SMT. CHARANJIT KAUR,KURUKSHETRA vs. ITO WARD-1, KURUKSHETRA

On the other hand, the Ld. DR submitted that since the assessee had deliberately evaded the notice issued by the AO, the assessee is now estopped from taking this plea that no notice was served. The Ld. DR further pointed out that this issue was not raised by the assessee before the Ld. CIT(A). The Ld. DR accordingly submitted - Smt. Charanjit Kaur, Kurukshetra that there is no merit in this ground of appeal of the assessee.

We have heard the rival contentions of the parties and carefully perused the material on record including the case law relied upon by the Ld. Counsel. The evidence on record prima facie shows that notice u/s 148 of the Act was not served upon the assessee. The Revenue is not in a position to rebut the contention of the assessee.

The Hon’ble Delhi High Court in the case of CIT vs. Chetan Gupta (supra) has held that in order to initiate reassessment proceedings, notice u/s 148 of the Act has to be served mandatorily served upon assessee in accordance with section 282(1) of the Act read with Order V, Rule 12 and Order III Rule 6 of the Civil Procedure Code.

The assessee has further challenged the action of the Ld. CIT(A) by raising another legal ground that the Ld. CIT(A) has eared in confirming the action of AO in initiating reassessment proceedings on the basis of approval granted by the Principal - Smt. Charanjit Kaur, Kurukshetra Commissioner of Income Tax (Pr. CIT) in a mechanical manner. The Ld. Counsel submitted before us that in this case there was no application of mind by the AO to come to the conclusion that the income of the assessee has escaped, despite this the Ld. Pr. CIT approved the proposal for issuing notice u/s 148 of the Act in a mechanical manner The Ld. counsel further invited our attention to page 1 and 2 of the paper book containing copy of reasons recorded for reassessment and the permission accorded by the competent authority to demonstrate lack of application by the authorities concerned. The Ld. Counsel placing reliance on the judgment of the Hon’ble Madhya Pradesh High Court in the case of CIT vs. S.

On the other hand, the Ld. DR supporting the order passed by the Ld. CIT(A) submitted that there is no infirmity in the reasons recorded by the AO and the sanction accorded by the competent authority. The Ld. DR further submitted that the competent authority has approved the proposal after going through the proposal of the AO in the light of the facts of the case.

We have heard the rival submissions of the parties and perused the material on record. The grievance of the assessee is that the AO had sent proposal for issuing notice u/s 148 of the Act without application of mind and without recording satisfaction that the income of the assessee has escaped assessment and the Ld. Pr. CIT accorded the sanction thereon without recording his satisfaction. We notice that the AO has only recorded in the reasons that during the previous year, assessee deposited cash amounting to Rs.14,32,000/- in her bank account, which has escaped assessment. We further notice that the Ld. Pr. CIT accorded permission by writing as “yes, satisfied, it is a fit case for issue of notice u/s 148.”

As pointed out by the Ld. Counsel for the assessee, the Hon’ble Madhya Pradesh High Court has held in the case of CIT vs. S.

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.”

In the present case, the Pr. CIT has recorded his satisfaction by writing “yes, satisfied, it is a fit case for issue notice u/s 148” on the format. In our considered view, the satisfaction recorded in the present case is similar to the satisfaction recorded in the case discussed above. - Smt. Charanjit Kaur, Kurukshetra

So far as, the application of mind by AO is concerned, the reasons recorded by AO for reopening of the case prima facie indicate that he has not applied his mind and proceeded on assumption that the bank deposit constitutes unexplained income of the assessee. As pointed out by the Ld. Counsel, the Delhi Bench of the ITAT in the case of Bir Bahadur Singh Sijwali vs. ITA (supra) has set aside the action of AO in reopening the case of the assessee initiated on fallacious assumption that bank deposits constitute undisclosed income of the assessee, overlooking the fact that source of deposit need not necessarily be income of the assessee. We further notice that in the present case, the Ld. Pr. CIT has accorded sanction for issuing notice u/s 148 of the Act, without ensuring that the AO has recorded the reasons after due application of mind.

Hence, in our considered view, the Ld. CIT(A) has sustained the addition in question ignoring that the impugned order suffers from the legal infirmities discussed in the forgoing paras. In the light of the facts of the case and the cases relied upon by the Ld. Counsel, we are of the opinion that the impugned order is not sustainable in law as the ld. CIT(A) has passed the impugned order ignoring the ratio laid down by the hon’ble High Court of Delhi and - Smt. Charanjit Kaur, Kurukshetra Madhya Pradesh and also the decision of the Delhi Bench of the Tribunal discussed above. We accordingly allow the legal grounds raised by the assessee and set aside the impugned order passed by the. ld. CIT(A).

Since we have allowed the appeal of the assessee, we do not consider it necessary to adjudicate the other grounds of appeal raised on merit.