| The Tax Publishers2019 TaxPub(DT) 7125 (Del-Trib) INCOME TAX ACT, 1961
Section 147
Where the JCIT while giving approval simply mentioned that “Yes, it is a fit case for issue of notice under section 148, reassessment proceedings need to be quashed because this approval indicates non application of mind. And, when the assessment is reopened on a particular issue but no such addition has been made on that very issue, then, the AO cannot make other additions which might have come to his notice during the course of completion of such reassessment. He has to issue separate notice. Therefore, the addition made by AO under section 40A (3) was not justified.
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Reassessment - Validity - JCIT gave approval for reopening in a mechanical manner - Whether AO could made addition which was certainly not the basis of reopening
AO reopened the assessment by issuing notice under section 148 on the ground that assessee had not disclosed the cash purchases in the return of income. Further, AO noted that assessee had made cash payment on various dates where the amount was in excess of Rs. 20,000, accordingly, he made addition under section 40A(3). However, assessee contended that it never make payment more than Rs. 20,000 at a time on any particular day and was not aware as to how and why payee had recorded in their books of account higher amount. Assessee further contended that AO invoked section 40A (3) by blindly relying upon the date-wise details of payments recorded by payee and as the basis of reopening was alleged undisclosed purchase, so AO could not have made disallowance under section 40A (3) which was certainly not the basis for initiating the proceedings under section 147, therefore, such addition could not be sustained in law. Assessee submitted that as the JCIT while giving approval simply mentioned that “Yes, it is a fit case for issue of notice under section 148, this clearly indicates non application of mind. Held: Perusal of the approval given by the JCIT shows that he has not applied his mind properly and has in a mechanical manner written: “Yes, it is a fit case for issue of notice under section 148; therefore, reassessment proceedings initiated by AO were not as per law and had to be quashed. Further, as the AO had not made any addition for which the case was reopened, therefore, he lacks the jurisdiction to assess such other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of such proceedings. Therefore, on this ground also, the addition made by AO under section 40A (3) was not justified.
REFERRED : Pr. CIT v. RMG Polyvinyl (I) Ltd. (2017) 396 ITR 5 (Del) : 2017 TaxPub(DT) 2034 (Del-HC), Pr. CIT v. Meenakshi Overseas Pvt. Ltd. (2017) 395 ITR 677 (Del) : 2017 TaxPub(DT) 1791 (Del-HC), Pr. CIT v. N.C. Cables Ltd. (2017) 391 ITR 11 (Del) : 2017 TaxPub(DT) 0264 (Del-HC), Pr. CIT v. G & G Pharma India Ltd. (2015) 384 ITR 147 (Del) : 2015 TaxPub(DT) 4054 (Del-HC), Oriental Insurance Co. v. CIT (2015) 378 ITR 421 (Del) : 2015 TaxPub(DT) 3662 (Del-HC), CIT v. Adhunik Niryat Ispat Ltd. (2012) 63 DTR 212 (Del) : 2012 TaxPub(DT) 0591 (Del-HC), Signature Hotels (P) Ltd. v. ITO & Anr. (2011) 338 ITR 51 (Del) : 2011 TaxPub(DT) 1992 (Del-HC), Ranbaxy Laboratories Ltd. v. CIT (2011) 336 ITR 136 (Del) : 2011 TaxPub(DT) 1457 (Del-HC), CIT v. Jet Airways (I) Ltd. (2011) 331 ITR 236 (Bom) : 2011 TaxPub(DT) 0218 (Bom-HC), CIT v. Shri Ram Singh (2008) 306 ITR 343 (Raj) : 2008 TaxPub(DT) 2035 (Raj-HC)
FAVOUR : Against the assessee
A.Y. : 2009-10
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