ITO 2(1)(4), MUMBAI V. GOODVALUE STOCKTRADE P.LTD, MUMBAI

ITA 5587/MUM/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0255 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2007-2008
• Appeal Filed On: 14-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAITANYA ANJARIA
• Assessee Lawyers: DR P DANIEL
• Keywords: Unexplained cash credit; Accommodation entries; Competent authority; Reassessment proceedings
• Section: 148; 143(3)

Judgement Text

P A G E | 1 ITA NO. 5587/MUM/2016 A.Y. 2007 - 08 ITO - 2(1)(4) VS. M/S GOOD VALUE STOCK TRADE PVT. LTD. IN THE INCOME TAX APPELLATE TRIBUNAL ' D ' BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO. 5587/MUM/2016 (ASSESSMENT YEAR: 2007 - 08 ) ITO - 2(1)(4) R. NO. 553, 5 TH FLOOR AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400 020 VS. M/S GOOD VALUE STOCK TRADE PVT. LTD., 6 TH FLOOR, VAIBHAV CHAMBERS, BKC, BANDRA (E), MUMBAI - 400051 PAN AAACG2216K ( APPELLANT ) ( RESPONDENT ) APPELLANT BY: SHRI CHAITANYA ANJARIA, D.R RESPONDENT BY: DR. P. DANIEL, A.R DATE OF HEARING: 01.11.2018 DA TE OF PRONOUNCEMENT: 0 7 . 12 .2018 O R D E R PER RAVISH SOOD, JM THE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) - 4, MUMBAI, DATED 20.06.2016 , WHICH IN TURN ARISES FROM THE ORDER PASSED BY THE A.O UNDER SEC.143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (FOR SHORT I.T ACT), DATED 27.03.2015 FOR A.Y. 2007 - 08. THE ASSESSING ASSAILING THE ORDER OF THE CIT(A) HAS RAISED BEFORE US THE FOL LOWING GROUNDS OF APPEAL : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN ALLOWING RELIEF TO THE ASSESSEE TO THE EXTENT IMPUGNED IN THE GROUNDS ENUMERATED BELOW: P A G E | 2 ITA NO. 5587/MUM/2016 A.Y. 2007 - 08 ITO - 2(1)(4) VS. M/S GOOD VALUE STOCK TRADE PVT. LTD. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN DELETING THE ADDITION ON ACCOUNT OF BOGUS SHARE CAPITAL. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) ERRED IN IGNORING THAT NONE OF THE 16 SHAREHOLDERS HAVE RESPONDED TO THE SUMMONS AND THAT SIX OF THE SIXTEEN SHAREHOLDERS HAVE ACCEPTED THAT T HESE ARE ACCOMMODATION ENTRIES. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASES AND IN LAWS, THE LD. CIT (A) GROSSLY ERRED IN CONCLUDING THAT THE CONFIRMATION GIVEN BY THE THREE CURRENT SHAREHOLDERS IN AY 2012 - 13 WOULD S UBSTANTIATE THE GENUINENESS OF THE INVESTORS IN A.Y.2007 - 08. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) IGNORED THE FINDING OF THE A.O THAT THE SHARES WERE SUBSEQUENTLY REPURCHASED AT A MINISCULE AMOUNT WHICH IS NOTHING BUT A COLORABLE DEVICE TO INTRODUCE UNACCOUNTED MONEY. 5. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, TH E DECISION OF THE CIT(A) MAY BE SET ASIDE AND THAT OF THE A.O RESTORED. 2. BRIEFLY STATED, THE ASSESSEE COMPANY WHICH HAD DURING THE YEAR UNDER CONSIDERATION EAR NED INCOME BY WAY OF INTEREST ON FIXED DEPOSITS AND DIVIDEND ON LISTED EQUITY SHARES HAD E - FILED ITS RETURN OF INCOME FOR A.Y. 2007 - 08 ON 24.10.2007, DECLARING INCOME OF RS.82,691/ - . THE RETURN OF INCOME FILED BY THE ASSESSEE WAS PROCESSED AS SUCH UNDER SEC. 143(1) OF THE I.T ACT. 3. S E ARCH AND SURVEY PROCEEDINGS CONDUCTED IN THE CASE O F SHRI PRAVIN KUMAR JAIN GROUP REVEALED THAT THE PARTIES/CONCERNS CONTROLLED BY THE SAID GROUP WERE INVOLVED IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRIES. ON THE BASIS OF INFORMATION RECEIVED BY THE A.O THAT THE ASSESSE E COMPANY HAD RECEIVED A CCOMMODATION ENTRI ES IN THE FORM OF SHARE APPLICATION MONEY AMOUNTING TO RS. 3 0 LAC FROM SIX COMPANIES BELONGING TO SHRI PRAVIN KUMAR JAIN GROUP VIZ. (I) M/S ALKA DIAMOND INDUSTRIES LTD.; (II) M/S OLIVE OVERSEAS PVT. LTD.; (III) M/S NAKSH A TRA BUSINESS PVT. LTD.; (IV) M/S LEXUX INFOTECH LTD, (V) M/S KUSH HINDUSTAN ENTERTAINMENT LTD; AND (VI) M/S JAVDA INDIA IMPEX LTD, ITS CASE WAS REOPENED UNDER SEC.147 OF THE I.T ACT. NOTICE UNDER P A G E | 3 ITA NO. 5587/MUM/2016 A.Y. 2007 - 08 ITO - 2(1)(4) VS. M/S GOOD VALUE STOCK TRADE PVT. LTD. SEC. 148 WAS ISSUED BY THE A.O ON 21.03.2014 AND WAS SERVED ON THE ASSESSEE ON 26.03.2014. THE ASSESSEE IN RESPONSE TO THE NOTICE ISSUED BY THE A.O UNDER SEC.148 FILED A LETTER DATED 21.04.2014 AND REQUESTED THAT ITS ORIGINAL RETURN OF INCOME FILED ON 24.10.2007 MAY BE TREATED AS THE RETUR N FILED IN COMPLIANCE THERETO. FURTHER, ON THE BASIS OF A REQUEST OF THE ASSESSEE THE COPY OF THE REASONS TO BELIEVE ON THE BASIS OF WHICH ITS CASE WAS REOPENED WERE MADE AVAILABLE BY THE A.O VIDE HIS LETTER DATED 25.07.2014. THE OBJECTIONS FILED BY THE ASSESSEE TO THE REOPENING OF ITS ASSESSMENT UNDER SEC.147 WERE REJECTED BY THE A.O BY HIS LETTER DATED 25.02.2015. 4. IN THE COURSE OF THE ASSESSMENT PROCEEDINGS IT WAS OBSERVED BY THE A.O THAT THE ASSESSEE COMPANY HAD ISSUED 1 LAC SHARES @ RS.100 PER SHARE, AS UNDER: SR. NO. NAME NUMBER OF SHARES AMOUNT DATE OF ALLOTMENT 1. ALKA DIAMOND INDUSTRIES LTD. 5000 5,00,000/ - 07.03.2007 2. ALPHA CHENIE TRADE AGENCIES P. LTD. 5000 5,00,000/ - 07.03.2007 3. BUNIYAD CHEMICALS 15,000 15,00,000/ - 07.03.2007 4. CREATIVE WORLD TELEFILMS LTD. 5000 5,00,000/ - 07.03.2007 5. GLIDER HOLDINGS LTD. 5000 5,00,000 07.03.2007 6. NAKSHATRA BUSINESS P. LTD. (HEMA TRDG. CO. P. LTD) 5000 50,00,000/ - 07.03.2007 7. JAGMANDARI FINVEST P. LTD. 5000 5,00,000/ - 07.03.2007 8. JAVDA INDIA IMPEX LTD. 5000 5,00,000/ - 07.03.2007 9. KIM ELECTRONICS IND. LTD. 5000 5,00,000/ - 07.03.2007 10. KUSH HINDUSTAN ENTERTAINMENT LTD. 5000 5,00,000/ - 07.03.2007 11. KRISHAN MINGRANITE LTD. 5000 5,00,000/ - 07.03.2007 12. LEXUS INFOTECH LTD. 5000 5,00,000/ - 07.03.2007 13. MIHIR AGENCIES P. LTD. 5,000 5,00,000/ - 07.03.2007 14. OLIVE OVERSEAS P. LTD. (REALGOLD TRDG. CO. P. LTD.) 5,000 5,00,000/ - 07.03.2007 15. TALENT INFOWAY LTD. 15,000 15,00,000/ - 07.03.2007 16. TRADELINK FINVEST & PROP. PVT. LTD. 5,000 5,00,000/ - 07.03.2007 1,00,000/ - 1,00,00,000 P A G E | 4 ITA NO. 5587/MUM/2016 A.Y. 2007 - 08 ITO - 2(1)(4) VS. M/S GOOD VALUE STOCK TRADE PVT. LTD. THE A.O I N ORDER TO VERIFY THE GENUINENESS AND VERACITY OF THE INTRODUCTION OF SHARE CAPITAL ISSUED NOTIC ES UNDER SEC.133(6) TO THE AFOREMENTIONED 16 SHARE ALLOTTEE PARTIES. HOWEVER, FIVE OF THE NOTICES WERE RETU R NED BACK BY THE POSTAL AUTHORITIES WITH THE REMARKS UNCLAIMED / LEFT. INSOFAR THE REMAINING ELEVEN NOTICES WERE CONCERNED, THE SAME WERE SERVED BUT THE PARTIES FAILED TO COMPLY WITH THE SAME. IN THE BACKDR OP OF THE AFORESAID FACTS THE A.O CALLED UPON THE ASSESSEE TO SHOW CAUSE AS TO WHY THE AFOREMENTIONED A MOUNT OF RS.1,00,00,000/ - MAY NOT BE TREATED AS AN UNEXPLAINED CASH CREDIT UNDER SEC.68 OF THE ACT. HOWEVER, THE ASSESSEE FAILED TO COMPLY WITH THE AFORESAID NOTICE AND DID NOT SUBMIT ANY REPLY. THE A.O DELIBERATING ON THE FACTS OF THE CASE OBSERVED THAT ALL THE SHARES ALLOTTED TO THE NEW INVES TORS WERE SUBSEQUENTLY B OUGHT BACK BY THREE SHAREHOLDERS OF THE ASSESSEE COMPANY VIZ. (I) M/S CHAMATKAR PROPERTIES AND INVESTMENT PVT. LTD; (II) M/S SWAPNASUNDARI HOLDING & ESTATE DEVELOPMENT PVT. LTD; AND (III) M/S AASHEES PROPERTIES PVT. LTD. ON THE BASIS OF THE AFORESAID FACTS THE A.O HELD A CONVICTION THAT THE WHOLE EXERCISE OF ISSUING FRESH SHARE CAPITAL AND ITS SUBSEQUENT BUY BACK AT A MINISCULE PRICE WHICH WAS EVEN BELOW THE PAR VALUE WAS CARRIED OUT BY THE ASSESSEE COMPANY TO INTRODUCE IT S OWN UNACCOUNTED MONEY IN THE FORM OF SHARE CAPITAL. THE A.O WAS OF THE VIEW THAT THE AFOREMENTIONED SIXTEEN NEW SHARE APPLICANT INVESTOR PARTIES WERE USED AS A TOOL TO INTRODUCE THE UNACCOUNTED MONEY OF THE ASSESSEE COMPANY. THE A.O IN ORDER TO FORTIFY H IS AFORESAID CONVICTION ISSUE D SUMMONS UNDER SEC.131 TO THE AFOREMENTIONED THREE MAJOR SHAREHOLDERS VIZ. (I) M/S CHAMATKAR PROPERTIES AND INVESTMENT PVT. LTD; (II) M/S SWAPNASUNDARI HOLDING & ESTATE DEVELOPMENT PVT. LTD; AND (III) M/S AASHEES PROPERTIES P VT. LTD WHO HAD REPURCHASE D THE SHARES AT BELOW THE PAR PRICE FROM THE ORIGINAL SHAREHOLDERS. ON THE BASIS OF THE DETAILS FURNISHED BY THE SHAREHOLDER S IT WAS OBSERVED BY P A G E | 5 ITA NO. 5587/MUM/2016 A.Y. 2007 - 08 ITO - 2(1)(4) VS. M/S GOOD VALUE STOCK TRADE PVT. LTD. THE A.O THAT THE SHARES WHICH WERE ORIGINALLY ISSUED AT RS.100 / - PER SHARE TO THE SIX TEEN PARTIES WERE THEREAFTER BOUGHT BACK BY THE AFOREMENTIONED THREE SHAREHOLDERS AT A PRICE AS LOW AS RS.9 PER SHARE. THE A.O IN ORDER TO VERIFY THE FACTS CALLED FOR CERTAIN INFORMATION FROM THE ASSESSEE COMPANY , WHICH HOWEVER DESPITE REASONABLE OPPORTUNI TY WAS NOT PLACED ON RECORD. IN THE ABSENC E OF REQUISITE INFORMATION VIZ. (I) EXACT NUMBER OF SHARES PURCHASE D; (II) THE PRICE PER SHARE PAID; (III) DATE OF PURCHASE ; AND (IV) COPIES OF TRANSFER DEEDS ETC . THE A.O WAS OF THE VIE W THAT THE AFORESAID REPURCH ASE OF SHARE S FROM THE SIXTEEN PARTIES AT A MINISCULE PRICE WAS BACKED WITH A PURPOSE TO REGAIN THE CONTROL OVER THE ASSESSEE COMPANY. IT WAS FURTHER OBSERVED BY THE A.O THAT THE NAMES OF SIX OUT OF THE AFORESAID SIXTEEN SHARE ALLOTTEE COMPANIES APPEARED IN THE LIST PROVIDED BY THE OFFICE OF THE DGIT (INV.), MUMBAI AND WERE STATED TO BE ENTITIES WHICH WERE INVOLVED IN PROVIDING ACCOMMODATION ENTRIES. IN THE BACKDROP OF THE AFORESAID FACTS THE A.O HELD THE AMOUNT OF RS.1,00,00,000/ - INTR ODUCED AS SHARE CAPITAL AS BEING IN NATURE OF ACCOMMODATION ENTRIES PROVIDED BY THE AFORESAID SIXTEEN COMPANIES. ON THE BASIS OF THE AFORESAID DELIBERATIONS THE A.O TREATED THE AMOUNT OF RS.1,00,00,000/ - AS AN UNEXPLAINED CASH CREDIT UNDER SEC.68 IN THE HA NDS OF THE ASSESSEE. 5. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). THE CIT(A) AFTER DELIBERATING ON THE FACTS OF THE CASE OBSERVED THAT THE A.O HAD SIMPLY DOUBTED THE GENUINENESS OF SHARE CAPITAL SUBSCRIPTIONS RECEIVED BY THE ASS ESSEE FROM CORPORATE ENTITIES WITHOUT PLACING ON RECORD ANY COGENT EVIDENCE. RATHER, IT WAS OBSERVED BY THE CIT(A) THAT THE A.O HAD ADMITTED THAT NOTICE S ISSUED UNDER SEC.133(6) OF THE IT ACT WERE DULY SERVED ON 11 PARTIES. IT WAS FURTHER OBSERVED BY THE C IT(A) THAT THE A.O HAD A LSO ADMITTED THAT THE SUMMONS ISSUED TO THREE MAJOR SHAREHOLDERS VIZ. (I) M/S CHAMATKAR PROPERTIES AND INVESTMENT PVT. LTD ; (II) M/S SWAPNASUNDARI HOLDING & ESTATE P A G E | 6 ITA NO. 5587/MUM/2016 A.Y. 2007 - 08 ITO - 2(1)(4) VS. M/S GOOD VALUE STOCK TRADE PVT. LTD. DEVELOPMENT PVT. LTD ; AND (III) M/S AASHEES PROPERTIES PVT. LTD WE RE DULY SERVED UPON THEM AND THEY HAD CONFIRMED OF HAVING MADE INVESTMENTS IN THE SHARES OF THE ASSESSEE COMPANY. FURTHER, IT WAS NOTICED BY THE CIT(A) THAT THE INFORMATION REGARDING PURCHASE OF SHARES BY THE AFOREMENTIONED THREE MAJOR SHAREHOLDERS FROM SO ME OF THE SIXTEEN PA RTIES WAS ALSO SUBMITTED IN THE COURSE OF THE ASSESSMENT PROCEEDINGS. THE CIT(A) WAS OF THE VIEW THAT AS IT WAS A MATTER OF RECORD THAT THE INFORMATION RELATING TO INVESTMENT IN SHARES WAS OBTAINED BY THE A.O ALONG WITH CONFIRMATIONS OF THE INVESTORS, THEREFORE , NOW WHEN THE ASSESSEE COMPANY HAD PROVED THE GENUINENESS OF THE TRANSACTIONS, IDENTITY OF THE INVESTORS AND THEIR CREDITWORTHINESS NO A DDITION COULD HAVE BEEN MADE UNDER SEC.68. FURTHER, IT WAS OBSERVED BY THE CIT(A) THAT THE A.O HAD ALSO FAIL ED TO DEMONSTRATE AND PLACE ON RECORD ANY SUCH EVIDENCE WHICH COULD IRREFUTABLY PROVE TO THE HILT THAT THE ASSESSEE HAD OBTAINED ACCOMMODATION ENTRIES FROM SHRI PRAVI N KUMAR JAIN G ROUP ENTITIES. THE CIT(A) WAS OF TH E VIEW THAT AS THE INVESTOR COMPANIES WERE REGULARLY FILING THEIR RETURNS OF INCOME AND THE TRANSACTIONS WERE ROUTED THROUGH BANKING CHANNEL, THUS NO ADDITION COULD HAVE BEEN MADE BY THE A.O DE HORS ANY COGE NT EVIDENCE IN HIS POSSESSION. IN ORDER TO FORTIFY HIS AFORESAID VIEW THE CIT(A) RELIED ON A HOST OF JUDICIAL PRONOUNCEMENT S INCLUDING THAT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. LOVELY EXPORTS (2008) 216 CTR 195 (SC) . 6. INSOFAR THE CLAIM OF THE ASSESSEE THAT ITS CASE WAS REOPENED BY THE A.O IN THE ABSENCE OF ANY TANG IBLE MATERIAL WHICH COULD FORM THE BASIS FOR FORMATION OF A BELIEF THAT THERE WAS ESCAPEMENT OF INCOME , THE SAME WAS NOT ACCEPTED BY THE CIT(A). THE CIT(A) WAS OF THE VIEW THAT AS NO REGULAR ASSESSMENT UNDER SEC.143(3) OR AN EARLIER ASSESSMENT UNDER SEC.147 WAS MADE IN THE HANDS OF THE ASSESSEE, P A G E | 7 ITA NO. 5587/MUM/2016 A.Y. 2007 - 08 ITO - 2(1)(4) VS. M/S GOOD VALUE STOCK TRADE PVT. LTD. THEREFORE , THE A.O HAD NO OCCASION TO VERIFY THE GENUINENESS AND VERACITY OF THE TRANSACTIONS INVOLVING INTRODUCTION OF SHARE CAPITAL BY T HE ASSESSEE COMPANY . FURTHER, IT WAS OBSERVED BY THE CIT(A) THAT AS THE A.O AT THE TIME OF REOPENING THE CASE OF THE ASSESSEE WAS HAVING SOME INFORMATION WHICH FORMED THE BASIS TO BELIEVE THAT THE INCOME OF THE ASSESSEE CHARGEABLE TO TAX HAD ESCAPED ASSESS MENT, THUS HE HAD VALIDLY REOPENED THE CASE AFTER RECORDING THE REASONS TO BELIE VE UNDER SEC.147 OF THE ACT. 7. THE REVENUE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAS CARRIED THE MATTER IN APPEAL BEFORE US. THE LD. AUTHORIZED REPRESENTATIVE (FOR SHORT A.R) FOR THE ASSESSEE AT THE VERY OUTSET OF THE HEARING OF THE APPEAL RAISED A PRELIMINARY OBJECTION UNDER RULE 27 OF THE A PPELLATE TRIBUNAL RULES, 1963 . IT IS THE CLAIM OF THE ASSESSEE THAT AS ASSESSMENT IN ITS CASE WAS EARLIER FRAMED VIDE O RDER PASSED UNDER SEC.143(3), DATED 18.12.2009, THEREFORE, THE A.O HAD ERRONEOUSLY REOPENED ITS CASE AND ISSUED NOTICE UNDER SEC.148 ON 21.03.2014 WITHOUT OBTAINING THE PRIOR APPROVAL OF THE PR INCIPAL CHIEF COMMISSIONER OR CHIEF COMMISSIONER OR PR INCIPAL C OMMISSIONER OR COMMISSIONER AS REQUIRED UNDER SEC.151(1) OF THE ACT. IT WAS SUBMITTED BY THE LD. A.R THAT AS THE NOTICE UNDER SEC. 148 WAS ISSUED BY THE A.O AFTER EXPIRY OF A PERIOD OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, THEREFORE, AS PER THE MANDATE OF LAW CONTEMPLATED IN SEC. 151 OF THE I . T ACT, IT WAS OBLIGATORY ON HIS PART TO HAVE OBTAINED THE SANCTION OF THE APPROPRIATE AUTHORITY AS ENVISAGED IN SEC. 151(1) PRIOR TO ISSUE OF SUCH NOTICE. IT WAS SUBMITTED BY THE LD. A.R THAT THE FACT T HAT ASSESSMENT HAD EARLIER BEEN FRAMED IN THE CASE OF THE ASSESSEE UNDER SEC.143(3) ON 18.12.2009 WAS BROUGH T TO THE NOTICE OF THE A.O BY THE ASSESSEE IN ITS O BJECTIONS FILED WITH HIM AS REGARDS THE VALIDITY OF THE RE ASSESSMENT PROCEEDINGS. THE LD. A.R IN P A G E | 8 ITA NO. 5587/MUM/2016 A.Y. 2007 - 08 ITO - 2(1)(4) VS. M/S GOOD VALUE STOCK TRADE PVT. LTD. ORDER TO FORTIFY HIS AFORESAID CONTENTION DREW OUR ATTENTION TO THE O BJECTIONS, DATED 16.02.2015 WHICH WERE FILED BY THE ASSESSEE WITH THE A.O. THE LD. A.R TOOK US THROUGH P ARA - 5 OF THE SAID OBJECTIONS AT PAGE 40 OF THE ASSESSES PAPER BOOK (FOR SHORT APB ), WHEREIN THE FACT THAT ASSESSMENT UNDER SEC.143(3) WAS FRAMED VIDE ORDER DATED 18.12.2009 WAS CLEARLY STATED BY THE ASSESSEE. INSOFAR THE MERITS OF THE CASE ARE CONCERNED, THE LD. A.R RELIED ON THE ORDER OF THE CIT(A). IT WAS SUBMITTED BY THE LD. A. R THAT THE CIT(A) HAD RIGHTLY APPRECIATED THAT AS THE COMPLETE DETAILS OF THE SHARE ALLOTTEE PARTIES WAS AVAILABLE WITH THE A.O, THEREFORE, NO ADDITION IN RESPECT OF THE SHARE CAPITAL WAS LIABLE TO BE MADE IN THE HANDS OF THE ASSESSEE. 8. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D.R) RELIED ON THE ASSESSMENT FRAMED BY THE A.O. IT WAS SUBMITTED BY THE LD. D.R THAT AS THE ASSESSEE HAD OBTAINED ACCOMMODATION ENTRIES FROM THE AFOREMENTIONED 16 PARTIES, THEREFORE, THE SAME HAD RIGHTLY BEEN ASSE SSED AS AN UNEXPLAINED CASH CREDIT UNDER SEC.68 IN THE HANDS OF THE ASSESSEE. INSOFAR THE VALIDITY OF THE REOPENING OF THE CASE UNDER SEC.148 WAS CONCERNED THE LD. D.R COULD NOT SUCCESSFULLY REBUT THE CONTENTIONS RAISED BY THE ASSESSEE AS REGARDS THE SAME. 9. W E HAVE HEARD THE AUTHORIZED REPRESENTATIVE S FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. WE SHALL FIRST ADVERT TO THE VALIDITY OF THE REASSESSMENT PROCEEDINGS AS HAD BEEN ASSAILED BY THE ASSESSEE BY RAISING A PRELIMINARY OBJECTION UNDER RULE 27 OF THE A PPELLATE TRIBUNAL RULES, 1963. AS THE OBJECTION RAISED BY THE ASSESSEE INVOLVES SEEKING OF AN ADJUDICATION OF A LEGAL ISSUE BASED ON THE FACTS AVAILABLE ON RECORD, THEREFORE, THE SAME IS ADM ITTED. IT IS THE CONTENTION OF THE LD. A.R THAT AS THE ORIGINAL ASSESSMENT IN THE CASE OF THE ASSESSEE WAS P A G E | 9 ITA NO. 5587/MUM/2016 A.Y. 2007 - 08 ITO - 2(1)(4) VS. M/S GOOD VALUE STOCK TRADE PVT. LTD. FRAMED BY THE A.O UNDER SEC.143(3), DATED 18.12.2009, THEREFORE, ITS CASE COULD HAVE BEEN REOPENED UNDER SEC. 148 OF THE I.T ACT ONLY AFTER OBTAINING THE APPROVAL OF THE PR INCIPAL CHIEF COMMISSIONER OR CHIEF COMMISSIONER OR PR INCIPAL COMMISSIONER OR COMMISSIONER AS CONTEMPLATED UNDER SEC.151(1) OF THE I.T ACT. IT WAS FURTHER SUBMITTED BY THE LD. A.R THAT THE FACT THAT THE ASSESSMENT HAD ORIGINALLY BEEN FRAMED IN THE CASE OF THE ASSESSEE UNDER SEC. 143(3), DATED 18.12.2009 WAS BROUGHT TO THE NOTICE OF THE A.O BY THE ASSESSEE IN ITS OBJECTIONS FILED WITH HIM AS REGARDS THE VALIDITY OF THE REASSESSMENT PROCEEDINGS. 10. WE HAVE DELIBERATED AT LENGTH ON THE ISS UE UNDER CONSIDERATION AND FIND SUBSTANTIAL FORCE IN THE OBJECTION RAISED BY THE LD. A.R AS REGARDS THE VALIDITY OF THE NOTICE ISSUED BY THE A.O UNDER SEC. 148 OF THE I . T ACT, WITHOUT OBTAINING THE APPROVAL OF THE APPROPRIATE AUTHORITY AS ENVISAGED UNDER S EC. 151(1). WE FIND THAT IT IS A MATTER OF FACT THAT ORIGINAL ASSESSMENT WAS FRAMED IN THE CASE OF THE ASSESSEE VIDE ORDER PASSED UNDER SEC.143(3) , DATED 18.12.2009 BY THE INCOME TAX OFFICER - 2(1)(4), MUMBAI ( PAGE 26 - 28 OF APB ). FURTHER, THE FACT THAT THE ORIGINAL ASSESSMENT UNDER SEC. 143(3) ALREADY STOOD FRAMED IN HANDS OF THE ASSESSEE WAS BROUGHT TO THE NOTICE OF THE A.O BY THE ASSESSEE IN ITS OBJECTIONS FILED WITH HIM AS REGARDS THE VALIDITY OF THE REASSESSMENT PROCEEDINGS, VIDE LETTER DATED 16.02.2015 ( PAGE 38 - 50 OF APB ). RATHER, ON A PERUSAL OF THE AFORESAID OBJECTIONS IT STANDS REVEALED THAT THE ASSESSEE IN HIS AFORESAID LETTER DATED 16.02.2015 HAD FURNISHED WITH THE A.O THE COMPLETE DETAILS AS REGARDS THE FRAMING OF THE ASSESSMENT IN ITS CASE UNDE R SEC.143(3) , AS UNDER: RETURN FILED - ACK NO. 2486790241007 27/10/2007 143(1) 25.10.2008 NOTICE U/S 143(2) 19.09.2014 P A G E | 10 ITA NO. 5587/MUM/2016 A.Y. 2007 - 08 ITO - 2(1)(4) VS. M/S GOOD VALUE STOCK TRADE PVT. LTD. ASSESSMENT ORDER U/S143(3) 18.12.2009 NOTICE U/S 148 21.03.2014 LETTER FOR RETURN IN RESPONSE TO 148 21.04.2014 11. WE FIND THAT THE A.O WHILE REJECTING THE OBJECTIONS RAISED BY THE ASSESSEE AS REGARDS THE VALIDITY OF THE REASSESSMENT PROCEEDINGS HAD ERRONEOUSLY OBSERVED THAT AS NO SCRUTINY ASSESSMENT ORDER WAS EARLIER PASSED IN ITS CASE FOR A.Y. 2007 - 08, THEREFORE, AS PER THE I . T A CT THE APPROVAL OF THE COMPETENT AUTHORITY I.E. THE ADDITIONAL CIT , RANGE - 2(1) WAS RIGHTLY OBTAINED FOR ISSUING THE NOTICE UNDER SEC. 148 OF THE I . T ACT ( PAGE 52 OF APB ). IN A SIMILAR MANNER , WHILE REBUTTING THE CONTENTIONS OF THE ASSESSEE O N CERTAIN OTH ER ASPECTS ALSO THE A.O HAD OBSERVED THAT NO ORIGINAL ASSESSMENT ORDER WAS PASSED IN THE CASE OF THE ASSESSEE UNDER SEC.143(3) FOR A.Y. 2007 - 08. INSOFAR THE FACT THAT THE A.O WHILE REOPENING THE CASE OF THE ASSESSEE HAD OBTAINED THE APPROVAL OF THE ADDITIO NAL CIT - RANGE - 2(1) , MUMBAI , THE SAME STANDS PROVED ON THE BASIS OF THE ADMISSION ON THE PART OF THE A.O IN H IS LETTER DATED 25.02.2015 REJECTING THE OBJECTIONS RAISED BY THE ASSESSEE AGAINST THE VALIDITY OF THE REASSESSMENT PROCEEDINGS , AS UNDER: PARA 8: THERE IS NO MENTION OF AUTHORIZATION OF A HIGHER AUTHORITY TO INITIATE THE CURRENT ASSESSMENT PROCEEDINGS. REBUTTAL: THE NOTICE U/S 148 CLEARLY MENTIONS THAT THE NOTICE IS ISSUED AFTER OBTAINING SATISFACTION OF THE ADDL. CIT RG. 2(1) IN PARA 3 OF THE NOTIC E. IT IS CLARIFIED THAT IN THE INSTANT CASE AS NO SCRUTINY ASSESSMENT ORDER WAS PASSED FOR A.Y 2007 - 08 THEREFORE AS PER THE ACT THE COMPETENT AUTHORITY IS THE RANGE HEAD I.E. ADDL. CIT RG.2(1) . IN THE BACKDROP OF THE AFORESAID FACTS , IT STANDS PROVED BEYOND ANY SCOPE OF DOUBT THAT THE A.O HAD ADMITTEDLY OBTAINED THE SANCTION OF THE ADDL. CIT - RANGE - 2(1), MUMBAI WHILE ISSUING THE NOTICE UNDER SEC. 148 OF THE I . T ACT. WE ARE OF THE CONSIDERED VIEW THAT AS THE ASSESSMENT IN THE CASE OF TH E ASSESSEE W AS ORIGINALLY CONCLUDED ON THE BASIS OF AN ORDER PASSED BY THE A.O UNDER SEC.143(3), DATED P A G E | 11 ITA NO. 5587/MUM/2016 A.Y. 2007 - 08 ITO - 2(1)(4) VS. M/S GOOD VALUE STOCK TRADE PVT. LTD. 18.12.2009, THEREFORE, AS PER THE MANDATE OF LAW ENVISAGED IN SEC. 151 (1) OF THE I . T ACT A STATUTORY OBLIGATION WAS CAST UPON THE A.O TO HAVE OBTAINED TH E APPROVAL OF THE APPROPRIATE AUTHORITY THEREIN CONTEMPLATED VIZ. PRINCIPAL CHIEF COMMISSIONER OR CHIEF COMMISSIONER OR PRINCIPAL COMMISSIONER OR COMMISSIONER FOR REOPENING THE CONCLUDED ASSESSMENT OF THE ASSESSEE AFTER THE EXPIRY OF A PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR I.E A.Y. 2007 - 08 UNDER SEC. 147 OF THE I.T ACT . IN OUR CONSIDERED VIEW NO NOTICE UNDER SEC.148 COULD HAVE BEEN ISSUED BY THE A.O TO THE ASSESSEE AFTER 31.03.2012, UNLESS THE APPROPRIATE AUTHORITY CONTEMPLATED I N SEC. 151(1) WAS SATISFIED ON THE REASONS RECORDED BY THE A.O THAT IT WAS A FIT CASE FOR THE ISSUE OF SUCH NOTICE. HOWEVER, AS EMERGES FROM THE RECORD THE A.O IN THE PRESENT CASE HA D ISSUED THE NOTICE UNDER SEC.148 WITHOUT OBTAINING THE SANCTION OF THE AP PROPRIATE AUTHORIT Y, AND HAD RATHER PROCEEDED WITH ON THE BASIS OF THE APPROVAL OF THE ADDL. CIT - RANGE - 2(1), MUMBAI. IN OUR CONSIDERED VIEW AS THE A.O HAD ISSUED NOTICE UNDER SEC. 148 WITHOUT OBTAINING THE APPROVAL OF THE APPROPRIATE AUTHORITY, THEREFORE , IT CAN SAFELY BE CONCLUDED THAT AS HE HAD PROCEEDED WITH THE REASSESSMENT PROCEEDING S WITHOUT VALID ASSUMPTION OF JURISDICTION , HENCE THE NOTICE ISSUED BY HIM UNDER SEC.148 OF THE I . T ACT CANNOT BE UPHELD AND IS LIABLE TO BE VACATED. OUR AFORESAID VIEW THAT A NOTICE ISSUED UNDER SEC. 148 WITHOUT OBTAINING THE APPROVAL OF THE APPROPRIATE AUTHORITY AS CONTEMPLATED UNDER SEC.151 OF THE I.T ACT CANNOT BE SUSTAINED AND IS LIABLE TO BE VACATE D IS FORTIFIED BY THE JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF SHRI GHANSHYAM K. KHABRANI VS. ACIT, CIRCLE - 1, THANE & OTHERS VS. ACIT & ORS. (2012) 346 ITR 443 (BOM) . IN THE AFORESAID CASE THE HONBLE HIGH COURT HAD OBSERV ED THAT IN THE ABSENCE OF THE APPROVAL OF THE APPROPRIATE AUTHORITY AS CONTEMPLATED UNDER SEC. 151 OF THE IT ACT, THE NOTICE FOR REOPENING P A G E | 12 ITA NO. 5587/MUM/2016 A.Y. 2007 - 08 ITO - 2(1)(4) VS. M/S GOOD VALUE STOCK TRADE PVT. LTD. ISSUED UNDER SEC. 148 COULD NOT BE SUSTAINED . IT WAS HELD BY THE HONBLE HIGH COURT AS UNDER: 6. THE SECOND GROUND UPON WHICH THE REOPENING IS SOUGHT TO BE CHALLENGED IS THAT THE MANDATORY REQUIREMENT OF SECTION 151(2) HAS NOT BEEN FULFILLED. SECTION 151 REQUIRES A SANCTION TO BE TAKEN FOR THE ISSUANCE OF A NOTICE UNDER SECTION 148 IN CERTAIN CASES. IN THE PRESENT CASE, AN ASSESSMENT HAD NOT BEEN MADE UNDER SECTION 143(3) OR SECTION 147 FOR A.Y. 200405. HENCE, UNDER SUB SECTION 2 OF SECTION 151, NO NOTICE CAN BE ISSUED UNDER SECTION 148 BY AN ASSESSING OFFICER WHO IS BELOW THE RANK OF JOINT COMMISSIONER AFTER THE EXPIRY OF 4 YEARS FRO M THE END OF THE RELEVANT ASSESSMENT YEAR 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. THE EXPRESSION 'JOINT COMMISSIONER' IS DEFINED IN SECTION 2(28C) TO MEAN A PERSON APPOINTED TO BE A JOINT COMMISSIONER OF INCOME TAX OR AN ADDITIONAL COMMISSIONER OF INCOME TAX UNDER SECTION 117(1). IN THE PRESENT CASE, THE RECORD BEFORE THE COURT INDICATE THAT THE ASSESSING OFFICER SUBMITTED A PROPOSAL ON 28 MARCH 2011 TO THE C1T(1) THANE THROUGH THE ADDITIONAL COMMISSIONER OF INCOME TAX RANGE (I) THANE. ON 28 MARCH 2011, THE ADDITIONAL CIT FORWARDED THE PROPOSAL TO THE CIT AND AFTER RECORDING A GIST OF THE COMMUNICATION OF T HE ASSESSING OFFICER STATED THAT : AS REQUESTED BY THE A.O. NECESSARY APPROVAL FOR ISSUE OF NOTICE U/S. 148 MAY KINDLY BE GRANTED IN THE CASE, IF APPROVED. ON THIS A COMMUNICATION WAS ISSUED ON 29 MARCH 2011 FROM THE OFFICE OF THE CIT (1) CONVEYING APPROVAL TO THE PROPOSAL SUBMITTED BY THE ASSESSING OFFICER. THERE IS MERIT IN THE CONTENTION RAISED ON BEHALF OF THE ASSESSEE THAT THE REQUIREMENT OF SECTION 151(2) COULD HAVE ONLY BEEN FULFILLED BY THE SATISF ACTION OF THE JOINT COMMISSIONER THAT THIS IS A FIT CASE FOR THE ISSUANCE OF A NOTICE UNDER SECTION 148. SECTION 151(2) MANDATES THAT THE SATISFACTION HAS TO BE OF THE JOINT COMMISSIONER. THAT EXPRESSION HAS A DISTINCT MEANING BY VIRTUE OF THE DEFINITION I N SECTION 2(28C). THE COMMISSIONER OF INCOME TAX IS NOT A JOINT COMMISSIONER WITHIN THE MEANING OF SECTION 2(28C). IN THE PRESENT CASE, THE ADDITIONAL COMMISSIONER OF INCOME TAX FORWARDED THE PROPOSAL SUBMITTED BY THE ASSESSING OFFICER TO THE COMMISSIONER OF INCOME TAX. THE APPROVAL WHICH HAS BEEN GRANTED IS NOT BY THE ADDITIONAL COMMISSIONER OF INCOME TAX BUT BY THE COMMISSIONER OF INCOME TAX. THERE IS NO STATUTORY PROVISION HERE UNDER WHICH A POWER TO BE EXERCISED BY AN OFFICER CAN BE EXERCISED BY A SUPERIOR OFFICER. WHEN THE STATUTE MANDATES THE SATISFACTION OF A PARTICULAR FUNCTIONARY FOR THE EXERCISE OF A POWER, THE SATISFACTION MUST BE OF THAT AUTHORITY. WHERE A STATUTE REQUIRES SOMETHING TO BE DONE IN A PARTICULAR MANNER, IT HAS TO BE DONE IN THAT MANNER. IN A SIMILAR SITUATION THE DELHI HIGH COURT IN COMMISSIONER OF INCOME TAX VS. SPL'S SIDDHARTHA LTD. (ITA NO.836 OF 2011 DECIDED ON 14 P A G E | 13 ITA NO. 5587/MUM/2016 A.Y. 2007 - 08 ITO - 2(1)(4) VS. M/S GOOD VALUE STOCK TRADE PVT. LTD. SEPTEMBER 2011) HELD THAT POWERS WHICH ARE CONFERRED UPON A PARTICULAR AUTHORITY HAVE TO BE EXERCISED BY THAT AUTHORITY AND THE SATISFACTION WHICH THE STATUTE MANDATES OF A DISTINCT AUTHORITY CANNOT HE SUBSTITUTED BY THE SATISFACTION OF ANOTHER. WE ARE IN RESPECTFUL AGREEMENT WITH THE JUDGMENT OF THE DELHI HIGH COURT. 7. IN VIEW OF THE FINDINGS WHICH WE HAV E RECORDED ON SUBMISSIONS (I), (II) AND (IV), IT IS NOT NECESSARY FOR THE COURT TO CONSIDER SUBMISSION (III) WHICH HAS BEEN URGED ON BEHALF OF THE ASSESSEE, ONCE THE COURT HAS COM E TO THE CONCLUSION THAT THERE WAS NO COMPLIANCE O F THE MANDATORY REQUIREMENTS OF SECTION 147 AND 151(2), THE NOTICE REOPENING THE ASSESSMENT CANNOT BE SUSTAINED IN LAW . FURTHER, A SIMILAR VIEW HAD AGAIN BEEN TAKEN BY THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF D.S.J. COMMUNICATION LTD. VS. DCIT, CIRCLE - 2(1) AND & ANR. (C.W.P. NO. 722 OF 2011; DATED 13.09.2012) . IN THE SAID CASE BEFORE THE HONBLE HIGH COURT THE A.O WHO WAS SUPPOSED TO HAVE OBTAINED THE APPROVAL OF THE ADDL. COMMISSIONER OR JOINT COMMISSIONER OF INCOME TAX FOR ISSUING THE NOTICE UNDER SEC.148, HAD HOWEVER OBTAINED THE APPROVAL OF THE CIT - 2 , MUMBAI . THE HONBLE HIGH COURT RELYING ON ITS EARLIER ORDER IN THE CASE OF SHRI GHANSHYAM K. KHABRANI ( S UPRA) QUASHED THE NOTICE ISSUED BY THE A.O UNDER SEC.148 OF THE ACT. 12. WE FIND THAT I N THE CASE BEFORE US THE A.O WHILE ISSUING THE NOTICE UNDER SEC. 148 HAD FAILED TO OBTAIN THE APPROVAL OF THE APPROPRIATE AUTHORITY AS ENVISAGED UNDER SEC.151(1) OF THE ACT, AND HAD ISSUED THE NOTICE UNDER SEC. 148 AFTER O BTAIN ING THE APPROVAL OF THE ADDL. CIT, RANGE - 2(1), MUMBAI . WE ARE OF THE CONSIDERED VIEW THAT IN THE BACKDROP OF THE AFORESAID FACTS READ WITH THE SETTLED POSITION OF LAW THE NOTICE ISSUED BY THE A.O UNDER SEC. 148 IN THE ABSENCE OF APPRO VAL OF THE APPROPRIATE AUTHORITY CONTEMPLATED UNDER SEC. 151(1) CANNOT BE SUSTAINED. IN TERMS OF OUR AFORESAID OBSERVATIONS THE NOTICE ISSUED BY THE A.O UNDER SEC.148 CANNOT BE UPHELD AND IS QUASHED. P A G E | 14 ITA NO. 5587/MUM/2016 A.Y. 2007 - 08 ITO - 2(1)(4) VS. M/S GOOD VALUE STOCK TRADE PVT. LTD. 13. THAT AS WE HAVE QUASHED THE NOTICE ISSUED BY THE A.O UNDER SEC. 148 OF THE ACT, THEREFORE, WE REFRAIN FROM ADVERTING TO AND THEREIN ADJUDICATING THE MERITS OF THE CASE. 14. THE APPEAL OF THE REVENUE IS DISMISSED IN TERMS OF OUR AFORESAID OBSERVATIONS. ORDER PR ONOUNCED IN THE OPEN COURT ON 0 7 .1 2.2018 S D / - S D / - ( SHAMIM YAHYA) (RAVISH SOOD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; 07.12.2018 PS. ROHIT / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI