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2015 (5) TMI 871 - DELHI HIGH COURT

2015 (5) TMI 871 - DELHI HIGH COURT - TMI - Reopening of assessment - absence of reasons recorded prior to the issuance of notice under Section 148 and the objections furnished by the petitioners to the Section 148 notice had not been disposed of by a separate speaking order prior to the re-assessment order - Held that:- As seen from the provisions of Section 148(2) as also the decisions of this Court in Haryana Acrylic(2008 (11) TMI 2 - DELHI HIGH COURT), and that of Baldwin Boys High School (2 .....

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notice under Section 148 would be invalid and consequently all proceedings pursuant thereto would also be vitiated.

Assessing Officer has to pass a speaking order disposing of the objections “before proceeding with the assessment”. In the present case, a separate speaking order has not been passed and the objections have been dealt with, if at all, in the re-assessment order itself. On this ground also, the petitioner is liable to succeed. See GKN Driveshafts [2002 (11) TMI 7 - SUPRE .....

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30.03.2014 passed by the Assessing Officer re-assessing the income of the assessee in respect of the Assessment Year 2008-2009. 2. When this matter came up for hearing on the first occasion, i.e., 19.08.2014, we had recorded that the learned counsel for the petitioners had raised two points in this petition. The first point was that the petitioners came to know, after the re-assessment order, that the purported reasons for initiating reassessment proceedings had been recorded after the issuance .....

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the case of G.KN Driveshafts (India) Ltd. v. ITO : 259 ITR 19(SC). 3. The counter-affidavit has been filed on behalf of the Revenue and a very surprising stand has been taken. In reply to paragraph No.1 of the petition on merits, the counter-affidavit reads as under:- 1. With respect to the content of Paragraph no. 1 it is respectfully submitted that the factual position in the matter is that the notice u/s.148 of the Act dated 30.08.2012 was issued and duly served upon the assessee company. Th .....

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d as to how such a circumstance could, at all, have arisen. We asked the learned counsel for the Revenue to produce the relevant file and on examining the same, we find that the reasons for issuance of the notice under Section 148 of the said Act which have been recorded bears the date 19.09.2012. The said date is printed. It is, first of all, inconceivable that when a document is being typed on or before 30.08.2012 (the date on which the notice under Section 148 was issued) that a future date o .....

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recorded on 18.09.2012, they were also furnished to the petitioners on 18.09.2012, but the notice under Section 148 had already been issued on 30.08.2012. It is evident that the notice was issued prior to the recording of the reasons. Section 148(2) of the Income-Tax reads as under:- 148. (2) The Assessing Officer shall, before issuing any notice under this section, record his reasons for doing so. It is absolutely clear from the said provision that the Assessing Officer is required to record h .....

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mere charades? Did he think that it was a mere pretence or a formality which had to be gotten over with? At this point, it would be well to remember that the Supreme Court in GKN Driveshafts (supra) had specifically directed that when a notice under Section 148 of the said Act is issued and the noticee files a return and seeks reasons for the issuance of the notice, the Assessing Officer is bound to furnish reasons within a reasonable time. On receipt of the reasons, the noticee is entitled to .....

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h-handedness on the part of Assessing Officers and to temper any action contemplated under Section 147 of the said Act by reason and substance. In fact, even Section 148(2) stipulates that the Assessing Officer shall, before issuing any notice under the said Section, record his reasons for doing so. The Supreme Court has only carried forward this mandatory requirement by directing that the reasons which are recorded be communicated to the assessee within a reasonable period of time so that at th .....

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ul reasons. These steps are also designed to ensure complete transparency and adherence to the principles of natural justice. Thus, a deviation from these directions would entail the nullifying of the proceedings….. (underlining added) 5. Furthermore in the decision of the High Court of Karnanataka - Commissioner of Income Tax, (Exemptions) v. Baldwin Boys High School: 364 ITR 637(Karnataka) - this very question of whether a notice under Section 148 of the said Act could be issued without .....

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of the Act, it is clear as crystal that the Assessing Officer is obliged to record reasons before issuing notice under section 148 of the Act…. (underlining added) 6. The decision sought to be relied upon by Mr Madan on behalf of the Revenue in the case of Adobe Systems Software Ireland Ltd. v. Assistant Dirctor of Income Tax, 2014(7) AD 244, is not at all relevant for the present discussion. That was a case which dealt with the furnishing of the reasons to the assessee. The issue which h .....

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pra), and that of the Karnataka High Court in Baldwin Boys High School (supra), that the reasons have to be recorded prior to the issuance of notice under Section 148. If they are not so recorded, then the notice under Section 148 and proceedings pursuant thereto are without authority of law. In the present case, it is evident that the reasons were recorded only on 18.09.2012, i.e., after the notice under Section 148 had been issued on 30.08.2012. Clearly, the statutory provisions, as explained .....

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