TMI Blog2023 (2) TMI 582X X X X Extracts X X X X X X X X Extracts X X X X ..... ued under Section 156 of the Act, and Penalty notice dated 31.03.2022 issued under Section 271(1)(c) of the Act, are quashed and set aside. The matter is now remanded back to the Assessing Officer, who shall provide the Petitioner with the satisfaction note of the Principal Commissioner of Income Tax, granting approval for issuance of Notice under Section 148 of the Act, the appraisal report from DDIT (Inv), and bank statements of M/S Sanyam Gems Pvt. Ltd., the statement of Shri Shripal Vora at Bhavnagar, recorded under Section 131 of the Act, and all other documents and material, which form the basis of the reasons recorded by the Assessing Officer for issuing notice under Section 148 of the Act - Decided in favour of assessee. - DHIRAJ SINGH THAKUR AND VALMIKI SA MENEZES, JJ. For the Petitioner : Mr. Satish Mody with Ms. Aasifa Khan, Advocate. For the Respondents : Mr. Akhileshwar Sharma with Ms. Shilpa Goel, Advocate. JUDGMENT : ( PER : VALMIKI SA MENEZES , J .) This is a writ petition invoking this Court s power under Article 226 of the Constitution of India to challenge order dated 31.03.2021, passed under Section 148 of the Income Tax Act, 1961 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Department, the Petitioner replied to both, Notice dated 26.01.2022 issued under Section 142(1) of the Act, and with reference to Notice under Section 148 dated 31.03.2021, requested the Respondent No.2 to furnish copy of the reasons for believing that the income chargeable to tax had escaped assessment; in the said reply, it also stated that the Petitioner - Co-op. Bank had filed its regular return of income in electronic form on 26.09.2013, declaring an income of Rs.7,65,40,780/- under Section 143(1) of the Act, and Assessment Order dated 17.03.2016 had come to be passed thereon. On the same date, the Petitioner also filed its return of income. 6. By Notice dated 05.02.2022, the Respondent No.2 provided reasons to the Petitioner with the information sought, which was in the form of an Annexure, and further clarifications, which were detailed in an Annexure to that Notice, wherein it alleged that based upon survey conducted under Section 133A carried out on 14.12.2016 at the premises of Shri Shripal Vora at Bhavnagar, unaccounted cash was seized from that premises and from a statements on oath recorded under Section 131 of the Act, from the said Vora, it came to be revealed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e satisfaction note and order of approval had not been enclosed with the Notice under Section 148 of the Act, issued to Petitioner nor had the appraisal report been provided to the Petitioner. The Petitioner also raised a specific contention that it would like to cross-examine the persons, who had given statements to the Income Tax Department during the search and seizure operation conducted at Bhavnagar, on the basis of which, the Petitioner had been implicated and the reopening notice issued. Further, letter dated 23.03.2022 to a notice issued dated 24.02.2022 fixing hearing on 28.02.2022 was sent by the Petitioner reiterating its earlier objections raised by its letter dated 23.03.2022, seeking an opportunity for virtual hearing through video conferencing on the date fixed for hearing. 9. The Petitioner Co-op. Bank claims that without any opportunity of hearing being given, it received a show cause notice dated 29.03.2022, wherein the Respondent No.2 contended that the explanation given by the Petitioner was not acceptable and accordingly, the Petitioner was given a final opportunity to explain the credit of Rs.2,00,00,000/- in its bank with substantial and clear evidence. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d out by the Central Faceless Assessment Center; that the assessment of the Central Circle is a physical assessment as e-proceedings and functionality of video conferencing as a hearing opportunity is not available to the Petitioner. 12. We have heard Mr Satish Mody, learned Counsel for the Petitioner, Mr Akhileshwar Sharma, learned Counsel for the Respondents and perused the record of the petition. 13. Mr Satish Mody, learned Counsel appearing for the Petitioner Co-op. Bank, submits that the impugned orders are unsustainable since they are passed in gross contravention of the principles of natural justice, since the Respondent No.2 has not only consistently refused to furnish copies of the appraisal report and the statements recorded in the search and seizure operations conducted by the revenue as referred to in its reasons, nor was the satisfaction recorded by the Principal Commissioner of Income Tax furnished to it. It is also the contention of the learned Counsel for the Petitioner that it has, on several occasions requested for cross-examination of the persons, who have given statements under Section 131 of the Act, during the search and seizure operations conducted at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vit-in-reply of the Assessing Officer and the approval order considers all the material that the Assessing Officer has placed before the Principal Commissioner of Income Tax, before the same has been granted for the reopening of assessment. 15. In Tata Capital Financial Services Limited ..V/s.. Assistant Commissioner of Income Tax, Circle 1(3)(1) and others (supra), this Court was also dealing with the similar notice issued under Section 148 of the Act, wherein the Petitioner had taken a specific defence that it was a Non-Banking Finance Company (NBFC) registered with the Reserve Bank of India (RBI) and that under Clause 3(2) of Notification dated 22.02.2007, issued by the RBI, income including interest/discount or any other charges of NPAs (Non- Performing Assets) shall be recognized only when it is actually realised. It was the Petitioner s case in that matter that there being a mandate of the RBI, that income was not offered to tax in the return of income on accrual basis, but was offered to tax on receipt basis and a provision was made in the annual report of the Petitioner for the relevant assessment year not crediting interest and other charges of Non-Performing Assets to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... list thereof shall be provided to petitioner alongwith notice of personal hearing so that petitioner will be able to deal with or distinguish these judgments/orders in the personal hearing. The Assessing Officer shall deal with all previous submissions while considering the assessee s objections, deal with each objections and give proper reasons for its conclusion. After referring to a judgment of the Delhi High Court in the case of Sabh Infrastructure Ltd. ..V/s.. Assistant Commissioner of Income Tax, reported in (2017) 398 ITR page 198 (Delhi), this Court in Tata Capital Financial Services Limited ..V/s.. Assistant Commissioner of Income Tax, Circle 1(3)(1) and others (supra), further passed general directions to the revenue for compliance in similar cases is in future. The directions are quoted as under : In the circumstances, the Revenue is directed to adhere to the following: (a) While communicating the reasons for reopening the assessment, a copy of the standard form/request sent by the Assessing Officer for obtaining approval of the Superior Officer should itself be provided to the assessee. This would contain comment or endorsement of the Superior Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the record that despite several requests from the Petitioner, specifically demanding a copy of all these documents, the Assessing Officer has refused to furnish copies of the same to the Petitioner. Thereafter, the Assessing Officer has, by order dated 22.03.2022 rejected the request of the Petitioner for furnishing all these documents without assigning any reasons for such rejection nor dealing with the specific objections and the request made by the Petitioner in its order. In fact, the order dated 22.03.2022 is diametrically opposed to the specific observations of this Court at para 4 in Tata Capital Financial Services Limited ..V/s.. Assistant Commissioner of Income Tax, Circle 1(3)(1) and others (supra). Thereafter, despite a specific request for a personal hearing by the Petitioner before passing the assessment order, the Assessing Officer has neither granted the same nor dealt with the request and has gone ahead and passed the assessment order on 31.03.2022, without hearing to the Petitioner. This arbitrary act of the Assessing Officer is also contrary to the specific directions of this Court contained in para 8(d) in Tata Capital Financial Services Limited ..V/s.. A ..... 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