Digvijay Advisor Pvt. Ltd, Ghaziabad UP V. ITO ward-7(3), New Delhi

ITA 4540/DEL/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 6554 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 17-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: FARAT KHAN
• Keywords: Reopening of assessment; Unexplained expenditure; Invalid notice; Period of limitation; Accommodation entries; Competent authority; Time period of passing order; Reason to believe; Reassessment proceedings
• Section: 143(3); 133(6); 292BB; 143(2); 64; 113; 73; 13; 147; 68; 148; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH, SMC-2: NEW DELHI (THROUGH VIDEO CONFERENCING) BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.4540/DEL/2019 ASSESSMENT YE AR : 2008-09 DIGVIJAY ADVISOR PVT. LTD. C/O-AKHILESH KUMAR, ADV. 206-207, ANSAL SATYAM, RDC, GHAZIABAD-201002 PAN-AAACK5245Q VS. ITO, WARD-7(3), NEW DELHI (APPELLANT) (RESPONDENT) APPELLANT BY : SH . AKHILESH KUMAR , ADVOCATE RESPOND ENT BY : SH. FARAT KHAN , SR. DR DATE OF HEARING : 04.02.2021 DATE OF PRONOUNCEMENT : 16.04.2021 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE O RDER DATED 11.03.2019 OF THE LEARNED CIT(A)-34, NEW DELHI, RELATING TO AS SESSMENT YEAR 2008-09. 2. FACT OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY AND FILED ITS RETURN OF INCOME ON 27.09.2008, DECLARIN G INCOME OF RS.42,396/-. IN THIS CASE, INFORMATION WAS RECEIVED FROM THE INVESTIGATION WING THAT THE ASSESSEE HAS OBTAINED ACCOMMODATION ENTR IES OF RS.30 LAKHS ON ACCOUNT OF SHARE CAPITAL. THE ASSESSING OFFICER, THEREAFT ER INITIATED REASSESSMENT PROCEEDINGS U/S 147 OF THE ACT AFTER RECO RDING THE REASONS AND WITH THE APPROVAL OF THE COMPETENT AUTHORITY. THE REAS ONS SO RECORDED WERE ITA NO.4540/DEL/2019 2 PROVIDED TO THE ASSESSEE AND THE OBJECTIONS TO THE RE OPENING FILED BY THE ASSESSEE WERE DISPOSED OF BY THE ASSESSING OFFICER. SUBSEQ UENTLY, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER AS KED THE ASSESSEE TO EXPLAIN THE IDENTITY AND CREDITWORTHINESS OF THE LOAN CR EDITOR AND GENUINENESS OF THE TRANSACTION. REJECTING THE VARIOUS EXP LANATION GIVEN BY THE ASSESSEE AND REJECTING THE OBJECTIONS OF THE ASSES SEE TO SUCH REOPENING OF ASSESSMENT FOR NON-ISSUE OF NOTICE U/S 148, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S 147/143(3) OF THE ACT, DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS.31,02,400/-, WHEREIN, HE MADE ADDITION OF RS.30 LAKHS U/S 68 OF THE ACT AND FURTHER AN AMOUNT OF RS.60,000/- B EING UNEXPLAINED EXPENDITURE INCURRED FOR OBTAINING THE ACCOMMODATION ENTRIES U/S 6 9C OF THE ACT. 3. BEFORE THE LEARNED CIT(A), THE ASSESSEE APART FROM CH ALLENGING THE ADDITION ON MERIT, CHALLENGED THE VALIDITY OF REOPENING OF ASSESSMENT. HOWEVER, THE LEARNED CIT(A) WAS ALSO NOT SATISFIED WITH THE ARGUMENTS ADVANCED BY THE ASSESSEE AND UPHELD THE VALIDITY OF REOP ENING OF ASSESSMENT PROCEEDINGS AS WELL AS ON THE MERIT. 4. AGGRIEVED WITH SUCH ORDER OF THE LEARNED CIT(A), THE A SSESSEE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS OF APPEAL:- 1. BECAUSE, THE ORDER OF LEARNED LOWER AUTHORITY IS BAD IN LAW & AGAINST THE FACTS AND CIRCUMSTANCE OF THE CASE. 2. BECAUSE, ID. CIT(A) GROSSLY ERRED IN REJECTING THE GROU ND THAT NOTICE U/S 148 IS ISSUED BEYOND LIMITATION, WITHOUT ANY EVIDENCE AND IN VIOLATION OF PRINCIPLE THAT ONUS IS ON AO WHO ISSUED THE NOTICE TO PROVE VALIDITY OF ISSUANCE IN T ERMS OF DATE ETC., HENCE ALLEGED NOTICE IS BARRED BY LIMITATION PROVIDE D U/S 149 OF ACT AND IS ILLEGAL. ITA NO.4540/DEL/2019 3 3. BECAUSE, ID. CIT(A) GROSSLY ERRED IN UPHOLDING THE SERVIC E BY AFFIXTURE VALID BY WRONGLY HOLDING THAT, SINCE THE 31 ST MARCH WAS THE LAST DAY OF SERVICE HENCE SERVICE BY AFFIXT URE WITHOUT ANY SERVICE BY POST ETC. IS VALID, WHICH IS CONTRARY T O S.282 OF ACT READ WITH PROVISIONS OF CPC AS HELD IN SCORES OF C ASES, BESIDES EVEN ALLEGED SERVICE IS NOT AS PER LAW, HENCE A LL THE PROCEEDINGS ARE BEYOND S.148/149 AND ARE VOID AB INITIO. 4. BECAUSE, WITHOUT PREJUDICE TO ABOVE, IN ALTERNATIVE, ID. CIT(A) ERRED IN JUSTIFYING THE VALIDITY OF NOTICE U/S 143(2), BY WRONGLY INVOKING PROVISIONS OF S.292BB, BEING ISSUED WIT HOUT FILING OF RETURN OF INCOME , AS SUCH ASSUMPTION OF JU RISDICTION AND CONSEQUENT ORDER U/S 143(3) IS ILLEGAL. 5. BECAUSE, WITHOUT PREJUDICE TO ABOVE, IN ALTERNATIVE, ID. CIT(A) ERRED IN SUSTAINING THE VALIDITY OF NOTICE U/S 148 W HICH IS ISSUED WITH VAGUE/WRONG REASONS WITHOUT ANY APPLICATIO N OF MIND AND SATISFACTION OF ID. AO AND/OR OF APPROVING AUTHORITY SHEERLY TO CONDUCT ROVING ENQUIRIES ONLY, HENCE NOTIC E IS BEYOND JURISDICTION. 6. BECAUSE, WITHOUT PREJUDICE TO ABOVE, IN ALTERNATIVE, ON MERITS, LD. CIT(A) ERRED IN SUSTAINING THE ADDITION OF RS.30.6 LAKH S U/S 68/69C BEING THE SHARE APPLICATION IN WHOLE DISRE GARD OF THE MATERIAL ON RECORD MERELY ON THE BASIS OF A GENER AL THIRD PARTY UNILATERAL STATEMENT THAT TOO WITHOUT PROVIDING OPPORTUNITY TO CROSS EXAMINE IN TERMS OF M/S ANDAMAN TIMBER IND. (SC) AND WITHOUT CONDUCTING ANY ENQUIRY. 5. THE LEARNED COUNSEL FOR THE ASSESSEE STRONGLY CHALLE NGED THE ORDER OF THE LEARNED CIT(A) IN CONFIRMING THE ADDITION ON MER IT AS WELL AS UPHOLDING THE VALIDITY OF REASSESSMENT. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE NOTICE U/S 148 HAS NOT BEEN ISSUED WITHIN THE LIMITATION PERIOD ENDED ON 31.03.2015 AND IN ANY EVENTUALITY NOTICE U/S 148 WAS NEVER SERVED ON THE ASSESSEE BEFORE COMPLETION OF ASSESSMENT . DESPITE THE OBJECTION OF THE ASSESSEE REPEATEDLY THAT NO SERVICE O F NOTICE WAS MADE AND THE SAID NOTICE WAS SERVED THROUGH AFFIXTURE WITHOUT RES ORTING TO SERVICE BY POST ETC., THE LOWER AUTHORITIES HAVE UPHELD THE VALIDITY O F SERVICE OF NOTICE. THE LEARNED COUNSEL FOR THE ASSESSEE REFERRING TO SECTION 282 READ WITH SERVICE RULES FROM 9 TO 17/20 OF ORDER V UNDER CPC, 19 08, SUBMITTED THAT ITA NO.4540/DEL/2019 4 WHEN THE AFFIXTURE IS ADMITTEDLY AFTER WORKING HOURS AND WITHOUT IDENTIFICATION OF PLACE/WITNESS, THE PROCEEDINGS U/S 147/148 ARE VOID AB INITIO . THE LEARNED COUNSEL FOR THE ASSESSEE REFERRING TO VARIO US PAGES OF PAPER BOOK SUBMITTED THAT ON 31 ST MARCH, THE ASSESSING OFFICER RECORDED THE REASONS, SEND THE REASONS FOR APPROVAL, OBTAINED APPROVA L OF THE ADDL. CIT ON THE VERY SAME DATE AND THEREAFTER ISSUED NOTICE, ORDERE D THE NOTICE SERVER AND ITI TO AFFIX THE NOTICE ETC, ARE NOT PRACTICALLY POSS IBLE. REFERRING TO THE ORDER OF THE ASSESSING OFFICER HOLDING THAT SERVICE BY AFFIXT URE IS SUFFICIENT AND NO NEED TO SERVE BY POST ETC. AND THE ORDER OF THE LEARNED CIT(A) HOLDING THAT SINCE THE NOTICE IS ISSUED ON THE LAST DAY AND THER EFORE, COULD NOT BE SENT THROUGH POST AND THEREFORE, SERVICE BY AFFIXTURE ON 31.03.2015 IS VALID, HE SUBMITTED THAT IN VIEW OF THE FOLLOWING DECISIONS, SUCH ACT ION OF THE ASSESSING OFFICER IS ILLEGAL AND VITIATES THE ENTIRE REASSESSMENT PROCE EDINGS. I. CIT V. RAMENDRA NATH GHOSH 82 ITR 888 (SC) II. CIT V MASCOMPTEL INDIA LTD [2012] 345 ITR 58 (DELHI) III. AVI -OIL INDIA P. LTD. V ADDL. CIT (2007) 18 SOT 219 (DEL-D) IV. SURENDER KUMAR PANDEY V ITO ITA 179 & 2072/2017 ORDER DT. 29.03.19 (DEL SMC) V. ARDENT STEEL LTD. V ACIT [2018] 94 TAXMANN.COM 95 (CHHATTISGARH) VI. CIT V ATLANTA CAPITAL (P) LTD. (DELHI) -- ITA NO. 665/20 15 (DEL. HC) 6. THE LEARNED COUNSEL FOR THE ASSESSEE IN HIS NEXT PLAN K OF ARGUMENT SUBMITTED THAT ASSESSEE FILED RETURN OF INCOME O N 27.09.08 AND ITA NO.4540/DEL/2019 5 NEITHER RECEIVED NOTICE U/S 148 OF THE ACT DATED 31.03. 2015 NOR FILED ANY RETURN IN COMPLIANCE TO SAME. THEREFORE, NOTICE U/S 143(2) DATED 15.05.2015 IS BEYOND LIMITATION WHICH EXPIRED ON 30.09.2009. THEREFORE, AS SUMPTION OF JURISDICTION ON SUCH INVALID NOTICE, MORE SO WHEN OBJECTION AB OUT THE SAME IS RAISED AND CONSEQUENTLY ORDER PASSED U/S 143(3) IS VOID AB INITIO . REFERRING TO THE ORDER OF THE ASSESSING OFFICER, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER HAS NEVER ADDRESSED THE ABOVE OBJECTION MADE BEFORE HIM. THE LEARNED CIT(A) HAS STATED THAT SINC E THE ASSESSEE HAS NOT RAISED THIS OBJECTION BEFORE THE ASSESSING OFFICER AND COMPLIED WITH NOTICE U/S 143(2), HENCE, IN TERMS OF SECTION 292BB OF THE A CT, THE ASSESSEE CANNOT RAISE THIS ISSUE IN APPELLATE PROCEEDINGS. REFERRING TO THE FOLLOWING DECISIONS, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT NON-ISSUE OF NOTICE OR INVALID ISSUE OF NOTICE U/S 143(2) IS NOT CURABLE DE FECT AND THE ASSESSMENT SO MADE HAS TO BE QUASHED. I. ASSTT. CIT V. HOTEL BLUE MOON [2010] 321 ITR 362/188 TAXMAN 113 (SC) II. CIT V. RAJEEV SHARMA [2011] 336 ITR 678 (ALL) III. PR. CIT SHRI JAI SHIV SHANKAR TRADERS (P.) LTD. [2015] 64 TAXMANN.COM 220 (DELHI) IV. GULAB BADGUJAR (HUF)V ITO [2019] 111 TAXMANN.COM 90 (PUNE - TRIB.) V. JYOTI PAT RAM VS ITO (2005) 92 ITD 423 ((LKO) 7. THE LEARNED COUNSEL FOR THE ASSESSEE IN HIS NEXT PLAN K OF ARGUMENT SUBMITTED THAT THE REASONS WERE STATED TO B E RECORDED ON 31.03.2015 ON THE BASIS OF LETTER DATED 31.03.2009 OF ADIT ABOUT AN ACCOMMODATION ENTRY OF RS. 30 LAKHS OF M/S KAROL BAGH TRA DING LTD. AS PER ITA NO.4540/DEL/2019 6 STATEMENT OF ONE MR. TARUN GOYAL. BUT THE ASSESSING OFFICER HAS NOT TAKEN ANY ACTION ON THIS INFORMATION THOUGH TIME TO ISSUE NOTICE ON THE INCOME TAX RETURN FILED ON 27.09.2008 WAS AVAILABLE TILL 30.09.2009. THIS SHO WS THAT THE ASSESSING OFFICER WAS NOT CONVINCED ABOUT THE CREDITABILITY OF SAID INFORMATION AND CHOSE NOT TO TAKE ANY ACTION. HE SUBMIT TED THAT THIS INFORMATION IS NOT NEW AND IS AVAILABLE AT THE TIME OF ORIGIN AL ASSESSMENT. THERE IS NO MATERIAL LINKING THE ASSESSEE WITH MR. TARUN GO YAL WHO ADMITTEDLY NEVER INVOKED THE NAME OF THE ASSESSEE ABOU T ANY ACCOMMODATION AMOUNT. HE SUBMITTED THAT THE LETTER DA TED 09.03.2015/23.03.2015 IS WITHOUT ANY APPROVAL U/S 133(6) OF THE ACT AND WAS SEEKING DETAILS ABOUT AN ACCOMMODATION ENTRY OF RS. 3 5/30 LAKHS FOR WHICH ADJOURNMENT WAS ALLOWED ON 06.04.2015, BUT REASONS DATED 31.03.2015 IS RECORDED FOR NON-COMPLIANCE OF THE SAID LETT ER. HE SUBMITTED THAT THERE IS NEITHER ANY REASON TO BELIEVE NOR THERE IS CREDIBLE MATERIAL/LIVE LINK WITH ASSESSING OFFICER AND AT THE MOST HE ACTED ON BO RROWED SATISFACTION. FURTHER, THE LOWER AUTHORITIES HAVE GIVEN TH E APPROVAL IN A MECHANICAL MANNER. REFERRING TO THE FOLLOWING DECISIONS, HE SUBMITTED THAT WHEN THE APPROVAL HAS BEEN GIVEN IN A MENCHANICAL MANNE R, SUCH REASSESSMENT PROCEEDINGS ARE INVALID. I. ESHA STRIPS PVT. LTD. V. ITO (ITA NO. 4689/D/18) (0 1/01/2019) II. PCIT V MEENAKSHI OVERSEAS (P) LTD. [2017] 82 TAXMAN N.COM 300 (DELHI) III. CIT V SFIL STOCK BROAKING LTD. (2010) 233 CTR (DEL) IV. CIT V N.C. CABLES (2017) 391 ITR 11 V. YUM REST. ASIA PTE LTD. V DCIT [2018] 99 TAXMANN.CO M 423 (DELHI) ITA NO.4540/DEL/2019 7 VI. CIT V S. GOYANKA LIME & CHEMICALS LTD.[2015] 56 TAX MANN.COM 390 (MADHYA PRADESH)--SLP DISMISSED IN 64 TAXMANN.COM 3 13(SC) VII. M/S SIGNATURE HOTELS PVT. LTD. VS. ITO [2011] 338 I TR 51(DEL) 8. SO FAR AS THE MERITS OF THE CASE IS CONCERNED, THE LE ARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS ENGAGE D IN THE BUSINESS OF ADVISORS TO MUTUAL FUND INVESTMENT AND HAS RECEIVED AN AMOUNT OF RS.30 LAKHS FROM M/S KAROL BAGH TRADING LTD FOR ALLOTMENT OF 60,0 00/- EQUITY SHARES AT PREMIUM OF RS.40/- EACH. THE SHARES WERE ALLOTT ED ON 31.03.2008. FURTHER, THE ASSESSEE DURING THE YEAR HAD ALSO ALLOTTED 12,000 SHARES OF RS.10/- WITH PREMIUM OF RS.40/- TO SHRI OM FURNITURE, FO R WHICH AMOUNT WAS RECEIVED IN PREVIOUS YEAR. THE ASSESSEE HAD FILED SHAR E APPLICATION FORM, CONFIRMATION, BANK STATEMENT AND BALANCE SHEET OF BOTH TH E PARTIES IN SUPPORT OF SUCH TRANSACTIONS. IT WAS ALSO SUBMITTED BEFO RE THE ASSESSING OFFICER THAT NONE OF THE DIRECTORS OF M/S KAROL BAGH TRADIN G LTD. IS PRESENT. HENCE, IT IS NOT POSSIBLE TO PRODUCE THEM FOR PERSONAL DEP OSITION. HOWEVER, THE ASSESSING OFFICER NEVER CONDUCTED ANY ENQUIRY FROM T HE SAID PARTY NOR REJECTED EVIDENCES PLACED BEFORE HIM. RELYING ON THE FOLLOWIN G DECISIONS, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ADD ITION MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE LEARNED CIT(A) IS NOT IN ACCORDANCE WITH LAW AND SHOULD BE DELETED. I. CIT V GANGESHWARI METALS P. LTD [2014] 361 ITR 10 ( DEL) II. PSYCHOTROPICS LEASING & FINANCE (P) LTD. V. ITO (IT A NO. 1122/D/14) (DATED11.10.2018) III. RATHI CERAMICS PVT. LTD. V. ITO (ITA NO. 4540/DEL/2 014) (04.02.2019) IV. GREEN INFRA LTD. V ITO 145 ITD 240(MUMBAI)--AFFIRME D IN [2017] 78 TAXMANN.COM 340 (BOMBAY)/[2017] 392 ITR 7 (BOMBAY) ITA NO.4540/DEL/2019 8 9. HE ACCORDINGLY SUBMITTED THAT BOTH LEGALLY AND FACTU ALLY, THE ADDITION MADE BY THE ASSESSING OFFICER AND UPHELD BY THE LE ARNED CIT(A) IS NOT JUSTIFIED. 10. THE LEARNED DR ON THE OTHER HAND, HEAVILY RELIED ON THE ORDER OF THE LEARNED CIT(A). HE SUBMITTED THAT THE LEARNED CIT(A) HAS GIVEN VALID REASON WHILE UPHOLDING THE VALIDITY OF REASSESSMENT PROCEED INGS. REFERRING TO THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF RAYM OND WOOLLEN MILLS LTD. VS ITO & ORS [236 ITR 34](SC), HE SUBMITTED THAT THE HONBLE SUPREME COURT HAS HELD THAT IN DETERMINING WHETHER COMMENCEMENT OF REASSESSMENT PROCEEDINGS WAS VALID IT HAS ONLY TO BE SEEN WHETHER T HERE WAS PRIMA FACIE SOME MATERIAL ON THE BASIS OF WHICH THE DEPARTMENT COULD REOPEN THE CASE. THE SUFFICIENCY OR CORRECTNESS OF THE MATERIAL IS NOT A THIN G TO BE CONSIDERED AT THIS STAGE. RELYING ON VARIOUS DECISION AS MENTIONED BY LEARNED CIT(A), HE SUBMITTED THAT THE REOPENING OF THE ASSESSMENT WAS VALID LY MADE AND THEREFORE, THE ORDER OF THE LEARNED CIT(A) ON THIS ISSUE SHOULD BE UPHELD . 11. SO FAR AS THE ARGUMENTS OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT NOTICE WAS NOT SERVED ON THE ASSESSEE IS CONCERN ED, HE SUBMITTED THAT THE SAID NOTICE WAS SERVED THROUGH AFFIXTURE WHICH IS A VALID MODE OF SERVICE AND ASSESSEE SHOULD NOT RAISE ANY OBJECTION ON THIS ISS UE. SO FAR AS THE MERIT OF THE ADDITION IS CONCERNED, THE LEARNED DR SUBMITT ED THAT THE ASSESSEE HAS FAILED TO PROVE THE IDENTITY AND CREDITWORTH INESS OF THE SHARE APPLICANT AND THE GENUINENESS OF THE TRANSACTIONS IN TERM S OF SECTION 68 OF THE ACT. THE ASSESSEE HAS FAILED TO PRODUCE THE DIRECTO RS OF THE INVESTOR COMPANY BEFORE THE ASSESSING OFFICER FOR HIS EXAMINATION. TH EREFORE, THE ITA NO.4540/DEL/2019 9 ORDER OF THE LEARNED CIT(A) SUSTAINING THE ADDITION IS IN ACC ORDANCE WITH LAW AND THEREFORE, SHOULD BE UPHELD. 12. I HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOT H THE SIDES, PERUSED THE ORDERS OF ASSESSING OFFICER AND THE LEARNED C IT(A) AND PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. I HAVE ALSO CONSIDE RED THE VARIOUS DECISIONS CITED BEFORE ME. I FIND THE ASSESSING OFFICER IN THE INSTANT CASE REOPENED THE ASSESSMENT AFTER RECORDING THE REASONS, WHICH REA DS AS UNDER:- 13. I FIND THE ADDL. CIT WHILE GIVING APPROVAL HAS MENTIONED AS UNDER:- ITA NO.4540/DEL/2019 10 I AM SATISFIED THAT THIS IS A FIT CASE FOR ISSUING NOTICE U/S 147/148. 14. A PERUSAL OF THE APPROVAL GIVEN BY THE ADDL. CIT SHO WS THAT HE HAS NOT APPLIED HIS MIND PROPERLY AND HAS IN A MECHANICAL MANNER GIVEN HIS APPROVAL. I FIND THE HONBLE DELHI HIGH COURT IN THE CASE O F CIT VS N.C. CABLES LTD. REPORTED 391 ITR 11 HAS HELD AS UNDER:- (SHORT NOTES) REASSESSMENT -ISSUANCE OF NOTICE-SANCTION FOR ISSUE OF NOTICE- ASSESSEE HAD IN ITS RETURN FOR AY 2001-02 CLAIMED T HAT SUM OF RS. 1 CRORE WAS RECEIVED TOWARDS SHARE APPLICATION AMOU NTS 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 ISSU ED 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 INCLUSIO N 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 OBJECT IONS AND DISMISSED REVENUE'S APPEAL HOLDING THAT THERE WAS NO PROPER APPLICATION OF MIND BY CONCERNED SANCTIONING AUTHOR ITY U/S SECTION 151 AS A PRE-CONDITION FOR ISSUING NOTICE U/S 147/1 48- HELD, SECTION 151 STIPULATES THAT CIT (A), WHO WAS COMPET ENT AUTHORITY TO AUTHORIZE REASSESSMENT NOTICE, HAD TO APPLY HIS MIND AND FORM OPINION-MERE APPENDING OF EXPRESSION 'APPROVED' SAY S NOTHING- IT WAS NOT AS IF CIT (A) HAD TO RECORD ELABORATE REASO NS FOR AGREEING WITH NOTING PUT UP-AT SAME TIME, SATISFACTION HAD T O BE RECORDED OF GIVEN CASE WHICH COULD BE REFLECTED IN BRIEFEST POS SIBLE 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.' 14.1. I FIND THE HONBLE MADHYA PRADESH HIGH COURT IN TH E CASE OF CIT VS. S. GOYANKA LIME & CHEMICALS LTD. REPORTED IN 231 TAXMANN 73 (MP) HAS HELD THAT WHERE THE JOINT COMMISSIONER RECORDED SATIS FACTION IN A MECHANICAL MANNER AND WITHOUT APPLICATION OF MIND TO ACCORD SANCTION FOR ITA NO.4540/DEL/2019 11 ISSUING NOTICE UNDER SECTION 148 OF THE ACT, REOPENING OF ASSESSMENT WAS INVALID. SIMILAR VIEW HAS BEEN TAKEN BY THE HONBLE DELHI HIGH COURT IN THE CASE OF YUM RESTAURANT ASIA PTE LTD. VS DCIT REPORTED IN 99 TAXMANN.COM 423 (DEL). SINCE, THE ADDL. CIT IN THE INSTANT CASE HAS GIVE N APPROVAL IN A MECHANICAL MANNER WITHOUT INDEPENDENT APPLICATION OF MIND, THEREFOR E, SUCH APPROVAL GIVEN U/S 151(1) OF THE ACT BEING NOT IN ACCORDAN CE WITH LAW, THE REASSESSMENT PROCEEDINGS HAS TO BE QUASHED. 14.2. EVEN OTHERWISE, I FIND IN THE INSTANT CASE, A PERUSA L OF THE ASSESSMENT ORDER SHOWS THAT THE ASSESSING OFFICER WHILE DISPOSING THE OBJECTIONS MADE BY THE ASSESSEE CHALLENGING THE SERVICE OF NOTICE U/S 148 HAS OBSERVED AS UNDER:- 15. A PERUSAL OF THE ABOVE REPLY OF THE ASSESSING OFFICER SHOWS THAT NOTICE U/S 148 DATED 31.03.2015 WAS SERVED ON THE ASSE SSEE THROUGH ITA NO.4540/DEL/2019 12 AFFIXTURE IN PRESENCE OF INSPECTOR OF THE WARD. FROM THE DETAILS FILED BY THE ASSESSEE IN THE PAPER BOOK, IT IS SEEN THAT THE REASONS WERE RECORDED ON 31.03.2015. THE REASONS SO RECORDED WERE SENT FOR APPRO VAL TO THE ADDL. CIT ON 31.03.2015, THE ADDL. CIT GAVE HIS APPROVAL ON 31.03.2015 , THE FILE WAS RECEIVED BACK BY THE ASSESSING OFFICER ON 31.03.2015. THE N OTICE U/S 148 OF THE ACT WAS HANDED OVER TO THE NOTICE SERVER AND THE AREA INSPECTOR ON THE VERY SAME DATE AND THE NOTICE WAS SERVED THROUGH AFFIX TURE ON THE SAME DATE INSTEAD OF FIRST ATTEMPTING TO SERVE THE SAME IN PERSON O R THROUGH POST. I, THEREFORE, FIND MERIT IN THE ARGUMENTS OF THE LEARNED COUNS EL FOR THE ASSESSEE THAT NO NOTICE U/S 148 OF THE ACT WAS EVER SERVED TO THE ASSESSEE AND EVEN IF IT IS ACCEPTED THAT SUCH A NOTICE IS SERVED THROUGH AFFIX TURE EVEN THEN ALSO THE SAME IS NOT VALID SERVICE BEING SERVED AFTER OFFICE HOU RS AND THE NOTICE SO AFFIXED DOES NOT BEAR THE NAME OF ANY WITNESS OF THE LOCA LITIES OTHER THAN THE WARD INSPECTOR WHO ACCOMPANIED THE NOTICE SERVER. THE CHRONOLOGY OF EVENTS THAT HAS TAKEN PLACE CLEARLY SHOWS THAT NO NOTICE U/S 148 WAS EVER SERVED UPON THE ASSESSEE BEFORE 31.03.2015 AND THEREFORE, I FIN D FORCE IN THE ARGUMENTS OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT SINCE NO NOTICE U/S 148 OF THE ACT WAS SERVED ON THE ASSESSEE BEFORE 31.03 .2015, THEREFORE, SUCH REASSESSMENT PROCEEDINGS ARE NOT IN ACCORDANCE WITH LAW AND HAS TO BE QUASHED. IN THIS VIEW OF THE MATTER, I QUASH THE REASSE SSMENT PROCEEDINGS. SINCE, THE ASSESSEE SUCCEEDS ON THE ABOVE TWO LEGAL GR OUNDS I.E. GIVING APPROVAL BY THE ADDL. CIT IN A MECHANICAL MANNER AND NON- SERVICE OF NOTICE U/S 148 OF THE ACT BEFORE THE SPECIFIED DATE, THE OTHER P LANK OF ARGUMENTS MADE BY THE ASSESSEE CHALLENGING THE VALIDITY OF REASSESS MENT PROCEEDINGS AS ITA NO.4540/DEL/2019 13 WELL AS THE ADDITION ON MERIT BECOME ACADEMIC IN NATURE AN D THEREFORE, THE SAME ARE NOT BEING ADJUDICATED. 16. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. THE DECISION WAS PRONOUNCED IN THE OPEN COURT ON 16.04.2021. SD/- SD/- (SUCHITRA KAMBLE) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER DELHI/DATED- 16.04.2021 F{X~{T COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT BY ORDER ASSISTANT REGISTRAR, ITAT, DELHI