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2015 (6) TMI 666 - ITAT DELHI

2015 (6) TMI 666 - ITAT DELHI - TMI - Reopening of assessment - non providing reasons for issuing notice - Held that:- Requirement of recording the reasons and communicating the same to the assessee, enabling the assessee to file objections and the requirement of passing a speaking order, are all designed to ensure that the Assessing Officer does not reopen the assessments which have been finalized on his mere whim and fancy, and that he does so only on the basis of lawful reasons and, a deviati .....

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for providing the same, the whole reassessment proceedings and the resultant order of assessment passed under Section 143(3)/148 of the Act have become vitiated entailing in nullifying proceedings and, accordingly, the orders of assessment under Section 143(3)/148 are quashed - Decided in favour of assessee. - ITA Nos.1068/Del/2008 to 1073/Del/2008 - Dated:- 10-6-2015 - Shri G.C. Gupta and Shri Inturi Rama Rao,JJ. For the Petitioner : Shri Kaanan Kapur and Shri Bhushan Kapur, Advocates. For the .....

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action of learned Assessing Officer, that completing assessment u/s 143(3)/148 of the Income Tax Act, 1961 was in order. 2. That the learned CIT(A) has erred in law and on facts in confirming A.O. s action of issuing the notice u/s 148 which was without jurisdiction as the condition precedent to the exercise of jurisdiction u/s 148 i.e. the recording of reason was totally absent. 3. That the learned Assessing Officer had not given reasonable opportunity to appellant before making assessment u/s .....

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e of legality of reassessment proceedings initiated by issue of notice under Section 148 of the Income-tax Act, 1961 for a fresh decision to the file of the Assessing Officer in the light of the decision of Hon ble Apex Court rendered in the case of GKN Driveshafts (India) Ltd. Vs. ITO & Others - [2003] 259 ITR 19 (SC). With regard to the other grounds of appeal raised by the assessee, the Tribunal has noted in its order that no adjudication is called for regarding the other grounds of the a .....

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set aside the order of the Tribunal dated 05.01.2009 and directed the Tribunal to decide the aforesaid appeals afresh and consequently, the appeals of the assessee were fixed for hearing before the Tribunal. 4. The learned counsel for the assessee submitted that the assessee had specifically requested the Assessing Officer for the copy of the reasons leading to reopening of the assessment in these cases under Section 148, but the Assessing Officer had ignored the request of the assessee and pro .....

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re bad in law and liable to be quashed. The learned counsel for the assessee submitted that an affidavit regarding non-receipt of reasons for reopening of assessment under Section 148 was filed. He referred to paragraph 4.6 of the impugned order passed by the learned CIT(A) wherein he has recorded that it appears from the records that the request for providing reasons for issuing the notice under Section 148 was made by the appellant. The CIT(A) further recorded that it is also apparent from the .....

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- [2003] 259 ITR 19 (SC). (ii) Haryana Acrylic Manufacturing Company Vs. CIT and Anr. - [2009] 308 ITR 38 (Delhi). (iii) CIT Vs. Videsh Sanchar Nigam Limited - [2012] 340 ITR 66 (Bom). (iv) CIT Vs. Fomento Resorts and Hotels Ltd. - judgment dated 27.11.2006 in Tax Appeal No.71 of 2006 (Bombay High Court). (v) Shri Balwant Rai Wadhwa Vs. ITO - order dated 14.01.2011 in ITA No.4806/Del/2010 (ITAT, Delhi A Bench). (vi) Industrial Development Bank of India Vs. DCIT - order dated 12.12.2012 in ITA No .....

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hat the decision of Hon'ble Delhi High Court in Haryana Acrylic Manufacturing Company (supra) clinches the issue in favour of the assessee, wherein it is held that the requirement of recording the reasons and communicating the same to the assessee, enabling the assessee to file objections and the requirement of passing a speaking order are all designed to ensure that the Assessing Officer does not reopen assessments which have been finalized on his mere whim or fancy and that he does so only .....

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otices under Section 148 of the Act. He submitted that the finding of the CIT(A) as recorded in paragraph 6.4 of his appellate order was that it was not correct to say that the assessee remained ignorant about the reasons for the issue of notice under Section 148 of the Act. The CIT(A) has recorded certain facts, i.e., that the assessee has not filed any return for A.Y. 1998-99 although its total income was in excess of maximum amount not chargeable to income tax and that, as per provisions of S .....

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graph 9.1 of the learned CIT(A) s order wherein it was recorded that the observation of the Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd. (supra) does not suggest that non-communication of the reasons would result in the assessment proceedings and the assessment order becoming void or bad in law where the return of income under Section 139(1) itself was not filed. The CIT(A) further noted that it is important to note that the said observation was made by the Hon ble Apex .....

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it was not supplied the copy of the reasons recorded for reopening of the assessment. The learned DR also relied on the ex parte order of the Tribunal dated 05.01.2009 wherein the Tribunal has restored the matter to the file of the Assessing Officer for a fresh decision. He relied on the order of the Assessing Officer and the learned CIT(A). 7. We have considered the rival submissions carefully and have gone through the order of the Assessing Officer and the learned CIT(A). We find that the basi .....

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a request was made in the concluding part of the letter to supply the reasons for reopening of the assessment under Section 148 of the Act. The assessee has also filed an affidavit to this effect regarding non-receipt of reasons for reopening of the case under Section 148 of the Act. The CIT(A) has given a finding in paragraph 6.4 of his appellate order that it appears from the records that the request for providing reasons for issuing the notice under Section 148 was made by the appellant. The .....

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pite of a specific request made by the assessee for providing reasons for issuing the notice under Section 148, renders the whole reassessment proceedings vitiated and void in law. The Tribunal, vide its order dated 05.01.2009, has set aside the issue of validity of notice under Section 148 for the relevant assessment years and has restored the same to the file of the Assessing Officer for a fresh decision in the light of the decision of Hon ble Apex Court rendered in the case of GKN Driveshafts .....

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Assessing Officer is bound to dispose of the same by passing a speaking order. In the case of the assessee before us, we find that the assessee has requested for furnishing of the reasons recorded for issuance of notice under Section 148 of the Act and the Assessing Officer has not furnished the reasons to the assessee. The plea of the learned DR, that this decision of Hon ble Apex Court in GKN Driveshafts (India) Ltd. (supra) is distinguishable, as, in this case, the assessee has filed the retu .....

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ing such notice. The Hon ble High Court has concluded in this case that the Assessing Officer shall supply the reasons recorded by him for issuing such notice within 30 days of the filing of the return of income by the assessee without waiting for the assessee to demand such reasons. In the case of the assessee before us, it is an admitted fact that the Department has failed to supply the assessee the copy of reasons recorded by the Assessing Officer for issuance of notice under Section 148 of t .....

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law cited by the learned counsel for the assessee supports the case of the assessee that once it is found that the copy of the reasons recorded for issuance of notice under Section 148 of the Act was not given to the assessee, inspite of a specific request made by the assessee in this behalf, the proceedings of assessment thereafter, including the assessment order passed, shall be vitiated and void. The decision of Hon'ble Delhi High Court in Haryana Acrylic Manufacturing Company (supra) is .....

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