IN THE ITAT, DELHI BENCH
BHAVNESH SAINI, J.M. & B.R.R. KUMAR, A.M.
Madhu Apartment (P) Ltd. v. ITO
I.T.A. Nos. 3869 & 3870/Del/2018
1 February, 2021
In favour of Assessee.
Assessee by: Suresh K. Gupta, C.A.
Revenue by: Prakash Dubey, Sr. Departmental Representative
Bhavnesh Saini, J.M.
This appeal by Assessee has been directed against the Order of the learned Commissioner (Appeals)-22, New Delhi, dated 26-4-2018, for the assessment years 2009-2010 and 2010-2011.
2. We have heard the Learned Representatives of both the parties through video conferencing and perused the findings of the authorities below.
3. In both the appeals, the assessee challenged the initiation of re-assessment proceedings under section 147/148 of the Income Tax Act, 1961, validity of sanction granted under section 151 of the Income Tax Act, 1961 and addition of Rs. 10 lakh each under section 68 of the Income Tax Act, 1961 and addition of Rs. 18 lakhs each on account of Commission.
4. Briefly the facts of the case are that assessee company filed its return of income for the assessment year 2009-2010 on 25-9-2009 declaring Rs. (-)5,90,668 and on 28-9-2010 for the assessment year 2010-2011 declaring income of Rs. (-)24,235. The assessing officer received information from Investigation Wing vide Letter, dated 12-3-2013 mentioning that search was carried-out in the case of Shri S.K. Jain Group of cases and it is transpired that assessee has received accommodation entry of Rs. 10 lakhs each in both the assessment years under appeal from M/s. VIP Leasing and Finance (P) Ltd., and M/s. Mega Top Promoters (P) Ltd., in a sum of Rs. 10 lakhs each. The assessing officer after giving an opportunity of being heard to the assessee, made additions of Rs. 10 lakhs in both the assessment years under appeals and have also added Rs. 18,000 on account of unexplained expenditure to obtain accommodation entry. The assessee challenged the re-assessment proceedings as well as additions before the learned Commissioner (Appeals), however, both the appeals of the assessee have been dismissed.
5. Learned Counsel for the Assessee referred to the copies of the reasons recorded for reopening of the assessment in which the assessing officer has mentioned that section 147(b) is applicable in the aforesaid cases for reopening of the assessment. He has submitted that the said section does not exist in the Statute.
Therefore, incorrect reasons are recorded and there was non-application of the mind on the part of the Approving Authority while giving sanction under section 151 of the Income Tax Act, 1961. He has submitted that the issue is covered by Order of ITAT, Delhi G-Bench, Delhi in the case of VRC Township (P) Ltd., Delhi v. ITO, Ward-17(1), New Delhi in ITA. No. 1503/Del./2017 vide Order, dated 14-10-2020 in paras 6 and 7 the Tribunal held as under :--
'6. We have considered the rival submissions. It is well settled Law that validation of re-assessment proceedings shall have to be determined with reference to the reasons recorded for reopening of the assessment. The learned Commissioner (Appeals) filed copy of the reasons recorded for reopening of the assessment at pages 14 and 15 of the PB. The same read as under :--
6.1. The above recording of reasons for initiation of re-assessment proceedings clearly show that in para 7 assessing officer has mentioned section 147(b) of the Income Tax Act is applicable for reopening of the assessment, though such section does not exist in the statute on the day of recording of the reasons for reopening of the assessment. Column Nos. 8 and 9 above are 'Blank' and did not provide any details. It did not say if assessee has filed any return earlier and whether assessee was assessed to tax prior to recording of the reasons, though the fact remain that assessee filed return of income voluntarily for the assessment year under appeal on 31-10-2007 through e-filing and such record was available with the assessing officer, therefore, non-mentioning of the correct fact would lead to the conclusion that no material was available before assessing officer to come to the conclusion that there is escapement of income based on the facts. Similarly, the Addl. Commissioner, without pointing-out the mistake and error in the reasons recorded above, in a most mechanical manner granted sanction to the reopening of the assessment. It is a settled principle of Law that sanction granted by the higher authority for issuing of reopening notice has to be on due application of mind. It cannot be a mechanical approval without examining the proposal sent by the assessing officer It appears from the reasons recorded above that the assessing officer as well as Addl. Commissioner have not applied their mind and by mentioning wrong section i.e., 147(b) of the Income Tax Act came to the conclusion that there is escapement of income under section 147(b) of the Income Tax Act which no longer exist in the statute. The Learned Addl. Commissioner instead of pointing-out such glaring mistake in the reasons and even finding two Columns 'Blank' in the reasons granted approval, even without mentioning how he was satisfied with the reasons for reopening of the assessment in the matter.