Shree Bhagwan, Gurgaon V. ITO WARD 4(2), Gurgaon

ITA 3173/DEL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 5387 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 11-04-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PARUL SINGH
• Assessee Lawyers: M R SAHU
• Keywords: Reopening of assessment; Reassessment proceedings
• Section: 48; 22; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHE : SMC : NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 3173/DEL/2019 ASSESSMENT YEAR : 2011-12 SHREE BHAGWAN, C/O M. SAHU & ASSOCIATES, CA H.NO. 651, FF, SECTOR-10A, NEAR MEENAKSHI PUBLIC SCHOOL, GURGAON HARYANA 122001 (PAN: AIXPB8389C) VS. ITO, WARD-4(2), GURGAON, HARYANA (APPELLANT) ( RESPONDENT) ASSESSEE BY : MR. M.R. SAHU, CA DEPARTMENT BY : MS. PARUL SINGH, SR. DR. ORDER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE O RDER PASSED BY THE LD. CIT(A)-I, GURGAON ON 22.01.2019 IN RELA TION TO THE ASSESSMENT YEAR 2011-12 ON AS MANY AS 08 GROUNDS. 2. BUT LATER ON, THE ASSESSEE HAS FILED THE FOLLOWING 0 2 ADDITIONAL GROUNDS AND PRAYED TO ACCEPT THE ADDITIONAL GROUNDS OF APPEAL HAVING REGARD TO THE RATIO OF THE DECISION OF THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF NATIONAL THERMAL POWER CORPORATION VS. CIT (1998) 22 9 ITR 383 (SC). 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE APPELLANT SUBMITS THAT HIGH AUTHORITY HAS SANC TIONED THE INCOME ASSESSMENT PROCEEDINGS UNDER SECTION 151 IN A MECHANICAL WAY AND WITHOUT APPLICATION OF INDEPEND ENT MIND, ACCORDINGLY INITIATION OF INCOME ASSESSMENT 2 PROCEEDINGS IS NOT VALID HAVING REGARD TO THE RATIO O F THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF UN ITED ELECTRIC CO. PVT. LTD. VS. CTI (2002) 258 ITR 317 (DEL . HC). 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, IT IS SUBMITTED THAT NO SPECIFIC SECTION WAS MENTION ED BY AO FOR TREATING CASH DEPOSITED IN THE BANK ACCOUNT AS UNEXPLAINED INCOME, BEFORE CIT(A) ASSESSEE CLAIMED ADDITION WAS MADE U/S. 68, CIT(A) APPLYING AGRA TRI BUNAL DECISION IN THE CASE OF SMT. RENU AGGRWAL VS. ITO (2012) 75 DTR (AGRA) TM 48 HOLDS THAT ADDITION CAN BE MADE EIT HER U/S. 68 OR U/S. 69, APPELLANTS SUBMITS THAT AGRA TRIBUNAL DE CISION IN THE CASE OF RENU AGGRWAL VS. ITO (2012) 75 DTR (AGR A) TM 48 IS NOT APPLICABLE TO THE FACTS OF THE APPELLANTS CASE AND APPELLANT IS PRAYING TO TREAT THE ADDITION ON ACCOUN T OF CASH DEPOSITED IN THE BANK ACCOUNT AS UNEXPLAINED INCOME U/ S 68 HAVING REGARD TO THE RATIO OF THE DECISION OF THE HON BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. BOSOTTO BEROTHER S LTD. (1940) 8 ITR 41 (MDS. HC). 3. HOWEVER, AT THE TIME OF HEARING, LD. AR OF THE ASS ESSEE ONLY ARGUED THE ADDITIONAL GROUND NO. 1 AND STATED THAT THIS ADDI TIONAL GROUND IS PURELY LEGAL WHICH GOES TO THE ROOT OF THE MATTER AND ALL FA CTS AND MATERIAL REQUIRED FOR THIS GROUND ALREADY AVAILABLE ON RECORD AND THERE FORE, THE SAME NEEDS TO BE ADMITTED, IN VIEW OF THE HONBLE SUPREME COURT DE CISION IN THE CASE OF NTPC 229 ITR 383 (SC). HE FURTHER DREW MY ATTENTION TOWARDS PAGE NO. 2 OF ASSESSEES SMALL PAPER BOOK WHICH IS A COPY OF APPROVAL GRANTED BY THE PR. COMMISSIONER OF INCOME TAX, GURGAON WHEREIN, HE H AS GRANTED THE APPROVAL BY MENTIONING THAT ON CONSIDERATION OF THE REASONS RECORDED BY THE ASSESSING OFFICER, I AM SATISFIED THAT IT IS A FIT CASE FOR THE ISSUE OF NOTICE U/S. 148 OF THE INCOME TAX ACT, 196 1 FOR THE 3 ASSESSMENT YEAR 2011-12, WHICH SHOWS THAT LD. PR. CIT, GURUGRAM HAS NOT RECORDED PROPER SATISFACTION AND WITHOUT APPLICAT ION OF MIND GAVE THE APPROVAL IN A MECHANICAL MANNER. HE FURTHER STATED THAT THIS LEGAL GROUND IS SQUARELY COVERED BY THE DECISION OF THE HON BLE DELHI HIGH COURT IN THE CASE OF UNITED ELECTRICAL COMPANY (P) LTD. VS. CIT & ORS. 258 ITR 317 (DEL.). THEREFORE, HE REQUESTED THAT THE SAME RATIO M AY BE FOLLOWED IN THE PRESENT CASE AND APPEAL OF THE ASSESSEE MAY BE ALLOWED ACCOR DINGLY BY QUASHING THE REASSESSMENT PROCEEDINGS. 4. ON THE CONTRARY, LD. DR STATED THAT SINCE THIS ADDIT IONAL GROUND WAS NOT TAKEN BEFORE THE LD. CIT(A), HENCE, THE SAME MAY NOT BE ADMITTED AND APPEAL OF THE ASSESSEE MAY BE DISMISSED. HE FURTHER RELIE D UPON THE ORDERS OF THE AUTHORITIES BELOW AND THE CASE LAWS CITED THEREIN . 5. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECOR DS, ESPECIALLY THE ADDITIONAL GROUND FILED BY THE ASSESSEE AND THE CASE LAW SUPPORTING THE CASE FOR ADMISSION OF ADDITIONAL GROUND AND ON WHICH THE LD . SR. DR REQUESTED NOT TO ADMIT THE ADDITIONAL GROUND. IN MY CONSIDERED VIEW, THE ADDITIONAL GROUND IS IN LEGAL AND JURISDICTIONAL NATURE AND NEEDS TO BE ADMITTED IN THE INTEREST OF JUSTICE, IN VIEW OF THE HONBLE SUPREME CO URT DECISION IN THE CASE OF NTPC 229 ITR 383 (SC). HENCE, I ADMIT THE SAME AND ONLY DECIDING THE ADDITIONAL GROUND NO. 1 AS ARGUED BY THE LD. COUNSEL FOR THE ASSESSEE. FOR THE SAKE OF CONVENIENCE, THE ADDITIONAL GROUND NO. 1 I S AGAIN REPRODUCED AS UNDER:- THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE APPELLANT SUBMITS THAT HIGH AUTHORITY HAS SANC TIONED THE INCOME ASSESSMENT PROCEEDINGS UNDER SECTION 151 IN A MECHANICAL WAY AND WITHOUT APPLICATION OF INDEPENDE NT MIND, ACCORDINGLY INITIATION OF INCOME ASSESSMENT PROCEEDINGS I S NOT VALID HAVING REGARD TO THE RATIO OF THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF UNITED ELECTRIC CO. PVT. LT D. VS. CTI (2002) 258 ITR 317 (DEL. HC). 4 6. I HAVE HEARD BOTH THE PARTIES AND CAREFULLY CON SIDERED THE CASE LAWS AND THE RELEVANT DOCUMENTS AVAILABLE ON RECORD ESPECIALL Y THE ASSESSMENT ORDER, IMPUGNED ORDER, REASONS/SATISFACTION/APPROVAL R ECORDED FOR ISSUE OF NOTICE U/S. 148 OF THE ACT PLACED IN PAPER BOOK, ESPECI ALLY PAGE NO. 2 OF THE PAPER BOOK, WHEREIN THE PR. CIT, GURGAON GRAN TED THE APPROVAL FOR ISSUING NOTICE U/S. 148 OF THE INCOME TAX ACT, 1961 BY MENTIONING AS UNDER:- ON CONSIDERATION OF THE REASONS RECORDED BY THE ASSESSING OFFICER, I AM SATISFIED THAT IT IS A FIT CASE FOR T HE ISSUE OF NOTICE U/S. 148 OF THE INCOME TAX ACT, 1961 FOR THE ASSESSMENT YEAR 2011-12. 6.1 AFTER PERUSING THE AFORESAID REMARKS OF THE PR. CI T, GURUGRAM, I FIND THAT THE APPROVAL GRANTED BY THE PR. CIT, GURUGRAM IS A MECHANICAL AND WITHOUT APPLICATION OF MIND, WHICH IS NOT VALID FOR INITIATING THE REASSESSMENT PROCEEDINGS, BECAUSE FROM THE AFORESAID REMARKS, IT IS NOT COMING OUT AS TO WHICH MATERIAL; INFORMATION; DOCUMENTS AND WHICH OTHER ASPECTS HAVE BEEN GONE THROUGH AND EXAMINED BY THE PR. CIT, GURUGRAM FOR REACHING TO THE SATISFACTION FOR GRANTING APPROVAL . THEREAFTER, THE AO HAS MECHANICALLY ISSUED NOTICE U/S. 148 OF THE ACT. KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND THE CASE LA WS APPLICABLE IN THE CASE OF THE ASSESSEE, I AM OF THE CONSIDERED VIEW THA T THE REOPENING IN THE CASE OF THE ASSESSEE FOR THE ASSTT. YEAR IN DISPUTE IS BA D IN LAW AND DESERVES TO BE QUASHED. MY AFORESAID VIEW IS FORTIFIED BY THE FOLLOWING DECISIONS INCLUDING THE ITAT, SMC, BENCH, NEW DELHI DECIS ION DATED 16.10.2019 IN THE CASE OF DHARMENDER KUMAR VS. ITO, WA RD 65(5), NEW DELHI DECIDED IN ITA NO. 2728/DEL/2018 RELEVANT TO A SSESSMENT YEAR 2008- 09 WHEREIN THE FOLLOWING CASE LAWS WERE FOLLOWED ON SIMILAR FACTS AND CIRCUMSTANCES OF THE CASE. 5 A) UNITED ELECTRICAL COMPANY (P) LTD. VS. CIT & OR S. 258 ITR 317 (DEL.) IN THIS CASE, APPROVAL BY THE ADDL. CIT U/S. 151 WAS GIVEN IN THE FOLLOWING TERMS:- YES, I AM SATISFIED THAT IT IS A FIT CASE FOR ISSUE OF NOTICE U/S. 148 OF THE INCOME TAX ACT. ANALYZING, THE ABOVE SATISFACTION/APPROVAL, IT HAS BEEN HELD THAT THE CIT IS REQUIRED TO APPLY HIS MIND TO THE PROPOSAL PUT UP TO HIM FOR APPROVAL IN THE LIGHT TO EH MATERIAL RELIED UPON BY THE AO. THE SA ID 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 ADDL. CIT BEFORE GRANTING THE APPROVAL. (PA RA 19). (B) HONBLE SUPREME COURT OF INDIA IN THE CASE OF CI T VS. S. GOYANKA LIME & CHEMICAL LTD. REPORTED IN (2015) 6 4 TAXMANN.COM 313 (SC) ARISING OUT OF ORDER OF HONBLE HI GH COURT OF MADHYA PRADESH IN CIT VS. S. GOYANKA LIME & CHEMICALS LTD. (2015) 56 TAXMANN.COM 390 (MP). SECTION 151, READ WITH SECTION 148 OF 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 6 WHETHER SPECIAL LEAVE PETITION FILED AGAINST IMPUGNED ORDER WAS TO BE DISMISSED HELD, YES (IN FAVOUR OF THE ASSESSEE). 6.2 IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS AND RESP ECTFULLY FOLLOWING THE PRECEDENTS, AS AFORESAID, I AM OF THE CONSI DERED VIEW THAT APPROVAL GRANTED BY THE PR. CIT, GURUGRAM IS A MECH ANICAL AND WITHOUT APPLICATION OF MIND, WHICH IS NOT VALID FOR INITIATI NG THE REASSESSMENT PROCEEDINGS ISSUE OF NOTICE U/S. 148 OF THE I.T. ACT, 196 1 AND IS NOT IN ACCORDANCE WITH SECTION 151 OF THE I.T. ACT, 1961, THUS, THE NOTICE ISSUED U/S. 148 OF THE ACT IS INVALID AND ACCORDINGLY THE REO PENING IN THIS CASE IS BAD IN LAW AND THEREFORE, THE SAME IS HEREBY QUASHED . ACCORDINGLY, THE LEGAL GROUND NO. 1 RAISED BY THE ASSESSEES COUNSEL IS ALL OWED. SINCE THE OTHER GROUNDS WERE NOT RAISED BY THE ASSESSEES COUNSEL, TH E SAME ARE DISMISSED AS SUCH. ACCORDINGLY, THE ASSESSEES APPEAL IS PARTLY ALLOWED. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STAND S PARTLY ALLOWED. ORDER PRONOUNCED ON 19-02-2020. SD/- [H.S. SIDHU] JUDICIAL MEMBER DATED: 19-02-2020 SRB COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.