TMI Blog2010 (5) TMI 690X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 were not provided to the assessee in spite of specific requests?" 2. The facts have been narrated in considerable detail in the orders of the learned Members and i do not propose to repeat them except where it is absolutely essential. In my opinion, Question No. ii) is more fundamental to the dispute before me and requires to be resolved first. There is no dispute that the copy of the reasons recorded for issuing notice under section 148 were not provided to the assessee despite specific request. In this situation, it seems to me that the only course open to me is to quash the re-assessment proceedings. The contention of the learned Senior Departmental Representative was that the judgment of the Supreme Court in the case of GKN Driveshafts (India) Ltd. vs. ITO (2003) 259 ITR 19 (SC) only lays down a procedure or a course of action to be adopted by the Assessing Officer and if the reasons for reopening the assessment are not supplied to the assessee despite the assessee's request, the assessment itself cannot be quashed or held ab initio void. He invited my attention to the following orders / judgments where this point arose but despite the same the re-assessments orders were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s an order on the objections and then proceed to complete the reassessment order. However, in the case of Fomento Resorts and Hotels Ltd., which arose under the Expenditure Tax Act, the Tribunal held that if the reasons for reopening the expenditure tax assessment under section 11 of the Expenditure Tax Act are not furnished, the reassessment is without jurisdiction and is liable to be quashed. In this order the Tribunal has referred to the judgment of the Supreme Court in the case of GKN Driveshafts (India) Ltd. (supra) and also to the judgment of the Hon'ble Bombay High Court in the case of Devji Ravji Patel vs-Balasubramaniam and Others (1994) 210 ITR 925 (Bom). Section 11 of the Expenditure Tax Act provides for chargeable expenditure escaping assessment. It does not expressly provide for recording of reasons before issuing the notice of reassessment. Section 148(2) of the Income Tax Act expressly states that before issuing a notice of reassessment the Assessing Officer shall record his reasons for doing so. I do not think that there is any material difference between the two provisions because it has been held by the Panaji Bench of the Hon'ble Bombay High Court in the judgme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer to dispose off the objections of the assessee by following the due procedure of law and in conformity with the judgment of the Supreme Court in the case of GKN Driveshafts (India) Ltd (supra). In the case of Allana Cold Storage Ltd. (supra) also, as paragraph 3 of the judgment would show, the reasons for reopening the assessment were supplied to the assessee but only on 21.03.2006 when the assessment was about to get barred by time. The assessee filed their objections to the reasons on 23.03.2006 and requested for personal hearing. But the Assessing Officer straightaway passed the reassessment order including the decision on the objections filed by the assessee. Thus, both the cases cited by the learned Senior DR are cases where the Assessing Officer did supply the reasons recorded for reopening the assessment. In the present case, however, there is no dispute that the reasons recorded for reopening the assessment were never supplied to the assessee. The facts being different, the cited judgments are not applicable. 6. In the light of the binding judgment of the Panaji Bench of the Hon'ble Bombay High Court (supra) and the order of the Tribunal in the case of Videsh Sanchar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at there was no fresh material to support the formation of the belief that income chargeable to tax had escaped assessment. The Balance Sheet, Profit and Loss Account and other details were filed with the return of income and it was not permissible for the Assessing Officer, after a gap of five years, and in the absence of any fresh tangible material, to come to the conclusion that income chargeable to tax had escaped assessment. The learned Accountant Member has however taken the view, dissenting from learned Judicial Member that the case is covered by the judgment of the Supreme Court in the case of ACIT vs. Rajesh Jhaveri Stock Brokers (P) Ltd. (supra). He opined that in a case where the return was merely processed under section 143(1) and no assessment was made under section 143(3), if the Assessing Officer forms the belief that income chargeable to tax has escaped assessment on the basis of material available in the return itself, it is not a case of a mere change of opinion. The reopening in such a case would be valid. 9. After careful consideration of the matter i am inclined, with respect, to agree with the view taken by the learned Judicial Member. In my humble opinion, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the reasons recorded and the formation of the belief would be to make the conditions of section 147 and section 148 otiose as regards notices of reopening issued in cases where the return was originally processed under section 143(1). There is no exclusion in section 147 to the effect that where the return was earlier processed under section 143(1) it is not necessary for the Assessing Officer to hold or entertain a belief that income chargeable to tax had escaped assessment for the reasons recorded by him. Therefore, the condition that the Assessing Officer must have reason to believe and the further condition that those reasons must have a live link with the formation of the belief is applicable equally to cases where the return was processed under section 143(1) as also to cases where the return was examined and an assessment was made by a speaking order under section 143(3). The only distinction recognized in section 147 between the two is where it is provided by the proviso that where the earlier assessment was made under section 143(3), no action for reopening the assessment can be taken after the expiry of four years from the end of the relevant assessment year unless in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us with the formation of such belief or that the reasons are based on gossip or rumour or were a mere pretence. This is made clear by the observations of the Court at page 512 of the report where it was held that "so long as the ingredients of section 147 are fulfilled" the Assessing Officer can reopen the proceedings even where intimation under section 143(1) had been issued. Thus fulfillment of the conditions of section 147, including the one that there should be "reason to believe", is essential for the validity of the notice under section 148. It is while expounding the words "reason to believe" that the Supreme Court in the later judgment in CIT vs. Kelvinator of India Ltd. (supra) held that there should be "tangible material" to come to the conclusion that income had escaped assessment. Thus, in my humble understanding of both the judgments, while resorting to section 147 even in a case where only an intimation had been issued under section 143(1)(a) it is essential that the Assessing Officer should have before him tangible material justifying his reason to believe that income had escaped assessment. 11. What the assessee contended before me and which contention had found f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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