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TMI Blog2021 (8) TMI 802X X X X Extracts X X X X X X X X Extracts X X X X ..... the undisclosed income/income from other sources of the assessee company which was not offered to tax by the assessee and therefore, stating that the income of Rs. 51 Lacs chargeable to tax had escaped assessment, learned Assessing Officer issued notice under section 148 on 18/4/2007. Assessee filed the copy of return that was already filed on 1/11/2004. After hearing the assessee, an addition of Rs. 71 lakh was made on account of unexplained credit under section 68 of the Income Tax Act, 1961 (for short "the Act") and a sum of Rs. 1.42 lakhs on account of commission at 2% in respect of the accommodation entry. 3. Assessee preferred appeal before the Ld. CIT(A) and while challenging the addition on merits, also contended that the action of the learned Assessing Officer under section 148 is bad in law since the Assessing Officer had no jurisdiction to frame the assessment under section 143(3) of the Act read with section 148 of the Act inasmuch as the impugned assessment was framed on the basis of mere internal office note, without recording reasons as envisaged under section 148 of the Act and according to the assessee there is no nexus between the alleged reasons and the assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee, the assessment that followed basing on such lapse is vitiated. He placed reliance on the decision of the coordinate Bench of this Tribunal in the case of Wimco Seedlings Ltd. vs. JCIT (Wimco Seedlings), in ITA No. 2755, 2756, 2757/Del/2002 for the Assessment Years 1989-90 to 1991-92 by order dated dated 22/06/2020. 6. Per contra, it is the submission on behalf of Revenue that there is no change in the reasons recorded and the reasons supplied to the assessee but in the reasons supplied to the assessee are only concise or a bridge ones and no prejudice was caused to the assessee, as rightly observed by the Ld. CIT(A) and therefore it is not a ground to vitiate the assessment proceedings. 7. We have gone through the record in the light of the submissions made on either side. It is an admitted fact that the reasons supplied to the assessee are condensed ones and such reasons read,- "That assessee has indulged in receiving accommodation entries and the total amount of payment received amounted to Rs. 51,00,000/- is bogus and represents undisclosed income not offered to tax in the return filed." whereas the detailed reasons recorded and found by the Ld. CIT(A) as avai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and (two) the reasons some before the High Court, it is apparent that both are altogether different. It is not denied that in context and in substance they are same but there should be same ad verbatim. It cannot be the case of the revenue that it gives few extracts of the reasons to the assessee to defend it against the reopening of the assessment and when cornered before the higher authorities, the revenue comes out with the detailed reasons recorded by the assessing officer. In fact in all circumstances the assessing officer is supposed to provide the complete reasons recorded for reopening of the assessment to facilitate the assessee to defend itself against the reopening of the assessment. To keep few arrows in its quiver and only disclosing few arrows out of that is not expected from a revenue officer. It also against the fair play rule of reassessment proceedings. In Haryana Acrylic Manufacturing 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 date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legation that there was failure on the part of the assessee to disclose fully and truly all material facts relating to accommodation entries raised from one of the companies of Sh. Sanjay Rastogi to the extent of Rs. 5,00,000. In this context, the learned counsel for the petitioner submitted that the entire proceedings are vitiated inasmuch as the reasons which were supplied to the petitioner were different from what, according to the respondents, were the "true" reasons. Therefore, what was supplied to the petitioner cannot be regarded as the reasons and the entire process of filing of objections to those purported reasons and the impugned order dated March 2, 2005, would be in respect of something which, even as per the respondents, were not the true reasons. Consequently, the entire proceedings leading up to the passing of the impugned order dated March 2, 2005, have to be set aside. 29. The 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 me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assume for the sake of argument that the "actual" reasons were those as noted in the said form. Then why did the Assessing Officer communicate a different set of reasons to the petitioner? Did he think that the supplying of reasons and the inviting of objections were mere charades? Did he think that it was a mere pretence or a formality which had to be gotten over with? At this point, it would be well to remember that the Supreme Court in G.K.N. Driveshafts [2003] 259 ITR 19 had specifically directed that when a notice under section 148 of the said Act is issued and the noticee files a return and seeks reasons for the issuance of the notice, the Assessing Officer is bound to furnish reasons within a reasonable time. On receipt of the reasons, the noticee is entitled to file objections to the issuance of notice and the Assessing Officer is 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 pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 05, are liable to be quashed." 30. As before us also the reasons recorded by the assessing officer produced before the honourable High Court are quite different and number eight whereas the extract given to the assessee was merely of two paragraphs. In view of this, respectfully following the decision of the honourable Delhi High Court we are not inclined to uphold the reopening of the assessment and hence they are quashed. The orders of the learned Commissioner of income tax upholding of the reopening of the assessment are reversed. Thus all the three assessment years reopening proceedings are held to be invalid and quashed. 10. It is, therefore, clear that the settled position of law on this aspect, as held by the Hon'ble High Court in the case of Haryana Acrylic Manufacturing Co. v. Commissioner of Income 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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