TMI Blog2018 (8) TMI 650X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the ld. AR are distinguishable on facts and does not support the case of the assessee. Even though the proceedings have been validly initiated by issuance of notice U/s 148 of the Act, however, giving the fact that the reasons so recorded have not been supplied to the assessee even though the same were being specifically asked during course of reassessment proceeding, a fact which remain undisputed before us, the reassessment proceedings have become vitiated and liable to be set aside respectfully following the decisions of the Hon’ble Supreme Court and other High Courts referred supra. Decided in favor of assessee. - ITA. No. 919/JP/2017 - - - Dated:- 6-8-2018 - SHRI VIJAY PAL RAO, JM AND SHRI VIKRAM SINGH YADAV, AM For The Assessee : Shri Rajeev Saxena (Adv.) For The Revenue : Shri J.C.Kulhari (JCIT) ORDER PER: VIKRAM SINGH YADAV, A.M. This is an appeal filed by the assessee against the order of ld. CIT(A), Udaipur dated 25.10.2017 for assessment year 2008-09 wherein the assessee has taken the following grounds of appeal as under:- 1. That the learned Commissioner of Income Tax (Appeals), has grossly erred both in law and on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 40,00,000/-. The Assessing Officer thereafter issued notice U/s 148 on 27.03.2015 which reads as under:- As per information gathered by the department, the assessee and his Brothers and Sisters has sold property named Asha Hotel of ₹ 40,00,000/- during the year under consideration and the share of the assessee of ₹ 8,00,000/-. The assessee has not explained of above sale amount and the Assessee has not filed return of income. Therefore, I have reasons to believe that income chargeable to tax of ₹ 8,00,000/- (share of the assessee) has escaped assessment in view of the explanation 2(a) of the section 147 of the Income Tax Act, 1961. 3. In response, the assessee filed her return of income on 05.05.2015 disclosing income of ₹ 8,140/-. In the computation of income, the assessee has shown total sale consideration of the property at ₹ 65,00,000/- and her 1/5 share at ₹ 13,00,000/- and the proportionate share of cost of acquisition at ₹ 13,96,720/- taking 1981-82 as the base year and shown long term capital loss of ₹ 96,730/-. The Assessing Officer accepted the total sale consideration at ₹ 65,00,000/- and her 1/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return by the appellant, can give reason to suspect however without any other material, same cannot be form the basis of reasons to believe. It was further contended that the approval for the initiation of the proceedings has also been granted mechanically by the ld. Additional Commissioner of Income Tax and in support reliance was placed on the decision of Pr. CIT vs. N.C. Cables Ltd 88 Taxmann.com 649 and Hon ble Supreme Court in case of CIT vs. S. Goyanka Lime Chemical Ltd. (2015) 64 Taxmann.com 313. It was further contended by the ld. AR that in order to comply with the notice issued U/s 148 of the Act, the assessee has duly filed her return of income, however, the Assessing officer has not provided reasons recorded for reopening assessment to the assessee even though the same were requested by the assessee. It was submitted that due to non-furnishing of reasons by the AO, the assessee could not file her objections to the reopening of the assessment proceeding. It was submitted that the same is against the law laid down by the Hon ble Supreme Court in case of GKN Driveshafts (India) Ltd. vs. ITO Ors. 125 taxman 963. 5. The ld. D/R is heard who has vehemently argued the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l/documents brought to his notice by the AO, has stated in so many words that yes, he is satisfied that it is fit case for issuance of notice U/s 148 of the Act . The said approval cannot be said to have been granted mechanically, rather in our view, the ld. Additional CIT has applied his mind before granting the approval to the Assessing Officer to initiate the proceedings U/s 147 of the Act. The decisions relied by the ld. AR are distinguishable on facts and does not support the case of the assessee. 8. Now coming to the other contention raised by the ld. AR that inspite of requesting the Assessing Officer to provide the reasons which has been recorded before reopening the assessment proceedings, the Assessing Officer has not provided the reasons to the assessee, the entire reassessment proceedings have been vitiated and bad in law and not in conformity with the law laid down by the Hon ble Supreme Court and various High Courts from time to time. 9. In the instant case, the reassessment proceedings were initiated by issue of notice under Section 148 of the Act for the impunged assessment year. The assessee has filed her return of income and has requested for the reasons le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce 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. 13. In the case of Mithlesh Kumar Tripathi reported in 280 ITR 216, the Hon'ble Allahabad High Court has held as under: The statute confers jurisdiction and empowers the Assessing Officer under section 148(2) of the Act to reopen assessment proceedings. Section 148(2) expressly requires recording of reasons which has a definite purpose (and is not a mere formality on paper), i.e., to avoid arbitrariness or biased or mala fide action by the taxing authorities. Section 148(2) is silent regarding communication of reasons. The provision has to be interpreted in a manner which makes it meaningful and purposive. Keeping the object of the Legislature in mind, the courts, including the Supreme Court, have interpreted the section by laying down that reasons have to be communicated, as otherwise the same will remain a mere formality with no ultimate purpose or object to be served. There is also nothing in section 148(2) of the Act indicating expressly or otherwise, that an assessee can ask for reasons to be communicated only after he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 that stage itself the assessee may point out any objections that he may have with regard to the initiation of action under section 147 of the said Act. The requirement of recording the reasons, 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 on the basis of lawful 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. Assuming as we have done that the 'actual' reasons were those as noted in the said form, it is obvious that the reasons were never communicated to the petitioner and it is only for the first time in the course of the present writ petition that those 'reasons' have surfaced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 for reasons recorded only once and therefore seeking to justify non-furnishing of reasons. We expect the state to act more responsibly. 16. In light of the above discussions, considering the entirety of facts and circumstances of the case, even though the proceedings have been validly initiated by issuance of notice U/s 148 of the Act, however, giving the fact that the reasons so recorded have not been supplied to the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
