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Income Tax Appellate Tribunal, BENCH, NAGPUR
Before: SHRI RAVISH SOOD & SHRI JAMLAPPA D BATTULL
आदेश/ ORDER PER RAVISH SOOD, JM: The present appeal filed by the assessee is directed against the order passed by the CIT(Appeals)-I, Nagpur, dated 30.09.2015, which in turn arises from the order passed by the A.O under Sec. 143(3) r.w.s 147 of the Income-tax Act, 1961 (for short ‘the Act’), dated 18.03.2014 for assessment year 2008-09. Before us the assessee has assailed the impugned order on the following grounds of appeal: “1. Under the facts and in the circumstances of the case the learned Commissioner of Income Tax (Appeals) erred in confirming the order of Deputy Commissioner of Income Tax though the objection to the jurisdiction was not disposed of by Deputy Commissioner of Income Tax before passing an order which is against the principles laid down by Hon'ble Supreme Court in a case G K N Driveshafts (India) Ltd. v ITO [(2003) 259 ITR 19 (SC)] and Bombay High Court in a case Asian Paints v DCIT [ (2008) 296 ITR 90 (Born.) ] 2. Under the facts and in the circumstances of the case the learned Commissioner of Income Tax(Appeals) erred in not taking a cognizance of assessee's request for a supply a copy of Joint Commissioner of Income Tax's approval which was required to establish that the approval was granted in "mechanical manner" and such approval is no approval as held by various higher authorities. 3. Under the facts and in the circumstances of the case the learned Commissioner of Income Tax(Appeals) erred in ignoring the submission made by assessee on 03/09/2015 in which various cases were cited in support of assessee's ground of improper approval by Joint Commissioner of Income Tax and further saying that the ratio of the decisions relied upon by the AR of the appellant is not applicable ( para 5.7 of appellate order). 4. Under the facts and in the circumstances of the case the learned Commissioner of Income Tax (Appeals) erred in not dealing the core issue of "mechanical approval" granted by Joint Commissioner of Income Tax which is apparent from the fact that in the reasons recorded for re-opening
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an assessment escaped income is taken Rs.24.99 lacs and the same income is approved by Jt. Commissioner of Income Tax whereas in the final assessment order concealed income is taken Rs.59.92 lacs (para 10 of assessment order) which is enough to establish that the approval was granted in a "mechanical manner" and diversifying the issue to some other procedural aspect on sanction u/s.151 of I T Act such as issue of notice after 4 years (para 5.5 of appellate order). 5. Under the facts and in the circumstances of the case, the learned Commissioner of Income Tax (Appeals) erred in treating a request of assessee for supply a copy of approval/sanction note which was required to pinpoint exact infirmity, at par with the inspection of same and ignoring a fat that an opportunity was not given by DCIT to explain the defect which was specifically asked for. 6. Under the facts and in the circumstances of the case, the learned Commissioner of Income Tax (Appeals) erred in ignoring the fact that the assessee was asking for a copy of sanction/approval note which was already given to the assesee but was misplaced and this fact was intimated to DCIT on 14.07.2015. 7. Under the facts and in the circumstances of the case, the learned Commissioner of Income Tax (Appeals) erred in confirming the view of Deputy Commissioner of income Tax on the issue of “Fresh Tangible Material” i.e. considering the information and material which was already with Deputy Commissioner of income Tax as “Fresh Tangible Material. 8. Any other ground that may be taken up at the time of hearing or prior to that.”
Succinctly stated, the assessee which is a co-operative society had filed its return of income for the assessment year 2008-09 on 30.09.2008, declaring a total income of Rs. Nil, i.e, after set-off of brought forward losses of earlier years of Rs. 59.92 lacs. Observing, that a perusal of the records revealed that no loss was available with the assessee society for set-off against its income for the year under consideration i.e. A.Y.2008-09, the Assessing Officer holding a belief that the assessee’s claim for set-off of brought forward losses had wrongly been allowed,
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thus, reopened its case u/s.147 of the Act. Case of the assessee society was
reopened by the AO on the basis of the following “reasons to believe” :
“Details of losses to be carried forward to future years as per schedule BFLA with the return for A.Y.2008-09
Sl. Assessment Date of House Loss from Loss from Short Long Other Other No. year filing ( property business speculative term term sources sources DD/MM/YYYY) loss other than business capital capital Loss( loss ( loss from loss loss other from speculative than loss owning business from race race houses) houses) I 1999-00 Rs. In Ii 2000-01 Lakh Iii 2001-02 Iv 2002-03 29.10.02 866.60 V 2003-04 Vi 2004-05 30.10.04 37.79 Vii 2005-06 Viii 2006-07 Ix Total of earlier year losses X Adjustment of above loses in Schedule BFLA Xi 2007-08 ( current year losses) Xii Total loss 900.39 carried forward to future years)
(ii). On examination of record available, it is seen that the assessee has filed return of income for A.Y.2002.03 on 31.10.2002 declaring nil income after claiming deduction u/s.80P of Rs.2,88,58,540. As per item No. 25(a) of the audit report inform No.3CD, the details given under the head “details of brought forward loss or depreciation allowance, in the following manner to the extent available is as under: S. No. Asst. Year Nature of Amount as Amount as Remarks loss/allowance ( returned (in assessed ( in rupees) rupees) give reference
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to relevant order) -Nil-
The assessment u/s.143(3) for A.Y.2002-03 was completed on 31.03.2005 determining nil income after allowing deduction of Rs.2,88,58,540/- u/s.80P of the Act. (iii). The assessee filed return of income for A.Yr.2003-04 on 31.10.2003 declaring nil income claiming deduction u/s.80P of Rs.1,10,75,430/, As per item No.25(a) of the audit report in Form No.3CD, the details given under the head "Details of brought forward loss or depreciation allowance, in the following manner, to the extent available" is as under:- S. No. Asst. Year Nature of Amount as Amount as Remarks loss/allowance ( returned (in assessed ( in rupees) rupees) give reference to relevant order) -Nil-
The assessment was completed u/s.143(3) on 29.11.2005 determining nil income after allowing deduction u/s.80P of Rs.1,10,75,430/-. (iv). For A.Yr.2004-05, the return of income was filed on 20.10.2004 declaring loss of Rs.40,27,302/-. As per item No.25(a) of the audit report in Form No.3CD, the details given under the head "Details of brought forward loss or depreciation allowance, in the following manner, to the extent available" is as under:- Asst. Year Remarks S. Nature of Amount as Amount as No. loss/allowance ( returned (in assessed ( give rupees) in rupees) reference to relevant order) 1. 2004-05 Business loss 4027302 Current loss carry -- during the year forward for next after provisions year The assessment was completed for A.Y.2004-05 u/s.143(3) on 07.08.2006 determining the loss at Rs.40,27,302/-. (v). For A.Yr.2005-06, the return of income was filed on 30.10.2005 declaring Nil income after claiming set off carry forward loss for A.Yr.2004-05 of Rs.40,27,302/- and claiming deduction u/s.80P on the balance income of
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Rs.1,95,18,863/-. As per item No.25(a) of the audit report in Form No.3CD, the details given under the head "Details of brought forward loss or depreciation allowance, in the following manner, to the extent available" is as under:- S. No. Asst. Year Nature of Amount as Amount as Remarks loss/allowance ( returned (in assessed ( in rupees) rupees) give reference to relevant order) The business loss of Rs.4027302 for the A.Y.2004-05 was carry forward now it is set off against the current years of profit.
The assessment was completed u/s.143(3) r.w.s.144 of the Act on 19.11.2007 determining income at Rs.2,35,950/- after allowing set off of brought forward loss of Rs.40,27,302/- pertaining to A.Yr.2004-05 and deduction of Rs. 1,95,18,863/- u/s 80P of the Act. (vi). For A.Yr.2006-07, the return of income was filed on 31.10.2006 declaring nil income after claiming deduction u/s.80P of Rs.28,39,640/-. As per item No.25(a) of the audit report in Form No.3CD, the details given under the head "Details of brought forward loss or depreciation allowance, in the following manner, to the extent available" is as under:- Asst. Year Remarks S. Nature of Amount as Amount as No. loss/allowance ( returned (in assessed ( give rupees) in rupees) reference to relevant order) 1. 2002-03 Business loss 28858541 Not available 98748798 2. 2004-05 Business loss 36762850 -Do- 3479468 Total 10,22,28,266/- The assessment was completed u/s.143(3) on 15.12.2008 determining income at Rs.87,58,960/-. The assessee preferred appeal before the CIT(Appeals), who vide order dtd. 27.03.2009 directed the A.O. to verify the assessee's claim of carry forward losses and allow the same as admissible to the assessee. In the order giving effect to the CIT(A)-II's order dtd.11.05.2009, the AO has specifically mentioned about the losses of which the relevant portion is reproduced as under:-
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"As regards the C/F loss of Rs.10,22,28,266/-, no such loss was claimed by the assessee in the previous years. The only loss claimed by the assessee for Rs.40,27,302/- in the return for F.Y.2004-05 which was correctly allowed in the assessment order for A. Y.2005-06. Hence there is no carry forward loss to be set off." (vii). Considering the above facts and figures, it is seen that there is no loss available for set off against the income for the year under consideration i.e.A.Y.2008-09. The assessee has made a wrong claim of set off of loss of Rs. 24.99 lakhs. The assessee has under stated its income.” Accordingly, the Assessing Officer vide his order passed u/s. 143(3) r.w.s 147 of the Act, dated 18.03.2014 after disallowing the assessee’s claim for set-off of brought forward losses of Rs. 59.92 lacs assessed its income at Rs.59.92 lacs.
Aggrieved, the assessee carried the matter in appeal before the CIT(Appeals). Before the CIT(Appeals) the assessee had, inter alia, assailed the validity of jurisdiction assumed by the Assessing Officer for reopening of its case in absence of a valid approval u/s 151 of the Act by the Jt. CIT. However, the CIT(Appeals) after deliberating at length on the various contentions that were advanced by the assessee, i.e., both as regards the validity of jurisdiction that was assumed by the Assessing Officer for reopening of the case, as well as those advanced qua the merits of its claim that no disallowance of the brought forward losses was called for in its case, not finding favor with the same dismissed the appeal.
The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us.
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At the very outset the Ld. Authorized Representative (for short ‘AR’) for the assessee assailed the assumption of jurisdiction by the Assessing Officer for re- opening of the case in the absence of grant of any valid approval/sanction u/s.151 of the Act by the appropriate authority i.e. Jt. CIT. Elaborating on his aforesaid contention, it was submitted by the Ld. AR that the approval u/s.151 of the Act had been granted by the Jt. CIT in a mechanical manner, i.e., without application of mind, as a result whereof the assessment therein framed by the Assessing Officer u/s. 143(3) r.w.s. 147 of the Act, dated 18.03.2014 could not be sustained and was liable to be struck down on the said count itself. In order to substantiate his aforesaid contention the Ld. AR had drawn our attention to the approval that was granted by the Jt. CIT, Amravati Range, Amravati u/s. 151 of the Act for reopening the case of the assessee (Page 38 of APB). It was submitted by the Ld. AR that the Jt. CIT at Column No.12 had in a mechanical manner, i.e., without application of mind merely stated “Yes” on the issue as to whether he was satisfied on the basis of the reasons recorded by the Assessing Officer that it was a fit case for issuing notice u/s.148 of the Act. It was averred by the Ld. AR that a mere scribbling of the term “Yes” did not suffice the statutory obligation that was cast upon the Jt. CIT, i.e, expressing his satisfaction on the reasons recorded by the Assessing Officer that the case of the assessee before him was fit for being reopened u/s.147 of the Act. In support of his aforesaid contention the Ld. AR had relied on the following judicial pronouncements:
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(i). CIT Vs. Soyuz Industrial Resources Ltd. (2015) 92 CCH 0087 (Del.-HC) (ii). CIT Vs. Suman Waman Chaudhary (2010) 321 ITR 495 ( Bom.) (iii). ITO, Ward 10(3), New Delhi Vs. M/s. Direct Sales P. Ltd., ITA No.3445/Del/2010 (iv). CIT Vs. Goyanka Lime & Chemicals Ltd. (2015) 56 taxman.com 390 (v). Shri Amarlal Bajaj Vs. ACIT, ITA No.611/MUM/2004( Mum.) (vi). The Central India Electric Supply Co. Ltd., ITA 17/1999 ( Del) (vii). Dr. Neeta Ranjan Modi Vs. ITO-11(3)(1), Mumbai, ITA No.370/Mum/2014( Mum.) (viii). Hirachand Kanunga Vs. DCIT (2015) 56 taxmann.com 199 ( Mum). (ix). Herman Remedies Ltd. Vs. DCIT (2006) 152 TAXMAN 269 ( Bom) (x). Pr. CIT Vs. Tupperware India P. Ltd., ITA No.415/2015.
Apart from that, the Ld. AR in order to drive home his claim that the Jt. CIT, Amravati had granted his approval u/s. 151 of the Act in a mechanical manner, i.e., without application of mind, therein, took us through the copy of the “reasons to believe” (as reproduced in the body of the assessment order). It was submitted by the Ld. AR that while for the assessee in its return of income had claimed set- off of brought forward losses of Rs.59.92 lacs, however, its case was reopened by the Assessing Officer for the reason that the assessee had raised a wrong claim for set-off of brought forward loss of Rs.24.99 lacs. It was submitted by the Ld. AR that the aforesaid factual position can safely be gathered both from the computation of income (Page 32 of the APB) as well as the assessment order
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wherein there was a clear reference of declining of the assessee’s claim for set-off of brought forward losses of Rs. 59.92 lacs. Backed by his aforesaid contentions, it was submitted by the Ld. AR that now when the case of the assessee was reopened by the Assessing Officer u/s. 147 of the Act in the absence of any valid approval/sanction u/s.151 of the Act, therefore, the assessment framed by him u/s. 143(3) r.w.s.147 of the Act, dated 18.03.2014 cannot be sustained and is liable to be struck down on the said count itself.
Per contra, the Ld. Departmental Representative (for short ‘DR’) relied on the orders of the lower authorities. It was submitted by the Ld. DR that though the Jt. CIT, Amravati had in his manual approval granted u/s.151 of the Act merely stated “Yes”, however, a perusal of the online approval as could be gathered from the ITD system of the Department, revealed, that the was granted by him after incorporating the necessary guidelines, on the basis of which it could safely held that same was not granted in a mechanical manner. Our attention was drawn by the Ld. DR to a letter dated 02.12.2021 that was filed by the Assessing Officer with the Addl. CIT, ITO-2, Nagpur wherein, it was stated by him that the Jt. CIT in his approval remark while granting the approval had duly applied his mind and had granted approval with the remark “I am satisfied with the reasons recorded by the Assessing Officer that this case is fit for reopening assessment u/s.147, hence approved”. It was stated by the Ld. DR that as per the ITD system the aforesaid
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approval was granted both for the year under consideration, i.e, A.Y.2008-09 as well as the immediately preceding year, i.e., A.Y.2007-08. Relying on the aforesaid approval granted by the Jt. CIT, it was submitted by the Ld. DR that as the approval of the Jt. CIT available on the ITD system had more evidentiary value as the same could not be tampered or manipulated, therefore, a perusal of the same revealed beyond any doubt due application of mind by the Jt. CIT while granting the approval/sanction u/s.151 of the Act. Backed by his aforesaid contentions, it was submitted by the Ld. DR that as the Jt. CIT had granted approval after due application of mind, therefore, the claim of the assessee’s Counsel that the case had been reopened u/s.147 in the absence of any valid sanction/approval u/s.151 of the Act by the appropriate authority was absolutely misconceived and had no legs to stand upon.
We have heard the Ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions.
Before proceeding any further, we may herein observe that the assessee had filed before us an application dated 12.11.2016 under Rule 29 of the Income- Tax Appellate Tribunal Rules, 1963 seeking permission for admission of additional evidence. On a perusal of the application, we find, it is the claim of the assessee
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that though a copy of the approval/sanction granted by the Jt. CIT, Amravati Range, Amravati u/s.151 of the Act was provided to him by the Assessing Officer in the course of the assessment proceedings, however, the same got misplaced and for the said reason could not be produced before the lower authorities. It is the claim of the assessee that it had though on the basis of inspection of the assessment records assailed the validity of the reassessment proceedings, on the ground that the Jt. CIT had granted the approval/sanction u/s.151 of the Act in a mechanical manner, i.e., without application of mind, however, he could not substantiate the same by placing on record any supporting evidence as the same at the relevant point of time was misplaced by him. Also, it is stated by him that though the assessee had specifically challenged the validity of the reassessment proceedings before the CIT (Appeals), however, the latter had failed to advert to and therein adjudicate the same. It is the claim of the assessee that as the aforesaid documentary evidence, i.e., approval/sanction note of the Jt. CIT, Amravati Range, Amravati dated 12.12.2013 would have a strong bearing on the adjudication of the issue in question, i.e., validity of the reopening of assessee’s case, therefore, the same may be admitted.
Per contra, the Ld. DR did not raise any serious objection to the seeking of admission of the aforesaid additional evidence, i.e., copy of the approval/sanction note of the Jt. CIT, Amravati Range, Amravati before us.
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We have given a thoughtful consideration and are of the considered view, that as the aforesaid approval/sanction note of the Jt. CIT, Amravati Range, Amravati forms a part of the assessment record and would have a strong bearing on the adjudication of the issue in question, i.e., validity of the jurisdiction assumed by the Assessing Officer for reopening the assessee’s case u/s.147 of the Act, thus, the same merits admission.
We shall now advert to the claim of the ld AR that the AO had invalidly assumed jurisdiction and reopened the case of the assessee, for the reason that the appropriate authority, i.e, the Jt. CIT, Amravati Range, Amravati had in a mechanical manner, i.e, without any application of mind granted his approval under Sec. 151 of the Act for reopening the case. Admittedly, it is a matter of fact borne from record that the Jt. CIT, Amravati Range, Amravati had manually granted his approval/sanction u/s.151 of the Act by scribbling “Yes” in Column No. 12 of the approval note/sheet, i.e, where he was required to state whether he is satisfied with the reasons recorded by the Assessing Officer that it is a fit case for issue of notice u/s.148 of the Act. For the sake of clarity the relevant extract of the approval sheet/note i.e. Column No.12 is reproduced as under:
Whether the Jt. CIT is satisfied the reasons Yes recorded by the A.O. that it is a fit case for issue of Note u/s.148. Sd/-
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At this stage, we may herein observe that the copy of the aforesaid manual approval sheet/note was the one which was made available to the assessee by the Assessing Officer in the course of the assessment proceedings. In so far the contention of the Ld. DR that as the Jt. CIT in his online approval available in ITD system for the assessment year(s) 2007-08 & 2008-09, i.e., both for the year under consideration as well as that for the immediately preceding year had duly recorded his satisfaction and granted his approval/sanction after due application of mind, therefore, the claim of the assessee’s counsel that the approval/sanction had been granted by the Jt. CIT in a mechanical manner, i.e, without application of mind cannot be accepted is concerned, we are afraid that the same does not inspire much of confidence and cannot be accepted on the very face of it for the reasons which we shall deal hereinafter.
Before proceedings any further, we may herein observe that a perusal of the online approval/sanction of Jt. CIT as has been filed by the Ld. DR in the course of proceedings before us for the assessment year(s) 2007-08 and 2008-09 i.e., for the year under consideration as well as that for the immediately preceding year, reveals, that the same also makes a reference of certain subsequent events, viz. (i). date of notice u/s.148 : 12.12.2013; (ii). date of service of notice : 16.12.2013; (iii). due date of filing return u/s.148 : 15.01.2014; and (iv). due date for assessment : 31.03.2015. Although the aforesaid online approval/sanction is
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dated 12.12.2013, however, a conjoint reading of the aforesaid details available on the online approval sheet/note filed by the Ld. DR, reveals reference to certain events which are subsequent to grant of the impugned online approval/sanction on 12.12.2013, i.e., say the date of issuance of notice u/s. 148 : 12.12.2013 ; date of service of notice u/s.148 : 16.12.2013 etc. On the basis of the aforesaid facts, we are of the considered view that the online approval/sanction relied upon by the Ld. DR does not inspire much of confidence, for the reason that reference to certain events as mentioned by us herein above which falls on dates subsequent to 12.12.2013, i.e, date of grant of approval/sanction u/s 151 by the Jt. CIT, raises serious doubts as regards his claim that the notice u/s.148 of the Act was issued to the assessee after obtaining the aforesaid online approval/sanction of the Jt. CIT. Our aforesaid conviction is all the more fortified by the fact that the manual approval sheet/note, dated 12.123.2013 was the one that was made available to the assessee in the course of the assessment proceedings. Be that as it may, we are even otherwise unable to comprehend that now when the Jt. CIT, Amravati Range, Amravati had granted manual approval/sanction by stating “Yes” at Column No.12 of the approval sheet/note as regards his satisfaction qua the reasons recorded by the Assessing Officer, then, where would be the need to separately grant an online approval and that too differently worded as had been brought to our notice by the Ld. DR. As observed by us herein above, now when the Assessing Officer in the course of the assessment proceedings had made available
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to the assessee a copy of the manual approval/sanction of the Jt. CIT, Amravati Range, Amravati, therefore, it has to be presumed that the notice u/s.148 of the Act was issued by the Assessing Officer on the basis of the said manual sanction/approval that was granted by the Jt. CIT, Amravati Range, Amravati.
On the basis of the fact that the case of the assessee was reopened by the AO u/s 147 after obtaining the manual approval/sanction of the approving authority, i.e, the Jt. CIT, Amravati Range, Amravati, we shall now deal with the sustainability of the same as per the mandate of law and the judicial pronouncements, as well as the validity of the assessment consequently framed by the Assessing Officer u/s. 143(3) r.w.s 147 of the Act, dated 18.03.2014.
Adverting to the claim of the Ld. AR that the authority granting the sanction/approval u/s 151 of the Act, viz. Jt. CIT, Amravati Range, Amravati, had granted the same in a mechanical manner, i.e, without application of mind, we find substance in the same. On a perusal of Column No. 12 of the form of approval wherein sanction/approval had been granted by the Jt. CIT, Amravati Range, Amravati, we find that the same reads as under :-
Whether the Jt. CIT is satisfied the reasons Yes recorded by the A.O. that it is a fit case for issue of Note u/s.148. Sd/-
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In our considered view, a mere scribbling or stating “Yes” would by no means suffice the statutory requirement as contemplated in Sec. 151 of the Act, i.e, satisfaction on the part of the sanctioning authority, on the reasons recorded by the A.O, that it is a fit case for issuance of a notice u/s 148 of the Act. As provided in Section 151 of the Act, no notice u/s 148 is to be issued by an AO unless the specified approving authority is satisfied, on the reasons recorded by the AO that it is a fit case for the issue of such notice. In our considered view, the aforesaid statutory provision, viz. Section 151 had been made available on the statute by the legislature as an inbuilt safeguard or, in fact, as a supervisory check over the work of the AO, particularly, in context of reopening of an assessment, so that an assessment is reopened by an A.O in exercise of the powers vested with him u/s 147 of the Act only after due application of mind, and if for some reason an error creeps into the exercise of the said power by the A.O, then, the superior officer, i.e, the authority specified in Sec. 151 of the Act is able to correct the same. It is for the aforesaid reason that Section 151 requires an officer of the rank of a Joint Commissioner of Income-tax to oversee the decision of the AO where the return originally filed was assessed u/s 143(3) of the Act, and further, in a case where such reopening of an assessment is sought to be made after the expiry of a period of four years from the end of the relevant assessment year, then, the said obligation is shifted on a superior officer as therein contemplated. In our considered view, as the reopening of a case results to disturbing the finality of a
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concluded assessment, therefore, the authorities specified for granting the approval u/s 151 of the Act remain under a statutory obligation of clearly applying their mind on the “reasons to believe” recorded by the AO and, only after being satisfied that it is a fit case for issuance of notice u/s. 148, approve the same. In fact, the approving authority in discharge of his aforesaid statutory duty is obligated to record his satisfaction as regards the reasons recorded by the AO for reopening the case of the assessee, in a manner, which would reveal that as per him it is a fit case for issuance of notice u/s 148 of the Act. In our considered view, mere scribbling of “Yes” by the approving authority can by no means suffice the statutory obligation cast upon him for granting approval after due application of mind for issuance of notice u/s 148 by the AO, because, if that be so, then, the said statutory check on the part of the superior authorities would be rendered as mere a idle formality, nugatory or in fact nothing better than an eye wash, which would beyond any doubt defeat the very purpose for which the said supervisory jurisdiction of the superior authorities had been made available on the statute by the legislature. Our aforesaid conviction is supported by the recent order of ITAT, Amritsar in the case of Shri Charanjiv Lal Aggarwal, Prop. M/s. Premier Rubber Mills, Amritsar Vs. ITO, Ward-4(1), Amritsar, ITA No. 598/Asr/2015. Also, a similar view had been taken by the Tribunal in the case of S/shri Tralochan Singh & Narotam Singh Vs. ITO, Ward 1(4), Mansa in ITA Nos. 306 & 307/ASR/2019, dated 30.06.2021, wherein it was held as under:-
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“12. As regards to the validity of the reassessment proceedings under section 147 r.w.s 148 of the Act, it is not in dispute that the A.O. is required to get the approval of the competent authority i.e; JCIT in the present case. Copy of the form for recording the reasons for initiating the proceedings under section 148 ofthe Act and for obtaining the approval of the JCIT is placed at page no. 2 & 3 of the assessee’s paper book wherein at S.No. 12 relating to satisfaction of the JCIT on the reasons recorded by the ITO for issuing of the notice under section 148 of the Act. The JCIT, Range-1, Bathinda mentioned as under: “Yes, it is a fit case to issue notice under section 148 of the Income Tax Act Sd/- P.K. Sharma JCIT, Range-1, Bathinda 12.1 From the aforesaid approval given by the JCIT, Range-1, Bathinda, it is clear that the satisfaction has been recorded in a mechanical manner, without applying the mind, for issuing the notice under section 148 of the Act. 13. An identical issue having similar facts has been adjudicated by this Bench of the ITAT in case of Shri Satnam Singh, Jalandhar Vs. ITO, Ward- 1(4), Jalandhar in ITA No. 579/ASR/2019 for the A.Y. 2013-14 vide order dt. 29/06/2021 wherein by following the order dated 15/03/2021 in ITA No. 215/Chd/2020 for the A.Y. 2009-10 in the case of Shri Tek Chand, Karnal Vs. ITO, Ward-2, Kaithal, the issue has been decided in favour of the assessee and the relevant findings have been given in para 14 to 14.4 which read as under: 14. We have considered the submissions of both the parties and perused the material available on the record. In the present case it is noticed that the A.O. obtained the approval of the JCIT before issuing the notice under section 148 of the Act, performa copy of which is placed at page no. 1 of the assessee’s paper book, in the said Performa for recording the reasons for initiating the proceedings under section 147 / 148 of the Act and for obtaining the approval of the Ld. JCIT, it has been mentioned in column no. 11 as under: “Yes it is approved for 148 action “ Sd/- (Umesh Takyar) Joint Commissioner of Income Tax Range-1, Jalandhar
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From the aforesaid approval it is clear that the JCIT, Range-1, Jalandhar recorded the satisfaction in a mechanical manner without application of mind. He accorded the sanction for issuing notice under section 148 of the Act in a mechanical manner. 14.1 On a similar issue the Hon'ble Guwahati High Court in the case of Ladhuram Laxmi narayan Vs. ITO, Additional 102 ITR 595 (supra) held as under: 22. Sub-section (2) of Section 151 requires that before issuing a notice under Section 148, the Commissioner must be satisfied on the reasons recorded by the Income-tax Officer that it is a fit case for the issue of such notice. The submission of the learned counsel is that in the instant case there was no real satisfaction of the Commissioner or in other words there could not be satisfaction of the Commissioner as contemplated under Subsection (2) in the facts and circumstances of thecase. In the column of the report whether the Commissioner was satisfied, the Additional Commissioner said " Yes ". 23. We have already found that the first ground given by the Income-tax Officer in his report praying for sanction for acting under Section 148 is admittedly a mistaken ground and, therefore, nonexistent. That being so, the satisfaction of the Additional Commissioner in the instant case, so far as the first ground is concerned, is wholly mechanical without applying his mind. It has further been held 24. Regarding the second ground, we find that the satisfaction could in law be only with respect to Clause (b) of Section 147 and that being so the notice issued on March 10, 1971, would be clearly barred under Section 149 of the Act. 25. In the result, in any view of the matter, we find that the impugned notice under Section 148 in the instant ease is bad in law and without jurisdiction. Accordingly, we quash the impugned notice dated March 10, 1.971, under Section 148 of the Act. 14.2 A similar view has been taken by the Hon'ble Andhra Pradesh High Court in the case of P. Munirathnam Chetty And P. Vs. ITO, C- Ward 101 ITR 385 (supra)wherein it has been held as under:
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The form like the one which is being used containing an endorsement merely saying "Yes" would justifiably cause apprehension that the act of the Commissioner is a mechanical act. In order to obviate this impression and to infuse more confidence in the assessee, it would be proper if the Commissioner also briefly slates why he has given his sanction to the proceedings under Section 147, thus avoiding all arguments in courts of law whether he applied his mind or he would have been satisfied in the circumstances of the case or not. 14.3 On an identical issue the ITAT Chandigarh Bench “B” Chandigarh vide order dt. 15/03/2021 in ITA No. 215/Chd/2020 for the A.Y. 2009-10 in the case of Shri Tek Chand Vs ITO, Ward-2, Kaithal held as under: 14.1 The A.O. obtained the approval of the PR. CIT before issuing the notice under section 148 of the Act. The proposal dt. 11/03/2016 seeking the approval for issuance of notice under section 148 of the Act, by the A.O. is placed at page no. 2 & 3 of the assessee’s paper book. While giving the approval the Ld. PR. CIT, Karnal recorded as under: “ Yes, satisfied, it is a fit case for issue of notice under section 148” Sd/- Pr. CIT, Karnal 14.2 From the aforesaid approval, it is clear that the Ld. Pr. CIT recorded satisfaction in the mechanical manner, without application of mind toaccord sanction for issuing notice under section 148 of the Act. On an identical issue the Hon'ble M.P. High Court in the case of CIT Jabalpur Vs. S. Goyanka Lime & Chemical Ltd. reported at (2015) 56 Taxmann.com 390 by following its own decision in the case of Arjun Singh Vs. ADIT (2000) 246 ITR 363 (M.P) held 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 is statutory obligation properly in the matter of recording sanction as he merely wrote on the format "Yes, 1 am satisfied" which indicates as if he was to sign only on the dotted line. Even
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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 analysedon 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. 14.3 Against the said order, the Hon'ble Apex Court dismissed the SLP filed by the Department and affirmed the order of the Hon'ble M.P. High Court in the case of CIT Vs. S. Goyanka Lime & Chemicals Ltd. (supra) held as under: “that where Joint Commissioner recorded satisfaction in mechanical manner and without application of mind to accord sanction for issuing notice under section 148, reopening of assessment was invalid.” 15. We therefore by following the ratio laid down by the Hon'ble Apex Court in the aforesaid referred to case, are of the view that the reopening under section 148 of the Act on the basis of mechanical approval without applyingthe mind by the Ld. Pr.CIT was not valid. Therefore, in the present case, the reopening of the assessment on the basis of notice under section 148 of the Act is quashed. 14.4 In the present case also since the A.O. reopened the assessment under section 147 of the Act by issuing the notice under section 148 of the Act, on the basis of mechanical approval, without applying his mind, therefore the said approval was not valid and consequently the reopening
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of the assessment on the basis of said approval was not valid. We therefore quash the same. Since, we have decided the legal issue in favour of the assessee therefore no finding is given on the other grounds raised by the assessee on merit. 13.1 Since the facts of the present case are identical to the facts involved in the aforesaid referred to case of Shri Satnam Singh, Jalandhar Vs. ITO, Ward-1(4), Jalandhar in ITA No. 579/ASR/2019 for the A.Y. 2013-14, so respectfully following the aforesaid referred to order dt. 29/06/2021 the reopening of the assessment under section 147 of the Act by issuing the notice under section 148 of the Act is quashed. Since we have decided the legal issue in favour of the assessee therefore no finding is given on the other grounds raised by the assessee on merit.”
Also, a similar view had been taken by the ITAT, Chandigarh Bench in the case of Shri. Tek Chand Vs. The ITO, Ward-2, Karnal, ITA No. 255/Chd/2020, dated 15.03.2021. In the said case the approving authority, i.e., Principal CIT, Karnal had granted the approval for issuance of notice u/s 147 of the Act, as under:- “Yes, satisfied, it is a fit case for issue of notice under section 148. Sd/- Pr. CIT, Karnal” The Tribunal by drawing support from the judgments of the Hon’ble High Court of Madhya Pradesh in case of CIT Vs. S. Goyanka Lime & Chemical Ltd (2015) 56 taxmann.com 390 (MP) and that in the case of Arjun Singh Vs. Asst. DIT reported in (2000) 246 ITR 363 (MP) observed, that as the reopening of the case of the assessee u/s 148 was on the basis of a mechanical approval, i.e, without application of mind by the Principal. CIT, therefore, the reopening of the case on the basis of the notice issued u/s 148 could not be sustained and was liable to be quashed. At this stage, we may herein observe that the aforementioned judgment
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of the Hon’ble High Court of Madhya Pradesh in the case of S. Goyanka Lime (supra) had thereafter been impliedly approved by the Hon’ble Supreme Court by dismissing the Special Leave Petition (SLP) filed by the revenue in Commissioner of Income-tax, Jabalpur (MP) Vs. S. Goyanka Lime & Chemical Ltd. (2015) 64 taxmann.com 313 (SC). Also, we find that a similar view had been taken by ITAT, Amritsar Bench in the case of Shri Satnam Singh Vs. ITO, Ward-1(4), Jalandhar, ITA No. 579/Asr/2019 for AY 2013-14 vide its order dated 29/06/2021. In the said order, the tribunal had observed that as the JCIT, Range-1, Jalandhar had granted the approval in a mechanical manner, i.e, without application of mind, therefore, the reopening of the assessee’s case was liable to be quashed for want of valid assumption of jurisdiction.
Our aforesaid observation that the Jt. CIT Amravati Range, Amravati had granted approval/sanction in a mechanical manner can also be gathered from the fact that though the assessee in its return of income for the year under consideration had though claimed set-off of brought forward losses for the assessment year 2002-03 onwards of Rs.59.92 lacs, however, the Assessing Officer in the “reasons to believe” had reopened the case of the assessee on the ground that it had wrongly raised claim of set-off of brought forward losses of Rs.24.99 lacs. Accordingly, the approval/sanction granted by the Jt. CIT Amravati Range, Amravati qua such wrong facts recorded by the Assessing Officer in the body of
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the “reasons to believe” substantiates our aforesaid conviction that reopening of the case of assessee is backed by the approval/sanction by the Jt. CIT in a mechanical manner, i.e, without application of mind.
In the backdrop of the facts involved in the case of the assessee before us, we are of the considered view that the issue herein involved, i.e., sustainability of the assessment in the backdrop of grant of approval u/s 151 in a mechanical manner, i.e, without application of mind by the approving authority, viz. Jt. CIT, Amravati Range, Amravati is in parity with those as were involved in the aforementioned judicial pronouncements. We, thus, in terms of our aforesaid observations are of the considered view, that as in case of the assessee before us the prescribed authority, viz. Jt. CIT, Amravati Range, Amravati had granted the approval u/s 151 of the Act in a mechanical manner, i.e, without application of mind to the facts of the case as were there before him, therefore, the assessment framed by the AO u/s. 147/143(3) of the Act, dated 18.03.2014 cannot be sustained and is liable to be vacated on the said count itself. Accordingly, for want of valid assumption of jurisdiction by the AO the assessment framed by him u/s 147/143(3) of the Act, dated 18.03.2014 is herein quashed.
As we have quashed the assessment framed by the AO for want of jurisdiction on his part for the reasons stated hereinabove, therefore, we refrain from adverting to the other contentions advanced by the Ld. AR both as regards
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the validity of the jurisdiction assumed by the AO for framing the impugned assessment, as well as those advanced by him qua the sustainability of the additions on the merits of the case, which, thus, are left open.
Resultantly, the appeal filed by the assessee is allowed in terms of our aforesaid observations.
Order pronounced in the open court on 09th day of May, 2022.
Sd/- Sd/- JAMLAPPA D. BATTULL RAVISH SOOD (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) रायपुर/ RAIPUR ; �दनांक / Dated : 09th May, 2022 SB आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to : अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The CIT(Appeals)-1, Nagpur. 4. The CIT-1, Nagpur. �वभागीय��त�न�ध,आयकरअपील�यअ�धकरण, 5. नागपुर/ DR, ITAT, Nagpur. गाड�फ़ाइल / Guard File. 6. आदेशानुसार / BY ORDER, // True Copy // �नजीस�चव / Private Secretary आयकर अपील�य अ�धकरण, रायपुर / ITAT, Raipur.
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Date 1 Draft dictated on 22.04.2021 Sr.PS/PS 2 Draft placed before author 22.04.2021 Sr.PS/PS 3 Draft proposed and placed JM/AM before the second Member 4 Draft discussed/approved by AM/JM second Member 5 Approved draft comes to the Sr. Sr.PS/PS PS/PS 6 Kept for pronouncement on Sr.PS/PS 7 Date of uploading of order Sr.PS/PS 8 File sent to Bench Clerk Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order