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2014 (9) TMI 1273 - AT - Income TaxReopening of assessment u/s 147 - inability of the AO to produce the reasons recorded or to produce the evidence of supply of the copy of reasons to the assessee - HELD THAT:- Whatever may be the reason but it is mandated by the Hon’ble Courts that reasons to believe must necessarily show, indicate and communicate why and for what grounds/cause any income has escaped assessment. Recording of reasons has been emphasised and adverted to as the foundation of the jurisdiction of an AO, who initiates reassessment proceedings. The validity of the reassessment proceedings is tested, by the Hon’ble Courts, on the basis of the underlying reasoning stated and recorded for opening of the reassessment. If the person affected by the action of the AO is not aware as to why the AO had found it fit to reopen his assessment, he will be in dark and will not be in position to defend himself. Principles of natural justice demand that nobody should be penalise unheard. Without furnishing the assessee a copy of the reasons recorded would tantamount to punish the assessee without hearing him. The power of the to issue notice u/s. 147 of the Act is coupled with the duty to follow a prescribed method. A duty has been cast upon him to supply the copy of reasons recorded to the assessee. Rights are always accompanied by duties and bigger rights brings higher the duties in picture. Power given to the AO by section 147 is not a simple power it is to unsettle the completed proceedings and it generally results in higher tax liability. Therefore, safeguards have been provided in the Act. Duty of the AO to communicate the reasons to the assessee is the other side of the coin and is the right of the assessee. The assessee cannot be burdened only with duties. His duty is to file the return once he gets the notice. Similarly, his right to know the reasons starts once he files a return and asks the AO to supply him the copy of recorded reasons. Case-issuance of notice u/s. 148 of the Act, the requests made by the assessee during assessment and after the assessment/appellate proceedings, the inability of the AO to produce the reasons recorded or to produce the evidence of supply of the copy of reasons to the assessee-we are of the opinion that validity of the assessment order and the subsequent order of the FAA cannot be upheld. Therefore, in the cases of Videsh Sanchar Nigam Ltd [2011 (7) TMI 715 - BOMBAY HIGH COURT] and Fomento Resorts and Hotels [2006 (11) TMI 645 - BOMBAY HIGH COURT] we are of the opinion that the order passed by the AO was not valid. The action of the AO has resulted in violation of basic principles of natural justice as well as invaluable right of the assessee. His order is beyond validity, so it is unsustainable. Decided in favour of assessee.
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