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2023 (10) TMI 390 - AT - Income TaxValidity of Reopening of assessment u/s 147 - Assessee argued that reasons recorded did not reveal any material or information in the possession of the AO on the basis of which he formed belief of escapement of income and non-application of mind by the AO while recording satisfaction for escapement of income - HELD THAT:- It is an admitted fact that the reasons supplied to the assessee did not disclose either material or information in the possession of the AO, which revealed to him that the assessee had resorted to CCM to shift profits/loss in trading of shares so as to evade payment of tax. Also, the reasons as noted by me, show no application of mind by the AO, relying merely on the information available with him. This information, as noted, neither reveals the material nor the source from where it came, nor it specifies scrip on which CCM was resorted to by the assessee to earn loss. In the absence of the specific information available with the AO, there was no scope for the AO to apply his mind on it independently, and check the information available with him so as to arrive at his own satisfaction of the income of the assessee being escaped the assessment. Therefore we are in complete agreement with the ld. counsel for the assessee that the jurisdiction assumed by the AO to reopen the case of the assessee is de hors the satisfaction of the AO of any income of the assessee having escaped the assessment and was clearly in violation of the condition prescribed under section 147 of the Act for assuming valid jurisdiction to frame assessment. The assessment order passed, as a consequence is, liable to quashed. The contention of the ld. DR that there was a separate reasons recorded by the AO which revealed the source of information or the material with the AO leading to his belief of escapement of income, is of no assistance to the validity of the re-assessment proceedings, since admittedly, this reason was never confronted to the assessee. The Hon’ble Supreme Court in the case of GKN Driveshafts (India) Ltd.[2002 (11) TMI 7 - SUPREME COURT] has categorically laid down the procedure to be adopted during reassessment proceedings, taking note of the principle of natural justice embedded in any proceedings, that the AO is required to supply copy of the reasons to the assessee, entertain his objection on the same, deal with the objections, and thereafter proceed with the reassessment proceedings - Therefore, the requirement of the assessee for being supplied with copy of the reasons before proceeding to frame assessment is a mandatory requirement and a brief or cryptic reason supplied to the assessee, with the original being held back by the AO, will not suffice to fulfill this mandatory requirement of law. For this reason, reject the arguments of the ld. DR. Throughout the re-assessment proceedings, and even in the appellate proceedings, the assessee was never confronted with the information with the AO regarding CCM indulged in by the assessee nor the details of the specific scrip in which the assessee had purportedly done CCM. There is no reference anywhere in the order both of the AO and the CIT(A) of the specific scrip in which the CCM was resorted to. In the absence of the assessee being confronted with the specific details of the adverse information in the possession of the Revenue department, on the basis of which the addition was made to his income, there is no case at all for upholding the order of the ld. CIT(A). Assessee appeal allowed.
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