Neelam Arora, New Delhi V. ITO, Ward-36(4), New Delhi

ITA 2689/DEL/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1280 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 28-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Bogus purchase; Invalid notice; Search and seizure; Question of law; Tangible material; Fair market value; Accommodation entries; Competent authority; Block assessment; Reassessment proceedings; Borrowed satisfaction
• Section: 143(3); 64; 43; 48; 13; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : SMC : NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER I.T.A. NO. 2689/DEL/2019 ASSESSMENT YEAR: 2010-11 NEELAM ARORA, VS. ITO, WARD-36(4), C/O KAPIL GOEL, ADV. NEW DELHI F-26/124, SECTOR-7, ROHINI, DELHI 85 (PAN: AFKPA9328J) (ASSESSEE) (RESPONDENT ASSESSEE BY : SHRI KAPIL GOEL, ADV. REVENUE BY : SHRI PRADEEP SINGH GAUTAM, SR. DR. ORDER THE ASSESSEE HAS FILED THIS APPEAL AGAINST THE IMPU GNED ORDER DATED 20.11.2018 PASSED BY THE LD. CIT(A)-12, NEW DELHI ON THE FOLLOWING GROUNDS:- 1. THAT ORDER PASSED BY LD AO DATED 29/12/2017 AND FURTHER ORDER PASSED BY LD CIT A DATED 20/11/2018 ARE BAD IN LAW IN AS MUCH AS NOTICE U/S 148 DATED 31/3/2017 WAS ISSUED BY ITO WA RD 68(2) NEW DELHI WHEREAS IMPUGNED ASSESSMENT IS FRAMED BY ITO WARD 36(4) NEW DELHI WHO HAS ADMITTEDLY NEITHER RECORDED REASONS ULS 148 NOR ISSUED ANY NOTICE ULS 148 SO IMPUGNED ASSES SMENT FRAMED BY ITO WARD 36(4) NEW DELHI AND CONSEQUENTIAL ORDER S OF CIT-A ARE VOID AB INITIO BEING PASSED WITHOUT JURISDICTION. 2. THAT ORDER PASSED BY LD AO DATED 29/12/2017 AND FURTHER ORDER PASSED BY LD CIT A DATED 20/11/2018 ARE BAD IN LAW IN AS MUCH AS NOTICE ULS 148 DATED 31/03/2017 IS APPARENTLY ISSUE D AFTER TIME BARRING DATE AS IT IS RECD. BY ASSESSEE ONLY ON 05/ 04/2017 SO IMPUGNED ASSESSMENT FRAMED BY ITO WARD 36(4) NEW DE LHI AND CONSEQUENTIAL ORDERS OF CIT-A ARE VOID AB INITIO BE ING PASSED ON BASIS OF TIME BARRED NOTICE ULS 148 OF THE ACT. 2 3. THAT ORDER PASSED BY LDAO DATED 29/12/2017 AND F URTHER ORDER PASSED BY LD CIT A DATED 20/11/2018 ARE BAD IN LAW IN AS MUCH AS NOTICE ULS 148 DATED 31/03/2017 IS BASED ON MECHANI CAL REASONS TO BELIEVE WHICH ARE BASED ON SUSPECT ONLY AND FOR PUR POSE OF MAKING ROVING AND FISHING ENQUIRIES ERGO IMPUGNED ASSESSME NT FRAMED BY ITO WARD 36(4) NEW DELHI AND CONSEQUENTIAL ORDERS O F CIT-A ARE VOID AB INITIO BEING PASSED ON BASIS OF INVALID REA SONS RECORDED. 4. THAT ORDER PASSED BY LD AO DATED 29/12/2017 AND FURTHER ORDER PASSED BY LD CIT A DATED 20/11/2018 ARE BAD IN LAW IN AS MUCH AS NOTICE U/S 148 DATED 31/03/2017 IS BASED ON MECHANI CAL APPROVAL OF PCIT 23 NEW DELHI MERELY ENDORSING THE RITUALIST IC WORDS 'YES I AM SATISFIED' WHICH MAKES THE IMPUGNED ASSESSMENT F RAMED BY ITO WARD 36(4) NEW DELHI AND CONSEQUENTIAL ORDERS OF CI T-A AS VOID AB INITIO BEING PASSED ON BASIS OF INVALID APPROVAL OF PCIT- 23 NEW DELHI. MERITS OF THE CASE 5. THAT LD CIT-A ERRED IN SUSTAINING THE DISALLOWAN CE OF RS 13,00,527 ON A/C OF COST OF IMPROVEMENT WHICH IS FULLY GENUIN E AND ADMISSIBLE ULS 48 OF THE ACT;. 6. THAT LD CIT-A ERRED IN SUSTAINING THE DISALLOWAN CE OF RS 19,07,832 BEING GENUINE BUSINESS LOSS ADMISSIBLE AS PER PROVI SIONS OF THE LAW WHICH IS NOT SUBJECT MATTER OF REASONS RECORDED U/S 148 OF THE ACT THUS BEYOND THE SCOPE OF REOPENING PROCEEDINGS UNDE R THE LAW. 7. THAT THE APPELLANT CRAVES LEAVE TO ADD ANY / ALT ER ANY / ALL GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING OF THE A PPEAL. HUMBLE PRAYER:- I) TO QUASH THE REOPENING MADE U/S. 148 OF THE ACT BEI NG MADE IN VIOLATION OF MANDATORY JURISDICTIONAL CONDI TIONS STIPULATED UNDER THE ACT: II) TO DELETE THE BOTH THE DISALLOWANCES MADE AND III) TO RESTORE RETURNED INCOME. IV) ANY OTHER APPROPRIATE RELIEF. 3 2. AT THE TIME OF HEARING, LD. COUNSEL FOR THE ASSE SSEE HAS PLACED THE COPY OF REASONS RECORDED BY THE AO AND APPROVAL GRANTE D BY THE PR. COMMISSIONER OF INCOME TAX, DELHI-23, NEW DELHI FOR ISSUANCE OF NOTICE U/S. 148 OF THE ACT. HE STATED THAT THE AO HAS ERRED IN ASSUMPTION OF J URISDICTION U/S. 147/148 OF THE ACT ON THE BASIS OF INVALID AND MECHANICAL APPR OVAL GRANTED BY THE PR. COMMISSIONER OF INCOME TAX, DELHI-23, NEW DELHI WH EREIN IT WAS MENTIONED YES, I AM SATISFIED, WHICH SHOWS THAT LD. PR. C IT, DELHI-23, NEW DELHI HAS NOT RECORDED PROPER SATISFACTION AND WITHOUT AP PLICATION OF MIND GAVE THE APPROVAL IN A MECHANICAL MANNER. HE FURTHER STATED THAT THIS LEGAL/JURISDICTIONAL GROUND IS SQUARELY COVERED BY THE DECISION OF THE I TAT, SMC, BENCH, NEW DELHI DATED 21.8.2019 IN THE CASE OF GOPAL CHAND MANUDHRA AND SONS; DAMYANTI MUNDHRA; RAMDEV MUNDHRA; SHRIYA DEVI MUNDHRA AND GO PAL CHAND MUNDHRA VS. ITO, WARDS 55(5), NEW DELHI DECIDED IN ITA NO. 1375; 1721; 1722; 1523- 1524/DEL/2019 RESPECTIVELY RELEVANT TO ASSESSMENT Y EAR 2011-12 AND THEREFORE, HE REQUESTED THAT THE SAME RATIO MAY BE FOLLOWED IN THE PRESENT CASE AND APPEAL OF THE ASSESSEE MAY BE ALLOWED ACCORDING LY BY QUASHING THE REASSESSMENT PROCEEDINGS. 3. ON THE CONTRARY, LD. SR. DR RELIED UPON THE ORDE RS OF THE AUTHORITIES BELOW AND STATED THAT THE REASONS RECORDED AND SATI SFACTION / APPROVAL ACCORDED IS WITHIN THE MEANING OF SECTION 151 OF THE ACT AND NEED NOT TO BE QUASHED. HE STATED THAT APART FROM RELYING ON THE ORDER OF THE LD. CIT(A), THE FOLLOWING CASES LAWS MAY KINDLY BE CONSIDERED WITH REGARD TO REOPENING OF CASES U/S. 147 OF THE I.T. ACT:- 1. SONIA GANDHI VS. ACIT (DELHI HIGH COURT) 29018) 97 TAXMANN.COM 150 (DELHI). I) WHERE CONGRESS PARTY GAVE LOAN TO AJL AND ASSIGNED SAID LOAN TO NON-PROFIT YI WHICH SUBSEQUEN TLY ISSUED SHARES TO ASSESSES AT A PRICE LESS THAN FMV, NON- DISCLOSURE BY ASSESSES OF ALLOTMENT OF SHARES IN YI WOULD BE A REASON TO INITIATE REASSESSMENT PROCEEDINGS. II) RELYING ON PCIT VS. MEENAKSHI OVERSEAS PVT. LTD . ITA NO. 651/DEL/2016 DATED 11.1.2016 (HONBLE DELHI HIG H COURT) APPROVAL U/S. 151 UPHELD. 4 2. RAYMOND WOOLLEN MILLS LTD. V. ITO AND OTHERS [236 ITR 341 (COPY ENCLOSED) WHERE HONBLE SUPREME COURT HEL D THAT IN DETERMINING WHETHER COMMENCEMENT OF REASSESSMENT PROCEEDINGS WAS VALID IT HAS ONLY TO B E SEEN WHETHER THERE WAS PRIMA FACIE SOME MATERIAL ON THE BASIS OF WHICH THE DEPARTMENT COULD REOPEN THE CASE. THE SUFFICIENCY OR CORRECTNESS OF THE MATERIA L IS NOT A THING TO BE CONSIDERED AT THIS STAGE. 2.1 YUVRAJ V. UNION OF INDIA BOMBAY HIGH COURT [20 091 315 ITR 84 (BOMBAY)/[2009] 225 CTR 283 (BOMBAY) POINTS NOT DECIDED WHILE PASSING ASSESSMENT ORDER UNDER SECTION 143(3) NOT A CASE OF CHANGE OF OPINIO N. ASSESSMENT REOPENED VALIDLY. 3. DEVI ELECTRONICS PVT LTD VS ITO BOMBAY HIGH COU RT 2017-TIQL-92-HC-MUM- IT THE LIKELIHOOD OF A DIFFERENT VIEW WHEN MATERIALS E XIST OF FORMING A REASONABLE BELIEF OF ESCAPED INCOME, WILL NOT DEBAR THE AO FROM EXERCISING HIS JURISDICTION TO AS SESS THE ASSESSEE ON REOPENING NOTICE.. 4. ACORUS UNITECH WIRELESS (P.) LTD. VS ACIT DELHI HIGH COURT T20141 43 TAXMANN.COM 62 (DELHI)/[2014] 223 TAXMAN 181 (DELHI)(MAG)/[2014] 362 ITR 417 (DELHI) IN TERMS OF SECTION 148, LAW ONLY REQUIRES THAT INFORMATION OR MATERIAL ON WHICH ASSESSING OFFICER RECORDS HIS OR HER SATISFACTION HAS TO BE COMMUNICATED TO ASSESSEE, WITHOUT MANDATING DISCLOSURE OF ANY SPECIFIC DOCUMENT. 5. PCIT, VS PARAMOUNT COMMUNICATION (P.) LTD. D ELHI HIGH COURT [2017] 79 TAXMANN.COM 409 (DELHI)/[2017] 392 ITR 444 (DELHI) INFORMATION REGARDING BOGUS PURCHASE BY ASSESSEE RECEIVED BY DRI FROM CCE WHICH WAS PASSED ON TO REVENUE AUTHORITIES WAS 'TANGIBLE MATERIAL OUTSIDE RECORD TO INITIATE VALID REASSESSMENT PROCEEDINGS. 6. PARAMOUNT COMMUNICATION (P.) LTD. VS PCIT SUPR EME COURT 2017-TIQL-253- SC-IT SLP OF ASSESSEE DISMISSED. INFORMATION REGARDING BO GUS PURCHASE BY ASSESSEE RECEIVED BY DRI FROM CCE WHICH WAS PASSED ON TO REVENUE AUTHORITIES WAS TANGIBLE MATERIAL OUTSIDE RECORD TO INITIATE VALID REASSESS MENT PROCEEDINGS. 5 7. AMIT POLYPRINTS (P.) LTD. VS PCIT GUJARAT HIGH COURT [2018] 94 TAXMANN.COM 393 (GUJARAT) WHERE REASSESSMENT PROCEEDINGS WERE INITIATED ON BASIS OF INFORMATION RECEIVED FROM INVESTIGATION WING THAT ASSESSEE HAD RECEIVED CERTAIN AMOUNT FROM SHEL L COMPANIES WORKING AS AN ACCOMMODATION ENTRY PROVIDER, REASSESSMENT COULD NOT BE HELD UNJUSTIFIE D. 8. AASPAS MULTIMEDIA LTD. VS PCIT GUJARAT HIGH CO URT [2017] 83 TAXMANN.COM 82 (GUJARAT) WHERE REASSESSMENT WAS MADE ON BASIS OF INFORMATION RECEIVED FROM PRINCIPAL DIT (INVESTIGAT ION) THAT ASSESSEE WAS BENEFICIARY OF ACCOMMODATION ENTR IES BY WAY OF SHARE APPLICATION PROVIDED BY A THIRD PAR TY, SAME WAS JUSTIFIED. 9. MURLIBHAI FATANDAS SAWLANI VS ITO GUJARAT HIG H COURT 2016-TIQL-370-HC- AHM-IT IT IS NOT OPEN TO THE ASSESSEE TO OBJECT TO THE REOPENING BY ASKING THE AO TO PRODUCE THE SOURCE FR OM WHERE THE AO HAS GATHERED THE INFORMATION FOR FORMI NG A BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. 10. ANKIT AQROCHEM (P.) LTD. VS JCIT RAJASTHAN HIG H COURT [2018] 89 TAXMANN.COM 45 (RAJASTHAN) WHERE DIT INFORMED THAT ASSESSEE-COMPANY HAD RECEIVED SHARE APPLICATION MONEY FROM SEVERAL ENTIT IES WHICH WERE ONLY ENGAGED IN BUSINESS OF PROVIDING BO GUS ACCOMMODATION ENTRIES TO BENEFICIARY CONCERNS, REASSESSMENT ON BASIS OF SAID INFORMATION WAS JUSTI FIED. 11. RAKESH GUPTA VS CIT P&H HIGH COURT F20181 93 TAXMANN.COM 271 (PUNJAB & HARYANA) WHERE ASSESSING OFFICER RECEIVED INFORMATION FROM PRINCIPLE DIRECTOR OF INCOME TAX (INVESTIGATION) TH AT ASSESSEE HAD RECEIVED BOGUS LOSS FROM HIS BROKER BY CLIENT CODE MODIFICATION, REASSESSMENT ON BASIS OF SAID INFORMATION WAS JUSTIFIED. 12. HOME FINDERS HOUSING LTD. VS. ITO (2018) 94 TAXMANN.COM 84 (SC). SLP DISMISSED AGAINST HIGH COURTS ORDER THAT NON-COMPLIANCE OF DIRECTION OF SUPREME COURT IN GKN DRIVESHAFTS (INDIA) LTD. VS. ITO (2002) 125 TAXMAN 963 THAT ON RECEIPT OF OBJECTION GIVEN BY ASSESSEE TO NOTICE UNDER SECTION 148, ASSESSING 6 OFFICER IS BOUND TO DISPOSE OBJECTIONS BY PASSING A SPEAKING ORDER, WOULD NOT MAKE REASSESSMENT ORDER VOID AB INITIO. 13. BALDEVBAHI BHIKHABHAI PATEL VS. DCIT (GUJARAT HIGH COURT) (2018) 94 TAXMANN.CO, 428(GUJARAT) WHERE REVENUE PRODUCED BUNCH OF DOCUMENTS TO SUGGEST THAT ENTIRE PROPOSAL OF REOPENING OF ASSESS MENT ALONGWITH REASONS RECORDED BY THE ASSESSING OFFICER FOR SAME WERE PLACED BEFORE ADDITIONAL COMMISSIONER WHO , UPON PERUSAL OF SAME, RECORDED HIS SATISFACTION THA T IT WAS A FIT CASE FOR ISSUANCE OF NOTICE FOR REOPENING ASSESSMENT, REASSESSMENT NOTICE ISSUED AGAINST ASSESSEE WAS JUSTIFIED. 4. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ELEVANT RECORDS ESPECIALLY THE ORDERS OF THE REVENUE AUTHORITIES AND THE CASE LAWS CITED BY BOTH THE PARTIES. AFTER PERUSING THE COPY OF RECORDING THE REASONS FOR INITIATING PROCEEDINGS U/S. 147 FOR OBTAINING THE APPROVAL OF THE PR. COMMISSIONER OF INCOME TAX, DELHI-23, NEW DELHI W HEREIN, THE LD. PR. COMMISSIONER OF INCOME TAX, DELHI-23, NEW DELHI WH ILE GRANTING APPROVAL FOR ISSUE OF NOTICE U/S. 148 OF THE ACT IN COLUMN NO. 1 2 HAS ONLY MENTIONED THAT YES, I AM SATISFIED, WHICH ESTABLISH THAT THE AP PROVING AUTHORITY HAS GIVEN APPROVAL TO THE REOPENING OF ASSESSMENT IN A MECHAN ICAL MANNER WITHOUT DUE APPLICATION OF MIND AND THEREFORE, ON THIS ACCOUNT THE REASSESSMENT IS NOT SUSTAINABLE IN THE EYES OF LAW AND NEEDS TO BE QUAS HED. THE JUDICIAL DECISIONS RELIED UPON BY THE LD. SR. DR, HAVE BEEN DULY CONS IDERED. IN MY CONSIDERED VIEW, I DO NOT FIND ANY PARITY IN THE FACTS OF TH E DECISIONS RELIED UPON WITH THE PECULIAR FACTS OF THE CASE IN HAND. 4.1 I HAVE ALSO PERUSED THE DECISION REFERRED BY T HE LD. COUNSEL FOR THE ASSESSEE OF THE ITAT, SMC, BENCH, NEW DELHI DATED 2 1.8.2019 IN THE CASE OF GOPAL CHAND MANUDHRA AND SONS; DAMYANTI MUNDHRA; RA MDEV MUNDHRA; SHRIYA DEVI MUNDHRA AND GOPAL CHAND MUNDHRA VS. ITO , WARDS 55(5), NEW DELHI DECIDED IN ITA NO. 1375; 1721; 1722; 1523-152 4/DEL/2019 RESPECTIVELY RELEVANT TO ASSESSMENT YEAR 2011-12 WHEREIN, THE S IMILAR AND IDENTICAL LEGAL/ JURISDICTIONAL ISSUE HAS BEEN ADJUDICATED AND DEC IDED IN FAVOUR OF THE 7 ASSESSEE. FOR THE SAKE OF CONVENIENCE, THE RELEVAN T PORTION OF THE FINDINGS OF THE TRIBUNAL IN THE AFORESAID CASE ARE REPRODUCED A S UNDER:- 18. I HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES AND PERUSED THE ORDERS OF THE ASSESS ING OFFICER AND CIT(A) AND THE PAPER BOOK FILED ON BEHA LF OF THE ASSESSEE. I HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE ME. I FIND THE CASE OF THE ASSESSEE WAS REOPENED U/S 147 BY RECORDING THE REASONS AND AFTER OBTAINING APPROVAL FROM THE JCIT AND THE PCIT ON THE BASIS OF THE INFORMATION RECEIVED F ROM THE INVESTIGATION WING OF THE DEPARTMENT THAT THE ASSESSEE IS A BENEFICIARY OF ACCOMMODATION ENTRY OF BOGUS LONG-TERM CAPITAL GAIN. THE REASONS SO RECORD ED BY THE ASSESSING OFFICER HAS ALREADY BEEN REPRODUCE D IN THE PRECEDING PARAGRAPHS AND, THEREFORE, THE SAME I S NOT BEING REPRODUCED HERE TO AVOID REPETITION. HOWEVER, A PERUSAL OF THE COLUMN NO.12 AND 13 OF TH E FORM FOR RECORDING THE REASONS FOR INITIATING THE PROCEEDINGS U/S 147 AND FOR OBTAINING THE APPROVAL OF THE ADDL./JOINT CIT, COPY OF WHICH IS PLACED AT PAG E 40 OF THE PAPER BOOK, REVEALS THAT THE JCIT WHILE GIVI NG HIS APPROVAL HAS MENTIONED AS UNDER:- RECOMMENDED FOR APPROVAL U/S 147 OF THE ACT. 19. SIMILARLY, THE PR. CIT, WHILE GIVING HIS APPROV AL HAS MENTIONED AS UNDER:- YES. I AM SATISFIED. 20. I FIND THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF M/S VIRAT CREDIT & HOLDINGS PVT. LTD. (SUPR A) WHILE DECIDING AN IDENTICAL ISSUE HAS QUASHED THE REASSESSMENT PROCEEDINGS WHERE THE APPROVING 8 AUTHORITIES WHILE GIVING APPROVAL HAS SIMPLY MENTIO NED YES. I AM SATISFIED. THE RELEVANT OBSERVATIONS O F THE TRIBUNAL FROM PARA 10 ONWARDS READ AS UNDER:- 10. FIRST OF ALL, LD. AR FOR THE ASSESSEE COMPANY DREW OUR ATTENTION TOWARDS SANCTION ACCORDED BY THE ADDL.CIT FOR REOPENING OF THE ASSESSMENT OBTAINED BY MOVING AN APPLICATION UNDER RIGHT TO INFORMATION ACT, 2005, AVAILABLE ON FILE AS ANNEXURE 'A'. PERUSAL OF THE SANCTION ACCORDED BY ADDL. CIT IN THE PRESCRIBED PROFORMA SHOWS THAT THERE IS A QUESTION NO.13 VIZ. : '13. WHETHER THE ADDL. CIT IS SATISFIED ON THE REASONS RECORDED UNDER SECTION 147 THAT IT IS A FIT CASE FOR ISSUE OF NOTICE UNDER SECTION 148 OF THE IT ACT. 11. IN RESPONSE TO AFORESAID QUESTION NO.13 IN THE PRESCRIBED PROFORMA, ADDL. CIT HAS WRITTEN 'YES. I AM SATISFIED.' NO DOUBT, COLUMNS OF REASONS RECORDED WAS THERE AND IT IS ALSO MENTIONED IN COLUMN NO.12 THAT REASONS FOR BELIEF THAT INCOME HAS ESCAPED ASSESSMENT ARE AS PER ANNEXURE ENCLOSED BUT SUCH ANNEXURE HAS NOT BEEN PRODUCED BEFORE THE BENCH FOR PERUSAL. 12. APPARENTLY, FROM THE APPROVAL RECORDED AND WORDS USED THAT 'YES. I AM SATISFIED.', IT HAS PROVED ON RECORD THAT THE SANCTION IS 9 MERELY MECHANICAL AND ADDL.CIT HAS NOT APPLIED INDEPENDENT MIND WHILE ACCORDING SANCTION AS THERE IS NOT AN IOTA OF MATERIAL ON RECORD AS TO WHAT DOCUMENTS HE HAD PERUSED AND WHAT WERE THE REASONS FOR HIS BEING SATISFIED TO ACCORD THE SANCTION TO INITIATE THE REOPENING OF ASSESSMENT U/S 148 OF THE ACT. 13. EVEN AO WHILE RECORDING THE REASONS FOR INITIATING THE REOPENING OF ASSESSMENT HAS NOT APPLIED HIS MIND INDEPENDENTLY. WHEN WE PERUSE THE REASONS RECORDED, AVAILABLE AT PAGES 31-32 OF THE PAPER BOOK, THE ENTIRE REASONS HAVE BEEN BASED ON THE STATEMENT OF ONE SHRI P.K. JINDAL, WHO HAS FURNISHED THE LIST OF COMPANIES STATED TO BE NOT DOING ANY BUSINESS ACTIVITIES BUT ENGAGED IN PROVIDING ACCOMMODATION ENTRIES. BEFORE ISSUING THE NOTICE AO APPEARED TO HAVE NOT EXAMINED THE PROFILE OF THE SAID COMPANIES TO ARRIVE AT A LOGICAL CONCLUSION SO AS TO ISSUE THE NOTICE U/S 148 OF THE ACT. WHEN THIS FACT IS EXAMINED IN THE LIGHT OF THE COMPLETED ASSESSMENT OF THE ASSESSEE U/S 143 (3), ALL THE DOCUMENTS CONCERNING SHARE APPLICATION MONEY, NOW AVAILABLE AT PAGES 1 TO 30 OF THE PAPER BOOK, WERE SUPPLIED TO THE AO. THIS FACT HAS NOT BEEN TAKEN INTO CONSIDERATION BY THE AO BEFORE INITIATING THE PROCEEDINGS U/S 147/148 OF THE ACT. HOWEVER, SINCE REOPENING OF ASSESSMENT IN THIS CASE IS OTHERWISE NOT 10 SUSTAINABLE, WE ARE NOT ENTERING INTO ANY MERITS. 14. HON'BLE SUPREME COURT IN CASE CITED AS CIT VS. S. GOYANKA LIME & CHEMICAL LTD. - (2015) 64 TAXMANN.COM 313 (SC) EXAMINED THE IDENTICAL ISSUE AS TO ACCORDING THE SANCTION FOR REOPENING THE ASSESSMENT U/S 148 OF THE ACT BY MERELY RECORDING 'YES. I AM SATISFIED.' AND HELD THAT REOPENING ON THE BASIS OF MECHANICAL SANCTION IS INVALID BY RETURNING FOLLOWING FINDINGS :- ' SECTION 151, READ WITH SECTION 148 OF THE INCOME-TAX ACT, 1961 - INCOME ESCAPING ASSESSMENT - SANCTION FOR ISSUE OF NOTICE (RECORDING OF SATISFACTION) - HIGH COURT BY IMPUGNED ORDER HELD THAT WHERE JOINT COMMISSIONER RECORDED SATISFACTION IN MECHANICAL MANNER AND WITHOUT APPLICATION OF MIND TO ACCORD SANCTION FOR ISSUING NOTICE UNDER. SECTION 148, REOPENING OF ASSESSMENT WAS INVALID - WHETHER SPECIAL LEAVE PETITION FILED AGAINST IMPUGNED ORDER WAS TO BE DISMISSED - HELD, YES [IN FAVOUR OF ASSESSEE] SEARCH AND SEIZURE-PROCEDURE FOR BLACK ASSESSMENT- SEARCH WAS CONDUCTED AT RESIDENTIAL AND BUSINESS PREMISES OF ASSESSEE AND 11 NOTICE FOR BLOCK ASSESSMENT U/S. 158-BC WAS ISSUED- FOR BLOCK PERIOD, RETURNS WERE FILED THAT WERE PROCESSED U/S. 143 (1)- HOWEVER, NOTICE U/S. 148 WAS ISSUED BY AO, ON BASIS OF CERTAIN REASONS RECORDED-ASSESSEE OBJECTED TO SAME BEFORE AO, THAT WAS REJECTED AND ASSESSMENT WAS COMPLETED U/SS. 143(3) AND CO NO.57/DEL/2012 147- CIT(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 WITHOUT APPLICATION OF MIND AND TO BE DONE IN MECHANICAL MANNER-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 UNSUSTAINABLE-ON SUCH CONSIDERATION, BOTH APPELLATE AUTHORITIES INTERFERED INTO MATTER- NO ERROR WAS COMMITTED WARRANTING RECONSIDERATION-AS FAR AS EXPLANATION TO S. 151, BROUGHT INTO FORCE BY FINANCE ACT, 2008 WAS CONCERNED, SAME ONLY PERTAINED TO 12 ISSUANCE OF NOTICE AND NOT WITH REGARD TO MANNER OF RECORDING SATISFACTION-AMENDED PROVISION DID NOT HELP REVENUE-NO QUESTION OF LAW INVOLVED IN MATTER, THAT WARRANTED RECONSIDERATION-REVENUE'S APPEALS DISMISSED.' 15. THE HON'BLE DELHI HIGH COURT HAS ALSO DECIDED THIS LEGAL ISSUE IN CASE CITED AS PR. CIT VS. N.C. CABLES LTD. IN ITA 335/2015 ORDER DATED 11.01.2017 BY RETURNING FOLLOWING FINDINGS :- ' REASSESSMENT-ISSUANCE OF NOTICE- SANCTION FOR ISSUE OF NOTICE- ASSESSEE HAD IN ITS RETURN FOR A Y 2001-02 CLAIMED THAT SUM OF RS. 1 CRORE WAS RECEIVED TOWARDS SHARE APPLICATION AMOUNTS AND A FURTHER SUM OF THIRTY FIVE LAKHS WAS CREDITED TO IT AS AN ADVANCE TOWARDS LOAN-ORIGINAL ASSESSMENT WAS COMPLETED U/S 143(3)-HOWEVER, PURSUANT TO REASSESSMENT NOTICE, WHICH WAS DROPPED DUE TO TECHNICAL REASONS, AND LATER NOTICE WAS ISSUED AND ASSESSMENTS WERE TAKEN UP AFRESH-AFTER CONSIDERING SUBMISSIONS OF ASSESSEE AND DOCUMENTS PRODUCED IN REASSESSMENT PROCEEDINGS, AO ADDED BACK A SUM 13 OF RS.1,35,00,000-CIT(A) HELD AGAINST ASSESSEE ON LEGALITY OF REASSESSMENT NOTICE BUT ALLOWED ASSESSEE'S APPEAL ON 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 APPEAL ON MERITS- REVENUE APPEALED AGAINST APPELLATE ORDER ON MERITS-ASSESSEE'S CROSS APPEAL WAS ON CORRECTNESS OF REOPENING OF ASSESSMENT- TRIBUNAL UPHELD ASSESSEE'S CROSS-OBJECTIONS AND DISMISSED REVENUE'S APPEAL HOLDING THAT THERE WAS NO PROPER APPLICATION OF MIND BY CONCERNED SANCTIONING AUTHORITY 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- MERE APPENDING OF EXPRESSION 'APPROVED' SAYS NOTHING-IT WAS NOT AS IF CIT (A) HAD TO RECORD ELABORATE REASONS FOR AGREEING WITH NOTING PUT UP-AT SAME TIME, SATISFACTION HAD TO BE RECORDED OF GIVEN CASE WHICH COULD BE REFLECTED IN BRIEFEST POSSIBLE MANNER- IN PRESENT CASE, EXERCISE 14 APPEARS TO HAVE BEEN RITUALISTIC AND FORMAL RATHER THAN MEANINGFUL, WHICH WAS RATIONALE FOR SAFEGUARD OF APPROVAL BY HIGHER RANKING OFFICER- REVENUE'S APPEAL DISMISSED.' 16. FURTHERMORE, PERUSAL OF THE NOTING SHEET DATED 09.03.2010 TO 30.12.2010 MADE AVAILABLE TO THE BENCH FOR PERUSAL SHOWS THAT ONLY AO HAS RECORDED THAT ADDL.CIT HAS CONSIDERED THE REASONS RECORDED BEFORE ACCORDING THE SANCTION, HOWEVER EVEN NO PRIMA FACIE MATERIAL IS THERE, IF ADDL.CIT HAS APPLIED HIS MIND BY CONSIDERING THE REASONS RECORDED BEFORE ACCORDING THE SANCTION. WE ARE OF THE CONSIDERED VIEW THAT THE AO WHO HAS RECORDED THE REASONS CANNOT ENTER INTO THE MIND OF THE SANCTIONING AUTHORITY (ADDL.CIT) DISCHARGING THE QUASI-JUDICIAL FUNCTION FOR ACCORDING VALID SANCTION FOR REOPENING THE ASSESSMENT. 17. MOREOVER, ACCORDING SANCTION IS NOT A SUPERVISORY ROLE RATHER IT IS A QUASI-JUDICIAL FUNCTION TO BE PERFORMED BY THE ADDL.CIT AS REQUIRED U/S 151 OF THE ACT. WHEN THE REVENUE DEPARTMENT IS MANNED BY HIGHLY QUALIFIED OFFICERS THEY ARE TO EVOLVE LEGALLY SUSTAINABLE STANDARD OPERATING PROCEDURE FOR DISCHARGING QUASI- JUDICIAL FUNCTION. 16. HON'BLE HIGH COURT OF DELHI IN CASE CITED AS SABH INFRASTRUCTURE LTD. VS. ACIT IN WP 15 (C) 1357/2016 ORDER DATED 25.09.2017 HAS ISSUED GUIDELINES TO THE REVENUE AUTHORITIES WHILE DECIDING THE ISSUE OF REOPENING U/S 147/148 OF THE ACT. OPERATIVE PART OF WHICH IS REPRODUCED AS UNDER:- '19. BEFORE PARTING WITH THE CASE, THE COURT WOULD LIKE TO OBSERVE THAT ON A ROUTINE BASIS, A LARGE NUMBER OF WRIT PETITIONS ARE FILED CHALLENGING THE REOPENING OF ASSESSMENTS BY THE REVENUE UNDER SECTIONS 147 AND 148 OF THE ACT AND DESPITE NUMEROUS JUDGMENTS ON THIS ISSUE, THE SAME ERRORS ARE REPEATED BY THE CONCERNED REVENUE AUTHORITIES. IN THIS BACKGROUND, THE COURT WOULD LIKE THE REVENUE TO ADHERE TO THE FOLLOWING GUIDELINES IN MATTERS OF REOPENING OF ASSESSMENTS: (I) WHILE COMMUNICATING THE REASONS FOR REOPENING THE ASSESSMENT, THE COPY OF THE STANDARD FORM USED BY THE AO FOR OBTAINING THE APPROVAL OF THE SUPERIOR OFFICER SHOULD ITSELF BE PROVIDED TO THE ASSESSEE. THIS WOULD CONTAIN THE COMMENT OR ENDORSEMENT OF THE SUPERIOR OFFICER WITH HIS NAME, DESIGNATION AND DATE. IN OTHER WORDS, MERELY STATING THE 16 REASONS IN A LETTER ADDRESSED BY THE AO TO THE ASSESSEE IS TO BE AVOIDED; (II) THE REASONS TO BELIEVE OUGHT TO SPELL OUT ALL THE REASONS AND GROUNDS AVAILABLE WITH THE AO FOR RE- OPENING THE ASSESSMENT - ESPECIALLY IN THOSE CASES WHERE THE FIRST PROVISO TO SECTION 147 IS ATTRACTED. THE REASONS TO BELIEVE OUGHT TO ALSO PARAPHRASE ANY INVESTIGATION REPORT WHICH MAY FORM THE BASIS OF THE REASONS AND ANY ENQUIRY CONDUCTED BY THE AO ON THE SAME AND IF SO, THE CONCLUSIONS THEREOF; (III) WHERE THE REASONS MAKE A REFERENCE TO ANOTHER DOCUMENT, WHETHER AS A LETTER OR REPORT, SUCH DOCUMENT AND/ OR RELEVANT PORTIONS OF SUCH REPORT SHOULD BE ENCLOSED ALONG WITH THE REASONS; (IV) THE EXERCISE OF CONSIDERING THE ASSESSEE'S OBJECTIONS TO THE REOPENING OF ASSESSMENT IS NOT A MECHANICAL RITUAL. IT IS A QUASI- JUDICIAL FUNCTION. THE ORDER DISPOSING OF THE OBJECTIONS SHOULD DEAL WITH EACH OBJECTION AND GIVE PROPER REASONS FOR THE CONCLUSION. NO ATTEMPT SHOULD BE MADE TO ADD TO 17 THE REASONS FOR REOPENING OF THE ASSESSMENT BEYOND WHAT HAS ALREADY BEEN DISCLOSED.' 17. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, REASSESSMENT OPENED BY THE AO IN THIS CASE IS NOT SUSTAINABLE IN THE EYES OF LAW, HENCE HEREBY QUASHED. CONSEQUENTLY, CROSS OBJECTION FILED BY THE ASSESSEE COMPANY STANDS ALLOWED AND THE APPEAL FILED BY THE REVENUE HAS BECOME INFRUCTUOUS. 21. I FIND THE TRIBUNAL IN THE CASE OF RAGHAV TECHNOLOGY PVT. LTD. (SUPRA) WHILE DECIDING AN IDEN TICAL ISSUE HAS ALSO QUASHED THE REASSESSMENT PROCEEDINGS UNDER SIMILAR CIRCUMSTANCES BY OBSERVING AS UNDER:- 8. I HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS AN ADMITTED FACT THAT THE CASE OF THE ASSESSEE WAS REOPENED BY THE ASSESSING OFFICER AFTER RECORDING REASONS AND ISSUE OF NOTICE U/S 148 AS PER THE PROVISIONS OF SECTION 147 AND 148 OF THE ACT ON THE BASIS OF THE INFORMATION RECEIVED FROM THE INVESTIGATION WING THAT THE ASSESSEE IS A BENEFICIARY OF ACCOMMODATION ENTRY OBTAINED FROM SURENDRA KUMAR JAIN GROUP OF CASES TOWARDS INTRODUCTION OF SHARE CAPITAL OF RS.35 LACS. I FIND, THE ASSESSEE HAS TAKEN A SPECIFIC GROUND BEFORE THE CIT(A) 18 CHALLENGING THE VALIDITY OF REASSESSMENT PROCEEDINGS ON THE GROUND THAT APPROVAL U/S 151 OF THE ACT OF THE SUPERIOR AUTHORITIES IS NOT IN ACCORDANCE WITH LAW. THE RELEVANT GROUND OF APPEAL NO.2 TAKEN BEFORE THE CIT(A) READS AS UNDER:- 2. THAT UNDER THE FACTS AND CIRCUMSTANCES, APPROVAL U/S 151 OF THE SUPERIOR AUTHORITIES IS NOT ACCORDANCE WITH LAW AND OTHERWISE ALSO MECHANICAL AND WITHOUT APPLICATION OF MIND, MAKING THE RE- ASSTT. PROCEEDINGS UNSUSTAINABLE IN LAW. 9. I FIND THE ABOVE GROUND HAS BEEN EXTRACTED BY THE CIT(A) IN THE BODY OF THE ORDER. SHE HAS ALSO MENTIONED AT PARA 3.2 OF THE ORDER THAT THE ASSESSEE CONTENDED THAT THERE WAS NO PROPER COMPLIANCE OF THE PROVISIONS OF SECTION 151 OF THE IT ACT, 1961. HOWEVER, HER FINDING ON THIS ISSUE IS MISSING IN THE ENTIRE ORDER. A PERUSAL OF THE APPROVAL GIVEN U/S 151, COPY OF WHICH IS PLACED AT PAGES 20 AND 21 OF THE PAPER BOOK SHOWS THAT THE PR. CIT WHILE GIVING APPROVAL HAS SIMPLY MENTIONED AS UNDER:- YES. I AM SATISFIED. 19 10. I FIND, THE HON'BLE DELHI HIGH COURT IN THE CASE OF UNITED ELECTRICAL COMPANY PVT. LTD. (SUPRA) WHILE DECIDING AN IDENTICAL ISSUE HAS HELD THAT THE POWER VESTED IN THE COMMISSIONER U/S 151 TO GRANT OR NOT TO GRANT APPROVAL TO THE ASSESSING OFFICER TO REOPEN AN ASSESSMENT 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. THAT POWER CANNOT BE EXERCISED CASUALLY AND IN A ROUTINE MANNER. ACCORDINGLY, THE HON'BLE HIGH COURT QUASHED THE NOTICE, SINCE THERE WAS NO PROPER APPLICATION OF MIND BY THE ADDL.CIT. 11. I FIND THE HON'BLE DELHI HIGH COURT IN THE CASE OF PR. CIT VS. N.C. CABLES LTD., WHILE DECIDING AN IDENTICAL ISSUE HAS HELD THAT SECTION 151 OF THE ACT CLEARLY STIPULATES THAT THE CIT, WHO IS THE COMPETENT AUTHORITY TO AUTHORIZE THE REASSESSMENT NOTICE HAS TO APPLY HIS MIND AND FORM AN OPINION. MERE APPENDING OF THE EXPRESSION APPROVED SAYS NOTHING. IT IS NOT AS IF THE COMMISSIONER HAS TO RECORD ELABORATE REASONS FOR AGREEING WITH THE NOTING PUT UP BEFORE HIM. AT THE SAME TIME, SATISFACTION HAS TO BE RECORDED OF THE GIVEN CASE WHICH CAN BE REFLECTED IN THE BRIEFEST POSSIBLE MANNER. WHEN SUCH EXERCISE APPEARS TO HAVE BEEN RITUALISTIC AND FORMAL RATHER THAN MEANINGFUL WHICH IS THE 20 RATIONALE FOR THE SAFEGUARD OF AN APPROVAL BY A HIGHER RANKING OFFICIAL, THE FINDING OF THE TRIBUNAL QUASHING THE REASSESSMENT PROCEEDINGS CANNOT BE DISTURBED. 12. I FIND THE HON'BLE SUPREME COURT IN THE CASE OF CHHUGAMAL RAJPAL VS. S.P. CHALIHA & ORS (SUPRA) HAS HELD THAT WHERE THE COMMISSIONER HAD MECHANICALLY RECORDED PERMISSION AND THE IMPORTANT SAFEGUARDS PROVIDED IN THE SECTION 147 AND 151 WERE LIGHTLY TREATED BY THE OFFICER AND THE COMMISSIONER, THE NOTICE ISSUED U/S 148 WAS HELD AS INVALID. THE VARIOUS OTHER DECISIONS RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE IN THE PAPER BOOK ALSO SUPPORT HIS CASE. SINCE, IN THE INSTANT CASE, ADMITTEDLY, THE LD. PCIT WHILE GRANTING APPROVAL HAS SIMPLY MENTIONED YES. I AM SATISFIED THEREFORE, FOLLOWING THE DECISIONS OF THE JURISDICTIONAL HIGH COURT (CITED SUPRA) ON THIS ISSUE WHICH ARE BINDING ON THE TRIBUNAL, THE REASSESSMENT PROCEEDINGS ARE TO BE TREATED AS NOT IN ACCORDANCE WITH THE LAW SINCE THE APPROVAL HAS BEEN GIVEN IN A MECHANICAL MANNER WITHOUT DUE APPLICATION OF MIND BY THE APPROVING AUTHORITY. I, THEREFORE, ALLOW GROUND OF APPEAL NO.2 BY THE ASSESSEE CHALLENGING THE VALIDITY OF REASSESSMENT PROCEEDINGS. SINCE THE ASSESSEE SUCCEEDS ON THIS LEGAL GROUND, THE VARIOUS OTHER GROUNDS RAISED BY THE ASSESSEE ARE NOT BEING ADJUDICATED BEING ACADEMIC IN NATURE. 21 22. SINCE, IN THE INSTANT CASE, BOTH THE APPROVING AUTHORITIES HAVE GIVEN APPROVAL IN A MECHANICAL MAN NER WITHOUT DUE APPLICATION OF MIND, THEREFORE, SUCH REASSESSMENT PROCEEDINGS HAVE TO BE TREATED AS NOT IN ACCORDANCE WITH LAW AND HAS TO BE QUASHED. 23. EVEN OTHERWISE ALSO, A PERUSAL OF THE REASONS RECORDED SHOW THAT THE NOTICE HAS BEEN ISSUED IN A MECHANICAL MANNER WITHOUT INDEPENDENT APPLICATION O F MIND BY THE ASSESSING OFFICER AND THE SATISFACTION BY THE ASSESSING OFFICER IS BASED ON BORROWED SATISFAC TION OF THE INVESTIGATION WING. THE ASSESSING OFFICER, WITHOUT APPLYING HIS MIND, HAS SIMPLY, ON THE BASIS OF THE INFORMATION OF THE INVESTIGATION WING, JUMPED T O THE CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME. THE REASONS SO RECORDED DO NOT SHOW THAT THERE IS ANY APPLICATION OF MIND BY THE ASSESSING OFFICER FOR RE ACHING THE CONCLUSION THAT THERE WAS ESCAPEMENT OF INCOME EXCEPT THE INFORMATION FROM THE INVESTIGATION WING. THE HON'BLE DELHI HIGH COURT IN A NUMBER OF DECISIO NS HAS HELD THAT REOPENING OF ASSESSMENT ON THE BASIS OF REPORT OF THE INVESTIGATION WING WITHOUT INDEPENDEN T APPLICATION OF MIND BY THE ASSESSING OFFICER IS NOT IN ACCORDANCE WITH LAW AND ACCORDINGLY THE REASSESSMEN T PROCEEDINGS HAVE BEEN QUASHED. THE HON'BLE DELHI HI GH COURT RECENTLY IN THE CASE OF SOUTH YARRA HOLDINGS VS. ITO, VIDE WRIT PETITION NO.3398 OF 2018, ORDER DATE D 1 ST MARCH, 2019, AT PARA 7 OF THE ORDER HAS 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 SATISFACTION. IT IS NOT OPEN TO AN ASSESSING OFFICER ISSUE A 22 REOPENING NOTICE AT THE DICTATE AND/OR SATISFACTION OF SOME OTHER AUTHORITY. THEREFORE, ON RECEIPT OF ANY INFORMATION WHICH SUGGESTS ESCAPEMENT OF INCOME, THE ASSESSING OFFICER MUST EXAMINE THE INFORMATION IN THE CONTEXT OF THE FACTS OF THE CASE AND ONLY ON SATISFACTION LEADING TO A REASONABLE BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT, THAT RE-OPENING NOTICE IS TO BE ISSUED. 24. THE HON'BLE HIGH COURT IN THE CASE OF PCIT VS. MEENAKSHI OVERSEAS PVT. LTD., VIDE ITA 692/2016, OR DER DATED 26 TH MAY, 2017, HAS OBSERVED AS UNDER:- 19. A PERUSAL OF THE REASONS AS RECORDED BY THE AO REVEALS THAT THERE ARE THREE PARTS TO IT. IN THE FIRST PART, THE AO HAS REPRODUCED THE PRECISE INFORMATION HE HAS RECEIVED 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 BANKS, AND THE CHEQUE NUMBER. THIS INFORMATION BY ITSELF CANNOT BE SAID TO BE TANGIBLE MATERIAL. 20. COMING TO THE SECOND PART, THIS TELLS US WHAT THE 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, WHAT IN SUCH INFORMATION LED HIM 23 TO FORM THE BELIEF THAT INCOME ESCAPED ASSESSMENT. BUT THIS IS ABSENT. HE STRAIGHTAWAY RECORDS THE CONCLUSION THAT 'THE ABOVESAID INSTRUMENTS ARE IN THE NATURE OF ACCOMMODATION ENTRY WHICH THE ASSESSEE 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 HAVE REASON TO BE BELIEVE THAT AN INCOME OF RS. 5,00,000 HAS ESCAPED ASSESSMENT IN THE AY 2004-05 DUE TO THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT... ' 22. AS RIGHTLY POINTED OUT BY THE ITAT, THE 'REASONS TO BELIEVE' ARE NOT IN FACT REASONS BUT ONLY CONCLUSIONS, ONE AFTER THE OTHER. THE EXPRESSION 'ACCOMMODATION ENTRY' IS USED TO DESCRIBE THE INFORMATION SET OUT WITHOUT EXPLAINING THE BASIS FOR ARRIVING AT SUCH A CONCLUSION. THE STATEMENT THAT THE SAID ENTRY WAS GIVEN TO THE ASSESSEE ON HIS PAYING 'UNACCOUNTED CASH' IS ANOTHER CONCLUSION THE BASIS FOR WHICH IS NOT DISCLOSED. WHO IS THE ACCOMMODATION ENTRY GIVER IS NOT MENTIONED. 24 HOW HE CAN BE SAID TO BE 'A KNOWN ENTRY OPERATOR' IS EVEN MORE MYSTERIOUS. CLEARLY THE 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 THEREFROM. 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 FOR THEMSELVES. THE TANGIBLE MATERIAL WHICH FORMS THE BASIS FOR THE BELIEF THAT INCOME HAS ESCAPED ASSESSMENT MUST BE EVIDENT FROM A READING OF THE REASONS. THE ENTIRE MATERIAL NEED NOT BE SET OUT. HOWEVER, SOMETHING THEREIN WHICH IS CRITICAL TO THE FORMATION OF THE BELIEF MUST BE REFERRED TO. OTHERWISE THE LINK GOES MISSING. 24. THE REOPENING OF ASSESSMENT UNDER SECTION 147 IS A POTENT POWER NOT TO BE LIGHTLY EXERCISED. IT CERTAINLY CANNOT BE INVOKED CASUALLY OR MECHANICALLY. THE HEART OF THE PROVISION 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 SUPPLIED SUBSEQUENTLY EITHER DURING THE PROCEEDINGS WHEN OBJECTIONS TO THE REOPENING 25 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. 25. I FIND THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF M/S SBS REALTORS (P) LTD. VS. ITO, VIDE ITA NO.7791/DEL/2018, ORDER DATED 1 ST APRIL, 2019, HAS ALSO QUASHED THE REASSESSMENT PROCEEDINGS BASED ON THE INFORMATION PROVIDED BY THE INVESTIGATION WING WITH OUT ANY INDEPENDENT APPLICATION OF MIND. IT WAS HELD T HAT THERE WAS NO TANGIBLE MATERIAL WHICH FORMED THE BAS IS FOR THE BELIEF THAT INCOME HAS ESCAPED ASSESSMENT. THE VARIOUS OTHER DECISIONS RELIED BY THE LD. COUNSEL A LSO SUPPORTS HIS CASE. SINCE, IN THE INSTANT CASE, THE REOPENING OF THE ASSESSMENT HAS BEEN MADE ON THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATIO N WING AND THERE IS NO INDEPENDENT APPLICATION OF MIN D BY THE ASSESSING OFFICER AND SUCH REOPENING IS MADE ON THE BASIS OF BORROWED SATISFACTION, THEREFORE, SUCH REOPENING IS NOT IN ACCORDANCE WITH LAW AND HA TO B E QUASHED. ACCORDINGLY, SUCH REASSESSMENT PROCEEDING S HAVE TO BE TREATED AS NOT IN ACCORDANCE WITH LAW AN D HAS TO BE QUASHED. 26. SINCE THE ASSESSEE SUCCEEDS ON THIS LEGAL GROUN D CHALLENGING THE VALIDITY OF REASSESSMENT PROCEEDING S, THE ADDITION ON MERIT IS NOT BEING ADJUDICATED BEIN G ACADEMIC IN NATURE. THE APPEAL FILED BY THE ASSESS EE IS ACCORDINGLY ALLOWED. ITA NOS. 1375/DEL/2019 (GOPAL CHAND MUNDHRA AND SONS); 1721/DEL/2019 (DAMYANTI MUNDHRA); 26 1722/DEL/2019 (RAMDEV MUNDHRA); 1524/DEL/2019 (GOPAL CHAND MUNDHRA). 27. IN THESE APPEALS ALSO IDENTICAL GROUNDS HAVE BE EN TAKEN BY THE RESPECTIVE ASSESSEES AND IN ALL THESE CASES THE APPROVING AUTHORITIES HAVE GIVEN APPROVAL TO TH E REOPENING OF ASSESSMENT IN A MECHANICAL MANNER WITHOUT DUE APPLICATION OF MIND. THEREFORE, FOLLOW ING THE REASONS GIVEN IN THE PRECEDING PARAGRAPHS, THE REASSESSMENT PROCEEDINGS INITIATED IN THE CASE OF T HESE ASSESSEES ARE ALSO HELD TO BE NOT IN ACCORDANCE WIT H THE LAW AND ARE ACCORDINGLY QUASHED. 28. IN THE RESULT, ALL THE FIVE APPEALS FILED BY TH E RESPECTIVE ASSESSES ARE ALLOWED. 4.2 SINCE IN THE PRESENT CASE THE APPROVING AUT HORITY HAS GIVEN APPROVAL TO THE REOPENING OF ASSESSMENT IN A MECHANICAL MANNER WITHOUT DUE APPLICATION OF MIND BY MENTIONING ONLY THAT YES. I AM SATISFIED , IN THE REASONS FOR INITIATING PROCEEDINGS U/S. 147 FOR OBTAINING THE A PPROVAL OF THE PR. CIT, DELHI- 23, NEW DELHI, AND THEREFORE, THE LEGAL ISSUE NO. 4 IN DISPUTE IS SQUARELY COVERED BY THE AFORESAID FINDING OF THE TRIBUNAL, HENCE, RESPECTFULLY FOLLOWING THE AFORESAID PRECEDENT I.E. ITAT, SMC, BENCH, NEW DELHI DECISION DATED 21.8.2019 IN THE CASE OF GOPAL CHAND MANUDHRA AND S ONS; DAMYANTI MUNDHRA; RAMDEV MUNDHRA; SHRIYA DEVI MUNDHRA AND GOPAL CHAND MUNDHRA VS. ITO, WARDS 55(5), NEW DELHI DECIDED IN ITA NO. 1375; 172 1; 1722; 1523- 1524/DEL/2019 RESPECTIVELY RELEVANT TO ASSESSMENT Y EAR 2011-12, THE REASSESSMENT IS HEREBY QUASHED AND ACCORDINGLY THE LEGAL GROUND NO. 4 IS ALLOWED. SINCE THE ASSESSEE SUCCEEDS ON THIS LEGAL GROUND CHALLENGING THE 27 VALIDITY OF REASSESSMENT PROCEEDINGS, THE ADDITION ON MERIT IS NOT BEING ADJUDICATED BEING ACADEMIC IN NATURE. THE APPEAL F ILED BY THE ASSESSEE IS ACCORDINGLY ALLOWED. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED ON 17/12/2019. SD/- [H.S. SIDHU] JUDICIAL MEMBER DATE 17/12/2019 SRB COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES