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Income Tax Appellate Tribunal, DELHI BENCH “SMC” NEW DELHI
Before: SHRI B.P. JAIN
ORDER
PER B.P. JAIN, ACCOUNTANT MEMBER:
This appeal of the assessee arises from the order of ld. CIT(A), Ghaziabad vide order dated 23.12.2015 for the A.Y. 2007-08. The assessee has raised the following grounds of appeal:- “1.That the order passed by the Assessing Officer and partly upheld by the Ld. CIT(A) is perverse to the law and to the facts of the case, because of \uvoking provisions of law u/s 147 of the Act, only upon the borrowed information. Page 1 of 10
2.That the order passed by the Assessing Officer and partly upheld by the Ld. CIT(A) were also wrong and not tenable, because of granting the approval only on a mechanical manner u/s 151 of the Income Tax Act, 1961.
That the order passed are further not legal because of not taking into consideration the Affidavit filed having declined to pay any donation / capitation fee at the time of admission of his daughter to Santosh Medical College, Ghaziabad.
That on the facts of the case the orders passed by the Assessing Officer were not legal, as the Assessing Officer failed to examine the College Authorities u/s 131 of the Act, in order to deviate the facts given in the Affidavit filed by the appellant.
5. That the copies of documents if any be available with the Assessing Officer, while taking cognizance of Section 147 of the Income Tax Act, 1961, as the Ld. CIT(A) has stated, has never been discussed in the reasons recorded or ever confronted by the Assessing Officer prior to pass the orders.
6. That the reasons so recorded by the Assessing Officer talks about the information only and not about any material if any be received from the office of DI (Inv.), Delhi, prior to record reasons and thereafter to the issuance of notice u/s 148 to the appellant, as such, the orders passed are illegal and not tenable.
7. That the copies of seized material if any confirms to be available with the Assessing Officer, were never confronted to the appellant
for its rebuttal thereof prior to pass the orders, as such the orders passed are unconstitutional, having no locus standi under the law.
8. That the Ld. CIT(A) has relied upon only the photocopies of the material which purported to have been collected by the Assessing Officer, thereafter to the recording of reasons from the office of DI (inv.) Delhi, as the same has neither supplied by Assessing Officer nor by the CIT(A) prior to adjudicate the appeal on merits.
9. That the Ld. CIT(A) has further failed to appreciate that the photocopies if any be collected forming basis of additions made by the Assessing Officer is having no legal value under the law, unless and until corroborate and confirmed by the concerned person to whom it belongs, therefore, the orders passed by the Assessing Officer and partly held by the Ld. CIT(A) suffers from infirmity, as such, not tenable.
That the orders passed are further illegal because of drawing inference only on the photocopies of the material if any purported to have been received by the Assessing Officer from the office of DI (Inv), Delhi, after recording the reasons, without confirming and confronting the same to the concerned appellant.
That the appellant reserves his rights to raise additional grounds of appeal at any time even during the course of hearing of this appeal.”
The brief facts of the case as emanating from the order of the Assessing Officer with regard to the initiation of proceedings u/s 147 of the Act are reproduced here in below:-
“As per information of the assessee has deposited cash amount of Rs. 22,00,000/- as donation/capitation fee with M/s. Santosh Medical College, Ghaziabad during the F.Y. 2006-07 and did not file his return of income. As such the income has escaped assessment, therefore, proceedings u/s 147 were initiated and notice u/s 148 of the IT Act was issued on 27.3.2014.”
3. The ld. CIT (A) confirmed the action of the Assessing Officer with regard to the validity of notice u/s 148 of the IT Act.
4. It was brought to our notice by the ld. AR at page no. 1 of the paper book the reasons recorded which are dated 27.3.2014 at paper book page no. 2 and 3 the approval from the Addl. Commissioner of Income wherein column 12 has given the satisfaction by mentioning “Yes” only. On paper book page 4, there is a notice u/s 148 which is also dated 27.3.2014, which means everything was done on 27.3.2014 i.e. in one day and the proposal was made and approved in a very mechanical manner which is not permitted in law and the case is covered by the decision of ITAT Delhi Bench SMC-III in ITAT no. 6138/D/2015 vide order dated 22.11.2016 and the decision of Hon’ble Delhi High Court in the case of Pr. Commissioner of Income Tax vs. NC Cables reported (2017) 391 ITR 11.
The copies of the orders were placed on record. The ld. DR on the other hand relied upon orders of both the authorities below.
I have heard the rival contentions and perused the facts of the case. The case is covered by the decision of ld. Bench in the case of Sh. Sunil Kumar Goel (supra). For the sake of convenience the decisions is reproduced her in below:-
“I have heard both the parties and carefully considered the same. I note that in this case the A.O. while recording the reasons dated 28,3.2014 for the belief that income has escaped assessment vide column no. 11 has recorded the reasons as under:-
"In this case the assessee filed the return of income of Rs. 4,32,147/- on 31.10.2007. The same was processed u/s. 143(1) on 14.7.2008. During the year the assessee has shown medical profession income.
A search operation u/s. 132 was carried on 27.6.2013 in the premises of Santosh Group of institution and Dr. P. Mahalingam. Certain documents / books of account were seized from the above premises which revealed that donation / capitation fee over and above the regular course fee, paid in cash by the parents of students taken admission in various medical courses. During the course of recording Page 5 of 10 statement u/s. 132(4) of the I.T. Act, relevant seized materials were confronted to Dr. P. Mahalingam, Chairman of the Trust. He has categorically admitted of accepting donation / capitation fee in cash and offered unaccounted money so received for taxation. On perusal of list given with the above information, it is revealed that Dr. Sunil Kumar Goel, Shantideep Hospital, Near Kendriya Vidyalaya, Delhi Road, Bulandshehr PAN : AGAPG0448G has given donation / capitation fee for the admission of Km. Ishitsa Goel in MBBS course who is his daughter on 15.06.2006 amounting to Rs. 20,00,000/-. On perusal of return of income for the AY 2007-08 filed in this office on 31.7.2007 on such information has been given by the assessee. in view of the above facts, I have reason to believe that there is escaped assessment by an income of Rs. 20,00,000/-, Hence, action u/s. 147 of the IT, Act are to be initiated and Notice u/s. 148 of Income Tax Act, 1961, is to be issued. Dated: 28.03.2014 SD/-
ITO 4.1 I further find that the concerned Joint Commissioner of Income Tax vide Column No. 12 while according the approval mentioned "Yes".
The AR before me submitted the copy of the decision of ITAT, 5. Delhi 'C' Bench in the case of Shri Hari Ram Gupta vs. ITO passed in (AY 2002-03) dated 4.7.2016 and SMC- I Bench, Delhi in the case of Chaudhry & Sons Forging Pvt. Ltd. vs. Page 6 of 10 ITO in (AY 2006-07) dated 12.7.2016 and stated that the issue involved in the present appeal is squarely covered by these decisions. He further stated that the Madhya Pradesh High Court at Jabalpur Bench in ITA No. 82 of 2012 (231 Taxman.73.) in the case of CIT, Jabalpur vs. M/s.
5. Goyanka Lime and Chemicals Ltd. dated 14.10.2014 has dealt the similar issue in which the Joint Commissioner while according sanction only stated that "I am Satisfied", The Hon'ble High Court on this took the view that this action for sanction was without application of mind and this was done in a mechanical manner and therefore the Hon'ble High Court quashed the assessment order. While questioned the quashing the assessment the Madhya Pradesh High Court relied on the decision of Arjun Singh vs. ADIT (MR) (2000) 246 ITR 363 in this case also the Joint Commissioner while according sanction; recorded "Yes, I am Satisfied". Ld. Counsel of the assessee further stated that a SLP filed 6. against the decision of the Hon'ble Madhya Pradesh High Court has been dismissed by Supreme Court vide its order dated 8th July 2015 and filed the copy thereof before me. In view of this decision, the ld. AR before me vehemently contended that in the recent case aiso the Joint Commissioner / Commissioner has given the sanction almost in the same manner and therefore the sanction given by the Joinc Commissioner/Commissioner tantamount to be on mechanical way without application of mind on his part. No contrary decision was brought to my knowledge by the Ld. DR even though the Ld. DR has vehemently contended that the remarks against Column no. 12 of the Joint Commissioner i.e. Page 7 of 10
"Yes" is tantamount to satisfaction be accorded on the reasons recorded in the and thus there is an application of mind on the part of the Joint Commissioner. Since the facts involved in the instant case and the case of the Jabalpur of Madhya Pradesh that are similar and no contrary decision was brought to my knowledge. I do not have any other alternative but to follow the decision of Madhya Pradesh High Court and accordingly set aside the order of the Ld. CIT(A) and quash the assessment made by the AO. So far the other issue regarding the reopening by the Assessing Officer and the additions made on merits does not require any adjudication as I have already quashed the assessment. My aforesaid view is fully supported by the latest IT AT 7. Coordinate SMC-I Bench decision dated 12.7.2016 in the case of Chaudhary & Sons Forging Pvt. Ltd. vs. ITO passed in AY 2006-07. In the result, the Appeal filed by the Assessee stands 8. allowed.”
Also the case is covered by the decision in the case of N.C. Cables Ltd. decided by the Hon’ble Delhi High Court (supra) where it has been held as under:- “That section 151 of the Act dearly stipulated that the Commissioner Y(Appends), who was the competent authority to authorise the reassessment notice, had to apply his mind and form an opinion. The mere appending of the expression "approved" says nothing. The Commissioner need not record Page 8 of 10
elaborate reasons for agreeing with the noting put up. At the same time, satisfaction for the given case to be recorded could be reflected in the briefest possible manner. The exercise appeared to have been ritualistic and formal rather than meaningful, which was the rationale for the safeguard of an approval by a higher ranking officer For these reasons, the findings by the Tribunal could not be disturbed.”
Therefore in all circumstances and facts of the case I quash the assessment made by the Assessing Officer, following decisions referred to herein above. There is no requirement of adjudication on the merit once the assessee succeeds on legal ground.
In the result, the appeal of the assessee is allowed.
Pronounced in the open court on 09.03.2017.