SRI BIDYADHAR BEHERA,BHUBANESWAR vs. ACIT, CIRCLE-4(1), BHUBANESWAR

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ITA 140/CTK/2020Status: DisposedITAT Cuttack10 July 2020AY 2014-155 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the AO is duty-bound to supply the reasons recorded for reopening the assessment to the assessee. Non-supply of these reasons, even if the assessee participated, renders the reassessment order bad in law and without jurisdiction.

What were the facts?

The Assessing Officer (AO) initiated reassessment proceedings under Section 148 of the Income Tax Act, 1961, without providing the assessee with a copy of the reasons recorded, despite repeated requests. The assessee participated in the proceedings and defended against proposed additions.

What were the issues?

Whether the reassessment proceedings are valid when the AO fails to provide the reasons recorded for reopening to the assessee, despite requests. Whether participation in reassessment proceedings waives the right to receive reasons for reopening.

Which sections of the Income-tax Act were involved?

Section 148,Section 147

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Income Tax Appellate Tribunal, CUTTACK ‘SMC’ BENCH, CUTTACK

Before: SHRI CHANDRA MOHAN GARG

For Appellant: Shri D.Parida/C.Parida, Ars
For Respondent: Shri Suresh Siva Nanda, DR
Pronounced: 10/07/2020

O R D E R This is an appeal filed by the assessee against the order of the CIT(A)-2, Bhubaneswar dated 22.4.2020 for the assessment year 2014-15.

2.

The sole grievance in the ground of appeal is that the action of the Assessing Officer in issuing notice u/s.148 of the Income tax Act, 1961 (in short ‘the Act’) was without jurisdiction as condition precedent to exercise jurisdiction u/s.148/147 of the Act for initiation of reassessment proceeding i.e. regarding of reasons and approval from the concerned authority to reopen have not been compiled at all as the Assessing Officer did not provide copy of reasons recorded to the assessee despite of the appellant’s repeated request for the same.

P a g e 1 | 5 40/CTK/202 0 Assessm ent Y ear : 20 14- 201 5

3.

Ld counsel for the assessee vehemently pointed out that from the observation of the ld CIT(A) in last part of para 4.2 clearly reveals that the ld CIT(A) very well noticed that the AO did not communicate the copy of the reasons to the assessee but he dismissed the ground and contention of the assessee by observing that the assessee has not been adversely affected and he had fully participated in the proceedings and defended himself against the proposed addition to be made. Pressing into service the proposition laid down by Hon’ble Supreme Court in the case of of GKN Driveshafts (India) Ltd vs. ITO & Ors, 259 ITR 019 (SC, ld A.R. strenuously submitted that it is the settled law that the AO is doubt bound to supply the reasons recorded to the assessee especially when the assessee had asked for the reasons recorded.

Ld A.R. also placed reliance on the decision of Hon’ble Bombay (2012) 340 ITR 66 (Bombay), wherein it is held that non-supply of reasons recorded to issue a reopening notice would make the order of assessment passed thereon bad as being without jurisdiction.

4.

Supporting to the action of the Assessing Officer as well as ld CIT(A), ld Sr. DR submitted that the ld CIT(A) was right in dismissing the contention/ground of the assessee regarding non-

P a g e 2 | 5 40/CTK/202 0 Assessm ent Y ear : 20 14- 201 5 supply of reasons recorded for reopening of assessment and submitted that the assessee through its letter dated 17.9.2018 had called for certified copy of the reasons recorded and approval obtained but the assessee had participated in the proceedings without raising any issue regarding non-receipt of reasons for reopening, making specific compliance for explaining the source of investment, which has been taken into consideration by the Assessing Officer. Therefore, non-supply of reasons recorded and reopening of assessment had not affected the assessee adversely in any manner.

5.

Placing rejoinder to above, ld A.R. submitted that non- supply of copy of reasons recorded for reopening of assessment alongwith notice u/s.148 of the Act and during the reassessment proceedings despite repeated request of the assessee is fatal for the revenue and only on this count, the impugned notice u/s.148 and reassessment order u/s.147 r.w.s 148 of the Act and all consequent proceedings should be annual and quashed.

6.

On careful consideration of the rival submissions, I am of the considered view that the plea of non-supply of reasons recorded was also raised before the ld CIT(A) by way of Ground Nos.2 & 3 but the same was dismissed by observing as under:

“4.2 Appellant’s submission, facts on record is carefully considered. The assessment record was called for and P a g e 3 | 5 40/CTK/202 0 Assessm ent Y ear : 20 14- 201 5 perused. It is a fact that the assessee in its letter dated 17.9.2018 had called for certified copy of the reasons recorded and approval obtained if any. However, the facts remain that AO had subsequently issued notices to the assessee calling for the source of investment in the immovable property, which was the reasons for reopening. Further, the assessee had participated in the proceedings without raising the issue of non-receipt of reasons for reopening, making specific compliance for explaining the source of investment, which has been taken into consideration.”

7.

On perusal of the assessment order and impugned order, I observe that the assessee had requested to supply reasons for reopening of assessment. The Assessing Officer did not supply the reasons recorded and completed the reassessment on 5.12.2018, which was confirmed by the ld CIT(A) on the ground that the assessee had participated in the proceedings. I find that the Hon’ble Supreme Court in the case of GKN Driveshafts (India)

Ltd(supra), has held that the Assessing Officer is bound to furnish reasons within a reasonable time for reopening the assessment to the assessee and the assessee if objects to the same, the Assessing Officer is bound to dispose of the same by passing a speaking order. Further, in the case of Videsh Sanchar Nigam Ltd (supra) the Hon’ble Bombay High Court held that non- supply of reasons recorded to issue a reopening notice would make the order of assessment passed thereon bad as being without jurisdiction.

P a g e 4 | 5 40/CTK/202 0 Assessm ent Y ear : 20 14- 201 5

8.

For the above reasons, I am of the considered view that the Assessing Officer was duty bound to supply the reasons recorded before reopening the assessment u/s.147 of the Act, which was not done in the present case. Therefore, the reassessment order dated 5.12.2018 is bad in law and hence, I cancel the reassessment order and allow this ground of appeal of the assessee.

9.

In the result, appeal of the assessee is allowed.

Order pronounced on 10 /07/2020.

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