MAHENDRA SHARMA,JAIPUR V. ITO, WARD-3(1), JAIPUR

ITA 654/JPR/2023

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 469974 (ITAT-JAIPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANUP SINGH
• Assessee Lawyers: SARWAN KUMAR GUPTA
• Keywords: Reassessment proceedings; Question of law; Unexplained cash credit; Unexplained expenditure; Salary income; Period of limitation; Reopening of assessment; Third party statement; Search and seizure; Accommodation entries; Assessment record; Competent authority; Reason to believe; Opportunity of cross examination; Audi alteram partem; Tangible material; Borrowed satisfaction; Procedural lapse; Penny stocks; Bogus
• Section: 147; 148; 143(3); 142(1); 292BB; 143(2); 250; 143(1); 11; 153; 139(1); 68; 22; 69C; 13; 139; 158BC; 20

Judgement Text

"vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCH ‘B’, JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA No. 654/JPR/2023 fu/kZkj.k o\"kZ@Assessment Year : 2011-12. Mahendra Sharma, Opp,. Road No. 8 Flat No. 2, RIICO Complex, Sikar Road, VKIA Road, Jaipur. cuke Vs. Income Tax Officer, Ward 3(1), Jaipur. LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No. CIJPS 0428 K vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksjls@Assessee by : Shri Sarwan Kumar Gupta, Adv. Shri S.L. Jain, Sr. Adv. & Shri Ashok Ku. Gupta,Adv. jktLo dh vksj ls@Revenue by : Shri Anup Singh, Addl.CIT lquokbZ dh rkjh[k@Date of Hearing: 28/01/2025 ?kks\"k.kk dh rkjh[k@Date of Pronouncement: 25/03/2025 vkns'k@ORDER PER DR. S. SEETHALAKSHMI, J.M. The present appeal has been filed by the assessee against the order of ld. CIT (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 30.09.2023 passed under section 250 of the I.T. Act, 1961, for the assessment year 2011-12. The assessee has raised the following grounds of appeal :- 2 ITA No. 654/JPR/2023 Mahendra Sharma vs. ITO . 1. The Reasons for Reopening of the assessment not valid: That the learned Authorities below have grossly erred in law and facts in where the assessee has already made a full and true disclosure of all the relevant materials in the first instance when the original assessment was framed – reasons for reopening fail to mention which material was failed to be disclosed by the assessee. It cannot be said that there was any failure on the party of the assessee to disclose truly and fully all the material facts necessary for assessment. There is no finding of concealed income. The reopening is based on third party statement (No evidentiary value). 2. Assumption of Jurisdiction on Presumption : That the learned Authorities below have grossly erred in law and facts in upholding the assumption of jurisdiction for re-assessment. The re-assessment proceedings in this case were only based on presumption/suspicion and were thus not validly initiated. 3. Re-assessment is based on borrowed satisfaction : That the learned Authorities below have grossly erred in law and facts in issuing notice u/s 148 on the basis of AIR information in respect of cash deposit in bank accounts and without verifying the correctness of the information and therefore re- assessment proceeding is absolutely bad in law and without jurisdiction and further AO not recorded his satisfaction and re-assessment is based on borrowed satisfaction which was not sufficient to confer power on the AO to initiate reassessment proceedings against the assessee. CIT vs. Shree Rajasthan Syntex Ltd. (2009) 313 ITR 231 (Raj.). SLP dismissed (20090 313 ITR (St.)27 (SC) – Sun Pharmaceutical Industries Ltd. vs. Dy. CIT (2016) 287 CTR (Del.) 621. 4. Sanction u/s 151 Not Obtained : That the learned Authorities below have grossly erred in law and facts in not taking the sanction u/s 151 of the IT Act before issue of notice u/s 148 from the Joint Commissioner of Income Tax and sanction ought not to be mechanical and sanctioning authority did apply his mind. Even the ld.AO has not provided sanction order in spite of many request. 5. Objection Not Disposed by Order : (a) That the learned Authorities below have grossly erred in law and facts in whether the AO was required to dispose off the objections filed by the assessee against the reasons recorded by him before he start the assessment proceedings as per law separately by an speaking order. 3 ITA No. 654/JPR/2023 Mahendra Sharma vs. ITO . (b) That the learned Authorities below have grossly erred in law and facts in whether having acquiesced and participating in the assessment proceedings by the assessee, is too late for the appellant to argue that non disposal of the objections was a fatal flaw vitiating the order passed by AO. M/s. K.C. Mercantile vs. CIT Circle-2, Jaipur (DB Appeal No. 292/2016). 6. Re-assessment can be by the Original AO : That the learned Authorities below have grossly erred in law and facts in making the reassessment u/s 147/148 without jurisdiction because reassessment can be made by the assessing officer who made the original assessment. Dushyant Kumar Jain vs. CIT (2016) 237 Taxman 646 (Delhi)(HC). 7. Notice u/s 143(2) not issue : That the learned Authorities below have grossly erred in law and facts in where a pre- condition for passing an order u/s 143(3) is the service of a notice u/s 143(2). It is based on the rule of “Audi alteram partem” i.e. no man should be condemned unheard. Hence, if the return filed by an assessee is not accepted the AO shall issue a notice u/s 143(2). No such notice was issued and therefore order is bad. ACIT vs. Hotel Blue Moon (2010) 321 ITR 362 (SC). 8. Addition u/s 68 : (a) That the learned Authorities below have grossly erred in law and facts in invoking section 68 without jurisdiction and per- sea illegal because this section can be invoke where any sum is found credited in the books of an assessee maintained for the any previous year, and the assessee offers no explanation. (b) That the learned Authorities below have grossly erred in law and facts making addition of Rs. 93,42,332/- on account of LTCG without any conclusive evidence/material on record. Addition is based on no evidence. The assessee has furnished all possible evidence. The profit of share business is exempted u/s 10(38). 9. Addition u/s 69C : That the learned Authorities below have grossly erred in law and facts making addition of Rs. 5,76,262/- on account of commission @ 6% of LTCG on sale value of shares of M/s. Shree Nath Commercial & Finance Ltd. without any conclusive evidence/material on record. Addition is based on no evidence. The assessee has furnished all possible evidence. 10. No Opportunity of Effective Hearing : That the learned Authorities below have grossly erred in law and facts in not providing adequate opportunity of hearing to the appellant and not appreciating replies and evidences of the assessee. 4 ITA No. 654/JPR/2023 Mahendra Sharma vs. ITO . 11. No Show Cause Notice : That the learned Authorities below have grossly erred in law and facts making disputed additions without serving show cause notice which is mandatory as per CBDT circular.” Ground nos. 1 to 7raised by the assesseeare legal issue relating to action under section 147 r.w.s. 148 of the IT Act, 1961. We, therefore, for the sake of convenience first take up these legal issues for adjudication. 2. The brief facts of the case are that the assessee is a regular Income-tax assessee. For the year under consideration, the assessee e-filed his income-tax return on 29.07.2011 declaring a total income of Rs. 1,47,600/-. In this case proceedings under section 147 of the IT Act, 1961 was initiated. Accordingly, notice under section 148 of Act was issued on 28.09.2016, which was served upon the assessee on 30.09.2016. In response this notice, the ld. A/R of the assessee attended and filed his written reply on 17.10.2016 stating that the reasons are not given in the notice on what ground notice under section 148 was issued and submitted that the return filed on 29.07.2011 may be treated as in response to the notice under section 148. Thereafter, the AO has again issued notice under section 148 dt. 28.03.2017. In response thereto the assessee has filed the ITR on 01.05.2017 and the assessee has also filed letter dated 04.05.2017 objecting the proceedings. This notice was issued with the approval of the Addl. CIT. Notice under section 142(1) of the IT Act, 1961 along with query letter were issued on 5 ITA No. 654/JPR/2023 Mahendra Sharma vs. ITO . 15.09.2017. In response thereto the assessee has filed the replies as required. The asessee has filled all the details related to the issue and the assessee has also demand the cross examination and statements of the persons recorded u/s 132(4) who allegedly admitted of providing the accommodation entries. However the ld. AO has denied the same. The ld. AO has issued the notice u/s 143(2) on dt. 24.11.2017, which was barred by limitation. 2.1 However, the ld. AO not satisfied with the reply of the ld. AO and completed the assessment on dt. 19.12.2017 by making the addition of Rs.93,42,332/- u/s 68 by treating the exempt LTCG as alleged unexplained cash credit. And also made the addition of Rs.5,76,262/- u/s 69C on account of alleged unexplained expenditure @ 6% for obtaining these alleged bogus LTCG. 2.2 In first appeal before ld. CIT (A), assessee has filed detailed written submission and documents. However, the ld. CIT(A) has summarily rejected the same and has not considered the same and dismissed the appeal of the assessee by stating that - “5.1 I have gone through the Assessment Order and submissions of the appellant. The learned AO carried addition of Rs.93,42,332/- by reversing exempted long term capital gain u/s 10(38) of I.T. Act. The appellant had sold shares named as M/s Shree Nath Commercial & Finance Ltd. the same were found to be penny stock. The learned AO contented that the underlined companies were bogus and without any substance and he observed that there is sudden surge in the volume traded and price is artificially rigged for these shares. The action learned AO is based on Investigation carried out by Kolkata Investigation Directorate on 84 6 ITA No. 654/JPR/2023 Mahendra Sharma vs. ITO . penny stocks. These shares sold by appellant falls under such investigation. In the submissions the appellant had claimed that the contentions are genuine. However, it failed to refute the contentions raised by learned AO i.e., reason for sudden increase in trade volumes, unusual rise in price, findings of investigation wing, justification against order of SEBI wherein artificial methods are adopted for manipulating the prices, inadequate financial health of underlined company. 5.2 The reliance is placed on following judicial pronouncement The Hon’ble Apex Court in Civil Appeal No.1969 of 2011 in the case of SEBI Vs. Rakhi Traders (P) Ltd (with Civil Appeal No.3174- 3177 of 2011 and Civil AppealNo.3180 of 2011) vide its order dated 08.02.18 observed as follows: …… 5.3 In view of the above I am of the considerate view that the addition carried out by learned AO is correct and is upheld.” Now, being aggrieved by the order of ld. CIT (A), the assessee has preferred this appeal before us. 3. Before us, the ld. A/R of the assessee submitted his written submissions as under :- “ 1. No notice under section 143(2) is issued before time hence assessment is invalid: 1.1 The ld. AO passed the reassessment order or has completed by the AO without issuing notice under section 143(2) of the IT Act, which was mandatory and, therefore the order passed by the AO is illegal and not sustainable in law. 1.2 As the Appellant filed his original return of Income on 29.07.2011 vide acknowledgement 254712610290711 declaring the total income of Rs.1,47,600/-. The ld. AO has issued the notice u/s 148 on 28.09.2016. In response thereto the assesssee has filed the letter on 17.10.2016 at the Dak Counter of the AO, in response to the notice under section 148 dt. 28.09.2016 and admittedly submitted that the return of income filed under section 139 of the Act may be treated as return in response to notice under section 148 vide letter (PB30). Hence Notice under section 143(2) is mandatory to be issued and served till 30.09.2017, and in absence of such service, Assessing Officer cannot proceed to make an inquiry on return filed in compliance with notice issued under section 148. And in the present case the ld. AO has issued the notice u/s 143(2) on dt. 24.11.2017, 7 ITA No. 654/JPR/2023 Mahendra Sharma vs. ITO . which is barred by the limitation and when the notice u/s 143(2) is barred by the limitation then all the subsequent proceedings and assessment is illegal bad in law and void ab initio and liable to be dropped. It is submitted that the facts of the case are quite similar and identical with the facts of the following cases. 1.3 Recently in the case of Gyatri Sharma v/s ITO Ward Bundi in ITA No.461/Jp/2018 dt.21.12.2020, the Honble Bench has quashed the assessment order in absence of notice u/s 143(2) Copy of order is enclosed and the observation given in this order may be taken as also our arguments or submissions before your honor. 1.4 In this matter we have to further submit that the CBDT circular No.549 dated 31/10/1989 (1990) 823 CTR (SC) (1) makes it abundantly clear that once an assessee does not received a notice u/s 143(2) within the period stipulated then such an assessee “can take it that the return filed by him has become final and no scrutiny proceedings are to be started in respect of that return”. The position emerges from this CBDT circular was referred to and clarified by Hon’ble Punjab and Haryana High Court in the case Vipan KhannaVs. CIT (2002) 175 CTR (P&H) 335. The Hon’ble High Court referred the circular in this case and observed that in case where the AO chose to verify the return and frame an assessment he has to issue a notice u/s 143(3) of the Act requiring the assessee to produce his books of accounts and other material in support of his return. The High Court proceeded to observe: “Thereafter he can make an assessment order under sub-section(3) of the section 143 of the Act. Another important change incorporated in subsection (2) of section 143 of the Act is that the notice under this sub-section cannot be served on an assessee after the expiry of 12 months from the end of the month in which the return is furnished. Therefore, in a case where a return is filed and is proceed u/s 143(1)(a)of the Act and not notice under sub-section (2) of Section143) of the Act thereafter is served on the assessee within the stipulated period of 12 months, the assessment proceedings u/s 143 come to an end and the matter becomes final. Thus, although technically no assessment is framed in such a case yet the proceedings for assessment stand terminated. 1.5. Similarly the issue related to issue of notice u/s 143(2) in case of assessment has been discussed in detail in ACIT &Anr Vs Hotel Blue Moon (2010) 229 CTR (SC) 219: \"An analysis of this subsection indicates that, after the return is filed, this clause enables the Assessing Officer to complete the assessment by following the procedure like issue of notice under section 143(2)/142 and complete the assessment under section 143(3). This section does not provide for accepting the return as provided under section 143(1)(a). The Assessing Officer has to complete the assessment under section 143(3) only. In case 8 ITA No. 654/JPR/2023 Mahendra Sharma vs. ITO . of default in not filing the return or not complying with the notice under section 143(2)/142, the Assessing Officer is authorized to complete the assessment ex parte under section 144. Clause (b) of section 158BC by referring to section 143(2) and (3) would appear to imply that the provisions of section 143(1) are excluded. But section 143(2)itself becomes necessary only where it becomes necessary to check the return, so that where block return conforms to the undisclosed income inferred by the authorities, there is no reason, why the authorities should issue notice under section 143(2). However, if an assessment is to be completed under section 143(3) read with section 158BC, notice under section 143(2) should be issued within one year from the date of filing of block return. Omission on the part of the assessing authority to issue notice under section 143(2) cannot be a procedural irregularity and the same is not curable and, therefore, requirement of notice under section 143(2) cannot be dispensed with.\" (emphasis added) 1.6That issue of a notice u/s143(2) of the Act, is mandatory even in a reassessment proceeding initiated u/s 148 of the Act has been clearly laid down by the Hon’ble Delhi High Court in the case of M/s. Alpine Electronics Asia PTE Ltd. V/s DGIT &Ors.,341 ITR 247(Del) considering the decision of the Hon’ble Apex Court in the case of Hotel Blue Moon (supra) at para 24ofthejudgmenttheirLordships heldthatSection143(2) was applicable to a proceedings u/s 147/148 also, since proviso to section148 of the Act, granted certain specific liberties to the revenue, with regard to extension of time for serving such notices. The Coordinate Bench in the cases of M/s. Amit Software Technologies Pvt. Ltd, (supra) after considering the decision of the Hon’ble Madras High Court as well as Delhi High Court had held that Section143(2) of the Act, was a mandatory requirement and not a procedural one. In completing the assessment u/s 148 of the Act, compliance of the procedure laid down u/s 143 and 143(2) is mandatory. Thus looking to the above facts, circumstances and legal position of law the assessment is also illegal and liable to be quashed. 1.7 M/s Kaizen Organics Pvt. Ltd. V/s THE ACIT, CIRCLE-3, JAIPUR- ITAT, JAIPUR Held: Reassessment order jurisdictional passed by the AO u/s 147 without issuance of statutory notice u/s 143(2) is not sustainable in law – 1.8 G. N. Mohan Raju V/s Income-tax Officer [2015] 57 taxmann.com 415 (Bangalore – Trib.) [2015] 167 TTJ 236 (Bangalore – Trib.)] Held: assessee requested vide Assessing Officer to treat original return as one in response to section 148 proceeding, notice under section 143(2) was mandatory; otherwise re- assessment would be bad in law [CIT v Alstom T & D India Ltd. (2014) 45 taxmann.com 424 (Mad)] See also. 9 ITA No. 654/JPR/2023 Mahendra Sharma vs. ITO . 1.9 CIT V/s Rajeev Sharma (2010) 232 CTR 303 (All)Held: Provision contained in section 143(2), is mandatory in nature and it is obligatory for the Assessing Officer to apply his mind to the contents of the return filed in response to notice under section 148 and thereafter issue notice under section 143(2), before proceeding to decide the controversy regarding escaped assessment, non issue of notice under section 143(2), after filing of return of return by assessee vitiated the reassessment proceedings 1.10 ACIT V/s Geno Pharmaceuticals Ltd. (2013) 214 Taxman 83 (Bom).Held Notice under section 143(2) is mandatory, and in absence of such service, Assessing Officer cannot proceed to make an inquiry on return filed in compliance with notice issued under section 148 1.11 PCIT V/s Silver Line (2016) 383 ITR 455 (Del)] Held Order of reassessment cannot be passed without notice under section 143(2). Jurisdictional error cannot be cured by section 292BB. 1.12 CIT V/s Jai Shiv Shankar Traders Pvt. Ltd. (2016) 383 ITR 448 (Del) Held Also refer Travancore Diagnostics (P.) Ltd. v ACIT (2017)390 ITR 167 (Ker)] Failure of AO to issue notice under section 143(2) prior of finalizing re-assessment order could not be condoned by referring to Sec. 292BB and is fatal to the order of re- assessment-Re-assessment was not sustainable in law. 1.13 ALOK MITTAL V/S DCIT (2008) 162 DTR 13 (Kol.) (Trib.) Sec 147, 292BAssessment made by the AO u/s 147 without issuance of statutory notice u/s 143(2) is bad in law and the same is liable to be cancelled. AO cannot claim the benefit of section 292B in a case where notice u/s 143(2) was not issued. 1.14 That the reassessment has been completed by the AO without issuing notice under section 143(2) of the IT Act timely and, therefore, the order passed by the AO is illegal and not sustainable in law. 2. On perusal of the report submitted by the ld. DR during the course of last hearing and inspection of the assessment record and order sheet entry dt.17.10.2016 it has come to our knowledge, where it has been mentioned “ written reply filled by the assessee and notice issued u/s 143(2) for dt.21.11.2016” and showing signature of the counsel. However as stated by the counsel that on dt.17.10.2016 neither he has appeared in the office of the ITO Ward 4(3) Jaipur nor he has received any notice u/s 143(2) dt.17.10.2016 on that day. As on the order sheet entry dt. 17.10.2016 name of the counsel is not appearing or mentioned, while on other entries his name and appearance are coming or mentioned i.e “Present Sh. V.K. Sharma advocate”. As he stated that the 10 ITA No. 654/JPR/2023 Mahendra Sharma vs. ITO . ld. AO had taken his various signature on the order sheet in one sitting and he in good- faith of the AO, without reading the same signed the order sheet, but in facts on dt. 17.10.2016 neither he has appeared nor received any notice u/s 143(2) on that day. He had received notice U/s 143(2) dt. 24.11.2017 first time on dt. 08.12.2017. In support the affidavit of the counsel is enclosed. 2.1Further in the report and in the Event chart at page 8 the ld. DR has stated that at Sr. No. notice u/s 143(2) issued on 17.10.2016 on the same date when the assessee has filed the ITR on dt.17.10.2016 in the office of the AO at dak. But assessee has not received such notice and the ld. DR has also not produced the copy of such notice with the reply, if such notice is issued then the same should be produced with the dispatch No. and with the proof of service, because in same list at page 9 also the ld. DR has stated that notice u/s 143(2) issued on 24.11.2017 which we have already produced and also in the order sheet entries dt. 24.11.2017 mentioned that notice u/s 143(2) issued, which has been served. If the ld. AO had issued the notice on dt. 17.10.2016, then what was the necessity to issue the same again on dt. 24.11.2017 and in the assessment order also there is mention about the notice dt.17.10.2016. The ld. DR has not stated anything on this regard. It means either no notice has been issued earlier or not served upon the assessee or no proper procedures have been followed. 2.2 Further we would like to submit that when assessee has filed the ITR with the letter in the Dak, then how it is possible to issue and serve the notice on the assessee on the same day. Which create a serious doubt. Hence it was necessary for the DR to produce the notice with the service, dispatch no. before the court but he has failed to do so. In the case of Simranpal Singh Suri vs. ITO ITA No. 2821/Del/2019 May 12, 2021 (2021) 62 CCH 0113 Del TribReassessment—Issuance of notice—Assessee is an individual and engaged in business of civil works contracts—Information was available on ITD System regarding cash deposits in Bank account—AO, on ground that no return for year under consideration was filed, reopened assessment u/s 147—AO asked for various details from assessee to substantiate various expenses claimed—Since assessee did not provide relevant details before him, AO rejected book results and made an addition being 25% of various expenses claimed in P&L Account—CIT(A) upheld addition made by AO—Held, case of assessee was reopened on ground that assessee has made cash deposit in various bank accounts during year and assessee has not filed her return of income—However, a perusal of paper book filed on behalf of assessee shows that assessee has filed return of income for impugned assessment year—PCIT, while giving his approval has not applied their mind and had given approval in a mechanical manner—It has been held in various decisions that reopening of assessment on wrong set of facts makes such reopening a nullity—Even otherwise also, approval in instant case has been given in a mechanical manner on wrong facts that assessee has not filed his return of income—Similar view has been taken by coordinate Benches of Tribunal in various other decisions to proposition that when approval was given mechanically by superior authorities, assessment so 11 ITA No. 654/JPR/2023 Mahendra Sharma vs. ITO . framed is liable to be quashed—Notice u/s 143(2) was issued to assessee on very same day on which assessee appeared and furnished copy of ITR in response to notice u/s 148—It has been held in various decisions that when notice u/s 143(2) is issued to assesseee on very same day on which assessee filed return in response to notice u/s 148 stating that return already filed may be treated as return in response to notice u/s 148, such notice issued u/s 143(2) on very same day has to be treated as invalid and assessment is vitiated due to non-application of mind by AO—Therefore, on all counts reassessment proceedings initiated by AO and upheld by CIT(A) is not in accordance with law—Assessee’s appeal allowed. Further on the perusal of the order sheet it is clearly appearing that the same has been written in one sitting and back date. Hence kindly peruse the order sheet. 3. Copy of reasons Recorded not supplied nor objection decided: Further after filling the ITR u/s 148 on dt.17.10.2017 we had demanded the copy of reasons recorded u/s 148 vide para 3 page 36 of the assessment order and also filed the objection against the issuance of notice or proceedings u/s 148 vide letter dt. 17.10.2017 and 04.05.2017 (PB30 and 32). However the ld. AO has neither provided the copy of reasons recorded u/s 148 nor decided the objection u/s 148 which was mandatory as per law and settled legal position of law. Recently the honble ITAT Jaipur Bench in the case of Banwari Lal Pareek V/s ITO Ward 1(5), Jaipur in ITA No. 135/Jp/2020 dt. 27.07.2022 it has been held that “2.3 We have heard both the parties and perused the material available on record. It is an admitted fact that from the very beginning the assessee had been demanding the reasons recorded and in this regard the reply dated 27-11-2017 (PBP 53-54) of the assessee written to the ITO, wherein the assessee had specifically asked and demanded the AO to provide the reasons for issuance of Notice u/s 148 of the Act to the assessee. However, the AO did not provide the same. In appeal before the ld. CIT(A), the assessee had categorically raised the specific ground that the reasons recorded for reopening of the assessment was never supplied / provided to the assessee. However, the ld. CIT(A) had ignored the said ground of the assessee and also did not deal with the specific ground raised by the assessee. In our view, the AO was bound to furnish reasons recorded by him within a reasonable time as has been held by the Hon’ble Supreme Court in the case of GKN Driveshafts (India) Ltd. vs ITO (supra) wherein the Hon’ble Court held as under:- ‘’5. We see no justifiable reason to interfere with the order under challenge. However, we clarify that when a notice u/s 148 of the Income Tax Act is issued, the proper course of action for the noticee is to file return and he so desires, to seek reasons for issuing notices. The Assessing Officer is bound to furnish reasons within a reasonable time. On receipt of reasons, the noticee is entitled to file objections to issuance of notice and the assessing officer is bound to dispose 12 ITA No. 654/JPR/2023 Mahendra Sharma vs. ITO . of the same by passing a speaking order. .In the instant case, as the reasons have been disclosed in these proceedings, the assessing officer has to dispose of the objections, if filed, by passing a speaking order, before proceeding with the assessment in respect of the above said five assessment years.’’ As per record, since the reasons recorded for reopening of the assessment were not furnished to the assessee till the completion of the assessment, therefore, in our considered view, the reassessment order in these circumstances of the case, cannot be upheld. For reaching this conclusion, we draw strength from the decision of Hon’ble Bombay High Court in the case of CIT vs Videsh Sanchar Nigam Ltd (2012) 340 ITR 66 wherein Hon’ble Bombay High Court had categorically held that since the reasons recorded for reopening of the assessment were not furnished to the assesse till the completion of the assessment then reassessment order cannot be upheld and thus dismissed the appeal filed by the Revenue. Even in the case of CIT vs Trend Electronics reported in (2015) 379 ITR 456, Hon’ble Bombay High Court has categorically held as under:- ‘’Income Tax Act 1961 Section 147 and 148 Reopening of assessment – validity of – Notice – Objections – Recording of reasons and furnishing of reasons to be strictly complied with – Failure on part of assessee to furnish reasons recorded to assessee when sought for – Reassessment not valid – Quashed – Appeal dismissed.’’ Hon’ble Karnataka High Court in the case of Pr.CIT and Another vs V. Ramaiah (ITA No. 451 of 2017 dated 02-07-2018) has held as under:- ‘’8. The decision relied upon by the learned counsel for the Revenue is distinguishable on facts. The order which was to be passed by the assessing authority as preliminary objection of the assessee, once the assessee has raised the objection to such reassessment‘proceedings, the meeting of such objections in the main reassessment order, could be procedural aspect of the matter but the recording of the reasons before the initiation of the reassessment proceedings and communication thereof to the assessee is sine qua non as held by the Hon’ble Supreme Court and that goes to the root of the matter and confers or deprives the assessing authority of the jurisdiction to undertake such reassessment proceedings, as the case may be. 9. In the present case, admittedly, such reasons were not supplied to the assessee during the contemporary period before going ahead with the reassessment proceedings. Therefore, the Tribunal in our opinion was perfectly justified in quashing such reassessment order. 10. We do not find any substantial question of law arising in the matter. Therefore, the appeal of the Revenue stands dismissed. No costs.’’ 13 ITA No. 654/JPR/2023 Mahendra Sharma vs. ITO . The SLP of the Revenue against the above order of Karnataka High Court (supra) has also been dismissed by the Hon’ble Supreme Court reported in (2019) 262 Taxman 16. Therefore considering the totality of the facts and circumstances of the case and keeping in view the legal proposition as discussed above, we hold that recording of reasons before initiation of reassessment proceedings and communication thereof to the assessee is sine qua non as held by the Hon’ble Supreme Court (supra) that goes to the root of the matter and confers or deprives the assessing authority of the jurisdiction to undertake such reassessment proceedings, as the case may be. In the present case, admittedly such reasons were not supplied to the assessee during the contemporary period before going ahead with the reassessment proceedings. Therefore, in our view, the reassessment proceedings initiated and consequential order passed by the AO and appeal order passed by the ld. CIT(A) are not justified and, therefore, we quash such reassessment order. Therefore, the ground raised by the assessee is allowed and consequential appeal of the assessee is also allowed with no order as to cost.” Here also the same position. Further the Honble Raj. High Court in the case of M/s K.C. Mercantile V/s DCIT Circle-2, Jaipur in DBIT No. 292/2016 dt. 07.11.2017 it has been held: Before proceeding with the matter, it is not out of place to mention that the law declared by the Supreme Court in GKN Driveshafts (supra) clearly held that the preliminary objection is to be decided as the first, it cannot be decided subsequently. The argument which has been canvassed by the assessee is required to be considered very seriously more particularly in view of the observations made by the Supreme Court in the case of KSS Petron Private Ltd (supra) which is followed in Hotel Blue Moon (supra), the law declared by the Supreme Court is taken in true spirit whether it will open a second inning in his own. Section 153(3) is to be read very cautiously as 153 powers are given to the Department, the Court has to look into whether the law declared by the Supreme Court is given away or protected. In the present case, as the Assessing Officer has clearly ignored the law declared by the Supreme Court, in that view of the matter, the issues which are raised in the matter, the Tribunal ought not to have remitted back for reassessment since period of limitation has already expired as the authority will get extended time of limitation beyond 9 months which is not the object of the Income Tax Act. In that view of the matter, on issue No. 1 and 2, the order of reassessment passed by the Tribunal is declared null and void. The questions are answered in favour of assessee and against the Department. Recently this Honble Tribunal in the case of in the case of Yashpal Agrawal the Honble ITAT In ITA No. 268/Jp/2023 dt. 30.06.2023 has quashed the assessment order on the grounds that the objections filled by the assessee against the proceedings u/s 147/148 has not been decided here is also the same position. 14 ITA No. 654/JPR/2023 Mahendra Sharma vs. ITO . The ld. DR in his report dt.06.08.2024 has wrongly stated that on examination of assessment record, it is noticed that no letter dt. 04.05.2017 is placed on record and as per order sheet entries between 22.11.2016 to 15.09.2017, the assessee has not filled any objection letter dt. 04.05.2017 before the ld. AO against the reassessment proceedings, u/s 147/148 of the Act, he filed his reply to the dak counter to take receipts only. In this regard it is submitted that we failed to understand what the ld. DR has sated, as one side he has stated that no objection filed further he has stated that he filed his reply to the dak counter to take receipts only, which is contradictory his own. When we had filed the same in the Dak counter which is the proof, if the same is not on record then it is not the fault of the assessee. Further we have taken the objection vide our letter dt. 04.05.2017(PB32), 06.11.2017, 10.11.2017, 18.12.2017The report of the ld. AO or DR without any basis and rebuttal of the details and reply filled by the assesssee. Thus on the above legal position of law the notice u/s 148 or proceedings u/s 147/148 and consequent assessment order liable to quashed. 4. Second 148 notice dt.28.03.2017 was issued without approval of any higher authorities, without recording reason, without withdrawing first 148 notice dt. 28.09.2016 and the assessment and all the proceedings were based on the first notice as clearly appearing from the assessment order. 5. Further on perusal of the approval and assessment record it has come to know that in the satisfaction the ld. Pr.CIT has mentioned only that “Yes I am Satisfied”. The ld. Pr. CIT has given the approval and satisfaction in the mechanical manner, he has not recorded his own satisfaction. As on perusal of the reason recorded and approval u/s 151 by the without competent authority it is clearly proved that they have not applied the mind on the reasons recorded they have only expressed or mentioned yes I am satisfied by the Add. CIT not by Pr. CIT on the reason forwarded. While as per decision of Pr. CIT vs. N. C. Cables Ltd.(2017) 98 CCH 0010 DelHC it has been held that Section 151 of the Act clearly stipulates that the CIT, who is the competent authority to authorize the reassessment notice, has to apply his mind and form an opinion. The mere appending of the expression ‘approved’ says nothing. It is not as if the CIT has to record elaborate reasons for agreeing with the noting put up. At the same time, satisfaction has to be recorded of the given case which can be reflected in the briefest possible manner. In the present case, the exercise appears to have been ritualistic and formal rather than meaningful, which is the rationale for the safeguard of an approval by a higher ranking officer. For these reasons, the Court is satisfied that the findings by the ITAT cannot be disturbed. Here is also the same position copy of reason recorded is enclosed(PB1-3) because no satisfaction by the ld. Pr. CIT, the satisfaction if any was of the ld. Add. CIT, who is not competent in the present case. 15 ITA No. 654/JPR/2023 Mahendra Sharma vs. ITO . On this preposition kindly also refer Also refer Maruti Clean Coal And Power Ltd. vs. ACIT (2018) 400 ITR 0397 (Chhattisgarh) In the case of CIT vs. S. Goyanka Lime & Chemicals Ltd. (2015) 231 TAXMAN 0073 (MP) it has been held that While according sanction, the Joint Commissioner, Income Tax has only recorded so “Yes, I am satisfied” If the case in hand is analysed on the basis of the aforesaid principle, the mechanical way of recording satisfaction by the Joint Commissioner, which accords sanction for issuing notice under section 147, is clearly unsustainable and we find that on such consideration both the appellate authorities have interfered into the matter. In doing so, no error has been committed warranting reconsideration. (para 7) As far as explanation to Section 151, brought into force by Finance Act, 2008 is concerned, the same only pertains to issuance of notice and not with regard to the manner of recording satisfaction. That being so, the said amended provision does not help the revenue. No question of law involved in the matter, warranting reconsideration appeals are, therefore, dismissed. Also refer PAC AIR SYSTEMS P. LTD. vs. ITO (2020) 58 CCH 0001 Del Trib it has been held that Reassessment—Income escaping assessment—Assessee filed present appeal challenging order of CIT(A) wherein, AO’s action was accepted— Assessee contended that AO had erred in assumption of jurisdiction u/s 147/148 based on invalid and mechanical approval granted by Addl. CIT—Held, approval granted by Addl. CIT was a mechanical and without application of mind, which was not valid for initiating re-assessment proceedings, because from said remarks, it was not coming out as to which material; information; documents and which other aspects went gone through and examined by Addl. CIT for reaching to satisfaction for granting approval—Thereafter, AO had mechanically issued notice u/s 148—Reopening in assessee’s case for AY in dispute was bad in law and deserved to be quashed—Approval granted by Addl. CIT was a mechanical and without application of mind, which was not valid for initiating reassessment proceedings issue of notice u/s 148 and was not in accordance with s. 151 thus, notice issued u/s 148 was invalid and accordingly, reopening in this was bad in law and therefore, same was hereby quashed—Assessee’s appeal partly allowed. In the case of Gorika Investment And Export (P) LTD. vs. ITO (2018) 53 CCH 0168 DelTribReopening—Income escaping assessment—Validity thereof—Assessee filed return of income declaring income which was processed u/s. 143(1)—AO issued notice u/s. 148 after recording reasons that income of assessee had escaped assessment—AO framed assessment u/s. 143(3) r.w.s. 147 by making addition—CIT(A) upheld order of AO—Held, in CIT Vs N.C. Cables Ltd., it was held that CIT(A) who was competent authority to authorize reassessment notice had to apply his mind and form opinion— Mere appending of expression ‘approved’ says nothing—Satisfaction had to be recorded of given case which could be reflected in briefest possible manner—Exercise appears to 16 ITA No. 654/JPR/2023 Mahendra Sharma vs. ITO . had been ritualistic and formal rather than meaningful, which was rationale for safeguard of approval by higher ranking officer—AO initiated proceedings u/s. 147 r.w.s. 148 on basis of information furnished by Directorate of Investigation Unit and CIT gave approval without applying his mind in slip-shod manner—As approval/sanction given by CIT was without recording satisfaction, reopening was not sustainable—Assessee’s appeal allowed. TARA ALLOYS LTD. vs. ITO (2018) 63 ITR (Trib) 0484 (Delhi)Reassessment— Income escaping assessment—Validity thereof—Case of assessee was selected for scrutiny as per provisions of section 147 and 151 and accordingly notice u/s 148 was issued to assessee—Proceedings u/s 147/148 were initiated after recording reasons on basis of information received from Investigation Wing of Department on basis of search and seizure operation—During course of assessment proceedings, assessee was specifically asked to explain and justify transaction with G received as share application money/share capital and why same should not be disallowed or added in income of assessee—AO held that it was camouflage just to introduce its own fund through entry operator therefore amount was added in income of assessee company as unexplained u/s 68—CIT(A) confirmed reassessment and addition made by AO of share capital and unexplained cash credit—Held, notice u/s 148 could be quashed if ‘belief’ was not bona fide or one based on vague, irrelevant and non-specific information—Basis of belief should be discernible from material on record which was available with AO when he recorded reasons—There should be link between reasons and evidence/material available with AO—Commissioner had simply affixed “approved” at bottom of note sheet prepared by ITO technical—ITO could not have had reason to believe that income had escaped assessment by reasons of assessee ’s failure to disclose material facts and if Commissioner had read report carefully he could not have come to conclusion that this was fit case for issuing notice u/s 148—Commissioner had simply put “approved” and signed report thereby giving sanction to AO—Nowhere Commissioner had recorded satisfaction note, not even in brief after applying his mind—After expiry of four years from end of relevant assessment year, notice u/s 148 should not be issued unless Commissioner was satisfied that it was fit case for issue of such notice—Reassessment proceedings and notice being bad in law were quashed—Assessee’s appeal allowed. Also refer a recent judgment of this Honble ITAT in the case of Sh. Anshuman Singh v/s ACIT Circle-1 Jaipur in ITA No.733 & 739/JP/2023 dt. 10.04.2024. 6. No income escaped: Further it is submitted that the notice u/s 148 can be issued only when there is any escape of income because S. 147 provides that If the Assessing Officer has reason to believe that an income chargeable to tax has escaped assessment for any assessment year, here the assessee has not escaped any income because the assessee has never having the undisclosed or unexplained income as alleged and the same has already been included in the ITR filled originally. Which shows that there was no escapement of income by the assessee, as the assessee is having income from salary, capital gain and other sources . Hence if there is neither the escapement of income by the assessee nor proved then the notice issued u/s 148 is invalid. 17 ITA No. 654/JPR/2023 Mahendra Sharma vs. ITO . 7. The Reasons for Reopeningof the assessment not valid:- That the learned AO has grossly erred both in law and facts where the assessee has already made full and true disclosure of all the relevant materials in the first instance when the original assessment was framed- reasons for reopening fail to mention which material was failed to be disclosed by the assesse. It cannot be said that the there was any failure on the part of assesse to disclose truly and fully all material facts necessary for assessment. There is no finding of concealed income. The reopening is based on third party statement , which have No evidentiary value without providing the cross examination. As the reasons as recorded by the ld. AO for reopening the assessment was totally presumptive/assumptive/surmises and vague in the air only in a mechanical manner because assessee already disclosed all the material facts regarding such long term capital gain in the ITR filled u/s 139(1) on which behalf the Ld. AO alleged that assesse has failed to disclosed fully and truly material facts. Thus the re-assessment proceedings in this case were only based on presumption/suspicion and were thus not validly initiated. The Ld. AO recorded the reasons without pointing out his own any finding regarding concealed income and about how the assessee has failed to disclosed fully and truly material facts while the assesse has done all the compliance on his part in this regard, therefore complete re-assessment proceedings void ab initio and bad in law and deserve to be quashed. 8. Re-assessment is based on borrowed satisfaction; The Ld. AO has issued notice u/s 148 on the basis of borrowed information from the Investigation Wing in respect of bogus LTCG, without verifying the correctness of the information and therefore re-assessment proceedings is absolutely bad in law and without jurisdiction and further AO not recorded his satisfaction and re-assessment is based on borrowed satisfaction which was not sufficient to confer power on the AO to initiate reassessment proceedings against assessee. CIT vs. Shree Rajasthan Syntex Ltd. (2009)313 ITR 231 (Raj.) SLP dismissed (2009) 313 ITR (St.) 27 (SC); Sun Pharmaceutical Industries Ltd. Vs. DY. CIT (2016)287 CTR(Del.)621; The Impugned initiation of assessment proceedings had started by the AO on borrowed satisfaction but not their own which is mandatory condition of the law as provided for re –opening of any assessment. Section 147 of Act clearly specify. In impugned case the Ld. AO had claimed that a certain transaction of bogus LTCG on the basis of statements as recorded of third party and Ld. AO could not have been made any enquiry regarding both the facts and without conducting any enquiry/investigation re- opened the case and issued the notices which is completely based on perverse findings and deserve to be declared as null and void ab initio. 18 ITA No. 654/JPR/2023 Mahendra Sharma vs. ITO . Here in impugned case AO’s self-satisfaction regarding escapement of income is not bringing on record which is mandatory condition of law under section 147 of Income Tax Act, 1961, it could have been come only after conducting enquiry and investigation but Ld. AO did not make such therefore complete re-assessment proceedings come under suspicious circle, various honorable courts propounded and led on this aspect and issue direction to handle such situation. Similarly in the case of CIT v. Indo Arab Air Services (2016) 130 DTR 78/ 283 CTR 92 (Delhi)(HC) it was held that mere information that huge cash deposits were made in the bank accounts could not give the AO prima facie belief that income has escaped assessment. The AO is required to form prima facie opinion based on tangible material which provides the nexus or the link having reason to believe that income has escaped assessment. The AO was also required to examine whether the cash deposits were disclosed in the return of income to form an opinion that income has escaped assessment. The power to reopen an assessment is conditional on the formation of a reason to believe that income chargeable to tax has escaped assessment. The power is not akin to a review. The existence of tangible material is necessary to ensure against an arbitrary exercise of power. Aventis Pharma Ltd. vs. ACIT (2010) 323 ITR 570 (Bom). The ld. DR has not stated that what was the sufficient material and not provided the same till date. As per the assessment order and reasons recorded it is clear that the notice has been issued only on the basis of information not on any material and such material has not been disclosed till date. For that we have already submitted in our WS that the reopening is based on the borrowed satisfaction. The ld. DR has referred so many judgments in his WS/reply but he has not filled any copies of the same nor has given any note on the same in support that how the same are applicable in the present case. Prayer: In view of the above facts, circumstances the case and legal position the notice as well as the assessment may kindly be quashed.” 4. On the other hand, the ld. D/R supported the orders of the lower authorities. The ld. D/R vide his letter dated 25.09.2024 submitted the AO report dated 30.08.2024 addressed to Addl. CIT (Sr. DR)-II ITAT Jaipur, as under :- “ Kindly refer to your office letter no. Addl. CIT (Sr. DR-II/ITAT/JPR/2024- 25/479 dated 21.08.2024 on the above mentioned subject. In this regard, the counter reply on the submission by the assessee is as follow : 19 ITA No. 654/JPR/2023 Mahendra Sharma vs. ITO . 1. No notice under section 143(2) is issued before time hence assessment is invalid. Reply : In this paragraph the assessee has raised the contention that notice u/s 143(2) has not been issued in time and has produced numerous case laws said to be supporting his contention. However, bare perusal of the record available with this office clearly shows that notice u/s 143(2) was issued on 17.10.2016 fixing date of hearing on 21.11.2016 (Copy enclosed as annexure-1). The representative of the assessee has also acknowledged the same as his signature are present on the order sheet.(copy enclosed as annexure-2) The same is also established from the fact that representative of the assessee had furnished a reply on 27.09.2017 where the following is mentioned in the subject : “ Sub- Your notice in case of M/s. Mahendra Kumar Sharma, Jaipur PAN : CIJPS0428K, AY 2011-12. Notice u/s 143(2)/148 of the Act.” The above clearly implies that the assessee has received the notice u/s 143(2) and has clearly acknowledged the same. Hence, raising the ground that no notice was issued u/s 143(2) before 30.09.2017 is a futile attempt to mislead the proceedings. Therefore, this ground deserves to be quashed. 2. In this point the assessee has stated the following : 2. On perusal of the report submitted by the ld. DR during the course of last hearing and inspection of the assessment record and order sheet entry dt. 17.10.2016 it has come to our knowledge, where it has been mentioned “written reply filed by the assessee and notice issued u/s 143(2) for dt. 21.11.2016” and showing signature of the counsel. However, as stated by the counsel that on dt. 17.10.2016 neither he has appeared in the office of the ITO Ward 4(3) Jaipur nor he has received any notice u/s 143(2) dt. 17.10.2016 on that day. As on the order sheet entry dt. 17.10.2016 name of the counsel is not appearing or mentioned, while on the other entries his name and appearance are coming or mentioned i.e. “Present Sh. V.K. Sharma advocate”. As he stated that the ld. AO had taken his various signature on the order sheet in one sitting and he in good-faith of the AO, without reading the same signed the order sheet, but in facts on dt. 17.10.2016 neither he has appeared nor received any notice u/s 143(2) on that day. He had received notice u/s 143(2) dt. 24.11.2017 first time on dt. 08.12.2017.” The issue raised by the assessee is completely wrong as on every entry of the order sheet, signature of the representative of the assessee are present. Also as discussed above, notice u/s 143(2) was issued on 17.10.2016 and assessee has acknowledge the same in his reply. Therefore, all the story made up by the assessee is baseless and deserves to be quashed. 3. Copy of reasons recorded not supplied nor objection decided. As per the order sheet entry dated 17.11.2017, it is amply clear that the assessee was provided complete information in soft copy regarding the information received from Investigation wing, on the basis of which, the case was reopened. (copy of order sheet 20 ITA No. 654/JPR/2023 Mahendra Sharma vs. ITO . depicting the same is enclosed).Therefore, it cannot be said that the reasons of reopening of the case were not provided to the assessee. 4. Second 148 notice was issued without approval of any higher authorities, without recording reason, without withdrawing first notice dated 28.09.2016 and the assessment and all the proceedings were based on the first notice as clearly appearing from the assessment order. It is pertinent to mention here that notice u/s 148 is issued through ITBA and it is impossible to withdraw notice which has been once issued u/s 148. Therefore, question of second 148 notice doesn’t arise. Moreover, records of this office clearly reveal that no notice u/s 148 dated 28.03.2017 was issued in the case of the assessee. 5. In points no. 5, 6, 7, the assessee has once again questioned the reasons for reopening of the assessment and claimed that no income has been escaped. These issues have already been discussed at length in the assessment order and it can be said that the issue raised by the assessee are baseless and deserve no attention. Thus, it is concluded that the contentions raised by the assessee are without any basis and the assessee is just raising new grounds in order to mislead the proceedings. This is submitted herewith for your kind perusal and consideration.” 5. To counter the above submissions, the ld. A/R of the assesseevide his letter dated 08.10.2024 submitted his comments and written submission on the report filed by the ld. D/R, which are reproduced as under :- “1. Your honor earlier we had filed our WS and paper book on the same the ld. DR has filled its report of AO. In this report the AO has stated that the notice u/s 143(2) was issued on dt. 17.10.2016 fixing the date of hearing on 21.11.2016 and produced the order sheet, the ld. AO has also filed a letter dt. 27.09.2017 and alleged that the contention of the assessee is mislead and wrong. 2.1 In this regard it is submitted that we still stands on our WS and contention. As now the ld. DR has mislead the matter and present wrong interpretation and documents very cleverly. As on perusal of the notice u/s 143(2) dt. 17.10.2016 and 24.11.2017 it will appear that on both the notices signature of the ITO Ward 4(3) is not matching and also perused the signature’s on the order sheet, secondly on notice dt. 17.10.216 there is no proof of service, no dispatch no etc. Further as per the ld. DR/AO 21 ITA No. 654/JPR/2023 Mahendra Sharma vs. ITO . when the notice u/s 143(2) had been issued on dt.17.10.2016 then what was and why the notice u/s 143(2) has been issued again on 24.11.2017 and served the same on the assessee, and on these no answer has been given. The ld. AO has not filed his counter affidavit on the same. 2.2 Further the assessee has not filled any letter on dt.27.09.2017 in response to the notice u/s 143(2) dated 17.10.2016. As the ld. DR/AO has filed letter dt. 27.09.2016 without going through the same and make wrong comments. As this letter it is mentioned that “ With reference to above that the notice for producing details is received on 26.09.2017 the case is relevant to 2011-12 FY 2010-11 the details are collected from bank and broker. Therefore it is requested kindly provide the time and adjourned the case for further date.” Certified copy of this letter dt. 27.09.2017 is enclosed. Thus this letter was in response to the notice u/s 142(1) dt. 15.09.2017 where the case was fixed for 27.09.2017 which was received by the ld. A/R on dt.26.09.2024 certified copy of notice dt.15.09.2024 is enclosed and on that date i.e 27.09.2017 A/R of assessee has appeared and the case was adjourned for 06.10.2017 kindly perused the order sheet and page 1 para 2 of the assessment order, notice 142(1) dt. 15.09.2017 and letter dt.27.09.2017 where all the details and noting are clearly mentioned and proving all the clear things and facts. As the revenue has had not produced the clear copy of the letter dt. 27.092017 before the honble bench as some words are missing in this letter, the reasons is best known to ld. DR. Hence we had for the certified copies of the letter and notice to the ld. AO to bring the actual facts before the honble bench and we have received the same on dt.07.10.2024 thus we able to bring the above facts before the honble bench. Thus the ld. AO/DR has misleaded the matter by producing the notice dt. 17.10.2016 and incomplete letter dt.27.09.2017. Further on perusal of the order sheet from 28.09.2016 to 15.09.2017 in which it is clear that the hearing has also been taken place between these days time to time. Further in the order sheets entries there is some gape but in the entries dated 21.11.2016 to 15.09.2017 there is no gape and one entries put up by inserting later time. 3. Regarding the copy of reasons recorded not supplied nor objection decided. The ld. AO/DR has stated that “as per order sheet entry dated 17.11.2017, it is amply clear that assessee was provided complete information in soft copy regarding the information received from Investigation wing, on the basis of which, the case was reopened”. In this regard it is submitted that on the reply of the same it is very clear that the ld. AO/DR has admitted that no reason recorded has been provided to the assessee because the ld. AO had supplied “the information received from Investigation wing” not reasons recorded because the Investigation Wing has neither recorded reasons nor the law has given the power to them, the reasons are to be recorded by the Assessing Officer only. Further the ld. AO/DR has not given any comments and proof that our objection 22 ITA No. 654/JPR/2023 Mahendra Sharma vs. ITO . have been decided by passing a separate speaking order. And for these we have already submitted our arguments in our WS filled earlier. Further if the honble bench desire to know the facts the entire assessment records may be called for and may see the matter. 4. Approval of 6 assessee;s in one letter illegal: Further the ld. Pr. CIT/JCIT has given one consolidated approval of 6/2 assessee’s through one letter dt. 27.09.2016 and this show how the Pr. CIT/JCIT has acted in formal way. On perusal of the assessment record and documents it is found that the approval was not in original letter or documents. The document of approval letter was in the photocopy, further the approval letter was not signed by the ld. Pr.CIT but by the ITO(T&J). How the approval of all the 6 different assessee’s can be given in one documents, when all are the independent or separate assessee and reasons are different. Thus it all shows how the wrong and illegal manner has been adopted by all the authorities. On this preposition and issue kindly refer the decision of this Honble ITAT in the case of Sh. Satya Naraya Bairwa v/s ITO in ITA No. 867 & 869/Jp/2018 dt. 15.09.2021 Copy is enclosed, wherein under the same facts and circumstances the Honble ITAT has held that “20. The ld. A/R has also drawn our attention on the approval of the Pr. CIT placed at page Nos. 7-8 of the paper book and also from the assessment record placed before us, we found that he has given one consolidated approval of 56 different assessee’s in one shot through one letter dated 29.03.2016 which is even not signed by him but signed by ITO (T&J), who is not a competent authority to give and signed the approval letter, which shows how the PR. CIT has acted in very formal way. When we examined of the assessment record, it is gathered that the approval was in photocopy and not in original or there was no original letter or documents of approval. Further the name of the assessee was at Sr. 46 out of 56 assessee's and even there was no tick on the name of the assessee in the approval list, which creates a doubt that the approval has been received before the issue of notice u/s 148 of the Act as the approval letter lying on the file after issuance of the notice u/s 148 or not before or attached with the notice u/s 148 and may reach in the office of the AO after 31.03.2016. Thus, in our view, approval u/s 151 cannot be given of all the 56 assessee's in a single documents, as all assessee's are the independent and separate also the reason recorded are different in each case and it is not possible that there shall be same reasons. Looking to these facts and record it is also held that the procedures and way of approval and satisfaction is not proper. Here AO initiated proceedings u/s. 147 r.w.s. 148 on basis of information furnished and CIT gave approval without applying his mind in slipshod manner. As approval/sanction given by CIT was without recording his own independent satisfaction as noted above, therefore the reopening was not sustainable as per above judicial pronouncements and irregularities noted. There were clear irregularities and violation of the provision of Sec. 151 of the Act and very foundation of the issuance of the notice u/s 148 was not as per law. Then in that eventuality, we are of the view that the issuance 23 ITA No. 654/JPR/2023 Mahendra Sharma vs. ITO . notice 148 of the Act and all the consequent proceedings and assessment order passed was not in accordance with law. The case laws relied upon by the ld. DR are not tenable in the facts and circumstances of present case, therefore, considering the totality of facts and circumstances of the case as well as the judicial pronouncements qua the issue under consideration, we find merit in the contention of the ld AR, therefore, we quash the proceedings U/s 147 of the Act.” This has been recently followed by the Honble ITAT in the case of Smt. Prabhati Devi and Vimla Devi in ITA No.1031 & 1034/Jp/2024 dt. 01.10.2024. Here is the same position. Prayer: Hence in view of facts, circumstances, legal position of the law and our WS the assessment may kindly be quashed and oblige.” 6. On the contrary, the ld. D/R, to counter the above submissions of the ld. A/R, submitted the AO Report dated 15.01.2025, vide his letter20.01.2025 as under :- “ Kindly refer to your letter no. Addl. CIT (Sr. DR-II/ITAT/JPR/2024-25/974 dated 09.01.2025 on the above mentioned subject. The comments/counter submission to the written submission by the assessee is as under : 2. Reply of point No. 1 :- As per assessment record, notice u/s 143(2) has been issued on 17.10.2016 fixing the date of hearing on 21.11.2016. The assessee has filed request for adjournment in response to the above notice on 27.09.2017 (copy enclosed). 3. Reply of Point Nos. 2.1 & 2.2 :- The contention of the assessee that the signature of the AO in the notice u/s 143(2) dated 17.10.2016 and 24.11.2017 is not mat6ching is childish, the undersigned has nothing to comment in this regard. Further, the assessee is saying that there is no proof of service on the notice dated 17.10.2016. The assessee is in receipt of the notice u/s 143(2) issued on 17.10.2016 as in his reply dated 27.09.2017, he has mentioned notice u/s 143(2) in the subject (copy enclosed). Again notice u/s 143(2) was issued on 24.11.2017 (copy enclosed). The reply filed by the assessee on 27.09.2017 is in response to the notice u/s 143(2) issued on 17.10.2016 as he has mentioned notice u/s 143(2) in the subject (copy enclosed). 24 ITA No. 654/JPR/2023 Mahendra Sharma vs. ITO . The contention of the assessee that entries in the order sheet has been inserted later is childish and imaginary. 4. Reply of point no. 3:- As per order sheet entry dated 17.11.2017, it is clear that assessee was provided complete information in soft copy (copy enclosed). Further, the case was reopened after obtaining the approval of competent authority (copy enclosed). 5. Reply of point no. 4:- The approval has been given by Pr.CIT-2, Jaipur letter dated 27.09.2016. Though it has been signed by ITO (T&J), it is clearly mentioned in the letter that the proposal for taking remedial action u/s 147/148 of the I.TR. Act, 1961, 1961 in the above mentioned case has been approved u/s 151 of the I.T. Act, 1961 by the Pr. CIT-2, Jaipur (copy enclosed). Further, the contention of the assessee regarding consolidated approval of 6 assessee’s through one letter is in vain as individual approval has been obtained in the form for obtaining sanction of the Pr.CIT-2, Jaipur for issue of notice u/s 148 of the I.T. Act, 1961 (copy enclosed). The Report is being submitted for your kind consideration and necessary action at your end.” 7. We have heard the rival submissions, perused the orders of the lower authorities and the paper book filed on behalf of the assessee. We have also considered the various decisions relied on by learned Counsels of both the sides. It is noted from the assessment order that the assessment was reopened by issuing notice under section 148 on 28.09.2016 on the basis of an information received from the Directorate of Income-tax (Inv.) Kolkata vide letter dated 27.04.2015 that survey/search operation were conducted by the Investigation Wing of the department in the case of Syndicate members (promoter of penny stock companies), share brokers and entry operators and the business of providing accommodation entries in the form of bogus LTCG was unearthed. A perusal of 25 ITA No. 654/JPR/2023 Mahendra Sharma vs. ITO . record shows that the notice under section 143(2) dated 24.11.2017 was issued, but as contended by revenue that notice under section 143(2) dated 17.10.2016 was issued. But there is no dispatch number etc. is given on the notice itself. Further, the ld. A/R submitted that when notice under section 143(2) had been issued on 17.10.2016 then what was the necessity to issue notice under section 143(2) again on 24.11.2017 and served the same on the assessee through order sheet. The contention of the ld. A/R was that no notice under section 143(2) dated 17.10.2016 was issued to the assessee. The ld. D/R replied that the representative of the assessee has acknowledged the receipt of notice u/s 143(2) of the Act vide their effect. It is also noticed that Notice under section 143(2) dated 17.10.2016 was alleged to have been issued but there is no part about service of that notice. Even that fact is not mentioned in the order sheet so produced. Thus, revenue did not support that in fact of notice under section 143(2) dated 17.10.2016 was issued to the assessee. The ld. A/R submitted that the AO has not filed any counter affidavit in regard to the issuance of notice under section 143(2) dated 17.10.2016 as against the affidavit filed by the counsel before us. It is mandatory on the part of the AO to issue notice under section 143(2) of the IT Act, 1961 within the stipulated time. The CBDT circular No.549 dated 31/10/1989 (1990) 823 CTR (SC) (1) makes it abundantly clear that once an assessee does not receive a notice u/s 143(2) within the period stipulated then such an assessee “can take it that the return filed by him 26 ITA No. 654/JPR/2023 Mahendra Sharma vs. ITO . has become final and no scrutiny proceedings are to be started in respect of that return”. The position emerges from this CBDT circular was referred to and clarified by Hon’ble Punjab and Haryana High Court in the case Vipan Khanna Vs. CIT (2002) 175 CTR (P&H) 335. The Hon’ble High Court referred the circular in this case and observed that in case where the AO chose to verify the return and frame an assessment, he has to issue a notice u/s 143(2) of the Act requiring the assessee to produce his books of accounts and other material in support of his return. The Hon’ble Supreme Court in the case of ACIT &Anr vs. Hotel Blue Moon (2010) 229 CTR (SC) 219 has discussed in detail in respect of issue of notice u/s 143(2) as under :- \"An analysis of this subsection indicates that, after the return is filed, this clause enables the Assessing Officer to complete the assessment by following the procedure like issue of notice under section 143(2)/142 and complete the assessment under section 143(3). This section does not provide for accepting the return as provided under section 143(1)(a). The Assessing Officer has to complete the assessment under section 143(3) only. In case of default in not filing the return or not complying with the notice under section 143(2)/142, the Assessing Officer is authorized to complete the assessment ex parte under section 144. Clause (b) of section 158BC by referring to section 143(2) and (3) would appear to imply that the provisions of section 143(1) are excluded. But section 143(2) itself becomes necessary only where it becomes necessary to check the return, so that where block return conforms to the undisclosed income inferred by the authorities, there is no reason, why the authorities should issue notice under section 143(2). However, if an assessment is to be completed under section 143(3) read with section 158BC, notice under section 143(2) should be issued within one year from the date of filing of block return. Omission on the part of the assessing authority to issue notice under section 143(2) cannot be a procedural irregularity and the same is not curable and, therefore, requirement of notice under section 143(2) cannot be dispensed with.\" (emphasis added) 27 ITA No. 654/JPR/2023 Mahendra Sharma vs. ITO . 7.1 The ld. A/R submitted that copy of reasons recorded not supplied nor the objections of the assessee was decided. In this regard, the ld. D/R submitted as under: “ As per the order sheet entry dated 17.11.2017, it is amply clear that the assessee was provided complete information in soft copy regarding the information received from Investigation wing, on the basis of which, the case was reopened.” 7.2 On the contrary, the ld. A/R contradicted the submission of the ld. D/R by statingthat from the reply it is very clear that the ld. AO/DR has admitted that no reason recorded has been provided to the assessee because the ld. AO had supplied “the information received from Investigation wing” and not the ‘reasons recorded’ because the Investigation Wing has neither recorded reasons nor the law has given the power to them, the reasons are to be recorded by the Assessing Officer only. Further the ld. AO/DR has not given any comments and proof that the objections of the assessee have been decided by passing a separate speaking order. On perusal of paper book, it is noticed that the assessee has raised objection vide letter dated 04.05.2017 (PB page 32), 06.11.2017, 10.11.2017 and 18.12.2017 (PB pages 36- 49). Thus the ld. D/R has failed to rebut the details filed by the assessee. 28 ITA No. 654/JPR/2023 Mahendra Sharma vs. ITO . The Coordinate Bench of the Tribunal, Jaipur in the case of Banwari Lal Pareek vs. ITO in ITA No. 135/JP/2020 dated 27.07.2022 it has been held as under : “2.3 We have heard both the parties and perused the material available on record. It is an admitted fact that from the very beginning the assessee had been demanding the reasons recorded and in this regard the reply dated 27-11-2017 (PBP 53-54) of the assessee written to the ITO, wherein the assessee had specifically asked and demanded the AO to provide the reasons for issuance of Notice u/s 148 of the Act to the assessee. However, the AO did not provide the same. In appeal before the ld. CIT(A), the assessee had categorically raised the specific ground that the reasons recorded for reopening of the assessment was never supplied / provided to the assessee. However, the ld. CIT(A) had ignored the said ground of the assessee and also did not deal with the specific ground raised by the assessee. In our view, the AO was bound to furnish reasons recorded by him within a reasonable time as has been held by the Hon’ble Supreme Court in the case of GKN Driveshafts (India) Ltd. vs ITO (supra) wherein the Hon’ble Court held as under:- ‘’5. We see no justifiable reason to interfere with the order under challenge. However, we clarify that when a notice u/s 148 of the Income Tax Act is issued, the proper course of action for the noticee is to file return and he so desires, to seek reasons for issuing notices. The Assessing Officer is bound to furnish reasons within a reasonable time. On receipt of reasons, the noticee is entitled to file objections to issuance of notice and the assessing officer is bound to dispose of the same by passing a speaking order. .In the instant case, as the reasons have been disclosed in these proceedings, the assessing officer has to dispose of the objections, if filed, by passing a speaking order, before proceeding with the assessment in respect of the above said five assessment years.’’ As per record, since the reasons recorded for reopening of the assessment were not furnished to the assessee till the completion of the assessment, therefore, in our considered view, the reassessment order in these circumstances of the case, cannot be upheld. For reaching this conclusion, we draw strength from the decision of Hon’ble Bombay High Court in the case of CIT vs Videsh Sanchar Nigam Ltd (2012) 340 ITR 66 wherein Hon’ble Bombay High Court had categorically held that since the reasons recorded for reopening of the assessment were not furnished to the assesse till the completion of the assessment then reassessment order cannot be upheld and thus 29 ITA No. 654/JPR/2023 Mahendra Sharma vs. ITO . dismissed the appeal filed by the Revenue. Even in the case of CIT vs Trend Electronics reported in (2015) 379 ITR 456, Hon’ble Bombay High Court has categorically held as under:- ‘’Income Tax Act 1961 Section 147 and 148 Reopening of assessment – validity of – Notice – Objections – Recording of reasons and furnishing of reasons to be strictly complied with – Failure on part of assessee to furnish reasons recorded to assessee when sought for – Reassessment not valid – Quashed – Appeal dismissed.’’ Further, the Honble Rajasthan High Court in the case of M/s K.C. Mercantile V/s DCIT Circle-2, Jaipur in DBIT No. 292/2016 dt. 07.11.2017 it has been held that - “Before proceeding with the matter, it is not out of place to mention that the law declared by the Supreme Court in GKN Driveshafts (supra) clearly held that the preliminary objection is to be decided as the first, it cannot be decided subsequently. The argument which has been canvassed by the assessee is required to be considered very seriously more particularly in view of the observations made by the Supreme Court in the case of KSS Petron Private Ltd (supra) which is followed in Hotel Blue Moon (supra), the law declared by the Supreme Court is taken in true spirit whether it will open a second inning in his own. Section 153(3) is to be read very cautiously as 153 powers are given to the Department, the Court has to look into whether the law declared by the Supreme Court is given away or protected. In the present case, as the Assessing Officer has clearly ignored the law declared by the Supreme Court, in that view of the matter, the issues which are raised in the matter, the Tribunal ought not to have remitted back for reassessment since period of limitation has already expired as the authority will get extended time of limitation beyond 9 months which is not the object of the Income Tax Act. In that view of the matter, on issue No. 1 and 2, the order of reassessment passed by the Tribunal is declared null and void. The questions are answered in favour of assessee and against the Department.” 30 ITA No. 654/JPR/2023 Mahendra Sharma vs. ITO . Thus on the above legal position of law the notice under section 148 or proceedings under section 147/148 and consequent assessment order liable to be quashed. 7.3 Further, a perusal of the approval given by the Joint Commissioner shows that he has given approval by observing as under as per clause 12 of the proforma :- “ Yes, Recommended for Reopening.” Similarly, the Pr. CIT-2 Jaipur while giving his approval has observed as under : “ Yes, I am satisfied.” A perusal of the above shows that the superior authorities have not applied their mind and had given approval in a mechanical manner. It has been held in various decisions that reopening of the assessment on wrong set of facts makes such reopening a nullity. Further, the ld. Pr. CIT/JCIT has given one consolidated approval of 6/2 assessee’s through one letter dated 27.09.2016 and this show how the Pr. CIT/JCIT has acted in formal way. On perusal of the assessment record and documents it is found that the approval was not in original letter or documents. The document of approval letter was in the photocopy, further the approval letter was not signed by the ld. Pr.CIT but by the ITO(T&J). How the approval of all the 6 different assessees can be given in one documents, when all are the independent or separate assessee and 31 ITA No. 654/JPR/2023 Mahendra Sharma vs. ITO . reasons are different. Thus it all shows how the wrong and illegal manner has been adopted by all the authorities. On this preposition and issue reference is drawn to the decision of the Coordinate Bench of the Tribunal, Jaipur in the case of Sh. Satya Naraya Bairwa v/s ITO in ITA No. 867 & 869/Jp/2018 dated 15.09.2021, wherein under the same facts and circumstances, the Coordinate Bench of Jaipur has held as under :- “20. The ld. A/R has also drawn our attention on the approval of the Pr. CIT placed at page Nos. 7-8 of the paper book and also from the assessment record placed before us, we found that he has given one consolidated approval of 56 different assessee’s in one shot through one letter dated 29.03.2016 which is even not signed by him but signed by ITO (T&J), who is not a competent authority to give and signed the approval letter, which shows how the PR. CIT has acted in very formal way. When we examined of the assessment record, it is gathered that the approval was in photocopy and not in original or there was no original letter or documents of approval. Further the name of the assessee was at Sr. 46 out of 56 assessee's and even there was no tick on the name of the assessee in the approval list, which creates a doubt that the approval has been received before the issue of notice u/s 148 of the Act as the approval letter lying on the file after issuance of the notice u/s 148 or not before or attached with the notice u/s 148 and may reach in the office of the AO after 31.03.2016. Thus, in our view, approval u/s 151 cannot be given of all the 56 assessee's in a single documents, as all assessee's are the independent and separate also the reason recorded are different in each case and it is not possible that there shall be same reasons. Looking to these facts and record it is also held that the procedures and way of approval and satisfaction is not proper. Here AO initiated proceedings u/s. 147 r.w.s. 148 on basis of information furnished and CIT gave approval without applying his mind in slipshod manner. As approval/sanction given by CIT was without recording his own independent satisfaction as noted above, therefore the reopening was not sustainable as per above judicial pronouncements and irregularities noted. There were clear irregularities and violation of the provision of Sec. 151 of the Act and very foundation of the issuance of the notice u/s 148 was not as per law. Then in that eventuality, we are of the view that the issuance notice 148 of the Act and all the consequent proceedings and assessment order passed was not in accordance with law. The case laws relied upon by the ld. DR are not tenable in the facts and circumstances of present case, therefore, considering the totality of facts and circumstances of the case as well as the 32 ITA No. 654/JPR/2023 Mahendra Sharma vs. ITO . judicial pronouncements qua the issue under consideration, we find merit in the contention of the ld AR, therefore, we quash the proceedings U/s 147 of the Act.” The above cited decision has also been recently followed by the ITAT Jaipur Bench in the cases of Smt. Prabhati Devi and Vimla Devi in ITA No.1031 & 1034/Jp/2024 dated 01.10.2024. 7.4 Looking to these facts discussed above and material on record, it is also held that the procedures and way of approval and satisfaction is not proper. Here, the AO initiated proceedings under section 147 read with section 148 on basis of borrowed information received from the Directorate of Investigation, Kolkata, without verifying the correctness of the information and the ld. PCIT gave approval without applying his mind in slipshod manner. As approval/sanction given by ld. PCIT was without recording his own independent satisfaction as noted above, therefore, the reopening was not sustainable as per above judicial pronouncements and irregularities noted. Thus, in that eventuality, we are of the view that the issuance of notice under section 148 of the IT Act and all the consequent proceedings and assessment order passed was not in accordance with law. The case laws relied upon by the ld. D/R are not tenable in the facts and circumstances of the present case, therefore, considering the totality of facts and circumstances of the case as well as the judicial pronouncements qua the issue under consideration, we find merit in the contention of the ld. A/R, therefore, we 33 ITA No. 654/JPR/2023 Mahendra Sharma vs. ITO . quash the proceedings under section 147 of the Act, on the various infirmity observed hereinabove. 8. Since the assessee succeeds on the legal grounds, the grounds challenging the addition on merit are not being adjudicated being academic in nature. 9. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 25/03/2025. Sd/- Sd/- ¼jkBksM deys'k t;UrHkkbZ ½ ¼MkWa-,l-lhrky{eh½ (RATHOD KAMLESH JAYANTBHAI) (Dr. S. Seethalakshmi) ys[kk lnL; @Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 25/03/2025 *Santosh vkns'k dh izfrfyfivxzsf’kr@Copy of the order forwarded to: 1. vihykFkhZ@The Appellant-Mahendra Sharma, Jaipur. 2. izR;FkhZ@The Respondent-The ITO Ward 3(1), Jaipur. 3. vk;djvk;qDr@CIT 4. vk;djvk;qDr@CIT(A) 5. foHkkxh; izfrfuf/k] vk;djvihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 6. xkMZQkbZy@Guard File {ITA No. 654/JPR/2023} vkns'kkuqlkj@By order, lgk;d iathdkj@Asst. Registrar ……………………………………………………. "