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| The Tax Publishers2020 TaxPub(DT) 4135 (Del-Trib) INCOME TAX ACT, 1961
Section 151
Where approval granted by CIT was a mechanical and without application of mind, which is not valid for initiating the reassessment proceedings, issue of notice under section 148 was not in accordance with section 151, therefore, notice issued under section 148 was invalid and accordingly the reopening in this case was bad in law and therefore, the same was quashed.
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Reassessment - Sanction for issue of notice - Approach of CIT for granting satisfaction for granting approval - Mechanical approval
Information was received from DIT(Inv.) that assessee had received accommodation entries from various parties. The case of assessee was reopened under section 147/148 and notice under section 148 was issued with the prior approval of the CIT after recording the reasons. In view of report received from the DIT (Inv.), AO initiated the proceedings under section 147 and issued notice under section 148. After adopting the prescribed procedure, AO made the addition by holding that this sum credited in the books of account was not satisfactorily explained and there was a prima facie evidence against the assessee viz. receipt of bogus accommodation entries and assessee had failed to discharge its onus to produce the legally evidence of creditworthiness of the subscribers and made the addition in dispute as unexplained investment of assessee out of undisclosed source of income being routed through such bogus accommodation entries. Held: Approval granted by CIT is a mechanical and without application of mind, which is not valid for initiating the reassessment proceedings, issue of notice under section 148 was not in accordance with section 151 because it was not coming out as to which material, information, documents and which other aspects have been gone through and examined by CIT for reaching to satisfaction for granting approval. Thus, notice issued under section 148 was invalid and accordingly the reopening in this case was bad in law and therefore, the same was quashed.
Followed:CIT v. S. Goyanka Lime and Chemicals Ltd. (2015) 56 taxmann.com 390 (MP) : 2018 TaxPub(DT) 4342 (MP-HC) United Electrical Co. Pvt. Ltd. v. CIT & Ors. (2002) 258 ITR 317 (Del.) : 2002 TaxPub(DT) 1670 (Del-HC) Dharmender Kumar C/O Raj Kumar & Associates v. ITO [ITA No. 2728/Del/2018 relevant to assessment year 2008-09] : 2019 TaxPub(DT) 6944 (Del-Trib) CIT v. S. Goyanka Lime And Chemical Ltd. (2015) 64 taxmann.com 313 (SC) : 2015 TaxPub(DT) 5456 (SC)
REFERRED :
FAVOUR : In assessee's favour
A.Y. : 2006-07
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