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TMI Blog2018 (8) TMI 1066X X X X Extracts X X X X X X X X Extracts X X X X ..... reasons were recorded prior to the issue of the notice on 28.05.2007. The AO should have recorded some reasons to justify such reassessment notice, before it was issued, given that it is a mandatory requirement under section 148(2) of the Act. In these circumstances, this court hereby directs the Chief Commissioner concerned to cause an inquiry to be conducted as to the involvement of the officials or employee in the manipulation of the record in this case, and take strict disciplinary action, according to the concerned rules and regulations. This inquiry should be in regard to the conduct of the concerned AO posted at the time, who issued the notice under Section 147/148 as well as the officers who filed the affidavits in these proceedings. The investigation and consequential action shall be completed within four months. The impugned reassessment notice and all subsequent orders, made pursuant thereto are hereby quashed. - Decided in favor of assessee. - W.P.(C) 8907/2008 - - - Dated:- 16-8-2018 - MR. S. RAVINDRA BHAT AND MR. JUSTICE A.K. CHAWLA JJ. Petitioner Through: Mr. C.S. Aggarwal, Sr. Adv. with Mr. Prakash Kumar, Ms. Pushpa Sharma and Mr. Uma Shankar, Advocat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gies Ltd. have been sold to Sh. Madan Mohan Aggarwal, the father of assessee. The address of Sh. Madan Mohan Aggarwal is the same as that of the assessee. As per the share transfer form, the sale has been carried out on 26.3.2004 which has been mentioned as approved date in the share transfer form. The sale of shares has not been carried out through a recognized stock exchange. The following table provides the details relating to the sale of shares of M/s Parsec Technologies Ltd. The AO proceeded to record that the assessee had acquired ₹ 10/- face value 3,84,500 shares of Parsec Technologies ( Parsec ) at a premium of ₹ 130/- per share and later another 46500 shares for ₹ 10 (without any premium) from one Ravi Sikka. He then sold (on 26.3.2004) 4,00,000 shares to his father M.M. Agarwal at ₹ 25/- per share and declared a loss. This transaction, according to the AO was not genuine and was a device to avoid tax, to claim loss that was not warranted. The AO also reasoned that this share transaction was shown to offset other income. The AO also pointed to another transaction of sale of mutual funds, which according to him, could not result in legitimate ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Section 147 of the Act and, entirely unreasonable, which itself shows that no reasons to believe were recorded as alleged when the notice under Section 148 of the Act was issued. Reliance here is placed on the judgment of this Court in the case of Haryana Acrylic Manufacturing Co. Vs. CIT (2009) 308 ITR 38 . It is highlighted more seriously, that the learned AO before initiating proceedings under section 147 of the Act on 28.05.2017 had not recorded any reasons to believe prior to issue of the notice under Section 148 of the Act, as is mandated under Section 148(2) of the Act. Mr. Agarwal submits that in the reasons to believe (Pg. 187) recorded by the learned AO states that as per share transfer form (which is at Pg 120 of Writ Petition) the sale has been carried out on 26.03.2004, which was mentioned as approval date in the share transfer form. Counsel submits that it is significant that share transfer form had been furnished by the assessee only on 25.03.2008 and this share transfer form was not available to anyone other than the company and could not have been available to anyone and as such the initiation of proceedings on the basis that reasons were recorded on 28.05. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the revenue in the digital form on 02.04.2018, it is discernable that the reasons which it claims were to be recorded on 28.05.2007 do not seem to have been so recorded on that date, i.e. 28.05.2007, but were recorded subsequently, much later. This is evident from the ensuing facts. The reasons to believe state, inter alia, as under: The return was processed u/s 143(1) of the Act on 31.03.2006. Subsequently. Refunds of ₹ 91,41,462/- and of ₹ 3,26,480/- were issued to the assessee after passing the orders under Section 154 of the Income Tax Act. 10. The refund of ₹ 91,41,462/- and ₹ 3,26,4801- were issued on 3 1.05.2007 and 6.11.2007 and an order under Section 154 of the Act dated 22.08.2007 (page 199/644 of original digital record) was passed. This order undeniably was been made after 28.05.2007. A copy of the order passed under Section 154 of the Act on 22.08.2007 is at page 644 of original record (also at page 199). Furthermore, in terms of the order passed on 22.08.2007, a refund of ₹ 94,67.942/- was been computed (by that order which includes a refund of ₹ 91,41,4621/-. This refund cheque was apparently sent to the assessee/p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s without saying that whilst the reasons shown to the court and the petitioner may ipso facto not be faulted, yet the file tells a different story; they were not recorded before the impugned notice was issued. In fact, the revenue played a subterfuge, in trying to cover up its omission, and in ante dating the record, in the attempt to establish that such reasons existed, and this court s interference was not called for. In these circumstances, this court hereby directs the Chief Commissioner concerned to cause an inquiry to be conducted as to the involvement of the officials or employee in the manipulation of the record in this case, and take strict disciplinary action, according to the concerned rules and regulations. This inquiry should be in regard to the conduct of the concerned AO posted at the time, who issued the notice under Section 147/148 as well as the officers who filed the affidavits in these proceedings. The investigation and consequential action shall be completed within four months. 14. The writ petition is allowed in the above terms; the impugned reassessment notice and all subsequent orders, made pursuant thereto are hereby quashed. The matter shall be listed ..... 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