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TMI Blog2013 (10) TMI 986X X X X Extracts X X X X X X X X Extracts X X X X ..... Pvt. Ltd. Bombay. Therefore, the very basis of reasons recorded by the Assessing Officer for reopening of the assessment was wrong because the assessee did not enter into any transaction to get the profit on account of long term capital gain with M/s. Mahasagar Securities Pvt. Ltd. Bombay rather the transaction was entered through M/s. Goldstar Finvest Pvt. Ltd, therefore, the belief of the Assessing Officer that income had escaped assessment which was earned by the assessee on the transactions entered into with M/s. Mahasagar Securities Pvt. Ltd. Bombay was incorrect - notice issued by the Assessing Officer under section 148 of the Act on the basis of the aforesaid reasons recorded under section 147 of the Act was not sustainable and the assessment proceedings on the basis of such notice were rightly set aside and quashed – Decided against the Revenue. - ITA No. 74/Jodh/2012 - - - Dated:- 20-9-2013 - Shri Hari Om Maratha And Shri N. K. Saini,JJ. For the Petitioner : Shri U. C. Jain Shri Rajendra Jain For the Respondent : Shri N. A. Joshi- D. R. ORDER Per N. K. Saini, A.M. This is an appeal by the department against the order dated 14/12/2011 of ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- Income-Tax Officer, Ward-2(1), Udaipur." Copy of the reasons recorded by the Assessing Officer were furnished by the assessee to the learned CIT(A) and it was submitted that the reasons recorded were not correct because of the following explanation:- "(i) The status of the assessee has been recorded as individual instead of HUF. (ii) It is humbly submitted that the information gathered does not, in any manner, dilute the legal requirements established since long for taking action u/s 147 of the Act. The ld. AO should have "reasons to believe" and not "reasons" to suspect". In the present case, while recording the reasons the ld. A0 stated that the assessee has entered into transaction with M/s Mahasagar Securities Pvt. Ltd., Mumbai (Now Alag Securities Pvt. Ltd.), which is not factually correct. No such transaction was entered into by the assessee. This very fact is also evident from the impugned assessment order itself. In fact, during the relevant year, the transaction was entered into by the assessee through stock broker Gold Star Finvest (P) Ltd. and not from the company as recorded in the reasons for re-opening of assessment. The ld. AO has acted merely on sus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total 1846777/- Less: Share purchases on 30.05.2001 Including brokerage 13311/- LTCG 1833466/- It is, therefore, very clear from the above that while recording the reasons, the ld. AO had no reason in his mind to doubt the purchase of shares. Therefore, once purchase of share was undisputed, its sale cannot be bogus but no reason for otherwise belief is recorded by the ld. AO. (vi) On going through the reasons recorded by the ld. AO, it may clearly be said that the AO did not have any relevant material in his possession for initiating the proceedings under Section 147. This is very much clear from the reasons recorded by the A0 as mentioned here-in-above, because the AO has not given any details/records from which he had formed the belief that income chargeable to tax has escaped assessment. The ld. AO has also not given the nature of transaction entered into, details of the company whose shares were purchased sold, how the transactions were held to be bogus, financial year of the transaction was also recorded as 2003-03, meaning thereby that he himself was not clear about the year of alleged escapement i.e. F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Del). Accordingly, it is submitted that the initiation of proceedings for re-opening of assessment u/s 147 and issuance of notice u/s 148 and in turn, the consequent impugned-assessment framed under s. 143(3)/147 are not tenable in law and deserves to be held as not valid and bad in law." 4. Learned CIT(A) after considering the submissions of the assessee observed that in the reasons recorded for reopening the case, status of the assessee had been mentioned as "individual" and if it was so, the proceedings under section 147 of the Act in the case of Shri Dinesh Jain in the capacity of "HUF" could not have been initiated because, it was on the basis of reasons only that notice under section 148 of the Act was issued. Learned CIT(A) observed that the Assessing Officer had mentioned the reasons that the assessee had entered into transaction of Rs.18,33,466/- with M/s. Mahasagar Securities Pvt. Ltd. (now Alag Securities Pvt. Ltd.) in the financial year 2003-04. The learned CIT(A) pointed out that in fact, the assessee had actually entered into transaction with M/s. Goldstar Finvest Pvt. Ltd. and not with M/s. Mahasagar Securities Pvt. Ltd. Bombay and the assessee in his return of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... D.R. supported the order of Assessing Officer while learned counsel for the assessee reiterated the submissions made before the authorities below and strongly supported the impugned order passed by the learned CIT(A). 6. We have considered the submissions of both the parties and carefully gone through the material available on record. In the present case, it is not in dispute that the assessment was reopened by the Assessing Officer by recording the reasons. It is well settled that for reopening of the assessment, the Assessing Officer should have reasons to believe that income chargeable to tax has escaped assessment and for that purpose, he is required to follow the procedure contained in section 148 to 153 of the Act. As per the provisions of section 148(2) of the Act, the Assessing Officer for issuing notice under this section shall record the reasons for doing so. The use of the word "shall" make it mandatory for the Assessing Officer to record the reasons for reopening the assessment and the reasons recorded should not be arbitrary and must be based on certain factual matrix to decide the controversy relating to reopening of the assessment. The principle of law is well set ..... X X X X Extracts X X X X X X X X Extracts X X X X
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