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Income Tax Appellate Tribunal, KOLKATA ‘SMC’ BENCH, KOLKATA
Before: Shri J. Sudhakar Reddy]
Date of concluding the hearing : December 11th, 2019 Date of pronouncing the order : January 8th, 2020 ORDER
Per J. Sudhakar Reddy, AM:
This is an appeal filed by the assessee directed against the order of the Commissioner of Income Tax (Appeals)-06, Kolkata [‘CIT(A)’ for short] dated 30.04.2019 u/s 250 of the Income Tax Act, 1961 (‘the Act’ for short) for AY 2010-11.
In this appeal, the assessee challenged the re-opening of assessment, as well as the addition made on merits. 3. I have heard Sh. Somnath Ghosh, ld. Counsel for the assessee and Sh. Jayanta Khanra, ld. DR on behalf of the Revenue. On a careful consideration of the facts and circumstances of the case, perusal of the papers on record and the orders of the authorities below, as well as case law cited, I hold as follows. 4. I first take up the issue of re-opening. Reasons for re-opening as extracted by the AO at page 1 & 2 of his order are extracted for ready reference: “As per information received from DDIT(lnv) Unit-2(2),Kolkata vide F.No.DDIT(lnv)/Unit- 2(2)/Kol/STR/2016-17/1715 dt.06.03.2017, it appears that Sri Asit Kumar Patra (PAN- AJGPP9385A) Prop of M/s Kalpana Trading maintained a Bank account N0.090105500027at ICICI Bank, in the name of M/s Kalpana Trading. As per information the total cash deposit were made in the above mentioned bank account of Rs.2,22,98,500/- during the F.Y.2009-10. The assessee filed his return of income for the A.Y.2010-11 on 09/03/2011 declaring total turnover at Rs.7,56,290/-. In view of the above, I have reason to believe that the cash deposit of Rs.2,15,42,210/-(Rs.2,22,98,500 - Rs.7,56,290) was made out of the undisclosed income of the assessee and the same has escaped assessment within the meaning of section 147 of the Act 1961 for the A.Y.2010-11.”
Assessment Year: 2010-11 Asit Kumar Patra.
The assessee submits that the bank account mentioned in the reasons does not belong to him and he has nothing to do the cash deposits made therein and that a complaint was registered with the police and also a case u/s 156(3) of the CRPC has been filed before the Chief Judicial Magistrate and that the AO agreed that the amounts deposited in the bank does not belong to the assessee and was of the view that the assessee acted in the capacity of an entry operator, for providing accommodation entry to beneficiaries, in lieu of commission and has chosen to bring to tax commission. He submits that the re-opening of assessment is thus bad in law. It was also argued that the approval given by the Pr. CIT was mechanical and hence bad in law.
On the legal issues I find that the re-opening is bad in law for the reasons that the Pr. CIT-8, Kolkata’s approval for re-opening has simply used one word (“Yes”). This takes me to a conclusion that the approval given in form for recording reasons in ITNS- 10 at Column 14 was a mechanical approval. No proper satisfaction is recorded by the Pr. CIT-8, Kolkata. The Hon’ble Delhi High Court in the case of PCIT vs. N.C. Cables Ltd. [2017] 391 ITR 11 (Delhi) dtd. 11.01.2017 at para 11 states as follows:
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.
The Hon’ble Supreme Court in the case of Chhugamal Rajpal vs. S.P. Chaliha [1971] 79 ITR 603 (SC) has held as follows:
“We are also of the opinion that the Commissioner has mechanically accorded permission. He did not himself record that he was satisfied that this was a fit case for the issue of a notice under section 148. To question No. 8 in the report which reads "Whether the Commissioner is satisfied that it is a fit case for the issue of notice under section 148", he just noted the word "Yes" and affixed his signature thereunder. We are of the opinion that if only he had read the report carefully, he could never have come to the conclusion on the material before him that this is a fit case to issue notice under section 148. The important safeguards provided in sections 147 and 151 were lightly treated by the Income-tax Officer as well as by the Commissioner. Both of them appear to have taken the duty imposed on them under these provisions as of little importance. They have substituted the form for the substance.”
Applying the propositions of law laid down in this case laws to the facts of the case, I have to hold that approval for re-opening of the assessment was given by Pr. CIT in a mechanical manner and without application of mind and does not meet the statutory requirement of Section 151 of the Act. Thus re-opening of assessment is bad in law.
Assessment Year: 2010-11 Asit Kumar Patra.
I also find that the AO has not applied his mind to the information received prior to recording of reasons, that the assessment should be re-opened. The fact is that the bank accounts do not belong to the assessee. This is accepted by the AO. No verification is done by the AO to the information received. The Hon’ble Delhi High Court in the case of Signature Hotels P. Ltd. vs. ITO [2011] 338 ITR 51, it is held that: “Section 147 of the Income-tax Act, 1961 - Income escaping assessment - General - Assessment year 2003-04 - Information given by Director of Income-tax (Investigation), that amount received by assessee from other company was nothing but accommodation entry and assessee was beneficiary, was not sufficient to reopen assessment when Assessing Officer did not apply his, own mind to that information.”
Applying the propositions of law laid down in the case laws I hold that the re- opening is bad in law.
In view of the above discussion I allow this appeal of the assessee by quashing the re-opening of assessment made u/s 148 of the Act.
In the result, the appeal of the assessee is allowed. Kolkata, the 8th January, 2020.