Hukam Singh, Rewari V. ITO, Ward-1, Rewari

ITA 375/DEL/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 8829 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 18-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Capital asset; Search and seizure; Question of law; Tangible material; Accommodation entries; Competent authority; Block assessment; Reassessment proceedings; Borrowed satisfaction; Capital Gains
• Section: 143(3); 54F; 64; 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. 375/DEL/2019 ASSESSMENT YEAR: 2007-08 HUKAM SINGH, VS. ITO, WARD-1, REWARI, REWARI S/O SHRI BUDHA, VPO MAHESWARI, PO DHARUHERA, REWARI HARYANA 123401 (PAN: COWPS6505Q) (ASSESSEE) (RESPONDENT ASSESSEE BY : SHRI KAPIL GOEL, ADVOCATE REVENUE BY : SHRI PRADEEP SINGH GAUTAM, SR. DR. ORDER THE ASSESSEE HAS FILED THIS APPEAL AGAINST THE IMPU GNED ORDER DATED 15.11.2018 PASSED BY THE LD. CIT(A), ROHTAK ON THE FOLLOWING GROUNDS:- THAT THE APPELLANT HUMBLY REITERATES ALL THE FACTS AND GROUNDS OF APPEAL RAISED BEFORE THE LD CIT (APPEALS). 2. THAT THE CIT(A) HAS BLINDLY CONFIRMED THE ASSESS MENT ORDER. THAT THE APPELLANT HEREBY RAISES THE FOLLOWING GROU NDS OF APPEAL FROM THE SAID ORDER AS FOLLOWS: A. THAT THE DAHRUHERA (REWARI) SITUATED IN DISTRICT R EWARI IS NOT COVERED BY ANY ENTRY MENTIONED IN THE GOVERNMENT OF INDIA GAZETTE DATED 6TH JAN 1994. B. THE CIT(A) HAS COMMITTED A MISTAKE BY HOLDING TH AT AGRICULTURAL LAND SOLD BY THE APPELLANT IS A CAPITA L ASSET. THAT NEITHER VILLAGE MAHESHWARI NOR DAHRUHERA (REWARI) H AS NOT POPULATION EXCEEDING TEN THOUSANDS DURING YEAR: 199 1, 2001. THAT THE VILLAGE MAHESHWARI IS OUTSIDE OF MUNICIPAL LIMIT OF DHARUHERA (REWARI). C. THE CIT (A) HAS COMMITTED A MISTAKE BY DISMISSIN G THE APPEAL EVEN AFTER HOLDING FINDING OF FACT THAT MUNI CIPAL COMMITTEE, DAHRUHERA (REWARI) DID NOT EXIST ON THE DATE OF GAZETTE NOTIFICATION ON 6TH JAN 1994 AND WAS CREATE D ON 12TH 2 MAY 2007. THAT, THEREFORE, IT IS HIT BY THE EXPLANA TION ATTACHED TO THE GOVERNMENT GAZETTE NOTIFICATION (SUPRA). THE CIT (A) HAS IGNORE THE EXPLANATION MENTIONED IN THE GOVERNM ENT GAZETTE NOTIFICATION. D. THAT CIT (A) ORDER VIOLATES LEGAL PRE-CONDITION AS TO EXISTENCE OF MUNICIPAL COMMITTEE AT DAHRUHERA DURIN G PREVIOUS YEAR (FY 2006-07). THAT THEREFORE WHEN THE MUNICIPA L COMMITTEE, DHARUHERA WAS NOT IN EXISTENCE ON BOOK O F STATUE DURING FINANCIAL YEAR : 2006-07, THEN THEREFORE AGR ICULTURAL LAND SOLD BY THE APPELLANT IS NOT A CAPITAL ASSET. 3. THE CIT (A) HAS DISALLOWED DEDUCTION CLAIMED UND ER SECTION 54F IN RESPECT OF THE FLAT PURCHASED BY THE APPELLA NT. THAT AS PER LAW APPLICABLE TO ASSESSMENT YEAR, THE APPELLAN T IS ENTITLED TO THE CLAIM DEDUCTION UNDER SECTION 54F FOR TWO HO USES. THE APPELLANT CRAVES FOR PERMISSION TO ADD, DELETE OR AMEND THE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEAR ING OF APPEAL. UNDER THE CIRCUMSTANCES IT IS PRAYED THAT THE APPEA L MAY BE ALLOWED AND / OR ANY OTHER RELIEF AS HON'BLE TRIBUN AL MAY THINK FIT. JUSTICE IS PRAYED, 2. LATER ON, THE ASSESSEE HAS FILED THE FOLLOWING A DDITIONAL GROUNDS UNDER RULE 11 OF THE ITAT. 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, LD AO ERRED IN ASSUMPTION OF JURISDICTION U LS 1471148 OF THE ACT WHEN REASONS RECORDED IN PRESENT CASE AS EVIDENT FROM CURSORY LOOK TO THE SAME (ENCLOSED HEREWITH) A RE BASED ON VAGUE GROUNDS AND MERE SUSPICION ONLY AS IN REAS ONS NO ATTEMPT IS MADE TO PRIMA FACIE CAPITAL GAINS IF ANY ESCAPING ASSESSMENT (ULS148 OF THE ACT) AND MERE SALE PROCEE DS IS IPSO-FACTO TREATED AS INCOME ESCAPING ASSESSMENT (R EFER COLUMN. NO 6 STATING ESTIMATED LTCG MORE THAN RS 116,18,750 WHICH IS SHARE OF ASSESSEE'S SALE CONSID ERATION SHOWS GROSS NON APPLICATION OF MIND) ERGO REOPENING PROCEEDINGS, RESULTANT ASSESSMENT ORDER ULS 147/14 3(3) AND CIT-A ORDER MAY PLEASE BE QUASHED AS VOID AB INITIO :. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, LD AO ERRED IN ASSUMPTION OF JURISDICTION U LS 147/148 OF THE ACT ON BASIS OF INVALID AND MECHANICAL APPRO VAL AS EVIDENT FROM CURSORY LOOK TO REASONS FORMAT (ENCLOS ED HEREWITH) AS MERE ENDORSEMENT IN COLUMN NO 12 IN YE S IS MADE ERGO REOPENING PROCEEDINGS, RESULTANT ASSESSME NT ORDER ULS 147/143(3) AND CIT-A ORDER MAY PLEASE BE QUASHE D AS VOID AB INITIO. 3 TO SUPPORT ADMISSION OF OUR LEGAL & JURISDICTIONAL GROUND, WE RELY ON FOLLOWING CASE LAWS I. RECENT APEX COURT DECISION IN SINGHAD TECHNICAL SOCIETY (ORDER DATED 29/08/2017) 397 ITR 344 II. HON'BLE DELHI HIGH COURT DECISION IN CASE OF FA ST BOOKING (D PVT. LTD., ORDER DATED 02.09.2015 (ITA NO. 334/2015 ) (378 ITR 693) III. HON'BLE DELHI HIGH. COURT DECISION IN CASE OF SILVER LINE, ORDER DATED 04.1L.2015 (ITA NO. 578/2015) (383 ITR 455) IV. HON'BLE PUNJAB AND HARYANA HIGH COURT DECISION IN CASE OF M/S VMT SPINNING CO. LTD., ORDER DATED 1 6.09.2016 (ITA NO. 445/2015) (389 ITR 326) V. HON'BLE GUIARAT HIGH COURT IN CASE OF JOLLY FANT ASY WORLD LTD 373 ITR 530 VI. DECISION OF THE HON'BLE BOMBAY HIGH COURT IN C IT VS. LALIT KUMAR BARDIA (2017) 84 TAXMANN.COM 213 (BOM), DECISION OF THE HON'BLE BOMBAY HIGH COURT IN CIT VS . LALIT KUMAR BARDIA (2017) 84 TAXMANN.COM 213 (BOM), 404 I TR 63(BOM.) (HC): WHEREIN IT HAS BEEN HELD THAT MERE PARTICIPATION IN PROCEEDINGS OR ACQUIESCENCE WOULD NOT CONFER JURISD ICTION. RELIANCE WAS PLACED ON THE RATIO LAID DOWN BY THE A PEX COURT IN KANWAR SINGH SAINI VS. HIGH COURT OF DELHI (2012 ) 4 SCC 307, WHEREIN IT WAS OBSERVED AS UNDER:- '18. IT IS SETTLED POSITION IN LAW THAT MERE PARTICIPATION IN PROCEEDI NGS OR ACQUIESCENCE WILL NOT CONFER JURISDICTION. THE APEX COURT IN KANWAR SINGH SAINI (SUPRA) MADE OBSERVATIONS, WHICH ARE APPOSITE TO THE ISSUE AT HAND AND WHICH READ AS UND ER:- '22. THERE CAN BE NO DISPUTE REGARDING THE SETTLED LEGAL PROPOSITION THAT CONFERMENT OF JURISDICTION IS A LE GISLATIVE FUNCTION AND IT CAN NEITHER BE CONFERRED WITH THE C ONSENT OF THE PARTIES NOR BY A SUPERIOR COURT, AND IF THE COU RT PASSES RDER/DECREE HAVING NO JURISDICTION OVER THE MATTER, IT WOULD AMOUNT TO A NULLITY AS THE MATTER GOES TO THE ROOTS OF THE CAUSE. SUCH AS ISSUE CAN BE RAISED AT ANY BELATED S TAGE OF THE PROCEEDINGS INCLUDING IN APPEAL OR EXECUTION. THE F INDING OF A COURT OR TRIBUNAL BECOMES IRRELEVANT AND UNENFORCEABLE/INEXECUTABLE ONCE THE FORUM IS FOUND TO HAVE NO JURISDICTION. ACQUIESCENCE OF A PARTY EQUALLY SH OULD NOT BE PERMITTED TO DEFEAT THE LEGISLATIVE ANIMATION. THE COURT CANNOT DERIVE JURISDICTION APART FROM THE STATUTE.' HIGH COURT OF JUDICATURE AT ALLAHABAD RESERVED INCOME TAX APPEAL NO. 67 OF 2005 SMT. PRABHA RANI AGRAWAL 4 FROM THE AFORESAID DECISIONS, IF FOLLOWS THAT (I) A QUESTION RELATING TO JURISDICTION WHICH GOES TO THE ROOT OF THE MATTER CAN ALWAYS BE RAISED AT ANY STAGE, BE IN APPEAL OR REVISION, (II) INITIATION OF PROCEEDINGS UNDER SECTION 147 O F THE ACT AND/OR SERVICE OF NOTICE ARE ALL QUESTIONS RELATING TO ASSUMPTION OF JURISDICTION TO ASSESS ESCAPED INCOM E, (III) IF AN ISSUE HAS NOT BEEN DECIDED IN APPEAL AND THE MA TTER HAS SIMPLY BEEN REMANDED, THE SAME CAN BE RAISED AGAIN NOTWITHSTANDING WITH THE FACT THAT NO FURTHER APPEA L HAS BEEN PREFERRED, (IV) IN THE REASSESSMENT PROCEEDINGS, RELIEF IN RES PECT OF ITEM WHICH WAS NOT ORIGINALLY CLAIMED CAN NOT BE CLAIMED AGAIN AS THE REASSESSMENT PROCEEDINGS ARE FOR THE BENEFIT OF THE REVENUE AND (V) RELIEF CAN ONLY BE CLAIMED IN RESPE CT OF THE ESCAPED INCOME. APPLYING THE PRINCIPLES LAID DOWN I N THE AFORESAID CASES TO THE FACTS OF THE PRESENT CASE, W E FIND THAT IN THE FIRST ROUND OF PROCEEDINGS BEFORE THE COMMIS SIONER OF INCOME TAX (APPEALS), THE APPELLANT HAD SPECIFICALL Y QUESTIONED THE VALIDITY OF THE PROCEEDINGS INITIATE D UNDER SECTION 148 OF THE ACT. THAT ISSUE WAS NOT DECIDED BY THE COMMISSIONER (APPEALS) WHO HAD REMANDED THE MATTER FOR FRESH ASSESSMENT AFTER PROVIDING OPPORTUNITY OF HEA RING. THE QUESTION RELATING TO THE JURISDICTION ASSUMED UNDER SECTION 147/148 OF THE ACT GOES TO THE VERY ROOT OF THE MAT TER AND IT CAN BE RAISED IN APPEAL FOR THE FIRST TIME. THE APP ELLANT HAD RAISED THIS QUESTION AGAIN IN APPEAL AND, THEREFORE , IT WAS INCUMBENT UPON THE COMMISSIONER OF INCOME TAX (APPE ALS) TO ADJUDICATE UPON THE GROUNDS TAKEN BEFORE HIM. IN FACT, HE HAD CASUALLY OBSERVED THAT THE PROCEEDINGS UNDER SE CTION 148 OF THE ACT HAD BEEN VALIDLY INITIATED BUT, WRONGLY APPLIED THE PRINCIPLES LAID DOWN BY THE APEX COURT IN THE CASE OF SUN ENGINEERING WORKS P. LTD. (SUPRA). 'IN THE CASE OF P. V. DOSHI [1978J 113 ITR 22 THIS HIGH COURT IN ALMOST IDENTICAL FACT SITUATION HELD THAT THE CO NDITIONS PRESCRIBED FOR INITIATING REASSESSMENT PROCEEDINGS ARE MANDATORY AND, THEREFORE, THERE COULD NEVER BE A WA IVER OF A MANDATORY PROVISION. THAT JURISDICTION COULD NOT BE CONFERRED ON THE AUTHORITY BY MERE CONSENT, BUT ONLY ON FULFI LLMENT ON THE CONDITIONS PRECEDENT FOR THE EXERCISE OF JURISD ICTION. IF THE JURISDICTION COULD NOT BE CONFERRED BY CONSENT, THE RE WOULD BE NO QUESTION OF WAIVER, ACQUIESCENCE OR ESTOPPELS OR THE BAR OF RES JUDICATA BEING ATTRACTED BECAUSE THE ORDER IN S UCH A CASE WOULD LACK INHERENT JURISDICTION AND WOULD BE A VOI D ORDER OR A NULLITY. THEREFORE, IN THE FACTS OF THE PRESENT CAS E THE TRIBUNAL HAD WRONGLY COME TO THE CONCLUSION THAT THE ASSE SSEE HAD WAIVED ITS RIGHT TO CHALLENGE REASSESSMENT PROCEEDI NGS BEFORE THE COMMISSIONER (APPEALS), AND WAS THUS NOT ENTITLED 5 TO RAISE THE SAID CHALLENGE BEFORE THE TRIBUNAL' O UR PLEA THAT REOPENING IS INVALID IS SUPPORTED BY RECENT DELHI I TAT DECISION IN CASE OF SHRI MOHD YAMEEN MUNNA IN ITA 7134/DEL/2 018 ORDER DATED 02.05.2019 (ENCLOSED HEREWITH) APART FR OM FOLLOWING OTHER DECISIONS. I) BOMBAY HIGH COURT DECISION IN CASE OF M OHANLAL CHAMPALA. JAIN (31/01/2019) II) GUJARAT HIGH COURT DECISION IN CASE OF GUNVA NTBHAI SOMABHAI PATEL (06/02/2018) ON APPROVAL POINT WE WISH TO PLACE RELIANCE ON DELH I BENCH ITA T RECENT DECISION IN CASE OF KASHI RAM (ITA 64511DE1L2018) O RDER DATED 16.04.2019 HELD AS: AFTER CONSIDERING THE RIVAL SUBMISSIONS AN D PERUSING THE ORDERS OF THE LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. I FIND THAT THE APPROVAL WAS GRANTED BY THE PRO CIT, FARIDABAD BY N OTING 'APPROVED' SHOWS THAT THE APPROVAL WAS GIVEN IN A MECHANICAL M ANNER WITHOUT RECORDING PROPER SATISFACTION AFTER DUE APPLICATION OF MIND. THE HON'BLE DELHI HIGH COURT IN THE CASE OF PRO CIT VS N. C. CA BLES LTD. (SUPRA) HAS HELD THAT MERE APPENDING OF THE EXPRESSION 'APPROVE D' SAYS NOTING. IT IS NOT AS IF THE CIT HAS TO RECORD ELABORATE REASONS F OR AGREEING WITH THE NOTING PUT UP. AT THE SAME TIME, SATISFACTION HAS T O BE RECORDED OF THE GIVEN CASE WHICH CAN BE REFLECTED IN THE BRIEFEST P OSSIBLE MANNER. IN THE PRESENT CASE, THE EXERCISE APPEARS TO HAVE B EEN RITUALISTIC AND FORMAL RATHER THAN MEANINGFUL, WHICH IS THE RATIONA LE FOR THE SAFEGUARD OF AN APPROVAL BV A HIGHER RANKING OFFICER. FOR THESE REASONS, THE COURT IS SATISFIED THAT THE FINDINGS BY THE ITAT CANNOT BE D ISTRIBUTED. ON BASIS OF ABOVE DISCUSSION WE MAKE A HUMBLE PRAYER FOR I) ADM ISSION OF OUR LEGAL AND JURISDICTIONAL ADDITIONAL GROUND AND II) ALLOWI NG OUR APPEAL BY ACCEPTING OUR ADDITIONAL GROUND IN TOTO AND III) QU ASH THE ORDERS PASSED BY LD AO AND LD CIT-A. SUBMITTED 3. AT THE TIME OF HEARING, LD. COUNSEL FOR THE ASSE SSEE ONLY ARGUED THE ADDITIONAL GROUND NO. 2 AND STATED THAT THE ADDITIO NAL GROUND BEING LEGAL AND JURISDICTIONAL AND NEEDS TO BE ADMITTED. HE FURTHE R DREW MY ATTENTION TOWARDS COLUMN NO. 12 PLACED AT PAGE NO. 6 OF THE PAPER BOO K, WHICH IS A COPY OF REASONS RECORDED BY THE AO AND APPROVAL GRANTED BY THE JCIT, WHEREIN THE AO HAS ERRED IN ASSUMPTION OF JURISDICTION U/S. 147/14 8 OF THE ACT ON THE BASIS OF INVALID AND MECHANICAL APPROVAL AS EVIDENT FROM CUR SORY LOOK TO REASONS FORMAT AS MERE ENDORSEMENT IN COLUMN NO. 12 IN YES IS MA DE, WHICH SHOWS THAT LD. JCIT HAS NOT RECORDED PROPER SATISFACTION AFTER DUE APPLICATION OF MIND AND GAVE THE APPROVAL IN A MECHANICAL MANNER. HE FURTH ER STATED THAT SIMILAR THIS 6 LEGAL/JURISDICTIONAL GROUND IS SQUARELY COVERED BY THE DECISION OF THE ITAT, SMC, BENCH, NEW DELHI DATED 21.8.2019 IN THE CASE OF GOP AL CHAND MANUDHRA AND SONS; DAMYANTI MUNDHRA; RAMDEV MUNDHRA; SHRIYA DEVI MUNDHRA AND GOPAL CHAND MUNDHRA VS. ITO, WARDS 55(5), NEW DELHI DECID ED IN ITA NO. 1375; 1721; 1722; 1523-1524/DEL/2019 RESPECTIVELY RELEVAN T TO ASSESSMENT YEAR 2011-12 AND THEREFORE, HE REQUESTED THAT THE SAME R ATIO MAY BE FOLLOWED IN THE PRESENT CASE AND APPEAL OF THE ASSESSEE MAY BE ALLOWED ACCORDINGLY BY QUASHING THE REASSESSMENT PROCEEDINGS. 4. ON THE CONTRARY, LD. DR STATED THAT SINCE THIS A DDITIONAL GROUND WAS NOT TAKEN BEFORE THE LD. CIT(A), HENCE, THE SAME MAY NO T BE ADMITTED AND APPEAL OF THE ASSESSEE MAY BE DISMISSED. IN SUPPORT OF HIS CONTENTION HE ALSO RELIED UPON THE COMMENTS ON THE ADDITIONAL GROUNDS OF APPE AL UNDER RULE 11 OF ITAT, WHICH READ AS UNDER:- SUB: -FURNISHING OF COMMENTS ON ADDITIONAL GROUND OF APPEAL UNDER RULE 11 OF ITAT IN ITA NO 375/DC)120I9 FOR A.Y. 2007-08 IN THE CASE OF SH. HUKUM SINGH -REG- KINDLY REFER TO YOUR OFFICE LETTER NO 44 DATED 03.06.2019 ON THE SUBJECT CITED ABOVE. IN THIS REGARD, IT IS SUBMITTED THAT YOUR OFFICE S EEK COMMENTS ON RAISING OF ADDITIONAL GROUND OF APPEAL WITH RESPECT TO ASSUMPTION OF JURISDICTION U/S 147/148 OF THE ACT IN CASE OF SH. HUKUM SINGH BY THE LEARNED AR OF THE ASSESSEE. IN THIS REGARD, THE AR HAS STATED THAT THE REASONS RECORDED IN SAID CAS E ARE BASED ON VAGUE GROUNDS AND THE SALE PROCEEDS NOT THE CAPITAL GAIN WERE TREATED AS INCOME ESCAPIN G ASSESSMENT. IN THIS REGARD, IT IS STATED THAT THE A R OF THE ASSESSEE MERE EMPHASIZED ONLY ON THE REASONS RECORCIING FORMAT AND SEEKING APPROVAL, IN WHICH TE XT 'ESTIMATED LTCG MORE THAN RS. 1,16,18,750/- WAS WRITTEN AGAINST POINT NO. 6 (QUANTUM OF INCOME, WHICH HAS ESCAPED INCOME). HOWEVER, THE REASONS RECORDED DURING THE ASSESSMENT PROCEEDINGS WERE ATTACHED AS SEPARATE ANNEXURE AND IN THE SAID ANNEXURE IT IS CLEARLY STATED THAT THE ASSESSEE HAS NOT DISCLOSED ITS/HIS/HER INCOME FROM LONG TERM CAPITAL GAIN IN AMOUNTING TO RS. 1,16,18,750/-. THE PART OF SAID ANNEXURE IS ENUMERATED HEREUNDER- 7 'DURING THE ASSESSMENT PROCEEDINGS 143(3)/148 IN THE CASE OF M/S, RAMOTAR PARKASH HUKUM KALU RAM S/O BUDHA HUF THE ASSESSEE HAS SUBMITTED AN AFFIDAVIT STATING THEREIN THAT THE LAND WAS SOLD BY HIM IN INDIVIDUAL CAPACITY AND NOT AS A HUF. ASSESSEES SHARE IN THE SAID SALE CONSIDERATION COMES TO RS. 1,16,18,750/-. THE QUERY LETTER IN THIS REGARD WAS ISSUED AND / HE ASSESSEE WASAS ASKED TO FURNISH THE COPY OF RETURN OF INCOME, PAN, CALCULATION OF CAPITAL COIN ON SAID LAND. THE ASSESSEE DID NOT FURNISH HIS REPLY. ON ENQUIRIES, I T IS NOTICED THAT THE HAND IN QUESTION IS SITUATED WITHIN 5 KM FRONT MUNICIPALITY'S LIMIT OF REWARI/DHARUHERA MUNICIPALITY. THUS THE LAND SOLD BY THE ASSESSEE IS COVERED IN THE DEFINITION OF CAPITAL ASSETS IN VIEW OF THE NOTIFICATION ISSUED BY THE CBDT ON 6.1.1994 (F.NO. 16H03/87 ITAI DATED 06.01. 94)' I, THEREFORE, HAVE REASON LO BELIEVE THAT THE ASSESSEE HAS NOT DISCLOSED ITS/ HIS/HER INCOME FROM LONG TERM CAPITAL GAIN AMOUNTING TO RS. 1,16,18,750/- AND ANY OTHER INCOME WHICH SUBSEQUENTLY COMES TO THE NOTICE OF THE UNDERSIGNED HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE I.T. ACT, 1961. ISSUE NOTICE U/S 148 OF THE I.T. ACT, 1961 FOR THE ASSESSMENT YEAR 2007-08 THEREFORE, BEING THE MALAFIDE INTENTION OF THE AR OF THE ASSESSEE, HIS/HER CONTENTION IS NOT ACCEPTABLE. FURTHER, THE. AR OF THE ASSESSEE HAS STATED THAT THE LD AO ERRED IN ASSUMPTION OF JURISDICTION U/S 147/148 OF THE ACT ON BASIS OF INVALID AND MECHANICAL APPROVAL. BUT IT IS EVIDENT FROM THE REASONS FORMAT THAT THE JOINT COMMISSIONER OF INCOME TAX, RANGE REWARI HAD PUT CLEARLY 'YES' AGAINST THE COLUMN 'WHETHER THE ADDL. COMMISSIONER OF INCOME TAX IS SATISFIED ON THE REASONS RECORDED BY THE ITO THAT IT IS A FIT CASE F OR ISSUE OF NOTICE' ALONG WITH HIS SIGNATURE AND STAMP. HENCE, THE NOTION OF AR OF THE ASSESSEE REGARDING LEGAL AND JURISDICTIONAL ADDITIONAL GROUND HAS NO FORCE. THE COMMENTS IN THE SAID 8 CASE ARE SUBMITTED TO YOUR GOOD OFFICE FOR NECESSARY ACTION. 5. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RE CORDS, ESPECIALLY THE ADDITIONAL GROUNDS FILED BY THE ASSESSEE AND THE CA SE LAWS SUPPORTING THE CASE FOR ADMISSION OF ADDITIONAL GROUNDS AND THE COMMENT S OF THE DEPARTMENT ON WHICH THE LD. SR. DR RELIED UPON FOR NOT ADMITTING THE ADDITIONAL GROUNDS. IN MY CONSIDERED VIEW, THE ADDITIONAL GROUNDS ARE IN L EGAL AND JURISDICTIONAL AND NEEDS TO BE ADMITTED IN THE INTEREST OF JUSTICE. H ENCE, I ADMIT THE SAME AND ONLY DECIDING THE ADDITIONAL GROUND NO. 2 AS ARGUED BY THE LD. COUNSEL FOR THE ASSESSEE. FOR THE SAKE OF CONVENIENCE, THE ADDITIO NAL GROUND NO. 2 IS AGAIN REPRODUCED AS UNDER:- 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, LD AO ERRED IN ASSUMPTION OF JURISDICTION U LS 147/148 OF THE ACT ON BASIS OF INVALID AND MECHANICAL APPRO VAL AS EVIDENT FROM CURSORY LOOK TO REASONS FORMAT (ENCLOS ED HEREWITH) AS MERE ENDORSEMENT IN COLUMN NO 12 IN YE S IS MADE ERGO REOPENING PROCEEDINGS, RESULTANT ASSESSME NT ORDER ULS 147/143(3) AND CIT-A ORDER MAY PLEASE BE QUASHE D AS VOID AB INITIO. 5.1 I HAVE ALSO PERUSED THE PAGE NO. 6 PLACED IN PA PER BOOK WHICH IS A COPY OF FORM FOR RECORDING THE REASONS FOR INITIATING PR OCEEDINGS U/S. 147 AND FOR OBTAINING THE APPROVAL OF THE ADDL./JOI NT COMMISSIONER OF INCOME TAX, ESPECIALLY THE COLUMN NO. 12 WHEREIN, THE LD. JOINT COMMISSIONER OF INCOME TAX, REWARI WHILE GRANTING A PPROVAL FOR ISSUE OF NOTICE U/S. 148 OF THE ACT HAS ONLY MENTIONED YES, WHICH ESTABLISH THAT THE APPROVING AUTHORITY HAS GIVEN APPROVAL TO THE REOPE NING OF ASSESSMENT IN A MECHANICAL MANNER WITHOUT DUE APPLICATION OF MIND A ND THEREFORE, ON THIS ACCOUNT THE REASSESSMENT IS NOT SUSTAINABLE IN THE EYES OF LAW AND NEEDS TO BE QUASHED. 5.2 I HAVE ALSO PERUSED THE DECISION REFERRED BY TH E 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 9 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 ASSESSEE. FOR THE SAKE OF CONVENIENCE, THE RELEVAN T PORTION OF THE FINDINGS OF THE TRIBUNAL ARE REPRODUCED AS 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:- 10 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 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 11 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 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, 12 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 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 13 - HELD, YES [IN FAVOUR OF ASSESSEE] SEARCH AND SEIZURE-PROCEDURE FOR BLACK ASSESSMENT- SEARCH WAS CONDUCTED AT RESIDENTIAL AND BUSINESS PREMISES OF ASSESSEE AND NOTICE FOR BLOCK ASSESSMENT U/S. 158-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- 14 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 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 15 AND ASSESSMENTS WERE TAKEN UP AFRESH-AFTER CONSIDERING SUBMISSIONS OF ASSESSEE AND DOCUMENTS PRODUCED IN REASSESSMENT PROCEEDINGS, AO ADDED BACK A SUM 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 16 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 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 17 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 (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 18 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 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- 19 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 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 20 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) 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 21 THAT THE PR. CIT WHILE GIVING APPROVAL HAS SIMPLY MENTIONED AS UNDER:- YES. I AM SATISFIED. 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 22 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 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 23 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. 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 24 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 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 25 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 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 26 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. 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 27 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 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 28 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); 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 THE RESPECTIVE ASSESSES ARE ALLOWED. 5.3 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 YES IN COLUMN NO. 12 OF THE FORMAT FOR RECORDING THE REASONS FOR INITIATING PROCEEDINGS U/S. 147 AND FOR OBTAINING THE APPROVAL OF THE ADDL./JCIT COMMISSIONER OF INCOME TAX AND TH EREFORE, THE LEGAL ISSUE IN DISPUTE IS SQUARELY COVERED BY THE AFORESAID FINDIN G OF THE TRIBUNAL, HENCE, RESPECTFULLY FOLLOWING THE AFORESAID PRECEDENT I.E. ITAT, SMC, BENCH, NEW DELHI 29 DECISION DATED 21.8.2019 IN THE CASE OF GOPAL CHAND MANUDHRA AND SONS; DAMYANTI MUNDHRA; RAMDEV MUNDHRA; SHRIYA DEVI MUNDH RA AND GOPAL CHAND MUNDHRA VS. ITO, WARDS 55(5), NEW DELHI DECIDED IN ITA NO. 1375; 1721; 1722; 1523-1524/DEL/2019 RESPECTIVELY RELEVANT TO A SSESSMENT YEAR 2011-12, THE REASSESSMENT IS HEREBY QUASHED AND ACCORDINGLY THE ADDITIONAL GROUND NO. 2 IS ALLOWED. SINCE THE ASSESSEE SUCCEEDS ON THIS LEGAL GROUND CHALLENGING THE 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. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED ON 22/11/2019. SD/- [H.S. SIDHU] JUDICIAL MEMBER DATE 22/11/2019 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