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TMI Blog2017 (9) TMI 192X X X X Extracts X X X X X X X X Extracts X X X X ..... er of assessment passed under Section 143 (3) read with 148 of the Act have become vitiated?" Background facts 3. The background facts are that the Respondent-Assessee, a firm, was engaged in the business of exhibition of films. It also received rental income. For the AYs in question, no return of income was filed by the Assessee under Section 139 (1) of the Act, although the Assessee was a registered tax payer and had been filing its returns of income in earlier years. 4. The case of the Department was that on examination of the assessment records, it was noticed that the Assessee had income from letting out of the property to Syndicate Bank, Vijaya Bank and Canara Bank. On the basis of the information received from the said banks, it was discovered that rent had been paid to the Assessee by them after deduction of tax at source. Notice under Section 148 5. On 2nd September 2005, the Assessing Officer ('AO') recorded reasons for reopening of the assessment in the file. On the same date, i.e. 2nd September 2005, notice was issued to the Assessee under Section 148 of the Act asking it to file the return of income within 30 days. It is stated that the Assessee filed the return o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnments were sought by the Assessee and therefore, reasonable opportunity was given to the Assessee. The remand report of the AO dated 13th July 2007 referred to two separate and independent facts - (i) that the Assessee had failed to file the return of income for the AY 1998-99 and the other AYs in question and; (ii) the existing assessment records showed that the Assessee was in receipt of rental income from house property and also had business income from exhibition of films. The return filed by the Assessee in response to the notice under Section 148 of the Act also proved these facts. 11. Secondly, the CIT (A) held that the Assessee's plea that the notice under Section 148 was on the basis of 'reasons to suspect' and not 'reasons to believe' was without merit. Further, the CIT (A) held that since sufficient opportunity had been vitiated by the Assessee before the AO, the failure to furnish the reasons to reopen could not be said to be fatal to the assessment proceedings. It was not as if the Assessee was unaware of the reasons for reopening the assessment. The AO's remand report did enclose a copy of the reasons. It is observed by the CIT (A) that, no doubt, the AO ough ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or standing counsel for the Revenue, submitted that even in GKN Driveshafts (supra) the Supreme Court did not invalidate the entire assessment proceeding but only permitted the Assessee to again avail of an opportunity of filing its objections to the reopening of the assessment. The reassessment proceedings were kept in abeyance till this procedure was completed. It is accordingly submitted that, in the present case also, if the Court is of the view that procedure outlined in GKN Driveshaft (supra) was not completed and that the reassessment proceedings could not have continued, the Court can direct the entire proceedings to recommence from that stage and give a time-bound direction for completing of the procedure involving consideration of the Assessee's objections to the reopening of the assessment. 16. Without prejudice to the above submissions, Mr. Hossain submitted that the present case is distinguishable from the decisions in GKN Driveshafts (supra) and Haryana Acrylic (supra). This was a case where no return was filed by the Assessee for the AY in question despite having both business income as well as income from house property. Therefore, the AO was justified in having re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of the abovesaid five assessment orders." 21. The above decision in GKN Driveshaft (India) Limited v. ITO (supra) was dated 25th November 2002. After this date the law is presumed to have been within the knowledge of all the Revenue officials. The failure thereafter by the AO to provide the Assessee the reasons for reopening the assessment could not be treated as a mere procedural lapse. It would not in all cases be open to the Revenue to simply seek to overcome this lapse by offering that the AO will consider the Assessee's objections and pass a fresh reasoned order thereon. This will depend on the facts and circumstances of each case. If the lapse is discovered within a short time and the offer to rectify the apse is made soon thereafter, no prejudice could be said to be caused either to the Assessee or the Revenue. Where, however, the Revenue contests the position at every stage and offers to consider the objections several years after it should have in the first place, the request to start the proceedings de novo may neither be fair nor efficacious. 22. In the present case the assessments of AYs 1999-2000 onwards for five years are sought to be reopened. The offer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to the Assessee. It is not in dispute that the Assessee had made a request in writing for the reasons in respect of each of the AYs in question. Merely because the Assessee did not repeat the request cannot mean that the Assessee waived its right to be provided the reasons. The proviso to Section 292 BB (1) of the Act makes it clear that there is no estoppel against an Assessee on account of participating in the proceedings as long as it has raised an objection in writing regarding the failure by the AO to follow the prescribed procedure. 25. The Court is also of the view that no comparison can be drawn with a situation where in the course of the assessment proceedings an opportunity to examine a witness is denied. That was the situation in Income Tax Officer v. M. Pirai Choodi (supra). There the Supreme Court was of the view that if there was a failure by the AO to provide the Assessee an opportunity of cross-examination of a witness, the Assessee could have gone in appeal. In that case it was found that "the Assessee had failed to avail statutory remedy." Here there is no failure by the Assessee to raise objections at every stage of proceedings. 26. The decision in CIT v. P.C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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