The Chandigarh Bench of Income Tax Appellate Tribunal (ITAT) has re-adjudication observing that the sanction by Principal Commissioner of Income Tax (PCIT) for the reassessment under Section 147 of the Income Tax Act 1961 was mechanical approval without application of mind.
The Assessee, Ravinder was a Non Resident and an American Citizen and during the Financial Year relevant to the impugned Assessment Year, he had sold his House Chandigarh and out of the sale proceeds, purchased REC bonds as provided under section 54EC of the Income Tax Act.
He wanted to remit the amount to his bank account in USA and for the purposes, he got certificate in Form No. 15CA and 15CB issued by the Chartered Accountant and the probable date of remittance was mentioned as 06/07/2010 and the source of such amount was clearly mentioned as long-term capital gains on sale of property. However, the assessee could not remit the amount due to some unavoidable reasons which had formed the basis of the belief that income in the hands of the assessee had escaped assessment.
Tejmohan Singh, on behalf of the assessee submitted that the sanction granted by the PCIT before issuance of notice under section 148 was a mechanical approval without application of mind and without taking into consideration the relevant material on record.
Akashdeep, on behalf of the revenue, supported the initiation of proceedings under Section 148 of the Act. It was submitted that the AO had credible and tangible material based on which he prima facie recorded the findings that the income had escaped assessment.
The Division Bench of Diva Singh, Judicial Member and Vikram Singh Yadav, Accountant Member allowed the appeal and observed that
“Both the parties have fairly submitted that even though the assessee has raised this ground of appeal before the CIT(A), there is no adjudication and finding recorded by the CIT(A). In view of the same and also given that on other grounds of appeal, we have set-aside the matter to the file of CIT(A), we deem it appropriate to set-aside this ground of appeal as well as to the file of the CIT(A) to decide the same as per law after providing reasonable opportunity to the assessee.”
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