TMI Blog2017 (9) TMI 192X X X X Extracts X X X X X X X X Extracts X X X X ..... tory for the AO to supply reasons for reopening the assessment and this has to be done within a reasonable time. See Haryana Acrylic Manufacturing Company v. The Commissioner of Income Tax IV [2008 (11) TMI 2 - DELHI HIGH COURT] - Decided in favour of assessee. - ITA No. 916/2015, ITA No. 990/2015, ITA No. 1000/2015, ITA No. 1001/2015, ITA No. 1003/2015, ITA No. 1030/2015, - - - Dated:- 29-8-2017 - S. MURALIDHAR PRATHIBA M. SINGH JJ. Appellant Through: Mr. Zoheb Hossain, Senior standing counsel. Respondent Through: Mr. Y.K. Kapur with Mr. Bhushan Kapur, Advocates. O R D E R Dr. S. Muralidhar, J.: 1. These six appeals, under Section 260A of the Income Tax Act, 1961 ( Act ), have been filed by the Revenue against the common order dated 10th June 2015 passed by the Income Tax Appellate Tribunal ( ITAT ) in ITA Nos. 1068/Del/2006 to 1073/Del/2008 for the Assessment Years ( AYs ) 1999-00 to 2004-05. Question involved 2. The short question sought to be urged by the Revenue in these appeals is whether In the facts and circumstances of the case, the ITAT could have held that since the Assessee was not given the copy of the reasons for issuing notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs in respect of each of the above AYs, making additions of the income from house property. Proceedings before the CIT (A) 8. Aggrieved by the assessment orders, the Assessee filed separate appeals before the Commissioner of Income Tax (Appeals) [ CIT (A) ]. In the appeals, one of the principal contentions raised by the Assessee was regarding failure of the AO to supply the Assessee reasons for reopening of the assessment. During the pendency of the appellate proceedings, a remand report was called for by the CIT (A) from the AO. This remand report was submitted by the AO on 13th July 2007 and a copy thereof was provided to the Assessee who filed a response thereto on 4th December 2007. 9. The case of the Assessee was that the AO had ignored the Assessee s request for being provided with the copy of the reasons. In terms of the judgment of the Supreme Court in GKN Driveshafts (India) Limited v. ITO [2003] 259 ITR 19 (SC), the entire reassessment proceedings stood vitiated on that score. 10. The CIT (A), by separate orders dated 7th January 2008, dismissed the appeals. The CIT (A) noted that the Assessee had made a request for being furnished reasons for reopenin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicable. The CIT (A) also distinguished the decision of the Supreme Court in GKN Driveshafts (supra) and held that the mere non-furnishing of reasons for reopening the assessment would not result in entire reassessment proceedings being invalidated. It was held that in the present case the Assessee had, despite having taxable income, failed to file returns as statutorily mandated under Section 139 (1) of the Act. The reasons for the notice under Section 148 of the Act was always in the knowledge of the Assessee. The lapse in not providing the reasons was procedural and would not render the entire reassessment proceedings invalid. Impugned order of the ITAT 14. When the matter travelled at the instance of the Assessee to the ITAT, a reference was made by the Assessee to the decision of this Court in Haryana Acrylic Manufacturing Company v. The Commissioner of Income Tax IV [2009] 308 ITR 38 (Del) and that of the Bombay High Court in CIT v. Fomento Resorts and Hotels Limited (decision dated 27th November 2006 in ITA No. 71/2006). It was held that the decision of this Court in Haryana Acrylic (supra) was binding on the Revenue. The failure to supply the reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nto Resorts and Hotels Limited (supra). 18. Mr. Kapur submitted that the law was well settled that a failure to supply reasons under Section 148 of the Act would vitiate the entire reassessment proceedings. Analysis and reasons 19. The above submissions have been considered. In GKN Driveshaft (India) Limited v. ITO (supra), the Supreme Court highlighted the procedure that ought to be followed when the assessment is proposed to be reopened under Section 148 of the Act. It explained that the proper course of action for the notice to file return and if he so desires, to seek reasons for issuing notices. The Assessing Officer is bound to furnish reasons within a reasonable time. On receipt of reasons, the assessee is entitled to file objections to issuance of notice and the Assessing Officer is bound to dispose of the same by passing a speaking order. 20. It appears that in the above case, the reasons were furnished only during the course of the proceedings in the Supreme Court. Prior thereto no such procedure had been devised regarding raising of objections to the reopening and the disposal of such objections by the AO by a speaking order even prior to the comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mandatory for the AO to supply reasons for reopening the assessment and this has to be done within a reasonable time. It was further observed by this Court as under: .... a notice under Section 148 without the communication of the reasons therefore is meaningless inasmuch as the Assessing Officer is bound to furnish the reasons within a reasonable time. In a case, where the notice has been issued within the said period of six years, but the reasons have not furnished within that period, in our view, any proceedings pursuant thereto would be hit by the bar of limitation inasmuch as the issuance of the notice and the communication and furnishing of reasons go hand-in-hand. The expression within a reasonable period of time as used by the Supreme Court in GKN Driveshaft (India) Limited (supra) cannot be stretched to such an extent that it extends even beyond the six years stipulated in Section 149. 24. Mr. Hossain sought to distinguish the decision in Haryana Acrylic Manufacturing Company v. The Commissioner of Income Tax (supra) on the ground that the Assessee in that case had filed its return which was scrutinized and an order was passed in the first instance under Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the same before the Assessing Officer. Thus, in the absence of reasons being furnished, when sought for would make an order passed on reassessment bad in law. The recording of reasons (which has been done in this case) and furnishing of the same has to be strictly complied with as it is a jurisdictional issue. This requirement is very salutary as it not any ensures reopening notices are not lightly issued. Besides in case the same 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 and if satisfied with the objections, then the impugned reopening notice under Section 148 of the Act is dropped/withdrawn otherwise it is proceeded with further. In issues such as this, i.e., where jurisdictional issue is involved the same must be strictly complied with by the authority concerned and no question of knowledge being attributed on the basis of implication can arise. We also do not appreciate the stand of the Revenue, that the Respondent-Assessee had asked ..... X X X X Extracts X X X X X X X X Extracts X X X X
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