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TMI Blog2023 (3) TMI 268X X X X Extracts X X X X X X X X Extracts X X X X ..... a Senior Standing Counsel For the Respondents : None ORDER 1. The present appeals filed by the Revenue are directed against the common order dated 18th August, 2022 passed by the Income Tax Appellate Tribunal (ITAT), Cuttack Bench, Cuttack in ITA Nos.72- 75/CTK/2021 filed by the Assessees for the Assessment Years (AYs) 2013-14. 2. By the impugned order, the ITAT allowed the aforementioned appeals of the Assessees thereby setting aside an order dated 23rd March, 2021 passed by the Principal Commissioner of Income Tax (PCIT), Sambalpur under Section 263 of the Income Tax Act, 1961 (Act) holding the original assessment order dated 28th December, 2018 of the Assessing Officer (AO) to be erroneous and prejudicial to the interests of the Revenue. 3. The background facts are that as far as the Assessee Badal Prakash Jindal, HUF is concerned, the said Assessee filed its return of income for the AY 2013-14 on 25th November, 2013 after claiming Long Term Capital Gains (LTCG) under Section 10(38) of the Act. The AO, i.e., the Income Tax Officer, Bargarh Ward, Bargarh gathered information that the Assessee had shown the LTCG out of the share transaction of a Kolkata based company, M/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the ld. Counsel that the copy of the reasons recorded by the AO on 26.03.2018 in the order sheet and copy of the reasons supplied to the assessee are different and there is no date in the copy of the reasons supplied to the assessee by the Department which clearly show that the AO has not supplied the actual reasons recorded by him in the order sheet to the assessee. Therefore, in view of the order of the ITAT, Kolkata in the case of Jansampark Advertising & Marketing Pvt. Ltd (supra), the validity of initiation of reassessment proceedings u/s 147 of the Act and consequent reassessment order is not sustainable. 15. We are not in agreement with the contention of the ld. CIT-DR that the AO has only made order sheet entry on 26.03.2018 copy of the actual reasons recorded by him was supplied to the assessee which is available at pages 4-9 of the assessee's paper book. Therefore, it cannot be alleged that the reasons recorded by the AO are different from the copy of the reasons supplied to the assessee because the reasons recorded in the order sheet at page 13 clearly reveals that the AO has recorded reasons for initiation of reassessment proceedings in the first order sheet record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nufacturing Co v. Commissioner of Income Tax 308 ITR 38 (Delhi) the identical issue arose. As per para no 4 following reasons were given to the assessee:- "4. The Assistant Commissioner of Income-tax supplied the reasons for initiating the proceedings under section 148 of the said Act dated March 29, 2004, sometime in September, 2004. The reasons which were supplied to the petitioner in September, 2004 were as under: "M/s. Haryana Acrylic Mfg. Co. Pvt. Ltd. Assessment year 1998-99 Reasons for initiating the proceedings under section 148 of the Income-tax Act. Return of income in this case was filed on November 30, 1998 declaring nil income. Assessment under section 143(3) was completed at nil income on March 7, 2001. It has come to the notice that the assessee-company has taken accommodation entries from one of the companies of Sh. Sanjay Rastogi, i.e. Hallmark Helathcare Limited, vide cheque no. 201845 dated October 17, 1997, amounting to Rs.5,00,000 during the year relevant to the assessment year 1998-99. I have reason to believe that the income to the extent of Rs. 5,00,000 has escaped assessment. As such after obtaining the approval o f CIT(C)- II to reopen the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he honourable High Court responded to the above anomaly where the reasons given to the assessee are altogether different then the reasons given to the higher authorities when the order of the assessing officer is challenged as under:- "30. The matter, however, does not end here. We have mentioned above that the stand taken by the respondents in their counter-affidavit before this Court is that the 'actual' reasons recorded are those recorded in the Form for recording reasons, a copy of which has been filed as Annexure A to the said counter-affidavit. It was urged on behalf of the respondents that the 'reasons for the belief that income has escaped assessment' at serial no. 11 of the said form clearly carries the allegation that 'there was failure on the part of the assessee to disclose fully and truly all material facts relating to accommodation entries'. This being the case, it was submitted, the bar of taking action within four years would not apply and consequently, the notice under section 148 was valid. 31. This argument suffers from several infirmities. First of all, the respondents cannot be permitted to gloss over the fact that the reasons whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s bound to dispose of the same by passing a speaking order. These are specific directions given by the Supreme Court in all cases where notices under section 148 of the said Act are issued. Surely, the Assessing Officer could not have construed these specific directions to be a mere empty formalities or dead letters? There is a strong logic and purpose behind the directions issued by the Supreme Court and that is to prevent highhandedness on the part of Assessing Officers and to temper any action contemplated under section 147 of the said Act by reason and substance. In fact, even section 148(2) stipulates that the Assessing Officer shall, before issuing any notice under the said section, record his reasons for doing so. The Supreme Court has only carried forward this mandatory requirement by directing that the reasons which are recorded be communicated to the assessee within a reasonable period of time so that at that stage itself the assessee may point out any objections that he may have with regard to the initiation of action under section 147 of the said Act. The requirement of recording the reasons, communicating the same to the assessee, enabling the assessee to file objec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come Tax 308 ITR 38 [Delhi] is that the requirement of recording the reasons communicating the same to the assessee enabling the assessee to file objections and the requirement of passing a speaking order are all designed to ensure that the Assessing Officer does not reopen assessments which have been finalized on his mere whim or fancy and that he does so only on the basis of lawful reasons and since these steps are also designed to ensure complete transparency and adherence to the principles of natural justice, any deviation from these directions would entail the nullifying of the proceedings. 11. Admittedly in the case on hand, the reasons supplied to the assessee are not the same and verbatim. In view of this settled position of law and respectfully following the line of decision in Haryana Acrylic Manufacturing Co v. Commissioner of Income Tax 308 ITR 38 [Delhi] by the higher forum referred to in the decision of the coordinate Bench of this Tribunal in the case of Wimco Seedlings (supra), we find it difficult to sustain the validity of the reopening of proceedings under section 147 of the Act and consequently quash the same." 11. This Court is entirely in agreement with t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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