IN INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-2 , NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA No. 2519/Del/2015 AY: 2005-06 Ajay Kumar Gupta, vs. ITO, Ward 1(3) C/o Raj Kumar & Associates, CAs Faridabad L-7 A, South Extn., Part 2 New Delhi 110 049 (PAN: AAQPG1783L) (Appellant) (Respondent) Appellant by : Shri Raj Kumar, C.A. Respondent by : Shri Amrit Lal, Sr. DR ORDER This is appeal filed by Assessee directed against Order dated 16.3.2015 of Ld.CIT(A), Faridabad pertaining to Assessment Year (A.Y.) 2005-06 on following grounds. 1. That under facts and circumstances, Ld. AO erred in law as well as on merits in determining assessable income at Rs. 23,67,640/- against declare at Rs. 3,45,411/- 2A. That under facts and circumstances, Ld. CIT (A) in not admitting additional ground taken before him which is pure legal ground. "That whole re-asstt. proceedings including initiation is without jurisdiction in absence of mandatory approval u/s. 151 (2) of I T. Act and / or for purely mechanical approval without any application of mind by Approving authority, in case, any such approval stands taken. " B. That without prejudice, as approval U/s. 151 (2) is pure mechanical and without application of mind and not as in manner envisaged in law, assumption of jurisdiction u/s. 147 /148 is illegal and un - warranted. 3. That under facts and circumstances, proceedings u/s. 147/148 are illegal, un-warranted and un - sustainable in law as well as on merits. 4A. That under facts and circumstances, both lower authorities erred in not accepting declared LTCG of Rs. 20,18,189/- on sale of STT paid shares as exempted income u/s. 10 (38) of I.T. Act and in taxing same as income from other sources. ITA No. 2519/Del/2015 A.Y. 2005-06 Ajay Kumar Gupta B. That without prejudice, in absence of confronting with adverse material and without producing persons for cross - examinations whose statements have been used against assessee, no adverse view can be taken in respect of such persons and such un - confronted material. C. That without prejudice, even material available do not give any inference of adverse view. D. That without prejudice, in view of explanation and documents furnished, claim stands established. 5. That there is absolutely no logic, no justification and no material for addition of Rs.4,036/- as un - explained expenditure for alleged commission payable for procuring LTCG of Rs. 20,18,189/- resp . 2. I heard rival contentions with respect to ground no.2A. copy of approval in question in proof is placed at page 65 of assessee s paper book. Ld. ACIT has written yes and signed in column no.12 in form for recording reasons for initiating proceedings u/s 148 of Act and for obtaining approval of ACIT/CIT. 3. additional ground was taken before First Appellate Authority. First Appellate Authority did not admit same. In my view such action of First Appellate Authority is bad in law. This is jurisdictional issue and as facts are on record, he should have admitted same and decided issue on merits. Nevertheless I admit this ground of appeal. 4. issue before me is whether: (a) whether approval u/s 151 of Income Tax Act 1961 (the Act) granted by ACIT was without application of mind and in mechanical manner and hence re-opening is bad in law. 5. After considering rival contentions, I find that legal issue in dispute is squarely covered by ITAT, SMC-2, New Delhi order dated 6.11.2015 passed in ITA No. 2521/Del/2015 (AY 2005-06) in case of Anjali Gupta vs. ITO wherein Tribunal has adjudicated legal issue in dispute in favour of Assessee as under:- 5. On considering rival contentions I find that D Bench of New Delhi Tribunal in case of M/s Kansal Fincap Ltd. 2 ITA No. 2519/Del/2015 A.Y. 2005-06 Ajay Kumar Gupta vs. ITO in ITA no.2661 and 2662/Del/2013 vide order dt. 31.8.2015 where at page 11 para 16 it was held as follows. 16. Having gone through decisions relied upon by Ld. A.R. we find that ratios laid down therein supports contentions of Ld.A.R. that approval as required u/s 151 of Act was granted by Ld.ACIT to initiate proceedings without application of mind in mechanical manner, AO was supposed to dispose of objections raised by assessee against reopening proceedings by passing speaking order meeting out each and every objection raised therein by assessee, and Assessing Officer has initiated reopening proceedings without examining even prima facie correctness of information received from Investigation Wing of Department wherein it was informed that as per statement of Shri Mahesh Garg recorded by them, there was escapement of assessable income in hands of assessee. In cited decisions in cases of United Electrical Co. (P) Ltd. vs. CIT ( supra) - Chhaganmal Rajpal Vs. S.P. Chaliha ( supra), 0 Central India Electric Supply Co. Ltd. vs. ITO (supra), approval of Addl. CIT/CIT/Board was. obtained under remarks "Yes, I am satisfied that it is fit case for issue of notice under sec. 148 of Income-tax Act", "Yes", and "Yes" respectively. Hon'ble Delhi High Court in case of United Electrical Co. (P) Ltd. vs. CIT (supra) after analyzing satisfaction/approval was pleased to hold that CIT is required to apply his mind to proposal put up to him for approval in light of material relied upon by Assessing Officer. said power cannot be exercised casually in routine manner. Again Hon'ble Supreme Court in case of Chhugamal Rajpal Vs. S.P. Chaliha 3 ITA No. 2519/Del/2015 A.Y. 2005-06 Ajay Kumar Gupta (supra) has been pleased to observe that Learned CIT did not himself record that he was satisfied that this was fit case for issue of notice under sec. 148 of Act. To question No. 8 in report which reads "whether CIT is satisfied that it is fit case for issue of notice under sec. 148", he just noted word "yes" and affixed his signature there under. Hon'ble Supreme Court was of opinion that if only CIT has read report carefully, he could never have come to conclusion on material before him that it is fit case to issue notice under sec. 148. Hon'ble Supreme Court pleased to hold that important safeguards provided under section 147 and 151 were lightly treated by ITO-as well as by CIT. Both of them appear to have taken duty imposed on them under these provisions as of little importance. In case of ITO vs. N.C. Cables Ltd. (supra) where also approval under Sec. 151 was recorded as "approved" and there also reopening proceedings were initiated en basis of information received from Investigation Wing of Department and same Mr. Mahesh Garg was involved, issue raised before Delhi Bench of ITAT was as to whether such approval would meet requirements prescribed under sec.151 of Act. ITAT after detailed deliberation en issue came to conclusion that reopening was bad in law for reasons that Ld.CIT had not recorded his satisfaction as contemplated u/s 151 of Act. Similar view has been expressed in remaining decisions cited by Ld.A.R. Respectfully following ratios laid down in cited decisions, we hold that reopening is bad in law for reason that Ld.ACIT has not recorded his satisfaction as contemplated u/s 151 of Act. 4 ITA No. 2519/Del/2015 A.Y. 2005-06 Ajay Kumar Gupta 5.1. Respectfully following Coordinate Bench decision in case of M/s Kansal Fincap Ltd. (supra), wherein Hon ble Jurisdictional High Court in case of United Electrical Co.P.Ltd. vs. CIT (2002) reported in 258 ITR 317 (Del) and judgement of Hon ble Supreme Court in case of Chhugamal Rajpal vs. S.P.Chalina & Others reported in 79 ITR 603 (S.C.) have been applied, I hold that reopening is bad in law, for reason that ACIT has granted approval with simple mere yes . Such remark cannot be considered as approval with application of mind. reopening of assessment is bad in law. 6. In result appeal of assessee is allowed. 6. Respectfully following Coordinate Bench decision in case of Anjali Gupta (Supra), I hold reopening as bad in law, hence, same is quashed and accordingly, legal issue involved in appeal is decided in favour of assessee. 7. In result, appeal of assessee is allowed. Order pronounced in Open Court on 5th October, 2016. Sd/- (H.S. SIDHU) JUDICIAL MEMBER Dated: 5th October, 2016 *SR Bhatnagar* Copy of Order forwarded to: 1.Appellant; 2.Respondent; 3.CIT; 4.CIT(A); 5.DR; 6.Guard File By Order Asst. Registrar 5 Ajay Kumar Gupta v. ITO, Ward 1(3), Faridabad