TaxTMI 
TaxTMI 
2026 (7) TMI 1963
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..../- in cash towards purchase of immovable property during the F.Y. 2016-17 to M/s Hotel Babylon Continental Pvt. Ltd.. The payment has been made in cash to M/s Hotel Babylon Continental Pvt. Ltd. As per the return of income filed by you for the A.Y. 2017-18 you had not furnished all the particulars relating the transaction made in cash with M/s Hotel Babylon Continental Pvt. Ltd,. Accordingly, the source of funds for investment of Rs. 7,50,000/- made in cash in the said immovable property remained unexplained and therefore escaped assessment to that extent for the financial year relevant to A.Y. 2017-18 within the meaning of provision of section 147 of Income tax Act, 1961". You are hereby show caused as to why an order under section 148A(d) of Income tax Act should not be passed holding that it is a fit case for issue of notice under section 148 and notice under section 148 of Income tax Act should not be issued for the Assessment Year 2017-18. Please submit your reply/submissions on above issue with documentary evidences in compliance of the order of the Hon'ble Supreme Court, referred supra, within two weeks from the date of receipt of this letter/notice electronical....
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....nvestment is only afterthought and without any basis." Thereafter, reassessment was completed vide order dated 29.05.2023. 4. The A.O had simply rejected the request of the assessee for furnishing requisite informations/documents on the ground that the assessee got opportunity while participating in the proceedings u/s. 148A(d) of the Act. The same was also reiterated by the Ld. Sr. DR at the time of hearing. The Ld. Sr. DR referred to the notice u/s. 148A(b) of the Act. However, he failed to answer what were the informations/documents based on which the Department had come to conclusion that the assessee had made payment in cash to M/s. Hotel Babylon Continental Pvt. Ltd. The notice u/s. 148A(b) of the Act simply states about informations available with the Department but what are those informations, they were never confronted with to the assessee nor copy of reasons were supplied before passing of the order u/s. 148A(d) of the Act, dated 14.07.2022. Thereafter, the assessee had made specific request to the A.O on 24.03.2023 to provide documents/informations, on the basis of which, the A.O had concluded that the assessee had made payment in cash and the said request was neve....
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....to the Department by the assessee that reasons for reopening were not provided to the assessee which may be provided so that the assessee can purposefully represent his case on merits before the A.O. However, reasons for reopening was never shared with the assessee. The Ld. Counsel demonstrates the aforesaid by furnishing copies of order sheet entry in the case of the assessee wherein, there is no whisper regarding providing copy of reasons recorded for reopening to the assessee. 4. In this regard, the Department was provided an opportunity to furnish a report from the A.O and the said report was brought on record by the Ld. Sr. DR which is extracted as follows: 5. It is crystal clear from the report of the Department that "reasons to believe" for reopening of the case was never provided to the assessee. That at Para 2 of the extracted report, the A.O writes "Regarding first ground of appeal of the assessee, it is submitted that as per case record, the reason to believe of reopening of case has been duly recorded....". The A.O says that reasons to believe has been duly recorded but did not state that said reasons to believe were furnished and shared with the asses....
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....47 of the Act, therefore, the very assumption of jurisdiction by him and framing of the impugned assessment cannot be sustained and is liable to be struck down on the said count itself. Our aforesaid view is supported by the judgment of the Hon'ble High Court of Bombay in the case of Agarwal Metals and Alloys Vs. ACIT & Ors. (2012) 346 ITR 64 (Bom.). In its aforesaid order, the Hon'ble High Court had after taking cognizance of the fact that the A.O in the case before them had failed to communicate the "reasons to believe" on the basis of which the case of the assessee was reopened, quashed the assessment by treating the same as having been passed in a brazen violation of the governing principles of law. The relevant observations of the Hon'ble High Court are culled out as under: "4. On these admitted facts, it is evident that there has been a complete violation of the applicable principles of law by the Assessing Officer. The Assessing Officer was required to communicate the reasons for reopening the assessment which he has failed to do. The Assessing Officer despite the judgment of the Supreme Court in GKN Driveshafts (India) Ltd., [2003] 259 ITR 19 (SC) has failed to pro....
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....tory right to file his objections before the A.O. Thereafter, the A.O is required to adjudicate the matter through a speaking order. The Hon'ble Supreme Court had mandated that the A.O must provide copy of reasons for reopening when requested, reinforcing the importance of such reasons. 8. Reverting to the facts of the present case, admittedly, as demonstrated by the Ld. Counsel, request has been made by the assessee to the A.O twice to furnish reasons to believe for reopening of the case. However, there was no compliance from the Department and even in the report that has been submitted by the Ld. Sr. DR, it is amply clear that the Department has never supplied reasons to believe to the assessee which is against the dictate of the Hon'ble Supreme Court (supra). Similarly, the Hon'ble High Court of Bombay in the case of Agarwal Metals and Alloys Vs. ACIT & Ors. (2012) 346 ITR 64 (Bom.) has held where the A.O failed to communicate the "reasons to believe" on the basis of which the case of the assessee was reopened, the Hon'ble High Court quashed the assessment by treating the same as having been passed in a brazen violation of the governing principles of law. Similar view h....
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....fore without valid inherent jurisdiction hence, bad in law, void ab initio, therefore quashed. 6. The legal issue is answered in favour of the assessee and against the Revenue. Rest other grounds stand academic only. 7. That as per above terms, appeal of the assessee is allowed. Order pronounced in open court on 29^th day of May, 2026. ============= Document 1 Date: 24.03.2023 To, The Assessment Unit, Income Tax Department Reg: In the matter of Harjot Singh Sailani, Eagle House, Gurudwara Road, Shyam Nagar, Raipur, C.G-492001 # PAN FVDPS7628D. Ref: Notice issued u/s 142(1) of the Income Tax Act, 1961 vide dated 18.03.2023, # DIN- ITBA/AST/F/142(1)/2022-23/1050932445(1) for the AY 2017-18. Sub: Submission in response to the captioned notice. Respected Sir/ Ma'am, The assessee is in receipt of notice issued u/s 142(1) vide dated 18.03.2023 for the AY 2017-18 wherein the following quey is being raised: "Please refer to your reply dated 16.01.2023 in which you have submitted that "During the relevant year, the assessee has not entered into any transaction wrt sale and purchase of property". But, as per the information available with this office i....