Binay Kumar Jindal (HUF), Bargarh V. Principal CIT, Sambalpur

ITA 73/CTK/2021

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 5981 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-08-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 29-06-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order; Tangible material; Accommodation entries; Assessment record; Reason to believe; Reassessment proceedings; Set aside
• Section: 147; 148; 263; 143(3); 43; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH, CUTTACK BEFORE SHRI C.M. GARG, JUDICIAL MEMBER AND SHRI ARUN KHODPIA, ACCOUNTANT MEMBER ITA No.72/CTK/2021 Assessment Year: 2013-14 Binay Kumar Jindal, Pushp Kunj, N.H.-6, By Pass Road, Bargarh – 768028. PAN: ABRPJ2286M Vs. ITO, Ward-Baragarh, Baragarh, Orissa – 768 028. ITA No.73/CTK/2021 Assessment Year: 2013-14 Binay Kumar Jindal, HUF Pushp Kunj, N.H.-6, By Pass Road, Bargarh – 768028. PAN: AAFHB3524H Vs. ITO, Ward-Baragarh, Baragarh, Orissa – 768 028. ITA No.74/CTK/2021 Assessment Year: 2013-14 Badal Prakash Jindal, HUF Pushp Kunj, N.H.-6, By Pass Road, Bargarh – 768028. PAN: AADHB9074J Vs. ITO, Ward-Baragarh, Baragarh, Orissa – 768 028. ITA No.75/CTK/2021 Assessment Year: 2013-14 Babulal Agarwal, Pushp Kunj, N.H.-6, By Pass Road, Bargarh – 768028. PAN: AEFPA1496K Vs. ITO, Ward-Baragarh, Baragarh, Orissa – 768 028. (Appellants) (Respondents) ITA Nos.72 to 75/CTK/2021 2 Assessee by : Shri S.M. Surana, AR Revenue by : Shri M.K. Gautam, CIT, DR Date of Hearing : 26.05.2022 Date of Pronouncement : 18.08.2022 ORDER PER C.M. GARG, JM: These appeals have been filed by the assessees against the order of the Principal Commissioner of Income-tax, Sambalpur dated 23.03.2021 passed u/s 263 of the Income-tax Act, 1961 (for short, ‘the Act’). As agreed by the ld. Representatives of both the sides, the facts and circumstances of all the four appeals are similar and identical, therefore, we are taking up ITA No.72/CTK/2021 for AY 2013-14 in the case of Shri Binay Kumar Jindal as the lead case. 2. The grounds raised by the assessee in this appeal read as follows:- “1. For that the Ld. Pr. Commissioner of Income tax erred in invoking the provision of section 263 on the reassessment made by the AO when the reopening itself was invalid having been reopened only on the basis of information from Investigation Wing without any tangible material or enquiry and hence the order subjected to revision was ab initio void. 2. For that the Ld. Pr. Commissioner of Income tax erred in invoking the provision of section 263 on the reassessment made by the AO when the reassessment proceedings were not valid since the reasons recorded and that reasons supplied to the assessee were different and hence the order subjected to revision was ab initio void. 3. For that the Ld. Pr. Commissioner of Income tax erred in invoking the provision of section 263 on the reassessment made by the AO when no sanction as required under the spirits of section 151 were ITA Nos.72 to 75/CTK/2021 3 obtained by the AO and hence the order subjected to revision was ab initio void. 4. For that the issue of notice u/s 148 was bad in law since no proper sanction was obtained and given after application of mind. 5. For that the Ld. Pr. Commissioner of Income tax erred in invoking the provision of section 263 on the reassessment made by the AO when the Hon’ble Jurisdictional ITAT had already held the transaction of shares in Tuni Textile Mills as genuine even prior to the reopening done by the AO. 6. For that the Ld. Pr. Commissioner of Income tax erred in invoking the provision of section 263 on the reassessment made by the AO when the order passed was neither erroneous nor prejudicial to the interest of revenue since the AO had duly applied his mind to the prevailing judgements on the issue though not specifically dealt with in the order. 7. For that the Ld Pr CIT erred in enhancing the assessment by directing the AO to make the addition of the LTCG as income when no enquiry was made by the AO with regard to the documents filed before the Ld AO in the course of assessment proceedings as well as before the Ld PCIT in the course of proceedings u/s 263. 8. For that the Ld PCIT had no power to make the enhancement himself by directing the AO to make addition on the facts and in the circumstances of the case.” 3. We have heard the rival arguments made by both the sides and perused the material placed on the record including the paper book filed by the assessee spread over 43 pages and another case law paper book spread over 89 pages. The ld. Counsel for the assessee submitted that the ld.PCIT has erred in invoking the provisions of section 263 of the Act on the reassessment order made by the AO. He further submitted that when the reopening itself was invalid having been reopened only on the information from the Investigation Wing without any ITA Nos.72 to 75/CTK/2021 4 tangible material, the order subjected to revision was void ab initio and, thus, the same cannot be revised u/s 263 of the Act. He further submitted that the ld. PCIT has also erred in invoking the provisions of section 263 on the reassessment order made by the AO u/s 143(3) r.w. section 147 of the Act dated 28.12.2018 when the reassessment proceedings itself were invalid since the reasons recorded and the reasons supplied to the assessee were different and hence, the order subjected to revision was void ab initio. The ld. Counsel for the assessee submitted hat the ld.PCIT has also erred in invoking the provisions of section 263 on the reassessment made by the AO when no sanction as per mandatory requirement of section 151 of the Act was obtained by the AO from the competent authority. Hence, reassessment order subjected to revision was void ab initio. The ld. Counsel of the assessee submitted that due to the said three reasons, the issuance of notice u/s 148 of the Act was bad in law in absence of any tangible material and sanction u/s 151 of the Act and on the sole reason that the reasons recorded by the AO and that supplied by the AO to the assessee were different. To support the above contentions, the ld. Counsel, placed reliance on the judgment of the ITAT Kolkata Bench in the case of Classic Flour & Food Processing Pvt. Ltd. vs. CIT, order dated 05.04.2017 in ITAs No.764 to 766/Kol/2014; order of the ITAT Kolkata Bench in the case of Jaiprakash Gupta vs. ITO, in ITA No.1934/Kol/2019, order dated 18.03.2020; order of the ITAT Kolkata Bench in the case of Ganapati Developers vs. ACIT, vide ITA No.139/Kol/2020; and the order dated 02.11.2020 and order of the ITAT Delhi Benches in the case of ITA Nos.72 to 75/CTK/2021 5 Jansampark Advertising & Marketing Pvt. Ltd. vs. ITO, vide ITA No.3132/Del/2018, order dated 12.08.2021. 4. Replying to the above, the ld.CIT-DR vehemently submitted that the validity of reassessment order u/s 143(3) r.w. section 147 of the Act and notice issued u/s 148 of the Act cannot be challenged in the appeal filed by the assessee against the revisionary order of the ld.PCIT passed u/s 263 of the Act. The ld.CIT-DR submitted that the best option available for the assessee was to challenge the validity of initiation of reassessment proceedings u/s 147 of the Act by filing an appeal before the CIT(A) which was not filed and, thus, the reassessment order dated 28.12.2018 had become final in absence of any appeal before the ld.CIT(A) against the said order. Therefore, the assessee cannot agitate the issue of challenging the validity of initiation of reassessment proceedings in the appeal filed by him against the order of the ld.PCIT u/s 263 revising such reassessment order. The ld. CIT-DR submitted that the assessee himself, during reassessment proceedings, admitted and accepted the impugned amount as short-term capital gain in the revised return of income in response to notice u/s 148 and paid tax thereon. Therefore, the case laws relied on by the ld. Counsel of the assessee are not applicable in the present case. The ld. CIT-DR also submitted that the original reassessment order, which was revised by the ld.PCIT is not invalid and void ab initio and, thus, no challenge can be made to ITA Nos.72 to 75/CTK/2021 6 the validity of such order which has attained finality in absence of any appeal by the assessee before the ld.CIT(A). 5. The ld.CIT-DR, drawing our attention to the assessee’s paper book page 13, submitted that this is only an entry of the order sheet and in the last line of the said order sheet the proposal was submitted to competent authority/JCIT for approval u/s 151, therefore, the allegations made by the assessee challenging the validity of such order is not maintainable in this appeal. The ld. CIT-DR in all fairness, admitted that the copies available at pages 4-9 of the assessee’s paper book are reasons recorded by the AO and the order sheet entry at page 13 cannot be treated as reasons recorded by the AO for initiation of reassessment proceedings. The ld.CIT-DR also submitted that there was a tangible material in the form of the enquiry report of the DDIT, Investigation, Kolkata dated 29.03.2016 in the hands of the AO, therefore, the contention of the ld. Counsel for the assessee that there was no tangible material in the hands of the AO are not correct and sustainable and the AO has initiated reassessment after due application of mind to the said tangible material, therefore, the contention of the assessee challenging the validity of the reassessment proceedings has no legs to stand. 6. Placing rejoinder to the above, the ld. Counsel of the assessee again took us through the order of the ITAT, Kolkata Bench in the case of M/s Classic Flour & Food Processing Pvt. Ltd. (supra); order in the case of Jaiprakash Gupta vs. ITA Nos.72 to 75/CTK/2021 7 ITO (supra); order in the case of Ganapati Developers vs. ACIT (supra); and order of the ITAT Delhi Benches in the case of Jansampark Advertising & Marketing Pvt. Ltd. (supra) and submitted that the validity of reassessment order passed u/s 143(3) r.w.s 147 can be challenged in the appeal filed by the assessee against the revisionary order u/s 263 of the Act and the assessee is also entitled to challenge the validity of such reassessment order on various grounds available to him as per the mandate and scheme of section 147 to 151 of the Act. 7. On careful consideration of the above rival submissions, first of all, we may point out that the submissions of the ld. Counsel of the assessee challenging the impugned revisionary order u/s 263 are two-fold, viz., (i) the assessee is entitled to challenge the validity of reassessment order passed u/s 143(3) r.w. section 147 of the Act in the appeal filed by the assessee against the revisionary order u/s 263 of the Act by which such reassessment order has been revised; and (ii) the assessee is entitled to challenge the validity of initiation of reassessment proceedings and reassessment order for any reason available to him under the provisions of section 147-151 of the Act. The precise reply and contention of the ld.CIT-DR is that the validity of the reassessment order passed u/s 143(3) and 147 of the Act cannot be challenged by the assessee in the appeal against the revisionary order of such reassessment order u/s 263 of the Act especially when the assessee has accepted the reassessment order without any challenge to the first appellate authority, i.e., to the CIT(A). The summary of the rejoinder of the ITA Nos.72 to 75/CTK/2021 8 ld. Counsel for the assessee is that since the assessee was not aggrieved by the reassessment order, therefore, no appeal was filed before the ld.CIT(A), but, when such reassessment order was revised by the ld.PCIT by invoking the provisions of section 263, then, the assessee is very well entitled to challenge the validity of such reassessment order which was revised in the appeal filed against the revisionary order. 8. From a careful reading of the order of the ITAT, Kolkata Bench in the case of M/s Classic Flour & Food Processing Pvt. Ltd. (supra), we observe that similar legal issue was placed before the ITAT Kolkata Bench and the issue was adjudicated in favour of the assessee, with the following observations and findings:- “9. On question no. 1 and 3 which is relevant to the present case the Hon’ble Mumbai bench of the Tribunal has taken the view that when the original assessment proceedings are null and void in the eyes of law for want of proper assumption of jurisdiction then such validity can be challenged even in collateral proceedings. The Mumbai bench took the view that the proceedings u/s 147 of the Act are primary proceedings and proceedings u/s 263 of the Act are collateral proceedings and in such collateral proceedings, the validity of initiation of the original proceedings u/s 147 of the Act can be challenged. The Mumbai bench of the Tribunal in this regard has placed reliance on several decisions, the principal decision being that of the Hon’ble Supreme Court in the case of Kiran Singh & Ors. V. Chaman Paswan & Ors. [1955] 1 SCR 117 wherein the Hon’ble Supreme Court observed as follows :- “ It is a fundamental principle well-established that a decree passed by a Court without jurisdiction is a nullity, and that its invalidity could be set up whenever and wherever it is sought to be enforced or relied upon, even at the stage of execution and even in collateral proceedings. ITA Nos.72 to 75/CTK/2021 9 A defect of jurisdiction, whether it is pecuniary or territorial, or whether it is in respect of the subject-matter of the action, strikes at the very authority of the Court to pass any decree and such a defect cannot be cured even by consent of parties." 10. The ITAT Mumbai bench made a reference to another decision of the Hon’ble Supreme Court in the case of Sushil Kumar Mehta vs Gobind Ram Bohra, (1990) 1 SCC 193 and the decisions in the case of Indian Bank vs Manilal Govindji Khona (2015) 3 SCC 712. The ITAT Mumbai bench also held that if order of assessment passed u/s 147 of the Act was illegal and nullity in the eyes of law then that order cannot be revised by invoking powers u/s 263 of the Act by CIT. The Mumbai Bench has in this regard placed reliance on the decision of Hon’ble Delhi bench of the Tribunal in the case of Krishna Kumar Saraf vs CIT in ITA NO.4562/Del/2007 order dated 24.09.2015 wherein it was held as follows :- “ 17. There is no quarrel with the proposition advanced by Id. DR that the proceedings u/s 263 are for the benefit of revenue and not for assessee. 18. However, u/s 263 the Id. Commissioner cannot revise a non est order in the eye of law. Since the assessment order was passed in pursuance to the notice U/S 143(2), which was beyond time, therefore, the assessment order passed in pursuance to the barred notice had no legs to stand as the same was non est in the eyes of law. All proceedings subsequent to the said notice are of no consequence. Further, the decision of Hon’ble Madras High Court in the case of CIT Vs. Gitsons Engineering Co. 370 ITR 87 (Mad) clearly holds that the objection in relation to non service of notice could be raised for the first time before the Tribunal as the same was legal, which went to the root of the matter. 19. While exercising powers u/s 263 Id. Commissioner cannot revise an assessment order which is non est in the eye of law because it would prejudice the right of assessee which has accrued in favour of assessee on account of its income being determined. If Id. Commissioner revises such an assessment order, then it would imply extending/ granting fresh limitation for passing fresh assessment order. It is settled law that by the action of the authorities the ITA Nos.72 to 75/CTK/2021 10 limitation cannot be extended. Because the provisions of limitation are provided in the same. 20. In view of above discussion ground no.3 is allowed and revision order passed u/s 263 is quashed. “ 11. The learned DR relied on the order of the CIT(A). We have considered the rival submissions. We are of the view that the validity of the order u/s 147 of the Act depends upon the AO assuming jurisdiction to make an order of assessment u/s 147 of the Act after fulfilling the conditions laid down in the said section namely reason to believe the income chargeable to tax for that assessment year has escaped assessment. If this condition is not satisfied then it cannot be said the AO has validly assumed jurisdiction u/s 147 of the Act. If the validity of proceedings u/s 147 of the Act has not been challenged by the assessee by filing appeal against the order u/s.147 of the Act, can it be challenged in the appeal against an order u/s 263 of the Act revising the invalid order u/s 147 of the Act. This issue has been analysed by the Hon’ble Mumbai Bench of the tribunal in the case of M/s. Westlife Development Ltd. (supra) and 147 proceedings has been equated to primary proceedings and the proceedings u/s 263 passed equated to collateral proceedings. It has further been held based on various judicial pronouncements of the Hon’ble Supreme Court that if the primary proceedings are non-est in law or void on the ground of lack of jurisdiction then the validity of such proceedings can be challenged even in an appeal arising out of collateral proceedings. We have already set out the ratio laid down in these decisions and we do not wish to repeat the same. Suffice it to say the law is well settled that invalidity of the primary proceedings for want of proper jurisdiction can be challenged even in appellate proceedings arising out of a collateral proceeding. In view of the aforesaid legal position we admit the additional grounds for adjudication.” 9. In view of the above, we note that the coordinate Bench, after considering the similar legal issue, held that ‘suffice it to say the law is well settled that invalidity of the primary proceedings for want of proper jurisdiction can be challenged even in appellate proceedings arising out of a collateral proceeding.’ Further, in the subsequent order in the case of Concord Infra Projects Pvt. Ltd. vs. ITA Nos.72 to 75/CTK/2021 11 CIT, order dated 13.10.2021 in ITA No.174/Kol/2021, the coordinate Bench held that the action of the AO in initiating reassessment proceedings u/s 147 of the Act and issuing notice u/s 148 can be challenged in the collateral proceedings u/s 263 of the act. 10. In the present case also the assessee has raised a legal issue that the assessee is entitled to challenge the validity of the reassessment proceedings on three counts, i.e., there was no tangible material in the hands of the AO; the AO did not apply his mind to such tangible material; and there was no approval as per the mandate of section 151 of the Act and that the copy of the reasons recorded by the AO was different from the copy of the reasons supplied to the assessee. 11. First of all, in view of the orders of ITAT, Kolkata Bench in the case of M/s Classic Flour & Food Processing Pvt. Ltd. (supra) and Concord Infra Projects Pvt. Ltd. (supra) as relied on by the ld. Counsel for the assessee, we hold that the validity of initiation of reassessment proceedings u/s 147 of the Act and reassessment order passed u/s 143(3) r.w. section 147 of the Act can be challenged by the assessee in the collateral proceedings u/s 263 of the Act and also in the appeal filed against the revisionary order u/s 263 of the Act. Therefore, we proceed to adjudicate the challenge to the validity of initiation of proceedings and reassessment order u/s 143(3) r.w. section 147 of the Act dated 18.12.2018. ITA Nos.72 to 75/CTK/2021 12 12. So far as the challenge to the notice u/s 148 of the Act and reassessment order dated 28.12.2018 on the ground that no approval or sanction was obtained by the AO before issuance of notice u/s 148 of the Act is concerned, from the order sheet dated 26.03.2018 filed at page 13 of the assessee’s paper book, i.e., reasons recorded by the AO as per the assessee, it is clearly discernible that in the last line of the said order sheet and reasons, the AO writes: ‘the proposal for issue of notice u/s 148 submitted to JCIT, Range, Sambalpur for kind approval.’ In the reassessment order page 3, para 5, the AO again noted that prior approval of JCIT, Range-2, Sambalpur was obtained u/s 151 of the Act administratively before issuance of notice u/s 148 of the Act. Therefore, we are unable to agree with the contention of the ld. Counsel for the assessee that no prior approval was obtained by the AO u/s 151 of the Act before issuing notice u/s 148. 13. Apropos the second contention of the ld. Counsel of the assessee challenging the validity of reassessment order i.e., no tangible material was in the hands of the AO at the time of initiating reassessment proceedings and without applying his mind to such material and without forming a valid reason to believe that income has escaped assessment, the AO has initiated reassessment proceedings and issued notice u/s 148 of the Act is concerned, the ld. Counsel of the assessee has placed vehement reliance on the judgment of the Hon’ble Supreme Court in the case of CIT vs. Odeon Builders Pvt. Ltd. (2019) 418 ITR 315 (SC) to submit that if there is no creating of third party information by the ITA Nos.72 to 75/CTK/2021 13 AO, then, no addition can be made in the hands of the assessee. We are in agreement with the contention of the ld.CIT-DR that this order do not pertain to a situation where the assessee had challenged the initiation of reassessment proceedings by alleging that the AO did not apply his mind to the third party information and did not form a proper reason to believe that income has escaped assessment. Per contra, from the reasons recorded by the AO in the order sheet dated 26.03.2018 and also reason supplied to the assessee available at pages 4-9 of the assessee’s paper book, it is clearly discernible that before initiating the reassessment proceedings, there was a tangible material in the hands of the AO in the form of report of the DDIT, Investigation, Bhubaneswar dated 29.03.2016 and the AO, after applying mind to such information/report of the Investigation Wing, arrived at a conclusion that he has ‘reason to believe’ that the income chargeable to tax has escaped assessment for AY 2013-14 within the meaning of section 147. Therefore, the second contention of the assessee is also dismissed. 14. Now, we turn to the third contention of 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 ITA Nos.72 to 75/CTK/2021 14 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 recorded on 26.03.2018 and, thereafter, on the very same date, after obtaining approval of competent authority/JCIT, Range-2, Sambalpur, on the very same date issued notice u/s 148. Therefore, we safely presume that the reasons recorded by the AO are different from the copy of the reasons supplied to the assessee. The ITAT, Delhi Bench in the case of Jansampark Advertising & Marketing Pvt. Ltd. (supra) decided a similar issue by referring to the order of the ITAT Delhi in the case of Wimco Seedlings Ltd. vs. JCIT, dated 2.06.2020 in ITAs No.2755, 2756, 2757/Del/2002 with the following observations and findings:- “8. A reading of the above clearly establishes that the reasons supplied to the assessee are not the very same reasons recorded and found in the assessment record. Alienation of the assessee against the Revenue is that it gave few extracts of the reasons to them to defend it against the reopening of the assessment and when cornered before the higher authorities, the revenue comes out with the detailed reasons ITA Nos.72 to 75/CTK/2021 15 recorded by the Assessing Officer, and such furnishing of a bridge or part of reasons is deprecated by higher forums as recorded by a coordinate Bench of this Tribunal in the case of Wimco Seedlings (supra). 9. For the sake of completeness we think necessary to extract the relevant observations of the coordinate Bench in the case of Wimco Seedlings, which is an as under: – “27. On perusal of above two statements (one) the reasons supplied it to the assessee 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 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 ITA Nos.72 to 75/CTK/2021 16 143(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 www.taxguru.inwww.taxguru.in 7 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 of CIT (C)- II to reopen the case, notice under section 148 of the Income-tax Act is issued to the assessee. (Sd) . . . . . . . 29-3-2004 ACIT, CC-18, New Delhi." 28. It was further pleaded before Honourable Court that :- 16. Lastly, it was contended that in the counter-affidavit filed by the respondents the reasons which had been indicated for initiation of proceedings under section 147 were entirely different to the reasons which had been supplied to the petitioner. The attention of this court was drawn to paragraph 5(d) of the counter-affidavit wherein it is stated that the true copy of the reasons recorded by the Assessing Officer and the approval granted by the Commissioner of Income-tax is enclosed as annexure A. Annexure A purports to be a form for recording the reasons for initiating proceedings under section 148 and for obtaining approval of the Commissioner of Incometax. Serial No. 11 of the form pertains to " reasons for the belief that income has escaped assessment" . Under this heading, the following is recorded : ... ... ... 17. It is apparent by comparing these purported reasons with the reasons extracted earlier and which had been supplied to the petitioner that the two are different. While in the reasons supplied to the petitioner there is no mention of the allegation that there was a failure on the part of the assessee to disclose fully and truly all material facts, in the reasons shown in the said form in annexure A to the ITA Nos.72 to 75/CTK/2021 17 counter-affidavit, there is a specific allegation 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 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 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 which were supplied to the petitioner were different from the reasons purportedly recorded in the ITA Nos.72 to 75/CTK/2021 18 said form on which they now seek to rely. If the reasons in the said form were the " actual" reasons, why were they not communicated to the petitioner? Why was nothing said about these reasons (noted in the form) when the petitioner filed its objections to the reasons which were supplied to it? It must be remembered that in its objections, the petitioner took the specific plea that in the absence of any allegation that the petitioner had failed to disclose fully and truly all material facts necessary for assessment, the Assessing Officer had no jurisdiction to issue the notice under section 148 and initiate action under section 147 after four years from the end of the relevant assessment year. Despite this precise objection, there is no mention of the reasons noted in the said form in the impugned order dated March 2, 2005. If the respondents had regarded the reasons noted in the said form to be the " actual" reasons, it would have been very easy for the Assessing Officer to have countered this objection by simply referring to the reasons noted in the form and saying that the allegation of failure to disclose is very much there. It is obvious that the reasons noted in the said form were never regarded as the reasons for initiating action under section 147 of the said Act. Thus, the respondents cannot now be permitted to fall back on those purported reasons noted in the said form. 32. Secondly, let us 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 ITR19 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, ITA Nos.72 to 75/CTK/2021 19 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 high- handedness 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 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. These steps are also designed to ensure complete transparency and adherence to the principles of natural justice. Thus, a deviation from these directions would entail the nullifying of the proceedings. Assuming as we have done that the " actual" reasons were those as noted in the said form, it is obvious that the reasons were never communicated to the petitioner and it is only for the first time in the course of the present writ petition that those " reasons" have surfaced. Therefore, if he proceeded on the assumption that the " actual" reasons were those as noted in the said form, the proper course of action as directed by the Supreme Court in G. K. N. Driveshafts [2003] 259 ITR 19 , has not been followed. It would mean that the reasons which were supplied to the petitioner were not the actual reasons and the objections which were taken by the petitioner were not to the actual reasons and the speaking order dated March 2, 2005, which was passed was also neither on the basis of the actual reasons nor the objections to the actual reasons. The entire process would be a sham and would amount to making a mockery of the law as settled by the Supreme Court. Therefore, for this reason also, the notice under section 148 as well as all ITA Nos.72 to 75/CTK/2021 20 proceedings subsequent thereto as also the order dated March 2, 2005, 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 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.” ITA Nos.72 to 75/CTK/2021 21 16. In view of the above, we are compelled to hold that the legal ground raised by the assessee is squarely covered in favour of the assessee and we hold that when the reasons recorded by the AO and the copy of the reasons supplied to the assessee are different, then, the validity of initiation of reassessment proceedings and reassessment order cannot be held as sustainable. We respectfully noted that the settled position of law on this aspect, as held by the Hon’ble High Court of Delhi in the case of Haryana Acrylic Ltd., reported in 308 ITR 38 (Del) 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 AO does not reopen the assessment which has been finalized on 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 to ensure that the principles of natural justice is followed and, therefore, any deviation from these steps would result in nullifying all the proceedings and reassessment order passed by the AO. 17. In view of the foregoing discussion, we reach to a logical conclusion that the initiation of reassessment proceedings by the AO and reassessment order passed u/s 143(3) r.w. section 147 of the Act dated 28.12.2018 was not valid. Therefore, we are compelled to hold that the initiation of reassessment proceedings in the present case was not valid as the mandatory requirement of section 147 of the Act has not been satisfied. We, therefore, hold that since the reassessment order dated 28.12.2018 was not valid, consequently, the subsequent ITA Nos.72 to 75/CTK/2021 22 revisionary order passed by ld. PCIT u/s 263 of the Act, dated 23.03.2021, is also held to be invalid and, thus, the same is quashed. 18. Since, in the earlier part of this order we have quashed the revisionary order of the ld.PCIT u/s 263 of the Act by allowing the legal ground of the assessee, therefore, other grounds of the assessee challenging the revisionary order u/s 263 of the Act have become academic and infructuous. Therefore, the same are not being adjudicated upon. 19. Since, in the beginning of the hearing of these four appeals the ld. Representatives of both the sides agreed that the facts and circumstances of all four appeals are quite similar and identical, therefore, our conclusion recorded for ITA No.72/CTK/2021 for AY 2013-14 would apply mutatis mutandis to other three appeals i.e., ITAs No.73, 74 & 75/CTK/2021 for AY 2013-14 also and consequently, the impugned revisionary orders of the ld. PCIT u/s 263 of the Act are also quashed in all other three appeals. 20. In the result, all the four appeals filed by the assessees are allowed. Order pronounced on 18.08.2022 under Rule 34(4) of the IT(AT) Rules, 1963. Sd/- Sd/- (ARUN KHODPIA) (C.M. GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 18 August, 2022. dk ITA Nos.72 to 75/CTK/2021 23 Copy forwarded to : 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asstt. Registrar, ITAT, Cuttack