HARJOT SINGH SAILANI,RAIPUR vs. INCOME TAX OFFICER WARD 3(1), RAIPUR

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ITA 328/RPR/2026Status: DisposedITAT Raipur29 May 2026AY 2017-1816 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that failure to provide the assessee with the 'reasons to believe' for reopening the assessment, despite specific requests, vitiates the reassessment proceedings. The AO lacked valid jurisdiction to proceed.

What were the facts?

The Assessing Officer (AO) reopened the assessment based on information that the assessee made a cash payment for immovable property. The assessee requested the reasons for reopening and the supporting documents, but these were not provided.

What were the issues?

Whether the reassessment proceedings are valid when the AO fails to provide the assessee with the reasons for reopening the assessment and supporting documents.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 148A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, RAIPUR BENCH “SMC”, RAIPUR

Before: SHRI PARTHA SARATHI CHAUDHURY

For Appellant: Shri Abhishek Mahawar, CA
For Respondent: Shri CH. Rajeswara Reddy, Sr. DR
Hearing: 29.05.2026Pronounced: 29.05.2026

आदेश / ORDER PER PARTHA SARATHI CHAUDHURY, JM The present appeal preferred by the assessee emanates from the order of the Ld.CIT(Appeals)/NFAC, Delhi dated 11.02.2026 for the assessment year 2017-18 as per the grounds of appeal on record.

2.

The contention in law as assailed by the Ld. Counsel for the assessee was that the copy of reasons recorded by the A.O forming “reasons to believe” for reopening of the assessment had not been supplied to the assessee in spite of specific request made by the assessee to the Department. The Ld. Counsel for the assessee submitted that as per notice issued u/s.148A(b) of the Income Tax Act, 1961 ( for short ‘the Act’), dated 26.05.2022, the A.O had written as follows: “As per available information you have made payment of Rs.7,50,000/- in cash towards purchase of immovable property during the F.Y. 2016-17 to M/s Hotel Babylon Continental Pvt. Ltd.. The payment has been made in cash to M/s Hotel Babylon Continental Pvt. Ltd. As per the return of income filed by you for the A.Y. 2017-18 you had not furnished all the particulars relating the transaction made in cash with M/s Hotel Babylon Continental Pvt. Ltd,. Accordingly, the source of funds for investment of Rs.7,50,000/- made in cash in the said immovable property remained unexplained and therefore escaped assessment to that extent for the financial year relevant to A.Y. 2017-18 within the meaning of provision of section 147 of Income tax Act, 1961". You are hereby show caused as to why an order under section 148A(d) of Income tax Act should not be passed holding that it is a fit case for issue of notice under section 148 and notice under section 148 of Income tax Act should not be issued for the Assessment Year 2017-18. Please submit your reply/submissions on above issue with documentary evidences in compliance of the

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order of the Hon'ble Supreme Court, referred supra, within two weeks from the date of receipt of this letter/notice electronically in e-proceedings facility through your account in e-filing portal of Income Tax Department.”

2.1 The Ld. Counsel further submitted that what were those available information with the Department, on the basis of which, they had come to conclusion that payment of Rs.7,50,000/- in cash was made towards purchase of immovable property during F.Y.2016-17 to M/s. Hotel Babylon Continental Pvt. Ltd., those information were never shared with the assessee. Specifically, order u/s. 148A(d) of the Act was passed on 14.07.2022 and it was considered a fit case for issuance of notice u/s. 148 of the Act. That having still not being supplied with those information, on the basis of which, the Department assails that the assessee had entered into transaction in cash with M/s. Hotel Babylon Continental Pvt. Ltd., the assessee made specific request dated 24.03.2023 to the A.O wherein firstly the assessee had denied that he had not made any payment of Rs.7,50,000/- in cash or through banking channels towards purchase of immovable property to M/s. Hotel Babylon Continental Pvt. Ltd. and the assessee also requested for furnishing of the relevant documents/information, on the basis of which, the Department had inferred that the assessee had done the said payment. The request letter dated 24.03.2023 is extracted as follows:

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3.

That instead of furnishing the relevant documents and informations as had been requested by the assessee, the A.O in the show cause notice regarding proposed variation to be made in the hands of the assessee observed as regards the request made by the assessee vide order dated 08.05.2023 as follows: “Furthermore, the contention of assessee regarding "provide us the documents/Information statement on the basis of which your good- self has inferred that the assessee has done the aforesaid payment & any action taken against the assessee without providing the documents/Information/ statement is against the law of natural justice are also not found acceptable at this stage. Since, he had already availed an opportunity to furnish his the reply/objection during the proceedings u/s 148A of the I T Act, 1961 but he had not filed any reply in respect of investment in purchase of immovable property which clearly evidenced that he was agreed with the finding of the department. Now, he taken plea to providing information/documents in respect of above investment is only afterthought and without any basis.” Thereafter, reassessment was completed vide order dated 29.05.2023.

4.

The A.O had simply rejected the request of the assessee for furnishing requisite informations/documents on the ground that the assessee got opportunity while participating in the proceedings u/s.148A(d) of the Act. The same was also reiterated by the Ld. Sr. DR at the time of hearing. The Ld. Sr. DR referred to the notice u/s.148A(b) of the Act. However, he failed to answer what were the informations/documents based on which the Department had come to conclusion that the assesse had made payment in cash to M/s. Hotel Babylon Continental Pvt. Ltd. The notice u/s.148A(b) of the Act simply

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states about informations available with the Department but what are those informations, they were never confronted with to the assessee nor copy of reasons were supplied before passing of the order u/s.148A(d) of the Act, dated 14.07.2022. Thereafter, the assessee had made specific request to the A.O on 24.03.2023 to provide documents/informations, on the basis of which, the A.O had concluded that the assessee had made payment in cash and the said request was never accepted by the Department and thereafter, as per show cause notice for the variation proposed, the request of the assessee was summarily dismissed and finally, reassessment order was passed by the Department dated 29.05.2023 without giving any information to the assessee regarding evidence or basis for “reasons to believe” for reopening of the assessment that the assessee had entered into such alleged cash transaction with M/s. Hotel Babylon Continental Pvt. Ltd. The assessee was made to defend his case without knowing the basis for such reassessment proceedings. That when the assessee repeatedly denied having such transactions with M/s. Hotel Babylon Continental Pvt. Ltd., the Department was bound to furnish copy of “reasons to believe” and relevant informations/documents during the course of reassessment proceedings on which they were relying upon. That since the Department failed to furnish copy of “reasons to believe” for reopening to the assessee, there has been brazen violation of principles of natural justice. The Ld. Sr.

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DR failed to refute these facts on record. He could not adduce any evidence to demonstrate that “reasons to believe” for reopening were furnished to the assessee. In absence of any evidence by the Revenue, the contentions of the Ld. Counsel for the assessee is deemed to be correct. I find that this Bench on the same identical facts and issues in the case of Chandra Kumar Dodwani Vs. ITO, Ward-3(2), Raipur (C.G.), ITA No.353/RPR/2026, A.Y.2010-11, dated 22.05.2026 had held and observed as follows: “2. At the time of hearing, it was contended by the Ld. Counsel for the assessee that the “reasons to believe” recorded for reopening has not been provided to the assessee. The A.O had proceeded to complete reassessment order u/s.143(3) r.w.s. 147 of the Act without furnishing copy of reasons recorded for reopening to the assessee. In this regard, the Ld. Counsel demonstrates that vide letter dated 21st April, 2017, it was requested by the assessee to the A.O to issue reasons recorded for reopening of the case for the year under consideration. The said request letter dated 21st April, 2017 is extracted as follows:

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3.

Thereafter, the assessee had written another letter to the Department dated 1st May, 2017 wherein reference of the earlier letter dated 21st April, 2017 was mentioned. In this way, twice it was requested to the Department by the assessee that reasons for reopening were not provided to the assesse which may be provided so that the assessee can purposefully represent his case on merits before the A.O. However, reasons for reopening was never shared with the assessee. The Ld. Counsel demonstrates the aforesaid by furnishing copies of order sheet entry in the case of the assessee wherein, there is no whisper regarding providing copy of reasons recorded for reopening to the assessee. 4. In this regard, the Department was provided an opportunity to furnish a report from the A.O and the said report was brought on record by the Ld. Sr. DR which is extracted as follows:

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5.

It is crystal clear from the report of the Department that “reasons to believe” for reopening of the case was never provided to the assessee. That at Para 2 of the extracted report, the A.O writes “Regarding first ground of appeal of the assessee, it is submitted that as per case record, the reason to believe of reopening of case has been duly recorded….”. The A.O says that reasons to believe has been duly recorded but did not state that said reasons to believe were furnished and shared with the assessee. The term ‘duly recorded’ does not answer the query that had been raised by this Bench to the Department regarding furnishing of the reasons to believe to the assessee. It is clear case therefore, such reasons to believe for reopening were never supplied to the assessee and the assessee was made to defend himself before the A.O without knowing the exact charge against him specifically and for which, transaction the Revenue is holding him responsible as income escaping assessment. That even quantum, for which, such reopening has been initiated that was also not known to the assessee during assessment proceedings. This is a clear case of gross violation of principles of natural justice as well as the mandate of the Hon’ble Supreme Court in GKN Driveshafts (India) Ltd. Vs. ITO & Ors. (2003) 259 ITR 19 (SC). This Bench of the Tribunal in the case of Paramjeet Narang 6. Vs. ITO-1(1), Bilaspur (C.G.), ITA Nos. 22 & 23/RPR/2017, A.Y.2009-10 & ITA No.183/RPR/2017, A.Y.2012-13, dated 04.08.2022 on the exact issue had held and observed as follows: “11. After having given a thoughtful consideration to the issue in hand, we are of the considered view that the failure on the part of the A.O to make available to the assessee a copy of the “reasons to believe” which formed the basis for reopening of his case goes to the very root of the validity of jurisdiction that was assumed by him for framing the

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impugned assessment. We, say so, for the reason that as the assessee despite specific request for a copy of the “reasons to believe” was not provided with the same by the A.O, thus, he remained divested of his statutory right of objecting to the very basis on which his case was reopened under section 147 of the Act. As stated by the Ld. AR, and rightly so, as held by the Hon’ble Supreme Court in the case of GKN Driveshafts (India) Ltd. Vs. ITO & Ors. (2003) 259 ITR 19 (SC), the assessee after obtaining a copy of the “reasons to believe” is vested with a statutory right to file his objections before the A.O, which the latter is required to dispose off on the basis of a speaking order. As in the case before us there has been a complete violation of the applicable principle of law by the A.O, who had despite specific request by the assessee failed to communicate the “reasons to believe” that had formed the very basis for reopening of his assessment u/s.147 of the Act, therefore, the very assumption of jurisdiction by him and framing of the impugned assessment cannot be sustained and is liable to be struck down on the said count itself. Our aforesaid view is supported by the judgment of the Hon’ble High Court of Bombay in the case of Agarwal Metals and Alloys Vs. ACIT & Ors. (2012) 346 ITR 64 (Bom.). In its aforesaid order, the Hon’ble High Court had after taking cognizance of the fact that the A.O in the case before them had failed to communicate the “reasons to believe” on the basis of which the case of the assessee was reopened, quashed the assessment by treating the same as having been passed in a brazen violation of the governing principles of law. The relevant observations of the Hon’ble High Court are culled out as under: “4. On these admitted facts, it is evident that there has been a complete violation of the applicable principles of law by the Assessing Officer. The Assessing Officer was required to communicate the reasons for reopening the assessment which he has failed to do. The Assessing Officer despite the judgment of the Supreme Court in GKN Driveshafts (India) Ltd., [2003] 259 ITR 19 (SC) has failed to provide an opportunity to the assessee to submit his objections to the reopening of the assessment. In the affidavit-in- reply, it has been submitted that the assessee was well aware of the reasons for the reopening of the assessment as the reasons were on the record for the assessment year 2007–08. This is clearly a specious explanation. According to counsel appearing on behalf of the Revenue, during the course of the assessment year 2007–08, it has been found that the petitioner has been engaged in under invoicing and

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it is on that basis that the assessment for the assessment year 2004–05 is sought to be reopened. Even if the submission of the learned counsel were to be correct, reasons have to be communicated to the petitioner. There has admittedly been no communication of reasons to the petitioner. In these circumstances, we are inclined to quash and set aside the impugned order of assessment which has been passed in a brazen violation of the governing principles of law. However, in order to obviate the bar of limitation, we intend to incorporate a protective stay in order to enable the Assessing Officer to proceed further in accordance with law.” Also, a similar view had been taken by the Hon’ble High Court of Delhi in the case of Pr. CIT Vs.Jagat Talkies Distributors (2017) 85 taxmann.com 189 (Del.). In its aforesaid order, the Hon’ble High Court relying on the judgment of the Hon’ble High Court of Bombay in the case of CIT Vs. Trend Electronics, ITA No.1867 of 2013, had held, that on account of the failure of the A.O to make available to the assessee a copy of the reasons for reopening of the assessment u/s.147 of the Act, the re-assessment proceedings would stand vitiated in law. Accordingly, as in the case before us, the A.O despite specific request of the assessee had failed to provide to him the copy of the reasons to believe on the basis of which his case was reopened u/s.147 of the Act, therefore, as per the aforesaid settled position of law the assessment framed by the him being devoid and bereft of valid assumption of jurisdiction cannot be sustained and is herein quashed.” 7. The Tribunal had relied on the binding decision of the Hon’ble Supreme Court in the case of GKN Driveshafts (India) Ltd. [supra) wherein it was held and observed that the assessee after obtaining a copy of the “reasons to believe” is vested with a statutory right to file his objections before the A.O. Thereafter, the A.O is required to adjudicate the matter through a speaking order. The Hon’ble Supreme Court had mandated that the A.O must provide copy of reasons for reopening when requested, reinforcing the importance of such reasons. 8. Reverting to the facts of the present case, admittedly, as demonstrated by the Ld. Counsel, request has been made by the assessee to the A.O twice to furnish reasons to believe for reopening of the case. However, there was no compliance from the Department and even in the report that has been submitted by the Ld. Sr. DR, it is amply clear that the

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Department has never supplied reasons to believe to the assessee which is against the dictate of the Hon’ble Supreme Court (supra). Similarly, the Hon’ble High Court of Bombay in the case of Agarwal Metals and Alloys Vs. ACIT & Ors. (2012) 346 ITR 64 (Bom.) has held where the A.O failed to communicate the “reasons to believe” on the basis of which the case of the assessee was reopened, the Hon’ble High Court quashed the assessment by treating the same as having been passed in a brazen violation of the governing principles of law. Similar view has been taken in the following decisions viz. (i) Pr. CIT Vs. Jagat Talkies Distributors (2017) 85 taxmann.com 189 (Del.); (ii) CIT Vs. Trend Electronics, ITA No.1867 of 2013 (Bom). The ruling therein is failure of the A.O to supply to the assessee a copy of the “reasons to believe” for reopening of the assessment u/s.147 of the Act, the re-assessment proceedings stands vitiated in law. 9. Considering the facts and circumstances and the aforesaid judicial pronouncements, in this case the A.O despite specific request by the assessee had failed to provide to the assessee copy of “reasons to believe”, on the basis of which, his case was reopened u/s. 147/148 of the Act. Therefore, as per settled position of law, assessment framed by the A.O being devoid and bereft of valid assumption of jurisdiction cannot be sustained and is herein quashed following the judgment of the Hon’ble Apex Court in the case of Union of India Vs. Rajeev Bansal (2024) 469 ITR 46 (SC). In this judgment, the Hon’ble Apex Court had established critical doctrine for determining the valid legality and execution of statutory power. The Hon’ble Apex Court reframed that Officer cannot simply assume valid jurisdiction since he is a quasi judicial authority and therefore, power is strictly tied to jurisdictional pre-conditions. Such power must have to be exercised strictly with legal validity within the bound jurisdiction. 10. In the present case, since copy of ‘reasons to believe” was not shared with the assessee in spite of repeated request, the notice for reassessment issued u/s.148 of the Act and subsequent reassessment order u/s.147/148 of the Act is therefore without valid inherent jurisdiction hence, bad in law, void ab initio, therefore quashed. 11. The legal issue is answered in favour of the assessee and against the Revenue. Rest other grounds stand academic only.

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12.

That as per above terms, appeal of the assessee is allowed.”

5.

That upon examination of the facts and circumstances and judicial pronouncements referred above, on the same parity of reasoning, it is held that since the ‘reasons to believe’ for reopening of the assessment was never shared with the assessee in spite of specific request by him, the notice for reassessment issued u/s.148 of the Act and subsequent reassessment order u/s.147 r.w.s. 144B of the Act by the A.O is therefore without valid inherent jurisdiction hence, bad in law, void ab initio, therefore quashed.

6.

The legal issue is answered in favour of the assessee and against the Revenue. Rest other grounds stand academic only.

7.

That as per above terms, appeal of the assessee is allowed. Order pronounced in open court on 29th day of May, 2026.

Sd/- (PARTHA SARATHI CHAUDHURY) �या�यक सद�य/JUDICIAL MEMBER रायपुर / Raipur; �दनांक / Dated : 29th May, 2026. SB, Sr. PS आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to : अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The Pr. CIT-1, Raipur (C.G.)

16 Harjot Singh Sailani Vs. ITO, 3(1), Raipur (C.G.) ITA No.328/RPR/2026

4.

�वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “एक-सद�य” ब�च, रायपुर / DR, ITAT, “SMC” Bench, Raipur. गाड� फ़ाइल / Guard File. 5. Samiran आदेशानुसार / BY ORDER, Bera, Sr. PS, // True Copy // ITAT, Raipur Senior Private Secretary आयकर अपील�य अ�धकरण, रायपुर / ITAT, Raipur Digitally signed by Samiran Bera, Sr. PS, ITAT, Raipur Date: 2026.05.29 18:38:21 +05'30'

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