M/s. Banke Bihari Properties Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 5128/DEL/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8171 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 24-02-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 13-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AMIT GOEL
• Keywords: Reopening of assessment; Unexplained cash credit; Gift; Depreciation; Principle of natural justice; Question of law; Tangible material; Accommodation entries; Reason to believe; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH C : NEW DELHI) BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 5128/DEL/2015 ASSESSMENT YEAR: 2006-07 M/S BANKE BIHARI PROPERTIES PVT. LTD. VS. ITO, WARD -4(1) 144/2, ANS HOUSE, ASHRAM, MATHURA NEW DELHI ROAD, NEW DELHI - 110 014 (PAN: AACCB6652Q) (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. AMIT GOEL, FCA REVENUE BY : SH. AMIT JAIN, SR. DR ORDER PER H.S. SIDHU, J.M. THE ASSESSEE HAS FILED THE APPEAL AGAINST THE ORDE R DATED 26.5.2015 OF THE LD. CIT(A)-2, NEW DELHI PERTAINING TO ASSESSMEN T YEAR 2006-07 AND RAISED THE FOLLOWING GROUNDS:- 1. THAT HAVING REGARD TO FACT AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) HAS ERRED IN LAW AND ON FACTS BY NOT ACCEPTING THE ASSE SSEE'S SUBMISSION THAT, IN ANY CASE, AND IN ANY VIEW OF MATTER, THE NOTICE U/S 147 IS BARRED BY LIMITATION AND THE NOTICE I ORDER ARE BASED ON INCO RRECT FACTS IN VIOLATION OF PRINCIPAL OF NATURAL JUSTICE. 2. THAT HAVING REGARD TO FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACT ION OF LD. AO BY TREATING THE ITA NO.5128/D EL/2015 2 AMOUNT OF RS 3,50,00,000/- AS UNEXPLAINED CREDIT, W HICH IS PURELY BASED UPON THE PRESUMPTION AND INCORRECT FACTS. 3. THAT HAVING REGARD TO FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) HAS ERRED IN LAW AND ON FACTS BY NOT ACCEPTING THE ASSESSEE SUBMISSION THAT AMOUNT IS RECEIVED THROUGH PROPER BANKING CHAN NEL, AND EVEN LOAN CREDITORS NEVER DENIED GRANTING THE LOANS TO THE AS SESSEE. 4. THAT HAVING REGARD TO FACTS AND CIRCUMSTAN CES OF THE CASE, LD. CIT (A) HAS ERRED IN LAW AND ON FACTS BY NOT ACCEPTING THE ASSE SSEE SUBMISSION THAT HE SHOULD NOT BE PUNISHED MERELY ON THE STATEMENT OF T HIRD PARTY WHERE OPPORTUNITY OF CROSS EXAMINE TO SHRI TARUN GOYAL (W HOSE STATEMENT WAS TAKEN BY THE INVESTIGATION WING) AND OTHER DIRECTOR S OF THE OTHER COMPANIES HAD NOT BEEN PROVIDED DURING THE COURSE O F ASSESSMENT PROCEEDING. 5. THAT HAVING REGARD TO FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACT ION OF LD. AO IN TREATING RS. 3,50,00,000/- AS UNEXPLAINED CREDIT, B ECAUSE OF THE ASSESSEE FAILED TO PRESENT THE LOAN CREDITORS BEFORE THE LD. A.O OR FAILED TO PRODUCE ANY DOCUMENTS OF THEIR IDENTITY / CREDIT WO RTHINESS WHICH IS BEYOND HIS CONTROL, SINCE MR. TARUN GOYAL AND OTHER S ARE NOT CO- OPERATING WITH THE ASSESSEE. THIS IS BAD IN LAW AND NOT SUSTAINABLE ON VARIOUS LEGAL AND FACTUAL GROUNDS. 6. THAT HAVING REGARD TO FACT AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) HAS ITA NO.5128/D EL/2015 3 ERRED IN LAW AND ON FACTS BY NOT ACCEPTING THE ASSE SSEE'S REQUEST THAT LD. A.O SHOULD OBTAIN THE DETAILS BY ANY MEANS / POWER, SINCE MR. TARUN GOYAL AND OTHERS OR NOT PROVIDING THE DESIRED DOCU MENTS / DETAILS OF THE ASSESSEE, AFTER SO MANY REQUEST. 7. THAT HAVING REGARD TO FACTS AND CIRCUMSTANCES O F THE CASE, LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACT ION OF LD. AO, WHO HAVE FAILED TO APPLY HIS MIND WHILE PASSING THE AS SESSMENT ORDER. HE FAILED TO GATHER THE INFORMATION OF LOAN CREDITORS, WHICH IS AVAILABLE WITH INVESTIGATION WING. 8. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, ACTION OF LD. CIT (A) IN CONFIRMING OF ACTION OF LD. AO IN MAKING ADDITION / DISALLOWANCE IS BAD IN LAW AND AGAINST THE FACTS AND CIRCUMSTANCES OF T HE CASE AND THE SAME IS NOT SUSTAINABLE ON VARIOUS LEGAL AND FACTUAL GROUND S. 9. THAT HAVING REGARD TO FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN NOT REVERSING THE ACTION OF LD. AO IN CHARGING INTEREST U/S 234 A, 234 B, AND 234 D OF IN COME TAX ACT, 1961. 10. THAT HAVING REGARD TO FACTS AND CIRCUMSTANC ES OF THE CASE, LD. CIT (A) HAS ERRED IN LAW AND ON FACTS BY STATING THAT ( PARA- 4 .2.14 OF THE ORDER) 'THE APPELLANT IS A PRIVATE LIMITED COMPANY, WHERE THE M ONEY HAVE BEEN RECEIVED THROUGH PRIVATE PLACEMENT AND NOT THROUGH PUBLIC ISSUE. SO BEING A PRIVATE LIMITED COMPANY, THE CONTRIBUTORS M UST HAVE BEEN PERSONALLY KNOWN TO THE APPELLANT.' ITA NO.5128/D EL/2015 4 THIS IS FACTUALLY INCORRECT, SINCE THOSE ARE THE LO AN CREDITORS OF THE APPELLANT COMPANY, AND NOT THE SHAREHOLDERS. AGAIN, THE AMOUNT WAS NOT RECEIVED BY APPELLANT COMPANY THROUGH PRIVATE PLACE MENT FOR ALLOTMENT OF SHARES , BUT IT WAS RECEIVED THROUGH BANKING CHA NNELS FROM THE LOAN CREDITORS OF THE APPELLANT COMPANY. 11. THAT HAVING REGARD TO THE FACTS & CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS NOT CALLED FOR THE REMAND REPORT. NOWHER E IN THE ASSESSMENT ORDER, THE LD. A.O HAS STATED THAT THESE LOANS WERE NOT RECEIVED BY THE COMPANY. THE RECEIPT OF THE LOANS WERE NOT OBJECTED . THE LOANS WERE ACTUALLY RECEIVED BY THE ASSESSEE COMPANY. THE ADDR ESSES , PAN NO., NAMES, WERE DULY PROVIDED, BUT THE LD. AO IGNORED T HEM AND RELIED ONLY ON THE INFORMATION OF THIRD PARTY, I.E INVESTIGATIN G DEPARTMENT OF 1. TAX WITHOUT GOING WITH THE DETAILS OF THE CASE. THAT THE INVESTIGATING DEPARTMENT MUST HAVE PROVIDE D THE NAMES, ADDRESSES, AND PAN NO. OF THE LOAN CREDITORS, WHO C OULD HAVE SUMMONED. THAT THE LD. AO MUST HAVE THE DETAILS OF THE BANK A CCOUNTS OF THE LOAN CREDITORS. THEY COULD HAVE SUMMONED THE REQUIRED IN FORMATION FROM BANKS OF THE LOAN CREDITORS. THAT THE LD. AO FAILS TO APPLY HIS MIND AND ALSO LD . CIT(A) FAILED GATHER INFORMATION FROM THIRD PARTIES, IN SPITE OF THE FAC T THAT ALL THE RESOURCES OF THE INFORMATION WAS AVAILABLE WITH THE LD. AO & LD. CIT(A). ITA NO.5128/D EL/2015 5 12. THAT THE APPELLANT CRAVES THE LEAVE TO ADD, MOD IFY, AMEND OR DELETE ANY OF THE GROUNDS OF APPEAL AT THE TIME OF HEARING AND ALL THE ABOVE GROUNDS ARE WITHOUT PREJUDICE TO EACH OTHER. 2. AT THE TIME OF HEARING, LD. AUTHORISED REPRESENT ATIVE OF THE ASSESSEE FILED THE FOLLOWING CONCISE/REVISED/ADDITIONAL LEGA L GROUNDS OF APPEAL. 1(A) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE NOTICE U/S 148 ISSUED IN THIS CASE IS BAD-IN-LAW, WITHOUT JURISDICTION AND BARRED BY LIMITATION AND ACCORDINGLY, THE NOTICE U/S 148 I SSUED AND ALSO THY ASSESSMENT ORDER PASSED ON THE FOUNDATION OF SUCH N OTICE ARE LIABLE TO BE QUASHED. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE COMMISSIONER OF INCOME TAX (A) ERRED IN NOT QUASHIN G THE NOTICE U/S 148 AND THE ASSESSMENT ORDER PASSED BY THE ASSESSING OF FICER. B) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE NOTICE U/S 148 ISSUED IN THIS CASE IS CONTRARY TO THE PROVISIO NS OF SECTION 147 TO SECTION 151 OF INCOME TAX ACT, 1961 AND THE COMMISS IONER OF INCOME TAX (APPEAL) HAS ERRED IN NOT HOLDING SO. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE COMMISSIONER OF INCOME TAX (APPEAL) ERRED IN CONFIR MING THE ADDITION OF RS.3,50,00,000/- MADE BY THE ASSESSING OFFICER ON A CCOUNT OF ALLEGED UNEXPLAINED CREDITS. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE ALLEGED REASONS GIVEN BY THE A.O. FOR MAKING THE ADDITION O F RS.3,50,00,000/- ON ACCOUNT OF ALLEGED UNEXPLAINED CREDITS AND THE REAS ONS GIVEN BY CIT(A) FOR CONFIRMING THE SAID ADDITIONS ARE ERRONEOUS AND NOT SUSTAINABLE BOTH ON FACTS AND IN LAW AND ACCORDINGLY THE ADDITION OF RS.3,50,00,000/- ON ACCOUNT OF ALLEGED UNEXPLAINED CREDITS IS LIABLE TO BE DELETED. THE APPELLANT CRAVES LEAVE TO ADD ONE OR MORE GROUN D OF APPEAL OR TO ALTER / MODIFY THE EXISTING GROUND BEFORE OR AT THE TIME OF HEARING OF APPEAL. ITA NO.5128/D EL/2015 6 3. AFTER FILING THE ABOVE GROUNDS, LD. COUNSEL OF THE ASSESSEE REQUESTED THAT BEFORE PROCEEDING ON MERIT IN THE CASE OF THE ASSES SEE, FIRST THE ADDITIONAL LEGAL GROUNDS RAISED BY THE ASSESSEE MAY BE CONSIDERED AN D DECIDED, BECAUSE THE LEGAL GROUNDS GOES TO THE ROOT OF THE MATTER AND VERY MUC H ESSENTIAL, HENCE HE REQUESTED THAT THE ADDITIONAL GROUNDS MAY BE ADMITT ED IN THE INTEREST OF JUSTICE. 4. LD. DR DID NOT RAISE ANY SERIOUS OBJECTION ON TH E ADMISSION OF ADDITIONAL GROUNDS. 5. WE HAVE HEARD BOTH PARTIES ON THE ADMISSION OF ADDITIONAL GROUNDS, AS AFORESAID, WE ARE OF THE VIEW THAT IN THE INTEREST OF JUSTICE, THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE MENTIONED IN PARA N O. 2 AT PAGE NO. 5 OF THIS ORDER ARE PURELY LEGAL AND DO NOT REQUIRE FRESH FAC TS WHICH IS TO BE INVESTIGATED AND GO TO THE ROOT OF THE MATTER. IN THE INTEREST OF JUSTICE, WE ADMIT THE ADDITIONAL GROUND RAISED BY THE ASSESSEE, IN VIEW O F THE DECISION OF THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF NTPC LIMITED 229 ITR 383 AND PROCEED TO DECIDE THE ADDITIONAL GROUNDS FIRST. 6. THE BRIEF FACTS OF THE CASE ARE THAT THE PROCEED INGS U/S. 147/148 WERE INITIATED IN THIS CASE AFTER RECORDING THE REASONS ON THE BASIS OF THE INFORMATION RECEIVED FROM DIRECTOR OF INCOME TAX (INVESTIGATION ), NEW DELHI, THAT CERTAIN PERSONS INCLUDING THE ASSESSEE COMPANY WERE BENEFI CIARIES OF TAKING ACCOMMODATION ENTRIES RECEIVED FROM THE PRIVATE LIM ITED COMPANIES FLOATED BY SH. TARUN GOYAL DURING THE PERIOD RELEVANT TO AY 20 06-07. THE FINDINGS OF THE INVESTIGATION WING OF THE DEPARTMENT, WERE BROUGH T TO THE KNOWLEDGE OF ALL THE ASSESSING OFFICERS ALONGWITH THE DATA COLLECTED IN THE COURSE OF INVESTIGATION. THE MODUS OPERANDI ADOPTED BY SUCH B ENEFICIARIES OF THE SERVICES OF ACCOMMODATION ENTRY PROVIDERS WAS DETECTED AND T HE ASSESSEE WAS FOUND TO BE THE ACCOMMODATION ENTRY FROM SUCH ENTRY OPERATOR CONTROLLED BY SH. TARUN GOYAL DURING THE FY 2005-06 RELEVANT TO AY 2006-07 AS PER THE FOLLOWING SPECIFIC DETAILS OF TRANSACTION:- S.NO. BENEFICIARY COMPANY NAME OF THE ENTRY OPERATOR AMOUNT INVOLVED. (RS.) 1. BANKE BIHARI PROPERTIES PVT. BHAVANI PORTFOLIO 25,0 0,000/- ITA NO.5128/D EL/2015 7 LTD. P. LTD. 2. BANKE BIHARI PROPERTIES PVT. LTD. COUNTRYWIDE CREDIT & SECURITIES P. LTD. 20,00,000/- 3. BANKE BIHARI PROPERTIES PVT. LTD. DEEP SA DRILLING P. LTD. 20,00,000/- 4. BANKE BIHARI PROPERTIES PVT. LTD. GEEFCEE FINANCE LTD. 20,00,000/- 5. BANKE BIHARI PROPERTIES PVT. LTD. KAROL BAGH TRADING LTD. 20,00,000/- 6. BANKE BIHARI PROPERTIES PVT. LTD. RISHABH SHOES P. LTD. 25,00,000/- 7. BANKE BIHARI PROPERTIES PVT. LTD. SADGURU FINMAN PVT. LTD. 20,00,000/- 8. BANKE BIHARI PROPERTIES PVT. LTD. TAURU FINMAN PVT. 15,00,000/- 9. BANKE BIHARI PROPERTIES PVT. LTD. TEJASVI INVESTMENT PVT. LTD. 25,00,000/- 10. BANKE BIHARI PROPERTIES PVT. LTD. THAR STEELS PVT. LTD. 15,00,000/- 11. BANKE BIHARI PROPERTIES PVT. LTD. UNIQUE CAPITAL PVT. LTD. 25,00,000/- 2,90,00,000/- ACCORDINGLY, NOTICE U/S. 148 OF THE I.T. ACT, 196 1 WAS ISSUED AND THE ASSESSEE WAS SUPPOSED TO FILE THE RETURN OF INCOME WITHIN 30 DAYS IN COMPLIANCE TO NOTICE U/S. 148. IN COMPLIANCE TO NOTICE U/S. 148, THE AR OF THE ASSESSEE HAS FILED A LETTER DATED 22.5.2013 ALONGWITH A PHOTOCO PY OF E-FILED RETURN WITHOUT ANY STAMP/ RECEIPT OF THE RELEVANT WARD/CIRCLE. TH E DECLARED INCOME / LOSS WAS SHOWN AT RS. 11,172/-. THE ASSESSEE ALSO REQUESTED A COPY OF REASONS VIDE THE ABOVE LETTER. THE REASONS WERE PROVIDED TO THE AS SESSEE VIDE LETTER DATED 16.7.2013. THEREAFTER, THE AR OF THE ASSESSEE FILE D OBJECTIONS ON THE REASONS RECORDED ON 11.9.2013. THE OBJECTIONS WERE DISPOS ED OFF VIDE ORDER DATED 4.10.2013 AND THE CASE WAS FIXED ACCORDINGLY. THER EAFTER, THE AO HAS OBSERVED THAT IN THE ABSENCE OF ANY SUPPORTING DOCUMENTS TO SUBSTANTIATE THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF LOAN GIVER, THE INFORMATION RECEIVED FROM THE DIT(INV.), REGARDING ACCOMMODATION ENTRIES OF R S. 3,50,00,000/- IS CORROBORATED WITH THE BOGUS TRANSACTIONS THROUGH B ANKING CHANNEL. ITA NO.5128/D EL/2015 8 ACCORDINGLY, THE AO ADDED RS. 3,50,00,000/- BEING R ECEIVED FROM ENTRY OPERATOR AND TREATED THE SAME AS UNDISCLOSED INCOME OF THE ASSESSEE AND COMPLETED THE ASSESSMENT AT RS. 3,49,88,828/- U/S. 147/143(3) OF THE ACT VIDE ORDER DATED 28.2.2014. 3. AGAINST THE ORDER OF THE AO, ASSESSEE APPEALED BEFORE THE LD. CIT(A), CHALLENGING THE REOPENING AS WELL AS THE ADDITIONS IN DISPUTE WHO VIDE IMPUGNED ORDER DATED 03.12.2013 HAS DISMISSED THE A PPEAL OF THE ASSESSEE. 4. AGGRIEVED WITH THE AFORESAID ORDER OF THE LD . CIT(A), ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL FOR CHALLENGING THE LEGA L ISSUE RAISED AS WELL AS THE ADDITION IN DISPUTE RAISED IN THE ADDITIONAL GROUN DS FILED DURING THE HEARING WHICH ARE MENTIONED UNDER PARA NO. 2 OF THIS ORDER, AS AFORESAID. 5. AT THE TIME OF HEARING, LD. COUNSEL OF THE ASSES SEE HAS ONLY ARGUED THE LEGAL GROUND THAT NOTICE U/S. 148 ISSUED IN THIS CASE IS CONTRARY TO THE PROVISIONS OF SECTION 147 TO SECTION 151 OF THE INC OME TAX ACT, 1961 BY STATING THAT ACTION OF THE ASSESSING OFFICER IS ILLEGAL. F IRST OF ALL, HE DRAW OUR ATTENTION TOWARDS PAGE NO. 1 OF THE PAPER BOOK WHICH IS A COP Y OF NOTICE DATED 25.3.2013 ISSUED U/S. 148 BY THE AO. FURTHER HE D RAW OUR ATTENTION TOWARDS PAGE NO. 17 TO 21 WHICH IS A COPY OF THE FORWARDING LETTER ALONGWITH COPY FO REASONS FOR REOPENING THE CASE U/S. 148 AND STATED THAT NO PROPER REASONS WERE RECORDED; NO NEXUS BETWEEN THE MATERIALS RELIED UPO N AND THE BELIEF FORMED FOR ESCAPEMENT OF INCOME; NO APPLICATION OF MIND; NO PR OPER SATISFACTION WAS RECORDED BEFORE ISSUE OF NOTICE U/S. 148; NO INDEPE NDENT CONCLUSION THAT THERE WAS ESCAPEMENT OF INCOME AND NO PROPER SATISFACTION / APPROVAL HAS BEEN OBTAINED FROM THE ADDL. CIT; LD. ADDL. CIT HAS GRAN TED THE APPROVAL FOR ITA NO.5128/D EL/2015 9 REOPENING OF THE ASSESSMENT IN A MECHANICAL MANNER AND WITHOUT DUE APPLICATION OF MIND BY WRITING THE WORD APPROVED. TO SUPPO RT HIS CONTENTION HE SUBMITTED THAT THE ISSUE IN DISPUTE IS SQUARELY CO VERED IN FAVOUR OF THE ASSESSEE BY THE ITAT DECISION DATED 09.1.2015 IN THE CASE OF G&G PHARMA INDIA LIMITED VS. ITO PASSED IN ITA NO. 3149/DEL/2013 (AY 2003-04 ) IN WHICH THE JUDICIAL MEMBER IS THE AUTHOR. HE FURTHER STATED THAT THE ABOVE DECISION OF THE ITAT DATED 9.1.2015 HAS BEEN UPHELD BY THE HONBLE JURIS DICTIONAL HIGH COURT IN ITS DECISION DATED 08.10.2015 IN ITA NO. 545/2015 IN TH E CASE OF PR. CIT-4 VS. G&G PHARMA INDIA LTD. IN THIS BEHALF, HE FILED THE COPY OF THE ORDER DATED 9.1.2015 OF THE ITAT, DELHI BENCH PASSED IN THE CAS E OF G&G PHARMA INDIA LTD VS. ITO (SUPRA) AND REFERRED THE PAGE NOS. 21-3 9 OF HIS ANOTHER PAPER BOOK I.E. COMPILATION OF CASE LAWS. HE FURTHER DRAW OUR ATTENTION TOWARDS THE PAGE NO. 39-56, AND RELIED UPON THE ITAT DECISION DATED 22.10.2014 IN THE CASE ITO VS. NC CABLES LTD. HE FURTHER RELIED UPON THE DEC ISION OF THE ITAT, MUMBAI BENCH IN THE CASE AMAR LAL BAJAJ VS. ACIT (2013) 3 7 TAXMANN.COM 7 (MUMBAI) TRIB. (COPY THEREOF AT PAGE NO. 67-71 OF THE PAPER BOOK) AND ALSO REFERRED THE M.P. HIGH COURT DECISION IN THE CASE O F CIT VS. M/S S. GOYANKA LIME AND CHEMICALS LTD. IN WHICH THE DEPARTMENT FI LED SLP IN THE HONBLE SUPREME COURT TITLE CIT VS. M/S S. GOYANKA LIME AND CHEMICALS LTRD. (2015) 64 TAXMANN.COM 313 (SC) WHEREIN THE HONBLE SUPREME COURT HAS UPHELD THE DECISION OF THE HONBLE HIGH COURT AND DISMISSED TH E DEPARTMENTS APPEAL. THEREFORE, HE REQUESTED THAT BY FOLLOWING THE AFORE SAID PRECEDENTS THE ITA NO.5128/D EL/2015 10 REASSESSMENT PROCEEDINGS OF THE AO MAY BE QUASHED B Y ACCEPTING THE APPEAL FILED BY THE ASSESSEE. 6. ON THE CONTRARY, LD. DR RELIED UPON THE ORDER PA SSED BY THE AUTHORITIES BELOW AND DRAW OUR ATTENTION TOWARDS THE PAGE NO. 1 7-21 OF THE PAPER BOOK WHEREIN THE REASONS RECORDED AND APPROVAL THEREOF WAS MENTIONED. HE STATED THAT THE AO HAS PROPERLY RECORDED THE REASONS FOR R EOPENING AND IN TURN LD. ADDL. CIT HAS GRANTED THE APPROVAL FOR THE SAME, B Y DUE APPLICATION OF MIND. HE FURTHER STATED THAT APPROVAL GRANTED BY THE ADD L. CIT IS NOT MECHANICAL ON THE CONTRARY THE ADDL. CIT HAS FULLY CONSIDERED THE FACTS OF THE CASE AND AFTER DUE CONSIDERATION OF THE FACTS HAS GIVEN A DIRECTIO N FOR REOPENING OF THE CASE BY WRITING THE WORD APPROVED. THEREFORE, HE STATED THAT, IT CANNOT BE SAID THAT THE SANCTION WAS GRANTED MECHANICALLY OR WITHOUT APPLIC ATION OF MIND. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RELEVANT RECORDS AVAILABLE WITH US, ESPECIALLY THE ORDERS OF THE REVENUE AUTHO RITIES AND THE CASE LAW CITED BY THE ASSESSEES COUNSEL ON THE ISSUE IN DISPUTE. IN OUR VIEW, IT IS VERY MUCH NECESSARY TO REPRODUCE THE REASONS RECORDED BY THE AO BEFORE ISSUE OF NOTICE U/S. 148 AND THE APPROVAL OF THE LD. ADDL. CIT, RA NGE-2, NEW DELHI FOR REOPENING OF ASSESSMENT WHICH READS AS UNDER:- FORM FOR RECORDING THE REASONS FOR INITIATING PROCEEDINGS U/S. 148 AND FOR OBTAINING THE APPROVAL OF THE ADDL. COMMISSIONER OF INCOME TAX / COMMISSIONER OF INCOME TAX ITA NO.5128/D EL/2015 11 1. NAME & ADDRESS OF THE ASSESSEE M/S BANKE BIHARI PROPERTIES PVT. LTD. 144/2, ASHRAM MATHURA ROAD, NEW DELHI 110 014 2. PAN AACCB6652Q 3. STATUS COMPANY 4. RANGE / WARD WARD-2(3), NEW DELHI 5. ASSESSMENT YEAR IN RESPECT OF WHICH IT IS PROPOSED TO ISSUE NOTICE U/S. 148. 2006-07 6. THE QUANTUM OF INCOME WHICH HAS ESCAPED ASSESSMENT. RS. 2,90,00,000/- 7. WHETHER THE PROVISIONS OF SECTION 147(A), 147(B) OR 147(C) ARE APPLICABLE OR ALL THE SECTIONS ARE APPLICABLE. YES 8. WHETHER THE ASSESSMENT IS PROPOSED TO BE MADE FOR THE FIRST TIME. IF THE REPLY IS IN AFFIRMATIVE PLEASE STATE. WHETHER ANY VOLUNTARY RETURN HAD ALREADY BEEN FILED. IF SO, DATE OF FILING THE SAID RETURN. YES NO NA 9. IF THE ANSWER TO ITEM 8 IS IN NEGATIVE PLEASE STATE THE INCOME ORIGINALLY ASSESSED WHETHER IT IS A CASE OF UNDER ASSESSMENT, ASSESSMENT AT TOO LOW A RATE, ASSESSMENT WHICH HAS BEEN MADE THE SUBJECT OF EXCESSIVE RELIEF OR ALLOWING OF EXCESSIVE LOSS OR DEPRECIATION. .. YES 10. WHETHER THE PROVISIONS OF SECTION 150(1) ARE APPLICABLE, IF THE REPLY IS IN THE AFFIRMATIVE, THE RELEVANT NA ITA NO.5128/D EL/2015 12 FACTS MAY BE STATED AGAINST ITEM NO. 11 AND IT MAY ALSO BE BROUGHT OUT THAT THE PROVISION OF SECTION 150(2) WOULD NOT STAND IN THE WAY OF INITIATING PROCEEDINGS U/S. 147. 11. REASONS FOR THE BELIEF THAT INCOME HAS ESCAPED ASSESSMENT. IN THIS CASE, THE ASSESSEE HAS NOT FILED ANY RETURN OF INCOME AS PER THE RECORD OF THIS OFFICE. THEREAFTER, AN INFORMATION W AS RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTMENT THAT THE ABOVE NAMED ASSESSEE IS A BENEFICIARY OF ACCOMMODATION ENTRIES RECEIVED FROM THE PRIVATE LIMITED COMPANIES FLOATED BY SHRI TARUN GOYAL DURING THE PE RIOD RELEVANT TO AY 2006- 07. IN THE REPORT IT HAS FURTHER BEEN STATED THAT A LL THE ENTRY GIVING COMPANIES ARE OPERATING FROM THE OFFICE OF SHRI TARUN GOYAL ADDRE SSED AT 13/34, WEA ARYA SARNS] ROAD, KAROL 8AGH, NEW DELHI AND HIS EARLIER OFFICE AT 203- DHAKA CHAMBERS, 2069/39, NAIWALA, KAROL SA'GN, NEW DELHI. IT HAS ALSO BEEN STATED THAT THE DIRECTORS OF THESE COMPANIES .. ARE FORMER AND PRESENT EMPLOYEES OF SHRI TATUN GOYAL WHO WERE USED MERELY FOR SIGNING THE DO CUMENTS, BANK CHEQUES ETC. I HAVE PERUSED THE INFORMATION CONTAINED IN TH E REPORT AND THE EVIDENCES GATHERED. THE REPORT PROVIDES DETAILS OF THE MODUS OPERANDI AND EXPLAINS HOW THE UNACCOUNTED MONEY OF THE BENEFICIARIES ARE PL OUGHED BACK IN ITS BOOKS OF ACCOUNT IN THE FORM OF BOGUS SHARE CAPITAL/CAPITAL GAINS, UNSECURED LOANS ETC.AFTER ROUTING THE SAME THROUGH THE BANK ACCOUNT (S) OF THE ENTRY OPERATORS FLOATED BY SHRI TARUN GOYAL. ENTRY OPERATORS WERE I DENTIFIED AFTER THOROUGH INVESTIGATION ON THE BASIS OF DEFINITIVE ANALYSIS O F THEIR IDENTITY, CREDITWORTHINESS ITA NO.5128/D EL/2015 13 AND THE SOURCE OF THE MONEY ULTIMATELY RECEIVED BY THE BENEFICIARIES, IN THE INSTANT CASE, THE ASSESSEE IS FOUND TO BE THE BENEF ICIARY OF ACCOMMODATION ENTRY FROM SUCH ENTRY OPERATOR CONTROLLED BY SHRI TARUN G OYAL DURING THE FY 2005-06 RELEVANT TO AY 2006-07 AS PER THE FOLLOWING SPECIFI C DETAILS OF TRANSACTIONS. S.NO. BENEFICIARY COMPANY NAME OF THE ENTRY OPERATOR AMOUNT INVOLVED. (RS.) 1. BANKE BIHARI PROPERTIES PVT. LTD. BHAVANI PORTFOLIO P. LTD. 25,00,000/- 2. BANKE BIHARI PROPERTIES PVT. LTD. COUNTRYWIDE CREDIT & SECURITIES P. LTD. 20,00,000/- 3. BANKE BIHARI PROPERTIES PVT. LTD. DEEP SA DRILLING P. LTD. 20,00,000/- 4. BANKE BIHARI PROPERTIES PVT. LTD. GEEFCEE FINANCE LTD. 20,00,000/- 5. BANKE BIHARI PROPERTIES PVT. LTD. KAROL BAGH TRADING LTD. 20,00,000/- 6. BANKE BIHARI PROPERTIES PVT. LTD. RISHABH SHOES P. LTD. 25,00,000/- 7. BANKE BIHARI PROPERTIES PVT. LTD. SADGURU FINMAN PVT. LTD. 20,00,000/- 8. BANKE BIHARI PROPERTIES PVT. LTD. TAURU FINMAN PVT. 15,00,000/- 9. BANKE BIHARI PROPERTIES PVT. LTD. TEJASVI INVESTMENT PVT. LTD. 25,00,000/- 10. BANKE BIHARI PROPERTIES PVT. LTD. THAR STEELS PVT. LTD. 15,00,000/- 11. BANKE BIHARI PROPERTIES PVT. LTD. UNIQUE CAPITAL PVT. LTD. 25,00,000/- 2,90,00,000/- THEASESSEEHAS RECEIVED UNEXPLAINED SUMS FROM THE EN TRY OPERATORS AS PER THE ABOVE DETAILS AS PER INFORMATION AVAILABLE WITH THE UNDERSIGNED. AS EXPLAINED ABOVE, THE IDENTIFY, CREDITWORTHINESS AND GENUINENE SS OF TRANSACTIONS WITH THE REASONS FOUND TO BE ENTRY OPERATOR CANNOT BE ESTABL ISHED. I THEREFORE, HAVE ITA NO.5128/D EL/2015 14 REASONS TO BELIEVE THAT ON ACCOUNT OF FAILURE ON TH E PART OF THE ASSESSEE TO DISCLOSE TRULY AND FULLY ALL MATERIAL FACTS NECESSA RY FOR ASSESSMENT FOR ABOVE ASSESSMENT YEAR, THE INCOME CHARGEABLE TO TAX AMOUN TING TO RS.2,90,00,000/- HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTI ON 147 OF THE ACT. SINCE FOUR YEARS HAS EXPIRED FROM THE END OF THE RE LEVANT ASSESSMENT YEAR, AND THE ASSESSEE HAS NOT FILED ANY RETURN OF INCOME, TH E REASONS RECORDED ABOVE FOR THE PURPOSE OF OPENING OF ASSESSMENT IS UP FOR KIND SATISFACTION OF THE ADDL CIT, RANGE-2, NEW DELHI IN TERMS OF THE PROVISIONS TO S ECTION 151(2) OF THE IT ACT, 1961. DATED: 22.03.2013 SD/- (PAWAN MEENA) ITO, WARD 2(3), NEW DELHI 12. WHETHER THE ADDL. CIT/CIT/CBDT IS SATISFIED ON THE REASONS RECORDED BY THE AO THAT IT IS A FIT CASE FOR THE ISSUE OF NOTICE U/S. 148. APPROVED DATED: SD/- (25.03.2013) (P.V. GUPTA) ADDL. CIT, RANGE-2, NEW DELHI 8. AFTER GOING THROUGH THE REASONS RECORDED BY THE ASSESSING OFFICER/DCIT, CIRCLE 2(3), NEW DELHI FOR REOPENING AND THE APPROV AL THEREOF BY THE LD. ADDL. CIT, RANGE-2, NEW DELHI, WE ARE OF THE VIEW THAT A O HAS NOT APPLIED HIS MIND SO AS TO COME TO AN INDEPENDENT CONCLUSION THAT HE HAS REASON TO BELIEVE THAT INCOME HAS ESCAPED DURING THE YEAR. IN OUR VIEW THE REASONS ARE VAGUE AND ARE NOT BASED ON ANY TANGIBLE MATERIAL AS WELL AS ARE N OT ACCEPTABLE IN THE EYES OF LAW. THE AO HAS MECHANICALLY ISSUED NOTICE U/S. 14 8 OF THE ACT, ON THE BASIS OF ITA NO.5128/D EL/2015 15 INFORMATION ALLEGEDLY RECEIVED BY HIM FROM THE DIRE CTORATE OF INCOME TAX (INVESTIGATION), NEW DELHI. KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND THE CASE LAW APPLICABLE IN THE CASE OF THE ASSESSEE, WE ARE OF THE CONSIDERED VIEW THAT THE REOPENING IN THE CA SE OF THE ASSESSEE FOR THE ASSTT. YEAR IN DISPUTE IS BAD IN LAW AND DESERVES TO BE QU ASHED. EVEN OTHERWISE, A PERUSAL OF THE ABOVE DEMONSTRATES THAT THE ADDL. C IT HAS WRITTEN APPROVED WHICH ESTABLISHES THAT HE HAS NOT RECORDED PROPER S ATISFACTION / APPROVAL, BEFORE ISSUE OF NOTICE U/S. 148 OF THE I.T. ACT. THEREAFTE R, THE AO HAS MECHANICALLY ISSUED NOTICE U/S. 148 OF THE ACT, ON THE BASIS OF INFORMATION ALLEGEDLY RECEIVED BY HIM FROM THE DIRECTORATE OF INCOME TAX (INVESTIG ATION), NEW DELHI. KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE P RESENT CASE AND THE CASE LAW APPLICABLE IN THE CASE OF THE ASSESSEE, WE ARE OF T HE CONSIDERED VIEW THAT THE REOPENING IN THE CASE OF THE ASSESSEE FOR THE ASSTT . YEAR IN DISPUTE IS BAD IN LAW AND DESERVES TO BE QUASHED. OUR VIEW IS SUPPORTED B Y THE FOLLOWING JUDGMENTS/DECISIONS:- (A) THE TRIBUNAL IN ITS DECISION DATED 9.1.2015 PAS SED IN ITA NO. 3149/DEL/2013 (AY 2003-04) IN THE CASE OF G &G PHARMA INDIA LIMITED VS. ITO, HAS HELD UNDER:- 8. WE HAVE PERUSED THE AFORESAID REASONS RECORDED BY THE AO FOR REOPENING THE ASSESSMENT IN DISPUTE AND WE ARE OF THE CONSIDERED VIEW THAT THE AO HAS NOT APPLIED HIS MIND SO AS TO COME TO AN INDEPENDENT CONCLUSION THAT HE HAS REASON TO ITA NO.5128/D EL/2015 16 BELIEVE THAT INCOME HAS ESCAPED DURING THE YEAR. A MERE REFERENCE IS MADE TO CERTAIN INFORMATION RECEIVED FROM THE INVESTIGATION WING WHICH WAS SUPPLIED TO THE ASSESSEE VIDE AOS LETTER DATED 15.9.2010. IN OUR VIEW THE REASONS ARE VAGUE AND ARE NOT BASED ON ANY TANGIBLE MATERIAL AS WELL AS A RE NOT ACCEPTABLE IN THE EYES OF LAW. THE AO HAD MECHANICALLY ISSUED NOTICES U/S. 148 OF THE ACT, ON THE BASIS OF INFORMATION ALLEGEDLY RECEIVED BY HIM FROM THE DIRECTORATE OF INVESTIGATION, JHANDEWALAN, NEW DELHI. KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND THE LAW APPLICABLE IN THE CASE OF THE ASSESSEE, WE ARE OF T HE CONSIDERED VIEW THAT THE REOPENING IN THE CASE OF T HE ASSESSEE FOR THE ASSTT. YEAR IN DISPUTE IS BAD IN L AW AND DESERVES TO BE QUASHED. WE DRAW OUR SUPPORT FROM THE JUDGMENTS OF THE HONBLE HIGH COURT OF DELHI IN THE FOLLOWING CASES:- (I) SIGNATURE HOTELS (P)_ LTD. VS. ITO AND ANOTHER REPORTED IN 338 ITR 51 (DEL) HAS UNDER SIMILAR CIRCUMSTANCES AS FOLLOWS:- FOR THE A.Y. 2003-04, THE RETURN OF INCOME OF THE ASSESSEE COMPANY WAS ACCEPTED U/S.143(1) OF THE INCOME-TAX ACT, 1961 AND WAS NOT SELECTED FOR SCRUTINY. SUBSEQUENTLY, ITA NO.5128/D EL/2015 17 THE ASSESSING OFFICER ISSUED NOTICE U/S.148 WHICH WAS OBJECTED BY THE ASSESSEE. THE ASSESSING OFFICER REJECTED THE OBJECTIONS. THE ASSESSEE COMPANY FILED WRIT PETITION AND CHALLENGED THE NOTICE AND THE ORDER ON OBJECTIONS. THE DELHI HIGH COURT ALLOWED THE WRIT PETITION AND HELD AS UNDER: (I) SECTION 147 OF THE INCOME-TAX ACT, 1961, IS WIDE BUT NOT PLENARY. THE ASSESSING OFFICER MUST HAVE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. THIS IS MANDATORY AND THE REASON TO BELIEVE ARE REQUIRED TO BE RECORDED IN WRITING BY THE ASSESSING OFFICER. (II) A NOTICE U/S.148 CAN BE QUASHED IF THE BELIEF IS NOT BONA FIDE, OR ONE BASED ON VAGUE, IRRELEVANT AND NON-SPECIFIC INFORMATION. THE BASIS OF THE BELIEF SHOULD BE DISCERNIBLE FROM THE MATERIAL ON RECORD, WHICH WAS AVAILABLE WITH THE ASSESSING OFFICER, WHEN HE RECORDED THE REASONS. THERE SHOULD BE A LINK BETWEEN THE REASONS AND THE EVIDENCE/MATERIAL AVAILABLE WITH THE ASSESSING OFFICER. (III) THE REASSESSMENT PROCEEDINGS WERE INITIATED ON THE BASIS OF INFORMATION RECEIVED FROM THE DIRECTOR OF INCOME-TAX (INVESTIGATION) THAT THE PETITIONER HAD INTRODUCED MONEY AMOUNTING TO RS.5 LAKHS DURING F.Y. 2002-03 AS STATED IN THE ITA NO.5128/D EL/2015 18 ANNEXURE. ACCORDING TO THE INFORMATION, THE AMOUNT RECEIVED FROM A COMPANY, S, WAS NOTHING BUT AN ACCOMMODATION ENTRY AND THE ASSESSEE WAS THE BENEFICIARY. THE REASONS DID NOT SATISFY THE REQUIREMENTS OF SECTION 147 OF THE ACT. THERE WAS NO REFERENCE TO ANY DOCUMENT OR STATEMENT, EXCEPT THE ANNEXURE. THE ANNEXURE COULD NOT BE REGARDED AS A MATERIAL OR EVIDENCE THAT PRIMA FACIE SHOWED OR ESTABLISHED NEXUS OR LINK WHICH DISCLOSED ESCAPEMENT OF INCOME. THE ANNEXURE WAS NOT A POINTER AND DID NOT INDICATE ESCAPEMENT OF INCOME. (IV) FURTHER, THE ASSESSING OFFICER DID NOT APPLY HIS OWN MIND TO THE INFORMATION AND EXAMINE THE BASIS AND MATERIAL OF THE INFORMATION. THERE WAS NO DISPUTE THAT THE COMPANY, S, HAD A PAID UP CAPITAL OF RS.90 LAKHS AND WAS INCORPORATED ON JANUARY 4, 1989, AND WAS ALSO ALLOTTED A PERMANENT ACCOUNT NUMBER IN SEPTEMBER 2001. THUS, IT COULD NOT BE HELD TO BE A FICTITIOUS PERSON. THE REASSESSMENT PROCEEDINGS WERE NOT VALID AND WERE LIABLE TO THE QUASHED. (II). IN THE CASE OF CIT VS. ATUL JAIN REPORTED IN 299 ITR 383 IT HAS BEEN HELD AS UNDER:- HELD, DISMISSING THE APPEALS, THAT THE ONLY INFORMATION WAS THAT THE ASSESSEE HAD TAKEN A BOGUS ENTRY OF CAPITAL GAINS BY PAYING CASH ITA NO.5128/D EL/2015 19 ALONG WITH SOME PREMIUM FOR TAKING A CHEQUE FOR THAT AMOUNT. THE INFORMATION DID NOT INDICATE THE SOURCE OF THE CAPITAL GAINS WHICH IN THIS CASE WERE SHARES. THERE WAS NO INFORMATION WHICH SHARES HAD BEEN TRANSFERRED AND WITH WHOM THE TRANSACTION HAD TAKEN PLACE. THE AO DID NOT VERIFY THE CORRECTNESS OF INFORMATION RECEIVED BY HIM BUT MERELY ACCEPTED THE TRUTH OF THE VAGUE INFORMATION IN A MECHANICAL MANNER. THE AO HAD NOT EVEN RECORDED HIS SATISFACTION ABOUT THE CORRECTNESS OR OTHERWISE OF THE INFORMATION FOR ISSUING A NOTICE U/S 148. WHAT HAD BEEN RECORDED BY THE AO AS HIS REASONS TO BELIEVEWAS NOTHING MORE THAN A REPORT GIVEN BY HIM TO THE COMMISSIONER. THE SUBMISSION OF THE REPORT WAS NOT THE SAME AS RECORDING OF REASONS TO BELIEVE FOR ISSUING A NOTICE. THE AO HAD CLEARLY SUBSTITUTED FORM FOR SUBSTANCE AND THEREFORE THE ACTION OF THE AO WAS NOT SUSTAINABLE. 9. IN VIEW OF ABOVE, WE ARE OF THE CONSIDERED VIE W THAT ABOVE ISSUE IS EXACTLY THE SIMILAR TO THE ISSUE I NVOLVED IN THE PRESENT APPEAL AND IS SQUARELY COVERED BY THE A FORESAID DECISIONS OF THE HONBLE HIGH COURT OF DELHI. HEN CE, RESPECTFULLY FOLLOWING THE ABOVE PRECEDENT, WE DECI DE THE LEGAL ISSUE IN DISPUTE IN FAVOR OF THE ASSESSEE AND AGAINST THE REVENUE AND ACCORDINGLY QUASH THE REASSESSMENT PROCEEDINGS. THE OTHER ISSUES ARE NOT DEALT WITH AS THE SAME HAVE BECOME ACADEMIC IN NATURE. ITA NO.5128/D EL/2015 20 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. (B). PR. CIT VS. G&G PHARMA INDIA LTD. IN ITA NO. 545/2015 DATED 8.10.2015 OF THE DELHI HIGH COURT WHEREIN THE HONBLE COURT HAS ADJUDICATED THE ISSUE AS UNDER:- 12. IN THE PRESENT CASE, AFTER SETTING OUT FOUR EN TRIES, STATED TO HAVE BEEN RECEIVED BY THE ASSESSEE ON A S INGLE DATE I.E. 10TH FEBRUARY 2003, FROM FOUR ENTITIES WH ICH WERE TERMED AS ACCOMMODATION ENTRIES, WHICH INFORMATION WAS GIVEN TO HIM BY THE DIRECTORATE OF INVESTIGATION, T HE AO STATED: 'I HAVE ALSO PERUSED VARIOUS MATERIALS AND REPORT FROM INVESTIGATION WING AND ON THAT BASIS IT IS EVI DENT THAT THE ASSESSEE COMPANY HAS INTRODUCED ITS OWN UNACCOU NTED MONEY IN ITS BANK ACCOUNT BY WAY OF ABOVE ACCOMMODA TION ENTRIES.' THE ABOVE CONCLUSION IS UNHELPFUL IN UNDERSTANDING WHETHER THE AO APPLIED HIS MIND TO TH E MATERIALS THAT HE TALKS ABOUT PARTICULARLY SINCE HE DID NOT DESCRIBE WHAT THOSE MATERIALS WERE. ONCE THE DATE O N WHICH THE SO CALLED ACCOMMODATION ENTRIES WERE PROVIDED I S KNOWN, IT WOULD NOT HAVE BEEN DIFFICULT FOR THE AO, IF HE HAD IN FACT UNDERTAKEN THE EXERCISE, TO MAKE A REFERENC E TO THE MANNER IN WHICH THOSE VERY ENTRIES WERE PROVIDED IN THE ACCOUNTS OF THE ASSESSEE, WHICH MUST HAVE BEEN TEND ERED ITA NO.5128/D EL/2015 21 ALONG WITH THE RETURN, WHICH WAS FILED ON 14TH NOVE MBER 2004 AND WAS PROCESSED UNDER SECTION 143(3) OF THE ACT. WITHOUT FORMING A PRIMA FACIE OPINION, ON THE BASIS OF SUCH MATERIAL, IT WAS NOT POSSIBLE FOR THE AO TO HAVE SI MPLY CONCLUDED: 'IT IS EVIDENT THAT THE ASSESSEE COMPANY HAS INTRODUCED ITS OWN UNACCOUNTED MONEY IN ITS BANK BY WAY OF ACCOMMODATION ENTRIES'. IN THE CONSIDERED VIEW OF T HE COURT, IN LIGHT OF THE LAW EXPLAINED WITH SUFFICIEN T CLARITY BY THE SUPREME COURT IN THE DECISIONS DISCUSSED HEREIN BEFORE, THE BASIC REQUIREMENT THAT THE AO MUST APPLY HIS MI ND TO THE MATERIALS IN ORDER TO HAVE REASONS TO BELIEVE T HAT THE INCOME OF THE ASSESSEE ESCAPED ASSESSMENT IS MISSIN G IN THE PRESENT CASE. 13. MR. SAWHNEY TOOK THE COURT THROUGH THE ORDER OF THE CIT(A) TO SHOW HOW THE CIT (A) DISCUSSED THE MATERI ALS PRODUCED DURING THE HEARING OF THE APPEAL. THE COUR T WOULD LIKE TO OBSERVE THAT THIS IS IN THE NATURE OF A POST MORTEM EXERCISE AFTER THE EVENT OF REOPENING OF THE ASSESSMENT HAS TAKEN PLACE. WHILE THE CIT MAY HAVE PROCEEDED ON THE BASIS THAT THE REOPENING OF THE AS SESSMENT WAS VALID, THIS DOES NOT SATISFY THE REQUIREMENT OF LAW THAT PRIOR TO THE REOPENING OF THE ASSESSMENT, THE AO HA S TO, APPLYING HIS MIND TO THE MATERIALS, CONCLUDE THAT H E HAS ITA NO.5128/D EL/2015 22 REASON TO BELIEVE THAT INCOME OF THE ASSESSEE HAS E SCAPED ASSESSMENT. UNLESS THAT BASIC JURISDICTIONAL REQUIR EMENT IS SATISFIED A POST MORTEM EXERCISE OF ANALYSING MATER IALS PRODUCED SUBSEQUENT TO THE REOPENING WILL NOT RESCU E AN INHERENTLY DEFECTIVE REOPENING ORDER FROM INVALIDIT Y . 14. IN THE CIRCUMSTANCES, THE CONCLUSION REACHED BY THE ITAT CANNOT BE SAID TO BE ERRONEOUS. NO SUBSTANTIAL QUESTION OF LAW ARISES. 15. THE APPEAL IS DISMISSED. (C) ITAT, E BENCH, NEW DELHI IN THE CASE OF ITO VS . M/S NC CABLES LTD. IN ITA NO. 4122/DEL/2009 (AY 2001-02 ) AND IN CROSS OBJECTION NO. 388/DEL/2009 IN THE MATTER OF M /S NC CABLES LTD. VS. ITO, VIDE ORDER DATED 22.10.2014, THE TRIBUNAL HAS HELD AS UNDER:- 10.2. THE MUMBAI E BENCH OF THE TRIBUNAL IN ITA 611/MUM/2004 AMARLAL BAJAJ (SUPRA) ORDER DT. 24.7.2 013 HAS CONSIDERED THE LEGAL POSITION AND HELD AS FOLLOWS. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND CA REFULLY PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND ALS O THE MATERIAL EVIDENCES BROUGHT ON 8 RECORD FROM BOTH SI DES. WE HAVE ALSO THE BENEFIT OF PERUSING THE ORDER SHEET E NTRIES BY WHICH THE LD. CIT HAS GRANTED SANCTION. LET US FIRS T ITA NO.5128/D EL/2015 23 CONSIDER THE RELEVANT PART OF THE PROVISIONS OF SEC . 151 OF THE ACT. 151. (1) IN A CASE WHERE AN ASSESSMENT UNDER SUB-SE CTION (3) OF SECTION 143OR SECTION 147HAS BEEN MADE FOR T HE RELEVANT ASSESSMENT YEAR, NO NOTICE SHALL BE ISSUED UNDER SECTION 148[BY AN ASSESSING OFFICER, WHO IS BELOW T HE 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 OF THE RELEVANT ASSESSMENT YEAR, NO SUCH NOTICE SHALL BE ISSUED UNLESS THE CHIEF COMMISSIONER OR COMMISSIONER IS SATISFIED, ON THE REASONS RECORDED BY THE ASSESSING OFFICER AFORESAID, THAT IT IS A FIT CASE FOR THE ISSUE OF S UCH NOTICE. (2) IN A CASE OTHER THAN A CASE FALLING UNDER SUB-SECTI ON (1), NO NOTICE SHALL BE ISSUED UNDER SECTION 148 BY AN ASSE SSING OFFICER, WHO IS BELOW THE RANK OF [JOINT} COMMISSIO NER, AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS THE [JOINT} COMMISSIONER IS SATISFIED, ON THE REASONS RECORDED BY SUCH ASSESSIN G OFFICER, THAT IT IS A FIT CASE FOR THE ISSUE OF SUC H NOTICE.} ITA NO.5128/D EL/2015 24 [EXPLANATION.-FOR THE REMOVAL OF DOUBTS, IT IS HERE BY DECLARED THAT THE JOINT COMMISSIONER, THE COMMISSIO NER OR THE CHIEF COMMISSIONER, AS THE CASE MAY BE, BEING S ATISFIED ON THE REASONS RECORDED BY THE ASSESSING OFFICER AB OUT FITNESS OF A CASE FOR THE ISSUE OF NOTICE UNDER SEC TION 148,NEED NOT ISSUE SUCH NOTICE HIMSELF.} ' 6. A SIMPLE READING OF THE PROVISIONS OF SEC. 151(1 ) WITH THE PROVISO CLEARLY SHOW THAT NO SUCH NOTICE SHALL BE I SSUED UNLESS THE COMMISSIONER IS SATISFIED ON THE REASONS RECORDED BY THE AO THAT IT IS A FIT CASE FOR THE IS SUE OF NOTICE WHICH MEANS THAT THE SATISFACTION OF THE COMMISSION ER 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 B Y THE AO. IN THE PRESENT CASE, THE ORDER SHEET WHICH IS P LACED ON RECORD SHOW THAT THE COMMISSIONER HAS SIMPLY AFFIXE D 'APPROVED' AT THE BOTTOM OF THE NOTE SHEET PREPARED BY THE ITO TECHNICAL. NOWHERE THE CIT HAS RECORDED HIS SATISFACTION. IN THE CASE BEFORE THE HON'BLE SUPREM E COURT (SUPRA) THAT ON AO'S REPORT THE COMMISSIONER AGAINS T THE QUESTION 'WHETHER THE COMMISSIONER IS SATISFIED TH AT IT IS A FIT CASE FOR THE ISSUE OF NOTICE UNDER SECTION 148 MERELY NOTED YES AND AFFIXED HIS SIGNATURE THERE UNDER . ON ITA NO.5128/D EL/2015 25 THESE FACTS, THE HON'BIE SUPREME COURT OBSERVED THA T THE IMPORTANT SAFEGUARDS PROVIDED IN SECTIONS 147 AND 1 51 WERE LIGHTLY TREATED BY THE OFFICER AND THE COMMISS IONER. THE HON'BLE SUPREME COURT FURTHER OBSERVED THAT THE ITO COULD NOT HAVE HAD REASON TO BELIEVE THAT INCOME HA D ESCAPED ASSESSMENT BY REASONS OF THE APPELLANT-FIRM 'S FAILURE TO DISCLOSE MATERIAL FACTS AND IF THE 9 COM MISSIONER HAD READ THE REPORT CAREFULLY HE COULD NOT HAVE COM E TO THE CONCLUSION THAT THIS WAS A FIT CASE FOR ISSUING A N OTICE UNDER SECTION 148. THE NOTICE ISSUED UNDER SECTION 148 WA S THEREFORE, INVALID. IT WOULD BE PERTINENT HERE TO N OTE THE REASONS RECORDED BY THE AO. 'INTIMATION HAS BEEN RE CEIVED FROM DCIT-24(2), MUMBAI VIDE HIS LETTERS DT. 22ND FEBRUARY, 2002 THAT ONE SHRI NITIN 1. RUGMANI ASSES SED IN HIS CHARGE HAD ARRANGED HAWALA ENTRIES IN ARRANGING LOANS, EXPENSES, GIFTS. DURING THE YEAR SHRI AMAR G . BAJAJ, PROP. OF MOHAN BROTHERS, 712, LINKING ROAD, KHAR (W ), MUMBAI-52 WAS THE BENEFICIARY OF SUCH LOANS, EXPENS ES AND GIFTS. THE MODUS-OPERANDI WAS TO COLLECT CASH FROM THE PARTIES TO WHOM LOANS WERE GIVEN AND CASH WAS DEPOS ITED INTO ACCOUNT OF SHRI NITIN 1. RUGANI AND CHEQUES WE RE ISSUED TO THE BENEFICIARY OF THE LOAN TRANSACTION. IN ORDER TO ENSURE THAT THE MONEY REACHED BY CHEQUES TO THE BEN EFICIARY ITA NO.5128/D EL/2015 26 SHRI NITIN 1. RUGANI KEPT BLANK CHEQUES OF THE THIR D PARTIES. THE ASSESSEE SHRI AMAR G. BAJAJ HAD TAKEN BENEFIT O F SUCH ENTRIES OF LOANS, COMMISSION AD BILL DISCOUNTING OF RS. 8,00,000/-, 11,21,243/- AND 9,64,739/- RESPECTIVELY . THE ASSESSMENT WAS COMPLETED U/S. 143(3) OF THE 1. T. A CT ON 31 ST MARCH, 1998 BY DCIT-SPL. RG. 40, MUMBAI. IT IS SE EN FROM RECORDS THAT THE AFORESAID POINTS HAVE NOT BEE N VERIFIED IN THE ASSESSMENT. I HAVE THEREFORE REASON TO BELIEVE THAT BY REASON OF THE FAILURE ON THE PART O F THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS NECESSARY FOR HIS ASSESSMENT, INCOME HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF PROVISO TO SEC. 14 7 AND EXPLANATION 2 (C)(I) OF THE INCOME-TAX ACT, 1961.' 7. IN THE LIGHT OF THE ABOVE MENTIONED REASONS, IN OUR CONSIDERATE VIEW, SECTION 147 AND 148 ARE CHARTER T O THE REVENUE TO REOPEN EARLIER ASSESSMENTS AND ARE, THER EFORE PROTECTED BY SAFEGUARDS AGAINST UNNECESSARY HARASSM ENT OF THE ASSESSEE. THEY ARE SWORD FOR THE REVENUE AND SH IELD FOR THE ASSESSEE. SECTION 151 GUARDS THAT THE SWORD OF SEC. 147 MAY NOT BE USED UNLESS A SUPERIOR OFFICER IS SATISF IED THAT THE AO HAS GOOD AND ADEQUATE REASONS TO INVOKE THE PROVISIONS OF SEC. 147. THE SUPERIOR AUTHORITY HAS TO EXAMINE THE REASONS, MATERIAL OR GROUNDS AND TO JUD GE ITA NO.5128/D EL/2015 27 WHETHER THEY ARE SUFFICIENT AND ADEQUATE TO THE FOR MATION OF THE NECESSARY BELIEF ON THE PART OF THE ASSESSING O FFICER. IF, AFTER APPLYING HIS MIND AND ALSO RECORDING HIS REAS ONS, HOWSOEVER BRIEFLY, THE COMMISSIONER IS OF THE OPINI ON THAT THE AO'S BELIEF IS WELL REASONED AND BONAFIDE, HE I S 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 TH E ORDER SHEET WHICH IS ON RECORD, THE COMMISSIONER HAS SIMP LY PUT 'APPROVED' AND SIGNED THE REPORT THEREBY GIVING SAN CTION TO THE AO. NOWHERE THE COMMISSIONER HAS RECORDED A SATISFACTION NOTE NOT EVEN IN BRIEF. THEREFORE, IT CANNOT BE SAID THAT THE COMMISSIONER HAS ACCORDED SANCTION AF TER APPLYING HIS MIND AND AFTER RECORDING HIS SATISFACT ION. 8. HON'BLE DELHI HIGH COURT IN THE CASE OF' UNITED ELECTRICAL CO. PVT. LTD. VS CIT 257 HAS HELD THAT ' THE PROVISO TO SUB-SECTION (1) OF SECTION 151OF THE 10 ACT PROVIDES THAT AFTER THE EXPIRY OF FOUR YEARS FROM T HE END OF THE RELEVANT ASSESSMENT YEAR, NOTICE UNDER SECTION 148 SHALL NOT BE ISSUED UNLESS THE CHIEF COMMISSIONER 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 A RE SOME IN- BUILTS SAFEGUARDS TO PREVENT ARBITRARY EXERCISE OF POWER BY ITA NO.5128/D EL/2015 28 AN ASSESSING OFFICER TO FIDDLE WITH THE COMPLETED ASSESSMENT'. THE HON'BLE HIGH COURT FURTHER OBSERVE D THAT 'WHAT DISTURBS US MORE IS THAT EVEN THE ADDITIONAL COMMISSIONER HAS ACCORDED HIS APPROVAL FOR ACTION U NDER SECTION 147 MECHANICALLY. WE FEEL THAT IF THE ADDIT IONAL COMMISSIONER HAD CARED TO GO THROUGH THE STATEMENT OF THE SAID PARTIES, PERHAPS HE WOULD NOT HAVE GRANTED HIS APPROVAL, WHICH WAS MANDATORY IN TERMS OF THE PROVI SO TO SUB-SECTION (1) OF SECTION 151 OF THE ACT AS THE AC TION UNDER SECTION 147 WAS BEING INITIATED AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. THE P OWER VESTED IN THE COMMISSIONER TO GRANT OR NOT TO GRANT APPROVAL IS COUPLED WITH A DUTY. THE COMMISSIONER I S REQUIRED TO APPLY HIS MIND TO THE PROPOSAL PUT UP T O HIM FOR APPROVAL IN THE LIGHT OF THE MATERIAL RELIED UPON B Y THE ASSESSING OFFICER. THE SAID POWER CANNOT BE EXERCIS ED CASUALLY AND IN A ROUTINE MANNER. WE ARE CONSTRAINE D TO OBSERVE THAT IN THE PRESENT CASE THERE HAS BEEN NO APPLICATION OF MIND BY THE ADDITIONAL COMMISSIONER BEFORE GRANTING THE APPROVAL'. 9. THE OBSERVATIONS OF THE HON'BLE HIGH COURT ARE V ERY MUCH RELEVANT IN THE INSTANT CASE AS IN THE PRESENT CASE ALSO THE COMMISSIONER HAS SIMPLY MENTIONED 'APPROVED' TO THE ITA NO.5128/D EL/2015 29 REPORT SUBMITTED BY THE CONCERNED AO. IN THE LIGHT OF THE RATIOS/OBSERVATIONS OF THE HON'BLE HIGH COURT MENTI ONED HEREINABOVE, WE HAVE NO HESITATION TO HOLD THAT THE REOPENING PROCEEDINGS VISA-VIS PROVISIONS OF SEC. 1 51 ARE BAD IN LAW AND THE ASSESSMENT HAS TO BE DECLARED AS VOID AB INITIO. GROUND NO. 1 OF ASSESSEE'S APPEAL IS ALLOWE D. 10. AS WE HAVE HELD THAT THE REASSESSMENT IS BAD IN LAW, WE DO NOT FIND IT NECESSARY TO DECIDE OTHER ISSUES WHI CH ARE ON MERITS OF THE CASE. 10.3 NO CONTRARY JUDGMENT OR ORDER IS BROUGHT TO O UR NOTICE. THIS BEING A CO-ORDINATE BENCH ORDER, WE ARE REQUIR ED TO FOLLOW THE SAME. 10.4 THE DECISION CITED BY THE LD. DR DOES NOT PERT AIN TO THE ISSUE OF CONTRAVENTION OF PROVISIONS OF S. 151 OF T HE ACT. THESE JUDGMENTS ARE ON OTHER ASPECTS RELATING TO REOPENIN G. THUS RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINA TE BENCH IN THE MATTER, WE HOLD THAT THE REOPENING IS BAD IN LAW FO R THE REASON THAT THE LD. CIT(A), DELHI HAS NOT RECORDED HIS SATISFAC TION AS CONTEMPLATED U/S. 151 OF THE ACT. (D) ITAT, MUMBI BENCH E IN THE CASE OF AMARLAL BA JAJ VS. ACIT REPORTED IN (2013) 37 TAXMANN.COM 7 (MUMBAI T RIB) IT HAS BEEN HELD AS UNDER:- ITA NO.5128/D EL/2015 30 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND CA REFULLY PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND ALS O THE MATERIAL EVIDENCES BROUGHT ON RECORD FROM BOTH SIDES. WE HAV E ALSO THE BENEFIT OF PERUSING THE ORDER SHEET ENTRIES BY WHIC H THE LD. CIT HAS GRANTED SANCTION. LET US FIRST CONSIDER THE REL EVANT PART OF THE PROVISIONS OF SEC. 151 OF THE ACT. 151. (1) IN A CA SE WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 OR SECTION 147 HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO NOTI CE SHALL BE ISSUED UNDER SECTION 148 [BY AN ASSESSING OFFICER, WHO IS BELOW THE RANK OF ASSISTANT COMMISSIONER [OR DEPUTY COMMI SSIONER], 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 O F FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, NO SUCH NO TICE SHALL BE ISSUED UNLESS THE CHIEF COMMISSIONER OR COMMISSIONE R IS SATISFIED, ON THE REASONS RECORDED BY THE ASSESSING OFFICER AFORESAID, THAT IT IS A FIT CASE FOR THE ISSUE OF S UCH NOTICE. (2) IN A CASE OTHER THAN A CASE FALLING UNDER SUB-SECTION (1 ), NO NOTICE SHALL BE ISSUED UNDER SECTION 148 BY AN ASSESSING O FFICER, WHO IS BELOW THE RANK OF [JOINT] COMMISSIONER, AFTER THE E XPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS THE [JOINT] COMMISSIONER IS SATISFIED, ON THE REASONS R ECORDED BY SUCH ASSESSING OFFICER, THAT IT IS A FIT CASE FOR THE IS SUE OF SUCH NOTICE.] ITA NO.5128/D EL/2015 31 [EXPLANATION.FOR THE REMOVAL OF DOUBTS, IT IS HERE BY DECLARED THAT THE JOINT COMMISSIONER, THE COMMISSIONER OR TH E CHIEF COMMISSIONER, AS THE CASE MAY BE, BEING SATISFIED O N THE REASONS RECORDED BY THE ASSESSING OFFICER ABOUT FITNESS OF A CASE FOR THE ISSUE OF NOTICE UNDER SECTION 148, NEED NOT ISSUE S UCH NOTICE HIMSELF.] 6. A SIMPLE READING OF THE PROVISIONS OF SEC. 151(1 ) WITH THE PROVISO CLEARLY SHOW THAT NO SUCH NOTICE SHALL BE I SSUED UNLESS THE COMMISSIONER IS SATISFIED ON THE REASONS RECORDED B Y THE AO THAT IT IS A FIT CASE FOR THE ISSUE OF NOTICE WHICH MEAN S THAT THE SATISFACTION OF THE COMMISSIONER IS PARAMOUNT FOR W HICH THE LEAST THAT IS EXPECTED FROM THE COMMISSIONER IS APPLICATI ON OF MIND AND DUE DILIGENCE BEFORE ACCORDING SANCTION TO THE REAS ONS RECORDED BY THE AO. IN THE PRESENT CASE, THE ORDER SHEET WHI CH IS PLACED ON RECORD SHOW THAT THE COMMISSIONER HAS SIMPLY AFFIXE D APPROVED AT THE BOTTOM OF THE NOTE SHEET PREPARED BY THE ITO TECHNICAL. NOWHERE THE CIT HAS RECORDED HIS SATISFACTION. IN T HE CASE BEFORE THE HONBLE SUPREME COURT (SUPRA) THAT ON AOS REPO RT THE COMMISSIONER AGAINST THE QUESTION WHETHER THE COMM ISSIONER IS SATISFIED THAT IT IS A FIT CASE FOR THE ISSUE OF NO TICE UNDER SECTION 148 MERELY NOTED ' YES ' AND AFFIXED HIS SIGNATURE THERE UNDER. ON THESE FACTS, THE HONBLE SUPREME COURT OBSERVED THA T THE IMPORTANT SAFEGUARDS PROVIDED IN SECTIONS 147 AND 1 51 WERE ITA NO.5128/D EL/2015 32 LIGHTLY TREATED BY THE OFFICER AND THE COMMISSIONER . THE HONBLE SUPREME COURT FURTHER OBSERVED THAT THE ITO COULD N OT HAVE HAD REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMEN T BY REASONS OF THE APPELLANT-FIRM'S FAILURE TO DISCLOSE MATERIA L FACTS AND IF THE COMMISSIONER HAD READ THE REPORT CAREFULLY HE COULD NOT HAVE COME TO THE CONCLUSION THAT THIS WAS A FIT CASE FOR ISSUING A NOTICE UNDER SECTION 148. THE NOTICE ISSUED UNDER SECTION 148 WAS THEREFORE, INVALID. IT WOULD BE PERTINENT HERE TO N OTE THE REASONS RECORDED BY THE AO. INTIMATION HAS BEEN RECEIVED FROM DCIT-24(2), MUMB AI VIDE HIS LETTERS DT. 22ND FEBRUARY, 2002 THAT ONE SHRI NITIN J. RUGMANI ASSESSED IN HIS CHARGE HAD ARRANGED HAWALA ENTRIES IN ARRANGING LOANS, EXPENSES, GIFTS. DURING THE YEAR SHRI AMAR G . BAJAJ, PROP. OF MOHAN BROTHERS, 712, LINKING ROAD, KHAR (W), MUM BAI-52 WAS THE BENEFICIARY OF SUCH LOANS, EXPENSES AND GIF TS. THE MODUS- OPERANDI WAS TO COLLECT CASH FROM THE PARTIES TO WH OM LOANS WERE GIVEN AND CASH WAS DEPOSITED INTO ACCOUNT OF SHRI N ITIN J. RUGANI AND CHEQUES WERE ISSUED TO THE BENEFICIARY OF THE L OAN TRANSACTION. IN ORDER TO ENSURE THAT THE MONEY REACHED BY CHEQUE S TO THE BENEFICIARY SHRI NITIN J. RUGANI KEPT BLANK CHEQUES OF THE THIRD PARTIES. THE ASSESSEE SHRI AMAR G. BAJAJ HAD TAKEN BENEFIT OF SUCH ENTRIES OF LOANS, COMMISSION AND BILL DISCOUNTING O F RS. 8,00,000/-, 11,21,243/- AND 9,64,739/- RESPECTIVELY. THE ASSESS MENT WAS ITA NO.5128/D EL/2015 33 COMPLETED U/S. 143(3) OF THE I.T. ACT ON 31ST MARCH , 1998 BY DCIT-SPL. RG. 40, MUMBAI. IT IS SEEN FROM RECORDS T HAT THE AFORESAID POINTS HAVE NOT BEEN VERIFIED IN THE ASSE SSMENT. I HAVE THEREFORE REASON TO BELIEVE THAT BY REASON OF THE F AILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MAT ERIAL FACTS NECESSARY FOR HIS ASSESSMENT, INCOME HAS ESCAPED AS SESSMENT WITHIN THE MEANING OF PROVISO TO SEC. 147 AND EXPLA NATION 2 (C)(I) OF THE INCOME-TAX ACT, 1961. 7. 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 SAFEGUARDS AGAINST UNNECESSARY HARASSMENT OF THE ASSESSEE. THE Y ARE SWORD FOR THE REVENUE AND SHIELD FOR THE ASSESSEE. SECTIO N 151 GUARDS THAT THE SWORD OF SEC. 147 MAY NOT BE USED UNLESS A SUPERIOR OFFICER IS SATISFIED THAT THE AO HAS GOOD AND ADEQU ATE REASONS TO INVOKE THE PROVISIONS OF SEC. 147. THE SUPERIOR AUT HORITY HAS TO EXAMINE THE REASONS, MATERIAL OR GROUNDS AND TO JUD GE WHETHER THEY ARE SUFFICIENT AND ADEQUATE TO THE FORMATION O F THE NECESSARY BELIEF ON THE PART OF THE ASSESSING OFFICER. IF, AF TER APPLYING HIS MIND AND ALSO RECORDING HIS REASONS, HOWSOEVER BRIE FLY, THE COMMISSIONER IS OF THE OPINION THAT THE AOS 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 ITA NO.5128/D EL/2015 34 PERUSAL OF THE ORDER SHEET WHICH IS ON RECORD, THE COMMISSIONER HAS SIMPLY PUT APPROVED AND SIGNED THE REPORT THE REBY GIVING SANCTION TO THE AO. NOWHERE THE COMMISSIONER HAS RE CORDED A SATISFACTION NOTE NOT EVEN IN BRIEF. THEREFORE, IT CANNOT BE SAID THAT THE COMMISSIONER HAS ACCORDED SANCTION AFTER APPLYI NG HIS MIND AND AFTER RECORDING HIS SATISFACTION. 8. HONBLE DELHI HIGH COURT IN THE CASE OF UNITED E LECTRICAL CO. PVT. LTD. VS CIT 258 ITR 317 HAS HELD THAT THE PRO VISO TO SUB- SECTION (1) OF SECTION151OF THE ACT PROVIDES THAT A FTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, NOTICE UNDER SECTION 148 SHALL NOT BE ISSUED UNLESS THE CH IEF COMMISSIONER OR THE COMMISSIONER, AS THE CASE MAY B E, IS SATISFIED, ON THE REASONS RECORDED BY THE ASSESSING OFFICER CONCERNED, THAT IT IS A FIT CASE FOR THE ISSUE OF S UCH NOTICE. THESE ARE SOME IN-BUILTS SAFEGUARDS TO PREVENT ARBITRARY EXERCISE OF POWER BY AN ASSESSING OFFICER TO FIDDLE WITH THE CO MPLETED ASSESSMENT. THE HONBLE HIGH COURT FURTHER OBSERVE D 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 CAR ED TO GO THROUGH THE STATEMENT OF THE SAID PARTIES, PERHAPS HE WOULD NOT HAVE GRANTED HIS APPROVAL, WHICH WAS MANDATORY IN T ERMS OF THE PROVISO TO SUB-SECTION (1) OF SECTION 151 OF THE AC T AS THE ACTION ITA NO.5128/D EL/2015 35 UNDER SECTION 147 WAS BEING INITIATED AFTER THE EXP IRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. THE P OWER 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 PROPOSAL PUT UP TO HIM FOR APPROVAL IN THE LIGHT OF THE MATERIAL RELIED UPON BY THE ASSESSING OFFICER. THE SAID POWE R 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 ADDITIONAL COMMISSIONER BEFORE GRANTING THE APPROVAL. 9. THE OBSERVATIONS OF THE HONBLE HIGH COURT ARE V ERY 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 HONBLE HIGH COURT MENTI ONED HEREINABOVE, WE HAVE NO HESITATION TO HOLD THAT THE REOPENING PROCEEDINGS VIS--VIS PROVISIONS OF SEC. 151 ARE BA D IN LAW AND THE ASSESSMENT HAS TO BE DECLARED AS VOID AB INITIO. GR OUND NO. 1 OF ASSESSEES APPEAL IS ALLOWED. 10. AS WE HAVE HELD THAT THE REASSESSMENT IS BAD IN LAW, WE DO NOT FIND IT NECESSARY TO DECIDE OTHER ISSUES WHICH ARE ON MERITS OF THE CASE. ITA NO.5128/D EL/2015 36 (E). HONBLE HIGH COURT OF MADHYA PRADESH IN THE C ASE OF CIT VS. S. GOYANKA LIME & CHEMICALS LTD. REPORTED I N (2015) 56 TAXMANN.COM 390 (MP) HAS HELD AS UNDER:- 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND WE FIND THAT WHILE ACCORDING SANCTION, THE JOINT COMMISSIONER, I NCOME TAX HAS ONLY RECORDED SO YES, I AM SATISFIED. IN THE CASE OF ARJUN SINGH VS. ASSTT. DIT (2000) 246 ITR 363 (MP), THE SAME QU ESTION HAS BEEN CONSIDERED BY A COORDINATE BENCH OF THIS COURT AND THE FOLLOWING PRINCIPLES ARE LAID DOWN:- THE COMMISSIONER ACTED, OF COURSE, MECHANICALLY IN ORDER TO DISCHARGE HIS STATUTORY OBLIGATION PROPERLY IN T HE MATTER OF RECORDING SANCTION AS HE MERELY WROTE ON THE FOR MAT YES, I AM SATISFIED WHICH INDICATES AS IF HE WAS TO SIGN ONLY ON THE DOTTED LINE. EVEN OTHERWISE ALSO, THE E XERCISE IS SHOWN TO HAVE BEEN PERFORMED IN LESS THAN 24 HOURS OF TIME WHICH ALSO GOES TO INDICATE THAT THE COMMISISONER D ID NOT APPLY HIS MIND AT ALL WHILE GRANTING SANCTION. THE SATISFACTION HAS TO BE WITH OBJECTIVITY ON OBJECTIV E MATERIAL 8. IF THE CASE IN HAND IS ANALYSED ON THE BASIS OF THE AFORESAID PRINCIPLE, THE MECHANICAL WAY OF RECORDING SATISFAC TION BY THE JOINT COMMISSIONER, WHICH ACCORDS SANCTION FOR ISSUING NOTICE UNDER SECTION 148, IS CLEARLY UNSUSTAINABLE AND WE ITA NO.5128/D EL/2015 37 FIND THAT ON SUCH CONSIDERATION BOTH THE APPELLATE AUTHORITIES HAVE INTERFERED INTO THE MATTER. IN DOI NG SO, NO ERROR HAS BEEN COMMITTED WARRANTING RECONSIDERATION . (F.) HONBLE SUPREME COURT OF INDIA IN THE CASE O F CIT VS. S. GOYANKA LIME & CHEMICAL LTD. REPORTED IN (2015) 64 TAXMANN.COM 313 (SC) IN THE HEAD NOTES HAS HELD THA T 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 T HAT WHERE JOINT COMMISSIONER RECORDED SATISFACTION IN MECHANI CAL MANNER AND WITHOUT APPLICATION OF MIND TO ACCORD SANCTION FOR ISSUING NOTICE UNDER SECTION 148, REOPENING OF ASSESSMENT W AS INVALID WHETHER SPECIAL LEAVE PETITION FILED AGAINST IMPUGN ED ORDER WAS TO BE DISMISSED HELD, YES (IN FAVOUR OF THE ASSES SEE). 9. IN VIEW OF ABOVE, WE ARE OF THE CONSIDERED VIEW THAT THE ABOVE ISSUE IS EXACTLY THE SIMILAR AND IDENTICAL TO THE ISSUE INV OLVED IN THE PRESENT APPEAL AND IS SQUARELY COVERED BY THE AFORESAID DECISIONS OF T HE HONBLE SUPREME COURT OF INDIA, HONBLE HIGH COURTS OF DELHI & MADHYA PRADE SH & ITAT, DELHI & MUMBAI. HENCE, RESPECTFULLY FOLLOWING THE ABOVE PR ECEDENTS, WE DECIDE THE LEGAL ISSUE IN DISPUTE IN FAVOR OF THE ASSESSEE AND AGAINST THE REVENUE AND QUASH THE REASSESSMENT PROCEEDINGS BEING BAD IN LAW. ITA NO.5128/D EL/2015 38 10. AS WE HAVE HELD THAT THE REASSESSMENT IS BAD IN LAW, WE DO NOT FIND IT NECESSARY TO DECIDE OTHER ISSUES WHICH ARE ON MERIT S OF THE CASE. 11. IN THE RESULT, THE ASSESSEES APPEAL STANDS A LLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 22-04-2016. SD/- SD/- (PRASHANT MAHARISHI) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 22-04-2016 SR BHATANGAR COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A), NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.