GAUTAMCHAND KANUGA (HUF), BHIWANDI V. DCIT CIR 1, KALYAN

ITA 4260/MUM/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4393 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 01-10-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 20-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H M WANARE
• Assessee Lawyers: DR P DANIEL
• Keywords: Reopening of assessment; Period of limitation; Tangible material; Reason to believe; Reassessment proceedings
• Section: 143(3); 147; 131; 148; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH G, MUMBAI BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ITA NO.4259/M/2012 ASSESSMENT YEAR: 2003-04 SHRI GAUTAMCHAND KANUGA, HOUSE NO.439, FLAT NO.1, SUMITA BUILDING, GOKULNAGAR, KASARALI, BHIWANDI PAN: ABGPK 2083A VS. DCIT, CIRCLE 1, KALYAN, 1 ST FLOOR, MOHAN PLAZA, WAYALE NAGAR, KHADAKPADA, KALYAN (W) (APPELLANT) (RESPONDENT) ITA NO.4260/M/2012 ASSESSMENT YEAR: 2003-04 SHRI GAUTAMCHAND KANUGA (HUF), BHIWANDI HOUSE NO.439, FLAT NO.1, SUMITA BUILDING, GOKULNAGAR, KASARALI, BHIWANDI PAN: ABGPK 2083A VS. DCIT, CIRCLE 1, KALYAN, 1 ST FLOOR, MOHAN PLAZA, WAYALE NAGAR, KHADAKPADA, KALYAN (W) (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : DR. P. DANIEL, A.R. REVENUE BY : SHRI H.M. WANARE, D.R. DATE OF HEARING : 01.10.2015 DATE OF PRONOUNCEMENT : 08.01.2016 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THESE ARE APPEALS BY THE ASSESSEE AS AN INDIVIDUAL AND AS HUF PREFERRED AGAINST TWO SEPARATE ORDERS BOTH DATED 09.03.2012 O F THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2003-04. AS THE FACTS IN THE CASE OF INDIVIDUAL AND THE HUF ARE IDENTICAL, THESE APPEALS WERE HEARD TOGETHER AN D DISPOSED OF BY THIS COMMON ORDER. FOR THE SAKE OF CONVENIENCE, FACTS H AVE BEEN TAKEN FROM THE CASE OF INDIVIDUAL IN ITA NO.4259/M/2012. ITA NOS.4259 & 4260/M/2012 SHRI GAUTAMCHAND KANUGA 2 2. THE MAIN GRIEVANCE OF THE ASSESSEE IS AGAINST TH E REOPENING OF THE ASSESSMENT UNDER SECTION 147 OF THE ACT. THE REOPE NING IN THIS CASE WAS DONE BY THE ASSESSING OFFICER (HEREINAFTER REFERRED TO A S THE AO) ON THE INFORMATION RECEIVED FROM INVESTIGATION WING TO THE EFFECT THAT A SEARCH OPERATION WAS CARRIED OUT IN THE CASE OF M/S. MAHASAGAR SECURITIE S PVT. LTD. AND ITS GROUP CONCERNS ON 25.11.09 AND THAT DURING THE COURSE OF SEARCH ACTION, IT WAS FOUND THAT M/S. MAHASAGAR SECURITIES PVT. LTD. AND ITS GR OUP CONCERNS WERE ENGAGED IN FRAUDULENT BILLING ACTIVITIES AND IN THE BUSINES S OF PROVIDING BOGUS SPECULATION PROFIT/LOSS, SHORT TERM/LONG TERM CAPIT AL GAIN/LOSS ETC. THE NAME OF THE ASSESSEE WAS ALSO LISTED IN THE LIST OF BENEFIC IARIES EXTRACTED FROM THE COMPUTER DATA OF SHRI MUKESH CHOKSHI, THE DIRECTOR OF SAID M/S. MAHASAGAR SECURITIES PVT. LTD. THE ASSESSMENT OF THE ASSESSE E WAS, THUS, REOPENED WHICH WAS ORIGINALLY PROCESSED UNDER SECTION 143(3) OF TH E ACT. THE AO ACCORDINGLY IN THE REOPENED ASSESSMENT PROCEEDINGS HELD THAT TH E PURCHASE AND SALE TRANSACTIONS OF THE SHARES CARRIED OUT BY THE ASSES SEE WAS BOGUS AND HE ACCORDINGLY TAXED THE ENTIRE SALE CONSIDERATION OF SHARES OF RS.44,22,227/- UNDER THE HEAD INCOME FROM OTHER SOURCES. BEING AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A). 3. THE LD. CIT(A) CONFIRMED THE ADDITIONS SO MADE B Y THE AO. 4. BEFORE US, THE LD. A.R. OF THE ASSESSEE HAS STAT ED THAT THE ISSUE IS SQUARELY COVERED WITH THE DECISION OF THE TRIBUNAL IN THE CASE OF SHRI HIRACHAND KANUGA VS. DCIT IN ITA NOS.4261 & 4262/ M/2012 VIDE ORDER DATED 17.02.15 (ONE OF US, LD. A.M, BEING THE AUTHO R OF SAID DECISION). HE HAS STATED THAT THE FACTS AND ISSUES UNDER CONSIDERATIO N ARE IDENTICAL IN ALL RESPECTS WITH THE ABOVE CASE WHEREIN THE ASSESSMENT WAS REOP ENED IN THE CASE OF HIRACHAND KANUGA IN HIS INDIVIDUAL CAPACITY AS WE LL AS IN RELATION TO HIS HUF. THE TRIBUNAL, CONSIDERING THE FACTS AND CIRCU MSTANCES OF THE CASE, HAS HELD THE REOPENING WAS BAD IN LAW. ITA NOS.4259 & 4260/M/2012 SHRI GAUTAMCHAND KANUGA 3 5. WE HAVE GONE THROUGH THE SAID DECISION. IT IS P ERTINENT TO MENTION HERE THAT THE REOPENING IN THE CASE OF ASSESSEE WAS DONE ON THE IDENTICAL INFORMATION AND IN RESPECT OF THE SAME LIST OF BENEFICIARIES WH EREIN THE NAME OF THE ASSESSEE AS WELL AS NAME OF MR. HIRACHAND KANUGA AP PEARED AS BENEFICIARIES. EVEN WE FIND THAT THE TRIBUNAL HAS DISCUSSED ABOUT THE SATISFACTION RECORDED BY THE ADDITIONAL COMMISSIONER OF INCOME TAX ON THE RE ASONS RECORDED BY THE AO WHEREIN THE TRIBUNAL HAS REPRODUCED THE LETTER D ATED 26.03.10 OF THE ADDITIONAL COMMISSIONER OF INCOME TAX SHOWING THAT THE PERMISSION WAS GRANTED BY THE ADDITIONAL COMMISSIONER IN RESPECT O F 22 ASSESSEES WHEREIN THE NAME OF THE ASSESSEE AND HIS HUF APPEARED AT SL. NO S.1 & 2 IN THE SAID LIST AND WHEREAS THE NAME OF HIRACHAND KANUGA HUF AND MR. HI RACHAND KANUGA IN INDIVIDUAL CAPACITY APPEARED AT SL. NOS.3 & 4. THE TRIBUNAL HAS GIVEN A CATEGORICAL FINDING THAT THE ADDITIONAL COMMISSIONE R HAS SIMPLY SANCTIONED THE PROPOSAL OF INITIATING THE PROCEEDINGS UNDER SE CTION 147 AND HE HAS NOWHERE RECORDED HIS SATISFACTION ON THE REASONS RE CORDED FOR REOPENING OF THE ASSESSMENT. FURTHER, THE TRIBUNAL HAS ALSO DISCUSS ED ABOUT THE MERITS OF THE REOPENING OF THE ASSESSMENT AND FORMATION OF BELIEF BY THE AO FOR THE SAID REOPENING AND THEREAFTER RELYING UPON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF SARTHAK SECURITIES CO. PVT. L TD. 329 ITR 110 HAS HELD THAT THE REOPENING WAS BAD IN LAW. THE RELEVANT FI NDINGS OF THE CO-ORDINATE BENCH OF THE TRIBUNAL FOR THE SAKE OF COMPLETENESS ARE REPRODUCED AS UNDER: 6. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE ONC E AGAIN STRONGLY CHALLENGED THE VALIDITY OF THE REASSESSMENT PROCEED INGS. THE FIRST PROPOSITION OF THE LD. COUNSEL WAS THAT THE REASONS RECORDED BY THE AO ARE WITHOUT APPLICATION OF MIND. IT IS THE SAY OF THE L D. COUNSEL THAT THE REOPENING IS BASED ON THE REPORT RECEIVED FROM THE INVESTIGAT ION WING AND THERE IS NO INDEPENDENT APPLICATION OF MIND BY THE AO. IN SUPPO RT OF HIS CONTENTION, THE LD. COUNSEL PLACED RELIANCE ON THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF SARTHAK SECURITIES CO. P. LTD. 329 ITR 110. 6.1. THE SECOND PROPOSITION PUT FORTH BY THE LD. CO UNSEL IS THAT THERE IS NO PROPER SANCTION/APPROVAL AS PER THE PROVISIONS OF S EC. 151(2) OF THE ACT. IN SUPPORT OF THIS CONTENTION, RELIANCE WAS PLACED ON THE DECISION OF THE TRIBUNAL MUMBAI BENCH IN THE CASE OF SHRI AMARLAL B AJAJ IN ITA NO. 611/M/04. ITA NOS.4259 & 4260/M/2012 SHRI GAUTAMCHAND KANUGA 4 6.2. THE LAST PROPOSITION MADE BY THE LD. COUNSEL I S THAT THE ASSESSMENT HAS BEEN FRAMED IN HASTE WITHOUT ALLOWIN G THE TIME AFTER REJECTION OF OBJECTION. IT IS THE SAY OF THE LD. CO UNSEL THAT ONCE THE AO REJECTS THE OBJECTION FILED BY THE ASSESSEE, THEN IN SUCH A CASE THE AO SHOULD NOT PROCEED FURTHER IN THE MATTER FOR A PERI OD OF 4 WEEKS. RELIANCE WAS PLACED ON THE DECISION OF THE HON'BLE JURISDICTIONA L HIGH COURT IN THE CASE OF ASIAN PAINTS LTD. 296 ITR 90 AND ARONI COMMERCIA LS LTD. 362 ITR 403. 7. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. IT IS THE SAY OF T HE LD. DR THAT THE ASSESSMENT WAS REOPENED ON THE BASIS OF TANGIBLE MATERIAL EVID ENCE IN THE FORM OF REPORT RECEIVED FROM THE INVESTIGATION WING, MUMBAI AND TH EREFORE IT CANNOT BE SAID THAT THERE IS NO APPLICATION OF MIND. THE LD. DR CO NTINUED BY STATING THAT PROPER APPROVAL WAS GIVEN BY THE JOINT CIT/ADDI. CI T AND THEREFORE IT IS INCORRECT TO SAY THAT THE REOPENING WAS WITHOUT ANY SANCTION. THIRDLY THE DR STATED THAT THE ASSESSEE DRAGGED THE ASSESSMENT PRO CEEDINGS TO THE FAG-END OF THE PERIOD OF LIMITATION AND THEREFORE THE AO CA NNOT BE BLAMED FOR PASSING THE ASSESSMENT ORDER IN HASTE. THE LD. DR C ONCLUDED BY SAYING THAT THE REASSESSMENT PROCEEDINGS WERE VALID AND THE LD. CIT(A) HAS RIGHTLY UPHELD THE FINDINGS OF THE AO. 8. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE RIVAL SUBMISSIONS. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTHORITIE S BELOW AND THE RELEVANT DOCUMENTARY EVIDENCES BROUGHT ON RECORD. L ET US FIRST SEE THE REASONS FOR REOPENING THE CASE U/S. 147 WHICH READ AS UNDER: '1. THE ASSESSEE HAD FILED RETURN OF INCOME FOR A. Y. 2003-04 ON 16.10.2003 DECLARING TOTAL INCOME OF RS. 5,95,080/- 2. A SEARCH ACTION WAS CONDUCTED IN THE CASE OF MIS. MAHASAGAR SECURITIES PVT. LTD (NOW ALAG SECURITIES PVT. LTD.) ON 25.11.2009 BY THE DDJT (INV) UNIT-1(4), MUMBAI. 3. DURING THE COURSE OF SEARCH IT WAS FOUND THAT MIS. MAHASAGAR SECURITIES PVT. LTD., AND ITS GROUP CONCE RNS WERE ENGAGED IN FRAUDULENT BILLING ACTIVITIES AND IN THE BUSINESS OF PROVIDING BOGUS SPECULATION PROFITS OR LOSS ON COMM ODITY TRADING, LONG TERM AND SHORT TERM GAINS OR/LOSS INTRODUCING SHARE APPLICATION MONEY. 4. DURING THE COURSE OF SEARCH FROM THE SEIZED COMPUT ER DATA, A LIST OF CLIENTS/BENEFICIARIES WHO HAVE TAKEN ENTRIE S FROM THE ABOVE COMPANY HAVE BEEN EXTRACTED. 5. THE NAME OF THE ASSESSEE IS FOUND TO BE APPEARING IN THE SAID TRANSACTIONS IN THE LIST MENTIONED IN THE COMPUTER DATA EXTRACTED FROM THE ABOVE COMPANY DURING SEARCH. ITA NOS.4259 & 4260/M/2012 SHRI GAUTAMCHAND KANUGA 5 6. IN VIEW OF THE ABOVE AND CONSIDERING THE FINDINGS A ND MODUS OPERANDI FOUND DURING SEARCH OPERATION, THERE IS A REASON TO BELIEVE THAT THE INCOME TO THE EXTENT AS RELEVANT T O BE WORKED OUT HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SEC. 1 47 OF THE I.T. ACT, 1961 AND HENCE A NOTICE U/S. 148 OF THE LT. ACT, 19 61 IS ISSUED.' 8.1. A PERUSAL OF THE REASONS MENTIONED HEREINABOVE CLEARLY SUGGEST THAT THERE IS NO APPLICATION OF MIND. IN OUR CONSIDERED OPINION, FORMATION OF BELIEF THAT INCOME HAS ESCAPED ASSESSMENT IS A CONDITION P RECEDENT. WE FIND THAT THE FACTS OF THE PRESENT CASE ARE IDENTICAL TO THE FACTS OF THE CASE DECIDED BY THE HON'BLE DELHI HIGH COURT IN THE CASE OF SARTHAK SECURITIES CO. P. LTD (SUPRA) WHEREIN ALSO THE ORIGINAL RETURN WAS PROCES SED AND INTIMATION WAS SENT U/S. 143(1) OF THE ACT ACCEPTING THE RETUR N. THE NOTICE U/S. 148 OF THE ACT WAS ISSUED BY THE AO ALLEGING THAT HE HAS R EASON TO BELIEVE INCOME CHARGEABLE TO TAX FOR THE ASSESSMENT WAS 2003-04 HA S ESCAPED ASSESSMENT WITHIN THE MEANING OF SEC. 147 OF THE ACT AND ACCOR DINGLY REQUIRED THE ASSESSEE TO FILE THE RETURN FOR THE ASSESSMENT YEAR IN CONSIDERATION. THE ASSESSEE SUBMITTED THE RETURN OF INCOME AS FILED EA RLIER SHOULD BE TREATED AS THE RETURN IN COMPLIANCE WITH THE NOTICE UNDER REFE RENCE. THE ASSESSEE ALSO REQUESTED TO PROVIDE A COPY OF THE REASONS RECORDED IT/S. 148(2) AND THE APPROVAL FOR ISSUANCE OF NOTICE. WHILE FURNISHING T HE REASONS, THE ITO ALSO INITIATED REASSESSMENT PROCEEDINGS BY ISSUING FORMA L NOTICE. ON A WRIT PETITION, THE HON'BLE HIGH COURT HELD AS UNDER: 'HELD, ALLOWING THE PETITION, THAT THE FORMATION OF BELIEF WAS A CONDITION PRECEDENT AS REGARDS THE ESCAPEMENT OF TH E TAX PERTAINING TO THE ASSESSMENT YEAR BY THE ASSESSING OFFICER. THE A SSESSING OFFICER WAS REQUIRED TO FORM AN OPINION BEFORE HE PROCEEDED TO ISSUE A NOTICE. THE VALIDITY OF REASONS, WHICH WERE SUPPOSE D TO SUSTAIN THE FORMATION OF AN OPINION, WAS CHALLENGEABLE. THE REASONS TO BELIEVE WERE REQUIRED TO BE RECORDED BY THE ASSESSING OFFICER. ONCE THE INGREDIENTS OF SECTION 147 WERE FULFILLED, THE ASSE SSING OFFICER WAS COMPETENT IN LAW TO INITIATE THE PROCEEDINGS UNDER SECTION 147. THE ASSESSING OFFICER WAS AWARE OF THE EXISTENCE OF THE FOUR COMPANIES WITH WHOM THE ASS ESSEE HAD ENTERED INTO TRANSACTION. BO TH THE ORDERS SHOWED THAT THE ASSESSING OFFICER WAS MADE AWARE OF THE SITUATION BY THE INVESTIGATION WING AND THERE WAS NO MENTION THA T THESE COMPANIES WERE FICTITIOUS COMPANIES. NEITHER THE REASONS IN T HE INITIAL NOTICE NOR THE COMMUNICATION PROVIDING REASONS REMO TELY INDICATED INDEPENDENT APPLICATION OF MIND. THOUGH CONCLUSIVE PROOF WAS NOT GERMANE AT THIS STAGE THE FORMATION OF BELIEF MUST BE ON THE BASE OR FOUNDATION OR PLATFORM OF PRUDENCE WHICH A REASONAB LE PERSON WAS REQUIRED TO APPLY. FROM THE PERUSAL OF THE REASONS RECORDED AND THE ORDER OF REJECTION OF OBJECTIONS, THE NAMES OF THE COMPANIES WERE AVAILABLE WITH THE AUTHORITY AND THEIR EXISTEN CE WAS NOT DISPUTED. THE ASSESSEE IN ITS OBJECTIONS HAD STATED THAT THE COMPANIES HAD BANK ACCOUNTS AND PAYMENTS WERE MADE TO THE ASSESSEE THROUGH BANKING CHANNEL. THE IDENTITY OF THE COMPAN IES WAS NOT DISPUTED. UNDER THESE CIRCUMSTANCES, THE INITIATION OF PROCEEDINGS ITA NOS.4259 & 4260/M/2012 SHRI GAUTAMCHAND KANUGA 6 UNDER SECTION 147 AND ISSUANCE OF NOTICE UNDER SECT ION 148 OF THE ACT WERE TO BE QUASHED.' 8.2. AS MENTIONED ELSEWHERE, THE FACTS OF THE CASE IN HAND SO FAR AS THE ISSUE OF NOTICE AND THE REASONS FOR THE ISSUE OF NO TICE U/S. 148 ARE CONCERNED ARE IDENTICAL TO THE FACTS OF SARTHAK SEC URITIES (SUPRA), THEREFORE, IN THE LIGHT OF THE JUDICIAL DECISION DI SCUSSED HEREINABOVE, THE ISSUANCE OF NOTICE U/S. 148 OF THE ACT HAS TO BE QU ASHED. 8.3. PROCEEDING FURTHER IN SO FAR AS APPROVAL U/S. 151(2) OF THE ACT IS CONCERNED, FOLLOWING HAS BEEN PLACED BEFORE US WHICH NEEDS TO BE MENTIONED SPECIFICALLY. 'OFFICE OF THE ADDL. COMMISSIONER OF INCOME- TAX ______RANI MANSION, 2 ND FLOOR, MURBAD ROAD, KULYAN (W)_____ NO. KY N/ADDL. CIT/ I 47/APPROVAL/2009- 10/2233 DAT E: 26/03/2010 THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-1,KALYAN SUB . PROPOSAL FOR INITIATING PROCEEDINGS U/S 147 I N GROUP CASES OF BENEFICIARIES OF MAHASAGAR SECURITIES PVT. LTD. (NO W ALAG SECURITIES PVT. LTD.) SHARE SCAM REG. REF. STATEMENT DATED 11/12/2009 U/S 131 OF SHRI M. C. CHOWKSI BY DDIT, MUMBAI. PLEASE REFER TO THE ABOVE. ON PERUSAL OF THE PROPOSALS FOR INITIATING PROCEEDI NGS U/S 147, YOU ARE HEREBY DIRECTED TO ISSUE NOTICE U/ 148. THE PROPOSA LS IN THE FOLLOWING CASES ARE APPROVED: (1) MR. GAIITAMCHAND M. KANUNGA (2) MR. GAUTAMCHAND M. KANUNGA (HUF) (3) MR. HIRACHAND M. KANUNGA (HUF) (4) MR. HIRACHAND M. KANUNGA (5) MISS SONAMN G. KANUNGA (MINOR) THROUGH SHRI GAUTAMN CHAND M. KANUNGA (6) MISS LAVINA V. KANUNGA (MINOR) THROUGH SHRI VIMAICH AND M. KANUNGA (7) MASTER KENIL G. KANUNGA (MINOR) THROUGH SHRI GAUTAM NCHAND M. KANUNGA (8) MASTER NILESH H. KANUNGA (MINOR) THROUGH SHRI HIRAC HAND M. JKANUNGA (9) SINT. MANJULA H. KANUNGA (10) MISS. DEEPIKA H. KANUNGA (MINOR) THROUGH SHRI HIRAC HAND M. KCMNUNGA ITA NOS.4259 & 4260/M/2012 SHRI GAUTAMCHAND KANUGA 7 (11) MISS. SIMNRAN H. KANUNGA (MINOR) THROUGH SHRI HIRAC HAND M. KANUNGA (12) 5MM' DAMAYANTI RAMESH GADA (13) SHRI. RAM ESH PREMNCHAND GADA (14) SHRI. ALLIAD P. KASHIKAR (15) 5MM'. NILIMA A. KASHIKAR (16) SHRI ABHAY P. KASHIKAR (17) SINT. GEETA A. KASHIKAR (18) SINT. NEE/AM M. GOYAL (19) VIMAIJAIN (20) NARESH FAIN (21) MILAN SALOT (22) MILAN SALOT (HUF) SD/- (SUBHASH BAINS) ADDL. COMMISSIONER OF INCOME TAX, RANGE 1, KALYAN.' 8.4. LET US FIRST CONSIDER THE RELEVANT PART OF THE PROVISIONS OF SEC. 151 OF THE ACT. (1)1N A CASE WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 OR SECTION 147 HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO NOTICE SHALL BE ISSUED UNDER SECTION 148 [BY AN ASSESSING OFFICER, WHO IS BELOW THE RANK OF ASSISTANT COMMISSIONER [OR DEPUTY COMMISSIONER], UNLESS THE [ JOINT] COMMISSIONER IS SATISFIED ON THE REASONS RECORDED BY SUCH ASSESSING OFFICER THAT IT IS A FIT CASE FOR THE ISSUE OF SUCH NOTICE]. PROVIDED THAT, AFTER THE EXPIRY OF FOUR YEARS FROM THE END O F THE RELEVANT ASSESSMENT YEAR, NO SUCH NOTICE SHALL BE I SSUED UNLESS THE CHIEF COMMISSIONER OR COMMISSIONER IS SATISFIED, ON THE R EASONS RECORDED BY THE ASSESSING OFFICER AFORESAID, THAT IT IS A FIT CASE FOR THE ISSUE OF SUCH NOTICE. (2) IN A CASE OTHER THAN A CASE FRILLING UNDER SUB- SECTION ( I ), NO NOTICE SHALL BE ISSUED UNDER SECTION 148 BY AN ASSESSING OFFICER, WHO IS BELOW THE RANK OF [JOINT] COMMISSIONER, AFTER THE EXPIRY OF FOUR YEAR S FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS THE [JOINT] COMMIS SIONER IS SATISFIED, ON THE REASONS RECORDED BY SUCH ASSESSING OFFICER, THAT IT IS A FIT CASE FOR THE ISSUE OF SUCH NOTICE.] [EXPLANATION.FOR THE REMOVAL OF DOUBTS, IT IS HERE BY DECLARED THAT THE JOINT COMMISSIONER, THE COMMISSIONER OR THE CHIEF COMMISS IONER, AS THE CASE MAY BE, BEING SATISFIED ON THE REASONS RECORDED BY THE ASSESSING OFFICER ABOUT FITNESS OF A CASE FOR THE ISSUE OF NOTICE UND ER SECTION 148, NEED NOT ISSUE SUCH NOTICE HIMSELF]' ITA NOS.4259 & 4260/M/2012 SHRI GAUTAMCHAND KANUGA 8 9. A SIMPLE READING OF THE PROVISIONS OF SEC. 151(1 ) WITH THE PROVISO CLEARLY SHOW THAT NO SUCH NOTICE SHALL BE ISSUED UN LESS THE ADDL. COMMISSIONER IS SATISFIED ON THE REASONS RECO RDED BY THE AO THAT IT IS A FIT CASE FOR THE ISSUE OF NOTICE WHICH MEANS THAT THE S ATISFACTION OF THE COMMISSIONER IS PARAMOUNT FOR WHICH THE LEAST THAT IS EXPECTED FROM THE COMMISSIONER IS APPLICATION OF MIND AND DUE DILIGEN CE BEFORE ACCORDING SANCTION TO THE REASONS RECORDED BY THE AO. 10. IN THE PRESENT CASE THE LETTER WHICH IS PLACED ON RECO RD SHOWS THAT THE ADDL. COMMISSIONER HAS SIMPLY SANCTIONED THE PROPOS AL FOR INITIATING PROCEEDINGS U/S. 147 IN GROUP CASES OF BENEFICIARIE S OF MAHASAGAR SECURITIES P. LTD. NOWHERE THE ADDL. CIT HAS RECORD ED HIS DISSATISFACTION. THE HON'BLE SUPREME COURT IN THE CASE OF CHHUGAMAL RAJP AL VS S.P. CHALIHA & OTHERS 79 ITR 603 OBSERVED THAT THE IMPORTANT SAFEG UARDS PROVIDED IN SEC. 147 AND 151 WERE LIGHTLY TREATED BY THE INCOME -TAX OFFICER AS WELL AS THE COMMISSIONER. 11. IN THE LIGHT OF THE ABOVE MENTIONED REASONS, IN OUR CONSIDERATE VIEW, SECTION 147 AND 148 ARE CHARTER TO THE REVENU E TO REOPEN EARLIER ASSESSMENTS AND ARE, THEREFORE PROTECTED BY SAFEGUA RDS AGAINST UNNECESSARY HARASSMENT OF THE ASSESSEE. THEY ARE SW ORD FOR THE REVENUE AND SHIELD FOR THE ASSESSEE. SECTION 151 GUARDS THAT TH E SWORD OF SEC. 147 MAY NOT BE USED UNLESS A SUPERIOR OFFICER IS SATISFIED THAT THE AO HAS GOOD AND ADEQUATE REASONS TO INVOKE THE PROVISIONS OF SEC. 147. THE S UPERIOR AUTHORITY HAS TO EXAMINE THE REASONS, MATERIAL OR GROUNDS AND TO JUD GE WHETHER THEY ARE SUFFICIENT AND ADEQUATE TO THE FORMATION OF THE NEC ESSARY BELIEF ON THE PART OF THE ASSESSING OFFICER. IF, AFTER APPLYING HIS MIND AND ALSO RECORDING HIS REASONS, HOWSOEVER BRIEFLY, THE COMMISSIONER IS OF THE OPINION THAT THE AO'S BELIEF IS WELL REASONED AND BONAFIDE, HE IS TO ACCORD HIS SANCTION TO THE ISSUE OF NOTICE U/S. 148 OF THE ACT. IN THE INSTANT CASE, WE FIND FROM THE PERUSAL OF THE ORDER SHEET WHICH IS ON RECORD, THE COMMISSIONER HAS SIMPLY PUT 'APPROVED' AND SIGNED THE REPORT THEREBY GIVING SANCTION TO THE AO. NOWHERE THE COMMISSIONER HAS RECORDED A SAT ISFACTION NOTE NOT EVEN IN BRIEF. THEREFORE, IT CANNOT BE SAID THAT THE COM MISSIONER HAS ACCORDED SANCTION AFTER APPLYING HIS MIND AND AFTER RECORDIN G HIS SATISFACTION. 12. HON'BLE DELHI HIGH COURT IN THE CASE OF UNITED ELECTRICAL CO. PVT. LTD. VS CIT 258 ITR 317 HAS HELD THAT 'THE PROVISO TO SUB-S ECTION (1) OF SECTION 151 OF THE ACT PROVIDES THAT AFTER THE EXPIRY OF FOUR YEARS FR OM THE END OF THE RELEVANT ASSESSMENT YEAR, NOTICE UNDER SECTION 148 SHALL NOT BE ISSUED UNLESS THE CHIEF CONMIISSIONER OR THE COMMISSIONER, AS THE CASE MAY BE, IS SATISFIED, ON THE REASONS RECORDED BY THE ASSESSING OFFICER CONCERNED , THAT IT IS A FIT CASE FOR THE ISSUE OF SUCH NOTICE. THESE ARE SOME IN-BUILTS SAFE GUARDS TO PREVENT ARBITRARY EXERCISE OF POWER BY AN ASSESSING OFFICER TO FIDDLE WITH THE COMPLETED ASSESSMENT'. THE HON'BLE HIGH COURT FURTH ER OBSERVED THAT 'WHAT DISTURBS US MORE IS THAT EVEN THE ADDITIONAL COMMIS SIONER HAS ACCORDED HIS APPROVAL FOR ACTION UNDER SECTION 147 MECHANICALLY. WE FEEL THAT IF THE ADDITIONAL COMMISSIONER HAD CARED TO GO THROUGH THE STATEMENT OF THE SAID PARTIES, PERHAPS HE WOULD NOT HAVE GRANTED HIS APPR OVAL, WHICH WAS ITA NOS.4259 & 4260/M/2012 SHRI GAUTAMCHAND KANUGA 9 MANDATORY IN TERMS OF THE PROVISO TO SUB-SECTION (1 ) OF SECTION 151 OF THE ACT AS THE ACTION UNDER SECTION 147 WAS BEING INITIATED AF TER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. THE POWER VESTED IN THE COMMISSIONER TO GRANT OR NOT TO GRANT APPROVAL IS COUPLED WITH A DUTY. THE COMMISSIONER IS REQUIRED TO APPLY HIS MIND TO THE P ROPOSAL PUT UP TO HIM FOR APPROVAL IN THE LIGHT OF THE MATERIAL RELIED UPON B Y THE ASSESSING OFFICER. THE SAID POWER CANNOT BE EXERCISED CASUALLY AND IN A ROUTINE MANNER. WE ARE CONSTRAINED TO OBSERVE THAT IN THE PRESENT CASE THE RE HAS BEEN NO APPLICATION OF MIND BY THE ADDITIONAL COMMISSIONER BEFORE GRANT ING THE APPROVAL'. 13. THE OBSERVATIONS OF THE HON'BLE HIGH COURT ARE VERY MUCH RELEVANT IN THE INSTANT CASE AS IN THE PRESENT CASE ALSO THE COMMISSIONER HAS SIMPLY MENTIONED 'APPROVED' TO THE REPORT SUBMITTED BY THE CONCERNED AO. IN THE LIGHT OF THE RATIOS/OBSERVATIONS OF THE HON'BLE HIGH COURT MENTIONED HEREINABOVE, WE HAVE NO HESITATION TO HOLD THAT THE REOPENING PROCEEDINGS VIS--VIS PROVISIONS OF SEC. 151 ARE BAD IN LAW AND THE ASSESSMENT HAS TO BE DECLARED AS VOID AB INITIO. 14. PROCEEDING FURTHER, A PERUSAL OF THE ASSESSMENT ORDER SHOW THAT THE AO HAS SUPPLIED THE REASONS RECORDED ON 15.11.2010. THE AS SESSEE FILED HIS OBJECTION ON 25.11.2010. THE OBJECTIONS FILED BY THE ASSESSEE WE RE REJECTED ON 14.12.2010 AND THE ASSESSMENT ORDER WAS MADE ON 24.12.2010. TH US THE AO DID NOT WAIT FOR FOUR WEEKS FROM THE DATE OF THE REJECTION OF THE OBJECTIONS AND THEREBY VIOLATED THE PRINCIPLES ENUNCIATED BY THE HON'BLE J URISDICTIONAL HIGH COURT IN THE CASE OF ASIAN PAINT LTD. (SUPRA) WHEREIN THE HON'BL E HIGH COURT HAS OBSERVED AS UNDER: 'REASSESSMENT-NOTICE U/S. 148- OBJECTIONS BY ASSESS EE-IF THE AO DOES NOT ACCEPT THE OBJECTIONS FILED BY THE ASSESSEE AGA INST REOPENING OF ASSESSMENT, HE IS NOT TO PROCEED FURTHER IN THE MAT TER FOR A PERIOD OF FOUR WEEKS FROM THE DATE OF SERVICE OF ORDER REJECT ING THE OBJECTIONS ON THE ASSESSEE ABOVE PROCEDURE IS TO B E FOLLOWED STRICTLY IN ALL SUCH CASES OF REOPENING OF ASSESSMENT.' 15. THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE O F ARONI COMMERCIALS LTD. (SUPRA) HAS MADE THE FOLLOWING OBS ERVATIONS: 'IT IS AXIOMATIC THAT THE LAW DECLARED BY THE HIGH COURT IS BINDING ON ALL AUTHORITIES FUNCTIONING WITHIN THE JURISDICTION OF THE COURT. IT IS NOT OPEN TO THE AO TO FEIGN IGNORANCE OF THE LAW DECLAR ED BY THE COURT AND PASS ORDERS IN DEFIANCE OF IT. THE BOMBAY HIGH COURT IN ASIAN PAINTS VS DCIT (2008) 296 ITR 90 (BORN) HAS C LEARLY LAID (TOWN THAT WHEN AN ASSESSMENT IS SOUGHT TO BE REOPENED U/S. 14 8 OF THE ACT AND THE OBJECTIONS OF THE ASSESSEE HAVE BEEN OVERRULED BY THE AO, THEN IN SUCH A CASE THE AO WILL NOT PROCEED FURTHER IN T HE MATTER FOR A PERIOD OF FOUR WEEKS FROM THE DATE OF RECEIPT OF TH E ORDER REJECTING THE OBJECTIONS OF THE ASSESSEE.' 16. THE AO HAS UNDOUBTEDLY FLAUNTED THE PROCEDURE LAID DOWN BY THE ITA NOS.4259 & 4260/M/2012 SHRI GAUTAMCHAND KANUGA 10 HON'BLE JURISDICTIONAL HIGH COURT THEREBY MAKING TH E ISSUANCE OF NOTICE U/S. 148 OF THE ACT BAD IN LAW. 16.1. HAVING SAID ALL THAT CONSIDERING THE FACTS OF THE CASE FROM ANY ANGLES IN THE LIGHT OF OUR DETAILED DISCUSSION HERE INABOVE, IN OUR CONSIDERED OPINION, THE REASSESSMENT PROCEEDINGS BA SED ON THE NOTICE ISSUED U/S. 148 IS BAD IN LAW. WE, THEREFORE, SET A SIDE THE FINDINGS OF THE LD. CIT(A) AND QUASH THE REASSESSMENT ORDER MADE U/S. 1 43(3) R.W. SEC. 147 OF THE ACT. 16.2. AS WE HAVE QUASHED THE REASSESSMENT ORDER, WE DO NOT FIND IT NECESSARY TO GO INTO THE MERIT OF THE CASE. 17. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 6. SINCE THE FACTS AND ISSUES INVOLVED IN THE CAPTI ONED APPEALS ARE IDENTICAL AND HENCE FOR THE SAKE OF CONSISTENCY, RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL, THE APPEALS OF THE ASSESSEE ARE HEREBY ALLOWED AND CONSEQUENTLY THE REOPENING OF THE ASSESSMENT I S HEREBY SET ASIDE AND THE ADDITIONS SO MADE IN THE R EOPENED ASSESSMENT PROCEEDINGS ARE HEREBY ORDERED TO BE DELETED. ORDER PRONOUNCED IN THE OPEN COURT ON 08.01.2016. SD/- SD/- (N.K. BILLAIYA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 08.01.2016. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.