SHRI SAPINDER SINGH,RAJPURA vs. ITO- WARD, RAJPURA

आदेश/Order

Per R.L. Negi, Judicial Member:

The assessee has preferred the present appeal against the order

dated 26.11.2019 passed by Commissioner of Income Tax (Appeals), Patiala, whereby the Ld. CIT(A) has dismissed the appeal filed by the assessee against the assessment order passed u/s 144 r.w.s 147 of the Income Tax Act, 1961 [for short ’the Act’] for the assessment year

2011-12.

ITA No. 86-Chd-2020- Sh Sapiner Singh, Rajpura 2 assessee filed his return of income for the assessment year under

consideration declaring income of Rs. 1,57,860/- and agricultural

income of Rs. 2,66,800/- Accordingly, AO issued notices u/s 142(1)

and 143(2) of the Act along with questionnaire. Since, the assessee or

his authorized representative failed to appear before the AO on the

dates fixed for hearing, AO decided to proceed u/s 144 of the Act. As

per the information received, the assessee had deposited Rs.

25,00,000/- in his account on 01.11.2010. During verification, the

assessee had contended that he along with his brother entered into an

agreement to sell their land to Sh. Vikrant Sandal and received

advance payment of Rs. 50,00,000/-. Since the deal could not be

finalized, they forfeited the entire amount received from Sh. Vikrant

Sandal and he deposited his share of Rs. 25,00,000/- in his bank

account. During assessment proceedings, the AO verified the

aforesaid facts and on the basis of the reply received from Sh. Vikrant

Sandal AO made addition of the said amount to the income of the

assessee as unexplained credit and determined the total income of the

assessee at Rs. 26,57,860/- besides the agricultural income of Rs.

02,66,800/-. In the first appeal, the ld. CIT(A) upheld the assessment

order and confirmed the addition made by AO. The assessee is in

appeal against the said findings of the ld. CIT(A).

following grounds: -

ITA No. 86-Chd-2020- Sh Sapiner Singh, Rajpura 3 “1. That the applicant provided source of cash deposit of Rs. 25,00,000/- with details of the persons from whom it was received and was duly returned through bank, the applicant has explained the source of cash and have discharged his primary onus to explain the source of cash with details.

I pray to see the two aspects to this transaction one is cash received and second is the same amount transferred back the same person from whom it was received through bank account. It is highly inappropriate to consider the money transferred though bank as an advance to the same person. “

application for allowing the assessee to raise additional ground of

appeal challenging the validity of reopening of assessment u/s 147

read with section 148 of the Act. The additional ground of appeal

reads as under: -

“That the Ld. Assessing Officer has erred in reopening the case u/s 147 read with notice u/s 148 as there was neither any reason to believe and also there has been mechanical satisfaction of the PCIT and as such the assessment as reopened deserves to be quashed.”

before us that the assessee wants to challenge the reassessment

proceedings and findings of the ld. CIT(A) in appellate proceedings

on legal ground after seeking permission to raise additional ground.

The ld. counsel further submitted that the assessee has moved

application dated 24.08.2021 for admission of additional ground. The

ITA No. 86-Chd-2020- Sh Sapiner Singh, Rajpura 4 ld. counsel placing reliance on the judgment of the Hon'ble Supreme

Court in the case of National Thermal Power Corporation vs. CIT 229

ITR 383, submitted that since the assessee has raised the legal ground

which does not require enquiry/verification of facts, the application

for permission to raise additional ground may be allowed and the

assessee may be permitted to argue the case on legal ground as well.

representative (DR) opposed the application on the ground that the

assessee has not raised the said ground before the ld. CIT(A).

material on record. As pointed out by the ld. counsel the additional

ground raised by the assessee is a legal ground which does not require

any inquiry or verification. In our considered view, the legal ground

raised by the assessee goes to the root of this appeal. Hence,

following the ratio laid down by the Hon'ble Supreme Court in the

case of National Thermal Power Corporation vs. CIT (supra), we

allowed the application of the assessee and permitted the ld. counsel

to argue the appeal on the legal ground as well.

confirming the action of the AO in initiating re-assessment

proceedings on the basis of approval granted by the Ld. Pr. CIT in

a mechanical manner. The Ld. pointed out that in the present case

since the AO initiated reassessment beyond the period of 4 years,

ITA No. 86-Chd-2020- Sh Sapiner Singh, Rajpura 5 the competent authority was required to accord valid sanction after

recording his satisfaction on the basis of the reasons recorded by

the AO. The ld. counsel further submitted that since the ld. Pr. CIT

accorded sanction for initiating proceedings u/s 147 of the Act

against the assessee in a mechanical manner without application of

mind, the assessment order passed by the AO and the appellate

order passed by the ld. CIT(A) are void and liable to be quashed.

The Ld. Counsel invited our attention to page 3 of the paper book,

which is the copy of sanction accorded by the ld. Pr. CIT for

initiating proceedings u/s 147 read with section 148 of the Act and

pointed out that the ld. Pr. CIT has merely endorsed the proposal

by writing ‘yes I am satisfied’ The Ld. counsel further submitted

that the action of the Ld. CIT(A) is not in consonance with the

ratio laid down by the Hon'ble Madhya Pradesh High Court in CIT

Vs S. Gayanka Lime & Chemicals Ltd. [2015] 56 taxman.com

390(MP) wherein the Hon'ble Court has declared the reopening

invalid on the ground that the competent authority has accorded

sanction for issuing notice u/s 148 in a mechanical manner without

application of mind. The Ld. counsel further pointed out that this

Bench of the Tribunal has decided the identical issue in favour of

the assessee and set aside the order passed by the Ld. CIT(A) in

the case of Charanjit Kaur v ITO, ITA No. 193/Chd/2020 on the

identical ground. In view of the aforesaid facts and circumstances

ITA No. 86-Chd-2020- Sh Sapiner Singh, Rajpura 6 of the case and the law laid down by the Hon'ble High Court, the

ld. counsel submitted that the impugned order may be set aside.

the ld. CIT(A) submitted that since the assessee had failed to

disclose the source of credit in his bank account, the Ld. CIT(A)

has rightly made confirmed the addition made by the AO. On the

issue of application of mind by the ld. Pr. CIT, the ld. DR

submitted that the ld. Pr. CIT has accorded the sanction for issuing

notice u/s 148 of the Act on the basis of the reasons recorded by

the AO therefore, there is no infirmity in the order passed by the

Ld. CIT(A).

perused the material on record including the cases relied upon by

the ld. counsel for the assessee. As pointed out by the ld. counsel,

in the case of CIT Vs S. Gayanka Lime & Chemicals Ltd. (supra),

the Hon'ble Madhya Pradesh High Court has quashed the re-

assessment proceedings for the reasons that the PCIT has recorded

his satisfaction by writing “yes, satisfied, it is a fit case for issue

of notice u/s 148”. In the present case also the ld. Pr. CIT has

accorded sanction by writing “reasons seen. yes, I am satisfied”

which shows that the Ld. Pr. CIT did not apply his mind while

granting sanction. As per the ratio laid down by the Hon’ble

Madhya Pradesh High Court in the aforesaid case, satisfaction has

ITA No. 86-Chd-2020- Sh Sapiner Singh, Rajpura 7 to be recorded objectivity on objective material. Further, this

Bench of the Tribunal has already decided the identical issue in

favour of the assessee in the case of Smt. Charajit Kaur vs ITO

(supra) by following the ratio laid down by the Hon'ble Madhya

Pradesh High Court in the case of CIT vs S. Gayanka Lime &

Chemicals Ltd. wherein the Hon'ble High Court has held as under:-

“7. We have considered the rival contentions and we find that while according sanction, the Joint Commissioner, Income Tax only recorded so “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 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.” 10. Hence, consistent with our findings in the case of Smt.

Charanjit Kaur vs ITO (supra), we hold that in the present case,

the ld. Pr. CIT has accorded the sanction for issuing notice u/s 148

of the Act, in a mechanical manner without application of mind.

Therefore, the ld. CIT(A) has wrongly confirmed the reassessment

ITA No. 86-Chd-2020- Sh Sapiner Singh, Rajpura 8 order passed by the AO. Accordingly, we set aside the impugned order passed by the ld. CIT(A) and direct the AO to delete the

addition.

In the result, the appeal of the assessee is allowed.

Order pronounced on 31.08.2021

Sd/- Sd/- (R.L.NEGI) ( N.K. SAINI) उपा�य� / Vice President �या�यक सद�य / Judicial Member

Dated : 31.08 .2021 “आर.के.” आदेशक ��त,ल-पअ.े-षत/ Copy of the order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent 3. आयकरआयु/त/ CIT 4. आयकरआयु/त (अपील)/ The CIT(A) 5. -वभागीय��त�न2ध, आयकरअपील%यआ2धकरण, च4डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड�फाईल/ Guard File

आदेशानुसार/ By order, सहायकपंजीकार/ Assistant Registrar