ITO WARD - 24(1), NEW DELHI V. SUNJOSS INTERNET PVT LTD, NEW DELHI

ITA 1094/DEL/2021

AI Insights

The case involves the Income Tax Department (Revenue) appealing against the order of the CIT (A) which quashed the reassessment of M/s. Sunjoss Internet Pvt. Ltd. for the Assessment Year 2011-12. The reassessment was based on information from a search and survey operation on entities controlled by Shri Pradeep Kumar Jindal, which revealed that these entities were involved in providing accommodation entries. The AO had reopened the assessment under sections 147 and 148 of the Income Tax Act, 1961, alleging that income had escaped assessment. The CIT (A) quashed the reassessment on grounds of lack of independent application of mind and borrowed satisfaction, which the Tribunal found to be incorrect, leading to the remittance of the case for a decision on merits.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 312907 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2025
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2011-2012
• Other Referred Cases: Agroha Fincap Ltd Vs ITO, Pr.CIT Vs. N.C Cables, AKG Securities & Consulting Ltd. Vs ITO, Meenakshi Overseas (P.) Ltd. Vs CIT, Raymond Woolen Mills Ltd. vs. ITO and Others, CIT v. Rajesh Jhaveri Stock Brokers (P) Ltd., Central Provinces Manganese Ore Co. Ltd. v. ITO, Zuari Estate Development & Investment Co Ltd, Indu Lata Rangwala vs DCIT, Vedauta Ltd vs ACIT, RDS Projects Ltd vs ACIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: HARPREET KAUR HANSRA
• Assessee Lawyers: RAJIV KHANDELWAL; ISSUE OF NOTICE
• Keywords: Set aside; Opportunity of being heard; Reassessment proceedings; Unexplained expenditure; Reopening of assessment; Accommodation entries; Assessment record; Competent authority; Reason to believe; Tangible material; Borrowed satisfaction; Bogus
• Section: 147; 148; 11; 68; 133(6); 69C

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘F’: NEW DELHI BEFORE SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER and SHRI ANUBHAV SHARMA, JUDICIAL MEMBER ITA No.1094/DEL/2021 (Assessment Year: 2011-12) ITO, Ward 24 (1), vs. M/s. Sunjoss Internet Pvt. Ltd., New Delhi. 211, Ansal Bhawan,, 16, KG Marg, Connaught Place, New Delhi – 110 001. (PAN : AAHCS3923N) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Rajiv Khandelwal, Advocate Shri Neelkanth Khandelwal, Advocate Shri Jaind Kumar Jaiswal, Advocate REVENUE BY : Ms. Harpreet Kaur Hansra, Sr. DR Date of Hearing : 03.02.2025 Date of Order : 30.04.2025 O R D E R PER S. RIFAUR RAHMAN, ACCOUNTANT MEMBER : 1. This appeal has been filed by the Revenue against the order of ld. Commissioner of Income-tax (Appeals)-8, New Delhi dated 13.07.2020 for the Assessment Year 2011-12 raising following grounds of appeal :- “1. The Ld. CIT(A) has failed to appreciate that remarks of the then competent authority while granting approval u/s 151 that \"Approved\" and \"Discussed with Assessing Officer”. It is a fit case for issue of notice u/s 148.: \" cannotes that competent authority had read and understood fully the proposal proposed by A.O and he is satisfied that the case is fit for reopening u/s 148 of the I.T. Act. 2 ITA No.1094/DEL/2021 2. The Ld. CIT(A) erred in relying on the ITAT Delhi order in case of Agroha Fincap Ltd Vs ITO , ward-1 (4), Delhi which is followed Delhi HC order in Case of Pr.CIT Vs. N.C Cables (2017) 391 ITR 11 and AKG Securities & Consulting Ltd. Vs ITO even where the remarks given by competent authority while granting approval u/s 151 defer in this case from above cases. 3. The Ld. CIT(A) has failed to adjudicate on addition of Rs.7,12,00,000/- on account of unexplained money u/s 68 of the Act and addition of Rs.14,24,000/- u/s 68 of IT Act on account of unexplained expenditure(u/s 69 of the Act) on merits. 4. The Ld. CIT (A) has failed to appreciate that the AO had framed opinion of escapement of amount of Rs.8,57,00,000/- but during assessment period he made addition of Rs.7,12,00,000/- and did not act in mechanical manner. The Ld.CIT(A) failed to adjudicate the case on merits. 5. The Ld. CIT(A) has failed to appreciate the bogus nature of transactions as the assessee company did not provide relevant documents before AO to establish the genuineness of the transactions so undertaken.” 2. Brief facts relating to the grounds raised by the Revenue are, assessee filed its original return of income on 29.09.2011 declaring income of Rs.1,40,080/-. The return was processed under section 143(1) of the Income-tax Act, 1961 (for short ‘the Act’). Subsequently, information was received from ADIT (Inv.), Unit 2(1), Delhi vide letter dated 15.03.2018. As per the information, a search/survey operation u/s 132/133A was conducted on 18.11.2015 on the business and residential premises of Shri Pradeep Kumar Jindal and his group companies. It was observed that the group was involved in providing accommodation entries through various non-descript entities headed by dummy Directors and actually controlled by Shri Pradeep Kumar Jindal. Based on the statements of Shri Pradeep Kumar Jindal and other evidences, it was 3 ITA No.1094/DEL/2021 observed that assessee is one of the beneficiary and it has dealt with four companies controlled by Shri Pradeep Kumar Jindal, namely, M/s. Madhurnath Infrastructure Pvt. Ltd., Reena Plastic and Pipes Pvt. Ltd., M/s. Focus Industrial Resources Ltd. and M/s. Arts Elastic Pvt. Ltd.. It was observed that assessee is having transaction with those companies by way of loan/advances. A notice was issued to the assessee to explain the transactions. In response, ld. AR of the assessee attended and submitted the detailed information which was reproduced at page 7 of the assessment order. After considering the submissions of the assessee, AO observed that all these companies have declared meagre income and does not have capacity to lend the money to the assessee and all these transactions fall u/s 68 of the Act for which assessee has not satisfied the conditions i.e. creditworthiness and genuineness of the transaction. Accordingly, he proceeded to make the addition of Rs.7,12,00,000/- along with 2% commission u/s 69C of the Act to the extent of Rs.14,24,000/-. 3. Aggrieved with the above order, assessee preferred an appeal before the ld. CIT (A)-8, New Delhi. Before ld. CIT (A), assessee has raised several grounds including validity of initiation of reassessment proceedings. After considering the detailed submissions of the assessee, assessment order and also order sheet recording, ld. CIT (A) has held that initiation 4 ITA No.1094/DEL/2021 of proceedings u/s 147 is with borrowed satisfaction and also not contained proper approval u/s 151 of the Act and the relevant findings of the ld.CIT (A) are as under :- “4.6 I have gone through the reasons recorded by the assessing officer for reopening the case under section 148/147. It is noticed that the reopening was made on the basis of the letter dated 15/03/2018 forwarded by ADIT(Inv)-2(1), Delhi only. It shows that the reopening was without application of mind and was purely on the basis of borrowed satisfaction as the AO has not made any enquiry to satisfy himself about the allegations against the appellant. There was no independent application of mind by Assessing Officer to tangible material. Therefore, reopening of the case on this count is erroneous and reliance is placed on the decision of jurisdictional High Court of Delhi in the case of PClT vs. Meenakshi Overseas (P.) Ltd. [2017] 82 taxmann.com 300 (Delhi) wherein it was held that where reassessment was resorted to on the basis of information from DIT (Investigation) that assessee had received accommodation entry but there was no independent application of mind by Assessing officer to tangible material and reasons failed to demonstrate link between tangible material and formation of reason to believe that income had escaped assessment, reassessment was not justified. ……….. 4.10 Further, the Ld. AR has vehemently argued that the sanction accorded u/s 151 of the Act by the competent authority cannot be regarded as the satisfaction as required under the Act. In this respect, he has made the written submission as mentioned supra in para 4.2 of this appellate order. The Ld. AR has also filed a copy of the decision of the Hon'ble ITAT Delhi dated 17.10.2019 in the case of Agroha Fincap Ltd Vs. ITO, Ward-l(4), Delhi (ITA No.l063/DeIj2019. He has drawn my attention to para 10 and 11 of this Hon'ble ITAT order which is reproduced as under: 10. I have considered' the arguments of both the sides, perused the orders of the Assessing Officer and CIT (A) and the. paper book filed on behalf of the assessee. I have also considered various decisions cited before us. At the outset, I 5 ITA No.1094/DEL/2021 deem it proper to adjudicate the legal ground raised by the assessee challenging the validity of the reassessment proceedings in absence of proper approval given u/s 151 of the IT Act. A perusal of the copy of approval given u/s 151, copy of which is placed at page 13 of the paper book, shows that the Addl. CIT, while giving approval has simply mentioned: \"Yes, I am satisfied that it is a fit case for reopening of assessment u/s 148.\" Similarly, the PCIT while giving approval has also simply mentioned: \"I am satisfied that it is a fit case for the issue of notice u/s 148 of the IT Act.\" From the above, it is clear that none of the supervisory authorities have applied their mind. I find, the Hon'ble Delhi High Court in the case of CIT vs: N.C. Cables Ltd., 391 ITR l1 (Del) has observed as under:- \"Reassessment-Issuance of Notice-Sanction for issue of Notice-Assessee had in its return for A Y 2001-02 claimed that sum of Rs. 1 Crore was received towards share application amounts and a further sum of Thirty Five Lakhs was credited to it as an advance towards loan-Original assessment was completed u/s 143(3)- However, pursuant to reassessment notice, which was dropped due to technical reasons, and later notice was issued 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 an legality of reassessment notice but allowed assessee’s appeal on merits holding that AO did not conduct appropriate enquiry to conclude that share inclusion and advance received were from bogus entities-Tribunal allowed assessee's appeal on merits- Revenue appealed against appellate order on merits- Assessee's cross appeal was on correctness of reopening of assessment- Tribunal upheld, assessee's cross-objections and dismissed Revenue's appeal holding that there was no proper application of mind by concerned sanctioning authority u/s Section 151 as a pre-condition for issuing notice u/s 147/148-Held, Section 151 stipulates that CIT (A), who was competent authority to authorize reassessment notice, had to apply his mind and form opinion-Mere 6 ITA No.1094/DEL/2021 appending of expression 'approved' says nothing-It was not as if CIT (A) had to record elaborate reasons for agreeing with noting put up-At same time, satisfaction had to be recorded of given case which could be reflected in briefest possible manner-In present case, exercise appears to have been ritualistic and formal rather than meaningful, which was rationale for safeguard of approval by higher ranking officer-Revenue's appeal dismissed.\" 11. Similar view has been taken by the coordinate Benches of the Tribunal in a number of cases where it had been held that merely giving approval by mentioning; \"Yes, I am satisfied that it is a fit case for reopening of assessment\" is not a valid approval. Accordingly the reassessment proceedings have been quashed. Since, in the instant case, both the superior authorities have merely given their approval in a mechanical manner without independent application of mind, therefore, respectfully following the decision of the jurisdictional High Court in the case of N.C. Cables (supra), I hold that the reassessment proceedings are bad in law. Accordingly, the same is quashed. Since the reassessment proceedings have been quashed, -the subsequent order passed by the Assessing Officer becomes had in law and accordingly the same is quashed. Since the assessee succeeds on the legal grounds, the grounds raised by the assessee become academic and, therefore, are not being adjudicated\". 4.11 I have considered the written submission and arguments of the Ld. AR. I have also perused the page 3 of the notesheet of the reasons recorded by the AO where the competent authority has just mentioned \"Approved.\" Further, in column 14 of the proforma\" Form for recording the reasons for initiating proceedings u/s 147 of the I.T.Act for obtaining approval of the Commissioner of Income Tax\", the competent authority has just mentioned\" Discussed with AO. It is a fit case for issue of notice u/s 148\". Considering the decisions of the Hon'ble ITAT Delhi in the case of \"Agroha Fincap Ltd Vs. ITO, Ward-l(4), Delhi (ITA NO.l063/Del/2019\" in which they have followed the decision of Hon'ble Delhi High Court in the case of Pr.CIT Vs. N.C. Cables (2017) 391 ITR 11, and also in the case of AKG Securities & Consulting Ltd. vs. ITO, WARD-l(l), 7 ITA No.1094/DEL/2021 New Delhi in ITA No. 4395/De1/2019 dated 27.02.20201 am of the view that there is no Independent application of mind by the assessing officer while reopening the case under section 148/147 and the case was reopened on the basis of borrowed satisfaction from the investigation wing. I'm also of the view that there is approval/sanction u/s 151 of the Act by the competent authority in view of the various decisions of the Hon’ble courts. Hence, the notice issued u/s 148 of the Act is not a valid notice and accordingly hold that the reopening proceedings were void ab initio, the same is hereby quashed. This ground of appeal is accordingly decided in favour of the appellant company and allowed.” 4. Since ld. CIT (A) has allowed the appeal on the jurisdictional issue, he has not dealt with the merits of the case. 5. Aggrieved with the above order, Revenue is in appeal before us. 6. At the time of hearing, ld. DR of the Revenue filed a written submissions which is reproduced as under :- “1. The present appeal has been preferred by the Revenue against the order dated 13.07.2020 passed by the Learned Commissioner of Income Tax (Appeals) [Ld. CIT(A)], whereby the assessment order passed under Section 147 of the Income-tax Act, 1961 (the \"Act\") was quashed solely on technical grounds without adjudicating on the merits of the case. Grounds of Appeal attached as Annexure 1. 2. The Ld. CIT(A) failed to appreciate that the assessee did not object to the validity of the notice issued under Section 148 within the prescribed period under Section 124(3) of the Income Tax Act 1961. Perusal of the assessment record reveals that the notice under Section 148 was issued on 31.03.2018. Furthermore, the office order sheet noting dated 23.10.2018 clearly shows that the Authorized Representative (AR) attended the proceedings and was specifically requested to submit any objections within the stipulated time period of 8 days. (Annexure 2) However, the assessee failed to file any objections within the given time frame. It is a settled position in law that an assessee cannot challenge jurisdiction belatedly without raising timely objections. As per Section 124(3), any objection to jurisdiction must be raised within 30 days of receipt of notice. Since the assessee failed to do so, the challenge to the validity of the notice is untenable. In the case of Abhishek Jain vs 11'0 (2018) 94 taxmann.eom 355 (Delhi) it is held that in terms of section I 24(3)(b ) jurisdiction of an Assessing Officer can not be called in 8 ITA No.1094/DEL/2021 question by an assessee after expiry of one month from date on which he was served with a notice for reopening assessment under section 148. 3. In its order, the CIT(A) observed that the reasons recorded by the Assessing Officer (AO) indicated a complete lack of application of mind and no independent thought process in the reassessment proceedings. However, the AO had valid reasons to believe that income had escaped assessment, which was supported by information provided by the Investigation Wing. It is emphasized that under Section 147, the AO is only required to have \"reasons to believe\" that income has escaped assessment. The Supreme Court in Raymond Woolen Mills Ltd. vs, ITO and Others (1997) 236 ITR 34 (SL). held that a prima facie belief based on tangible material is sufficient. The fact that the final addition (Rs. 7.12 crore) differs from the amount escaping assessment as per the reasons recorded for initiating proceedings escapement (Rs. 8.57 crore) does not invalidate the reopening, as held in CIT v. Rajesh Jhaveri Stock Brokers (P) Ltd., 291 ITR 500 (SC). 4. Further, the AO's reasoning is based on independent application of mind, satisfying legal requirements. The verification of transactions is part of the reassessment process, not a prerequisite for issuing a notice under Section 148. The Supreme Court in Central Provinces Manganese Ore Co. Ltd. v. ITO (1991) 191 ITR 662 (SC) clarified that sufficiency of evidence is not a ground to quash reassessment. Hence, the reassessment is valid, and the reasons recorded by the AO are legally justified. 5. Before recording the reasons of reopening and issue of notice u/s 148. Notices under Section 133(6) were issued to all parties and the assessee involved in the transaction with the assessee. (Annexure 3) S.No. Parties Notices u/s 133(6) issued on Reply 1 M/s. Rerum Infrastructure Pvt. Ltd. 20.03.2018 No reply 2 M/s. Focus Industrial Resources Ltd. 20.03.2018 No reply 3 M/s. Arts Elastic Pvt. Ltd. 20.03.2018 No reply 4 Sanjoss Internet Pvt. Ltd. 20.03.2018 No reply There was no compliance to the said notices and the assessee also failed to establish the genuineness of the transactions before the AO, justifying the reopening under Section 147. 6. The Ld. CIT(A) erred in holding that the approving authority had not applied an independent mind while granting approval under Section 151 of the Act. The order of the Ld. CJT(A) is contrary to law and facts for the following reasons: a. The office order notesheet dated 23.10.201 (Annexure 4) indicates that the assessment record was presented to the competent authority for discussion, involving the Assessing Officer (AO) and the Additional Commissioner of Income Tax (Addl. CIT), along with the case records and relevant information. In the notesheet, the competent authority approved the reasons for initiating 9 ITA No.1094/DEL/2021 proceedings under Section 147 and explicitly mentioned this in the form for recording reasons for initiating proceedings u/s 147 of the Income Tax Act 1961. The competent authority while granting approval under Section 151 used the expressions \"Discussed with AO. It is a fit case for issue of notice under Section 148.\" (Annexure 5). This clearly indicates that the Competent Authority duly examined the material on record, applied its mind, and was satisfied with the reasons recorded by the Assessing Officer (AO) for reopening the assessment. The requirement for elaborate reasoning does not arise when the Principal Commissioner is satisfied with the reasons recorded by the Assessing Officer. This principle was upheld in Virbhadra Singh vs. DCIT (88 taxmann.com 888), where the competent authority's agreement with the AO's reasons and proper application of mind in granting approval were deemed sufficient for a valid notice under Section 147/148. Similarly, in PCIT vs. Meenakshi Overseas Pvt. Ltd. (ITA No. 65112015, dated 11.01.2016), the Hon'ble Jurisdictional High Court held that the mandate of Section 151 (I) is met when the approving authority records satisfaction in writing, such as stating, \"Yes, I am satisfied.\" This position was further affirmed in S. Gandhi & Others (WP(C) 8482/2018, order dated 18.09.2018) and Experion Developers Pvt. Ltd. vs. ACIT (l15 Taxman 33. All the aforementioned case laws have been thoroughly discussed by the Hon'ble ITAT, Delhi D-Bench, in its order dated 04.01.2022 in the case of Krishna Devi vs. ITO (ITA 6356/DeI/2019), which was decided in favor of the Revenue. b. The Ld. CIT(A) relied upon the decision of Agroha Fincap Ltd. vs. ITO, which in turn relied upon Pr. C[T vs. N.C. Cables (2017) 391 [TR II (Delhi) and AKG Securities & Consulting Ltd. vs. lTO. However, in the present case, the remarks of the approving authority are distinguishable from those in Agroh a Fincap Ltd. because: 1. Proper Application of Mind - Unlike in N. C. Cables, where the approval was given in a routine manner without demonstrating independent satisfaction, the approving authority in the instant case has explicitly recorded satisfaction after considering the reasons provided by the AO. 2. Detailed Examination of Material - The approval in this case is not a mere endorsement but reflects a conscious decision based on the material placed before the authority. The AO's reasons were scrutinized, and the approving authority ensured that the conditions for reopening were met before granting sanction. 3. Absence of Mechanical Approval - In Agroha Fincap Ltd., the approval was found to be mechanical because it lacked reasoning or evidence of consideration. In contrast, in the present case, the approving authority has provided a clear indication that the reasons recorded by the AO were examined and found to be valid. fulfilling the requirements of Section 151. 10 ITA No.1094/DEL/2021 Therefore, the reliance on Agroha Fincap Ltd. and the precedents cited therein does not apply to the present case, as the approval here was granted with due diligence and proper application of mind. 7. The Ld. CIT(A) erred in not adjudicating the case on merits despite the fact that the AO made additions amounting to Rs. 7,12,00,000/- under Section 68 (unexplained money) and Rs.14,24,000/- under Section 69 (unexplained expenditure) of the Act. These additions were based on substantive evidence and could not have been ignored without due consideration. Further reliance is also placed on:  AGR Investment vs Addl CIT (333 ITR 146) (Delhi): In this case. the Hon'ble Delhi High Court held that mere brevity in approval remarks does not render it invalid if the competent authority has duly considered the material. This case supports the Revenue's argument that the approval in the present case was granted after proper application of mind.  IMD Global (P) Ltd vs PCIT (2019) 112 taxrnann.com 204 (Delhi): The Hon'ble Court upheld reopening under Section 147 where the AO relied on credible material indicating escapement of income. This supports the argument that tangible material from the Investigation Wing justified the AO's action in reopening the case.  Sonia Gandhi vs ACIT (2018) 407 ITR 594 (Delhi): The Hon'ble High Court ruled that reopening based on material suggesting undisclosed income was valid. In the present case, the AO's belief of escapement was based on credible information, reinforcing the validity of the reopening.  ACIT vs Rajesh Jhaveri Stock Brokers (P) Ltd (2007) 219 ITR 500 (SC): The Hon'ble Supreme Court clarified that reopening requires only prima facie belief of escapement and does not demand conclusive proof at the notice stage. This aligns with the present case, where the ; 0 had sufficient grounds to initiate reassessment.  DCIT vs Zuari Estate Development & Investment Co Ltd (2015) 373 ITR 661 (SC): The Supreme Court upheld that reopening is valid if the approving authority has considered the material before granting approval. This counters the Ld. CIT(A)'s finding that there was no independent application of mind.  Indu Lata Rangwala vs DCIT (2017) 384 ITR 337 (Delhi): The Delhi High Court held that courts should not interfere with reopening unless there is a clear lack of jurisdiction. Since the assessee never raised a timely objection under Section 124(3), the reopening remains valid.  Vedauta Ltd vs ACIT (WP(C) o. 13036 of 2019, order dated 20.12.2019): The Hon'ble Court ruled that an approval granted under Section 151 is valid if it is based on a reasonable satisfaction of escapement of income. This supports the 11 ITA No.1094/DEL/2021 Revenue's contention that the approval process in the present case was legally sound.  RDS Projects Ltd vs ACIT (2020) 113 taxmann.com 534 (Delhi): The Hon'ble Court upheld reopening where the AO relied on Investigation Wing inputs and corroborated material, reinforcing the Revenue's stand that the AO exercised independent judgment in reopening the case. 9. PRAYER: The Ld. CIT(A) failed to acknowledge that the AO exercised due diligence by issuing notices under Section 133(6), recording reasons for reopening, and obtaining necessary approvals under Section 151 after proper application of mind. Furthermore, the Ld. CIT(A) did not adjudicate the case on merits, despite the AO making substantial additions under Sections 68 and 69. It is also evident that the assessee failed to challenge the notice under Section 148 within the time prescribed under Section 124(3), rendering its challenge to jurisdiction unsustainable. The Revenue prays that the order of the Ld. CIT(A) be set aside and that the assessment order passed under Section 147 be upheld in the interest of justice and equity.” 7. On the other hand, ld. AR of the assessee submitted as under :- “1. It is imperative to mention that during the course of hearing, the learned DR placed before the Hounourable Bench the assessment records and submitted that prior to the Assessing Officer recording the reasons for reopening of assessment, the Assessing Officer on receipt of information from the Investigation Wing has independently carried out certain inquires vis-a-vis the parties from whom the loan is received by the assessee by issue of notice under section 133(6) of the Act to the lenders. Thereafter issued the notice under section 148 for reopening of assessment; however, this fact is not recorded in the reasons. 1.1 Further, the learned DR submitted that this inquiry which has been conducted by the Assessing Officer did not have the desired results, to the satisfaction of the Assessing Officer, and it is after this that he records the reasons for re-opening of assessment and obtains approval from the requisite authority concerned (the Pro Commissioner of Income-tax in this case); thereafter, issues the notice under section 148 for re-opening of assessment. 2. It is contended that this inquiry which has been conducted by the Assessing Officer which did not lead to the desired result to the satisfaction of the Assessing Officer which ultimately culminated into the reasons being recorded by the Assessing Officer and the necessary approval from the concerned authority, nowhere forms part of the reasons recorded by the Assessing Officer and thus, the reasons recorded by the Assessing Officer are incomplete and faulty and as such, the approval from the concerned authority too suffers from a defect, inasmuch as the approval has been given without due application of mind and is arbitrarily inasmuch as this aspect of the 12 ITA No.1094/DEL/2021 Assessing Officer having conducted inquiries prior to the Assessing Officer recording reasons for re-opening of assessment should have been pointed out by the Pro Commissioner of Income-tax and as such, the reopening of assessment suffers from both the facts mentioned above - a) reasons recorded for re-opening of assessment are incomplete and faulty and should be read as recorded, nothing can be added thereto - Hindustan Lever Ltd 268 ITR 332 (Born) b) approval of the approving authority is in arbitrary/ mechanical manner, without application of mind – N.C. Cables 391 ITR 11 (Del) Capital Broadways (P) Ltd 301 Taxman 506 (Del) S. Goyanka Lime & Chemical Ltd 231 Taxman 73 (SC) (SLP dismissed) 237 Taxman 378 (SC) It is thus, contended that the re-opening of assessment ought to be quashed. 3. It is interesting to note that the CIT(A) has allowed the appeal of the assessee on two counts namely, that the reopening is on the basis of borrowed satisfaction and that the approving authority has given approval without application of mind - refer order of the CIT(A) on page no 18, para no 4.11. However, the Revenue in the grounds of appeal before the Tribunal, has taken a ground only in respect of the approval given by the concerned authority but the first aspect that the reasons for re-opening of assessment are incomplete and faulty and on the basis of borrowed satisfaction has not been challenged. Thus, notwithstanding the conclusion of the Honourable Tribunal on the grounds raised by the Revenue, the order quashing the assessment order of the Assessing Officer will still hold the field on the basis of the reasons being on the basis of borrowed satisfaction.” 8. Considered the rival submissions and material available on record. We observed that based on the search and survey operations carried out in the case of Shri Pradeep Kumar Jindal who was providing accommodation entries to various beneficiaries through the non-descript companies managed and controlled by him, he has categorically agreed that he is habitually providing accommodation entries to various parties. Based on the above information received from Investigation Wing, the AO initiated 13 ITA No.1094/DEL/2021 proceedings for reopening of the assessment. It is a fact on record that assessee has received funds from these entities in the form of unsecured loans. Based on the above information, Assessing Officer had formed opinion that income has escaped assessment and since reopening of the assessment was beyond four years. AO has obtained the approval from ld. PCIT-8, Delhi and the relevant approval papers were filed by the ld. DR of the Revenue and placed on record. As per which ld. PCIT-8, Delhi has approved the reopening of the assessment. Considering the fact that the assessee has received funds and transactions through companies managed and controlled by Shri Pradeep Kumar Jindal. 9. We observed that ld. CIT (A) has granted relief to the assessee by observing that AO has not made any enquiry to satisfy himself about the allegations against the assessee and there was no independent application of mind by the AO and he has initiated the proceedings on the basis of borrowed satisfaction. After considering the detailed submissions submitted before us, we observed that it is a fact on record that the AO has received various information based on the search and survey operation conducted in the case of Shri Pradeep Kumar Jindal and he also accepted that he is providing accommodation entries to various beneficiaries through the companies controlled by him. The AO has noticed and found that assessee has carried out several transactions with 14 ITA No.1094/DEL/2021 those companies which are controlled by Shri Pradeep Kumar Jindal. Since AO has observed that there is clear fact on record that assessee has entered into several transactions with those companies, in order to verify the same, he has proceeded to reopen the assessment. Therefore, at the time of initiation of reassessment proceedings, the information available with the AO is sufficient to form an opinion that there is escapement of income. Therefore, it cannot be said that it is borrowed satisfaction. 10. With regard to obtaining approval u/s 151 of the Act, we observed that the same facts were recorded by the AO and the same was documented and submitted before the ld. PCIT-8, New Delhi. Since the facts and material available with the AO which was forwarded to the ld. PCIT which is sufficient enough to accord approval. Since detailed facts were already submitted before the ld. PCIT, there is no further requirement to apply further investigation but to granting approval. Therefore, we are inclined to reject the findings of the ld. CIT (A) and case laws relied upon by the ld. CIT (A) are distinguishable to the facts of the present case. Accordingly, grounds no.1 & 2 raised by the Revenue are allowed. 11. With regard to grounds no.3 & 4, we observed that ld. CIT (A) has not adjudicated on the merits of the issue, therefore, we are inclined to remit this issue to the file of ld. CIT (A) to adjudicate on merits raised by the assessee. Accordingly, we are inclined to remit grounds no.3 & 4 to the 15 ITA No.1094/DEL/2021 file of ld. CIT (A). It is needless to say that proper opportunity of being heard be granted to the assessee. Accordingly, grounds no.3 & 4 are allowed for statistical purposes. 12. Grounds No.5 & 6 are general in nature, hence not adjudicated. 13. In the result, the appeal filed by the Revenue is partly allowed for statistical purposes. Order pronounced in the open court on this 30th day of April, 2025. Sd/- sd/- (ANUBHAV SHRMA) (S.RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 30.04.2025 TS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI "