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Parvez Cavas Damania Versus The Dy. Commissioner of Income Tax,

2016 (10) TMI 310 - ITAT PUNE

Reopening of assessment - Assessing Officer after receiving certain information through AIR data issued notice under section 148 of the Act - Held that:- The Assessing Officer in the present case has failed to provide the copy of reasons recorded for reopening of the assessment to the assessee and in view thereof, remedy available with the assessee to object to the reasons recorded for reopening of the assessment and duty of the Assessing Officer to deal with the said objections could not be tak .....

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ain the same. However, the exact reasons recorded for reopening the assessment are at variance i.e. information was received from DIT(Systems) in respect of ₹ 2,29,806/- being received from HSBC Bank. The reassessment proceedings were completed against the assessee to explain the deposit of ₹ 2,29,806/- on 31.03.2007, whereas AIR information was in respect of amount received from HSBC Bank. On this ground also, reassessment proceedings completed against the assessee are bad in law an .....

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of your Appellant was selected for scrutiny on the basis of AIR data for depositing ₹ 2,29,806/- in Hong Kong & Shanghai Banking Corporation Ltd ONLY. The addition made on this account in to the saving bank account and disallowances of Professional Expenses are unjust against provision of Law. The reasons forwarded for Non Production of Bank Statement may please be seen in Practical angle . 2. On facts & circumstances prevailing in the case & as per provision of law it be held .....

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ng the course of hearing and passed the order, rejecting the submission and confirming the Assessing Officer order, which is improper and against justice. The order passed by The Commissioner Of Income Tax (Appeals) - II is passed in violation of rules of natural justice and may please be held as vitiated and be set aside. So also Preservation of Books of Accounts for Financial Year 2006-07 is practically and technically impossible. The Vouchers of Expenses Produced before the Assessing Officer .....

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961 . The assessment so framed deserved to be quashed. Just and proper relief be granted to the appellant in this respect. 4. The learned Authorized Representative for the assessee at the outset pointed out that the additional ground of appeal raised was against jurisdiction of re-assessment made in the case of assessee and the same may be decided first before deciding the issue raised on merits. He further submitted that the additional ground of appeal raised is a purely legal ground, which goe .....

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come of ₹ 8,08,450/-. The Assessing Officer on the basis of AIR data noted that the assessee had deposited sum of ₹ 2,29,806/- on 31.03.2007 in the bank account maintained with Hong Kong & Shanghai Banking Corporation Ltd., which was not considered while filing the return of income. Therefore, notice under section 148 of the Act was issued on 29.03.2014 after taking prior approval under section 151(2) of the Act from JCIT, Ahmednagar Range, Ahmednagar. The said notice under secti .....

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disallowance of expenditure of ₹ 1,11,490/-. 7. Before the CIT(A), the assessee claimed that notice issued under section 148 of the Act was time barred. However, the assessee furnished submissions that the notice issued was within time and was issued after obtaining approval, but the request of assessee to give reasons recorded for reopening the assessment were not intimated to the assessee. The assessee made a fresh application for supplying reasons so recorded for issue of notice under .....

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148 of the Act to verify the genuineness of sources of deposits, which was not permissible in law. The CIT(A) noted the contention of assessee vide para 4.5 of the appellate order that the notice under section 148 of the Act was issued within time and after due approval of JCIT. The second contention of the assessee was that reasons were not communicated to him. The CIT(A) in this regard observed that the perusal of assessment order reflects that no reasons were ever asked by the assessee from t .....

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missions. Also, the validity of notice, etc. had never been challenged before the Assessing Officer and hence, the action of Assessing Officer in issuance of notice under section 148 of the Act was held to be in order. 8. The learned Authorized Representative for the assessee referred to the letter dated 16.04.2014 filed on 21.04.2014 under which, the assessee sought the reasons for reopening of assessment after he had given an intimation that the original return of income filed by him should be .....

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eopening the assessment under section 147 of the Act and vide letter dated 02.05.2016, the reasons have been given, which are at variance from the extract of reasons given to the assessee in the assessment order. The learned Authorized Representative for the assessee referred to the ratio laid down by the Hon ble Bombay High Court in CIT Vs. Trend Electronics (2015) 379 ITR 456 (Bom), wherein it has been held that in the absence of providing reasons for reopening the assessment to the assessee w .....

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ved necessary approval from JCIT under section 151(2) of the Act and issued notice under section 148 of the Act. In compliance, the assessee filed a letter dated 21.04.2014 stating that original return of income filed under section 139(1) of the Act be treated as return of income filed in response to notice under section 148 of the Act. Thereafter, vide same letter dated 21.04.2014, the assessee asked the Assessing Officer to furnish reasons for reopening the assessment under section 147/148 of .....

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and the appellate orders. The exact reasons for reopening the assessment are as under:- Reasons for reopening the case of Shri Parvez Damania A.Y. 2007 -08 In this case information is received from the DIT(Systems)-Systems-II, New Delhi in respect of AIR information of ₹ 2,29,806/- in respect of amounts received from Hong Kong and Shanghai Banking Corporation Ltd. It is seen that the same is not included in the income of the assessee and therefore to this extent I am satisfied that income .....

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nt is with regard to amounts received from HSBC Bank totaling ₹ 2,29,806/-. The two are at variance i.e. initial communication to the assessee was with regard to deposits in the said HSBC bank account and on the other hand, the exact reasons were on account of amount received from HSBC Bank. In such scenario, where correct reasons have not been provided to the assessee, the question which arises is whether re-assessment proceedings completed against the assessee are validly complete. 12. T .....

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iled return of income for the relevant assessment year on 22.02.2008 declaring total income of ₹ 8,08,450/- and the Assessing Officer was requested to treat the same as return of income filed in response to notice issued under section 148 of the Act. Secondly, the assessee vide the said letter itself requested the Assessing Officer to give reasons of issuing notice under section 148 of the Act. He asked the Assessing Officer to give the reasons in writing at an earliest opportunity, but no .....

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recorded for reopening the assessment have not been provided to the assessee at the first instance and also where there is a deviation in the reasons recorded and reasons as taken note of by the Assessing Officer while completing the assessment order, can any addition be made in the hands of assessee. 14. The Hon ble Bombay High Court in CIT Vs. Trend Electronics (supra) in a case of reassessment, wherein an objection was raised by the assessee held that recording of reasons and furnishing of re .....

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owed the decision of the court in VIDESH SANCHAR NIGAM LTD in holding that an order passed in reassessment proceedings was bad in law in the absence of reasons recorded for issuing a reopening notice under section 148 of the Income-tax Act, 1961, being furnished to the assessee when sought for. It is axiomatic that the power to reopen a completed assessment under the Act is an exceptional power and whenever the Revenue seeks to exercise such power, it must strictly comply with the pre-requisite .....

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nd furnishing of the reasons has to be strictly complied with as it is a jurisdictional issue. This requirement is salutary as it not only ensures reopening notices are not lightly issued but also where notices have been issued on some misunderstanding/misconception, the assessee is given an opportunity to point out that the reasons to believe as recorded in the reasons do not warrant reopening before the reassessment proceedings are commenced. The Assessing Officer disposes of these objections .....

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to justify non-furnishing of reasons. The State is expected to act more responsibly. 15. Now, coming to the facts of the present case, where the assessment in the hands of assessee was reopened after recording the reasons for reopening the assessment under section 147 of the Act and thereafter, notice under section 148 of the Act was issued requiring the assessee to furnish return of income and where the assessee had furnished the said return of income and had then asked for reasons recorded fo .....

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