Mere signing against a particular column of format is nothing but a mechanical approval

Shri Ram Niranjan Tibra Vs ITO (ITAT Jaipur)

Mere signing against a particular column of format is nothing but a mechanical approval

Ld. CIT acted mechanically in order to discharge his statutory obligation when he merely wrote on the format “Yes, I am satisfied”. In the case in hand, the Id. CIT has even not written any affirmative sentence or word but has just signed against the column which was pre-typed “Yes”. Therefore, applying the principle as laid down by the Hon’ble High Court, the sanction accorded by the Id. CIT for issuing the notice under section 148 in the case of the assessee is hyper mechanical. The said decision of the Hon’ble Madhya Pradesh High Court was challenged by the revenue before the Hon’ble Supreme Court but the SLP was dismissed reported in 237 Taxman 378 (SC). In a series of decisions as relied upon by the Id. Counsel of the assessee, the Coordinate Benches of the Tribunal have taken a consistent view that mere signing against a particular column of the format is nothing but a mechanical approval without application of mind. Hence in view of the above facts and circumstances of the case, we hold that the reopening of the assessment is not valid and the same is liable to be quashed. We order accordingly.

Loose papers which were neither prepared by the assessee nor belonging to the assesse would not constitute a tangible material or incriminating material to form the belief that income assessable to tax has escaped assessment.

DDIT Investigation as well as the AO proceeded on the anonymous complaint and further during the investigation, the assessees were confronted with the details as mentioned in the loose papers and it was found that none of the loose papers as annexed to the anonymous complaint were either prepared by the assessees or part of the record of the assessee. The factual details which are not in dispute cannot be considered as incriminating material to conclude that there is a extra money over and above mentioned in the sale deed is paid by the assessee_ The anonymous complaint giving the details and allegation of tax evasion may be relevant to suspect the transaction and to conduct the further investigation for ascertaining the correct facts leading to the evasion of tax, if any, but the allegation in the complaint itself would not constitute a tangible material or a basis for holding that there is an suppression of purchase/sale consideration and evasion of tax. Further, the contents of the complaint remained unsubstantiated in the absence of corroborating evidence. Even the complaint was not proved by the complainant as the department was not having the name and particulars of the complainant. In such circumstances the allegations in the complaint were required to be proved by independent corroborative evidence. The DDIT Investigation though conducted an enquiry from the sellers as well as the purchaser (assessee) but nothing has come out in the said enquiry to substantiate the allegations made in the complaint. The sellers as well as the purchasers have categorically denied in their statements recorded under section 131 of the Act of having any payment or receipt of any money over and above the consideration stated in the sale deed. The sale deed and transaction of purchase and sale of the land in question was in public domain as it was a registered deed available with the Sub Registrar, therefore, giving the particulars of the purchase and sale of the land as well as of the parties is not disclosing any new facts which were not either disclosed by the assessee or not available in the public domain. Further the assessee filed the return of income and it is not the case of the department that the said transaction of purchase is not disclosed by the assessee. The only allegation is that the correct or actual consideration paid by the assessees was not disclosed. The DDIT Investigation himself has admitted the fact that during the enquiry and investigation carried out, the sellers as well as the purchasers have denied having any such payment or receipt as alleged in the complaint and, therefore, it was only an expression of opinion of the DDIT that there was an unaccounted investment by the purchasers without any such fact or any material revealing such fact detected during the course of such investigation. Therefore, the reopening is merely based on suspicion and without any tangible material which could be regarded as incriminating material revealing the income assessable to tax has escaped assessment. Hence the reasons recorded by the AO do not lead to the formation of opinion that there was an unaccounted investment and consequently escapement of income.

Therefore, in the facts and circumstances the reopening is based on a borrowed satisfaction which is also not based on any tangible material but merely on suspicion and allegations made in the anonymous complaint. The DDIT Investigation has stated this fact that the loose papers annexed to the complaint were neither prepared by the assessee nor belonging to the assessee. Therefore, such loose papers prepared by some anonymous person would not constitute a tangible material or incriminating material to form the belief that income assessable to tax has escaped assessment.

FULL TEXT OF THE ITAT JUDGEMENT

These three appeals by the three connected assessees are directed against three separate orders of Id. CIT (A)-1, Jodhpur dated 21^st March, 2018, 22^nd March, 2018 and 22nd March, 2018 respectively for the assessment year 2007-08. Since common grounds and issues are raised in these three appeals arising from the same set of facts and transactions, therefore, for sake of convenience these three appeals are clubbed together for the purpose of hearing and disposal and are being disposed off by this composite order. For the purpose of recording the facts, the appeal in ITA No. 657/JP/2018 is taken as lead case wherein the assessee has raised the following grounds of appeal :-

1. That in law and in the facts and in circumstances of the case, the Id. CIT (Appeals) grossly erred in confirming the reassessment proceedings under Section 148 of the Income-tax Act, 1961.

1.1. That the Id. CIT (A) grossly erred in ignoring that the Id. Assessing Officer had erred in deliberately not passing a speaking order to the legal objections raised before him prior to initiating the reassessment proceedings, nor even prior to passage of assessment order, thus making the assessment order illegal and void.

1.2. That the Id. lower authorities grossly erred in ignoring the facts that the notice u/s. 148 of the Act was issued without proper sanction, without any reason to believe, without any application of mind and the entire proceedings of reassessment deserved to have been quashed.

1.3. That on the facts and in the circumstances of the case, the Id. lower authorities grossly erred in issuing notice u/s 148 if the Income-tax Act. 1961 without satisfying the conditions of section 148, 149 & 151 of the income-tax Act,1961.

1.4. That the assessment proceedings u/s 148 of the Act were initiated on the basis of surmises conjectures, suspicions and suffer from various infirmities and maladies, the proceedings are unwarranted, illegal, bad in law, against the principal of natural justice, against the settled legal principals and sound conscious and deserve to be quashed.

2. That on the facts and in the circumstances of the case the learned lower authorities grossly erred in making addition of Rs. 41,50,348/- in the hands of the assessee appellant u/s 69 of the Income-tax Act.

2.1 That on the facts and in the circumstances of the case the learned lower authorities grossly erred in adopting the purchase consideration of the impugned land purchased at Rs. 12,451,045/- as against purchase consideration of Rs. 8,40,000/- declared by the assessee appellant and other joint purchasers.

2.2 That on the facts and in the circumstances of the case the learned lower authorities grossly erred in comparing average selling price with average purchase price- deliberately ignoring material fact that entire land area purchased is not saleable and nearly 2/3rd area itself has to be left for common amenities, facilities, parks, road etc. That while working out the average purchase price the ld. lower authorities deliberately chose to ignore the cost incurred on development and only referred to the purchase price.

2.3 That the Id. lower authorities grossly erred in deliberately ignoring several reasonable plausible objection which had material bearing on the impugned case and ignoring the same is unjustified, bad in law, is in utter violation of principal of natural justice and ought to have been considered. No-consideration is unjustified, bad in law and entire approach deserves to be deprecated. The learned Assessing Officer grossly erred in not allowing the assessee appellant the right to cross-examination for the reasons best known to him.

2.4 That the id. lower authorities grossly erred in solely and blindly relying upon dumb document and upon the report sent by the Investigation wing of the Income-tax department which in itself was inconclusive. The learned Assessing Officer has referred and relied upon aspects which do not have any correlation with the facts of the case.

2.5 That the approach adopted by the learned lower authorities .confirms the submission of the assessee appellant that the entire exercise has been carried out at someone’s else’s behest with view to harass the assessee appellant.

3. That the Id. CIT(A) malafidely did not even bother to refer to the detailed written submission filed before him and also grossly erred in ignoring the finding arrived at by the Id. CIT(A) in the case of the sellers of the afore-said land.

4. The appellant craves leave to add, alter, modify or amend any ground on or before the date of hearing.”

Ground Nos. 1 to 1.4 are regarding validity of initiation of proceedings under section 147/148 of the IT Act.

2. The assessee is an Individual and proprietor of M/s. Moral Construction Company, engaged in the business of real estate transactions. During the year under consideration, the assessee along with Shri Ram Niranjan Tibra and Shri Parmanand R. Verma (the other assessees) jointly purchased agricultural land measuring 1.72 hectare bearing Khasra No. 2479 and Khasra No. 2489/4083 situated at Indali Road, Jhunjhunu (Rajasthan) vide sale deed dated 1^st February, 2007 for a consideration of Rs. 8,40,000/-. The land was valued for stamp duty purposes at Rs. 8,70,000/-. The assessee filed his return of income on 30.03.2008 declaring total income of Rs. 7,31,750/-. The said return of income was processed under section 143(1) of the IT Act at the declared income. There was a Tax Evasion Petition (TEP) received by the Office of the DDIT (Investigation)-I, Jaipur regarding suppression of purchase consideration by the assessee along with two other purchasers in respect of the land purchased vide Sale Deed dated 1^st February, 2007. As per the details given in the said complaint, the actual amount paid by the purchasers was stated to be Rs. 1,32,01,045/- as against the purchase consideration of Rs. 8,40,000/- shown in the sale deed. The DDIT Investigation Jaipur conducted an enquiry and examined all the purchasers involved in these transactions being sellers as well as purchasers. The statements were recorded under section 131 of the IT Act on 17^th February, 2014, however, neither the sellers nor the purchasers have accepted any amount as alleged in the complaint received or paid in respect of the said transactions of sale and purchase of the agricultural land. The DDIT Investigation forwarded the information to the AO vide letter dated 25^th March, 2014 for taking action under section 148 of the Act. Based on the said information received from the DDIT, the AO reopened the assessment vide notice dated 29.03.2014 issued under section 148 of the Act. The assessee objected to the validity of reopening of the assessment and filed objection against the notice under section 148 which was disposed off by the AO vide order dated 25.11.2014. Subsequently, the AO passed the reassessment order on 30^th March, 2015 whereby the addition of Rs. 41,50,348/- being 1/3^rd share in the total undisclosed income of Rs. 1,24,51,045/- was added to the total income of each of the assessees under section 69 of the Act. The assessee challenged the action of the AO before the Id. CIT (A) and raised the objection against the validity of reopening but could not succeed.

3. Before the Tribunal, the Id. Counsel for the assessee submitted that the AO has reopened the assessment on the basis of mere petition without even knowing the name of the complainant who has made the petition. The DDIT Investigation has conducted an enquiry on the said complaint but no material or any fact has been brought on record to reveal that the assessees have paid any extra amount over and above the purchase consideration mentioned in the sale deed. The DDIT Investigation has duly examined the sellers who have specifically denied to have received any such extra consideration as well as the purchasers being the assessees.

Thus the report of the DDIT Investigation is based only on suspicion and doubt without any detection of fact about the alleged unaccounted/unexplained money changed hands. The Id. Counsel has further contended that even the approval for issuing the notice under section 148 on the reasons recorded by the AO has been given by the Id. CIT without application of mind but mechanically. He has referred to the sanction granted by the Id. CIT and submitted that the Id. CIT has just signed the proforma against the typed word “Yes”. Thus it is only a mechanical approval without application of mind when the word “Yes” was pre-typed by the AO and it was not even written by the Id. CIT. He has further contended that this issue was specifically raised by the assessee in his objection against the notice under section 148, however the AO while disposing off the objection vide communication dated 25.11.2014 has not dealt with this objection of the assessee. The Id. Counsel has stated at Bar that though the assessee challenged the notice issued under section 148 before the Hon’ble Jurisdictional High Court in the Writ Petition, however, the assessee would withdraw the said Writ Petition as this Tribunal has heard this appeal of the assessee and the objection against the reopening of the assessment. In view of the statement made by the Id. Counsel at Bar, the Bench has proceeded with the matter. The Id. Counsel has referred to the statements recorded by the Id. DDIT Investigation under section 131 of the sellers of the land and submitted that all the four sellers in their statements have denied having received any extra or alleged amount over and above the consideration shown in the sale deed. The reasons recorded by the AO and formation of belief that the income assessable to tax has escaped assessment, is based on the borrowed satisfaction and not AO’s own opinion and decision. He has thus contended that the DDIT has specifically mentioned that there is unaccounted investment of Rs. 1,24,51,045/- made by the purchasers and also suggested the remedial action under section 148. Therefore, this is not the AO’s own independent decision but it is a borrowed satisfaction. In support of his contention he has relied upon the following decisions :-

CIT vs. S. Goyanka Lime & Chemical Ltd.
64 taxmann.com 313 (SC)

CIT vs. S. Goyanka Lime & Chemical Ltd.
56 taxmann.com 390 (MP)

ITO vs. Direct Sales P. Ltd.
(ITA No. 3545/DEL/2010)

Hirachan Kanuga vs. DCIT
56 taxmann.com 199 (Mum. Trib)

Amarlal Bajaj vs. ACTT,
37 taxmann.com 7 (Mum. Trib)

Banke Bihari Properties Pvt. Ltd. vs. ITO
(ITA No. 5128/DEL/2015)

Prakash Chandra Bohra vs. ITO
(ITA No. 553/JODH/2014)

The Id. Counsel has also referred to the order of the Id. CIT (A) in case of sellers of the land and submitted that the Id. CIT (A) vide order dated 16.01.2017 has deleted the addition made by the AO on account of understatement of sale consideration based on the report of the DDIT Investigation and Tax Evasion Petition.

4. On the other hand, the Id. D/R has submitted that the approval was granted after considering the reasons recorded by the AO which are annexed to the proposal sent by the AO and, therefore, only after satisfaction of the reasons recorded, the Id. CIT has granted the approval. He has further submitted that the details given in the Tax Evasion Petition along with the loose papers are found to be correct to the extent of particulars of land, parties, date of transaction and consideration shown in the sale deed. Therefore, when these facts are not in dispute, then the other facts given in the said Tax Evasion Petition cannot be rejected. He has relied upon the orders of the authorities below and submitted that those loose papers were confronted with the assessee and, therefore, the AO has conducted the requisite enquiry in the assessment proceedings. The AO has given the finding that the assessee along with his partners have indulged in preparing their transactions in such loose papers which are reliable source in connection with the purchase of land in question, when part details and contents of the loose papers regarding the description of particulars of the land, parties and consideration mentioned in the sale deed are admitted than the other contents cannot be denied.

5. We have considered the rival submissions as well as the relevant material on record. There is no dispute that these assessees have jointly purchased the land in question vide sale deed dated 1^st February, 2007 for a consideration of Rs. 8,40,000/-. However, the land was valued for the purpose of stamp duty at Rs. 8,70,000/-. The assessees are engaged in the real estate business and, therefore, maintaining the books of account and showing the transactions of purchase and sales in the regular books of account, therefore, there is no allegation by the department that the transaction in question was not disclosed by the assessee in their books of account. The assessee has duly explained the fact that the land was duly shown as part of the stock-in-trade and expenditure incurred by the assessee in development of the land is also recorded in the books of account. The sale of the land after the development work and curving out the plots is also not in dispute as the AO has given the details of the plots of land sold by the assessee. The assessment was reopened by the AO by recording the reasons at pages 2 and 3 of the assessment order as under :-

The AO has recorded in the reasons the fact regarding the sale deed, the description of property, purchase consideration mentioned in the sale deed and stamp duty valuation. These facts are otherwise not in dispute as all are mentioned in the sale deed itself. The AO has then discussed the tax evasion petition received by the DDIT Investigation and thereafter the statements of the sellers as well as the purchasers recorded under section 131 of the IT Act. These facts were also not in controversy as in the statements recorded under section 131 by the DDIT Investigation nothing was detected or discovered to reveal that any unaccounted purchase or sale consideration as alleged in the complaint has exchanged hands by the purchasers and sellers of the land in question. The AO has mentioned that the statements of these parties cannot be believed or trusted as it was stated by the DDIT in the letter dated 25^th March, 2014. Thus the reason recorded by the AO is nothing but reproduction of all the communications made by the DDIT vide letter dated 25^th March, 2014. For sake of ready reference and completeness, the letter dated 25^th March, 2014 is reproduced as under :-

” F.No. DDIT(Inv)-1/JPR/2013-14/2020 25.03.2014

The Assistant Commissioner of Income-Tax Officer, Circle, Jhunjhun, Jhunjhunu.

Sub- TEP in the case of Shri Om Prakash Norwal, Jhunjhunu-regarding-

Please refer to above mentioned subject. A TEP in the case of Shri Om Prakash Morwal, Shri Parman and R. Verma (Morwal) and Shri Ramniranjan Tibra, Jhunjhunu was received in the office.

Among other allegations, complainant had alleged that a land at Indali Road, ,Jhunjhunu, was purchased by above three purchasers in Rs. 1,32,91,045/- and on this they have colonized many plots. In support of this allegation complainant filed copy of registered sale deed and so hand written calculation alongwith the TEP.

Summons u/s 131 was issued to all three purchasers i.e. Shri Om Prakash Morwal, Shri Parmanand R. Verma (Morwal) and Shri Ramniranjan Tibra’ and their statements were recorded oath. During proceedings, sellers of the said land i.e. Shri Shyam Lal, Shri Sajjan Lal, Shri Ramav, and Shri Santosh Kumar were also summoned u/s 131 and their statements were also recorded oath. On verification of hand written papers filed with the TEP, it was observed that Indali proj land was purchased in Rs. 1,32,91,045/- and registry of said land was done in Rs. 8,40,000/- . However, all the sellers and purchasers stated that the said land transaction was made for 8,40,000/-.

Although the purchasers i.e. Shri Om Prakash Morwal, Shri Parmanand R. Verma (Morwal) and Shri Ramniranjan Tibra and all the four sellers denied having any connection with^–papers filed with the TEP, it is clear that details of purchasers of the plots as well as area of land purchased by them as mentioned in TEP are correct. Therefore, it is obvious that all the parties concerned (sellers and purchasers) are hiding true particulars of the land transactions un-consideration and that the actual value of this land transaction was indeed Rs. 1,32,91,045/-.

Owing to the above discussion, it is clear that unaccounted investment of Rs.1,24,51,045(Rs. 1,32,91,045 — Rs. 8,40,000) was made by the above three purchasers, with their individual investment being Rs. 41,50,348/-.

Similarly, total sales consideration in the hands of each seller comes to Rs. 33,22,761j- (as no return of income was filed by them for the AN. 2007-08 showing the resultant capital gains).

Therefore, the case of the purchaser i.e. Shri Om Pralcash Morwal (PAN-AARPM0675Q) is being referred to you for taking appropriate action as per I.T.Act, 1961 for Financial Year 2006-07 related to A.Y. 2007-08.

It may be noted that remedial action u/s 148 for the A.Y. 2007-08 is oettino barred by limitation on 31.03.2014.

Copy of sale deed and hand written calculation of above said land are enclosed alongwith copy of statements of all the above sellers and purchasers.

Sd/-

(Chanchal Meena)
Dy. Director of Income-tax (Inv.)-1

Encl as above-

Copy to

1. The Director of Income-tax (inv.) Jaipur for kind information.

2. The Commissioner of Income-tax-III, Jaipur for kind information.

3. The Addl. Director if Income-tax (Inv.) Jaipur for kind information

4. The Addl. Commissioner of Income-tax, Range- Jhunjhun for kind information

Dy. Director of Income-tax (Inv.)-1, Jaipur.”

Thus except translating English version into Hindi vernacular by the AO, there is nothing in the reasons recorded to suggest that the AO has applied his own mind on the information or material as forwarded by the DDIT Investigation vide letter dated 25^th March, 2014. It is further pertinent to note that the said communication is not forwarding the facts or information to the AO but it is a sort of opinion and finding given by the DDIT Investigation. The entire narration of the said communication dated 25.03.2014 is a finding and opinion of the DDIT wherein it is stated that though purchasers as well as the sellers denied having any connection with the papers filed with Tax Evasion Petition (TEP), it is clear that the details of the purchasers of the plots as well as areas of the land purchased by them as mentioned the TEP are correct. The DDIT goes further to say that it is obvious that all the persons concerned (sellers and purchasers) are hiding true particulars of the land transaction under consideration and that the actual value of the land transaction was indeed Rs. 1,32,91,045/- as alleged in the TEP. The DDIT has not stopped there but also given his opinion that it is unaccounted investment in the hands of the purchasers and undisclosed sale consideration in the hands of the sellers. It is also specified that the case of purchaser Shri Om Prakash Morwal is being referred for taking appropriate action. The DDIT Investigation has also suggested the remedial action under section 148 for the assessment year 2007-08 is getting barred by limitation on 31.03.2014. Thus this communication is not forwarding the information and fact but it is a sort of direction with the finding and opinion on the issue. The DDIT and the AO have given much emphasis on the details of the subsequent sale of the plots by the assessees. However, there is no allegation that those details are not disclosed by the assessee as the same were duly recorded in the books of account and also declared in the return of income filed for the relevant assessment year. Once the sellers as well as the purchasers have denied the allegation of any unaccounted purchase consideration/sale consideration paid or received in their statements recorded under section 131 of the Act, then in the absence of any such fact detected during the investigation carried out by the DDIT, the opinion formed by the DDIT and consequently by the AO is merely based on the allegation made in the complaint which is anonymous complaint as admitted and stated by the DDIT Investigation vide letter dated 09/17.03.2015 as under :-

“F.No. DDIT(Inv)-1/JPR/2014-15/880       Date 09/17.03.2015

The Income-Tax Officer,
Ward-1, Jhunjhunu.

Sub- TEP in the case of Sh. Ramniranjan Tibra and others-reg

**********************

Please refer to your letter no. 1721 dated 02.03.2015

2. The details submitted by the complainant have been forwarded to you earlier vide this office letter no. 2033 dated 26.03.2014. However, this office is not having the name and address of the complainant and therefore, the same cannot be provided to your office.

Sd/-
(Chanchal Meena)
Dy. Director of Income-tax (Inv.)-1

End as above-

Copy to

1. The Addl. Director if Income-tax (Inv.) Jaipur for kind information

2. The Addl. Commissioner of Income-tax, Jhunjhun for kind information

Dy. Director of Income-tax (Inv.)-1,
Jaipur.

Thus the DDIT Investigation as well as the AO proceeded on the anonymous complaint and further during the investigation, the assessees were confronted with the details as mentioned in the loose papers and it was found that none of the loose papers as annexed to the anonymous complaint were either prepared by the assessees or part of the record of the assessee. The factual details which are not in dispute cannot be considered as incriminating material to conclude that there is a extra money over and above mentioned in the sale deed is paid by the assessee_ The anonymous complaint giving the details and allegation of tax evasion may be relevant to suspect the transaction and to conduct the further investigation for ascertaining the correct facts leading to the evasion of tax, if any, but the allegation in the complaint itself would not constitute a tangible material or a basis for holding that there is an suppression of purchase/sale consideration and evasion of tax. Further, the contents of the complaint remained unsubstantiated in the absence of corroborating evidence. Even the complaint was not proved by the complainant as the department was not having the name and particulars of the complainant. In such circumstances the allegations in the complaint were required to be proved by independent corroborative evidence. The DDIT Investigation though conducted an enquiry from the sellers as well as the purchaser (assessee) but nothing has come out in the said enquiry to substantiate the allegations made in the complaint. The sellers as well as the purchasers have categorically denied in their statements recorded under section 131 of the Act of having any payment or receipt of any money over and above the consideration stated in the sale deed. The sale deed and transaction of purchase and sale of the land in question was in public domain as it was a registered deed available with the Sub Registrar, therefore, giving the particulars of the purchase and sale of the land as well as of the parties is not disclosing any new facts which were not either disclosed by the assessee or not available in the public domain. Further the assessee filed the return of income and it is not the case of the department that the said transaction of purchase is not disclosed by the assessee. The only allegation is that the correct or actual consideration paid by the assessees was not disclosed. The DDIT Investigation himself has admitted the fact that during the enquiry and investigation carried out, the sellers as well as the purchasers have denied having any such payment or receipt as alleged in the complaint and, therefore, it was only an expression of opinion of the DDIT that there was an unaccounted investment by the purchasers without any such fact or any material revealing such fact detected during the course of such investigation. Therefore, the reopening is merely based on suspicion and without any tangible material which could be regarded as incriminating material revealing the income assessable to tax has escaped assessment. Hence the reasons recorded by the AO do not lead to the formation of opinion that there was an unaccounted investment and consequently escapement of income. It is also pertinent to note that in case of the sellers, the AO has made the corresponding additions based on the report of the DDIT and the Id. CIT (A) vide a composite order dated 16.01.2017 in case of the four sellers has deleted the said addition. The relevant finding of the Id. CIT (A) is in para 5.4 as under :-

” 5.4 Having considered all facts, it is observed that statements of all buyers and sellers were recorded by the DDIT(Inv.) after receipt of the anonymous TEP. In their statements all these persons have stated that the actual transaction of the land situated at Indali Road was at Rs. 840000/-. The loose papers received alongwith the complaint have been confronted to the buyers. All the buyers in their statement given before the DDIT(Inv.) have categorically denied their connection with the loose papers and stated that they did not know the person who had authored the loose papers.

However, they admitted that the said land was purchased by them on the date given on registry i.e. 01.02.2007 and they also admitted that after making purchase they started selling of the land in succeeding years after dividing them into plots. Further in their statement when they were confronted with the papers, the buyers have admitted that the details appearing in these loose papers resembles only upto the extent of name of party, the dates of sale and the area of land sold, whereas the other details mentioned in the same papers in respect of charging of higher rate of land sold, total amount of receipts etc.were denied by them. The TEP and the documents therein cannot be said to constitute any evidence of suppression of sale value of the land by the appellants, on several counts. Most importantly, the author thereof is not known and also not examined or cross-examined. Secondly, the sale consideration and cost of plot, as mentioned in the TEP is not established by any corroborating evidence and is flatly denied by the parties to the transaction in their statements. Thus, the adoption of sale price at Rs. 33,23,761 in the hands of each appellant, is not supported by proper evidence. Even the facts that subsequent sale of plots in the same land took place at much higher rates, is of no help to the AO as it is seen that such subsequent sales are of ‘residential plots’ vis-a-vis sale of ‘land’ by the appellants. The evaluated value of such ‘residential plots’ as per Stamp Valuation Authority itself ranges from Rs. 400 to Rs. 825 sq. yard as per the chart at page 13 of assessment orders, whereas the evaluated rate of land sold by appellants is approx. Rs. 42 per sq. yard, which shows that clearly some development of land and plotting has been done by the buyers before subsequent sale of land by them, even though such development might not be legal considering that no permission for conversion thereof was taken from the concerned authorities. Therefore, subsequent increase in value of land does not imply a higher sale consideration in the hands of the appellants. For the reasons stated above, it is held that the adoption of higher sale consideration of Rs. 33,22,761 is baseless and consequent computation of capital gains is incorrect.”

Therefore, in the facts and circumstances the reopening is based on a borrowed satisfaction which is also not based on any tangible material but merely on suspicion and allegations made in the anonymous complaint. The DDIT Investigation has stated this fact that the loose papers annexed to the complaint were neither prepared by the assessee nor belonging to the assessee. Therefore, such loose papers prepared by some anonymous person would not constitute a tangible material or incriminating material to form the belief that income assessable to tax has escaped assessment.

5.1. The assessee has also raised the objection against the mechanical approval by the Id. CIT. There is no quarrel that there are binding precedents on this point that the approval must be granted after considering the reasons recorded by the AO. In the case in hand, the Id. CIT has granted approval by putting his signature against the particular column where even the word “Yes” was pre-typed by the AO while putting the proposal of reopening. The said approval given by the Id. CIT is reproduced as under :-

Form for recording reasons for initiation proceedings under section 147 and for obtaining the approval of the commissioner of Income Tax(OSD), Range Head, Range- Jhunjhunu, Jhunjhunu

Thus it is apparent that the Id. CIT has just signed^. in the prescribed column which does not exhibit any thought process on the part of the Commissioner on the reasons recorded by the AO prior to putting his signature. The Hon’ble Madhya Pradesh High Court in case of CIT vs. Goyanka Lime & Chemical Ltd (supra) while considering the issue of recording the satisfaction in mechanical manner without application of mind for according sanction for issuing the notice under section 148 has held in para 7 to 9 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 his statutory obligation properly in the matter of recording sanction as he merely wrote on the format “Yes, I am satisfied” which indicates as if he was to sign only on the dotted line. Even 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 analysed on 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.”

The Hon’ble High Court has observed that the Id. CIT acted mechanically in order to discharge his statutory obligation when he merely wrote on the format “Yes, I am satisfied”. In the case in hand, the Id. CIT has even not written any affirmative sentence or word but has just signed against the column which was pre-typed “Yes”. Therefore, applying the principle as laid down by the Hon’ble High Court, the sanction accorded by the Id. CIT for issuing the notice under section 148 in the case of the assessee is hyper mechanical. The said decision of the Hon’ble Madhya Pradesh High Court was challenged by the revenue before the Hon’ble Supreme Court but the SLP was dismissed reported in 237 Taxman 378 (SC). In a series of decisions as relied upon by the Id. Counsel of the assessee, the Coordinate Benches of the Tribunal have taken a consistent view that mere signing against a particular column of the format is nothing but a mechanical approval without application of mind. Hence in view of the above facts and circumstances of the case, we hold that the reopening of the assessment is not valid and the same is liable to be quashed. We order accordingly.

6. Since we have quashed the reassessment as invalid, therefore, we do not propose to go into the other issues raised on the merits of the addition.

7. In the other two appeals, the issue and facts are identical as in the case of Shri Om Prakash Morwal, therefore, our finding on this issue of reopening is mutatis mutandis is applicable on the said issue in other connected appeals. Consequently, the reopening of the assessment is in respect of the other two assessees who are joint purchasers of the land are also quashed as invalid. The issues raised on merits are not taken up for adjudication being infrastructure.

8. In the result, appeals of the assessees are allowed.

Order pronounced in the open court on 25 Nov. 2019.