SHRIMATI NEETIMA GOYAL,FEROZPUR CANTT. vs. INCOME TAX OFFICER,3(2), FEROZPUR

आयकर अऩीऱीय अधधकरण, अमृतसर न्यायऩीठ, अमृतसर IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH AMRITSAR BEFORE SHRI L.P. SAHU, AM & SHRI RAVISH SOOD, JM आयकर अऩीऱ सं./ITA No.184/ASR/2018 (ननधाारण वषा / Assessment Year :2011-2012) Neetima Goyal, Vs. ITO, Ward-3(2), Ferozepur Prop. Raghav Sales, G.T.Road, Ferozepur Cantt., PIN-152001 स्थायी ऱेखा सं./ PANNo. : AICPG 3586 H (अऩीऱाथी /Appellant) .. (प्रत्यथी / Respondent) ननधााररती की ओर से /Assessee by : Shri I.P.Bansal, Advocate राजस्व की ओर से /Revenue by : Shri Charan Dass, DR

सुनवाई की तारीख / Date of Hearing : 03/02/2020 घोषणा की तारीख/Date of Pronouncement : 05/02/2020 आदेश / O R D E R Per L.P.Sahu, AM: The assessee has filed this appeal against the order of CIT(A), Bathinda, dated 23.01.2018 for assessment year 2011-2012, on the following grounds :- 1. (a)The three Additions amounting to Rs.3668497.00/- made by the A.0.,Ferozepur u/s 143(3) of the Income-Tax Act,1961 and sustained by the Ld. CIT(Appeals), Bathinda to the extent of Rs.3368497.00 are absolutely illegal, unwarranted and bad in law and the same may kindly be quashed. 2. That the CIT (Appeals) decided the case in a very hurried manner without listening the request of the appellant to file documents which were very much relevant in deciding the case. The appellant requested to allow some time to file the documents required by the CIT(A)as she was out of station due to some unavoidable circumstances, but the request was not acceded to and the case was decided, which is against the rules of natural justice. 3. The appellant craves leave to add/amend/argue any other question of law/fact at the time of hearing of this appeal

2 ITA No.184/ASR/2018 2. Subsequently, the assessee has filed paper book containing the additional evidences along with an application dated 16.05.2019 for taking additional ground on record, which read as under :- “1. That under the facts and circumstances of the case impugned assessment order dated 27-12-2016 is bad in law on account of invalid initiation of reassessment proceedings on following grounds: - a. That Ld. AO did not have 'reason to believe' as postulated in section 147 of the Act to draw an opinion that the income of the assessee for the year under consideration has escaped from assessment. b. That there was no application of own mind by the AO in recording the reasons that the income of the assessee has escaped from the assessment. c. That initiation of reassessment proceedings is bad in law on the ground that the satisfaction recorded by JCIT is not in accordance with mandate of law and the requirements of section 151 have not been fulfilled.” Accordingly the ld. AR of the assessee submitted that the additional ground filed by the assessee, being legal in nature, goes to the root of the matter, therefore, the same may kindly be admitted and appeal of the assessee may kindly be heard on legal issue. Considering the above submissions of the assessee and the decision of the Hon’ble Supreme Court in the case of National Thermal Power Co. Ltd. (NTPC Ltd.) Vs. Commissioner of Income Tax, 229 ITR 383, the additional ground is admitted, the additional evidences filed by the assessee are taken on record and the appeal is heard finally on the legal issue as well as on merits as raised by the assessee in the form No.36.

3 ITA No.184/ASR/2018 3. Facts in brief are that the assessee filed her return of income for the A.Y.2011-12 on presumptive basis, u/s 44AD of the Income-Tax Act, 1961 declaring total income at Rs.1,00,415/- and also agricultural income of Rs.7,85,324/-. It was noticed by the AO that during the financial year 2010-11 relevant to assessment year 2011-12 the assessee had purchased half of the land 71 kanals 19 marlas costing Rs.45,00,000/- stamp duty Rs.2,25,000/- plus registration fee Rs.30,000/- on 11.11.2010. The AO examined the fact and found that this transaction was not verifiable in the return of income for the assessment year 2011-12. In such a circumstance the A.O. was having reasons to believe that income to extent of Rs.23,77,500/- has escaped assessment within the meaning of section 147 of the Income Tax Act, 1961. Accordingly, notice u/s 148 of Income Tax Act, 1961 with the approval of worthy Principal Commissioner of Income Tax vide dated 29.03.2016, was issued and was served upon the assessee. The approval u/s.151(2) of the Act was obtained by the AO in the prescribed form in which the JCIT in reply to the column No.12 has mentioned as “yes satisfied”. In compliance the assessee filed her reply. Thereafter the AO issued notice u/s 143(2) of the Income Tax Act, 1961 alongwith detailed questionnaire. In compliance to the same, the assessee filed the details as required by the AO. Thereafter the AO completed the assessment u/s.143(3) of the Act vide order dated

4 ITA No.184/ASR/2018 27.12.2016 making additions on account of agricultural income at Rs.7,85,324/-, on account of purchase of land at Rs.17,40,000/- and on account of credits in the bank account at Rs.11,43,173/-. 4. Feeling aggrieved from the assessment order, the assessee appealed before the CIT(A) and the CIT(A) partly allowed the appeal of the assessee. 5. Against the order of the CIT(A), the assessee is in further appeal before the Income Tax Appellate Tribunal. 6. Ld. AR before us filed written synopsis which read as under :- 1. The assessee is an individual and it is no account case. 2. Present proceedings are reassessment proceedings and AO has made following additions: a. Rs. 7,85,324/- by not admitting the agricultural income. b. Rs. 17,40,000/- on account of unexplained investment in purchase of agricultural land. c. Rs. 11,43,173/- on account of unexplained credit in the bank account. 3. The reassessment proceedings were initiated on the ground that during the course of assessment proceedings of the assessee for A.Y. 2012-13, it came to the notice of the AO that in A.Y. 2011-12 the assessee had purchased agricultural land for an amount of Rs. 23.77 lakh against shown by the assessee at Rs. 23,40,000/-, (copy of reason is placed at pages 64 to 66.) 4. Sanction u/s 151(2) obtained by the AO from JCIT. The sanction has been granted by writing the words ‘ yes, satisfied’. Page 66 of the paper-book. 5. The assessee did not raise the ground before CIT(A) agitating the validity of reassessment proceedings. However, the assessee has filed an application for admission of additional grounds as well as admission of additional evidence in which the validity of reassessment proceedings has been challenged on the ground that the reasons to believe recorded by the AO are not as mandated in section 147 and also on the ground that the sanction granted by the JCIT is not in accordance of mandate of law. For this purpose, reliance is placed on the decision in the case of Smt. Prabha Rani Agarwal V. ITO. Copy at pages 1-7 of compendium.

5 ITA No.184/ASR/2018 6. From the reasons recorded it can be seen that just for the purpose of making roving and fishing inquiries in to the investment made by the assessee, the reassessment proceedings have been initiated. For this purpose the assessee is making reference to the explanation given by the assessee to the AO in reply dated 17-03- 2018 furnished during the course of assessment proceedings for A.Y. 2012-13 page 46 and 47. Just to verify the said aspect the AO issued notice of reassessment proceedings which is equivalent to ‘reason to suspect’ and for his purpose the assessee is placing reliance on the decision of Hon’ble Supreme Court in the case of ITO Vs Lakhmani Mewal Das [1976] 103 ITR 437 (SC)( page 8 to 16) of the case law compendium. Reference is made to last para at page 15 and 16 of the case law compendium. 7. The reassessment proceedings is also invalid on the ground that satisfaction recorded by JCIT (page 66 as ‘yes satisfied’) Hon’ble Court have interpreted that the satisfaction to be recorded u/s 151 should not be in a ritualistic or mechanical manner and there should be more than writing the sanction by word ‘approving’ or ‘yes satisfied’. For this purpose, the reliance is placed on the following decisions: - Chhugamal Rajpal Vs S.P. Chaliha H9711 79 ITR 603 (SC) Page 17 to 24 of case law compendium and the relevant observation are at page 24. The commissioner in the said case approved the reassessment just by writing ‘yes’ and it was held that reassessment proceedings invalid on that ground. Commissioner of Income-tax Vs Smt. Attri Devi [2005] 276 ITR 532 (Punjab & Haryana) In this case the Tribunal had quashed the reassessment proceedings on the ground that the sanction was granted without application of mind in mechanical manner and the order of Tribunal was upheld on this ground. Pr . CIT Vs N.C. Cables Ltd f20171 391 ITR 11 (Delhi) In this case sanction u/s 151 was granted by commissioner that the expression’ approved’. It was observed by Hon’ble High Court that the power was exercised in a ritualistic manner, therefore, reassessment proceedings were invalid. Para 11 of the judgment at page 30 of case law compendium. CIT Vs S. Goyanka Lime & Chemicals Ltd 120151 231 Taxman 73 (Madhya Pradesh) In this case the approval was granted with the expression ‘yes, I am satisfied’. In the present case also, the approval has been granted by ‘yes satisfied’. It was held that such sanction granted for issue of notice u/s 148 is unsustainable and thus, the

6 ITA No.184/ASR/2018 assessment proceedings were invalid. Reference is made to para 7 and 8 of the decision at page 32 of the case law compendium. This decision of Hon’ble Madhya Pradesh High Court has been upheld by Hon’ble Supreme Court vide order dated 08-07-2018 in CIT Vs S. Goyanka Lime & Chemical Ltd [2016] 237 Taxman 378 (SC), page 33 of the case law compendium. ON MERITS Addition of Rs. 7,85,324/- 8. This addition has been made by the AO on the basis of conjectures and surmises ignoring the evidence produced before him and CIT(A) has only given part relief. Reference in this regard is made to the fact that the assessee had acquired of agricultural land on lease on which agricultural activity was carried out and evidence of obtaining such land is furnished at page 28 to 30. The land was taken on lease w.e.f 01-04-2010 and this fact has been confirmed by the land owner by way of affidavit, (copy is placed at page 28 to 30 of the case- law compendium). Agricultural crop was sold through Kaccha Aadtia and relevant evidence in the shape of J form and confirmed copies of account of sale of agricultural crop are attached at page 53 to 63. The total crop sold of the assessee through Kaccha Aadtia is a sum of Rs. 7,73,174.11 (Rs. 6,77,663.77 through Varun and Company and Rs. 65,510.34 through Kewal Krishan Varun Kumar) page 62 and 63. The sale proceeds are received by cheques which were directly credited in the bank account of the assessee. Thus, there was evidence on record for earning agricultural income which has been totally ignored by the AO and CIT(A). It may be submitted that these evidences were filed before AO in subsequent reassessment proceedings and AO did not find any defect in the same. Reference in this regard is made to the reply filed by the assessee before AO on 03-12- 2018 which is placed at page 48 to 63 where all these evidences were filed. On the basis of this reply the AO has rendered assessment order dated 22-12-2018 at page 80 and 81 of the paper-book. 9. Thus, the disallowance is bad in law. Addition of Rs. 17,40,000/- 10. This addition is on account of unexplained investment in agricultural land. It is already submitted that this case is no account case. To explain the investment in agricultural land the assessee submitted that a sum of Rs. 8.82 lakh was from current year income. So far as it relates to this amount the submissions are made in para 24 of the written submission. It is mentioned that assessee is engaged in the business of sale and purchase of timber and cutting of lodges etc. It may be mentioned that during the course of business the assessee is entitled to accumulate the cash obtained from sales to make the investment and at the end of the year total income is computed and may be taken in to consideration for making the investment during the year under consideration.

7 ITA No.184/ASR/2018 11. So far as it relates to loan taken for LMG Timbers (LMG) of a sum of Rs. 7,69,000/-. It may be mentioned that AO himself has accepted Rs. 6,00,000/- received from LMG which is proprietary concern of Santosh Goyal (mother in law of the assessee). Her balance sheet is furnished at page 31 where in on the asset side the total amount of Rs. 7,69 lakh is outstanding ( Rs. 7,25,000/- in the name of Raghav Sales proprietary concern of the assessee and Rs. 44,000/- in the name of the assessee are outstanding). 12. Coming to Rs. 6.86 lakh investment from Stree-Dhan, it is submitted that assessee is being assessed from A. Y. 2004-05 and it was explained to the AO that total income returned from all these years is Rs. 7.08 lakh and apart from that the assessee was having the amount given by the relatives from time to time and also had saving in hand the details given in para 22. Therefore, the addition made by the AO on account of unexplained investment made in agricultural land is not warranted on merits. Additions of Rs. 11,43,173/- 13. Copy of bank account are filed at pages 76 to 79. At page 76 copy of Oriental Bank of Commerce is attached. Rs. 6,00,000/- deposited on 10-11-2010 is from LMG which has been accepted by the AO. There are two cash deposited on 26-11-2010 and 27-11-2010 of Rs. 5,00,000/- each. The source of these deposits partly (Rs. 6,00,000/-) consisted of cash withdrawal made on 15-11-2010 and 16-11-2010. The balance of Rs. 4,00,000/- can be said to be out of Stree-Dhan as explained of Rs. 6.86 lakh while making submission of investment in agricultural land. It may be seen Rs. 10,00,000/- deposited on 26-11-2010 and 27-11-2010 were paid by cheques on 02-12-2010 for purchase of agricultural land to Sh. Sarabjit Singh. Copy of purchase deed is attached at page 67 to 75. Rs. 3,00,000/- deposited on 31-12-2020 is agricultural income received by the assessee from Varun and Company and Rs. 65,510.34 deposited on 08-02-2011 is agricultural income received by assessee from Kewal Krishan Varun Kumar. 14. Rs. 3,77,603.77 credited in Central Bank of Indian from ‘Varun and Company’ as sale proceeds of agricultural crops and Rs. 5,00,000/- deposited on 31-03-2011 is received from LMG for which the explanation was given to the AO as per page 48 and 33 of the paper- book. Therefore, there is no unexplained deposits in the bank account of the assessee. 15. It may also be mentioned here reference can also be made to the decision in the case of Jitnedra Kumar Yadav Vs ACIT (ITA no. 1808/Del/2016) dated 10-04-2019, where in it has been held that addition u/s 68 is not sustainable in a case where assessee is not maintaining books of account.

8 ITA No.184/ASR/2018 16. These synopsis are requested be read with written submissions and relevant documents filed in the paper-book. 17. In view of above submission, the impugned assessment odder may be held invalid and on merits the addition made by the AO are requested to be deleted. 7. Inviting our attention to the paper book at pages 64 to 66, which are the copies of reasons recorded by the Assessing Officer/ITO, Ward- 3(2), Ferozepur and the approval granted by the JCIT, Range-III, Ferozepur for issuance of notice u/s.148 and submitted that neither any proper reasons were recorded nor any nexus between the materials relied upon and the belief formed for escapement of income. It was also the contention of ld.AR that the reasons have been recorded without application of mind and even no proper satisfaction was recorded before issuance of notice u/s. 148 of the Act. Ld. AR further submitted that the approval has been granted for reopening of the assessment in a mechanical manner and without due application of mind by writing the word "Yes satisfied” that it is a fit case for issuance of notice u/s.148 of the Act for reopening of the case. Therefore, the ld.AR submitted that initiation of proceeding u/s 147 and issue of notice u/s 148 of the Act is void ab-initio and, hence, assessment as completed u/s 143(3) / 147 of the Act deserves to be annulled/quashed. To support his contentions, apart from the case laws relied on by the ld. AR above, also placed reliance on the following case laws:-

9 ITA No.184/ASR/2018 i. Smt. Prabha Rani Agrawal Vs. ITO [2013] 351 ITR 275 (Allahabad) ii. ITO Vs. Lakhmani Mewal Das [1976] 103 ITR 437 (SC) iii. Metal Import (P) Ltd. Vs. CIT 73 taxmann 375 iv. CIT Vs. Sun Engineering Works (P) Ltd. [1992] 198 ITR 297 (SC) Jitendra Kumar Yadav Vs. ACIT, New Delhi in ITA No.1808/Del/2016 v.

10 ITA No.184/ASR/2018 ground for reassessment as held in the judgments relied upon on behalf of the assessee but if there are reasons to believe that tax has escaped, reassessment is permissible. Reasons can be even on the basis of particulars of the return without any new material. Even if proceedings under s. 143(2) are not taken, reassessment proceedings can be taken. (2)It is further held by following the case of raymond wollen mills vs ITO (1999)236 ITR 34 SC, that court can invalidate a notice issued u/s 148 only if it is satisfied that no material was available before the A.O on the basis of which he could form a belief or that the said belief was not at all bonafide or was based on wage ,arbitrary or non specific information. Thus exception to reason only when no material available with Assessing Officer- belief can be made on any material whatsoever (Grover nursing Home vs ITO -248ITR 493-2001(P&H)) (3) It is further held that - belief can be reached in any manner, and is not qualified by a precondition of faith and true disclosure of material facts by the assessee as contemplated in the pre amended Section 147(a) of the Act. (Jawand Sons vs CIT 18 November, 2009(P&H) (4) It is also held that satisfaction arrived at by any relevant material after following due procedure, it cannot be assailed.it may involve change of opinion but not at par with mere change of opinion. (Tilak Raj Bedi vs JCIT (2009) 319 ITR 385-P&H) (4) It is well settled that audit objection on the on the point of fact can be a valid ground for reopening of assessment. (i) Usha International Ltd, vs Assessee on 9 March, 2015 (ITAT delhi ) -As this tangible material, in the shape of audit objection, came into existence after the completion of the original assessment and led to the initiation of reassessment, we hold this report of the internal audit party, formed a valid foundation for the initiation of reassessment proceedings, thereby pushing the case outside the ambit of ‘change of opinion'. (ii) CIT PVS beedies (p) ltd vs 1999 237 ITR 13 Sc (b) It is also well settled that even if the information be such that it could have been obtained during the previous assessment from an investigation of the materials on the record, or the facts disclosed thereby or from other enquiry or research into facts or law, but was not in fact obtained, the jurisdiction of the Income-tax Officer is not affected. ” (iii) Usha International Ltd, vs Assessee on 9 March, 2015 (IT AT delhi) -As this tangible material, in the shape of audit objection, came into existence after the completion of the original assessment and led to the initiation of reassessment, we hold this report of the internal audit party, formed a valid foundation for the initiation of reassessment proceedings, thereby pushing the case outside the ambit of 'change of opinion'. (iv) CIT PVS beedies (p) Itd vs 1999 237 ITR 13 Sc

11 ITA No.184/ASR/2018

(7) It is also well settled that even if the information be such that it could have been obtained during the previous assessment from an investigation of the materials on the record, or the facts disclosed thereby or from other enquiry or research into facts or law, but was not in fact obtained, the jurisdiction of the Income-tax Officer is not affected. " (AlA firm vs CIT (1991) 189 ITR 285(sc) -The expression 'information' in the context in which it occurs must, in our judgment, mean instruction or knowledge derived from an external source concerning facts or particulars, or as to law relating to a matter bearing on the assessment.. .Jurisdiction of the Income-tax Officer to reassess income arises if he has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment. That information, must, it is true, have come into the possession of the Income-tax Officer after the previous assessment, but even if the information be such that it could have been obtained during the previous assessment from an investigation of the materials on the record, or the facts disclosed thereby or from other enquiry or research into facts or law, but was not in fact obtained, the jurisdiction of the Income-tax Officer is not affected. " (8 ) - it is also well settled that it is for the income tax officer to draw the proper inference of facts Calcutta Discount Company vs ITO November, 1960 Sc Burden could not be fully discharged by simply producing the Account books and other documents, but the assessee must also disclose such specific items or portions thereof as are relevant to the assessment. But once he has done so, it is for the Income-tax Officer to draw the proper inferences of fact and law therefrom and the assessee cannot further be called upon to do so for him. Power under s. 34(1 )(a) is asserted by the assessing authority and the record prima facie supports its existence, any enquiry as to whether the authority could reasonably hold the belief that the under assessment was due to non-disclosure by the assessee of material facts necessary for the assessment must, be barred. In view of the above the above the submission of the asssessee with case laws not justified. On issue of non issue of notice u/s 143(2) There is no requirement under the act that notice uls 143(2) is mandatory for assessment u/s 147. Similar view held as under. (CIT vs Madhya bharat energy corporation 11-7-2011 (Delhi High court.) Tarsem Singla Vs CIT(Punjab & Haryana)/[2016] Punjab & Haryana) On service of notice u/s 148 R.K Upadhyaya vs Shanabhai P. Patel on 28 April, 1987- Once a notice is issued within the period of limitations, jurisdiction becomes vested in the Income-tax Officer to proceed to reassess. The mandate of section 148(1)

12 ITA No.184/ASR/2018 is that reassessment shall not be made until there has been service. The requirement of issue of notice is satisfied when a notice is actually issued. In this case, admittedly, the notice was issued within the prescribed period of limitation as March 31, 1970, was the last day of that period. Service under the new Act is not a condition precedent to conferment of jurisdiction in the Income-tax Officer to deal with the matter but it is a condition precedent to making of the order of assessment. The High Court in our opinion lost sight of the distinction and under a wrong basis felt bound by the judgment in 53 ITR 100. As the Income-tax Officer had issued notice within limitations, the appeal is allowed and the order of the High Court is vacated. The Income-tax Officer shall now proceed to complete the assessment after complying with the requirements of law. On Objection to notice u/s 148 Even in case of order not passed, directions are to be issued to AO to remove the defects and pass fresh assessment order disposing the objections. [( Allana Cold storage vs ITO (2006)287 ITR (Bombay) Rabo India Finance Ltd vs DCIT (2012) 23 taxmann .com 163(Bombay) Infrastructure and energy services Itd vs DCIT (2010)233 CTR I75 (Bombay) In support of his contentions, ld.DR also relied on the following case laws :- i) Bhagwat Prasad Vs. CIT, [1998] 97 TAXMAN 294 (All); ii) Jasbir Singh Vs. CIT, ITA No.84 of 2016 (O&M)(Punjab & Haryana High Court) order dated 11.04.2016; iii) Rakesh Gupta vs. CIT, CWP No.27068 of 2016, order dated 27.04.2018; and iv) Sh. Ashok Kumar Vs. ITO, ITA No.2574/ASR/2014, order dated 22.02.2019. Finally, the ld.DR submitted that the appeal of the assessee deserves to be dismissed. 9. After considering the rival submissions of both the sides, perusing the entire material available on the record and orders of both the authorities below along with the case laws and paper book filed placed before us, we find that the issue before us raised by the assessee, being legal in nature, is as to whether the reassessment proceedings initiated by the Assessing Officer by recording the reasons

13 ITA No.184/ASR/2018 u/s.147/148 of the Act and the satisfaction recorded by the JCIT u/s.151(2) of the Act, are sustainable or not. 10. In the instant case, the AO during the course of assessment proceedings found that the assessee has escaped assessment. Subsequently, the AO recorded the reasons and after getting approval from the JCIT, issued notice u/s.148 to the assessee. Accordingly, the Assessing Officer completed reassessment proceeding holding that the assessee could not substantiate the source of investment made by the assessee. We have also gone through the reasons recorded by the Assessing Officer/ITO, Ward-3(2), Ferozepur for reopening and the approval thereof by the Ld. Jt. CIT, Range-III, Ferozepur and found that the AO has not applied his mind so as to come to an independent conclusion that he has reason to believe that income has escaped assessment during the year under appeal. Keeping in view of the facts and circumstances of the present case and the case law applicable in the case of the assessee, we are of the considered view that the reopening in the case of the assessee for the assessment year under consideration is bad in law and deserves to be quashed. Further to fortify our view as to whether the approval given by the JCIT u/s.151(2) of the Act is sustainable or not, we would like to reproduce the provisions of Section 151 of the Income Tax Act, 1961, which read as under :-

14 ITA No.184/ASR/2018 "151. Sanction for issue of notice.—(1) No notice shall be issued under section 148 by an Assessing Officer, after the expiry of a period of four years from the end of the relevant assessment year, unless the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner is satisfied, on the reasons recorded by the Assessing Officer, that it is a fit case for the issue of such notice. (2) In a case other than a case falling under sub-section (1), no notice shall be issued under section 148 by an Assessing Officer, who is below the rank of Joint Commissioner, unless the Joint Commissioner is satisfied, on the reasons recorded by such Assessing Officer, that it is a fit case for the issue of such notice. (3) For the purposes of sub-section (1) and sub-section (2), the Principal Chief Commissioner or the Chief Commissioner or the Principal Commissioner or the Commissioner or the Joint Commissioner, as the case may be, being satisfied on the reasons recorded by the Assessing Officer about fitness of a case for the issue of notice under section 148, need not issue such notice himself.". 11. On careful perusal of the above provisions, it is clear that the Revenue can reopen the earlier assessments u/s.147 & 148 of the Act, however, Section 151 of the Act prohibits the Revenue to use the provisions of Section 147 of the Act unless there is a satisfaction of the superior officer that the Assessing Officer has good and sufficient reasons to invoke the provisions of Section 147 of the Act. The superior authority has to examine the reasons, material or grounds and to judge whether they are sufficient and adequate to the formation of the necessary belief on the part of the assessing officer. If, after applying his mind and also recording his reasons, howsoever briefly, the JCIT/Commissioner is of the opinion that the AO's belief is well reasoned and bonafide, he is to accord his sanction to the issue of notice u/s. 148 of the Act. In the instant case, we find from the perusal of the order sheets filed at pages 64 to 66 in the paper book, the Jt. CIT

15 ITA No.184/ASR/2018 has simply put "yes satisfied" and signed the report thereby giving sanction to the AO. The JCIT has nowhere recorded his satisfaction note nor any brief of the satisfaction has been given therein. Therefore, it cannot be said that the Jt. CIT has accorded sanction after applying his mind and after recording his satisfaction. To support our view, reliance can be placed on the decision of Hon’ble Delhi High Court in the case of Pr.CIT Vs. N.C.Cables Ltd., [2017] 88 taxmann.com 649 (Delhi), wherein the Hon’ble High Court has observed that the satisfaction has to be recorded of the given case which can be reflected in the briefest possible manner. The relevant observations of the Hon’ble High Court in para 11 read as under :- “11. Section 151 of the Act clearly stipulates that the CIT (A), who is the competent authority to authorize the reassessment notice, has to apply his mind and form an opinion. The mere appending of the expression ‘approved’ says nothing. It is not as if the CIT (A) has to record elaborate reasons for agreeing with the noting put up. At the same time, satisfaction has to be recorded of the given case which can be reflected in the briefest possible manner. In the present case, the exercise appears to have been ritualistic and formal rather than meaningful, which is the rationale for the safeguard of an approval by a higher ranking officer. For these reasons, the Court is satisfied that the findings by the ITAT cannot be disturbed.” 12. The Hon’ble Madhya Pradesh High Curt in the case of CIT vs. S. Goyanka Lime & Chemical Ltd. reported in (2015) 56 taxmann.com 390 (Madhya Pradesh), has observed the satisfaction has to be recorded with objectivity on objective material. It was further held by the Hon’ble High Court that granting approval with the expression ‘yes, I am satisfied’ for issuance of notice u/s.148 of the Act is unsustainable.

16 ITA No.184/ASR/2018 Accordingly, the Hon’ble High Court dismissed the appeal filed by the Revenue observing as under :- “7. We have considered the rival contentions and we find that while according sanction, the Joint Commissioner, Income Tax has only recorded so "Yes, I am satisfied". In the case of Arjun Singh (supra), the same question has been considered by a Coordinate Bench of this Court and the following principles are laid down:— 'The Commissioner acted, of course, mechanically in order to discharge his statutory obligation properly in the matter of recording sanction as he merely wrote on the format "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 section 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. 9. As far as explanation to Section 151, brought into force by Finance Act, 2008 is concerned, the same only pertains to issuance of notice and not with regard to the manner of recording satisfaction. That being so, the said amended provision does not help the revenue. 10. In view of the concurrent findings recorded by the learned appellate authorities and the law laid down in the case of Arjun Singh (supra), we see no question of law involved in the matter, warranting reconsideration. 11. The appeals are, therefore, dismissed.” 13. The above decision of the Hon’ble High Court has been upheld by the Hon’ble Apex Court reported in (2015) 64 taxmann.com 313 (SC) dismissing the S.L.P filed by the Revenue. 14. Further in the case of Chhugamal Rajpal Vs.S.P.Chaliha & Ors, reported in 79 ITR 603 (SC), the Hon’ble Supreme Court has held that where the Commissioner, while granting the sanction just noted the word "Yes" and affixed his signature thereunder, he had only

17 ITA No.184/ASR/2018 mechanically accorded permission, and that the important safe-guards provided in section 151 of the Act were lightly treated. 15. During the course of hearing ld. AR of the assessee drew our attention to the pages 46 & 47 of the paper book and submitted that the assessee in reply dated 17.03.2015 has furnished her explanation with regard to investment made by the assessee, however, just to verify the said aspect the AO issued notice of reassessment proceedings which is equivalent to ‘reason to suspect’ and for this purpose, ld. AR of the assessee has placed reliance on the decision of Hon’ble Supreme Court in the case of ITO Vs. Lakhmani Mewal Das [1976] 103 ITR 437 (SC). We have also perused the reply filed by the assessee and found that the investment made by the assessee has been explained. No new information was available to the Assessing Officer for reopening the case u/s 147 of the Act. Therefore, opinion of the AO that the assessee has escaped assessment falls within the category of ‘reason to suspect’ on which basis he went for reopening the case of the assessee. However, the words mentioned in the statute are “reason to believe” and not “reason to suspect”, thus, the reassessment framed by the AO is not sustainable as has been held by the Hon’ble Supreme Court in the case of Lakhmani Mewal Das (supra), as under :- “The powers of the Income-tax Officer to reopen assessment, though wide, are not plenary. The words of the statute are "reason to believe" and not "reason to suspect". The reopening of the assessment after the lapse of many years is a serious matter. The Act, no doubt, contemplates

18 ITA No.184/ASR/2018 the reopening of the assessment if grounds exist for believing that income of the assessee has escaped assessment. The underlying reason for that is that instances of concealed income or other income escaping assessment in a large number of cases come to the notice of the income- tax authorities after the assessment has been completed. The provisions of the Act in this respect depart from the normal rule that there should be, subject to right of appeal and revision, finality about orders made in judicial and quasi-judicial proceedings. It is, therefore, essential that before such action is taken the requirements of the law should be satisfied. The live link or close nexus which should be there between the material before the Income-tax Officer in the present case and the belief which he was to form regarding the escapement of the income of the assessee from assessment because of the latter's failure or omission to disclose fully and truly all material fact was missing in the case. In any event, the link was too tenuous to provide a legally sound basis for reopening the assessment. The majority of the learned judges in the High Court, in our opinion, were not in error in holding that the said material could not have led escaped assessment because of his failure or omission to disclose fully and truly all material facts. We would, therefore, uphold the view of the majority and dismiss the appeal with costs.” 16. The observations of the Hon'ble Supreme Court and the Hon’ble High Court are very much relevant in the instant case as in the present case also the Jt. CIT has simply mentioned "Yes satisfied" to the report submitted by the concerned AO. In the light of the ratios/observations of the Hon'ble Supreme Court and the Hon’ble High Court mentioned hereinabove, we have no hesitation to hold that the reopening proceedings vis-à-vis provisions of Sec. 151 of the Act are bad in law and the assessment has to be declared as void ab initio. Therefore, in our considered opinion, the approval in the case at hand is clearly an approval granted without application of mind, and hence, it is not at all a legally tenable approval. In the peculiar facts and circumstances of the case, the case laws relied on by the ld.DR are distinguishable on facts as noted in the order. As we have allowed the legal issue raised by

19 ITA No.184/ASR/2018 the assessee, therefore, other grounds raised by the assessee on merits are not being adjudicated upon. 17. In the result, appeal of the assessee is allowed on legal ground. Order pronounced in the open court on 05/02/2020. Sd/- Sd/- (RAVISH SOOD) (L.P.SAHU) न्यानयक सदस्य / JUDICIAL MEMBER ऱेखा सदस्य / ACCOUNTANT MEMBER अमृतसर/ Amritsar; ददनांक Dated 05/02/2020 Prakash Kumar Mishra, Sr.P.S. आदेश की प्रनतलऱपऩ अग्रेपषत/Copy of the Order forwarded to : 1. अऩीऱाथी / The Appellant- Neetima Goyal, Prop. Raghav Sales, G.T.Road, Ferozepur Cantt., PIN-152001 2. प्रत्यथी / The Respondent- ITO, Ward-3(2), Ferozepur 3. आयकर आयुक्त(अऩीऱ) / The CIT(A), 4. आयकर आयुक्त / CIT 5. पवभागीय प्रनतननधध, आयकर अऩीऱीय अधधकरण, अमृतसर/DR, ITAT, Amritsar 6. गार्ा पाईऱ / Guard file. सत्यापऩत प्रनत //True Copy// आदेशानुसार/ BY ORDER, (Senior Private Secretary) ITAT Amritsar Bench, Amritsar