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Rajendra Agrawal, 56, Ff, Nri Colony,Mandakini,Greater Kailash-Iv,New Delhi 110 048 Vs. Ito, Ward-23(2), New Delhi
December, 02nd 2019

Referred Sections:
Section 147
Section 148 of the IT Act.
Section 151,

Referred Cases / Judgments:
Shriya Devi Mundhra and Gopal Chand Mundhra vs. ITO, Wards 55(5), New Delhi decided in ITA No. 1375; 1721; 1722; 1523-1524/Del/2019
CIT vs. S. Goyanka Lime & Chemical Ltd. -(2015) 64 taxmann.com 313 (SC)
CIT vs. N.C. Cables Ltd. in ITA 335/2015 order dated 11.01.2017
SABH Infrastructure Ltd. vs. ACIT in WP (C) 1357/2016 order dated 25.09.2017
Chhugamal Rajpal vs. S.P. Chaliha & Ors (supra)
South Yarra Holdings vs. ITO, vide Writ Petition No.3398 of 2018,
PCIT vs. Meenakshi Overseas Pvt. Ltd., vide ITA 692/2016,
M/s SBS Realtors (P) Ltd. vs. ITO, vide ITA No.7791/Del/2018, order dated 1st April, 2019,

                   IN THE INCOME TAX APPELLATE TRIBUNAL
                      DELHI BENCH : SMC : NEW DELHI


               BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER


                        I.T.A. No. 4624/Del/2014
                       Assessment Year: 2007-08
RAJENDRA AGRAWAL,                        vs.   ITO, WARD-23(2),
56, FF, NRI COLONY,                            NEW DELHI
MANDAKINI,
GREATER KAILASH-IV,
NEW DELHI ­ 110 048
(PAN: COWPS6505Q)
(ASSESSEE)                                     (RESPONDENT
     Assessee by             :     Shri Raj Kumar, CA & Sh. Sumit Goel, CA
     Revenue by              :     Shri Pradeep Singh Gautam, Sr. DR.


                                   ORDER
     The Assessee has filed this appeal against the impugned order dated
26.5.2014 passed by the Ld. CIT(A)-XI, New Delhi on the following grounds:-
               1. That the order of the Ld. CIT(A) is against law and facts.
               2. That the Ld. CIT(A) erred in conforming the addition of Rs.
                  1035000/- made by the AO on account of cash deposit in
                  the bank account, by ignoring all the submissions and
                  documents filed by the appellant.
               3. That the Ld. CIT(A) erred in enhancing the addition by
                  1224000 on account of cash deposit in the bank account of
                  the appellant.
               4. That the AO erred in issuing the notice u/s. 148 of the Act to
                  the appellant, although there was no reason to believe for
                  him to issue notice to the appellant and thus the notice
                  issued is without jurisdiction.
               5. That the AO never supplied the copy of reason recorded u/s.
                  148 of the Act to the appellant, which is in clear violation of
                  provisions of law and of various judicial pronouncements.
               6. That the Ld. CIT(A) erred in not following the proper
                  procedure in enhancing the addition of the appellant.
               7. That the appellant craves leave to add or alter any of the
                  grounds of appeal.

2.   Later on, the assessee has filed the following additional grounds:-
                 "Gr. No. 4 of Form 36 (Additional Ground No. 1)

                 That the AO erred in issuing the notice u/s. 148 of the Act to
                 the appellant, although there was no reason to believe for him
                 to issue notice to the appellant and thus the notice issued is
                 without jusridcition.

                 Additional Ground No. 2

                 That the approval of the Additional CIT u/s. 151 of the I.T. Act
                 is not as per law and not competent so as to provide a legally
                 valid jurisdiction to AO to initiate the re-assessment
                 proceedings, more so the approval / satisfaction is
                 mechanical, without application of mind and in stereo typed
                 manner."


3.   At the time of hearing, Ld. Counsel for the assessee only argued the
additional ground no. 2 and stated that the additional ground raised is pure
legal issue which goes to the root of the matter and all facts and material
required for this ground already available on record and therefore, the same
needs to be admitted, in view of the Hon'ble Supreme Court decision in the case
of NTPC 229 ITR 383 (SC). He further drew my attention towards Page No. 1
at Assessee's Paper Book which is a copy of reasons recorded by the AO and
approval granted by the Addl. CIT, Range-23, New Delhi wherein the AO has
erred in assumption of jurisdiction u/s. 147/148 of the Act on the basis of
invalid and mechanical approval granted by the Addl. CIT, Range-23, New Delhi
as "ON THE BASIS OF `A' ABOVE, I AM SATISFIED",           which shows that Ld.
Addl. CIT has not recorded proper satisfaction and without application of mind
gave the approval in a mechanical manner.          He further stated that this
legal/jurisdictional ground is squarely covered by the decision of the ITAT, SMC,
Bench, New Delhi dated 21.8.2019 in the case of Gopal Chand Manudhra and
Sons; Damyanti Mundhra; Ramdev Mundhra; Shriya Devi Mundhra and Gopal
Chand Mundhra vs. ITO, Wards 55(5), New Delhi decided in ITA No. 1375;
1721; 1722; 1523-1524/Del/2019 respectively relevant to assessment year
2011-12 and therefore, he requested that the same ratio may be followed in



                                       2
the present case and appeal of the assessee may be allowed accordingly by
quashing the reassessment proceedings.
4.    On the contrary, Ld. DR stated that since this additional ground was not
taken before the Ld. CIT(A), hence, the same may not be admitted and appeal
of the assessee may be dismissed. He further relied upon the orders of the
authorities below.
5.    I have heard both the parties and perused the records, especially the
Additional grounds filed by the assessee and the case laws supporting the case
for admission of additional grounds on which the Ld. Sr. DR relied upon for not
admitting the additional grounds. In my considered view, the additional grounds
are in legal and jurisdictional nature and needs to be admitted in the interest of
justice. Hence, I admit the same and only deciding the additional ground no. 2
as argued by the ld. Counsel for the assessee. For the sake of convenience, the
additional ground no. 2 is again reproduced as under:-
                     Additional Ground No. 2

                     That the approval of the Additional CIT u/s. 151 of the I.T. Act
                     is not as per law and not competent so as to provide a legally
                     valid jurisdiction to AO to initiate the re-assessment
                     proceedings, more so the approval / satisfaction is
                     mechanical, without application of mind and in stereo typed
                     manner."


5.1   I have also perused the page no. 1 placed in Paper Book which is a copy
of RECORDING THE REASONS FOR INITIATING PROCEEDINGS U/S. 147 AND
FOR OBTAINING THE APPROVAL OF THE Addl. Commissioner of Income Tax,
Range-23, New Delhi wherein, the         Ld. Addl.   Commissioner of Income Tax,
Range-23, New Delhi while granting approval for issue of notice u/s. 148 of the
Act has only mentioned that "ON THE BASIS OF `A' ABOVE, I AM SATISFIED",,
which establish that the approving authority has given approval to the
reopening of assessment in a mechanical manner without due application of
mind and therefore, on this account the reassessment is not sustainable in the
eyes of law and needs to be quashed.




                                           3
5.2   I have also perused the decision referred by the Ld. Counsel for the
assessee of the ITAT, SMC, Bench, New Delhi dated 21.8.2019 in the case of
Gopal Chand Manudhra and Sons; Damyanti Mundhra; Ramdev Mundhra;
Shriya Devi Mundhra and Gopal Chand Mundhra vs. ITO, Wards 55(5), New
Delhi decided in ITA No. 1375; 1721; 1722; 1523-1524/Del/2019 respectively
relevant to assessment year 2011-12 wherein, the similar and identical legal/
jurisdictional   issue has been adjudicated and           decided in favour of the
assessee. For the sake of convenience, the relevant portion of the findings of
the Tribunal in the aforesaid case are reproduced as under:-


                       "18. I have considered the rival arguments made by
                       both the sides and perused the orders of the Assessing
                       Officer and CIT(A) and the paper book filed on behalf of
                       the assessee.          I have also considered the various
                       decisions cited before me.          I find the case of the
                       assessee was reopened u/s 147 by recording the
                       reasons and after obtaining approval from the JCIT and
                       the PCIT on the basis of the information received from
                       the Investigation Wing of the Department that the
                       assessee is a beneficiary of accommodation entry of
                       bogus long-term capital gain. The reasons so recorded
                       by the Assessing Officer has already been reproduced in
                       the preceding paragraphs and, therefore, the same is
                       not    being    reproduced       here   to   avoid     repetition.
                       However, a perusal of the column No.12 and 13 of the
                       form   for     recording   the   reasons     for   initiating   the
                       proceedings u/s 147 and for obtaining the approval of
                       the Addl./Joint CIT, copy of which is placed at page 40
                       of the paper book, reveals that the JCIT while giving his
                       approval has mentioned as under:-


                       "Recommended for approval u/s 147 of the Act."

                                          4
19.    Similarly, the Pr. CIT, while giving his approval
has mentioned as under:-
              "Yes. I am satisfied."


20.    I find the coordinate Bench of the Tribunal in the
case of M/s Virat Credit & Holdings Pvt. Ltd. (supra)
while deciding an identical issue has quashed the
reassessment       proceedings     where        the        approving
authorities while giving approval has simply mentioned
"Yes. I am satisfied." The relevant observations of the
Tribunal from para 10 onwards read as under:-

      "10. First of all, ld. AR for the assessee
      company drew our attention towards sanction
      accorded by the Addl.CIT for reopening of the
      assessment       obtained    by      moving           an
      application under Right to Information Act,
      2005, available on file as Annexure 'A'.
      Perusal of the sanction accorded by Addl. CIT
      in the prescribed proforma shows that there is
      a question no.13 viz. :

            "13.   Whether   the   Addl.    CIT       is
            satisfied on the reasons recorded
            under section 147 that it is a fit case
            for issue of notice under section
            148 of the IT Act.

      11. In response to aforesaid question no.13 in
      the   prescribed    proforma,     Addl.    CIT       has
      written "Yes. I am satisfied." No doubt,
      columns of reasons recorded was there and it

                   5
is also mentioned in column no.12 that
reasons for belief that income has escaped
assessment are as per annexure enclosed but
such annexure has not been produced before
the Bench for perusal.

12. Apparently, from the approval recorded
and words used that "Yes. I am satisfied.", it
has proved on record that the sanction is
merely mechanical and Addl.CIT has not
applied independent mind while according
sanction as there is not an iota of material on
record as to what documents he had perused
and what were the reasons for his being
satisfied to accord the sanction to initiate the
reopening of assessment u/s 148 of the Act.

13. Even AO while recording the reasons for
initiating the reopening of assessment has not
applied his mind independently. When we
peruse the reasons recorded, available at
pages 31-32 of the paper book, the entire
reasons have been based on the statement of
one Shri P.K. Jindal, who has furnished the
list of companies stated to be not doing any
business activities but engaged in providing
accommodation entries. Before issuing the
notice AO appeared to have not examined the
profile of the said companies to arrive at a
logical conclusion so as to issue the notice u/s
148 of the Act. When this fact is examined in
the light of the completed assessment of the







           6
assessee u/s 143 (3), all the documents
concerning share application money, now
available at pages 1 to 30 of the paper book,
were supplied to the AO. This fact has not
been taken into consideration by the AO
before initiating the proceedings u/s 147/148
of the Act. However, since reopening of
assessment in this case is otherwise not
sustainable, we are not entering into any
merits.

14. Hon'ble Supreme Court in case cited
as CIT vs. S. Goyanka Lime & Chemical Ltd. -
(2015) 64 taxmann.com 313 (SC) examined
the   identical   issue    as    to    according     the
sanction for reopening the assessment u/s
148 of the Act by merely recording "Yes. I am
satisfied." And held that reopening on the
basis of mechanical sanction is invalid by
returning following findings :-


      " Section    151,    read       with section
      148 of the Income-tax Act, 1961 -
      Income      escaping       assessment      -
      Sanction     for     issue      of   notice
      (Recording of satisfaction) - High
      Court by impugned order held 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


            7
assessment was invalid - Whether
Special Leave Petition filed against
impugned order was to be dismissed
- Held, yes [In favour of assessee]
Search and Seizure-Procedure for
black        Assessment-           Search      was
conducted           at         residential      and
business premises of Assessee and
notice for block assessment u/s.
158-BC        was        issued-      For     block
period, returns were filed that were
processed u/s. 143 (1)- However,
notice u/s. 148 was issued by AO,
on      basis       of     certain        reasons
recorded-Assessee objected to same
before AO, that was rejected and
assessment          was        completed      u/ss.
143(3) and CO No.57/Del/2012 147-
CIT(A) found that reason recorded
by Joint Commissioner of Income
Tax, for according sanction, was
merely recording 'I am Satisfied'-
Action for sanction was alleged to be
without application of mind and to
be done in mechanical manner-Held,
while        according          sanction,     Joint
Commissioner,            Income        Tax     only
recorded        "Yes,      I     am    satisfied"-
Mechanical          way          of      recording
satisfaction by Joint Commissioner,
that accorded sanction for issuing
notice       u/s.        147,      was       clearly

         8
    unsustainable-On                                such·
    consideration,               both          Appellate
    authorities interfered into matter-
    No error was committed warranting
    reconsideration-As                       far       as
    explanation to S. 151, brought into
    force     by Finance          Act,       2008     was
    concerned, same only pertained to
    issuance of notice and not with
    regard         to    manner         of     recording
    satisfaction-Amended provision did
    not help Revenue-No question of law
    involved in matter, that warranted
    reconsideration-Revenue's                      Appeals
    dismissed."

15. The Hon'ble Delhi High Court has also
decided this legal issue in case cited as Pr.
CIT vs. N.C. Cables Ltd. in ITA 335/2015
order dated 11.01.2017 by returning following
findings :-


    " Reassessment-Issuance of Notice-
    Sanction            for     issue    of        Notice-
    Assessee had in its return for A Y
    2001-02 claimed that sum of Rs. 1
    Crore was received towards share
    application amounts and a further
    sum       of    Thirty       Five    Lakhs        was
    credited to it as an advance towards
    loan-Original               assessment            was
    completed             u/s     143(3)-However,


              9
pursuant to reassessment notice,
which was dropped due to technical
reasons, and later notice was issued
and assessments were taken up
afresh-After considering submissions
of      assessee            and         documents
produced               in          reassessment
proceedings, AO added back a sum
of      Rs.1,35,00,000-CIT(A)                  held
against       assessee        on    legality     of
reassessment           notice      but     allowed
assessee's appeal on merits holding
that AO did not conduct appropriate
enquiry        to     conclude      that     share
inclusion       and     advances          received
were from bogus entities-Tribunal
allowed assessee's appeal on merits-
Revenue appealed against appellate
order     on        merits-Assessee's        cross
appeal        was      on     correctness        of
reopening of assessment- Tribunal
upheld assessee's cross-objections
and     dismissed           Revenue's       appeal
holding that there was no proper
application of mind by concerned
sanctioning          authority          u/s Section
151 as a pre- condition for issuing
notice        u/s     147/148-Held, Section
151 stipulates that CIT (A), who was
competent           authority      to    authorize
reassessment notice, had to apply
his mind and form opinion- Mere

         10
      appending of expression 'approved'
      says nothing-It was not as if CIT (A)
      had to record elaborate reasons for
      agreeing with noting put up-At same
      time, satisfaction had to be recorded
      of given           case    which        could    be
      reflected           in     briefest       possible
      manner- In present case, exercise
      appears to have been ritualistic and
      formal        rather       than     meaningful,
      which was rationale for safeguard of
      approval by higher ranking officer-
      Revenue's appeal dismissed."

16. Furthermore, perusal of the noting sheet
dated      09.03.2010            to   30.12.2010         made
available to the Bench for perusal shows that
only AO has recorded that Addl.CIT has
considered          the    reasons       recorded       before
according the sanction, however even no
prima facie material is there, if Addl.CIT has
applied his mind by considering the reasons
recorded before according the sanction. We
are of the considered view that the AO who
has recorded the reasons cannot enter into
the     mind        of     the    sanctioning         authority
(Addl.CIT)          discharging         the    quasi-judicial
function    for      according        valid    sanction     for
reopening the assessment.


17. Moreover, according sanction is not a
supervisory role rather it is a quasi-judicial


               11
function to be performed by the Addl.CIT as
required u/s 151 of the Act. When the
Revenue Department is manned by highly
qualified officers they are to evolve legally
sustainable standard operating procedure for
discharging quasi- judicial function.


16. Hon'ble High Court of Delhi in case cited
as SABH Infrastructure Ltd. vs. ACIT in WP
(C) 1357/2016 order dated 25.09.2017 has
issued guidelines to the Revenue authorities
while deciding the issue of reopening u/s
147/148 of the Act. Operative part of which is
reproduced as under:-

    "19. Before parting with the case,
    the Court would like to observe that
    on a routine basis, a large number
    of writ petitions are filed challenging
    the reopening of assessments by the
    Revenue                 under Sections
    147 and 148 of the Act and despite
    numerous judgments on this issue,
    the same errors are repeated by the
    concerned Revenue authorities. In
    this background, the Court would
    like the Revenue to adhere to the
    following guidelines in matters of
    reopening of assessments:


    (i) while communicating the reasons
    for reopening the assessment, the


           12
copy of the standard form used by
the AO for obtaining the approval of
the Superior Officer should itself be
provided to the Assessee. This would
contain         the         comment        or
endorsement of the Superior Officer
with his name, designation and date.
In other words, merely stating the
reasons in a letter addressed by the
AO to the Assessee is to be avoided;


(ii) the reasons to believe ought to
spell out all the reasons and grounds
available with the AO for re- opening
the assessment - especially in those
cases        where    the     first   proviso
to Section      147 is      attracted.   The
reasons to believe ought to also
paraphrase any investigation report
which may form the basis of the
reasons and any enquiry conducted
by the AO on the same and if so, the
conclusions thereof;


(iii)   where the reasons make             a
reference      to     another     document,
whether as a letter or report, such
document and/ or relevant portions
of such report should be enclosed
along with the reasons;




        13
            (iv) the exercise of considering the
            Assessee's         objections        to         the
            reopening of assessment is not a
            mechanical ritual. It is a quasi-
            judicial function. The order disposing
            of the objections should deal with
            each    objection     and      give       proper
            reasons      for   the    conclusion.           No
            attempt should be made to add to
            the reasons for reopening of the
            assessment         beyond       what        has
            already been disclosed."

      17. In view of what has been discussed
      above, reassessment opened by the AO in
      this case is not sustainable in the eyes of law,
      hence hereby quashed. Consequently, cross
      objection filed by the assessee company
      stands allowed and the appeal filed by the
      Revenue has become infructuous.



21.    I    find   the   Tribunal     in   the    case        of   Raghav
Technology Pvt. Ltd. (supra) while deciding an identical
issue has also quashed the reassessment proceedings
under similar circumstances by observing as under:-


      "8.      I have considered the rival arguments
      made by both the sides and perused the
      material     available     on   record.          It    is    an
      admitted fact that the case of the assessee
      was reopened by the Assessing Officer after


                   14
recording reasons and issue of notice u/s 148
as per the provisions of section 147 and 148
of the Act on the basis of the information
received from the Investigation Wing that the
assessee is a beneficiary of accommodation
entry obtained from Surendra Kumar Jain
group of cases towards introduction of share
capital of Rs.35 lacs. I find, the assessee has
taken a specific ground before the CIT(A)
challenging       the    validity    of   reassessment
proceedings on the ground that approval u/s
151 of the Act of the superior authorities is
not in accordance with law. The relevant
ground of appeal No.2 taken before the
CIT(A) reads as under:-


     "2.          That under the facts and
     circumstances, approval u/s 151 of
     the     superior      authorities     is   not
     accordance with law and otherwise
     also     mechanical            and    without
     application of mind, making the re-
     asstt. Proceedings unsustainable in
     law."


9.     I find the above ground has been
extracted by the CIT(A) in the body of the
order. She has also mentioned at para 3.2 of
the order that the assessee contended that
there was         no    proper   compliance     of    the
provisions of section 151 of the IT Act, 1961.
However, her finding on this issue is missing

             15
in the entire order. A perusal of the approval
given u/s 151, copy of which is placed at
pages 20 and 21 of the paper book shows
that the Pr. CIT while giving approval has
simply mentioned as under:-


       "Yes. I am satisfied."


10.     I find, the Hon'ble Delhi High Court in
the case of United Electrical Company Pvt.
Ltd. (supra) while deciding an identical issue
has   held   that the power vested           in the
commissioner u/s 151 to grant or not to grant
approval to the Assessing Officer to reopen an
assessment is coupled with a duty.             The
commissioner is required to apply his mind to
the proposal put up to him for approval in the
light of the material relied upon by the
Assessing Officer. That power cannot be
exercised casually and in a routine manner.
Accordingly, the Hon'ble High Court quashed
the   notice,     since   there   was   no   proper
application of mind by the Addl.CIT.


11.      I find the Hon'ble Delhi High Court in
the case of Pr. CIT vs. N.C. Cables Ltd., while
deciding an identical issue has held that
section 151 of the Act clearly stipulates that
the CIT, who is the competent authority to
authorize the reassessment notice has to
apply his mind and form an opinion. Mere
appending of the expression `approved' says

             16
nothing. It is not as if the commissioner has
to record elaborate reasons for agreeing with
the noting put up before him. At the same
time, satisfaction has to be recorded of the
given case which can be reflected in the
briefest    possible       manner.         When      such
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 official, the finding of the
Tribunal      quashing          the     reassessment
proceedings cannot be disturbed.
12.        I find the Hon'ble Supreme Court in
the case of Chhugamal Rajpal vs. S.P. Chaliha
& Ors (supra) has held that where the
commissioner         had      mechanically     recorded
permission        and   the    important      safeguards
provided in the section 147 and 151 were
lightly    treated      by    the   officer    and    the
commissioner, the notice issued u/s 148 was
held as invalid.        The various other decisions
relied on by the ld. counsel for the assessee
in the paper book also support his case.
Since, in the instant case, admittedly, the ld.
PCIT while granting approval has simply
mentioned `Yes. I am satisfied' therefore,
following the decisions of the jurisdictional
High Court (cited supra) on this issue which
are binding on the Tribunal, the reassessment
proceedings are to be treated as not in
accordance with the law since the approval
has been given in a mechanical manner

             17
      without   due        application         of    mind       by    the
      approving       authority.          I,    therefore,           allow
      ground of appeal            No.2 by the assessee
      challenging         the   validity       of     reassessment
      proceedings. Since the assessee succeeds on
      this legal ground, the various other grounds
      raised    by        the   assessee            are   not    being
      adjudicated being academic in nature."
22.    Since, in the instant case, both the approving
authorities have given approval in a mechanical manner
without   due     application        of        mind,      therefore,         such
reassessment proceedings have to be treated as not in
accordance with law and has to be quashed.
23.    Even otherwise also, a perusal of the reasons
recorded show that the notice has been issued in a
mechanical manner without independent application of
mind by the Assessing Officer and the satisfaction by
the Assessing Officer is based on borrowed satisfaction
of the Investigation Wing.                     The Assessing Officer,
without applying his mind, has simply, on the basis of
the information of the Investigation Wing, jumped to
the conclusion that there is escapement of income. The
reasons so recorded do not show that there is any
application of mind by the Assessing Officer for reaching
the conclusion that there was escapement of income
except the information from the Investigation Wing.
The Hon'ble Delhi High Court in a number of decisions
has held that reopening of assessment on the basis of
report of the Investigation Wing without independent
application of mind by the Assessing Officer is not in
accordance with law and accordingly the reassessment
proceedings have been quashed. The Hon'ble Delhi High






                     18
Court recently in the case of South Yarra Holdings vs.
ITO, vide Writ Petition No.3398 of 2018, order dated 1st
March, 2019, at para 7 of the order has observed as
under:-
      "7. It is a settled position in law that re-
      opening of an assessment has to be done by
      an Assessing Officer on his own satisfaction.
      It is not open to an Assessing Officer issue a
      reopening      notice      at     the    dictate   and/or
      satisfaction      of       some        other    authority.
      Therefore, on receipt of any                   information
      which suggests escapement of income, the
      Assessing        Officer        must      examine     the
      information in the context of the facts of the
      case and only on satisfaction leading to a
      reasonable belief that income chargeable to
      tax has escaped assessment, that re-opening
      notice is to be issued."
24.    The Hon'ble High Court in the case of PCIT vs.
Meenakshi Overseas Pvt. Ltd., vide ITA 692/2016, order
dated 26th May, 2017, has observed as under:-

      "19. A perusal of the reasons as recorded by
      the AO reveals that there are three parts to it.
      In the first part, the AO has reproduced the
      precise information he has received from the
      Investigation Wing          of    the Revenue. This
      information is in the form of details of the
      amount of credit received, the payer, the
      payee, their respective banks, and the cheque
      number. This information by itself cannot be
      said to be tangible material.

                  19
20. Coming to the second part, this tells us
what the AO did with the information so
received.   He   says:     "The        information   so
received has been gone through." One would
have expected him to point out what he found
when he went through the information. In
other words, what in such information led him
to   form   the belief that income            escaped
assessment.      But     this     is     absent.     He
straightaway records the conclusion that "the
abovesaid instruments are in the nature of
accommodation entry which the Assessee had
taken after paying unaccounted cash to the
accommodation entry given (sic giver)". The
AO adds that the said accommodation was "a
known entry operator" the source being "the
report of the Investigation Wing".


21. The third and last part contains the
conclusion drawn by the AO that in view of
these facts, "the alleged transaction is not the
bonafide one. Therefore, I have reason to be
believe that an income of Rs. 5,00,000 has
escaped assessment in the AY 2004-05 due to
the failure on the part of the Assessee to
disclose fully and truly all material facts
necessary for its assessment... "

22. As rightly pointed out by the ITAT, the
'reasons to believe' are not in fact reasons but
only conclusions, one after the other. The
expression 'accommodation entry' is used to


            20
describe the information set out without
explaining the basis for arriving at such a
conclusion. The statement that the said entry
was given to the Assessee on his paying
"unaccounted cash" is another conclusion the
basis for which is not disclosed. Who is the
accommodation entry giver is not mentioned.
How he can be said to be "a known entry
operator" is even more mysterious. Clearly
the source for all these conclusions, one after
the other, is the Investigation report of the
DIT. Nothing from that report is set out to
enable the reader to appreciate how the
conclusions flow therefrom.


23.   Thus,      the    crucial   link   between    the
information made available to the AO and the
formation of belief is absent. The reasons
must be self evident, they must speak for
themselves.       The    tangible    material   which
forms the basis for the belief that income has
escaped assessment must be evident from
a reading of the reasons. The entire material
need not be set out. However, something
therein which is critical to the formation of the
belief must be referred to. Otherwise the link
goes missing.

24.       The     reopening         of     assessment
under Section 147 is a potent power not to be
lightly   exercised.      It   certainly   cannot   be
invoked casually or mechanically. The heart of


            21
      the provision is the formation of belief by the
      AO that income has escaped assessment. The
      reasons so recorded have to be based on
      some tangible material and that should be
      evident from reading the reasons. It cannot
      be supplied subsequently either during the
      proceedings when objections to the reopening
      are considered or even during the assessment
      proceedings that follow. This is the bare
      minimum mandatory requirement of the first
      part of Section 147 (1) of the Act."

25.     I find the coordinate Bench of the Tribunal in the
case of M/s SBS Realtors (P) Ltd. vs. ITO, vide ITA
No.7791/Del/2018, order dated 1st April, 2019, has also
quashed the reassessment proceedings based on the
information provided by the Investigation Wing without
any independent application of mind. It was held that
there was no tangible material which formed the basis
for the belief that income has escaped assessment. The
various other decisions relied by the ld. counsel also
supports his case.        Since, in the instant case, the
reopening of the assessment has been made on the
basis of information received from the Investigation
Wing and there is no independent application of mind by
the Assessing Officer and such reopening is made on the
basis    of    borrowed    satisfaction,   therefore,   such
reopening is not in accordance with law and ha to be
quashed.      Accordingly, such reassessment proceedings
have to be treated as not in accordance with law and
has to be quashed.



                 22
                       26.   Since the assessee succeeds on this legal ground
                       challenging the validity of reassessment proceedings,
                       the addition on merit is not being adjudicated being
                       academic in nature. The appeal filed by the assessee is
                       accordingly allowed.
                       ITA Nos. 1375/Del/2019 (Gopal Chand Mundhra and
                       Sons);      1721/Del/2019        (Damyanti        Mundhra);
                       1722/Del/2019        (Ramdev   Mundhra);     1524/Del/2019
                       (Gopal Chand Mundhra).


                       27.   In these appeals also identical grounds have been
                       taken by the respective assessees and in all these cases
                       the approving authorities have given approval to the
                       reopening of assessment in a mechanical manner
                       without due application of mind.       Therefore, following
                       the reasons given in the preceding paragraphs, the
                       reassessment proceedings initiated in the case of these
                       assessees are also held to be not in accordance with the
                       law and are accordingly quashed.


                       28.      In the result, all the five appeals filed by the
                       respective assesses are allowed."
5.3    Since in the present case the approving authority has given approval to
the reopening of assessment in a mechanical manner without due application of
mind by mentioning only that "ON THE BASIS OF `A' ABOVE, I AM SATISFIED",
in the Reasons for Initiating Proceedings u/s. 147 and For obtaining the
Approval of the Addl. Commissioner of Income Tax, Range-23, New Delhi, a
copy thereof is placed at page no. 1 of the Paper Book, and therefore, the legal
issue in dispute is squarely covered by the aforesaid finding of the Tribunal,
hence, respectfully following the aforesaid precedent i.e. ITAT, SMC, Bench,
New Delhi decision dated 21.8.2019 in the case of Gopal Chand Manudhra and
Sons; Damyanti Mundhra; Ramdev Mundhra; Shriya Devi Mundhra and Gopal

                                       23
Chand Mundhra vs. ITO, Wards 55(5), New Delhi decided in ITA No. 1375;
1721; 1722; 1523-1524/Del/2019 respectively relevant to assessment year
2011-12, the reassessment is hereby quashed and accordingly the additional
ground no. 2 is allowed.    Since the assessee   succeeds on this legal ground
challenging the validity of reassessment proceedings, the addition on merit is
not being adjudicated being academic in nature.       The appeal filed by the
assessee is accordingly allowed.
6.   In the result, the appeal filed by the assessee stands allowed.
      Order pronounced on 02/12/2019.
                                                         Sd/-
                                                     [H.S. SIDHU]
                                                  JUDICIAL MEMBER
Date 02/12/2019
"SRB"
Copy forwarded to: -
1.   Appellant -
2.   Respondent -
3.   CIT
4.   CIT (A)
5.   DR, ITAT        TRUE COPY
                                                     By Order,

                                       Assistant Registrar, ITAT, Delhi Benches




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