.4 THE REPORT OF THE ITS WAS ONLY SUFFICIENT TO MA KE A PRIMA FACIE REASON TO SUSPECT THAT THE SOME AMOUNTS HAVE BEEN S HOWN BY SOME DEDUCTOR ON THE PAN OF THE ASSESSEE BUT IT WAS NOT SUFFICIENT ENOUGH TO ITA NO. 219/JP/2020 APOORVA SHARMA VS. ITO 11 DRAW A CONCLUSION THAT THE INCOME HAS ESCAPED THE A SSESSMENT. TO CONVERT REASON TO SUSPECT INTO REASON TO BELIEVE SO ME TANGIBLE MATERIAL WAS NEEDED. THEREFORE, TO REACH TO SUCH A DECISIVE FINDING THE AO WAS EXPECTED TO OBTAIN THE BANK STATEMENT OR OTHER MATE RIAL SUGGESTING THAT AMOUNT TO THIS EXTENT HAS BEEN RECEIVED BY THE ASSESSEE, BEFORE RECORDING THE REASONS, FROM BANK OR FROM THE FATHER OF ASSESSEE, BUT NOTHING OF THIS SORT WAS DONE. THIS SHOWS THAT THE AO HAS MERELY GONE BY THE REPORT OF ITS. IN THIS REGARD RELIANCE IS PL ACED ON THE DECISION OF HONBLE DELHI HC IN THE CASE OF MEENAKSHI OVERSEAS PVT LTD VS ITO (2017) 395 ITR 677 (DELHI HC) WHEREIN THE HONBLE C OURT RETURNED THE FINDING THAT THE REOPENING OF ASSESSMENT UNDER SE CTION 147 IS A POTENT POWER NOT TO BE LIGHTLY EXERCISED. IT CERTAI NLY CANNOT BE INVOKED CASUALLY OR MECHANICALLY. THE HEART OF THE PROVISIO N IS THE FORMATION OF BELIEF BY THE AO THAT INCOME HAS ESCAPED ASSESSMENT . THE REASONS SO RECORDED HAVE TO BE BASED ON SOME TANGIBLE MATERIAL AND THAT SHOULD BE EVIDENT FROM READING THE REASONS. IT CANNOT BE S UPPLIED SUBSEQUENTLY EITHER DURING THE PROCEEDINGS WHEN OBJ ECTIONS TO THE REOPENING ARE CONSIDERED OR EVEN DURING THE ASSESSM ENT PROCEEDINGS THAT FOLLOW. THIS IS THE BARE MINIMUM MANDATORY REQ UIREMENT OF THE FIRST PART OF SECTION 147 (1) OF THE ACT. 3.5 THUS, FROM THE REASONS RECORDED IT CLEARLY GETS MANIFESTED THAT LD.AO SIMPLY MADE THE TOTALS OF FIGURES APPEARING I N FORM 26AS WITHOUT ANY VERIFICATION OR EXAMINATION OF THE SAME . 3.6 IT IS ALSO A SETTLED LAW THAT THE INFORMATION U SED BY THE AO FOR HAVING A REASON TO BELIEVE MUST BE SPECIFIC & RELIA BLE BUT NOT VAGUE AND FACTUALLY INCORRECT. A BARE PERUSAL OF THE REASONS RECORDED REVEAL THAT ITA NO. 219/JP/2020 APOORVA SHARMA VS. ITO 12 SAME ARE COMPLETELY VAGUE. INSTEAD OF RECORDING A C LEAR FINDING, MERELY GROSS RECEIPTS HAS BEEN MENTIONED WITHOUT GIVING AN Y SPECIFIC AS TO NATURE OF ALLEGED INCOME OR THE BANK ACCOUNT IN WHI CH ALLEGED RECEIPTS HAVE BEEN RECEIVED BY THE ASSESSEE. 3.7 AS MENTIONED ABOVE, AFTER RECORDING THE REASONS , THE ASSESSING OFFICER HAS SUBSEQUENTLY WRITTEN A LETTER U/S 133(6 ) TO PUNJAB NATIONAL BAN TO OBTAIN THE COPY OF BANK STATMENTS. GIVEN THA T, ON THE BASIS OF THIS TRANSACTION, AO FORMED A REASON OF ESCAPEMENT IN THE HANDS OF THE ASSESSEE, THEREFORE, IT WAS ESSENTIAL ON HIS PART T O AT LEAST EXAMINE THE CORRECT FACTS OF THE TRANSACTION BEFOREHAND. THERE IS NO DISPUTE THAT THE AO CAN RELY UPON THE INFORMATION RECEIVED BUT AT TH E SAME TIME, WHERE HE IS ASSUMING JURISDICTION U/S 147, HE IS REQUIRED TO CARRY OUT FURTHER EXAMINATION TO MAKE A ESTABLISH FORMATION OF BELIEF THAT INCOME HAS ESCAPED, WHEREAS, NOTHING OF THIS SORT WAS DONE. 3.8 THE HON'BLE DELHI HIGH COURT RECENTLY IN THE CA SE OF SOUTH YARRA HOLDINGS VS. ITO, VIDE WRIT PETITION NO.3398 OF 201 8, ORDER DATED 1ST MARCH, 2019, AT PARA 7 (CASE LAW#6) OF THE ORDER HA S OBSERVED AS UNDER:- 7. IT IS A SETTLED POSITION IN LAW THAT RE-OPENING OF AN ASSESSMENT HAS TO BE DONE BY AN ASSESSING OFFICER ON HIS OWN S ATISFACTION. IT IS NOT OPEN TO AN ASSESSING OFFICER ISSUE A REOPENI NG NOTICE AT THE DICTATE AND/OR SATISFACTION OF SOME OTHER AUTHORITY . THEREFORE, ON RECEIPT OF ANY INFORMATION WHICH SUGGESTS ESCAPEMEN T OF INCOME, THE ASSESSING OFFICER MUST EXAMINE THE INFORMATION IN THE CONTEXT OF THE FACTS OF THE CASE AND ONLY ON SATISFACTION L EADING TO A ITA NO. 219/JP/2020 APOORVA SHARMA VS. ITO 13 REASONABLE BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT, THAT RE-OPENING NOTICE IS TO BE ISSUED. 3.9 IN SUPPORT OF OUR CONTENTION, WE RELY UPON THE DECI SION OF HONBLE BENCH, IN THE CASE OF M/S. BALAJI HEALTH CARE PVT. LTD.V/S. ITO IN ITA NOS. 566 & 567/JP/2018 VIDE ORDER DATED 30.1.2019 H OLDING AS UNDER: 20.FURTHER, IT IS NOTED THAT AFTER RECORDING OF THE REASONS, THE ASSESSING OFFICER HAS SUBSEQUENTLY WRITTEN A LETTER ON 30.08.2013 TO ACIT, NEW DELHI R EQUESTING FOR COPY OF STATEMENTS OF SURENDRA KUMAR JAIN,VIRENDRA KUMAR JAIN AT WHOSE PREMISES THE SEARCH WAS CONDUCTED AND P C AGARWAL, SO CALLED MEDIATOR IN THESE TRANSACTIONS. GIVEN THAT S EARCH PROCEEDINGS IN RESPECT OF THESE TWO PERSONS HAVE FO RMED THE BASIS FOR THE PRESENT REASSESSMENT PROCEEDINGS IN T HE HANDS OF THE ASSESSEE, IT WAS ESSENTIAL TO AT LEAST EXAMINE THE STATEMENTS OF THESE THREE PERSONS AND SEIZED MATERIAL IF ANY F OUND DURING THE COURSE OF SEARCH WHICH IN ANY WAYS INDICATE THAT TH ESE TWO PERSONS HAVE CARRIED OUT CERTAIN TRANSACTIONS WITH THE ASSESSEE AND PRIMA FACIE THESE TRANSACTIONS ARE SUSPECTED TO BE ACCOMMODATION ENTRIES AND NOT ACTUAL TRANSACTIONS. HOWEVER, THERE IS NOTHING IN THE REASONS SO RECORDED THAT TH E ASSESSING OFFICER HAS GONE THROUGH THE STATEMENTS SO RECORDED DURING THE COURSE OF SEARCH AND THE SEIZED MATERIAL TO SHOW PR IMA FACIE LINKAGE OF ASSESSEES UNDISCLOSED INCOME BEING ROUT ED BACK IN FORM OF SHARE CAPITAL. THIS SHOWS THAT THE ASSESSIN G OFFICER HAS MERELY GONE BY THE REPORT OF THE DIT, INVESTIGATION WING AND THE SAID REPORT EVEN DIDNT HAVE THE STATEMENTS OF THES E PERSONS WHICH EITHER FIND MENTION IN THE REPORT OR AS ENCLO SURES WHEN THE ITA NO. 219/JP/2020 APOORVA SHARMA VS. ITO 14 SAME WAS FORWARDED TO THE ASSESSING OFFICER. THEREF ORE, IT TRANSPIRES THAT THERE IS NO FURTHER EXAMINATION WHI CH HAS BEEN CARRIED OUT BY THE ASSESSING OFFICER. THE FACT THAT THE ASSESSEE HAS FILED ITS RETURN OF INCOME U/S 139(1) WAS VERY MUCH IN THE KNOWLEDGE OF THE ASSESSING OFFICER AND THE LATTER C OULD HAVE VERIFIED THE TRANSACTIONS WITH THE REPORTED TRANSAC TIONS IN THE FINANCIAL STATEMENTS AND COULD HAVE ASKED FOR MORE INFORMATION TO ESTABLISH THE NECESSARY NEXUS, HOWEVER NOTHING O F THAT SORT HAS BEEN DONE BY THE ASSESSING OFFICER AND HE HAS M ERELY GONE BY THE REPORT OF DIT, INVESTIGATION WING. IT IS TRU E THAT THE ASSESSING OFFICER CAN RELY ON THE REPORT OF DIT, IN VESTIGATION WING BUT AT THE SAME TIME, WHERE HE IS ASSUMING JURISDIC TION U/S 147, HE IS REQUIRED TO CARRY OUT FURTHER EXAMINATION AND ANALYSIS IN ORDER TO ESTABLISH THE NEXUS BETWEEN THE MATERIAL A ND FORMATION OF BELIEF THAT INCOME HAS ESCAPED ASSESSMENT AND IN ABSENCE THEREOF, THE ASSUMPTION OF JURISDICTION U/S 147 HAS NO LEGAL BASIS AND RESULTANT REASSESSMENT PROCEEDINGS DESERVE TO B E SET-ASIDE. OUR VIEWIS FORTIFIED BY THE DECISION OF THE HONBLE DELHI HIGH COURT IN CASE OF MEENAKSHI OVERSEAS PVT. LTD. (SUPR A) WHEREIN IT WAS HELD AS UNDER:- ... IN LIGHT OF ABOVE DISCUSSIONS AND IN THE ENTIRETY O F FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSUMPTION OF JURISD ICTION AND INITIATION OF THE PROCEEDINGS UNDER SECTION 147 OF THE ACT TO REOPEN THE ASSESSMENT PROCEEDINGS DOES NOT SATISFY THE REQUIREMENT OF LAW AND IS HEREBY SET-ASIDE. IN THE RESULT, GROUND NO. 1 OF THE ASSESSEES APPEAL IS ALLOWED. ITA NO. 219/JP/2020 APOORVA SHARMA VS. ITO 15 3.10 SIMILAR VIEW HAS BEEN TAKEN BY HONBLE BENCH I N THE CASE OF SHRI SHUJAAT ALI KHAN VS ITO IN ITA NO.170/JP/2019 VIDE ORDER DATED 05.01.2021. (CASE LAW#7) AND MEENA BALDUA VS ITO IN ITA NO.872/JP/2018 (JAIPUR TRIB.) VIDE ORDER DATED 08.0 3.2019. 3.11 IN VIEW OF THESE FACTS AND CIRCUMSTANCES, ONCE THE AO REACHED TO A FINDING THAT THE ASSESSEE RECEIVED GROSS AMOUNT O F RS.21,60,840/- WHICH HAS ESCAPED THE ASSESSMENT, HE WAS TO MAKE SO ME INQUIRY TO BRING SOME TANGIBLE MATERIAL RATHER THAN COMPLETELY RELYING UPON A ONE LINE INFORMATION AND THEN WAS TO EXAMINE THE CORREC T FACTS TO ESTABLISH THE NEXUS BETWEEN THE MATERIAL AND FORMATION OF BEL IEF THAT INCOME HAS ESCAPED. THE TANGIBLE MATERIAL WHICH FORMS THE BASI S FOR THE BELIEF THAT INCOME HAS ESCAPED ASSESSMENT MUST BE EVIDENT FROM A READING OF THE REASONS BUT AS THERE WAS NO SUCH TANGIBLE MATERIAL WITH THE AO AND ONLY CONCLUSIONS HAVE BEEN DRAWN. THEREFORE, IN ABS ENCE OF THESE PRE CONDITIONS, THE ASSUMPTION OF JURISDICTION U/S 147 HAS NO LEGAL BASIS AND RESULTANTLY THE ASSESSMENT MADE U/S 148 DESERVES TO BE QUASHED. IN SUPPORT OF OUR CONTENTION WE RELY UPON THE FOLLOWIN G CASE LAWS: 4. NON APPLICATION OF MIND BY CONCERNED SANCTIONING AUTHORITY: 4.1 THE COPY OF APPROVAL GRANTED BY PCIT-II, JAIPUR VIDE LETTER DATED 25.03.2017 IS PLACED AT PBP 2 TO 3. A PERUSAL OF TH E APPROVAL LETTER REVEAL THAT THE APPROVAL HAS BEEN GRANTED MERELY ME NTIONING YES AGAINST THE COLUMN WHICH QUERIED WHETHER THE PR.CI T IS SATISFIED ON THE REASONS RECORDED BY THE AO THAT IT IS A FIT CAS E FOR THE ISSUE OF NOTICE U/S 148. THIS SHOWS THAT PCIT-II, JAIPUR HA S NOT RECORDED ITA NO. 219/JP/2020 APOORVA SHARMA VS. ITO 16 PROPER SATISFACTION AND WITHOUT APPLICATION OF MIND GAVE THE APPROVAL IN MECHANICAL MANNER. IN SUPPORT OF OUR CONTENTION WE RELY UPON THE FOLLOWING CASE LAWS: CIT VS S GOYANKA LIME & CHEMICAL LTD (2015) 64 TAXMANN.COM 313 (SC) SECTION 151, READ WITH SECTION 148 OF THE INCOME-T AX ACT, 1961 - INCOME ESCAPING ASSESSMENT - SANCTION FOR IS SUE OF NOTICE (RECORDING OF SATISFACTION) - HIGH COURT BY IMPUGNED ORDER HELD THAT WHERE JOINT COMMISSIONER RECORDED SATISFACTION IN MECHANICAL MANNER AND WITHOUT APPLI CATION OF MIND TO ACCORD SANCTION FOR ISSUING NOTICE UNDER. S ECTION 148, REOPENING OF 8 ASSESSMENT WAS INVALID - WHETHER SPE CIAL LEAVE PETITION FILED AGAINST IMPUGNED ORDER WAS TO BE DISMISSED - HELD, YES [IN FAVOUR OF ASSESSEE] SEARCH AND SEIZURE-PROCEDURE FOR BLACK ASSESSMENT- SEARCH WAS CONDUCTED AT RESIDENTIAL AND BUSINESS PREMISES OF ASSESSEE AND NOTICE FOR BLOCK ASSESSMENT U/S. 158-B C WAS ISSUED- FOR BLOCK PERIOD, RETURNS WERE FILED THAT W ERE PROCESSED U/S. 143 (1)- HOWEVER, NOTICE U/S. 148 WA S ISSUED BY AO, ON BASIS OF CERTAIN REASONS RECORDED-ASSESSE E OBJECTED TO SAME BEFORE AO, THAT WAS REJECTED AND ASSESSMENT WAS COMPLETED U/SS. 143(3) AND CO NO.57/DEL/2012 147- C IT(A) FOUND THAT REASON RECORDED BY JOINT COMMISSIONER OF INCOME TAX, FOR ACCORDING SANCTION, WAS MERELY RECORDING ' I AM SATISFIED'- ACTION FOR SANCTION WAS ALLEGED TO BE W ITHOUT APPLICATION OF MIND AND TO BE DONE IN MECHANICAL MA NNER- ITA NO. 219/JP/2020 APOORVA SHARMA VS. ITO 17 HELD, WHILE ACCORDING SANCTION, JOINT COMMISSIONER, INCOME TAX ONLY RECORDED 'YES, I AM SATISFIED'- MECHANICAL WAY OF RECORDING SATISFACTION BY JOINT COMMISSIONER, THAT ACCORDED SANCTION FOR ISSUING NOTICE U/S. 147, WAS CLEARLY 9 UNSUSTAINABLE-ON SUCH CONSIDERATION, BOTH APPELLAT E AUTHORITIES INTERFERED INTO MATTER NO ERROR WAS COM MITTED WARRANTING RECONSIDERATION-AS FAR AS EXPLANATION TO S. 151, BROUGHT INTO FORCE BY FINANCE ACT, 2008 WAS CONCERN ED, SAME ONLY PERTAINED TO ISSUANCE OF NOTICE AND NOT WITH R EGARD TO MANNER OF RECORDING SATISFACTION-AMENDED PROVISION DID NOT HELP REVENUE-NO QUESTION OF LAW INVOLVED IN MATTER, THAT WARRANTED RECONSIDERATION-REVENUE'S APPEALS DISMISS ED. THE HON'BLE DELHI HIGH COURT HAS ALSO DECIDED THIS LEGAL ISSUE IN CASE CITED AS PR. CIT VS. N.C. CABLES LTD. IN IT A 335/2015 ORDER DATED 11.01.2017 BY RETURNING FOLLOWING FINDI NGS :- ' REASSESSMENT-ISSUANCE OF NOTICE SANCTION FOR ISSU E OF NOTICE ASSESSEE HAD IN ITS RETURN FOR A Y 2001-02 C LAIMED THAT SUM OF RS. 1 CRORE WAS RECEIVED TOWARDS SHARE APPLI CATION AMOUNTS AND A FURTHER SUM OF THIRTY FIVE LAKHS WAS CREDITED TO IT AS AN ADVANCE TOWARDS LOAN-ORIGINAL ASSESSMEN T WAS COMPLETED U/S 143(3)-HOWEVER, 10 PURSUANT TO REASSE SSMENT NOTICE, WHICH WAS DROPPED DUE TO TECHNICAL REASONS, AND LATER NOTICE WAS ISSUED AND ASSESSMENTS WERE TAKEN UP AFR ESH- AFTER CONSIDERING SUBMISSIONS OF ASSESSEE AND DOCUM ENTS PRODUCED IN REASSESSMENT PROCEEDINGS, AO ADDED BACK A SUM OF RS.1,35,00,000-CIT(A) HELD AGAINST ASSESSEE ON L EGALITY OF ITA NO. 219/JP/2020 APOORVA SHARMA VS. ITO 18 REASSESSMENT NOTICE BUT ALLOWED ASSESSEE'S APPEAL O N MERITS HOLDING THAT AO DID NOT CONDUCT APPROPRIATE ENQUIRY TO CONCLUDE THAT SHARE INCLUSION AND ADVANCES RECEIVED WERE FROM BOGUS ENTITIES-TRIBUNAL ALLOWED ASSESSEE'S APP EAL ON MERITS REVENUE APPEALED AGAINST APPELLATE ORDER ON MERITS- ASSESSEE'S CROSS APPEAL WAS ON CORRECTNESS OF REOPE NING OF ASSESSMENT- TRIBUNAL UPHELD ASSESSEE'S CROSS-OBJECT IONS AND DISMISSED REVENUE'S APPEAL HOLDING THAT THERE WAS N O PROPER APPLICATION OF MIND BY CONCERNED SANCTIONING AUTHOR ITY 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 AUTHORITY TO AUTHORIZE REASSESSMENT NOTICE, HAD TO APPLY HIS MIND AND FORM OPINION- MERLY APPENDING OF EXPRESSIO N 'APPROVED' SAYS NOTHING-IT WAS NOT AS IF CIT (A) HA D 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 REFLECTED IN BRIEFEST POSSIBLE MANNER- IN PRESENT CASE, EXERCISE APPEARS TO HAVE BEEN RITUALISTIC AND FORMAL RATHER THAN MEANINGFUL, WHICH WAS RATIONALE FOR SAF EGUARD OF APPROVAL BY HIGHER RANKING OFFICERREVENUE'S APPEAL DISMISSED.' THE CASE OF ASSESSEE IS SQUARELY COVERED BY THE DEC ISION OF HONBLE JAIPUR ITAT IN THE CASE OF M/S ANGEL INFRAS TRUCTURE PVT LTD VS DCIT IN ITA NO.464/JP/2018 VIDE ORDER DATED 06.12.2018 (CASE LAW#8) ITA NO. 219/JP/2020 APOORVA SHARMA VS. ITO 19 THE CASE OF ASSESSEE IS SQUARELY COVERED BY THE DEC ISION OF HONBLE ITAT, DELHI BENCH IN THE CASE OF BLUE CHIP DEVELOPERS P LTD VS ITO IN ITA NO.1061/DEL/2019 VIDE ORDER DAT ED 02.12.2019 WHEREIN IT WAS HELD AS UDNER: 4.2 SINCE IN THE PRESENT CASE THE APPROVING AUTHOR ITY HAS GIVEN APPROVAL TO THE REOPENING OF ASSESSMENT IN A MECHANICAL MANNER WITHOUT DUE APPLICATION OF MIND B Y ONLY MENTIONING IN COLUMN NO. 12 YES, IN THE REASONS F OR INITIATING PROCEEDINGS U/S. 147 AND FOR OBTAINING T HE APPROVAL OF THE ADDL. COMMISSIONER OF INCOME TAX, DELHI-2, N EW DELHI, A COPY OF WHICH IS PLACED AT PAGE NO. 103 OF THE PA PER BOOK NO. 2, AND THEREFORE, THE LEGAL ISSUE IN DISPUTE IS SQUARELY COVERED BY THE AFORESAID FINDING OF THE TRIBUNAL, H ENCE, RESPECTFULLY FOLLOWING THE AFORESAID PRECEDENT I.E. ITAT, SMC, BENCH, NEW DELHI ORDER DATED 16.10.2019 IN THE CASE OF DHARMENDER KUMAR VS. ITO DECIDED IN ITA NO. 2728/DE L/2018 (AY 2008-09), AS RELIED BY THE LD. COUNSEL FOR THE ASSESSEE, THE REASSESSMENT IS HEREBY QUASHED AND ACCORDINGLY THE GROUND NO. 2 IS ALLOWED. SINCE THE ASSESSEE SUCCEED S ON THIS LEGAL GROUND CHALLENGING THE VALIDITY OF REASSESSME NT PROCEEDINGS, THE ADDITION ON MERIT IS NOT BEING ADJ UDICATED BEING ACADEMIC IN NATURE. THE APPEAL FILED BY THE A SSESSEE IS ACCORDINGLY ALLOWED. HONBLE ITAT, DELHI BENCH IN A RECENT DECISION IN THE CASE OF RAJENDRA AGRAWAL VS ITO IN ITA NO.4624/DEL/2014 VID E ORDER DATED 02.12.2019 HELD AS UNDER: ITA NO. 219/JP/2020 APOORVA SHARMA VS. ITO 20 5.3 SINCE IN THE PRESENT CASE THE APPROVING AUTHOR ITY HAS GIVEN APPROVAL TO THE REOPENING OF ASSESSMENT IN A MECHANICAL MANNER WITHOUT DUE APPLICATION OF MIND B Y MENTIONING ONLY THAT ON THE BASIS OF A ABOVE, I AM SATISFIED, IN THE REASONS FOR INITIATING PROCEEDIN GS U/S. 147 AND FOR OBTAINING THE APPROVAL OF THE ADDL. COM MISSIONER OF INCOME TAX, RANGE-23, NEW DELHI, A COPY THEREOF IS PLACED AT PAGE NO. 1 OF THE PAPER BOOK, AND THEREFORE, THE LEGAL ISSUE IN DISPUTE IS SQUARELY COVERED BY THE AFORESA ID FINDING OF THE TRIBUNAL, HENCE, RESPECTFULLY FOLLOWING THE AFO RESAID PRECEDENT I.E. ITAT, SMC, BENCH, NEW DELHI DECISION DATED 21.8.2019 IN THE CASE OF GOPAL CHAND MANUDHRA AND S ONS; DAMYANTIMUNDHRA; RAMDEV MUNDHRA; SHRIYA DEVI MUNDHR A AND GOPAL 24 CHAND MUNDHRA VS. ITO, WARDS 55(5), NE W DELHI DECIDED IN ITA NO. 1375; 1721; 1722; 1523- 1524/DEL/2019 RESPECTIVELY RELEVANT TO ASSESSMENT Y EAR 2011- 12, THE REASSESSMENT IS HEREBY QUASHED AND ACCORDIN GLY THE ADDITIONAL GROUND NO. 2 IS ALLOWED. SINCE THE ASSES SEE SUCCEEDS ON THIS LEGAL GROUND CHALLENGING THE VALID ITY OF REASSESSMENT PROCEEDINGS, THE ADDITION ON MERIT IS NOT BEING ADJUDICATED BEING ACADEMIC IN NATURE. THE APPEAL FI LED BY THE ASSESSEE IS ACCORDINGLY ALLOWED. DHARMENDRA KUMAR VS ITO IN ITA NO.2728/DEL/2018 VID E ORDER DATED 16.10.2019 HELD AS UNDER: 5. I HAVE HEARD BOTH THE PARTIES AND CAREFULLY CON SIDERED THE CASE LAWS AND THE RELEVANT DOCUMENTS AVAILABLE ON R ECORD ITA NO. 219/JP/2020 APOORVA SHARMA VS. ITO 21 ESPECIALLY THE ASSESSMENT ORDER, IMPUGNED ORDER, REASONS/SATISFACTION/APPROVAL RECORDED FOR ISSUE OF NOTICE U/S. 148 OF THE ACT AS WELL AS THE PAPER BOOK FILED BY T HE ASSESSEE CONTAINING PAGES 1-41 OF THE PAPER BOOK IN WHICH HE HAS ATTACHED THE COPY OF AIR INFORMATION; COPY OF REASO NS RECORDED; COPY OF APPROVAL PERFORMA U/S. 151; LETTE R DATED 26.2.2015 ISSUED BY AO; LETTER DATED 12.3.2015 ISSU ED BY AO; CASH FLOW STATEMENT; CONFIRMATION FROM RAMA DEVI; B ANK STATEMENT OF RAM DEVI; COPY OF PAN CARD OF RAMA DEV I; CONFIRMATION FROM SHYAM SUNDER; BANK STATEMENT OF S HYAM SUNDER; COPY OF PAN CARD OF SHYAM SUNDER; CONFIRMAT ION FROM VIRENDER KUMAR; CONFIRMATION FROM ESHWAR DUTT; CONFIRMATION FROM DAYANAND SHARMA; JEWELLERY SALE B ILL TO ASSESSEE; JEWELLERY SALE BILL TO ROHTASH (2 IN NOS ); JEWELLERY SALE BILL TO KUMUD; SUB. TO CIT DATED 18.8.17; RR D ATED 27.10.17; SUB. TO CIT(A) DATED 7.12.17 (REJOINDER T O RR) AND SUB. TO CIT(A) DATED 15.2.2018 AND ESPECIALLY THE P AGE NO. 2- 3 OF THE PAPER BOOK WHICH IS A COPY OF PERFORMA FOR RECORDING THE REASONS FOR INITIATING PROCEEDING S U/S. 148 AND FOR OBTAINING APPROVAL OF ADDL. CIT, RANGE-65, NEW DELHI IN WHICH ADDL. CIT, RANGE-65, 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 APPROVAL U/S. 151 OF THE ACT WAS GRANTED BY THE ADDL. CIT, RANGE-65, NEW DELHI VIDE COLUMN NO. 11 BY MENTIONING AS UNDER:-YES, I AM SATISFIED ON THE REASONS RECORDED BY AO THAT IT IS A FIT CASE FOR ISSUE OF NOTICE U/S. 148 OF THE I.T. ACT, 1961.5.1 AFTER ITA NO. 219/JP/2020 APOORVA SHARMA VS. ITO 22 PERUSING THE AFORESAID REMARKS OF THE ADDL. CIT, RA NGE-65, NEW DELHI, I FIND THAT THE APPROVAL GRANTED BY THE ADDL. CIT, RANGE-65, NEW DELHI IS A MECHANICAL AND WITHOUT APP LICATION OF MIND, WHICH IS NOT VALID FOR INITIATING THE REAS SESSMENT PROCEEDINGS, BECAUSE FROM THE AFORESAID REMARKS, IT IS NOT COMING OUT AS TO WHICH MATERIAL; INFORMATION; DOCUM ENTS AND WHICH OTHER ASPECTS HAVE BEEN GONE THROUGH AND EXAM INED BY THE ADDL. CIT, RANGE-65, NEW DELHI FOR REACHING TO THE SATISFACTION FOR GRANTING APPROVAL. THEREAFTER, THE AO HAS MECHANICALLY ISSUED NOTICE U/S. 148 OF THE ACT. KEE PING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND THE CASE LAWS APPLICABLE IN THE CASE OF THE ASSESSE E, I AM OF THE CONSIDERED VIEW THAT THE REOPENING IN THE CASE OF THE ASSESSEE FOR THE ASSTT. YEAR IN DISPUTE IS BAD IN L AW AND DESERVES TO BE QUASHED. 5. THE LD. CIT(A) ERRED IN LAW AS WELL AS ON THE FA CTS OF THE CASE IN CONFIRMING THE ADDITION OF RS. 21,75,286/- ON ACCOU NT OF COMMISSION EARNED IN THE HANDS OF THE ASSESSE AS AGAINST HER F ATHER DESPITE THE FACT THAT SHE WAS MINOR AND WAS STUDYING IN CLASS-1 2 TH AT SAINT ANSELMS SCHOOL, MANSAROVAR, JAIPUR AT THE RELEVANT POINT OF TIME. 5.1 AT THE OUTSET, IT IS SUBMITTED THAT LD. AO PROC EEDED TO ASSESS THE COMMISSION IN THE HANDS OF APPELLANT ON THE GROUND THAT INCOME HAS BEEN EARNED OUT OF MANUAL WORK DONE BY HIM OR ACTIV ITY INVOLVING APPLICATION OF HIS SKILLS, TALENT OR SPECIALIZED KN OWLEDGE AND EXPERIENCE. IN THIS REGARDS, FOLLOWING PECULIAR FACTS NEED KIND CONSIDERATION: ITA NO. 219/JP/2020 APOORVA SHARMA VS. ITO 23 (I) DURING THE SUBJECTED ASSESSMENT YEAR, THE APPELLANT WAS STUDYING IN CLASS-12, AS REGULAR STUDENT WITH SAINT ANSLEMS SCHOOL, JAIPUR. THE SAME IS EVIDENT FROM THE HER 12 TH CLASS MARKS SHEET WHICH IS PLACED HEREUNDER. (II) THE NATURE OF INCOME IS COMMISSION, WHICH REQUIRES THE PERSON TO WORK AS AN AGENT OF THE PRINCIPAL FOR WHICH EXISTEN CE OF AN AGENCY CONTRACT IS A PRE-REQUISITE. ASSESSEE BEING A MINOR WAS DISQUALIFIED FOR ENTERING INTO ANY KIND OF AGREEMENT IN VIEW OF SECT ION 11 OF INDIA CONTRACT ACT, 1872. FOR THE SAKE OF CONVENIENCE THE SAME IS BEING REPRODUCED HEREUNDER: SECTION 11 OF INDIA CONTRACT ACT, 1872 11. WHO ARE COMPETENT TO CONTRACT.EVERY PERSON IS COMPETENT TO CONTRACT WHO IS OF THE AGE OF MAJORITY ACCORDING TO THE LAW TO WHICH HE IS SUBJECT, AND WHO IS OF SOUND MIND AND I S NOT DISQUALIFIED FROM CONTRACTING BY ANY LAW TO WHICH H E IS SUBJECT IN VIEW OF THIS, IT IS EVIDENT THAT ASSESSE WAS DIS QUALIFIED FOR ENTERING INTO ANY KIND OF AGREEMENT, THEREFORE THER E WAS NO SUCH AGENCY ARRANGEMENT BETWEEN THE APPELLANT AND EVE JE WELS LIMITED AND IN THE ABSENCE OF ANY AGENCY AGREEMENT, TREATING THE ALLEGED COMMISSION INCOME IN THE HANDS OF ASSESSEE IS UNREASONABLE AND CONTRARY TO THE LAW. (III) UNDER CLAUSE (A) OF PROVISO TO SECTION 64(1A), THE MANUAL WORK DONE BY MINOR HAS BEEN PROVIDED TO BE ASSESSED IN H IS/HER OWN HAND. HERE, THE PURPOSIVE INTERPRETATION TO THE WORD MANU AL WORK USED IN THE ITA NO. 219/JP/2020 APOORVA SHARMA VS. ITO 24 SAID PROVISO NEEDS TO BE GIVEN. HERE THE MANUAL WOR K DENOTES THE ACTIVITIES IN THE NATURE OF PAINTING OR SCULPTURE M AKING OR ANY OTHER WORK INVOLVING MANUAL EFFORTS BY THE MINOR. IN THE INSTANT CASE, THE NATURE OF INCOME IS COMMISSION, WHICH IS PURELY A B USINESS RECEIPT, REQUIRING THE PERSON TO WORK AS AN AGENT OF THE PRI NCIPAL. THUS, CERTAINLY THE SAME DOES NOT FALL UNDER THE CATEGORY OF ANY MANUAL WORK DONE BY THE APPELLANT AND THE COMMISSION INCOME DOE S NOT COME UNDER THE AMBIT OF CLAUSE (A) OF PROVISO TO SECTION 64(1A ). (IV) LD. AO AS WELL CIT(A) HAS STRESSED UPON THE FACT TH AT TDS HAS BEEN DEDUCTED ON THE INCOME ON WHICH TAX WAS DEDUCT ED AT SOURCE BY EVE MIRACLE JEWELS LIMITED U/S 194H AND THE ASSESSE PROVIDED CERTAIN SERVICES FOR WHICH COMMISSION WAS PAID BY THE DEDUC TOR WHICH PROVES THAT ASSESSEES OWN EFFORTS WERE INVOLVED IN EARNIN G THE INCOME. IN THIS REGARDS IT IS SUBMITTED THAT MERE DEDUCTION OF TDS DOES NOT IMPLIES THAT CERTAIN SERVICES HAS BEEN PROVIDED BY THE MINO R. THE LD.AO AS WELL AS CIT(A) FAILED TO BROUGHT ON RECORD THAT SERVICE AS AN AGENT HAS BEEN PROVIDED BY THE APPELLANT TO THE EVE JEWELS LIMITED OR NO SUCH INQUIRY HAS WAS MADE FROM EVE JEWELS LIMITED TO ESTABLISH T HIS FACT. THE ONUS IN ON THE DEPARTMENT TO PROVE THE THAT THE INCOME Q UALIFIES TO BE ASSESSED IN HER OWN HAND, WHICH THE LOWER AUTHORITI ES FAILED TO DISCHARGED AND MERELY GOING BY THE FACT THAT TDS HA S BEEN DEDUCTED, IT HAS BEEN CONCLUDED THAT SERVICES HAS BEEN PROVIDED BY MINOR. (V) LD. AO HAS MENTIONED THAT INCOME HAS BEEN EARNED OU T OF APPLICATION OF HER SKILLS, TALENT OR SPECIALIZED KN OWLEDGE AND EXPERIENCE BUT IT IS NOWHERE MENTIONED THAT WHAT KIND OF SKILL S OR TALENT OR ITA NO. 219/JP/2020 APOORVA SHARMA VS. ITO 25 SPECIALIZED KNOWLEDGE HAS BEEN POSSESSED BY APPELLA NT. FIRST, THE APPELLANT BEING A FULL TIME STUDENT, IT IS IMPROBAB LE THAT SHE WAS HAVING ANY TIME OR SKILLS TO RUN AN AGENCY TO EARN COMMISS ION INCOME. MOREOVER, AT THAT TIME, APPELLANT WAS MERE 17 YEARS OF AGE, THEREFORE IT CANNOT BE SAID THAT SHE WAS HAVING SORT OF EXPERIEN CE IN THE AGENCY BUSINESS AS IN PRECEDING YEARS NO SUCH INCOME HAS B EEN EARNED BY HER. THUS THESE BALD ASSERTIONS ARE NOTHING MORE THAN SU RMISES IN THE ABSENCE OF ANY EVIDENCE TO PROVE THE SAME. (VI) LD. AO AS WELL AS CIT(A) PROCEEDED TO TAX THE ALLEG ED COMMISSION INCOME IN THE HANDS OF APPELLANT ON THE GROUND THAT VIDE DULY NOTARIZED AFFIDAVIT SHE HAS ADMITTED THE INCOME IN HER HANDS. A PERUSAL OF AFFIDAVIT DATED 17.08.2017 REVEALS THAT ONLY CERTAI N FACTUAL POSITION WERE MENTIONED I.E. THE BANK ACCOUNT IN WHICH COMMI SSION WAS RECEIVED AND AMOUNT OF COMMISSION RECEIVED. IN THE AFFIDAVIT, IT WAS NO-WHERE ADMITTED THAT APPELLANT WAS WORKING AS AN AGENT AND RECEIVED THE COMMISSION IN HER OWN CAPACITY OR PROV IDED ANY SERVICE TO M/S EVE JEWELS LIMITED. THERE IS NO DENIAL FROM THE FACT THAT AMOUNT WAS RECEIVED IN THE BANK ACCOUNT OF APPELLANT. MORE IMPORTANTLY, AFFIDAVIT DATED 17.08.2017 (PBP 11-12) WAS FILED IN SUPPORT OF LETTER DATED 14.08.2017 (PBP-6) TO SUBSTANTIATE THE CLAIM THAT REASSESSMENT ACTION HAS BEEN TAKEN ON THE FACTUALLY INCORRECT AS SUMPTION OF FACT BECAUSE INSTEAD OF COMMISSION RECEIPTS OF RS.21,60, 840/- (AS ALLEGED IN REASONS RECORDED), THE ACTUAL RECEIPTS OF APPELLANT ARE RS.14,28,318/- ONLY (AS EVIDENT FROM COPY OF BANK STATEMENTS SUBMI TTED BY ASSESSE AND OBTAINED BY AO U/S 133(6) OF THE ACT). THEREFOR E, THE MEANING OF ITA NO. 219/JP/2020 APOORVA SHARMA VS. ITO 26 AFFIDAVIT HAS BEEN TAKEN COMPLETELY OUT OF CONTEXT FOR THE SAKE OF MAKING ADDITION. (VII) EVIDENTLY, THE INCOME WAS NOT EARNED BY THE APPELLA NT OUT OF HER MANUAL WORK OR ANY SKILL OR SPECIALIZED KNOWLEDGE O R EXPERIENCE, THEREFORE, THE SAME CANNOT BE TAXED IN HER INDIVIDU AL HANDS ONLY ON THE GROUND THAT INCOME HAS NOT BEEN SHOWN BY HER FATHER IN HIS RETURN OF INCOME. (VIII) UNDER THE FACTS AND CIRCUMSTANCES, IT IS EVIDENTLY CLEAR THAT THE ADDITION MADE BY AO AND SUSTAINED BY CIT(A) APPLYIN G THE PROVISO TO SECTION 64(1A) IS COMPLETELY UNJUSTIFIED BEING CONT RARY TO THE LAW AND FACTS, HENCE THE SAME MAY KINDLY BE QUASHED. IN VIEW OF THESE ABOVE MENTIONED FACT AND CIRCUMSTA NCES, AND CASE LAWS RELIED UPON, THE ACTION OF THE AO IS EXCESSIVE , ILLEGAL AND WITHOUT JURISDICTION AND RESULTANTLY THE ASSESSMENT MADE U/ S 148 KINDLY TO BE QUASHED. 5. PER CONTRA, THE LD. DR SUBMITTED THAT CONTENTIO N OF THE LD AR REGARDING INITIATION OF PROCEEDINGS BY NON-JURISDIC TIONAL ASSESSING OFFICER CANNOT BE ACCEPTED AS THE ASSESSEE NEVER OB JECTED TO THE ASSESSING OFFICER EXERCISING JURISDICTION ON RECEIP T OF NOTICE U/S 148 AND ANYTIME DURING THE COURSE OF REASSESSMENT PROCEEDIN GS. THE PROVISIONS OF SECTION 124(3) ARE CLEARLY ATTRACTED IN THE INST ANT CASE. 6. IT WAS FURTHER SUBMITTED BY THE LD DR THAT THE A O WAS IN RECEIPT OF INFORMATION THAT ASSESSEE WAS IN RECEIPT OF INCO ME ON WHICH TDS HAS ITA NO. 219/JP/2020 APOORVA SHARMA VS. ITO 27 BEEN DONE AND IN VIEW OF THE FACT THAT THE ASSESSEE HAS NOT FILED THE RETURN OF INCOME, THE ASSESSING OFFICER HAD REASONS TO BELIEVE THAT THE INCOME HAS ESCAPED ASSESSMENT AND THEREFORE, THE AO WAS JUSTIFIED IN INITIATING THE PROCEEDINGS U/S 148 WHICH HAVE BEEN RIGHTLY UPHELD BY THE LD CIT(A). 7. THE LD. DR FURTHER SUBMITTED THAT DURING THE COU RSE OF ASSESSMENT PROCEEDINGS, ASSESSEE NO DOUBT CLAIMED T HAT THE INCOME WAS RECEIVED AS MINOR AND THEREFORE IT SHOULD BE CL UBBED IN THE INCOME OF FATHER. HOWEVER AS PER THE PROVISO TO SECTION 64 (1A), THE CLUBBING PROVISIONS SHALL NOT APPLY IN RESPECT OF INCOME AS ARISES OR ACCRUES TO THE MINOR CHILD ON ACCOUNT OF ANY MANUAL WORK DONE BY HIM OR ACTIVITY INVOLVING APPLICATION OF HIS SKILL, TALENT OR SPECI ALIZED KNOWLEDGE AND EXPERIENCE. IN THE CASE OF THE ASSESSEE, SHE RECEIV ED INCOME ON WHICH TAX WAS DEDUCTED AT SOURCE BY EVE MIRACLE JEWELS LI MITED. THE ASSESSEE PROVIDED CERTAIN SERVICES FOR WHICH COMMIS SION WAS PAID BY THE DEDUCTOR WHICH PROVES THAT ASSESSEES OWN EFFOR TS WERE INVOLVED IN EARNING THE INCOME. FURTHER, EVEN IF IT IS ASSUMED THAT THE INCOME EARNED WAS NOT DUE TO THE EFFORTS OF THE ASSESSEE, WHY THE SAME WAS NOT CLUBBED BY HER FATHER WHILE FILING HIS RETURN O F INCOME FOR THE YEAR 2010-11. SINCE FATHER HAS NOT CLUBBED THE INCOME, I T PROVES THAT ASSESSEES CLAIM IS AN AFTERTHOUGHT ONLY TO ESCAPE TAX IN HER HAND. THEREFORE IN VIEW OF THE ABOVE FACTS CLAIM OF THE A SSESSEE WAS RIGHTLY REJECTED BY THE AO AND ENTIRE COMMISSION INCOME OF RS. 21,60,840/- WAS BROUGHT TO TAX IN HER HANDS AND WHICH HAS RIGHT LY BEEN CONFIRMED BY THE LD CIT(A). IT WAS ACCORDINGLY SUBMITTED THA T THERE IS NO ITA NO. 219/JP/2020 APOORVA SHARMA VS. ITO 28 INFIRMINITY IN THE FINDINGS AND ORDER OF THE LD CIT (A) AND SAME SHOULD BE UPHELD AND THE APPEAL OF THE ASSESSEE BE DISMISS ED. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PURUSED THE MATERIAL AVAILABLE ON RECORD. FIRSTLY, REGARDING THE CONTENT ION OF THE LD AR CHALLENGING THE ISSUANCE OF NOTICE U/S 148 BY NON-J URISDICTIONAL ASSESSING OFFICER, IT IS NOTED THAT ON RECEIPT OF S UCH NOTICE U/S 148 AND THEREAFTER, DURING THE ENTIRETY OF THE REASSESSMENT PROCEEDINGS, THERE IS NOT A WHISPER ON PART OF THE ASSESSEE IN CHALLENGIN G AND OBJECTING TO ISSUANCE OF NOTICE U/S 148 BY NON-JURISDICTIONAL AS SESSING OFFICER IN TERMS OF SECTION 124(3) OF THE ACT. IN THE INSTANT CASE, THE ASSESSEE HAS NOT FILED ANY RETURN OF INCOME EARLIER AND EVEN NO RETURN OF INCOME HAS BEEN FILED IN RESPONSE TO NOTICE U/S 148 OF THE ACT FORGOT ABOUT FILING THE RETURN OF INCOME PRESCRIBED IN NOTICE U/S 148 O F THE ACT. THEREFORE, IN SUCH FACTS AND CIRCUMSTANCES OF THE CASE, WHERE THE ASSESSEE HAS NOT RAISED ANY OBJECTIONS AS SO PROVIDED IN TERMS O F SECTON 124(3) THEREBY ACCEPTING AND NOT OBJECTING TO THE JURISDIC TION OF THE ASSESSING OFFICER WITHIN THE TIMELINES AS SO PRESCRIBED IN TH E STATUE, THE ASSESSEE CANNOT PLEAD AND TAKE A LEGAL DEFENCE CHALLENGING T HE JURISDICTION OF THE ASSESSING OFFICER AFTER COMPLETION OF THE ASSESSMEN T PROCEEDINGS. THUS, WE AGREE WITH CONTENTIONS ADVANCED BY THE LD DR AND THE CONTENTS SO ADVANCED BY THE LD AR IN THIS REGARD CA NNOT BE ACCEPTED. 9. NOW, COMING TO THE SECOND CONTENTION RAISED BY THE LD A/R CHALLENGING THE JURISDICTION OF THE ASSESSING OFFIC ER IN INITIATING THE REASSESSMENT PROCEEDINGS ON THE BASIS OF REASONS RE CORDED ON INCORRECT ASSUMPTION OF FACTS AND NON APPLICATION OF MIND BY THE ASSESSING ITA NO. 219/JP/2020 APOORVA SHARMA VS. ITO 29 OFFICER AT THE TIME OF RECORDING OF THE REASONS AND EVEN THE APPROVAL GRANTED MECHANICALLY BY THE CONCERNED SANCTIONING A UTHORITY. IN THIS REGARD, WE REFER TO THE REASONS RECORDED BY THE ASS ESSING OFFICER BEFORE ISSUANCE OF NOTICE U/S 148 WHICH READ AS UNDER:- ON THE BASIS OF THE INFORMATION AVAILABLE ON THE R ECORD, IT IS GATHERED THAT DURING THE YEAR UNDER CONSIDERATION T HE ASSESSEE HAS RECEIVED THE GROSS RECEIPTS AMOUNTING TO RS.21,60,8 40/- ON WHICH TDS OF RS.2,17,807/- HAS BEEN DEDUCTED BUT HE/SHE/I T HAS NOT FILED RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. LETTER OF NMS HAS ALSO BEEN ISSUED BUT NO COMPLIANCE WAS MADE. TH EREFORE, I HAVE REASON TO BELIEVE THAT THE ABOVE INCOME OF RS. 21,60,840/- WHICH IS CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. 10. ON PERUSAL OF THE REASONS SO RECORDED, IT IS NO TED THAT IT TALKS ABOUT CERTAIN INFORMATION AVAILABLE ON RECORD WITH THE ASSESSING OFFICER. WHAT IS THE NATURE AND THE SOURCE OF SUCH INFORMATI ON AND WHAT THE CONTENTS OF SUCH INFORMATION AND MORE IMPORTANTLY, HOW THE SAID INFORMATION PERTAINS TO OR CONNECTED WITH THE ASSES SEE AND WHETHER SUCH INFORMATION FORMS A TANGIBLE MATERIAL IN POSSE SSION OF THE ASSESSING OFFICER FOR FORMING A REASONABLE BELIEF T HAT INCOME HAS ESCAPED ASSESSMENT IS NOT DISCERNABLE FROM THE REAS ONS SO RECORDED. 11. IT HAS BEEN SUBMITTED BY THE LD AR THAT THE REA SONS WERE RECORDED ON THE BASIS OF INDIVIDUAL TRANSACTION STA TEMENT (ITS) SHOWING THE DETAILS OF FORM 26AS IN WHICH CERTAIN E NTRIES WERE APPEARING SHOWING TOTAL PAYMENT OF RS. 21,60,840/- AND TDS DEDUCTED OF RS. 2,17,807/- AND ON THE BASIS OF SAID INFORMAT ION, THE REASONS HAVE BEEN RECORDED. IT HAS BEEN FURTHER SUBMITTED THAT AFTER RECORDING THE ITA NO. 219/JP/2020 APOORVA SHARMA VS. ITO 30 SAID REASONS, A NOTICE U/S 133(6) DATED 22.08.2017 WAS ISSUED TO PUNJAB NATIONAL BANK TO OBTAIN COPIES OF BANK STATE MENTS OF THE ACCOUNT IN WHICH SUCH ALLEGED RECEIPTS WERE CREDITE D. IT WAS ACCORDINGLY SUBMITTED THAT AT THE TIME OF RECORDING THE REASONS , THERE WAS NO TANGIBLE MATERIAL IN THE HANDS OF THE ASSESSING OFF ICER TO HAVE A REASON TO BELIEVE THAT INCOME TO THE EXTENT OF RS.21,60,84 0/- HAS ESCAPED THE ASSESSMENT AND THE ASSESSING OFFICER WAS HAVING ONL Y ITS INFORMATION WHICH COULD BE A BASIS TO SUSPECT AND NOT THE BASIS TO DRAW A CONCLUSION THAT THE INCOME HAS ESCAPED ASSESSMENT. WE FIND THAT THE FACT THAT THE ASSESSING OFFICER WAS HAVING ONLY ITS INFORMATION WHICH IDEALLY SHOULD HAVE BEEN EVIDENT FROM THE REASONS A ND THE INFORMATION IN TERMS OF SECTION 133(6) HAS BEEN COLLECTED FROM THE BANK SUBSEQUENT TO RECORDING OF THE REASONS IS A MATTER OF RECORD A ND HAS NOT BEEN DISPUTED BY THE REVENUE. IN SUCH CIRCUMSTANCES, WE AGREE WITH THE CONTENTIONS OF THE LD AR THAT POSSESSION OF ITS INF ORMATION THAT THE ASSESSEE HAS RECEIVED CERTAIN AMOUNT COULD BE BASIS FOR MAKING FURTHER ENQUIRIES AND IN ABSENCE OF SUCH ENQUIRIES BEING CO NDUCTED PRIOR TO RECORDING OF THE REASONS, THERE IS ABSENCE OF TANGI BLE MATERIAL IN POSSESSION OF THE ASSESSING OFFICER AT THE TIME OF RECORDING OF REASONS AND SUBSEQUENT ENQUIRIES AFTER RECORDING OF THE REA SONS COULD NOT BE USED TO SUPPLEMENT THE REASONS SO RECORDED BY THE A SSESSING OFFICER. SIMILAR VIEW HAS BEEN TAKEN BY US IN CASE OF SH. SH UJAAT ALI KHAN VS. ITO (SUPRA) WHEREIN OUR FINDINGS READ AS UNDER: 12. ON PERUSAL OF THE REASONS SO RECORDED, WE FIN D THAT THE ASSESSING OFFICER HAD RECEIVED CERTAIN INFORMATION THAT THE ASSESSEE HAD SOLD AN IMMOVEABLE PROPERTY FOR CONSID ERATION OF RS 7 LACS AND WHICH HAS BEEN VALUED AT RS 7.17 LACS FOR THE PURPOSES OF CHARGING STAMP DUTY. THE NATURE AND SO URCE OF SUCH ITA NO. 219/JP/2020 APOORVA SHARMA VS. ITO 31 INFORMATION IS NOT DISCERNABLE FROM THE REASONS SO RECORDED NOR THE SPECIFIC OF THE IMMOVABLE PROPERTY IN TERMS OF LOCATION, SIZE, PURCHASER, ETC HAS BEEN STATED, THEREFORE, THE QUES TION THAT HAS BEEN RAISED BEFORE US IS ABOUT THE TANGIBLE NATURE OF SUCH INFORMATION AND MATERIAL IN POSSESSION OF THE AO AN D THE NEXUS THEREOF WITH FORMATION OF BELIEF THAT THE INCOME HA S ESCAPED ASSESSMENT. IT HAS BEEN CONTENDED BY THE LD AR THAT THE INFORMATION SO REFERRED IN THE REASONS RECORDED IS ONLY THE CIB REPORT RECEIVED BY THE ASSESSING OFFICER, A FACT WH ICH IS CORROBORATED BY THE ASSESSING OFFICER WHERE HE HAD ISSUED A NOTICE U/S 133(6) TO SUB-REGISTRAR-2 TO OBTAIN COPY OF THE SALE DEED. IT IS AN ADMITTED FACT THAT THE SAID NOTICE U/S 133(6) WAS ISSUED ON 3.08.2015 SUBSEQUENT TO RECORDING OF REAS ONS BY THE AO ON 25.03.2015. THEREFORE, WE FIND THAT AS ON TH E DATE OF RECORDING OF REASONS BY THE AO, ONLY PIECE OF INFOR MATION IN POSSESSION OF THE AO WAS THE CIB REPORT THAT THE AS SESSEE HAS SOLD CERTAIN IMMOVEABLE PROPERTY AND THE AO WAS NOT EVEN HAVING A COPY OF THE SALE DEED OR THE SPECIFICS OF THE IMMOVEABLE PROPERTY, WHICH TO OUR MIND, RAISES A QUESTION MARK ON THE TANGIBLE NATURE OF SUCH INFORMATION IN TERMS OF WHE THER IT IS REAL OR ACTUAL RATHER THAN IMAGINARY AND WHETHER IT ACTU ALLY RELATES TO THE ASSESSEE OR NOT. WHERE THE AO STILL WISHES TO R ELY ON THE REPORT OF CIB, GIVEN THAT SUCH REPORT IS MORE OF A GENERIC REPORT AND NOT CONTAINING EXACT SPECIFICS OF OF IMMOVEABLE PROPERTY AND OTHER PARTICULARS OF THE TRANSACTION, IT IS EXPECTE D THAT THE AO ON RECEIPT OF SUCH REPORT SHOULD CARRY OUT FURTHER EXA MINATION BEFORE ARRIVING AT THE PRIMA FACIE VIEW THAT INCOME HAS ES CAPED ASSESSMENT AND THE MATTER IS FIT FOR ISSUANCE OF NO TICE U/S 148 OF THE ACT. SUCH EXAMINATION IS REQUIRED TO BE CARRIE D OUT BEFORE ISSUANCE OF NOTICE U/S 148 AS THE SAME IS REQUIRED FOR THE ASSESSING OFFICER TO FORM HIS OWN INDEPENDENT OPINI ON THAT THE INCOME HAS ESCAPED ASSESSMENT. IN THE INSTANT CASE , THERE IS NO SUCH EXAMINATION AND INVESTIGATION CARRIED OUT BY T HE AO AND INFACT, ONLY AFTER RECORDING OF THE REASONS, HE HAS SOUGHT COPY OF THE SALE DEED FROM THE SUB-REGISTRAR WHERE THE ASSE SSEE HAS ITA NO. 219/JP/2020 APOORVA SHARMA VS. ITO 32 BEEN SHOWN AS POWER OF ATTORNEY HOLDER OF THE OWNER OF THE IMMOVEABLE PROPERTY WHICH AGAIN RAISES A QUESTION M ARK ON THE TANGIBLE NATURE OF THE CIB REPORT. WE THEREFORE FI ND THAT THE AO HAS MERELY GONE BY THE CIB REPORT AND WAS NOT EVEN IN POSSESSION OF THE SALE DEED AND THE EXACT SPECIFICS OF THE TRANSACTION AT THE TIME OF RECORDING OF REASONS AND THEREFORE, IT IS A CASE WHERE THE PROCEEDINGS ARE VITIATED FOR WANT OF TANGIBLE MATERIAL IN POSSESSION OF THE AO AND LACK OF REASON TO BELIEVE WHICH IS MORE IN THE REALM OF SUSPICION RATHER THAN FORMATION OF OPINION THAT INCOME HAS ESCAPED ASSESSMENT. THE RE ASONS THUS RECORDED AND/OR THE DOCUMENTS AVAILABLE ON RECORD, THEREFORE, DONT SHOW A LINK/NEXUS AND RELEVANCY TO THE OPINIO N FORMED BY THE ASSESSING OFFICER REGARDING ESCAPEMENT OF INCOM E. FURTHER, EVEN THOUGH THE REOPENING IN THE PRESENT CASE WAS A FTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT A .Y 2008-09, GIVEN THAT THERE WAS NO ORIGINAL RETURN OF INCOME F ILED BY THE ASSESSEE AND CONSEQUENT ASSESSMENT, IT WAS NOT NECE SSARY FOR THE AO TO SHOW THAT THERE WAS ANY FAILURE TO DISCLO SE FULLY OR TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT IN TERMS OF PROVISO TO SECTION 147 OF THE ACT WHICH IS NOT APPLICABLE I N THE INSTANT CASE. SIMILAR VIEW HAS BEEN TAKEN BY THE COORDINATE BENCH IN CASE OF BALAJI HEALTHCARE PVT LTD (SUPRA) WHEREIN T HE RELEVANT FINDINGS READ AS UNDER: 20.FURTHER, IT IS NOTED THAT AFTER RECORDING OF THE REASONS, THE ASSESSING OFFICER HAS SUBSEQUENTLY WRITTEN A LETTER ON 30.08.2013 TO ACIT , NEW DELHI REQUESTING FOR COPY OF STATEMENTS OF SURENDRA KUMAR JAIN,VIRENDRA KUMAR JAIN AT WHOSE PREMISES THE SEAR CH WAS CONDUCTED AND P C AGARWAL, SO CALLED MEDIATOR I N THESE TRANSACTIONS. GIVEN THAT SEARCH PROCEEDINGS I N RESPECT OF THESE TWO PERSONS HAVE FORMED THE BASIS FOR THE PRESENT REASSESSMENT PROCEEDINGS IN THE HANDS OF TH E ASSESSEE, IT WAS ESSENTIAL TO AT LEAST EXAMINE THE STATEMENTS OF THESE THREE PERSONS AND SEIZED MATERI AL IF ANY FOUND DURING THE COURSE OF SEARCH WHICH IN ANY WAYS ITA NO. 219/JP/2020 APOORVA SHARMA VS. ITO 33 INDICATE THAT THESE TWO PERSONS HAVE CARRIED OUT CE RTAIN TRANSACTIONS WITH THE ASSESSEE AND PRIMA FACIE THES E TRANSACTIONS ARE SUSPECTED TO BE ACCOMMODATION ENTR IES AND NOT ACTUAL TRANSACTIONS. HOWEVER, THERE IS NOTH ING IN THE REASONS SO RECORDED THAT THE ASSESSING OFFICER HAS GONE THROUGH THE STATEMENTS SO RECORDED DURING THE COURS E OF SEARCH AND THE SEIZED MATERIAL TO SHOW PRIMA FACIE LINKAGE OF ASSESSEES UNDISCLOSED INCOME BEING ROUTED BACK IN FORM OF SHARE CAPITAL. THIS SHOWS THAT THE ASSESSING OFF ICER HAS MERELY GONE BY THE REPORT OF THE DIT, INVESTIGATION WING AND THE SAID REPORT EVEN DIDNT HAVE THE STATEMENTS OF THESE PERSONS WHICH EITHER FIND MENTION IN THE REPO RT OR AS ENCLOSURES WHEN THE SAME WAS FORWARDED TO THE ASSES SING OFFICER. THEREFORE, IT TRANSPIRES THAT THERE IS NO FURTHER EXAMINATION WHICH HAS BEEN CARRIED OUT BY THE ASSES SING OFFICER. THE FACT THAT THE ASSESSEE HAS FILED ITS R ETURN OF INCOME U/S 139(1) WAS VERY MUCH IN THE KNOWLEDGE OF THE ASSESSING OFFICER AND THE LATTER COULD HAVE VERIFIE D THE TRANSACTIONS WITH THE REPORTED TRANSACTIONS IN THE FINANCIAL STATEMENTS AND COULD HAVE ASKED FOR MORE INFORMATIO N TO ESTABLISH THE NECESSARY NEXUS, HOWEVER NOTHING OF T HAT SORT HAS BEEN DONE BY THE ASSESSING OFFICER AND HE HAS M ERELY GONE BY THE REPORT OF DIT, INVESTIGATION WING. IT I S TRUE THAT THE ASSESSING OFFICER CAN RELY ON THE REPORT O F DIT, INVESTIGATION WING BUT AT THE SAME TIME, WHERE HE I S ASSUMING JURISDICTION U/S 147, HE IS REQUIRED TO CA RRY OUT FURTHER EXAMINATION AND ANALYSIS IN ORDER TO ESTABL ISH THE NEXUS BETWEEN THE MATERIAL AND FORMATION OF BELIEF THAT INCOME HAS ESCAPED ASSESSMENT AND IN ABSENCE THEREO F, THE ASSUMPTION OF JURISDICTION U/S 147 HAS NO LEGAL BASIS AND RESULTANT REASSESSMENT PROCEEDINGS DESERVE TO B E SET- ASIDE. OUR VIEWIS FORTIFIED BY THE DECISION OF THE HONBLE DELHI HIGH COURT IN CASE OF MEENAKSHI OVERSEAS PVT. LTD. (SUPRA) WHEREIN IT WAS HELD AS UNDER:- ITA NO. 219/JP/2020 APOORVA SHARMA VS. ITO 34 19. A PERUSAL OF THE REASONS AS RECORDED BY THE AO REVEALS THAT THERE ARE THREE PARTS TO IT. IN THE FI RST PART, THE AO HAS REPRODUCED THE PRECISE INFORMATION HE HAS RE CEIVED FROM THE INVESTIGATION WING OF THE REVENUE. THIS INFORMATION IS IN THE FORM OF DETAILS OF THE AMOUNT OF CREDIT RECEIVED, THE PAYER, THE PAYEE, THEIR RESPECTIVE BA NKS, AND THE CHEQUE NUMBER. THIS INFORMATION BY ITSELF CANNO T BE SAID TO BE TANGIBLE MATERIAL. 20. COMING TO THE SECOND PART, THIS TELLS US WHAT T HE AO DID WITH THE INFORMATION SO RECEIVED. HE SAYS: 'THE INFORMATION SO RECEIVED HAS BEEN GONE THROUGH.' ONE WOULD HAVE EXPECTED HIM TO POINT OUT WHAT HE FOUND WHEN HE WENT THROUGH THE INFORMATION. IN OTHER WORDS, WH AT IN SUCH INFORMATION LED HIM TO FORM THE BELIEF THAT IN COME ESCAPED ASSESSMENT. BUT THIS IS ABSENT. HE STRAIGHT AWAY RECORDS THE CONCLUSION THAT 'THE ABOVE SAID INSTRUM ENTS ARE IN THE NATURE OF ACCOMMODATION ENTRY WHICH THE ASSE SSEE HAD TAKEN AFTER PAYING UNACCOUNTED CASH TO THE ACCOMMODATION ENTRY GIVEN(SIC GIVER)'. THE AO ADDS THAT THE SAID ACCOMMODATION WAS 'A KNOWN ENTRY OPERATOR' THE SOURCE BEING 'THE REPORT OF THE INVESTIGATION WING' . 21. THE THIRD AND LAST PART CONTAINS THE CONCLUSION DRAWN BY THE AO THAT IN VIEW OF THESE FACTS, 'THE ALLEGED TRANSACTION IS NOT THE BONAFIDE ONE. THEREFORE, I H AVE REASON TO BE BELIEVE THAT AN INCOME OF RS. 5,00,000 HAS ESCAPED ASSESSMENT IN THE AY 2004-05 DUE TO THE FAI LURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND T RULY ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT... ' 22. AS RIGHTLY POINTED OUT BY THE ITAT, THE 'REASON S TO BELIEVE' ARE NOT IN FACT REASONS BUT ONLY CONCLUSIO NS, ONE AFTER THE OTHER. THE EXPRESSION 'ACCOMMODATION ENTR Y' IS USED TO DESCRIBE THE INFORMATION SET OUT WITHOUT EX PLAINING ITA NO. 219/JP/2020 APOORVA SHARMA VS. ITO 35 THE BASIS FOR ARRIVING AT SUCH A CONCLUSION. THE ST ATEMENT THAT THE SAID ENTRY WAS GIVEN TO THE ASSESSEE ON HI S PAYING 'UNACCOUNTED CASH' IS ANOTHER CONCLUSION THE BASIS FOR WHICH IS NOT DISCLOSED. WHO IS THE ACCOMMODATION EN TRY GIVER IS NOT MENTIONED. HOW HE CAN BE SAID TO BE 'A KNOWN ENTRY OPERATOR' IS EVEN MORE MYSTERIOUS. CLEARLY TH E SOURCE FOR ALL THESE CONCLUSIONS, ONE AFTER THE OTHER, IS THE INVESTIGATION REPORT OF THE DIT. NOTHING FROM THAT REPORT IS SET OUT TO ENABLE THE READER TO APPRECIATE HOW THE CONCLUSIONS FLOW THERE FROM. 23. THUS, THE CRUCIAL LINK BETWEEN THE INFORMATION MADE AVAILABLE TO THE AO AND THE FORMATION OF BELIEF IS ABSENT. THE REASONS MUST BE SELF EVIDENT, THEY MUST SPEAK F OR THEMSELVES. THE TANGIBLE MATERIAL WHICH FORMS THE B ASIS FOR THE BELIEF THAT INCOME HAS ESCAPED ASSESSMENT MUST BE EVIDENT FROM A READING OF THE REASONS. THE ENTIRE M ATERIAL NEED NOT BE SET OUT. HOWEVER, SOMETHING THEREIN WHI CH IS CRITICAL TO THE FORMATION OF THE BELIEF MUST BE REF ERRED TO. OTHERWISE THE LINK GOES MISSING. 24. THE REOPENING OF ASSESSMENT UNDER SECTION 147 I S A POTENT POWER NOT TO BE LIGHTLY EXERCISED. IT CERTAI NLY CANNOT BE INVOKED CASUALLY OR MECHANICALLY. THE HEART OF T HE PROVISION IS THE FORMATION OF BELIEF BY THE AO THAT INCOME HAS ESCAPED ASSESSMENT. THE REASONS SO RECORDED HAV E TO BE BASED ON SOME TANGIBLE MATERIAL AND THAT SHOULD BE EVIDENT FROM READING THE REASONS. IT CANNOT BE SUPP LIED SUBSEQUENTLY EITHER DURING THE PROCEEDINGS WHEN OBJECTIONS TO THE REOPENING ARE CONSIDERED OR EVEN DURING THE ASSESSMENT PROCEEDINGS THAT FOLLOW. THIS IS THE BARE MINIMUM MANDATORY REQUIREMENT OF THE FIRST PART OF SECTION 147 (1) OF THE ACT. ITA NO. 219/JP/2020 APOORVA SHARMA VS. ITO 36 25. AT THIS STAGE IT REQUIRES TO BE NOTED THAT SINC E THE ORIGINAL ASSESSMENT WAS PROCESSED UNDER SECTION 143 (1) OF THE ACT, AND NOT SECTION 143(3) OF THE ACT, THE PRO VISO TO SECTION 147 WILL NOT APPLY. IN OTHER WORDS, EVEN TH OUGH THE REOPENING IN THE PRESENT CASE WAS AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT AY, IT WAS NOT N ECESSARY FOR THE AO TO SHOW THAT THERE WAS ANY FAILURE TO DI SCLOSE FULLY OR TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. 26. THE FIRST PART OF SECTION 147(1) OF THE ACT REQ UIRES THE AO TO HAVE 'REASONS TO BELIEVE' THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. IT IS THU S FORMATION OF REASON TO BELIEVE THAT IS SUBJECT MATT ER OF EXAMINATION. THE AO BEING A QUASI JUDICIAL AUTHORIT Y IS EXPECTED TO ARRIVE AT A SUBJECTIVE SATISFACTION INDEPENDENTLY ON AN OBJECTIVE CRITERIA. WHILE THE R EPORT OF THE INVESTIGATION WING MIGHT CONSTITUTE THE MATERIA L ON THE BASIS OF WHICH HE FORMS THE REASONS TO BELIEVE THE PROCESS OF ARRIVING AT SUCH SATISFACTION CANNOT BE A MERE R EPETITION OF THE REPORT OF INVESTIGATION. THE RECORDING OF RE ASONS TO BELIEVE AND NOT REASONS TO SUSPECT IS THE PRE- COND ITION TO THE ASSUMPTION OF JURISDICTION UNDER SECTION 147 OF THE ACT. THE REASONS TO BELIEVE MUST DEMONSTRATE LINK BETWEE N THE TANGIBLE MATERIAL AND THE FORMATION OF THE BELIEF O R THE REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMEN T. 36. IN THE PRESENT CASE, AS ALREADY NOTICED, THE R EASONS TO BELIEVE CONTAIN NOT THE REASONS BUT THE CONCLUSIONS OF THE AO ONE AFTER THE OTHER. THERE IS NO INDEPENDENT APP LICATION OF MIND BY THE AO TO THE TANGIBLE MATERIAL WHICH FO RMS THE BASIS OF THE REASONS TO BELIEVE THAT INCOME HAS ESC APED ASSESSMENT. THE CONCLUSIONS OF THE AO ARE AT BEST A REPRODUCTION OF THE CONCLUSION IN THE INVESTIGATION REPORT. INDEED IT IS A 'BORROWED SATISFACTION'. THE REASONS FAIL TO ITA NO. 219/JP/2020 APOORVA SHARMA VS. ITO 37 DEMONSTRATE THE LINK BETWEEN THE TANGIBLE MATERIAL AND THE FORMATION OF THE REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. 37. FOR THE AFOREMENTIONED REASONS, THE COURT IS SA TISFIED THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, NO ERROR HAS BEEN COMMITTED BY THE ITAT IN THE IMPUGNED ORDE R IN CONCLUDING THAT THE INITIATION OF THE PROCEEDINGS U NDER SECTION 147/148 OF THE ACT TO REOPEN THE ASSESSMENT S FOR THE AYS IN QUESTION DOES NOT SATISFY THE REQUIREMEN T OF LAW. SUBSEQUENTLY, THE HONBLE DELHI HIGH COURT IN CASE OF RMG POLYVINYL LTD. (SUPRA) HAS HELD AS UNDER:- 12.RECENTLY, IN ITS DECISION DATED 26TH MAY, 2017 IN ITA NO. 692/2016 PR. CIT V.MEENAKSHI OVERSEAS, THIS COU RT DISCUSSED THE LEGAL POSITION REGARDING REOPENING OF ASSESSMENTS WHERE THE RETURN FILED AT THE INITIAL S TAGE WAS PROCESSED UNDER SECTION143(1) OF THE ACT AND NOT UN DER SECTION 143(3) OF THE ACT. THE REASONS FOR THE REOP ENING OF THE ASSESSMENT IN THAT CASE WERE MORE OR LESS SIMIL AR TO THE REASONS IN THE PRESENT CASE, VIZ., INFORMATION WAS RECEIVED FROM THE INVESTIGATION WING REGARDING ACCOMMODATION ENTRIES PROVIDED BY A 'KNOWN' ACCOMMODATION ENTRY PROVIDER. THERE, ON FACTS, THE COURT CAME TO THE CONCLUSION THAT THE REASONS WERE, IN FA CT, IN THE FORM OF CONCLUSIONS 'ONE AFTER THE OTHER' AND T HAT THE SATISFACTION ARRIVED AT BY THE AO WAS A 'BORROWED SATISFACTION' AND AT BEST 'A REPRODUCTION OF THE CO NCLUSION IN THE INVESTIGATION REPORT.' 13. AS IN THE ABOVE CASE, EVEN IN THE PRESENT CASE, THE COURT IS UNABLE TO DISCERN THE LINK BETWEEN THE TAN GIBLE MATERIAL AND THE FORMATION OF THE REASONS TO BELIEV E THAT ITA NO. 219/JP/2020 APOORVA SHARMA VS. ITO 38 INCOME HAD ESCAPED ASSESSMENT. IN THE PRESENT CASE TOO, THE INFORMATION RECEIVED FROM THE INVESTIGATION WIN G CANNOT BE SAID TO BE TANGIBLE MATERIAL PER SE WITHO UT A FURTHER INQUIRY BEING UNDERTAKEN BY THE AO. IN THE PRESENT CASE THE AO DEPRIVED HIMSELF OF THAT OPPORTUNITY BY PROCEEDING ON THE ERRONEOUS PREMISE THAT ASSESSEE H AD NOT FILED A RETURN WHEN IN FACT IT HAD. IN LIGHT OF ABOVE DISCUSSIONS AND IN THE ENTIRETY O F FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSUMPTION OF JURISDICTION AND INITIATION OF THE PROCEEDINGS UNDE R SECTION 147 OF THE ACT TO REOPEN THE ASSESSMENT PROCEEDINGS DOES NOT SATISFY THE REQUIREMENT OF LAW AND IS HEREBY SE T-ASIDE. IN THE RESULT, GROUND NO. 1 OF THE ASSESSEES APPEA L IS ALLOWED. 12. MOVING FURTHER, THE REASONS SO RECORDED TALKS A BOUT THE ASSESSEE RECEIVING GROSS RECEIPTS OF RS 21,60,840/- ON WHICH TDS OF RS 2,17,807/- HAS BEEN DEDUCTED. THE ASSESSEES PAN N UMBER IS ALSO MENTIONED WHILE RECORDING THE SAID REASONS AND THE PAN NUMBER CARRIES THE DATE OF BIRTH OF THE ASSESSEE AND ON PERUSAL TH EREOF, IT IS NOTED THAT THE ASSESSEE WAS A MINOR DURING THE FINANCIAL YEAR 2009-10 RELEVANT TO ASSESSMENT YEAR 2010-11. THE NATURE OF GROSS RECEI PTS IS AGAIN NOT DISCERNABLE FROM THE REASONS SO RECORDED AND IN ABS ENCE THEREOF, IT WOULD BE TAKEN AND UNDERSTOOD AS ANY GROSS RECEIPTS WHICH IS RECEIVED BY THE ASSESSEE, BEING A MINOR AND ON WHICH THERE I S DEDUCTION OF TAX AT SOURCE. 13. THE QUESTION THAT ARISES IS WHETHER RECEIPTS IN HANDS OF THE MINOR CAN BE BROUGHT TO TAX IN HER OWN HANDS OR IN THE HA NDS OF EITHER OF HER PARENTS IN TERMS OF SECTION 64(1A) AND WHETHER THER E IS APPLICATION OF ITA NO. 219/JP/2020 APOORVA SHARMA VS. ITO 39 MIND BY THE ASSESSING OFFICER AND WHETHER THERE IS A PRIMA FACIE FINDING TO THIS EFFECT WHICH IS DISCERNABLE FROM THE REASON S SO RECORDED. IT IS A SETTLED LEGAL PROPOSITION THAT THE SATISFACTION OF THE ASSESSING OFFICER FOR ASSUMPTION OF JURISDICTION U/S 147 OF THE ACT SHOUL D BE DISCERNABLE FROM THE REASONS SO RECORDED AND THE REASONS ALONE SHOUL D BE CONSIDERED FOR DETERMINING WHETHER THE ASSESSING OFFICER IS IN POS SESSION OF THE MATERIAL/INFORMATION BASIS WHICH HE HAS FORMED THE REASONABLE BELIEF THAT THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSM ENT FOR THE IMPUGNED ASSESSMENT YEAR. FOR ASSUMPTION OF JURISDI CTION U/S 147, THE ASSESSING OFFICER MUST FORM A PRIMA FACIE VIEW ON T HE BASIS OF TANGIBLE MATERIAL IN HIS POSSESSION THAT THERE IS AN ESCAPEM ENT OF INCOME, THE OPINION SO FORMED MAY BE SUBJECTIVE BUT THE REASONS RECORDED OR THE INFORMATION AVAILABLE ON RECORD MUST SHOW THAT THE OPINION IS NOT A MERE SUSPICION, THE REASONS RECORDED AND/OR THE DOC UMENTS AVAILABLE ON RECORD MUST SHOW A LINK/NEXUS AND RELEVANCY TO T HE OPINION FORMED BY THE ASSESSING OFFICER REGARDING ESCAPEMENT OF IN COME AND THE REASONS ARE REQUIRED TO BE READ AS THEY WERE RECORD ED BY THE ASSESSING OFFICER. AND IT IS FOR THE ASSESSING OFFICER TO DIS CLOSE AND OPEN HIS MIND THROUGH THE REASONS RECORDED BY HIM AND HE HAS TO S PEAK THROUGH THE REASONS THAT THE INCOME CHARGEABLE TO TAX HAS ESCAP ED ASSESSMENT. IN THE INSTANT CASE, WE FIND THAT THE REASONS SO RECOR DED ARE SILENT AS TO HOW RECEIPTS IN HANDS OF THE MINOR CAN BE BROUGHT T O TAX IN HER OWN HANDS IN TERMS OF SECTION 64(1A). HOW THE ASSESSING OFFICER HAS REACHED A PRIMA FACIE VIEW AND FORMED A REASONABLE BELIEF THAT SUCH RECEIPTS CAN BE BROUGHT TO TAX IN THE HANDS OF THE MINOR AND NOT IN HANDS OF EITHER OF HER PARENTS IS NOT DISCERNABLE F ROM THE REASONS SO RECORDED. THE PROVISIONS OF SECTION 4 RELATING TO C HARGE OF TAX, ITA NO. 219/JP/2020 APOORVA SHARMA VS. ITO 40 PROVISIONS OF SECTION 5 REGARDING SCOPE OF TOTAL IN COME HAVE TO BE READ ALONG WITH THE PROVISIONS OF SECTION 64 REGARDING C LUBBING OF INCOME OF SPOUSE, MINOR CHILD, ETC AND IN PARTICULAR, SECTION 64(1A) REGARDING CLUBBING OF MINORS INCOME AS APPLICABLE IN THE INS TANT CASE. THE ASSESSEE, BEING A MINOR, A FACT WHICH IS CLEARLY EM ERGING FROM THE RECORDS, THE ASSESSING OFFICER HAS TO ARRIVE AT A P RIMA FACIE FINDING WHILE RECORDING THE REASONS AS TO HOW THE RECEIPTS CAN BE BROUGHT TO TAX IN HER OWN HANDS INSTEAD OF EITHER OF HER PARENTS AND CANNOT IGNORE THE EXISTENCE OF THE SAID PROVISIONS IN TERMS OF SECTIO N 64(1A) READ WITH PROVISO THERETO AS PROVIDED IN THE STATUE AND HAVIN G NOT CONSIDERED THE SAID PROVISIONS, IT SHOWS NON-APPLICATION OF MIND B Y THE ASSESSING OFFICER TO THE INFORMATION IN HIS POSSESSION AND TH E LEGAL PROVISIONS AS THE MATTER IS NOT RESTRICTED TO ARRIVING AT THE REA SONABLE BELIEF THAT INCOME HAS ESCAPED ASSESSMENT RATHER THE MATTER IS WHETHER THE INCOME HAS ESCAPEMENT ASSESSMENT IN THE HANDS OF TH E ASSESSEE TO WHOM IT HAS ACCRUED/ARISEN/RECEIVED AND CAN LAWFULL Y BE BROUGHT TO TAX IN HER HANDS. TO OUR MIND, THE APPLICABILITY OF SEC TION 64(1A) OR THE EXCLUSION AS SO PROVIDED IN THE PROVISO TO THE SAID PROVISIONS HAVE TO BE EXAMINED ATLEAST PRIMA FACIE AT THE TIME OF RECORDI NG OF THE REASONS ITSELF AND NOT SUBSEQUENT DURING THE COURSE OF REAS SESSMENT PROCEEDINGS. FURTHER, WE FIND THAT THE REASONS SO RECORDED WERE SENT FOR RECOMMENDATION TO THE ADDITIONAL COMMISSIONER O F INCOME TAX, RANGE 6, JAIPUR AND THEN TO THE APPROVING AUTHORITY , THE PCIT-II, JAIPUR AND WE FIND THAT THESE TWO AUTHORITIES HAVE ALSO RE COMMENDED AND APPROVED THE REASONS SO RECORDED BY THE ASSESSING O FFICER WITHOUT CONSIDERING THE FACT THAT THE AO WHILE RECORDING TH E REASONS THAT INCOME HAS ESCAPED IN THE HANDS OF THE MINOR HAS NO T CONSIDERED THE ITA NO. 219/JP/2020 APOORVA SHARMA VS. ITO 41 IMPACT AND APPLICABILITY OF PROVISIONS OF SECTION 6 4(1A) OF THE ACT. THE SAID ACT THUS AGAIN REFLECT A MECHANICAL APPROACH O N PART OF THE SANCTIONING AUTHORITY AND NON-APPLICATION OF MIND B EFORE GRANTING SUCH APPROVAL AND VARIOUS AUTHORITIES CITED AT THE BAR R EGARDING NON- APPLICATION OF MIND BY THE SANCTIONING AUTHORITY AT THE TIME OF GRANTING THE APPROVAL THUS SUPPORT THE CASE OF THE ASSESSEE. 14. IN LIGHT OF ABOVE DISCUSSIONS AND IN THE ENTIRE TY OF FACTS AND CIRCUMSTANCES OF THE CASE AND FOLLOWING THE DECISIO NS REFERRED SUPRA, THE ASSUMPTION OF JURISDICTION AND INITIATION OF TH E PROCEEDINGS UNDER SECTION 147 OF THE ACT TO REOPEN THE ASSESSMENT PRO CEEDINGS ARE VITIATED IN THE INSTANT CASE AND DOES NOT SATISFY T HE REQUIREMENT OF LAW AND SUCH ACTION ON THE PART OF THE ASSESSING OFFICE R CANNOT BE ACCEPTED AND THE NOTICE UNDER SECTION 148 AND CONSEQUENT PRO CEEDINGS ARE THUS SET-ASIDE. 15. IN VIEW OF THE ABOVE DISCUSSIONS WHERE THE REA SSESSMENT PROCEEDINGS HAVE BEEN QUASHED AND SET-ASIDE, THE OT HER GROUNDS OF APPEAL TAKEN BY THE ASSESSEE HAVE BECOME ACADEMIC A ND ARE THUS DISMISSED AS INFRUCTIOUS. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT ON 06/10/2021. SD/- SD/- LANHI XKSLKBZ FOE FLAG ;KNO ( SANDEEP GOSAIN ) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR ITA NO. 219/JP/2020 APOORVA SHARMA VS. ITO 42 FNUKAD@ DATED:- 06/10/2021. GANESH KUMAR VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SH. APOORVA SHARMA, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- ITO, WARD 6(4), JAIPUR 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE { ITA NO. 219/JP/2020} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR