Ajay Kumar Gupta, New Delhi V. ITO, Faridabad

ITA 2519/DEL/2015

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 4240 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 5 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 2
• Next Hearing Date: 07-09-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 30-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMRIT LAL
• Keywords: Reopening of assessment
• Section: 147; 148; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-2, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 2519/DEL/2015 AY: 20 05-06 AJAY KUMAR GUPTA, VS. ITO, WARD 1(3) C/O RAJ KUMAR & ASSOCIATES, CAS FARIDABAD L-7 A, SOUTH EXTN., PART 2 NEW DELHI 110 049 (PAN: AAQPG1783L) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAJ KUMAR, C.A. RESPONDENT BY : SHRI AMRIT LAL, SR. DR ORDER THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AG AINST THE ORDER DATED 16.3.2015 OF LD.CIT(A), FARIDABAD PERTAINI NG TO THE ASSESSMENT YEAR (A.Y.) 2005-06 ON THE FOLLOWING GROUNDS. 1. THAT UNDER THE FACTS AND CIRCUMSTANCES, LD. AO E RRED IN LAW AS WELL AS ON MERITS IN DETERMINING THE ASSESSABLE INCOME AT R S. 23,67,640/- AGAINST DECLARE AT RS. 3,45,411/- 2A. THAT UNDER THE FACTS AND CIRCUMSTANCES, THE LD . CIT (A) IN NOT ADMITTING THE ADDITIONAL GROUND TAKEN BEFORE HIM WHICH IS A P URE LEGAL GROUND. 'THAT THE WHOLE RE-ASSTT. PROCEEDINGS INCLUDING INI TIATION IS WITHOUT JURISDICTION IN THE ABSENCE OF MANDATORY APPROVAL U/S. 151 (2) O F THE I T. ACT AND / OR FOR PURELY MECHANICAL APPROVAL WITHOUT ANY APPLICATION OF MIND BY THE APPROVING AUTHORITY, IN CASE, ANY SUCH APPROVAL STANDS TAKEN. ' B. THAT WITHOUT PREJUDICE, AS THE APPROVAL U/S. 151 (2) IS PURE MECHANICAL AND WITHOUT APPLICATION OF MIND AND NOT AS IN THE M ANNER ENVISAGED IN LAW, THE ASSUMPTION OF JURISDICTION U/S. 147 /148 IS ILL EGAL AND UN - WARRANTED. 3. THAT UNDER THE FACTS AND CIRCUMSTANCES, THE PROC EEDINGS U/S. 147/148 ARE ILLEGAL, UN-WARRANTED AND UN - SUSTAINABLE IN L AW AS WELL AS ON MERITS. 4A. THAT UNDER THE FACTS AND CIRCUMSTANCES, BOTH T HE LOWER AUTHORITIES ERRED IN NOT ACCEPTING THE DECLARED LTCG OF RS. 20, 18,189/- ON SALE OF STT PAID SHARES AS EXEMPTED INCOME U/S. 10 (38) OF THE I.T. ACT AND IN TAXING THE SAME AS INCOME FROM OTHER SOURCES. ITA NO. 2519/DEL/2015 A.Y. 2005-06 AJAY KUMAR GUPTA 2 B. THAT WITHOUT PREJUDICE, IN THE ABSENCE OF CONFRO NTING WITH THE ADVERSE MATERIAL AND WITHOUT PRODUCING THE PERSONS FOR CROS S - EXAMINATIONS WHOSE STATEMENTS HAVE BEEN USED AGAINST THE ASSESSEE, NO ADVERSE VIEW CAN BE TAKEN IN RESPECT OF SUCH PERSONS AND SUCH UN - CONF RONTED MATERIAL. C. THAT WITHOUT PREJUDICE, EVEN THE MATERIAL AVAILA BLE DO NOT GIVE ANY INFERENCE OF ADVERSE VIEW. D. THAT WITHOUT PREJUDICE, IN VIEW OF EXPLANATION A ND DOCUMENTS FURNISHED, THE CLAIM STANDS ESTABLISHED. 5. THAT THERE IS ABSOLUTELY NO LOGIC, NO JUSTIFICAT ION AND NO MATERIAL FOR ADDITION OF RS.4,036/- AS UN - EXPLAINED EXPENDITUR E FOR ALLEGED COMMISSION PAYABLE FOR PROCURING LTCG OF RS. 20,18,189/- RESP . 2. I HEARD RIVAL CONTENTIONS WITH RESPECT TO GROUND NO.2A. A COPY OF THE APPROVAL IN QUESTION IN PROOF IS PLACED AT PAGE 65 OF THE ASSESSEES PAPER BOOK. THE LD. ACIT HAS WRITTEN YES AND SIGNED IN COLUMN NO.12 IN THE FORM FOR RECORDING THE REASONS FOR INITIATING PROCE EDINGS U/S 148 OF THE ACT AND FOR OBTAINING THE APPROVAL OF THE ACIT/CIT. 3. THE ADDITIONAL GROUND WAS TAKEN BEFORE THE FIRST APPELLATE AUTHORITY. THE FIRST APPELLATE AUTHORITY DID NOT ADMIT THE SAM E. IN MY VIEW SUCH ACTION OF THE FIRST APPELLATE AUTHORITY IS BAD IN L AW. THIS IS A JURISDICTIONAL ISSUE AND AS THE FACTS ARE ON RECORD, HE SHOULD HA VE ADMITTED THE SAME AND DECIDED THE ISSUE ON MERITS. NEVERTHELESS I ADMIT THIS GROUND OF THE APPEAL. 4. THE ISSUE BEFORE ME IS WHETHER: (A) WHETHER THE APPROVAL U/S 151 OF THE INCOME TAX ACT 1961 (THE ACT) GRANTED BY THE ACIT WAS WITHOUT APPLICATION OF MIND AND IN A MECHANICAL MANNER AND HENCE THE RE-OPENING IS BAD I N LAW. 5. AFTER CONSIDERING THE RIVAL CONTENTIONS, I FIND THAT THE LEGAL ISSUE IN DISPUTE IS SQUARELY COVERED BY THE ITAT, SMC-2, NEW DELHI ORDER DATED 6.11.2015 PASSED IN ITA NO. 2521/DEL/2015 (AY 2005 -06) IN THE CASE OF ANJALI GUPTA VS. ITO WHEREIN THE TRIBUNAL HAS ADJUD ICATED THE LEGAL ISSUE IN DISPUTE IN FAVOUR OF THE ASSESSEE AS UNDER:- 5. ON CONSIDERING THE RIVAL CONTENTIONS I FIND THA T THE D BENCH OF THE NEW DELHI TRIBUNAL IN THE CASE OF M/S KANSA L FINCAP LTD. ITA NO. 2519/DEL/2015 A.Y. 2005-06 AJAY KUMAR GUPTA 3 VS. ITO IN ITA NO.2661 AND 2662/DEL/2013 VIDE ORDE R DT. 31.8.2015 WHERE AT PAGE 11 PARA 16 IT WAS HELD AS F OLLOWS. 16. HAVING GONE THROUGH THE DECISIONS RELIED UPON BY THE LD. A.R. WE FIND THAT THE RATIOS LAID DOWN THEREIN SUPPORTS THE CONTENTIONS OF THE LD.A.R. THAT THE APPROVAL AS REQUIRED U/S 151 OF THE ACT WAS GRANTED BY THE LD.ACIT TO IN ITIATE THE PROCEEDINGS WITHOUT APPLICATION OF MIND IN A MECHANICAL MANNER, THE AO WAS SUPPOSED TO DISPOSE O F THE OBJECTIONS RAISED BY THE ASSESSEE AGAINST THE R EOPENING PROCEEDINGS BY PASSING A SPEAKING ORDER MEETING OUT EACH AND EVERY OBJECTION RAISED THEREIN BY THE ASSESSEE, AND THE ASSESSING OFFICER HAS INITIATED THE REOPENING PROCE EDINGS WITHOUT EXAMINING EVEN PRIMA FACIE THE CORRECTNESS OF INFORMATION RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTMENT WHEREIN IT WAS INFORMED THAT AS PER THE STATEMENT OF SHRI MAHESH GARG RECORDED BY THEM, THE RE WAS ESCAPEMENT OF ASSESSABLE INCOME IN THE HANDS OF THE ASSESSEE. IN THE CITED DECISIONS IN THE CASES OF UN ITED ELECTRICAL CO. (P) LTD. VS. CIT ( SUPRA) - CHHAGANM AL RAJPAL VS. S.P. CHALIHA ( SUPRA), 0 CENTRAL INDIA ELECTRIC SUPPLY CO. LTD. VS. ITO (SUPRA), THE APPROVAL OF THE ADDL. CIT/CIT/BOARD WAS. OBTAINED UNDER THE REMARKS 'YES, I AM SATISFIED THAT IT IS A FIT CASE FOR ISSUE OF NOT ICE UNDER SEC. 148 OF THE INCOME-TAX ACT', 'YES', AND 'YES' RESPECTIVELY. THE HON'BLE DELHI HIGH COURT IN THE C ASE OF UNITED ELECTRICAL CO. (P) LTD. VS. CIT (SUPRA) AFTE R ANALYZING THE SATISFACTION/APPROVAL WAS PLEASED TO HOLD THAT CIT IS REQUIRED TO APPLY HIS MIND TO THE PROPOSAL PUT UP T O HIM FOR APPROVAL IN THE LIGHT OF THE MATERIAL RELIED UPON B Y THE ASSESSING OFFICER. THE SAID POWER CANNOT BE EXERCIS ED CASUALLY IN A ROUTINE MANNER. AGAIN THE HON'BLE SUP REME COURT IN THE CASE OF CHHUGAMAL RAJPAL VS. S.P. CHAL IHA ITA NO. 2519/DEL/2015 A.Y. 2005-06 AJAY KUMAR GUPTA 4 (SUPRA) HAS BEEN PLEASED TO OBSERVE THAT LEARNED CI T DID NOT HIMSELF RECORD THAT HE WAS SATISFIED THAT THIS WAS A FIT CASE FOR THE ISSUE OF A NOTICE UNDER SEC. 148 OF TH E ACT. TO QUESTION NO. 8 IN THE REPORT WHICH READS 'WHETHER T HE CIT IS SATISFIED THAT IT IS A FIT CASE FOR THE ISSUE OF NOTICE UNDER SEC. 148', HE JUST NOTED THE WORD 'YES' AND AFFIXED HIS SIGNATURE THERE UNDER. THE HON'BLE SUPREME COURT WA S OF THE OPINION THAT IF ONLY THE CIT HAS READ THE REPOR T CAREFULLY, HE COULD NEVER HAVE COME TO THE CONCLUSI ON ON THE MATERIAL BEFORE HIM THAT IT IS A FIT CASE TO IS SUE NOTICE UNDER SEC. 148. THE HON'BLE SUPREME COURT PLEASED T O HOLD THAT THE IMPORTANT SAFEGUARDS PROVIDED UNDER SECTIO N 147 AND 151 WERE LIGHTLY TREATED BY THE ITO-AS WELL AS BY THE CIT. BOTH OF THEM APPEAR TO HAVE TAKEN THE DUTY IMP OSED ON THEM UNDER THESE PROVISIONS AS OF LITTLE IMPORTA NCE. IN THE CASE OF ITO VS. N.C. CABLES LTD. (SUPRA) WHERE ALSO THE APPROVAL UNDER SEC. 151 WAS RECORDED AS 'APPROVED' AND THERE ALSO THE REOPENING PROCEEDINGS WERE INITIATE D EN THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATIO N WING OF THE DEPARTMENT AND THE SAME MR. MAHESH GARG WAS INVOLVED, THE ISSUE RAISED BEFORE THE DELHI BENCH O F THE ITAT WAS AS TO WHETHER SUCH APPROVAL WOULD MEET THE REQUIREMENTS PRESCRIBED UNDER SEC.151 OF THE ACT. T HE ITAT AFTER DETAILED DELIBERATION EN THE ISSUE CAME TO TH E CONCLUSION THAT THE REOPENING WAS BAD IN LAW FOR T HE REASONS THAT THE LD.CIT HAD NOT RECORDED HIS SATISF ACTION AS CONTEMPLATED U/S 151 OF THE ACT. SIMILAR VIEW H AS BEEN EXPRESSED IN THE REMAINING DECISIONS CITED BY THE LD.A.R. RESPECTFULLY FOLLOWING THE RATIOS LAID DOWN IN THE CITED DECISIONS, WE HOLD THAT THE REOPENING IS BAD IN LAW FOR THE REASON THAT LD.ACIT HAS NOT RECORDED HIS SATISFACTI ON AS CONTEMPLATED U/S 151 OF THE ACT. ITA NO. 2519/DEL/2015 A.Y. 2005-06 AJAY KUMAR GUPTA 5 5.1. RESPECTFULLY FOLLOWING THE COORDINATE BENCH DE CISION IN THE CASE OF M/S KANSAL FINCAP LTD. (SUPRA), WHEREIN TH E HONBLE JURISDICTIONAL HIGH COURT IN CASE OF UNITED ELEC TRICAL CO.P.LTD. VS. CIT (2002) REPORTED IN 258 ITR 317 (DEL) AND TH E JUDGEMENT OF HONBLE SUPREME COURT IN THE CASE OF CHHUGAMAL RAJ PAL VS. S.P.CHALINA & OTHERS REPORTED IN 79 ITR 603 (S.C.) HAVE BEEN APPLIED, I HOLD THAT THE REOPENING IS BAD IN LAW, F OR THE REASON THAT THE ACIT HAS GRANTED APPROVAL WITH A SIMPLE ME RE YES. SUCH A REMARK CANNOT BE CONSIDERED AS APPROVAL WITH APPLICATION OF MIND. THE REOPENING OF ASSESSMENT IS BAD IN LAW . 6. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED. 6. RESPECTFULLY FOLLOWING THE COORDINATE BENCH DECI SION IN THE CASE OF ANJALI GUPTA (SUPRA), I HOLD REOPENING AS BAD IN L AW, HENCE, THE SAME IS QUASHED AND ACCORDINGLY, THE LEGAL ISSUE INVOLVED IN THE APPEAL IS DECIDED IN FAVOUR OF THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH OCTOBER, 2016. SD/- (H.S. SIDHU ) JUDICIAL MEMBER DATED: THE 5 TH OCTOBER, 2016 *SR BHATNAGAR* COPY OF THE ORDER FORWARDED TO: 1.APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT(A); 5.DR; 6.GUARD FILE BY ORDER ASST. REGISTRAR