Tara Alloys Ltd., New Delhi V. ITO, New Delhi

ITA 2421/DEL/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3191 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2005-2006
• Appeal Filed On: 24-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K JIWANI
• Assessee Lawyers: AMIT GOEL
• Keywords: Reopening of assessment; Unexplained cash credit; Gift; Depreciation; Question of law; Tangible material; Accommodation entries; Non compliance; Reason to believe; Reassessment proceedings
• Section: 143(3); 147; 68; 148; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH SMC : NEW DELHI) BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 2421/DEL/2017 ASSESSMENT YEAR: 2005-06 M/S TARA ALLOYS LTD., VS. ITO, WARD 25(1) 102, HARSHA HOUSE, NEW DELHI KARAMPURA COMMERCIAL COMPLEX, NEW DELHI (PAN: AAACT0545N) (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. AMIT GOEL, ADV. REVENUE BY : SH. V.K. JIWANI, SR. DR ORDER THE ASSESSEE HAS FILED THE APPEAL AGAINST THE ORDE R DATED 06.3.2017 OF THE LD. CIT(A)-33, NEW DELHI PERTAININ G TO ASSESSMENT YEAR 2005-06 AND RAISED THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE AO ERRED IN ISSUING NOTICE U/S. 148 OF THE ACT . THE NOTICE U/S. 148 ISSUED IN THIS CASE IS ILLEGAL, VOI D AND WITHOUT JURISDICTION AND ACCORDINGLY THE ASSESSMENT ORDER PASSED ON THE FOUNDATION OF SUCH NOTICE IS LI ABLE TO BE QUASHED. THE LD. CIT(A) OUGHT TO HAVE HELD TH E REASSESSMENT PROCEEDINGS AS ILLEGAL, VOID AND WITHO UT JURISDICTION. 2 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE CIT(A) ERRED IN CONFIRMING THE ADDITION MADE BY THE AO OF SHARE CAPITAL OF RS. 40,80,000/- AS ALLE GED UNEXPLAINED CASH CREDIT U/S. 68 OF THE ACT. THE ADDITION MADE BY THE AO IS NOT SUSTAINABLE AND CIT( A) OUGHT TO HAVE DELETED THE SAME. 3. THE ALLEGED REASONS GIVEN BY AO AND CIT(A) FOR MAKING / CONFIRMING THE ADDITION OF RS. 40,80,000/ - ARE ERRONEOUS, BOTH ON FACTS AND IN LAW AND, THEREFORE, THE ADDITION OF RS. 40,80,000/- MADE BY THE AO AND CONFIRMED BY CIT(A) IS LIABLE TO BE DELETED. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, MODIFY OR DELETE ONE OR MORE GROUND OF APPEAL BEFORE OR AT TH E TIME OF HEARING OF APPEAL. THE AFORESAID GROUNDS OF APPEAL ARE WITHOUT PREJUD ICE OF EACH OTHER. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE PROCEED INGS U/S. 147/148 OF THE INCOME TAX ACT, 1961 (HEREINAFTER R EFERRED AS THE ACT) WERE INITIATED IN THIS CASE AFTER RECORDING TH E REASONS ON THE BASIS OF THE INFORMATION RECEIVED FROM THE INVESTIG ATION WING OF THE DEPARTMENT, DELHI ON THE BASIS OF SEARCH AND SEIZU RE OPERATION CARRIED OUT ON TARUN GOYAL GROUP OF CASES, THAT CE RTAIN PERSONS/COS. WERE USING SERVICES OF ACCOMMODATION ENTRY OPERATOR S TO CHANNELIZE 3 THEIR OWN UNACCOUNTED MONEY IN THEIR REGULAR BOOKS OF ACCOUNTS BY ROUTING THE SAME THROUGH THE ACCOUNTS OF ACCOMMODAT ION ENTRY PROVIDERS. THE MODUS OPERANDI ADOPTED BY SUCH BENEF ICIARIES OF THE SERVICES OF ACCOMMODATION ENTRY PROVIDERS WAS DETEC TED TO BE AS UNDER:- THE PERSONS WHO HAD UNACCOUNTED MONEY (HEREINAFTER CALLED AS ENTRY TAKERS OR BENEFICIARIES) AND WANTED TO INTROD UCE THE SAME IN THE BOOKS OF ACCOUNTS WITHOUT PAYING TAX, APPROACHE D SUCH ANOTHER PERSON(HEREINAFTER CALLED AS ENTRY OPERATOR)AND WOU LD HAND OVER THE 'CASH PLUS COMMISSION TO THE LATTER. THE ENTRY OPER ATOR IN TURN WOULD ISSUE CHEQUES/DDS/POS IN THE NAME OF THE BENEFICIAR Y FROM THE SAME ACCOUNT(IN WHICH THE CASH IS DEPOSITED) OR ROUTED T HROUGH A CHAIN OF BANK ACCOUNTS IN FORMS OF CHEQUES ETC. OR TRANSFERR ED THROUGH CLEARING IN TWO OR MORE STAGES. THE BENEFICIARY THE REAFTER DEPOSITED THESE INSTRUMENTS IN ITS BANK ACCOUNT AND THE MONEY WOULD COME TO HIS REGULAR BOOKS OF ACCOUNT IN THE FORM OF GIFT, S HARE APPLICATION MONEY, LOAN, TRANSACTION OF SALE OF UNQUOTED SHARES ETC. THROUGH BANKING CHANNELS. A SEARCH U/S 132 OF THE L.T.ACT, 1961 WAS CONDUCTED AT THE OFFICE PREMISES OF SHRI TARUN GOYAL, CHARTERED ACCOUNTANT AT 13/34, WEA, ARYA SAMAJ ROAD, KAROL BAGH, NEW DELHI BY THE INVES TIGATION WING ON 15.9.2008. SHRI TARUN GOYAL CREATED A NUMBER OF PRIVATE LIMITED COMPANIES AND FIRMS FOR PROVIDING ACCOMMODATION ENT RIES. THE DIRECTORS OF THESE COMPANIES WERE HIS EMPLOYEES WHO WORKED IN HIS 4 OFFICE AS PEONS, RECEPTIONISTS ETC. ALL THE DOCUMEN TS WERE GOT SIGNED FROM THESE EMPLOYEES. 'A NUMBER OF BANK ACCOUNTS IN VARIOUS BANKS WERE OPENED IN THE NAMES OF THESE COMPANIES AND HIS EMPLOYEES, IN WHICH HUGE CASE DEPOSITS WERE MADE. LATER CHEQUES W ERE ISSUED TO VARIOUS BENEFICIARIES, DISGUISING THE WHOLE TRANSAC TION AS GENUINE. DURING THE COURSE OF SEARCH IT WAS ESTABLISHED THAT SHRI TARUN GOYAL HAS FLOATED ABOUT 90 COMPANIES ANIES FOR THE PURPOS E OF PROVIDING ACCOMMODATION ENTRIES. ALL THE COMPANIES FLOATED BY TARUN GOYAL ARE NOT CARRYING OUT ANY GENUINE ACTIVITY AND ARE MEREL Y BEING USED TO PROVIDE ACCOMMODATION ENTRIES. HENCE ALL THE COMPAN IES OF SHRI TARUN GOYAL ARE 'BOGUS'. ALL THE COMPANIES ARE OPERATING FROM THE OFFICE OF SHRI TARUN GOYAL FROM 13/34, WEA, ARYA SAMAJ ROAD, KAROL BAGH, NEW D ELHI AND AT HIS FORMER OFFICE VIZ: 203, 'DHAKA CHAMBERS, 39, NA IWALA KAROL BAGH, NEW DELHI. ALL THE CHEQUE BOOKS ETC WERE FOUN D IN THE SAME PREMISES. THE BANK ACCOUNTS OF ACCOMMODATION ENTRY PROVIDERS AND OTHER DOCUMENTS WERE SEIZED BY THE INVESTIGATION WING WHI CH IS INTEGRAL PART OF THE DEPARTMENT AND IT IS SEEN THAT THE NAME OF ASSESEE COMPANY ALSO FIGURES IN THE LIST OF NAMES HAVING RE CEIVED FROM SUCH ACCOUNTS OF OPERATORS, AMOUNT IN AGGREGATE AMOUNTIN G TO RS. 40,80,000/- FROM M/S. GEEFCEE FINANCE LTD. THE ABO VE COMPANY IS FOUND BY THE INVESTIGATION WING AS ENGAGED IN BUSIN ESS OF PROVIDING ACCOMMODATION ENTRIES. 5 2.1 IN VIEW OF ABOVE THE CASE OF THE ASSESSEE WAS S ELECTED FOR SCRUTINY AS PER THE PROVISIONS OF SECTION 147 AND 1 51 OF THE I.T. ACT, 1961 AND ACCORDINGLY NOTICE U/S 148 OF THE ACT WAS ISSUED TO THE ASSESSEE ON 23.3.2012. 2.2 IN RESPONSE TO THE NOTICE U/S. 148 OF THE ACT, A LETTER DATED 16.4.2012 WAS FILED BY THE ASSESSEE STATING THEREIN THAT RETURN OF INCOME TOR A.Y. 2005-06 WAS FILED 31.10.2005 VIDE A CKNOWLEDGEMENT NO. 2455 DT. 31. 10.2005 BE TREATED AS A RETURN FIL ED IN PURSUANCE OF CAPTIONED NOTICE U/S 148 OF THE ACT DECLARING AN INCOME OF RS.6340/, AND ITS NATURE OF BUSINESS OF COMMISSION AGENT. THEREAFTER A NOTICE U/S 143(2) OF THE I. T. ACT, 1961 ISSUED O N 7.5.2012, BUT NONE ATTENDED ON THE GIVEN DATE. FURTHER NOTICE ISS UED ON 8.10.2012. ON 19.11.2012 ASSESEE/ AR OF THE ASSESSE E ATTENDED, A COPY OF THE REASONS RECORDED WAS PROVIDED TO HIM AN D SPECIFICALLY ASKED TO FILE OBJECTION IF ANY, WITHIN 7 DAYS. BUT ON GIVEN DATE ATTENDED NOR ANY REPLY WAS FILED. THE ASSESSEE HAS NOT FILED ANY OBJECTION W.R.T. ISSUE OF NOTICE U/S. 148 OF THE I. T. ACT, 1961. 2.3 SHRI RAJINDER AGGARWAL, DIRECTOR OF THE COMPANY AND A.R. OF THE ASSESSEE ATTENDED THE PROCEEDINGS FROM TIME TO TIME. DURING THE COURSE ASSESSMENT PROCEEDINGS VIDE ORDER SHEET ENTRY DATED 15.3.2013 THE ASSESSEE WAS SPECIFICALLY ASKED TO EX PLAIN AND JUSTIFY THE TRANSACTION WITH M/S GEEFCEE FINANCE LTD. AMOUN TING TO RS.40,80,000/- RECEIVED AS SHARE APPLICATION MONEY/ SHARE CAPITAL, IN 6 CASE OF NON COMPLIANCE OR NON JUSTIFICATION WHY THE SAME SHOULD NOT BE DISALLOWED OR ADDED IN THE INCOME OF THE ASSESSE E. 2.4 THE REPLY OF THE ASSESSEE VIDE LETTER DT. 22.3. 2013 FILED EARLIER HAVE BEEN CONSIDERED BUT NOT FOUND TENABLE BY THE A O. AO OBSERVED THAT AS PER BANK STATEMENT OF M/S GEEFCEE FINANCE LTD., THE KARUR VISHYA BANK LTD., KAROL BAGH, NEW DELHI CURRENT A/C NO. 1592 FOR THE PERIOD 1.4.2004 ONWARD SHOWS REGULAR D EPOSIT OF CASH AND THE SAME HAS BEEN TRANSFERRED TO THE OTHER BANK ACCOUNTS FROM THESE BANKS ACCOUNTS THE FUNDS TRANSFERRED TO THE B ENEFICIARY ACCOUNTS INCLUDING ABN AMRO BANK. IT IS ALSO EVIDEN T FROM THE ANOTHER BANK ACCOUNT OF M/S GEEFCEE FINANCE LTD., IN HDFC BANK, OLD RAJINDER NAGAR ACCOUNT NO. 0026230001027 THAT H UGE / HIGH VALUE CHEQUES HAVE BEEN DEPOSITED REGULARLY AND TRA NSFERRED REGULARLY TO THE OTHER ACCOUNTS. THERE IS NO SPECIF IC BUSINESS OF THE COMPANY FROM WHERE DAILY CASH HAS BEEN GENERATED. A O FURTHER NOTED THAT FURTHER COPIES OF THE BANK STATEMENTS FI LED BY THE ASSESSEE OF M/S GEEFCEE FINANCE LTD VIDE ITS LETTER DATED 19.3.2013 ALSO REVEALED THAT THERE WAS HIGH VALUE CHEQUE DEPO SIT OR FUND TRANSFER THROUGH CLEARING IN THE ACCOUNTS OF M/S G EEFCEE FINANCE LTD. IMMEDIATELY PRECEDING DATES ON WHICH DATE THE FUND HAS TRANSFERRED BY THE COMPANY TO M/S TARA ALLOYS. IT C AN BE SEEN FROM THE FOLLOWING DETAILS: 7 BANK ACCOUNT OF M/S GEEFCEE LTD. IN ABN AMRO BANK B ARAKHAMBA ROAD SHOWS ON 25.3.2004 AN AMOUNT OF RS. 10 LACS DE POSITED THROUGH BY CHEQUE AND ON SAME DATE AN AMOUNT OF 6 L ACS TRANSFERRED IN THE ACCOUNT OF MIS. TARA ALLOYS ACCOUNT. SIMILAR LY IN BANK OF PUNJAB ACCOUNT OF M/S GEEFCEE FINANCE LTD. NO.0200 11.02174 AT KAROL BAGH BRANCH DELHI, IT IS EVIDENT ON THE SAME DATE OR IMMEDIATELY PRECEDING DATES THE SAME AMOUNT AS TRAN SFERRED TO M/S TARA ALLOYS OR HIGHER VALUE AMOUNT HAVE BEEN RECEIV ED THROUGH HIGH VALUE CHEQUES SUCH AS ON 24.6.2004 ASSESSEE RECEIVE D RS. 6 LACS AND ON IMMEDIATELY PRECEDING DATE I.E 23.6.04 RS.8 LACS HAVE BEEN DEPOSITED AS SAI DWARKA, ON 26.6.2004 ASSESSEE RECE IVED RS.6 LACS FROM M/S GEEFCEE FINANCE LTD. AND ON SAME DATE THE SAME AMOUNT HAS BEEN DEPOSITED IN ITS ACCOUNTS FROM MERTA FINAN CE LTD. ONE OF THE COMPANY OF THE ENTRY OPERATOR WHICH IS USED AS PROVIDING ACCOMMODATION ENTRY. SIMILARLY SAME PATTERN HAS BEE N FOUND IN ALL THE MONEY RECEIVED BY THE ASSESSEE. 2.5 IN VIEW OF ABOVE THE CLAIM OF THE ASSESEE THAT THEY HAVE GENUINE BUSINESS TRANSACTION WITH M/S GEE FCEE FINA NCE LTD. AND AS STATED BY SHRI TARUN GOYAL IN HIS STATEMENT RECORDE D ON 22.3.2013 THAT THEY HAVE GENUINE BUSINESS TRANSACTIONS CANNOT BE TENABLE. FURTHER MERE FILING APPLICATION FOR LICENSE FOR MIN ING DOESN'T AFFECTED THE GROWTH OF THE COMPANY IMMEDIATELY WHICH THE M/S GEEFCEE FINANCE LTD. INVESTED A SUM OF RS. 4080000/- ALMOST 90% CAPITAL OF ASSESSEE COMPANY. THE ASSESSEE COMPANY HAS ALSO NOT HAVING ANY 8 TECHNICAL EXPERTISE IN THE MINING INDUSTRY. IN VIE W OF THE ABOVE, AO CONCLUDED THAT IT IS A CAMOUFLAGE JUST TO INTRODUCE ITS OWN FUND THROUGH ENTRY OPERATOR. THEREFORE, AN AMOUNT OF RS. 40,80,000/- WAS ADDED IN THE INCOME OF THE ASSESSEE COMPANY AS UNEXPLAINED U/S. 68 OF THE ACT AND AO COMPLETED THE ASSESSME NT AT RS. 40,86,340/- U/S. 147/143(3) OF THE ACT VIDE ORD ER DATED 26.3.2013. 3. AGAINST THE ORDER OF THE AO, ASSESSEE APPEALED BEFORE THE LD. CIT(A), CHALLENGING THE REOPENING AS WELL AS THE A DDITIONS IN DISPUTE WHO VIDE HIS IMPUGNED ORDER DATED 06.03.2017 HAS DI SMISSED THE APPEAL OF THE ASSESSEE BY UPHOLDING THE ORDER OF TH E AO. 4. AGGRIEVED WITH THE AFORESAID ORDER OF THE LD. CIT(A), ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL FOR CHALL ENGING THE LEGAL ISSUE AS WELL AS THE MERIT OF THE CASE I.E. DELETI ON OF ADDITION OF RS. 40,80,000/-. 5. AT THE TIME OF HEARING, LD. COUNSEL OF THE ASSES SEE HAS ARGUED THE LEGAL GROUND AS WELL MERITS OF THE CASE . HE STATED THAT THAT NOTICE U/S. 148 OF THE ACT IS ILLEGAL, VOID, AND WITHOUT JURISDICTION AND ACCORDINGLY THE ASSESSMENT ORDER P ASSED ON THE FOUNDATION OF SUCH NOTICE IS LIABLE TO BE QUASHED. FIRST OF ALL, HE DRAW OUR ATTENTION TOWARDS PAGE NO. 84-87 OF THE PAPER B OOK WHICH IS A COPY OF FORM FOR RECORDING THE REASONS FOR INITIATI NG PROCEEDINGS UNDER SECTION 148 OF THE ACT AND FOR OBTAINING THE APPROVAL OF THE ADDL. CIT, RANGE-16, NEW DELHI AND STATED THAT NO PROPER REASONS 9 WERE RECORDED; NO NEXUS BETWEEN THE MATERIALS RELIE D UPON AND THE BELIEF FORMED FOR ESCAPEMENT OF INCOME; NO APPLICAT ION OF MIND; NO PROPER SATISFACTION WAS RECORDED BEFORE ISSUE OF NO TICE U/S. 148; NO INDEPENDENT CONCLUSION THAT THERE WAS ESCAPEMENT OF INCOME AND NO PROPER SATISFACTION / APPROVAL HAS BEEN OBTAINED F ROM THE ADDL. CIT; LD. ADDL. CIT HAS GRANTED THE APPROVAL FOR REOPENIN G OF THE ASSESSMENT IN A MECHANICAL MANNER AND WITHOUT DUE A PPLICATION OF MIND BY WRITING THE WORD YES, I AM SATISFIED THAT IT IS A FIT CASE FOR REOPENING U/S. 147 . TO SUPPORT HIS CONTENTION HE SUBMITTED THAT THE ISSUE IN DISPUTE IS SQUARELY CO VERED IN FAVOUR OF THE ASSESSEE BY THE ITAT DECISION DATED 09.1.2015 I N THE CASE OF G&G PHARMA INDIA LIMITED VS. ITO PASSED IN ITA NO. 3149/DEL/2013 (AY 2003-04) IN WHICH THE JUDICIAL MEMBER IS THE AUTHOR. HE FURTHER STATED THAT THE ABOVE DECISION OF THE ITAT DATED 9.1.2015 HAS BEEN UPHELD BY THE HONBLE JURISDICTIONAL HIGH COURT IN ITS DECISION DATED 08.10.2015 IN ITA NO. 545/2015 IN TH E CASE OF PR. CIT-4 VS. G&G PHARMA INDIA LTD. IN THIS BEHALF, HE FILED THE COPY OF THE ORDER DATED 9.1.2015 OF THE ITAT, DELHI BENCH P ASSED IN THE CASE OF G&G PHARMA INDIA LTD VS. ITO (SUPRA) AND REFERR ED THE PAGE NOS. 88-105 OF HIS PAPER BOOK. HE FURTHER DRAW OUR ATT ENTION TOWARDS THE PAGE NO. 106-108 WHICH IS A COPY OF DECISION DA TED 14.10.2014 OF HONBLE HIGH COURT OF MADHYA PRADESH IN THE CASE OF CIT VS. S. GOYANKA LIME & CHEMICAL LTD.REPORTED AS (2015) 56 T AXMANN.COM 390 (MADHYA PRADESH) WHICH WAS LATE UPHELD BY THE H ONBLE 10 SUPREME COURT OF INDIA IN SLP NO. 11916 OF 2015 V IDE JUDGMENT DATED 8.7.2015 REPORTED AS (2015) 64 TAXMANN.COM 31 3 (SC). THEREFORE, HE REQUESTED THAT BY FOLLOWING THE AFORE SAID PRECEDENTS THE REASSESSMENT PROCEEDINGS OF THE AO MAY BE QUAS HED BY ACCEPTING THE APPEAL FILED BY THE ASSESSEE. 5.1 HOWEVER, ON THE MERIT OF THE CASE, LD. COUNSEL OF THE ASSESSEE HAS STATED THAT AO HAS MADE THE ADDITION OF SHARE C APITAL OF RS. 40.80 LACS INVESTED IN THE COMPANY BY GEEFCEE FINAN CE LTD. THERE WAS NO REASON OR BASIS FOR MAKING THE ADDITION OF T HE AFORESAID AMOUNT OF SHARE CAPITAL OF RS. 40.80 LACS U/S. 68 O F THE ACT. THE ASSESSEE HAD FURNISHED BEFORE THE AO ALL THE NECES SARY DETAILS AND DOCUMENTARY EVIDENCES TO DISCHARGE ITS ONUS U/S. 68 OF THE ACT. HE FURTHER STATED THAT THE DOCUMENTS / DETAILS SUBMITT ED BEFORE THE AO PROVED NOT ONLY THE IDENTITY OF THE SHARE HOLDER BU T ALSO THEIR CREDITWORTHINESS AND THE GENUINENESS OF THE TRANSAC TIONS AND THE ADDITION WAS MADE BASED UPON THE DOUBTS / REASONS WHICH ARE NOT SUSTAINABLE ON FACTS AS WELL AS IN LAW. LD. COUNSEL OF THE ASSESSEE FURTHER STATED THAT IT IS APPARENT FROM THE ASSESSM ENT ORDER, THE AO HAS INITIATED THE REASSESSMENT PROCEEDINGS AND MADE THE IMPUGNED ADDITION OF RS. 40.80 LACS ON THE BASIS OF SOME SEA RCH U/S. 132 OF THE ACT CONDUCTED IN THE CASE OF SH. TARUN GOYAL AND D URING THE COURSE OF ASSESSMENT PROCEEDINGS, STATEMENT ON OATH OF TAR UN GOYAL WAS RECORDED BY THE AO ON 22.3.2013 AND IN THE SAID STA TEMENT, SH. TARUN GOYAL CONFIRMED THE AO ABOUT HIS COMPANY GEEF CEE FINANCE 11 LTD. HAVING MADE INVESTMENT OF RS. 40.80 LACS IN THE ASSESSEE COMPANY. HENCE, THERE REMAINS NO BASIS FOR THE AO TO MAKE THE ADDITION. IN VIEW OF THE ABOVE, LD. AR OF THE ASSES SEE REQUESTED THAT ADDITION IN DISPUTE MAY BE DELETED AND APPEAL OF TH E ASSESSEE MAY BE ALLOWED. 6. ON THE CONTRARY, LD. DR RELIED UPON THE ORDER PA SSED BY THE AUTHORITIES BELOW AND STATED THAT THE REASONS FOR R EOPENING AND IN TURN LD. ADDL. CIT HAS GRANTED THE APPROVAL FOR TH E SAME, BY DUE APPLICATION OF MIND. HE FURTHER STATED THAT APPROV AL GRANTED BY THE ADDL. CIT IS NOT MECHANICAL ON THE CONTRARY THE ADD L. CIT HAS FULLY CONSIDERED THE FACTS OF THE CASE AND AFTER DUE CONS IDERATION OF THE FACTS HAS GIVEN A DIRECTION FOR REOPENING OF THE CA SE BY WRITING THE WORD YES, I AM SATISFIED THAT IT IS A FIT CASE FOR REOP ENING U/S. 147 . THEREFORE, HE STATED THAT, IT CANNOT BE SAID THA T THE SANCTION WAS GRANTED MECHANICALLY OR WITHOUT APPLICATION OF MIND. MOREOVER, ON THE MERITS OF THE CASE, LD. DR RELIED UPON THE O RDERS OF THE AUTHORITIES BELOW AND STATED THAT AO AS WELL AS LD. CIT(A) BOTH HAVE RIGHTLY OBSERVED THAT THE IT IS A CAMOUFLAGE JUST T O INTRODUCE ITS OWN FUND THROUGH ENTRY OPERATOR, HENCE, THE ADDITION OF RS. 40.80 LACS WAS RIGHTLY MADE IN THE HANDS OF THE ASSESSEE. 7. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ELEVANT RECORDS AVAILABLE WITH US, ESPECIALLY THE ORDERS OF THE REV ENUE AUTHORITIES AND THE CASE LAW CITED BY THE ASSESSEES COUNSEL ON THE ISSUE IN DISPUTE. 12 IN MY VIEW, IT IS VERY MUCH NECESSARY TO REPRODUCE THE REASONS RECORDED BY THE AO BEFORE ISSUE OF NOTICE U/S. 148 OF THE ACT AND THE APPROVAL OF THE LD. ADDL. CIT, RANGE-2, NEW DELHI FOR REOPENING OF ASSESSMENT WHICH READS AS UNDER:- FORM FOR RECORDING THE REASONS FOR INITIATING PROCEEDINGS U/S. 148 AND FOR OBTAINING THE APPROVAL OF THE ADDL. COMMISSIONER OF INCOME TAX / COMMISSIONER OF INCOME TAX-RANGE-16, NEW DELHI 1. NAME & ADDRESS OF THE ASSESSEE M/S TARA ALLOYS LTD. 102, HARSHA HOUSE KARAMPRA COMMERCIAL COMPLEX, NEW DELHI 2. PAN AAACT0545N 3. STATUS COMPANY 4. RANGE / WARD WARD-16(1), DELHI 5. ASSESSMENT YEAR IN RESPECT OF WHICH IT IS PROPOSED TO ISSUE NOTICE U/S. 148. 2005-06 6. THE QUANTUM OF INCOME WHICH HAS ESCAPED ASSESSMENT. RS. 40,80,000/- 7. WHETHER THE ASSESSMENT IS PROPOSED TO BE MADE FOR THE FIRST TIME. IF THE RELY IS IN AFFIRMATIVE. PLEASE STATE AS PER OFFICE RECORD, YES. 8. IF THE ANSWER TO ITEM 8 IS IN THE NEGATIVE PLEASE STATE:- (A) THE INCOME ORIGINALLY ASSESSED. (B) WHETHER IT IS A CASE OF TOO LOW N.A. 13 A RATE, ASSESSMENT UNDER ASSESSMENT, ASSESSMENT AT BEEN MADE THE SUBJECT OF EXCESSIVE RELIEF OR ALLOWING OF EXCESSIVE LOSS OF DEPRECIATION 9. WHETHER THE PROVISIONS OF SECTION 150(1) ARE APPLICABLE, IF THE REPLY IS IN THE AFFIRMATIVE, THE RELEVANT FACTS MAY BE STATED AGAINST ITEM NO. 11 AND IT MAY ALSO BE BROUGHT OUT THAT THE PROVISION OF SECTION 150(2) WOULD NOT STAND IN THE WAY OF INITIATING PROCEEDINGS U/S. 147. NO 10. REASONS FOR THE BELIEF THAT INCOME HAS ESCAPED ASSESSMENT. AS PER ANNEXURE A DATED 23/3/2012 SD/- (DHARAM SINGH) INCOME TAX OFFICER, WARD 16(1), DELHI 11. WHETHER THE COMMISSIONER I.T. YES, I AM SATISF IED IS SATISFIED ON THE REASONS THAT IT IS A FIT CAS E FOR RECORDED BY AO THAT IT IS A REOPENING U/S. 147. FIT CASE FOR THE ISSUE OF NOTICE U/S. 148 DATE: 23.03.2012 SD/- (SUNITA SINGH) ADDL. CIT, RANGE16(1), N DELHI 14 INCOME TAX DEPARTMENT M/S TARA ALLOYS LTD. AY 2005-06 ANNEXURE A AS PER THE REPORT OF THE INVESTIGATION WING OF THE DEPARTMENT, DELHI, DURING THE INVESTIGATION IN CERTAIN CASES OF 'ACCOMMODATION ENTRY OPERATORS' IT WAS REVEALED THAT CERTAIN PERSO NS WERE USING SERVICES OF THESE ACCOMMODATION ENTRY OPERATORS TO CHANNELIZE THEIR OWN UNACCOUNTED MONEY IN THEIR REGULAR BOOKS OF ACC OUNTS BY ROUTING THE SAME THROUGH THE ACCOUNTS OF ACCOMMODAT ION ENTRY PROVIDERS. THE FINDINGS OF THE 'INVESTIGATION WING' OF THE DEPARTMENT, WERE BROUGHT TO THE KNOWLEDGE OF ALL AS SESSING OFFICERS ALONGWITH THE DATA COLLECTED ON THE ENTRIES PROVIDE D THROUGH THEIR BANK ACCOUNTS, IN THE COURSE OF INVESTIGATION. THE MODUS OPERANDI ADOPTED BY SUCH BENEFICIARIES OF THE SERVICES OF ACCOMMODATION ENTRY PROVIDERS WAS DETECTED TO BE AS UNDER :- A) THE PERSONS WHO HAD UNACCOUNTED MONEY (HEREINAFT ER CALLED AS ENTRY TAKERS OR BENEFICIARIES) AND WANTED TO INTRO DUCE THE SAME IN THE BOOKS OF ACCOUNTS WITHOUT PAYING TAX, APPROACHE D SUCH ANOTHER PERSON (HEREINAFTER CALLED AS ENTRY OPERATOR) AND W OULD HAVE OVER THE CASH (PLUS COMMISSION) TO THE LATTER. THE ENTRY OPERATOR IN TURN WOULD ISSUE CHEQUES / DDS/POS IN THE NAME OF THE BE NEFICIARY FROM THE SAME ACCOUNT (IN WHICH THE CASH IS DEPOSITED) O R ANOTHER ACCOUNT IN WHICH FUNDS ARE TRANSFERRED THROUGH CLEARING IN TWO OR MORE STAGES. B) THE BENEFICIARY THEREAFTER DEPOSITED THESE INSTR UMENTS IN ITS BANK ACCOUNT AND THE MONEY WOULD COME TO HIS REGULAR BOO KS OF ACCOUNT IN THE FORM OF GIFT, SHARE APPLICATION MONEY, LOAN, TRANSACTION OF SALE OF UNQUOTED SHARES ETC THROUGH BANKING CHANNELS. C) THE STATEMENT OF BANK ACCOUNTS OF ACCOMMODATION ENTRY PROVIDERS WERE COLLATED BY THE INVESTIGATION WING A ND IT IS SEEN THAT THE NAME OF THE ASSESSEE COMPANY ALSO FIGURES IN TH E LIST OF NAMES HAVING RECEIVED FROM SUCH ACCOUNTS OF ENTRY OPERATO RS, AMOUNTS IN AGGREGATE AMOUNTING TO RS.4080000/- WHOSE FROM GEEF CEE FINANCE LIMITED. THE ABOVE NAMED COMPANIES I FOUND BY THE INVESTIGAT ION WING AS ENGAGED IN BUSINESS OF PROVIDING ACCOMMODATION ENTR IES ONLY AND THEY HAD NO OTHER BUSINESS. IN VIEW OF ABOVE, I HAVE REASONS TO BELIEVE THAT T HIS IS A FIT CASE FOR REOPENING U/S. 147 OF THE INCOME TAX ACT, 1961. 15 AS PER THE RECORDS OF THIS WARD, NO SCRUTINY WAS DONE IN THIS CASE APPROVAL IS THEREFORE SOLICITED FOR ISSUING NO TICE U/S. 148. SD/- ( DHARAM SINGH ) DT. 23.03.2012 ITO, WARD 16(1), N DELHI 8. AFTER GOING THROUGH THE REASONS RECORDED BY THE ASSESSING OFFICER/ITO, WARD 16(1), NEW DELHI FOR REOPENING AND THE APPROVAL THEREOF BY THE LD. ADDL. CIT, RANGE-16, NEW DELHI, I AM OF THE VIEW THAT AO HAS NOT APPLIED HIS MIND SO AS TO COME TO A N INDEPENDENT CONCLUSION THAT HE HAS REASON TO BELIEVE THAT INCOM E HAS ESCAPED DURING THE YEAR. IN MY VIEW THE REASONS ARE VAGUE AND ARE NOT BASED ON ANY TANGIBLE MATERIAL AS WELL AS ARE NOT A CCEPTABLE IN THE EYES OF LAW. THE AO HAS MECHANICALLY ISSUED NOTICE U/S. 148 OF THE ACT, ON THE BASIS OF INFORMATION ALLEGEDLY RECEIVED BY HIM FROM THE DIRECTORATE OF INCOME TAX (INVESTIGATION), NEW DELH I. KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE PRES ENT CASE AND THE CASE LAW APPLICABLE IN THE CASE OF THE ASSESSEE, I AM OF THE CONSIDERED VIEW THAT THE REOPENING IN THE CASE OF T HE ASSESSEE FOR THE ASSTT. YEAR IN DISPUTE IS BAD IN LAW AND DESERV ES TO BE QUASHED. EVEN OTHERWISE, A PERUSAL OF THE ABOVE DEMONSTRATE S THAT THE ADDL. CIT HAS WRITTEN YES, I AM SATISFIED THAT IT IS A FIT CASE FOR REOPENING U/S. 147 WHICH ESTABLISHES THAT HE HAS NOT RECORDED PROPER SATISFACTION / APPROVAL, BEFORE ISSUE OF NOT ICE U/S. 148 OF THE I.T. ACT. THEREAFTER, THE AO HAS MECHANICALLY ISSUE D NOTICE U/S. 148 OF THE ACT, ON THE BASIS OF INFORMATION ALLEGEDLY R ECEIVED BY HIM FROM THE DIRECTORATE OF INCOME TAX (INVESTIGATION), NEW DELHI. KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE PRES ENT CASE AND THE CASE LAW APPLICABLE IN THE CASE OF THE ASSESSEE, I AM OF THE 16 CONSIDERED VIEW THAT THE REOPENING IN THE CASE OF T HE ASSESSEE FOR THE ASSTT. YEAR IN DISPUTE IS BAD IN LAW AND DESERV ES TO BE QUASHED. MY VIEW IS SUPPORTED BY THE FOLLOWING JUDGMENTS/DE CISIONS:- (A) THE TRIBUNAL IN ITS DECISION DATED 9.1.2015 PASSED IN ITA NO. 3149/DEL/2013 (AY 2003-04) IN THE CASE OF G&G PHARMA INDIA LIMITED VS. ITO, HAS HELD UNDER:- 8. WE HAVE PERUSED THE AFORESAID REASONS RECORDED BY THE AO FOR REOPENING THE ASSESSMENT IN DISPUTE AND WE ARE OF THE CONSIDERED VIEW THAT THE AO HAS NOT APPLIED HIS MIND SO AS TO COME TO AN INDEPENDENT CONCLUSION THAT HE HAS REASON TO BELIEVE THAT INCOME HAS ESCAPED DURING THE YEAR. A MERE REFERENCE IS MADE TO CERTAIN INFORMATION RECEIVED FROM THE INVESTIGATION WING WHICH WAS SUPPLIED TO THE ASSESSEE VIDE AOS LETTER DATED 15.9.2010. IN OUR VIEW THE REASONS ARE VAGUE AND ARE NOT BASED ON ANY TANGIBLE MATERIAL AS WELL AS ARE NOT ACCEPTABLE IN THE EYES OF LAW. THE AO HAD MECHANICALLY ISSUED NOTICES U/S. 148 OF THE ACT, ON THE BASIS OF INFORMATION ALLEGEDLY RECEIVED BY HIM FROM THE DIRECTORATE OF 17 INVESTIGATION, JHANDEWALAN, NEW DELHI. KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND THE LAW APPLICABLE IN THE CASE OF THE ASSESSEE, WE ARE OF THE CONSIDERED VIEW THAT THE REOPENING IN THE CASE OF THE ASSESSEE FOR THE ASSTT. YEAR IN DISPUTE IS BAD IN LAW AND DESERVES TO BE QUASHED. WE DRAW OUR SUPPORT FROM THE JUDGMENTS OF THE HONBLE HIGH COURT OF DELHI IN THE FOLLOWING CASES:- (I) SIGNATURE HOTELS (P)_ LTD. VS. ITO AND ANOTHER REPORTED IN 338 ITR 51 (DEL) HAS UNDER SIMILAR CIRCUMSTANCES AS FOLLOWS:- FOR THE A.Y. 2003-04, THE RETURN OF INCOME OF THE ASSESSEE COMPANY WAS ACCEPTED U/S.143(1) OF THE INCOME-TAX ACT, 1961 AND WAS NOT SELECTED FOR SCRUTINY. SUBSEQUENTLY, THE ASSESSING OFFICER ISSUED NOTICE U/S.148 WHICH WAS OBJECTED BY THE ASSESSEE. THE ASSESSING OFFICER REJECTED THE OBJECTIONS. THE ASSESSEE COMPANY FILED WRIT PETITION AND CHALLENGED THE NOTICE AND THE ORDER ON OBJECTIONS. THE DELHI HIGH COURT ALLOWED THE WRIT PETITION AND HELD AS UNDER: 18 (I) SECTION 147 OF THE INCOME-TAX ACT, 1961, IS WIDE BUT NOT PLENARY. THE ASSESSING OFFICER MUST HAVE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. THIS IS MANDATORY AND THE REASON TO BELIEVE ARE REQUIRED TO BE RECORDED IN WRITING BY THE ASSESSING OFFICER. (II) A NOTICE U/S.148 CAN BE QUASHED IF THE BELIEF IS NOT BONA FIDE, OR ONE BASED ON VAGUE, IRRELEVANT AND NON- SPECIFIC INFORMATION. THE BASIS OF THE BELIEF SHOULD BE DISCERNIBLE FROM THE MATERIAL ON RECORD, WHICH WAS AVAILABLE WITH THE ASSESSING OFFICER, WHEN HE RECORDED THE REASONS. THERE SHOULD BE A LINK BETWEEN THE REASONS AND THE EVIDENCE/MATERIAL AVAILABLE WITH THE ASSESSING OFFICER. (III) THE REASSESSMENT PROCEEDINGS WERE INITIATED ON THE BASIS OF INFORMATION RECEIVED FROM THE DIRECTOR OF INCOME-TAX (INVESTIGATION) THAT THE PETITIONER HAD INTRODUCED MONEY AMOUNTING TO RS.5 LAKHS DURING F.Y. 2002-03 AS STATED IN THE ANNEXURE. ACCORDING TO THE INFORMATION, THE AMOUNT RECEIVED FROM A COMPANY, S, WAS NOTHING BUT AN ACCOMMODATION ENTRY AND THE ASSESSEE WAS THE BENEFICIARY. THE REASONS DID NOT SATISFY THE REQUIREMENTS OF SECTION 147 OF THE 19 ACT. THERE WAS NO REFERENCE TO ANY DOCUMENT OR STATEMENT, EXCEPT THE ANNEXURE. THE ANNEXURE COULD NOT BE REGARDED AS A MATERIAL OR EVIDENCE THAT PRIMA FACIE SHOWED OR ESTABLISHED NEXUS OR LINK WHICH DISCLOSED ESCAPEMENT OF INCOME. THE ANNEXURE WAS NOT A POINTER AND DID NOT INDICATE ESCAPEMENT OF INCOME. (IV) FURTHER, THE ASSESSING OFFICER DID NOT APPLY HIS OWN MIND TO THE INFORMATION AND EXAMINE THE BASIS AND MATERIAL OF THE INFORMATION. THERE WAS NO DISPUTE THAT THE COMPANY, S, HAD A PAID UP CAPITAL OF RS.90 LAKHS AND WAS INCORPORATED ON JANUARY 4, 1989, AND WAS ALSO ALLOTTED A PERMANENT ACCOUNT NUMBER IN SEPTEMBER 2001. THUS, IT COULD NOT BE HELD TO BE A FICTITIOUS PERSON. THE REASSESSMENT PROCEEDINGS WERE NOT VALID AND WERE LIABLE TO THE QUASHED. (II). IN THE CASE OF CIT VS. ATUL JAIN REPORTED IN 299 ITR 383 IT HAS BEEN HELD AS UNDER:- HELD, DISMISSING THE APPEALS, THAT THE ONLY INFORMATION WAS THAT THE ASSESSEE HAD TAKEN A BOGUS ENTRY OF CAPITAL GAINS BY PAYING CASH ALONG WITH SOME PREMIUM FOR TAKING A CHEQUE FOR THAT AMOUNT. THE INFORMATION DID NOT 20 INDICATE THE SOURCE OF THE CAPITAL GAINS WHICH IN THIS CASE WERE SHARES. THERE WAS NO INFORMATION WHICH SHARES HAD BEEN TRANSFERRED AND WITH WHOM THE TRANSACTION HAD TAKEN PLACE. THE AO DID NOT VERIFY THE CORRECTNESS OF INFORMATION RECEIVED BY HIM BUT MERELY ACCEPTED THE TRUTH OF THE VAGUE INFORMATION IN A MECHANICAL MANNER. THE AO HAD NOT EVEN RECORDED HIS SATISFACTION ABOUT THE CORRECTNESS OR OTHERWISE OF THE INFORMATION FOR ISSUING A NOTICE U/S 148. WHAT HAD BEEN RECORDED BY THE AO AS HIS REASONS TO BELIEVEWAS NOTHING MORE THAN A REPORT GIVEN BY HIM TO THE COMMISSIONER. THE SUBMISSION OF THE REPORT WAS NOT THE SAME AS RECORDING OF REASONS TO BELIEVE FOR ISSUING A NOTICE. THE AO HAD CLEARLY SUBSTITUTED FORM FOR SUBSTANCE AND THEREFORE THE ACTION OF THE AO WAS NOT SUSTAINABLE. 9. IN VIEW OF ABOVE, WE ARE OF THE CONSIDERED VIEW THAT ABOVE ISSUE IS EXACTLY THE SIMILAR TO T HE ISSUE INVOLVED IN THE PRESENT APPEAL AND IS SQUAREL Y COVERED BY THE AFORESAID DECISIONS OF THE HONBLE HIGH COURT OF DELHI. HENCE, RESPECTFULLY FOLLOWIN G THE ABOVE PRECEDENT, WE DECIDE THE LEGAL ISSUE IN DISPUTE IN FAVOR OF THE ASSESSEE AND AGAINST THE REVENUE AND ACCORDINGLY QUASH THE REASSESSMENT PROCEEDINGS. THE OTHER ISSUES ARE NOT DEALT WITH AS THE SAME HAVE BECOME ACADEMIC IN NATURE. 21 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. (B). PR. CIT VS. G&G PHARMA INDIA LTD. IN ITA NO. 545/2015 DATED 8.10.2015 OF THE DELHI HIGH COURT WHEREIN THE HONBLE COURT HAS ADJUDICATED THE ISSUE AS UNDER:- 12. IN THE PRESENT CASE, AFTER SETTING OUT FOUR ENTRIES, STATED TO HAVE BEEN RECEIVED BY THE ASSESSEE ON A SINGLE DATE I.E. 10TH FEBRUARY 2003, FROM FOUR ENTITIES WHICH WERE TERMED AS ACCOMMODATION ENTRIES, WHICH INFORMATION WAS GIVEN TO HIM BY THE DIRECTORATE OF INVESTIGATION, THE AO STATED: 'I HAVE ALSO PERUSED VARIOUS MATERIALS AND REPORT FROM INVESTIGATION WING AND ON THAT BASIS IT IS EVIDENT THAT THE ASSESSEE COMPANY HAS INTRODUCED ITS OWN UNACCOUNTED MONEY IN ITS BANK ACCOUNT BY WAY OF ABOVE ACCOMMODATION ENTRIES.' THE ABOVE CONCLUSION IS UNHELPFUL IN UNDERSTANDING WHETHER THE AO APPLIED HIS MIND TO THE MATERIALS THAT HE TALKS ABOUT PARTICULARLY SINCE HE DID NOT DESCRIBE WHAT THOSE MATERIALS WERE. ONCE THE DATE ON WHICH THE SO CALLED ACCOMMODATION ENTRIES WERE PROVIDED IS KNOWN, IT WOULD NOT HAVE BEEN DIFFICULT FOR THE AO, 22 IF HE HAD IN FACT UNDERTAKEN THE EXERCISE, TO MAKE A REFERENCE TO THE MANNER IN WHICH THOSE VERY ENTRIES WERE PROVIDED IN THE ACCOUNTS OF THE ASSESSEE, WHICH MUST HAVE BEEN TENDERED ALONG WITH THE RETURN, WHICH WAS FILED ON 14TH NOVEMBER 2004 AND WAS PROCESSED UNDER SECTION 143(3) OF THE ACT. WITHOUT FORMING A PRIMA FACIE OPINION, ON THE BASIS OF SUCH MATERIAL, IT WAS NOT POSSIBLE FOR THE AO TO HAVE SIMPLY CONCLUDED: 'IT IS EVIDENT THA T THE ASSESSEE COMPANY HAS INTRODUCED ITS OWN UNACCOUNTED MONEY IN ITS BANK BY WAY OF ACCOMMODATION ENTRIES'. IN THE CONSIDERED VIEW OF THE COURT, IN LIGHT OF THE LAW EXPLAINED WITH SUFFICIENT CLARITY BY THE SUPREME COURT IN THE DECISIONS DISCUSSED HEREINBEFORE, THE BASIC REQUIREMENT THAT THE AO MUST APPLY HIS MIND TO THE MATERIALS IN ORDER TO HAVE REASONS TO BELIEVE THAT THE INCOME OF THE ASSESSEE ESCAPED ASSESSMENT IS MISSING IN THE PRESENT CASE. 13. MR. SAWHNEY TOOK THE COURT THROUGH THE ORDER OF THE CIT(A) TO SHOW HOW THE CIT (A) DISCUSSED THE MATERIALS PRODUCED DURING THE HEARING OF THE APPEAL. THE COURT WOULD LIKE TO OBSERVE THAT THIS I S 23 IN THE NATURE OF A POST MORTEM EXERCISE AFTER THE EVENT OF REOPENING OF THE ASSESSMENT HAS TAKEN PLACE. WHILE THE CIT MAY HAVE PROCEEDED ON THE BASIS THAT THE REOPENING OF THE ASSESSMENT WAS VALID, THIS DOES NOT SATISFY THE REQUIREMENT OF LAW THAT PRIOR TO THE REOPENING OF THE ASSESSMENT, THE AO HAS TO, APPLYING HIS MIND TO THE MATERIALS, CONCLUDE THAT HE HAS REASON TO BELIEVE THAT INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. UNLESS THAT BASIC JURISDICTIONAL REQUIREMENT IS SATISFIED A POST MORTEM EXERCISE OF ANALYSING MATERIALS PRODUCED SUBSEQUENT TO THE REOPENING WILL NOT RESCUE AN INHERENTLY DEFECTIVE REOPENING ORDER FROM INVALIDITY . 14. IN THE CIRCUMSTANCES, THE CONCLUSION REACHED BY THE ITAT CANNOT BE SAID TO BE ERRONEOUS. NO SUBSTANTIAL QUESTION OF LAW ARISES. 15. THE APPEAL IS DISMISSED. (C) ITAT, E BENCH, NEW DELHI IN THE CASE OF ITO VS. M/S NC CABLES LTD. IN ITA NO. 4122/DEL/2009 (AY 2001-02) AND IN CROSS OBJECTION NO. 388/DEL/2009 IN THE MATTER OF M/S NC CABLES LTD. VS. ITO, VIDE ORDER DATED 22.10.2014, THE TRIBUNAL HAS HELD AS UNDER:- 24 10.2. THE MUMBAI E BENCH OF THE TRIBUNAL IN ITA 611/MUM/2004 AMARLAL BAJAJ (SUPRA) ORDER DT. 24.7.2013 HAS CONSIDERED THE LEGAL POSITION AND HEL D AS FOLLOWS. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND ALSO THE MATERIAL EVIDENCES BROUGHT ON 8 RECORD FROM BOTH SIDES. WE HAVE ALSO THE BENEFIT OF PERUSING THE ORDER SHEET ENTRIES BY WHIC H THE LD. CIT HAS GRANTED SANCTION. LET US FIRST CONSIDER THE RELEVANT PART OF THE PROVISIONS OF SEC . 151 OF THE ACT. 151. (1) IN A CASE WHERE AN ASSESSMENT UNDER SUB- SECTION (3) OF SECTION 143OR SECTION 147HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO NOTICE SHALL BE ISSUED UNDER SECTION 148[BY AN ASSESSING OFFICER, WHO IS BELOW THE RANK OF ASSISTANT COMMISSIONER [OR DEPUTY COMMISSIONER}, UNLESS THE [JOINT} COMMISSIONER IS SATISFIED ON THE REASONS RECORDED BY SUCH ASSESSING OFFICER THAT IT IS A FIT CASE FOR THE ISSUE OF SUCH NOTICE} : 25 PROVIDED THAT, AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, NO SUCH NOTICE SHALL BE ISSUED UNLESS THE CHIEF COMMISSIONER OR COMMISSIONER IS SATISFIED, ON THE REASONS RECORDED BY THE ASSESSING OFFICER AFORESAID, THAT IT IS A FIT CASE FOR THE ISSUE OF S UCH NOTICE. (2) IN A CASE OTHER THAN A CASE FALLING UND ER SUB-SECTION (1), NO NOTICE SHALL BE ISSUED UNDER SECTION 148 BY AN ASSESSING OFFICER, WHO IS BELOW THE RANK OF [JOINT} COMMISSIONER, AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS THE [JOINT} COMMISSIONER IS SATISFIED, ON THE REASONS RECORDED BY SUCH ASSESSING OFFICER, THAT IT IS A FIT CASE FOR THE IS SUE OF SUCH NOTICE.} [EXPLANATION.-FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT THE JOINT COMMISSIONER, THE COMMISSIONER OR THE CHIEF COMMISSIONER, AS THE CASE MAY BE, BEING SATISFIED ON THE REASONS RECORDED BY THE ASSESSING OFFICER ABOUT FITNESS OF A CASE FOR THE ISSUE OF NOTICE UNDER SECTION 148,NEED NOT ISSUE SUCH NOTICE HIMSELF.} ' 26 6. A SIMPLE READING OF THE PROVISIONS OF SEC. 151(1 ) WITH THE PROVISO CLEARLY SHOW THAT NO SUCH NOTICE SHALL BE ISSUED UNLESS THE COMMISSIONER IS SATISFIE D ON THE REASONS RECORDED BY THE AO THAT IT IS A FIT CASE FOR THE ISSUE OF NOTICE WHICH MEANS THAT THE SATISFACTION OF THE COMMISSIONER IS PARAMOUNT FOR WHICH THE LEAST THAT IS EXPECTED FROM THE COMMISSIONER IS APPLICATION OF MIND AND DUE DILIGENCE BEFORE ACCORDING SANCTION TO THE REASONS RECORDED BY THE AO. IN THE PRESENT CASE, THE ORDER SHEET WHICH IS PLACED ON RECORD SHOW THAT THE COMMISSIONER HAS SIMPLY AFFIXED 'APPROVED' AT THE BOTTOM OF THE NOTE SHEET PREPARED BY THE ITO TECHNICAL. NOWHERE THE CIT HAS RECORDED HIS SATISFACTION. IN THE CASE BEFORE THE HON'BLE SUPREME COURT (SUPRA) THAT ON AO'S REPORT THE COMMISSIONER AGAINST THE QUESTION 'WHETHER THE COMMISSIONER IS SATISFIED THAT IT IS A FIT CASE FO R THE ISSUE OF NOTICE UNDER SECTION 148 MERELY NOTED YES AND AFFIXED HIS SIGNATURE THERE UNDER. ON THESE FACTS, THE HON'BIE SUPREME COURT OBSERVED THAT THE IMPORTANT SAFEGUARDS PROVIDED IN SECTIONS 147 AND 151 WERE LIGHTLY TREATED BY THE OFFICER AND THE COMMISSIONER. THE HON'BLE SUPREME COURT 27 FURTHER OBSERVED THAT THE ITO COULD NOT HAVE HAD REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT BY REASONS OF THE APPELLANT-FIRM'S FAILURE TO DISCLOSE MATERIAL FACTS AND IF THE 9 COMMISSIONER HAD READ THE REPORT CAREFULLY HE COULD NOT HAVE COME TO THE CONCLUSION THAT THIS WAS A FIT CASE FOR ISSUING A NOTICE UNDER SECTION 148. THE NOTICE ISSUED UNDER SECTION 148 WAS THEREFORE, INVALID. IT WOULD BE PERTINENT HERE TO NOTE THE REASONS RECORDED BY THE AO. 'INTIMATION HAS BEEN RECEIVED FROM DCIT-24(2), MUMBAI VIDE HIS LETTERS DT. 22ND FEBRUARY, 2002 THAT ONE SHRI NITIN 1. RUGMANI ASSESSED IN HIS CHARGE HAD ARRANGED HAWALA ENTRIES IN ARRANGING LOANS, EXPENSES, GIFTS. DURING THE YEAR SHRI AMAR G. BAJAJ, PROP. OF MOHAN BROTHERS, 712, LINKING ROAD, KHAR (W), MUMBAI-52 WAS THE BENEFICIARY OF SUCH LOANS, EXPENSES AND GIFTS. THE MODUS-OPERANDI WAS TO COLLECT CASH FROM THE PARTIES TO WHOM LOANS WERE GIVEN AND CASH WAS DEPOSITED INTO ACCOUNT OF SHRI NITIN 1. RUGANI AND CHEQUES WERE ISSUED TO THE BENEFICIARY OF THE LOAN TRANSACTION. IN ORDER TO ENSURE THAT THE MONEY REACHED BY CHEQUES TO THE BENEFICIARY SHRI NITIN 1. RUGANI KEPT BLANK CHEQUES 28 OF THE THIRD PARTIES. THE ASSESSEE SHRI AMAR G. BAJAJ HAD TAKEN BENEFIT OF SUCH ENTRIES OF LOANS, COMMISSION AD BILL DISCOUNTING OF RS. 8,00,000/-, 11,21,243/- AND 9,64,739/- RESPECTIVELY. THE ASSESSMENT WAS COMPLETED U/S. 143(3) OF THE 1. T. ACT ON 31 ST MARCH, 1998 BY DCIT-SPL. RG. 40, MUMBAI. IT IS SEEN FROM RECORDS THAT THE AFORESAID POINTS HAVE NOT BEEN VERIFIED IN THE ASSESSMENT. I HAVE THEREFORE REASON TO BELIEVE THAT BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HI S ASSESSMENT, INCOME HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF PROVISO TO SEC. 147 AND EXPLANATION 2 (C)(I) OF THE INCOME-TAX ACT, 1961.' 7. IN THE LIGHT OF THE ABOVE MENTIONED REASONS, IN OUR CONSIDERATE VIEW, SECTION 147 AND 148 ARE CHARTER TO THE REVENUE TO REOPEN EARLIER ASSESSMENTS AND ARE, THEREFORE PROTECTED BY SAFEGUARDS AGAINST UNNECESSARY HARASSMENT OF THE ASSESSEE. THEY ARE SWORD FOR THE REVENUE AND SHIELD FOR THE ASSESSEE. SECTION 151 GUARDS THAT THE SWORD OF SEC. 147 MAY NOT BE USED UNLESS A SUPERIOR OFFICER IS SATISFIED THAT THE AO HAS GOOD 29 AND ADEQUATE REASONS TO INVOKE THE PROVISIONS OF SEC. 147. THE SUPERIOR AUTHORITY HAS TO EXAMINE THE REASONS, MATERIAL OR GROUNDS AND TO JUDGE WHETHER THEY ARE SUFFICIENT AND ADEQUATE TO THE FORMATION OF THE NECESSARY BELIEF ON THE PART OF TH E ASSESSING OFFICER. IF, AFTER APPLYING HIS MIND AND ALSO RECORDING HIS REASONS, HOWSOEVER BRIEFLY, THE COMMISSIONER IS OF THE OPINION THAT THE AO'S BELIEF IS WELL REASONED AND BONAFIDE, HE IS TO ACCORD HIS SANCTION TO THE ISSUE OF NOTICE U/S. 148 OF THE ACT . IN THE INSTANT CASE, WE FIND FROM THE PERUSAL OF TH E ORDER SHEET WHICH IS ON RECORD, THE COMMISSIONER HAS SIMPLY PUT 'APPROVED' AND SIGNED THE REPORT THEREBY GIVING SANCTION TO THE AO. NOWHERE THE COMMISSIONER HAS RECORDED A SATISFACTION NOTE NOT EVEN IN BRIEF. THEREFORE, IT CANNOT BE SAID THAT TH E COMMISSIONER HAS ACCORDED SANCTION AFTER APPLYING HIS MIND AND AFTER RECORDING HIS SATISFACTION. 8. HON'BLE DELHI HIGH COURT IN THE CASE OF' UNITED ELECTRICAL CO. PVT. LTD. VS CIT 257 HAS HELD THAT 'THE PROVISO TO SUB-SECTION (1) OF SECTION 151OF TH E 10 ACT PROVIDES THAT AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, 30 NOTICE UNDER SECTION 148 SHALL NOT BE ISSUED UNLESS THE CHIEF COMMISSIONER OR THE COMMISSIONER, AS THE CASE MAY BE, IS SATISFIED, ON THE REASONS RECORDED BY THE ASSESSING OFFICER CONCERNED, THAT I T IS A FIT CASE FOR THE ISSUE OF SUCH NOTICE. THESE A RE SOME IN-BUILTS SAFEGUARDS TO PREVENT ARBITRARY EXERCISE OF POWER BY AN ASSESSING OFFICER TO FIDDLE WITH THE COMPLETED ASSESSMENT'. THE HON'BLE HIGH COURT FURTHER OBSERVED THAT 'WHAT DISTURBS US MORE IS THAT EVEN THE ADDITIONAL COMMISSIONER HAS ACCORDED HIS APPROVAL FOR ACTION UNDER SECTION 147 MECHANICALLY. WE FEEL THAT IF THE ADDITIONAL COMMISSIONER HAD CARED TO GO THROUGH THE STATEMENT OF THE SAID PARTIES, PERHAPS HE WOULD NOT HAVE GRANTED HIS APPROVAL, WHICH WAS MANDATORY IN TERMS OF THE PROVISO TO SUB-SECTION (1) OF SECTION 151 OF THE ACT AS THE ACTION UNDER SECTION 147 WAS BEING INITIATED AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. THE POWER VESTED IN THE COMMISSIONER TO GRANT OR NOT TO GRANT APPROVAL IS COUPLED WITH A DUTY. THE COMMISSIONER IS REQUIRED TO APPLY HIS MIND TO THE PROPOSAL PUT UP TO HIM FOR APPROVAL IN THE LIGHT OF THE MATERIAL RELIED UPON BY THE ASSESSING OFFICER. 31 THE SAID POWER CANNOT BE EXERCISED CASUALLY AND IN A ROUTINE MANNER. WE ARE CONSTRAINED TO OBSERVE THAT IN THE PRESENT CASE THERE HAS BEEN NO APPLICATION OF MIND BY THE ADDITIONAL COMMISSIONER BEFORE GRANTING THE APPROVAL'. 9. THE OBSERVATIONS OF THE HON'BLE HIGH COURT ARE VERY MUCH RELEVANT IN THE INSTANT CASE AS IN THE PRESENT CASE ALSO THE COMMISSIONER HAS SIMPLY MENTIONED 'APPROVED' TO THE REPORT SUBMITTED BY THE CONCERNED AO. IN THE LIGHT OF THE RATIOS/OBSERVATIONS OF THE HON'BLE HIGH COURT MENTIONED HEREINABOVE, WE HAVE NO HESITATION TO HOLD THAT THE REOPENING PROCEEDINGS VISA-VIS PROVISIONS OF SEC. 151 ARE BAD IN LAW AND THE ASSESSMENT HAS TO BE DECLARED AS VOID AB INITIO. GROUND NO. 1 OF ASSESSEE'S APPEAL IS ALLOWED. 10. AS WE HAVE HELD THAT THE REASSESSMENT IS BAD IN LAW, WE DO NOT FIND IT NECESSARY TO DECIDE OTHER ISSUES WHICH ARE ON MERITS OF THE CASE. 10.3 NO CONTRARY JUDGMENT OR ORDER IS BROUGHT TO O UR NOTICE. THIS BEING A CO-ORDINATE BENCH ORDER, WE AR E REQUIRED TO FOLLOW THE SAME. 32 10.4 THE DECISION CITED BY THE LD. DR DOES NOT PERT AIN TO THE ISSUE OF CONTRAVENTION OF PROVISIONS OF S. 151 OF THE ACT. THESE JUDGMENTS ARE ON OTHER ASPECTS RELATING TO REOPENING. THUS RESPECTFULLY FOLLOWING THE DECISIO N OF THE COORDINATE BENCH IN THE MATTER, WE HOLD THAT THE REOPENING IS BAD IN LAW FOR THE REASON THAT THE LD. CIT(A), DELHI HAS NOT RECORDED HIS SATISFACTION AS CONTEMPLATED U/S. 151 OF THE ACT. (D) ITAT, MUMBI BENCH E IN THE CASE OF AMARLAL BAJAJ VS. ACIT REPORTED IN (2013) 37 TAXMANN.COM 7 (MUMBAI TRIB) IT HAS BEEN HELD AS UNDER:- 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE ORDERS OF THE LOWER AUTHORITI ES AND ALSO THE MATERIAL EVIDENCES BROUGHT ON RECORD FROM BOTH SIDES. WE HAVE ALSO THE BENEFIT OF PERUSING THE ORD ER SHEET ENTRIES BY WHICH THE LD. CIT HAS GRANTED SANC TION. LET US FIRST CONSIDER THE RELEVANT PART OF THE PROV ISIONS OF SEC. 151 OF THE ACT. 151. (1) IN A CASE WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 OR SECTION 147 HAS BEEN MADE FOR THE RELEVANT ASSESSME NT YEAR, NO NOTICE SHALL BE ISSUED UNDER SECTION 148 [ BY AN ASSESSING OFFICER, WHO IS BELOW THE RANK OF ASSISTA NT COMMISSIONER [OR DEPUTY COMMISSIONER], UNLESS THE [JOINT] COMMISSIONER IS SATISFIED ON THE REASONS RE CORDED 33 BY SUCH ASSESSING OFFICER THAT IT IS A FIT CASE FOR THE ISSUE OF SUCH NOTICE] : PROVIDED THAT, AFTER THE EXPIRY O F FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, NO SUCH NOTICE SHALL BE ISSUED UNLESS THE CHIEF COMMISSIONER OR COMMISSIONER IS SATISFIED, ON THE REASONS RECORDED BY THE ASSESSING OFFICER AFORESAID , THAT IT IS A FIT CASE FOR THE ISSUE OF SUCH NOTICE. (2) IN A CASE OTHER THAN A CASE FALLING UNDER SUB-SECTION (1), NO NOTICE SHALL BE ISSUED UNDER SECTION 148 BY AN ASSESSING OFFICER, WHO IS BELOW THE RANK OF [JOINT] COMMISSIO NER, AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS THE [JOINT] COMMISSIONER IS SATISFIED, ON THE REASONS RECORDED BY SUCH ASSESSIN G OFFICER, THAT IT IS A FIT CASE FOR THE ISSUE OF SUC H NOTICE.] [EXPLANATION.FOR THE REMOVAL OF DOUBTS, IT IS HERE BY DECLARED THAT THE JOINT COMMISSIONER, THE COMMISSIO NER OR THE CHIEF COMMISSIONER, AS THE CASE MAY BE, BEIN G SATISFIED ON THE REASONS RECORDED BY THE ASSESSING OFFICER ABOUT FITNESS OF A CASE FOR THE ISSUE OF NOTICE UND ER SECTION 148, NEED NOT ISSUE SUCH NOTICE HIMSELF.] 6. A SIMPLE READING OF THE PROVISIONS OF SEC. 151(1 ) WITH THE PROVISO CLEARLY SHOW THAT NO SUCH NOTICE SHALL BE ISSUED UNLESS THE COMMISSIONER IS SATISFIED ON THE 34 REASONS RECORDED BY THE AO THAT IT IS A FIT CASE FO R THE ISSUE OF NOTICE WHICH MEANS THAT THE SATISFACTION O F THE COMMISSIONER IS PARAMOUNT FOR WHICH THE LEAST THAT IS EXPECTED FROM THE COMMISSIONER IS APPLICATION OF MI ND AND DUE DILIGENCE BEFORE ACCORDING SANCTION TO THE REASONS RECORDED BY THE AO. IN THE PRESENT CASE, TH E ORDER SHEET WHICH IS PLACED ON RECORD SHOW THAT THE COMMISSIONER HAS SIMPLY AFFIXED APPROVED AT THE BOTTOM OF THE NOTE SHEET PREPARED BY THE ITO TECHNI CAL. NOWHERE THE CIT HAS RECORDED HIS SATISFACTION. IN T HE CASE BEFORE THE HONBLE SUPREME COURT (SUPRA) THAT ON AOS REPORT THE COMMISSIONER AGAINST THE QUESTION WHETHER THE COMMISSIONER IS SATISFIED THAT IT IS A FIT CASE FOR THE ISSUE OF NOTICE UNDER SECTION 148 MERELY NO TED ' YES ' AND AFFIXED HIS SIGNATURE THERE UNDER. ON THE SE FACTS, THE HONBLE SUPREME COURT OBSERVED THAT THE IMPORTANT SAFEGUARDS PROVIDED IN SECTIONS 147 AND 1 51 WERE LIGHTLY TREATED BY THE OFFICER AND THE COMMISS IONER. THE HONBLE SUPREME COURT FURTHER OBSERVED THAT THE ITO COULD NOT HAVE HAD REASON TO BELIEVE THAT INCOM E HAD ESCAPED ASSESSMENT BY REASONS OF THE APPELLANT- FIRM'S FAILURE TO DISCLOSE MATERIAL FACTS AND IF TH E COMMISSIONER HAD READ THE REPORT CAREFULLY HE COULD NOT HAVE COME TO THE CONCLUSION THAT THIS WAS A FIT CAS E FOR 35 ISSUING A NOTICE UNDER SECTION 148. THE NOTICE ISSU ED UNDER SECTION 148 WAS THEREFORE, INVALID. IT WOULD BE PERTINENT HERE TO NOTE THE REASONS RECORDED BY THE AO. INTIMATION HAS BEEN RECEIVED FROM DCIT-24(2), MUMB AI VIDE HIS LETTERS DT. 22ND FEBRUARY, 2002 THAT ONE S HRI NITIN J. RUGMANI ASSESSED IN HIS CHARGE HAD ARRANGE D HAWALA ENTRIES IN ARRANGING LOANS, EXPENSES, GIFTS. DURING THE YEAR SHRI AMAR G. BAJAJ, PROP. OF MOHAN BROTHERS, 712, LINKING ROAD, KHAR (W), MUMBAI-52 WA S THE BENEFICIARY OF SUCH LOANS, EXPENSES AND GIFTS. THE MODUS-OPERANDI WAS TO COLLECT CASH FROM THE PARTIES TO WHOM LOANS WERE GIVEN AND CASH WAS DEPOSITED INTO ACCOUNT OF SHRI NITIN J. RUGANI AND CHEQUES WERE IS SUED TO THE BENEFICIARY OF THE LOAN TRANSACTION. IN ORDE R TO ENSURE THAT THE MONEY REACHED BY CHEQUES TO THE BENEFICIARY SHRI NITIN J. RUGANI KEPT BLANK CHEQUES OF THE THIRD PARTIES. THE ASSESSEE SHRI AMAR G. BAJAJ HAD TAKEN BENEFIT OF SUCH ENTRIES OF LOANS, COMMISSION AND BI LL DISCOUNTING OF RS. 8,00,000/-, 11,21,243/- AND 9,64,739/- RESPECTIVELY. THE ASSESSMENT WAS COMPLET ED U/S. 143(3) OF THE I.T. ACT ON 31ST MARCH, 1998 BY DCIT- SPL. RG. 40, MUMBAI. IT IS SEEN FROM RECORDS THAT T HE AFORESAID POINTS HAVE NOT BEEN VERIFIED IN THE 36 ASSESSMENT. I HAVE THEREFORE REASON TO BELIEVE THAT BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE T O DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR HIS ASSESSMENT, INCOME HAS ESCAPED ASSESSMENT WITHIN TH E MEANING OF PROVISO TO SEC. 147 AND EXPLANATION 2 (C )(I) OF THE INCOME-TAX ACT, 1961. 7. IN THE LIGHT OF THE ABOVE MENTIONED REASONS, IN OUR CONSIDERATE VIEW, SECTION 147 AND 148 ARE CHARTER T O THE REVENUE TO REOPEN EARLIER ASSESSMENTS AND ARE, THEREFORE PROTECTED BY SAFEGUARDS AGAINST UNNECESSA RY HARASSMENT OF THE ASSESSEE. THEY ARE SWORD FOR THE REVENUE AND SHIELD FOR THE ASSESSEE. SECTION 151 GU ARDS THAT THE SWORD OF SEC. 147 MAY NOT BE USED UNLESS A SUPERIOR OFFICER IS SATISFIED THAT THE AO HAS GOOD AND ADEQUATE REASONS TO INVOKE THE PROVISIONS OF SEC. 1 47. THE SUPERIOR AUTHORITY HAS TO EXAMINE THE REASONS, MATERIAL OR GROUNDS AND TO JUDGE WHETHER THEY ARE SUFFICIENT AND ADEQUATE TO THE FORMATION OF THE NEC ESSARY BELIEF ON THE PART OF THE ASSESSING OFFICER. IF, AF TER APPLYING HIS MIND AND ALSO RECORDING HIS REASONS, HOWSOEVER BRIEFLY, THE COMMISSIONER IS OF THE OPINI ON THAT THE AOS BELIEF IS WELL REASONED AND BONAFIDE, HE IS TO ACCORD HIS SANCTION TO THE ISSUE OF NOTICE U/S. 148 OF 37 THE ACT. IN THE INSTANT CASE, WE FIND FROM THE PERU SAL OF THE ORDER SHEET WHICH IS ON RECORD, THE COMMISSIONE R HAS SIMPLY PUT APPROVED AND SIGNED THE REPORT THEREBY GIVING SANCTION TO THE AO. NOWHERE THE COMMISSIONER HAS RECORDED A SATISFACTION NOTE NOT EVEN IN BRIEF. THEREFORE, IT CANNOT BE SAID THAT THE COMMISSIONER HAS ACCORDED SANCTION AFTER APPLYING HIS MIND AND AFTER RECORDING HIS SATISFACTION. 8. HONBLE DELHI HIGH COURT IN THE CASE OF UNITED ELECTRICAL CO. PVT. LTD. VS CIT 258 ITR 317 HAS HEL D THAT THE PROVISO TO SUB-SECTION (1) OF SECTION151OF THE ACT PROVIDES THAT AFTER THE EXPIRY OF FOUR YEARS FROM T HE END OF THE RELEVANT ASSESSMENT YEAR, NOTICE UNDER SECTI ON 148 SHALL NOT BE ISSUED UNLESS THE CHIEF COMMISSION ER OR THE COMMISSIONER, AS THE CASE MAY BE, IS SATISFIED, ON THE REASONS RECORDED BY THE ASSESSING OFFICER CONCE RNED, THAT IT IS A FIT CASE FOR THE ISSUE OF SUCH NOTICE. THESE ARE SOME IN-BUILTS SAFEGUARDS TO PREVENT ARBITRARY EXER CISE OF POWER BY AN ASSESSING OFFICER TO FIDDLE WITH THE COMPLETED ASSESSMENT. THE HONBLE HIGH COURT FURTH ER OBSERVED THAT WHAT DISTURBS US MORE IS THAT EVEN T HE ADDITIONAL COMMISSIONER HAS ACCORDED HIS APPROVAL F OR ACTION UNDER SECTION 147 MECHANICALLY. WE FEEL THAT IF THE 38 ADDITIONAL COMMISSIONER HAD CARED TO GO THROUGH THE STATEMENT OF THE SAID PARTIES, PERHAPS HE WOULD NOT HAVE GRANTED HIS APPROVAL, WHICH WAS MANDATORY IN TERMS OF THE PROVISO TO SUB-SECTION (1) OF SECTION 151 OF TH E ACT AS THE ACTION UNDER SECTION 147 WAS BEING INITIATED AF TER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. THE POWER VESTED IN THE COMMISSION ER TO GRANT OR NOT TO GRANT APPROVAL IS COUPLED WITH A DUTY. THE COMMISSIONER IS REQUIRED TO APPLY HIS MIND TO T HE PROPOSAL PUT UP TO HIM FOR APPROVAL IN THE LIGHT OF THE MATERIAL RELIED UPON BY THE ASSESSING OFFICER. THE SAID POWER CANNOT BE EXERCISED CASUALLY AND IN A ROUTINE MANNER. WE ARE CONSTRAINED TO OBSERVE THAT IN THE PRESENT CASE THERE HAS BEEN NO APPLICATION OF MIND BY THE ADDITIONAL COMMISSIONER BEFORE GRANTING THE APPROVAL. 9. THE OBSERVATIONS OF THE HONBLE HIGH COURT ARE V ERY MUCH RELEVANT IN THE INSTANT CASE AS IN THE PRESENT CASE ALSO THE COMMISSIONER HAS SIMPLY MENTIONED APPROVE D TO THE REPORT SUBMITTED BY THE CONCERNED AO. IN THE LIGHT OF THE RATIOS/OBSERVATIONS OF THE HONBLE HIGH COUR T MENTIONED HEREINABOVE, WE HAVE NO HESITATION TO HOL D THAT THE REOPENING PROCEEDINGS VIS--VIS PROVISIONS OF 39 SEC. 151 ARE BAD IN LAW AND THE ASSESSMENT HAS TO B E DECLARED AS VOID AB INITIO. GROUND NO. 1 OF ASSESSE ES APPEAL IS ALLOWED. 10. AS WE HAVE HELD THAT THE REASSESSMENT IS BAD IN LAW, WE DO NOT FIND IT NECESSARY TO DECIDE OTHER ISSUES WHICH ARE ON MERITS OF THE CASE. (E). HONBLE HIGH COURT OF MADHYA PRADESH IN THE CASE OF CIT VS. S. GOYANKA LIME & CHEMICALS LTD. REPORTED IN (2015) 56 TAXMANN.COM 390 (MP) HAS HELD AS UNDER:- 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND WE FIND THAT WHILE ACCORDING SANCTION, THE JOINT COMMISSIONER, INCOME TAX HAS ONLY RECORDED SO YES, I AM SATISFIED. IN THE CASE OF ARJUN SINGH VS. ASSTT . DIT (2000) 246 ITR 363 (MP), THE SAME QUESTION HAS BEEN CONSIDERED BY A COORDINATE BENCH OF THIS COURT AND THE FOLLOWING PRINCIPLES ARE LAID DOWN:- THE COMMISSIONER ACTED, OF COURSE, MECHANICALLY IN ORDER TO DISCHARGE HIS STATUTORY OBLIGATION PROPERLY IN THE MATTER OF RECORDING SANCTION AS HE MERELY WROTE ON THE FORMAT YES, I AM SATISFIED WHICH INDICATES AS IF HE WAS TO SIGN ONLY ON THE 40 DOTTED LINE. EVEN OTHERWISE ALSO, THE EXERCISE IS SHOWN TO HAVE BEEN PERFORMED IN LESS THAN 24 HOURS OF TIME WHICH ALSO GOES TO INDICATE THAT THE COMMISISONER DID NOT APPLY HIS MIND AT ALL WHILE GRANTING SANCTION. THE SATISFACTION HAS TO BE WITH OBJECTIVITY ON OBJECTIVE MATERIAL 8. IF THE CASE IN HAND IS ANALYSED ON THE BASIS OF THE AFORESAID PRINCIPLE, THE MECHANICAL WAY OF RECORDING SATISFACTION BY THE JOINT COMMISSIONER, WHICH ACCORDS SANCTION FOR ISSUING NOTICE UNDER SECTION 148, IS CLEARLY UNSUSTAINABLE AND WE FIND THAT ON SUCH CONSIDERATION BOTH THE APPELLATE AUTHORITIES HAVE INTERFERED INTO THE MATTER. IN DOING SO, NO ERROR HAS BEEN COMMITTED WARRANTING RECONSIDERATION. (F.) HONBLE SUPREME COURT OF INDIA IN THE CASE O F CIT VS. S. GOYANKA LIME & CHEMICAL LTD. REPORTED IN (20 15) 64 TAXMANN.COM 313 (SC) IN THE HEAD NOTES HAS HELD THAT SECTION 151, READ WITH SECTION 148 OF INCOME TAX ACT, 1961 INCOME ESCAPING ASSESSMENT SANCTION F OR ISSUE OF NOTICE (RECORDING OF SATISFACTION) HIGH COURT BY IMPUGNED ORDER HELD THAT WHERE JOINT COMMISSIONER RECORDED SATISFACTION IN MECHANICAL MANNER AND WITH OUT APPLICATION OF MIND TO ACCORD SANCTION FOR ISSUING NOTICE UNDER SECTION 148, REOPENING OF ASSESSMENT WAS INVA LID WHETHER SPECIAL LEAVE PETITION FILED AGAINST IMPU GNED ORDER WAS TO BE DISMISSED HELD, YES (IN FAVOUR OF THE ASSESSEE). 9. IN VIEW OF ABOVE, I AM OF THE CONSIDERED VIEW T HAT THE ABOVE LEGAL ISSUE IS EXACTLY THE SIMILAR AND IDENTICAL TO THE ISSUE INVOLVED IN 41 THE PRESENT APPEAL AND IS SQUARELY COVERED BY THE A FORESAID DECISIONS OF THE HONBLE SUPREME COURT OF INDIA, HONBLE HIG H COURTS OF DELHI & MADHYA PRADESH & ITAT, DELHI & MUMBAI. HENCE, RE SPECTFULLY FOLLOWING THE ABOVE PRECEDENTS, I DECIDE THE LEGAL ISSUE IN DISPUTE IN FAVOR OF THE ASSESSEE AND AGAINST THE REVENUE AND A CCORDINGLY QUASH THE REASSESSMENT PROCEEDINGS BEING BAD IN LAW . SINCE I HAVE ALREADY QUASHED THE REASSESSMENT PROCEEDINGS, AS AF ORESAID, THE OTHER ISSUE ON MERIT ARE NOT BEING DEALT WITH BEING ACADEMIC IN NATURE. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED ON 01-03-2018. SD/- (H.S. SIDHU) JUDICIAL MEMBER DATED : 01-03-2018 SR BHATANGAR COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A), NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.