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Facts
The assessee's appeal challenges the validity of assessment proceedings, arguing that the Assessing Officer (AO) did not provide reasons for reopening despite requests. The AO's reasons for reopening stated the assessee had not filed a return, which the assessee claims is false, having filed it with acknowledgment. The AO proceeded with the assessment without addressing this discrepancy.
Held
The Tribunal held that the reasons recorded for reopening were fallacious and contrary to the facts on record. The Competent Authority appears to have mechanically approved the AO's reasons. Consequently, the subsequent reassessment proceedings were vitiated.
Key Issues
Whether the reasons recorded for reopening of assessment were valid and supported by facts, and if failure to provide these reasons vitiates the assessment proceedings.
Sections Cited
147, 151, 139(1), 148
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Income Tax Appellate Tribunal, DELHI BENCH “SMC”, DELHI
(A.Y.2010-11) Chetan Prabhakar, E-23, Sudershan Park, Moti Nagar, Delhi 110015 ...... अपीलाथ�/Appellant PAN: AKYPP-7691-L बनाम Vs. Income Tax Officer, Ward-41(5), ..... �ितवादी/Respondent Civic Centre, Minto Road, Delhi 110002 अपीलाथ� �ारा/ Appellant by : Shri Abhishek Jain, Chartered Accountant and Ms. Sunidi Sharma, Advocate �ितवादी�ारा/Respondent by : Shri Manoj Kumar, Sr. DR सुनवाई क� ितिथ/ Date of hearing : 21/05/2025 घोषणा क� ितिथ/ Date of pronouncement : : 21/05/2025 आदेश/ORDER
PER VIKAS AWASTHY, JM:
This appeal by the assessee is directed against order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi (hereinafter referred to as 'the CIT(A)') dated 17.09.2023, for assessment year 2010-11.
Shri Abhishek Jain, appearing on behalf of the assessee submits that in grounds no. 1 to 5 of appeal, the assessee has assailed validity of assessment on different facets. At the outset he submitted that the Assessing Officer (AO) has not provided reasons for reopening to the assessee despite repeated requests. He further stated that the assessee came to know for the first time about reasons for (AY 2010-11) reopening from the assessment order. A bare perusal of reasons would show that they are contrary to the facts on record. In the reasons recorded for reopening, the AO has mentioned that the assessee has not filed return of income for AY 2010-11. Whereas, the assessee filed his return of income for AY 2010-11 on 16.08.2010 vide acknowledgment no.2610002785, a copy of said return was also provided to the AO during assessment proceedings. The AO after taking note of the same proceeded to make assessment without even referring to the returned income or refuting submissions of the assessee with regard to filing return of income for AY 2010-11. The ld. AR further submitted that the Competent Authority who has granted approval for reopening of assessment has not examined the records and in a mechanical manner approved the proposal for reopening forwarded by the AO. In support of his submissions, he placed reliance on the decision of Tribunal rendered in the case of Shree Balkishan Agarwal Glass Industries Ltd. vs. DCIT in for AY 2005-06 decided on 21.09.2020. 2.1. He further submitted that the assessment made without providing reasons for reopening is against the principles laid down by the Hon’ble Apex Court in the case of GKN Drive Shafts India Ltd. vs. ITO 259 ITR 19 (SC). The ld. AR of assessee further submitted that the assessee vide letter dated 18.11.2024 asked for reasons recorded for reopening the assessment, copy of approval u/s. 151 of the Income Tax Act,1961(hereinafter referred to as ‘the Act’), copy of notice issued u/s. 148 of the Act and copy of ITR filed by the assessee u/s. 139(1) of the Act. However, till date no information was provided to the assessee or document sought by the assessee were ever provided by the Department. Thereafter, the assessee sent several reminders to provide the aforesaid documents and also allow inspection of assessment file. Neither the documents were provided to the assessee nor (AY 2010-11) inspection was allowed. The assessee during pendency of appeal before the Tribunal also lodged online grievance on 21.02.2025 vide acknowledgment no.21050444 but till date no reply has been received on the said grievance as well. A copy of request for inspection of file and subsequent reminders including the complaint lodged with grievance cell are at pages 13 to 23 of the paper book. The ld. AR thus prayed for reversing findings of the AO and allowing appeal of the assessee on legal ground alone.
Per contra, Shri Manoj Kumar representing the department vehemently defended the impugned order and prayed for dismissing appeal of the assessee. The ld. DR submits that the appeal of assessee was dismissed by the CIT(A) on the ground of limitation. No plausible reason has been given by the assessee explaining in ordinate delay of 567 days in filing of appeal before the CIT(A).
Both sides heard, orders of the authorities below examined. The assessee has assailed validity of assessment order on the ground that the reasons recorded for reopening were never provided to the assessee and that the reasons recorded for reopening are contrary to the facts on record.
A perusal of documents on record does not show that after issuance of notice u/s. 148 of the Act, the assessee responded to said notice or filed any return of income in response thereto. No document has been placed on record by the assessee either asking for reasons recorded for reopening from the Assessing Officer during assessment proceedings. Hence, the obligation cast upon the assessee by the Hon’ble Apex Court in the case of GKN Drive Shafts India Ltd. vs. ITO (supra) is not complied with in the instant case. Therefore, the grievance of (AY 2010-11) assessee that reasons recorded for reopening were not provided to the assessee is uncalled for.
The second objection of the assessee is that the reasons recorded for reopening are contrary to the facts on record. The AO has reproduced the reasons recorded for reopening assessment in the assessment order. The relevant extract of the same are reproduced herein under:- “In this case department has information that during the period 01-04-2009 10 31- 03-2010 relevant for the assessment year 2010-11 assessee had deposited a sum of Rs. 21.50,000/-/- in cash into his Bank Account with HDFC bank limited. Further, perusal of ITD database reveals that assessee had not filed his Income Tax Return for A.Y. 2010-11. As such cash of Rs. 21,50,000/- remains unexplained. Under such a situation I have reason to believe that income at least to the extent of Rs. 21,50,000/- has escaped assessment in the hands of assessee within the meaning of explanation 2(a) of section 147 of Income Tax Act, 1961.”
A perusal of aforesaid reasons reveal that the AO has categorically mentioned that the assessee has not filed his Income Tax Return for AY 2010-11, as such cash of Rs.21,50,000/- deposited in the bank account remains unexplained. Under such situation the AO has reason to believe that income to the extent of Rs.21,50,000/- has escaped assessment. The assessee has placed on record a copy of acknowledgment of return of income for AY 2010-11 filed on 16.08.2010. The copy of said acknowledgment was also furnished by the assessee before AO, the AO in para 5 of the assessment order has taken note of the same. The relevant extract of the assessment order wherein the AO has recorded the fact of assessee filing return of income for AY 2010-11 is reproduced herein below:- “5. In response to the above said show cause notice, AR of the assessee appeared on 22.11.2017 and filed a letter along with the copy of Return of Income for the assessment year 2010-11 filed with ITO W-26(1), New Delhi vide (AY 2010-11) acknowledgement No-2610002785 dated 16-08-2010, In his letter AR of the assessee stated that all credit entries reflecting in his bank account are from pre- mature FDR's. Further on request of the AR the case was adjourned for 28-11-2017 with the condition to file the submissions with regard to cash deposits made by the assesssee in his bank account maintained with HDFC bank Ltd.”
Nowhere, in the assessment order the AO has refuted assessee’s claim of filing return of income for the impugned assessment year or has raised any doubt over the genuineness of the acknowledgment furnished by the assessee to show assessee’s claim of return of income filed for AY 2010-11. This clearly shows that the reasons recorded for reopening were contrary to the facts and documents on record. The assessee has placed reliance on the decision of Coordinate Bench in the case of Shree Balkishan Agarwal Glass Industries Ltd. vs. DCIT (supra). In the said case on somewhat similar set of facts, the Coordinate Bench held reassessment proceedings invalid.
The reasons recorded for reopening is not a mere formality. The reasons recorded for reopening by the Assessing Officer are the soul of reassessment proceedings. The entire reassessment proceedings are based on the reasons recorded for reopening. Therefore, the statue also casts the responsibility upon a higher authority to approve the reasons for reopening. In the instant case reasons recorded by the AO are contrary to the facts on record, thereafter, it seems that the Competent Authority in a perfunctory manner has approved the reasons. Considering entire facts of the case, I am of considered view that the reasons recorded for reopening are fallacious. Hence, the subsequent proceedings arising there from are vitiated. The assessee succeeds on ground no. 1 of appeal.
(AY 2010-11) 10. Since, the assessee succeeds on jurisdictional issue, the ground raised by the assessee on merits of the additions have become academic, hence, not deliberated upon.