Anil Kumar Jain Vs DCIT (ITAT Delhi)
Reassessment Quashed for Mechanical & Undated Sanction u/s 151 – Non-Application of Mind Vitiates Entire Proceedings
Summary: ITAT Delhi allowed the assessee’s appeal for AY 2013-14 and quashed the reassessment proceedings after holding that assumption of jurisdiction under section 147 was invalid. The assessee had originally filed his return declaring income of Rs.13,24,680/-, and assessment under section 143(3) was completed at Rs.14,22,340/-.
Subsequently, on the basis of information arising from search/survey proceedings involving Shri Anand Jain and Shri Naresh Jain Group and a further survey at the assessee’s business premises, the Assessing Officer reopened the assessment alleging that the assessee was a beneficiary of accommodation entries. In reassessment, additions aggregating Rs.1,13,96,698/- were made, comprising unsecured loans of Rs.42,20,000/- from three entities and alleged bogus purchases of Rs.71,76,698/-. The CIT(A) confirmed the Assessing Officer’s action. Before the Tribunal, the assessee challenged the reopening on several jurisdictional grounds, principally contending that the Assessing Officer had acted on borrowed satisfaction without independent application of mind and that sanction under section 151 was mechanically granted.
The Tribunal examined the approval proforma and found that Column No.9 did not disclose the earlier assessment completed under section 143(3), while the PCIT’s satisfaction in Column No.17 merely stated that, on perusal of the recorded reasons, it was a fit case for notice under section 148. The Tribunal further noted that the original assessment under section 143(3) had been completed after the survey, and therefore the survey material could not be regarded as fresh material subsequently discovered. Even the reasons recorded referred only to processing of the return and did not mention the completed scrutiny assessment. These circumstances, according to the Tribunal, demonstrated reopening without application of mind.
