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Income Tax Appellate Tribunal, DELHI BENCH “SMC-I”: NEW DELHI
Before: SHRI P.K.BANSAL
This appeal has been filed by the assessee against the order of the Ld. CIT(A) dated 23.3.2015. Ground No. 1a) and 1b) since not pressed stand dismissed not pressed. Ground No. 1c) relates to that no proper and valid sanction u/s 151 of the appropriate authority and therefore the proceeding initiated u/s 148 are void. Ground No. 2 also relates to the validity of the initiation of proceedings u/s 148 as the jurisdiction in the case of the assessee were with the ITO Ward 33(2) while the proceedings u/s 147 were initiated by ITO Ward 25 (3).
I have heard the rival submissions and carefully considered the same. I noted that in this case while getting the approval for initiating the proceeding u/s 147 the AO recorded the following reasons as are appearing at page 4 and 5 of the paper book :-
“An information about accommodation entries taken by different persons/assesses has been received in the form of CD from the DIT (Inv.)-1, New Delhi through the CIT Delhi-IX vide F.No. CIT – IX/Hqrs/2006-07/2576 dated 22.3.2007 duly forwarded by the Addl. CIT Range-25 vide F. No. Addl. CIT/R-25/06-07/1368 dated 22.3.2007 which also include the name of the assessee in question.
The assessee has taken accommodation entry to the tune of Rs. 500000/- from M/s. Rabik Exports Ltd. vide instrument drawn on Ratnakar Bank, Karol Bagh, (Account No. 49) on 21.11.2001 and Rs. 500000/- from M/s. VPS Values and Tubes (P) Ltd. vide instrument drawn on Ratnakar Bank, Karol Bagh, (Account No. 41) and the said amount has been credited into assessee’s bank account No. 1079 with Bank of Baroda, Punjabi Bagh, New Delhi.
I have, therefore, reason to believe that Income chargeable to tax to the extent mentioned above has escaped assessment. Hence, notice u/s 148 of I.T. Act is proposed to be issued.”
When the matter went before the Joint Commissioner the Joint Commissioner approved the reasons by stating “ Yes. I am satisfied.”
Now the question before me is whether this fulfils the requirement of 2 section 151 of the Income Tax Act. In this case the asstt. year was involved in assessment year 2002-03. The reasons were recorded by the AO on 3.3.2009 which were sent for approval of the Joint Commissioner.
Joint Commissioner while giving his approval marked on the prescribed form “Yes. I am satisfied.” Since no assessment u/s 143(3) was completed therefore the proceeding u/s 147 after the expiry of the four years could have been initiated by AO who is below the rank of Joint Commissioner, unless the Joint Commissioner is satisfied on the reasons recorded by such AO that it is a fit case for the issuance of the notice.
The Ld. AR before me submitted the copy of the decision of the Madhya Pradesh High Court at Jabalpur Bench in of 2012 231 Taxman.73 in the case of CIT, Jabalpur vs. M/s. S. Goyanka Lime and Chemicals Ltd. dated 14.10.2014 in which while giving the approval on the reasons recorded by the AO. 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 (MP) (2000) 246 ITR 363 in this case also the Joint Commissioner while according 3 sanction recorded “Yes, I am Satisfied” . In view of this decision the Ld. AR before me vehemently contended that in the recent case also the Joint Commissioner has given the sanction in the same manner and therefore the sanction given by the Joint commissioner tentamounts to be on mechanical manner 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 “ Yes, I am Satisfied” tentamounts to satisfaction be accorded on the reasons recorded in the proforma 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 Pradesn 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 AO Ward 25 (3) and the additions made on merits does not require any adjudication as I have already quashed the assessment.
In the result, appeal filed by the assessee is allowed.
Order pronounced in the open court on 11/07/2016.