Income Tax Appellate Tribunal – Mumbai
Intime Realty Pvt. Ltd., Mumbai vs Dcit- Cc 3(4), Mumbai on 6 December, 2021 IN THE INCOME TAX APPELLATE TRIBUNAL, ‘C’ BENCH
MUMBAI
BEFORE: SHRI LALIET KUMAR, JUDICIAL MEMBER
&
SHRI M.BALAGANESH, ACCOUNTANT MEMBER
ITA No.6357/Mum/2019
(Assessment Year :2010-11)
M/s. Intime Realty Private Vs. DCIT-CC-3(4)
Limited Mumbai
B-306-309, Dynasty 19 t h Floor, Air India
Business Park, Building, Nariman Point
J.B. Nagar Mumbai
Opp. Sangam Cinema,
Andheri(E)
Mumbai – 400 059
PAN/GIR No.AABCI9177N
(Appellant) .. (Respondent)
Assessee by Shri Dharmesh Shah
Revenue by Shri R.A. Dhyani
Date of Hearing 01/12/2021
Date of Pronouncement 06/12 /2021
आदे श / O R D E R
PER M. BALAGANESH (A.M):
This appeal in ITA No.6357/Mum/2019 for A.Y.2010-11 arises out of
the order by the ld. Commissioner of Income Tax (Appeals)-51, Mumbai in
appeal No.CIT(A)-51/IT-271/DCIT-CC-3(4)/2017-18 dated 09/08/2019 (ld.
CIT(A) in short) against the order of assessment passed u/s.143(3) r.w.s.
147 of the Income Tax Act, 1961 (hereinafter referred to as Act) dated
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M/s. Intime Realty P. Ltd.,
30/06/2016 by the ld. Dy. Commissioner of Income Tax, Central Circle-3(4),
Mumbai (hereinafter referred to as ld. AO).
2. The assessee has raised a ground challenging the validity of
assumption of jurisdiction u/s.147 of the Act.
3. We have heard rival submissions and perused the materials available
on record. At the outset, the ld. AR submitted that the assessment for
A.Y.2010-11 was reopened by the ld. AO after obtaining the prior approval of
the ld. PCIT in terms of Section 151 of the Act. But he vehemently submitted
that the approval u/s.151 of the Act sanctioned by the ld. PCIT was a
mechanical approval without due application of mind as the ld. PCIT in the
prescribed proforma in response to Question No.13 as to whether he
satisfied with the reasons recorded by the ld. DCIT that it is a fit case for
issuing notice u/s.148 of the Act, the ld. PCIT had merely replied “Yes, it is a
fit case for issue of notice u/s.148”. The ld. AR submitted that similar
sanction u/s.151 granted by the ld. PCIT was subject matter of adjudication
by this Tribunal in the case of sister concern of the assessee i.e. in the case
of Seawoods Hospitality and Realty Pvt. Ltd., vs. DCIT in ITA No.92/Mum/
2019 for A.Y.2010-11 dated 28/10/2020 wherein this Tribunal had quashed
the re-assessment proceedings as the same has been initiated without
obtaining proper sanction in terms of Section 151(1) of the Act from the ld.
PCIT who had given approval in a mechanical way.
4. Per contra, the ld. DR vehemently relied on the orders of the ld.
CIT(A) in this regard.
5. We find that the assessee company is engaged in the business of
investment in shares and had filed its return of income for the A.Y.2010-11
originally u/s.139 of the Act on 06/10/2010 declaring total loss of
Rs.4,15,968/-, which was duly processed u/s.143(1) of the Act. Pursuant to
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M/s. Intime Realty P. Ltd.,
the survey conducted in the business premises of the assessee u/s.133A of
the Act on 21/11/2013 wherein it was observed that assessee had received
substantial amount towards issue of shares at a very high premium without
any justification or basis, notice u/s.148 of the Act was issued on
19/01/2016. Since, the said assessment was sought to be reopened beyond
a period of four years from the end of relevant assessment year, approval
was sought to be obtained from ld. PCIT through the ld. Addl. CIT in terms
of Section 151 of the Act in the prescribed proforma. For the sake of
convenience, the said prescribed proforma is reproduced hereunder:-
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M/s. Intime Realty P. Ltd.,
5.1. We find from the perusal of the aforesaid proforma, the ld. PCIT
had merely accorded approval in a mechanical manner which has not
been appreciated by the various High Courts. The various High Courts
have held that approval granted in the aforesaid mechanical manner is
not with proper application of mind by the competent authority and
hence, the re-assessment should be quashed on that count. We also find
that the identical issue had cropped up before this Tribunal in the case of
Seawoods Hospitality and Realty Pvt. Ltd., vs. DCIT in ITA No.92/Mum/2019
wherein the re-assessment was quashed for the same reason by observing
as under:-
“ITA No.92/Mum/2019 (A.Y.2010-11) – Seawoods Hospitality and Realty
P. Ltd.,
2. Though the assessee has raised several grounds, we find that it has
raised a legal ground challenging the validity of reopening of the
assessment. Hence, we proceeded to address the legal issue raised by the
assessee on the validity of reopening of assessment.
3. We find that the assessee is a private limited company engaged in the
business of investment in shares and securities. The return of income for the
A.Y.2010-11 was filed by the assessee on 15/10/2010 which was duly
processed u/s.143(1) of the Act. The said return was not selected for
scrutiny by issue of notice u/s.143(2) of the Act and as such, the said
assessment became final. Subsequently a notice u/s.148 of the Act dated
14/01/2016 was issued by the ld. AO on the ground that income of the
assessee had escaped assessment with regard to issue of share capital and
share premium in the sum of Rs.3,35,00,000/- which in the opinion of the ld.
AO was bogus, as certain fresh tangible information had emanated out of
the search and seizure operation u/s.132 of the Act carried out in Mahavir
Group of cases. As an off shoot of that search, a survey action was also
carried out u/s.133A of the Act in the business premises of the assessee,
based on which for the aforesaid reasons recorded for reopening of
assessment, notice u/s.148 of the Act dated 14/01/2016 was issued.
3.1. In response to the said notice, assessee filed a letter dated
18/02/2016 requesting the ld. AO to treat the original return of income filed
on 15/10/2010 as the return filed in response to notice u/s.148 of the Act.
The assessee on receipt of reasons recorded for reopening of assessment
also filed objections to the same before the ld. AO. The ld. AO disposed off
the objections by way of a separate speaking order dated 19/02/2016
rejecting the contentions of the assessee. Thereafter, the ld. AO proceeded
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M/s. Intime Realty P. Ltd.,
to frame re-assessment u/s.143(3) r.w.s.147 of the Act on 13/06/2016
wherein the share capital and share premium received by the assessee in the
sum of Rs.3,35,00,000/- was added as unexplained cash credit u/s.68 of the
Act.
4. The ld. AR at the outset argued that the notice u/s.148 of the Act in the
instant case for the A.Y.2010-11 was apparently issued beyond four years
from the end of the relevant assessment year which requires a sanction of
approval to be accorded by the Pr. Commissioner of Income Tax (PCIT in
short) in terms of Section 151(1) of the Act. In this regard, he placed on
record as part of the paper book and drew our attention to the page 1 of the
case law paper book containing approval sought by the ld. AO before the ld.
PCIT u/s.151(1) of the Act for reopening of assessment in the case of the
assessee in the prescribed proforma on 08/01/2016. The said proforma was
sent by the ld. AO to the ld. PCIT through proper channel i.e ld. Additional
Commissioner of Income Tax on 08/01/2016. The ld. AR specifically drew
our attention to reply given by the ld. AO in response to question No.7 of the
prescribed proforma by mentioning Section 147 (b) which he stated that the
said provision has been omitted from the statute long back. He also argued
that the Additional Commissioner as well as Pr. Commissioner while
affixing their signature did not mention the date of granting of approval in
terms of Section 151 of the Act for reopening of assessment in the
prescribed proforma. The ld. AR vehemently argued that the ld. PCIT had
not applied his mind at all in the instant case for according approval and
granted mechanical approval by simply stating “yes, it is a fit case for issue
of notice u/s.148”. The ld. AR argued that the reasons recorded for
reopening the assessment were done by the ld. AO only on 14/01/2016
which was subsequent to sending the proforma dated 08/01/2016 for
seeking approval to the ld. PCIT. The reasons recorded are enclosed in
page 7 of the paper book filed by the assessee. This clearly goes to prove
that the ld. PCIT while according sanction in terms of Section 151(1) of the
Act, had not applied his mind and had given a mechanical sanction for
reopening the case even when the reasons recorded for reopening the
assessment were not even placed before him by the ld. AO. Infact, in
question No.11 of the prescribed proforma, the reasons recorded for
reopening the assessment is one of the main question mentioned therein for
which the ld. AO has replied “As per Annexure” and the said annexure is
enclosed in page 7 of the paper book which is nothing but the reasons
recorded for reopening the assessment which is dated on 14/01/2016.
Hence, the ld. AO could not have sent the proforma for approval u/s.151(1)
of the Act to the ld. PCIT on 08/01/2016 with the reasons recorded for
reopening of assessment. The ld. AR placed reliance on the following
decisions in support of its contention that where the ld. PCIT gave the
mechanical approval for reopening of assessment without due application of
mind in terms of Section 151(1) of the Act, the said re-assessment requires
to be quashed:-
(a) Co-ordinate Bench decision of this Tribunal in the case of Avani Premises
Pvt. Ltd., vs. ITO in ITA No.1664/Mum/2019 for A.Y.2008-09 dated
09/01/2020.
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M/s. Intime Realty P. Ltd.,
(b) Decision of Hon’ble Delhi High Court in the case of PCIT vs. N.C. Cables
Limited reported in 391 ITR 11 (Del)
(c) Decision of the Hon’ble Supreme Court in the case of Chhugamal Rajpal vs.
S.P.Chaliha & Others reported in 79 ITR 603 (SC)
(d) Decision of Hon’ble Madhya Pradesh High Court in the case of CIT vs.
S.Goyanka Lime and Chemical Ltd. reported in 231 Taxman 73. SLP of
revenue before the Hon’ble Supreme Court was also dismissed in 237
Taxman 378.
(e) Co-ordinate Bench decision of this Tribunal in the case of Astra Exim Pvt.
Ltd., vs. ITO in ITA No.277/Mum/2018 for A.Y.2007-08 dated 31/08/2018.
5. The ld. AR also placed on record the copy of the Hon’ble Jurisdictional
High Court in the case of Smt. Kalpana Shantilal Haria vs. ACIT in WP (L)
No.3063 of 2017 dated 22/12/2017 to drive home the point that where in
the prescribed proforma, the ld. AO had wrongly mentioned the Section
147(b) and which has been accorded sanction by the ld. JCIT, then the same
would not be a curable defect u/s.292B of the Act and that the approval has
been sanctioned by the competent authority without due application of mind
and hence, reopening should be quashed.
5.1. Per contra, the ld. DR filed a written submission through email on
06/10/2020 on the merits of the addition and also on the arguments
advanced by the ld. AR. The ld. DR placed reliance on the decision of the
Hon’ble Andhra Pradesh High Court in the case of P. Munirathnam Chetty
and P.Satyanarayana Chetty reported in 101 ITR 385 where according to
the ld. DR, the Hon’ble High Court had observed as under:-
“Where the ITO has given elaborate reasons for reopening in his
report to the CIT, mere “yes” endorsement to the CIT would
amount to his satisfaction”.
5.2. The ld. DR also placed reliance on the following decisions in
support of his contention that reopening of assessment could be made where
information has been received from external agencies as under:-
“Sterlite Industries(lndia) Ltd. V/s. ACIT (MAD) (302 ITR 275)
where it was held that information from Enforcement
Directorate showing possible inflation of purchases ‘ notice
issued u/s.148 valid’.
In AGR Investment Ltd. v/s, Addl.CIT & Anr.(Del) (333 ITR 146)
Shalimar Buildcon (P) Ltd. Vs ITO ITAT Jaipur (136 TTJ 701)
wherein it was held that information from investigation Wing ‘
notice u/s. 148 issued on the basis of such letter’.”
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M/s. Intime Realty P. Ltd.,
5.3. We find that the reopening in the instant case has been made beyond
four years from the end of the relevant assessment year which requires
sanction of approval from the ld. PCIT u/s.151(1) of the Act. We find from
page 1 of the Case Law Paper book filed by the assessee before us
containing proforma in the prescribed format seeking sanction of approval
u/s.151(1) of the Act, that the said proforma was sent by the ld. AO to the ld.
PCIT through proper channel i.e. Additional CIT on 08/01/2016. For the
sake of convenience, the entire proforma is reproduced herein:-
5.4. From the aforesaid proforma, it could be seen that question No.7
specifically mandate the ld. AO to mention whether the provisions of Section
147(a) or 147 (b) or both the sections are applicable. In response thereto,
the ld. AO had mentioned only 147(b). We find that the provisions of Section
147(b) has been omitted from the statute book long back and was certainly
not in force for A.Y.2010-11. We find that the ld. CIT(A) without looking
into these facts had accorded a mechanical approval without due
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M/s. Intime Realty P. Ltd.,
application of mind. We find that reliance placed by the ld. AR on the
decision of Hon’ble Jurisdictional High Court squarely clinches the issue
before us in this regard in the case of Smt. Kalpana Shantilal Haria vs.
ACIT referred to supra, wherein it was held that:-
“6. The grievance of the petitioner is that there is no proper sanction
in view of non application of mind by the Joint Commissioner of
Income Tax. The Assessing Officer has invoked a provision of law to
sustain the impugned notice which is admittedly not in the statute
and the Joint Commissioner has yet approved it.
7. Mr. Chanderpal, learned Counsel appearing for the Revenue
tendered a copy of the letter dated 19th December, 2017 issued to
the petitioner wherein the Assessing Officer has stated that the
words “147(b)” were inadvertently filled in the prescribed form,
instead of Section 147 of the Act while obtaining the sanction from
the Joint Commissioner of Income Tax. It is further submitted on
behalf of the Revenue that the same is a curable defect under
section 292B of the Act. Therefore, the impugned notice cannot be
held to be bad for mere incorrect mentioning of section on account
of the mistake.
(emphasis supplied by us)
8. There can be no dispute with regard to the application of Section
292B of the Act to sustain a notice from being declared invalid
merely on the ground of mistake in the notice. However, the issue
here is not with regard to the mistake / error committed by the
Assessing Officer while taking a sanction from the Joint
Commissioner of Income Tax but whether there was due application
of mind by the Joint Commissioner of Income Tax while giving the
necessary sanction for issuing the impugned notice. It is a settled
principle of law that sanction granted by the higher Authority for
issuing of a reopening notice has to be on due application of mind. It
cannot be an mechanical approval without examining the proposal
sent by the Assessing Officer. Prima facie, it appears to us that if
the Joint Commissioner of Income Tax would have applied his
mind to the application made by the Assessing Officer, then the
very first thing which would arise is the basis of the notice, as the
provision of law on which it is based is no longer in the statute.
Non-pointing out the mistake / error by the Joint Commissioner of
Income Tax on the part of the Assessing Officer is prima facie
evidence of non-application of mind on the part of the sanctioning
authority while granting the sanction.”
(emphasis supplied by us)
5.5. From the aforesaid proforma, it is also evident that the question
No.11 mandate the ld. AO to specify the reasons which enabled him to form
the belief that income of the assessee had escaped assessment and in reply
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M/s. Intime Realty P. Ltd.,
to the said question, the ld. AO had mentioned “As per Annexure”. The
said annexure containing the reasons recorded for reopening the
assessment is enclosed in page 7 of the paper book of the assessee which is
reproduced herein for the sake of convenience:-
5.6. We find from the aforesaid annexure containing the reasons recorded
for reopening of assessment year, the same was prepared by the ld. AO only
on 14/01/2016 whereas the proforma was sent in the prescribed format by
him on 08/01/2016 itself. Actually, the reasons recorded for reopening of
assessment is supposed to go alongwith proforma in the prescribed format
before the ld. CIT while according the sanction of approval u/s.151(1) of the
Act. The aforesaid decision clearly goes to prove that at the time of seeking of
approval in the prescribed proforma dated 08/01/2016, the ld. AO had not
even recorded the reasons for reopening of assessment and that there was
absolutely no other material available before the ld. PCIT to apply his mind
and come to a conclusion that it is a fit case for reopening of assessment.
Hence, it could be safely concluded that the approval given by the ld. PCIT for
reopening is only a mechanical approval without due application of mind on
his part. One more strange point which we note from page 1 of the case law
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M/s. Intime Realty P. Ltd.,
paper book containing the prescribed proforma for reopening is that the ld.
PCIT had not even mentioned the date and his name while according approval
in the prescribed proforma.
5.7. From the aforesaid proforma, it could be seen that the ld. PCIT had only
mentioned for question No.13 as under:-
“Question Number 13. Whether the Pr. Commissioner is satisfied on
the reasons recorded by the DCIT, that it is a fit case for the issue of a
notice under section 148.
Reply: Yes, it is fit case for issue of notice u/s.148.”
5.8. We find that the aforesaid approval granted by the ld. PCIT does not
constitute proper sanction in terms of the Section 151(1) of the Act and rather
it would only tantamount to mechanical approval granted by him without due
application of mind. In this regard, we would like to place reliance on the Co-
ordinate Bench decision of this Tribunal which has been rightly relied upon by
the ld. AR in the case of that Avani Premises Pvt. Ltd., vs. ITO in ITA
No.1664/Mum/2019 dated 09/01/2020 wherein the approval was obtained from
Additional CIT in terms of Section 151 of the Act and question No.12 thereon
and the reply given by the Additional CIT was as under:-
“Whether the Addl. Commissioner is satisfied on the reasons recorded
by the DCIT, that it is a fit case for the issue of a notice under Section
148.”
Reply: Yes, I am so satisfied
5.8.1. The operative portion of decision of this tribunal in ITA
No.1664/Mum/2019 dated 09/01/2020 is reproduced hereunder:-
6. The learned Counsel for the assessee stated that this issue is squarely
covered in favour of assessee by wherein mechanical approval is held to
be no approval by Hon’ble Madhya Pradesh High Court in the case of
CIT vs. S. Goyanka Lime & Chemicals Ltd. (2015) 231 Taxman 73
(Madhya Pradesh), wherein Hon’ble High court has considered the
satisfaction accorded by the Joint Commissioner of Income Tax, wherein
it is recorded that “Yes I am satisfied” and Hon’ble High court held that
the mechanical way of recording satisfaction by the JCIT, which accords
sanction for issuing notice under section 148 of the Act is unsustainable.
The Hon’ble Madhya Pradesh High court held as under: –
“7. We have considered the rival contentions and we find that
while according sanction, the Joint Commissioner, Income
Tax has only recorded so “Yes, I am satisfied”. In the case of
Arjun Singh (supra), the same question has been considered
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M/s. Intime Realty P. Ltd.,
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 the matter of
recording sanction as he merely wrote on the format “Yes, I
am satisfied” which indicates as if he was to sign only on the
dotted line. Even otherwise also, the exercise is shown to have
been performed in less than 24 hours of time which also goes
to indicate that the Commissioner did not apply his mind at
all while granting sanction. The satisfaction has to be with
objectivity on objective material.’
8. If the case in hand is analysed on the basis of the aforesaid
principle, the mechanical way of recording satisfaction by the
Joint Commissioner, which accords sanction for issuing
notice under section 148, is clearly unsustainable and we find
that on such consideration both the appellate authorities have
interfered into the matter. In doing so, no error has been
committed warranting reconsideration.
9. As far as explanation to Section 151, brought into force by
Finance Act, 2008 is concerned, the same only pertains to
issuance of notice and not with regard to the manner of
recording satisfaction. That being so, the said amended
provision does not help the revenue.
10. In view of the concurrent findings recorded by the learned
appellate authorities and the law laid down in the case of
Arjun Singh (supra), we see no question of law involved in the
matter, warranting reconsideration.”
7. The learned Counsel for the assessee then drew our attention to the decision
of Hon’ble Supreme Court in SLP, wherein SLP is being dismissed against the
judgement of Hon’ble Madhya Pradesh High Court in the case of CIT vs. S
Goyanka Lime & Chemical Ltd. (2016) 237 Taxman 378 (SC). The learned
Counsel for the assessee also relied on the decision of Hon’ble Delhi High Court
in the case of PCIT vs. N.C. Cables Ltd. (2017) 391 ITR 11 (Delhi), wherein
Hon’ble Delhi High Court has considered the issue of application of mind while
according sanction for issue of notice under section 147 or 148 of the Act and
this provision of section 151 of the Act was considered by Hon’ble Delhi High
Court and held as under: –
“11. Section 151 of the Act clearly stipulates that the Commissioner of
Income-tax (Appeals), who is the competent authority to authorize the
reassessment notice, has to apply his mind and form an opinion. The
mere appending of the expression “approved” says nothing. It is not as
if the Commissioner of Income-tax (Appeals) has to record elaborate
reasons for agreeing with the noting put up. At the same time,
satisfaction has to be recorded of the given case which can be reflected
in the briefest possible manner. In the present case, the exercise
appears to have been ritualistic and formal rather than meaningful,
which is the rationale for the safeguard of an approval by a higher
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M/s. Intime Realty P. Ltd.,
ranking officer. For these reasons, the court is satisfied that the findings
by the Income-tax Appellate Tribunal cannot be disturbed.”
8. The learned Counsel for the assessee also relied on the decision of
Hon’ble Supreme Court in the case of Chhugamal Rajpal vs. S.P. Chaliha and
Others and stated that Hon’ble Supreme Court long back in 1971 while
adjudicating the issue of according of sanction for issue of notice under section
148 of the Act has considered this issue and finally observed as under: –
“Further his report mentions: “Hence proper investigation
regarding these loans is necessary”. In other words his conclusion
is that there is a case for investigating as to the truth of the alleged
transactions. That is not the same thing as saying that there are
reasons to issue notice under section 148. Before issuing a notice
under section 148, the Income-tax Officer must have either reasons
to believe that by reason of the omission or failure on the part of
the assessee to make a return under section 139 for any assessment
year to the Income-tax Officer or to disclose fully and truly all
material facts necessary for his assessment for that year, income
chargeable to tax has escaped assessment for that year or
alternatively notwithstanding that there has been no omission or
failure as mentioned above on the part of the assessee, the Income-
tax Officer has in consequence of information in his possession
reason to believe that income chargeable to tax has escaped
assessment for any assessment year. Unless the requirements of
clause (a) or clause (b) of section 147 are satisfied, the Income-tax
Officer has no jurisdiction to issue a notice under section 148.
From the report submitted by the Income-tax Officer to the
Commissioner, it is clear that he could not have had reasons to
believe that by reason of the assessee’s omission to disclose fully
and truly all material facts necessary for his assessment for the
accounting year in question, income chargeable to tax has escaped
assessment for that year; nor could it be said that he, as a
consequence of information in his possession, had reasons to
believe that the income chargeable to tax has escaped assessment
for that year. We are not satisfied that the Income-tax Officer had
any material before him which could satisfy the requirements of
either clause (a) or clause (b) of section 147. Therefore, he could
not have issued a notice under section 148. Further, the report
submitted by him under section 151(2) does not mention any
reason for coming to the conclusion that it is a fit case for the issue
of a notice under section 148. We are also of the opinion that the
Commissioner has mechanically accorded permission. He did not
himself record that he was satisfied that this was a fit case for the
issue of a notice under section 148. To question No. 8 in the report
which reads “Whether the Commissioner is satisfied that it is a fit
case for the issue of notice under section 148”, he just noted the
word “Yes” and affixed his signature thereunder. We are of the
opinion that if only he had read the report carefully, he could
never have come to the conclusion on the material before him that
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this is a fit case to issue notice under section 148. The important
safeguards provided in sections 147 and 151 were lightly treated
by the Income-tax Officer as well as by the Commissioner. Both of
them appear to have taken the duty imposed on them under these
provisions as of little importance. They have substituted the form
for the substance.”
9. On the other hand, the learned Sr. Departmental Representative,
Shri Michael Jerald strongly opposed the issue raised because this
issue was never raised before CIT(A) by the assessee and even now
before Tribunal this issue is not raised, hence, he strongly opposed the
adjudication of this issue. When it was pointed out to the learned Sr.
Departmental Representative that the Revenue itself has filed this
information regarding according of approval for issuance of notice
under section 148 of the Act and approval accorded under section 151
of the Act, still he opposed the adjudication of this issue because this
issue has not been raised before the lower authorities by the assessee.
10. We have heard rival contentions and gone through the facts and
circumstances of the case. We noted that this is purely a legal issue
and legal issue regarding reopening was raised before CIT(A) by the
assessee, and CIT(A) has adjudicated the issue of reopening. This is
one of the facet of reopening and that facts relating to this issue are
available on record and no new facts are to be brought on record.
Even the Revenue vide order dated 30.09.2019 has filed this
information, which is part of the record of the assessment, that the
Addl. CIT while granting approval for issuance of notice under section
148 of the Act issued by the AO, the satisfaction recorded is just that
“Yes I am so satisfied”. We noted that this issue has time and again
came up before Hon’ble High courts and Hon’ble High courts and
Hon’ble Supreme Court has categorically held that the satisfaction
should not be mechanical satisfaction and the important safe guards
provided in section 147 to 151 of the Act, are not to be taken lightly by
the department as well as by the concern Additional CIT or CIT as the
case may be. While granting approval, the concern authority should be
satisfied objectively. We also noted that in the present case, the
authorities have accorded the satisfaction in a mechanical way which
is unsustainable in law. Hence, on this very jurisdictional issue, we set
aside the orders of the lower authorities and allow this appeal of the
assessee.
11. As regards to the other grounds raised by the assessee, since we
have adjudicated the issue on jurisdiction and quash the reopening, we
need not to go into the other issues raised on jurisdiction as well as the
merits of the case.
12. In the result, the appeal of the assessee is allowed.”
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5.9. We find that the aforesaid decision of Mumbai Tribunal considers
the decision of the Hon’ble Madhya Pradesh High Court in 231 Taxman
73, wherein revenue SLP was subsequently dismissed by the Hon’ble
Supreme Court in 237 Taxman 378. We also find similar view was
expressed by the Hon’ble Supreme Court in the case of Chhugamal Rajpal
vs. S.P.Chaliha & Others reported in 79 ITR 603 (SC) supra wherein the
Hon’ble Supreme Court had emphasised the fact that the Additional
Commissioner of Income Tax granting mechanical permission by simply
saying the words “yes” and affixing the signature in the prescribed
proforma does not tantamount to proper sanction in terms of Section 151 of
the Act. In view of the aforesaid decisions of various other High Courts and
also by the decision of the Hon’ble Supreme Court on the impugned issue,
it could be safely concluded that the ld. PCIT, being a competent authority
had granted mechanical approval without due application of mind on the
prescribed proforma for reopening of assessment in terms of Section 151 of
the Act. We find that the case law relied upon by the ld. DR of Hon’ble
Andhra Pradesh High Court in the case of P. Munirathnam Chetty and
P.Satyanarayana Chetty reported in 101 ITR 385 does not advance the
case of the revenue and there is no need for us to go into it at this juncture
in view of various other High Court decisions and Supreme Court decision
in favour of the assessee on the similar issue. Respectfully following the
aforesaid judicial precedents, we have no hesitation to hold that the entire
re-assessment has been initiated without obtaining proper sanction in
terms of Section 151(1) of the Act from the ld. PCIT and hence, we hold
that the approval accorded by the ld. PCIT in a mechanical way is
unsustainable in law, hence, on this very jurisdictional issue, we set aside
the orders of the lower authorities and allow the appeal of the assessee.
5.10. We find the ld. DR vehemently argued the validity of reopening by
placing reliance on the following decisions:-
a. GKN Drive Shafts case rendered in 259 ITR 19 (SC) on providing reasons
recorded for reopening the assessment to the assessee.
b. Raymond Wollen Mills Ltd., case reported in 236 ITR 34 (SC) on the
aspect of sufficiency of reasons while reopening the assessment.
c. Rajesh Jhaveri Stock Brokers Pvt. Ltd., reported in 291 ITR 500 (SC) on
the aspect of sufficiency of reasons while reopening the assessment.
d. Decision of Hon’ble Madras High Court in the case of Sterlite Industries
(India) Ltd., vs. ACIT reported in 302 ITR 275 wherein it was held that
information from Enforcement Directorate showing inflation of purchases
could be a good ground for issuing notice u/s.148 of the Act.
e. Decision of the Hon’ble Delhi High Court in the case of AGR Investment
Ltd., reported in 333 ITR 146 and the decision of Jaipur Bench in the case
of Shalimar Buildcon 136 TTJ 701 wherein it was held that the notice
u/s.148 of the Act could be issued based on information from Investigation
Wing about tainted transactions carried out by the assessee.
5.11. We find that all the aforesaid case laws referred by the ld. DR did not
address on the crucial point canvassed by the ld. AR that ld. PCIT had only
granted mechanical approval u/s.151(1) of the Act without proper
15
ITA No.6357/Mum/2019
M/s. Intime Realty P. Ltd.,
application of mind. Hence the reliance placed on the aforesaid decisions
by the ld. DR does not come to the rescue of the revenue in the instant case.
5.12. Since the entire reopening of assessment had been quashed on the
aforesaid aspect, we need not go into other grounds raised by the assessee
both on law as well as on merits and they are hereby left open.
6. In the result, appeal of the assessee in ITA No.92/Mum/2019 for
A.Y.2010-11 is allowed.
5.2. For the elaborate reasons adduced in the aforesaid order and by
respectfully following the various judicial precedents relied upon
hereinabove in the said order, we have no hesitation in quashing the re-
assessment proceedings in the facts and circumstances of the instant
case.
5.3. Since, re-assessment is quashed on technical ground, the other
grounds raised by the assessee on merits need not be adjudicated as it
becomes academic in nature.
6. In the result, appeal of the assessee is allowed.
Order pronounced on 06/12/2021 by way of proper mentioning in
the notice board.
Sd/- Sd/-
(LALEIT KUMAR) (M.BALAGANESH)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Mumbai; Dated 06/ 12 /2021
KARUNA, sr.ps
16
ITA No.6357/Mum/2019
M/s. Intime Realty P. Ltd.,
Copy of the Order forwarded to :
1. The Appellant
2. The Respondent.
3. The CIT(A), Mumbai.
4. CIT
5. DR, ITAT, Mumbai
6. Guard file.
//True Copy//
BY ORDER,
(Asstt. Registrar)
ITAT, Mumbai
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