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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
2 | P a g e ITAs No.7188 & 7666/Mum/2004 आदेश / O R D E R महावीर ससुंह, न्याययक सदस्य/ PER MAHAVIR SINGH, JM:
These cross appeals are arising out of the order of the Commissioner of Income Tax (Appeals)]-XXVI, Mumbai [in short CIT(A)], in appeal No. CIT(A)-XXVI/DC Cir. 6(3)/193/2003-04 vide dated 30.07.2004. The Assessment was framed by the Dy. Commissioner of Income Tax, Circle-6(3), Mumbai (in short DCIT/ITO/ AO) for the A.Y. 2000-01 vide order dated 06.02.2004 under section 143(3) read with section 147 of the Income-tax Act, 1961 (hereinafter ‘the Act’).
The first issue in this appeal of assessee is as regards to the order of CIT(A) confirming the action of the AO in reopening the assessment. For this assessee has raised the following ground No. 1: - “Ground No. 1
The Learned Commissioner of Income-tax (Appeals) XXVI, Mumbai (“the CIT(A)”) erred in confirming the action of the DCIT in reopening the assessment under section 147 of Income- tax Act, 1961 (“the Act”).
2. He failed to appreciate and ought to have held that: i. The appellant had not failed to disclose any relevant facts at the time of assessment.
3 | P a g e ITAs No.7188 & 7666/Mum/2004 ii. on the facts and circumstances of the Appellant’s case and in law the DCIT was not justified in reopening the assessment.
3. The appellant therefore prays that the re- opening of the assessment be held to be ab initio and/ or otherwise void and bad in law.”
We have heard rival contentions and gone through the facts and circumstances of the case. At the outset, the learned Counsel for the assessee took us through the re-assessment order and stated that the assessment year involved is 2000-01 and original return was processed under section 143(1)(a) of the Act dated 08.03.2002. Subsequently, notice under section 148 of the Act was issued on 05.04.2002 and assessee filed its letter dated 12.02.2012 requesting for treating the return of income filed originally on 27.11.2000 as return of income filed in response to notice under section 148 of the Act. The learned Counsel for the assessee drew our attention to assessee’s above stated letter dated 12.12.2002 and the relevant read as under: - “……. without prejudice to our abovementioned contentions, for the sake of compliance with your notice under section 148, we request you to treat our Return of Income filed on November 27, 2000 for AY 2000-01 as our Return filed in response to your captioned notice.
……..”
4 | P a g e ITAs No.7188 & 7666/Mum/2004 4. Subsequently, the learned Counsel for the assessee drew our attention to same letter where request was made to the AO to furnish the reasons recorded for issuance of notice under section 148 of the Act and the relevant para read as under: -
In our case, we are not aware of escapement of any income. Accordingly, we request you to kindly furnish to us the reasons for issuance of the aforesaid Notice Under section 148 of the Act to enable us to consider the matter further. Needless to say, this is without prejudice to all our rights and contentions in the matter including that your aforesaid Notice under section 148 of the Act is ab-initio or otherwise void, illegal and inoperative. We also crave to bring the legal position laid down in the following decisions to your kind attention in this regard.
But the AO has not given copy of reasons recorded for issuance of notice under section 148 of the Act and proceeded to frame reassessment under section 143(3) read with section 147 of the Act vide order dated 06.02.2004. The learned Counsel for the assessee took us through the adjudication of this legal issue by CIT(A) vide Para 3.3. which read as under: - “3.3 In the case on hand, return was filed on 27.11.2000 declaring total income of ₹ 6,69,23,830/- under section 115JA of the Act a loss of ₹ 26,42,35,244/- under the regular provisions of the Act. Return was processed under section 143(1)(a) on 08.03.2002 and the 5 | P a g e ITAs No.7188 & 7666/Mum/2004 returned income was accepted as the assessed income. Viewed in the light of this factual background, it cannot be said that when recourse is made to the provisions of section 147, it was prompted by mere change of opinion. The decisions relied upon by the appellant for the assessee, in this behalf, are distinguishable and have no application ot the facts of the present case. It was also brought to my notice that the appellant ahs appeared on at least six different dated before the AO, i.e. on 19.12.2002, 06.01.2003, 10,11.2003, 19.01.2004 and 03.02.2004 and the appellant filed detailed and specific replies also to the AO. Therefore it cannot be accepted that the appellant did not know the reasons for reopening the case. Even the oral intimation is the proper intimation with reference to the reopening of the case.”
The learned Counsel for the assessee in view of the above facts stated that the admitted position is that no reasons recorded by the AO were ever supply to the assessee and hence, according to him, reassessment framed without the providing reasons is bad in law and reassessment is to be quashed. For this, the learned Counsel for the assessee relied on the decision of Hon’ble Bombay High Court in the case of CIT vs. Videsh Sanchar Nigam Limited (2012) 340 ITR 66 (Bom), wherein the Hon’ble Bombay High Court has held that where the reasons recorded for reopening of assessment not furnished till the completion of 6 | P a g e ITAs No.7188 & 7666/Mum/2004 assessment, the reassessment order cannot be upheld. For this, he relied para 2 of the order, which read as under: -
2. The finding of fact recorded by the Income- tax Appellate Tribunal is that in the present case the reasons recorded for reopening of the assessment though repeatedly asked by the assessee were furnished only after completion of the assessment. The Tribunal following the judgment of this court in the case of CIT v. Fomento Resorts & Hotels Ltd., IT Appeal No. 71 of 2006, dated 27-11-2006, has held that though the reopening of the assessment is within three years from the end of the relevant assessment year, since the reasons recorded for reopening of the assessment were not furnished to the assessee till the completion of assessment, the reassessment order cannot be upheld. Moreover, special leave petition filed by the Revenue against the decision of this court in the case of Fomento Resorts & Hotels Ltd. (supra) has been dismissed by the apex court, vide order dated July 16, 2007.
The learned Counsel for the assessee further, relied on the decision of another Hon’ble High Court decision in the case of CIT vs. Trend Electronics (2015) 379 ITR 456, “8. We find that the impugned order merely applies the decision of the Apex Court in GNK Driveshafts (India) Ltd. (supra). Further it also 7 | P a g e ITAs No.7188 & 7666/Mum/2004 follows the decision of this Court in Videsh Sanchanr Nigam Ltd. (supra) in holding that an order passed in reassessment proceedings are bad in law in the absence of reasons recorded for issuing a reopening notice under Section 148 of the Act being furnished to the assessee when sought for. It is axiomatic that power to reopen a completed assessment under the Act is an exceptional power and whenever revenue seeks to exercise such power, they must strictly comply with the prerequisite conditions viz. Reopening of reasons to indicate that the Assessing Officer had reason to believe that income chargeable to tax has escaped assessment which would warrant the reopening of an assessment. These recorded reasons as laid down by the Apex Court must be furnished to the assessee when sought for so as to enable the assessee to object to 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 only ensures reopening notices are not lightly issued. Besides in case the same have been issued on some misunderstanding/misconception, the assessee
8 | P a g e ITAs No.7188 & 7666/Mum/2004 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.”
When these facts were confronted to the learned CIT Departmental Representative, he only relied on the inspection report of the case records by CIT Departmental Representative, filed on 17.09.2018 vide No. CIT (Departmental Representative)/ITAT-10/B-Bench/2018-19, wherein it is admitted that there is no evidence that reasons were ever supplied to the assessee and the relevant text of the letter read as under: - “As directed by your good selves, the assessment folder in the case of M/s Piramal Glass Private Limited for the A'Y 2000 -01 was 9 | P a g e ITAs No.7188 & 7666/Mum/2004 requisitioned from the assessing officer. Inspection of the assessment folder revealed that the reasons for reopening of the case under section 147 was indeed available on record. It is seen from the order sheet noting that the Authorized Representative of the assessee had attended the assessment proceedings on numerous occasions. The following submissions are found on record- I) Letter dated December 23, 2002 - information under section 142(1) submission of details. ii) Letter dated November 10, 2003 - information under section 142(I)/submission of details. iii) Letter dated January 19, 2004 - information under section 142(1)/submission of details. iv) letter dated February 3. 2004 - information under section 142(1)/submission of details As seen from the above submissions, the letter dated December 5, 2002 which has been claimed to have been submitted by the Authorized Representative is not available on record. Hence, the claim of the assessee stating that it had requested for the reasons for reopening of the assessment under section 148 were not found on record and consequently the same could not be verified. It is also not seen from the record if the reasons for reopening
10 | P a g e ITAs No.7188 & 7666/Mum/2004 were indeed requested by the assessee and whether the same were supplied to the assessee.
In view of the landmark Supreme court judgment in the case of M/s Home Finders Housing Ltd Vs. Income tax Officer, Corporate Ward 2(3) [2018] 94taxnzann.com84 (SC), wherein it has held h' the court that, non- compliance of procedure indicated hi' Supreme Coon would not make order void or non-est and such a violation was a procedural irregularity which could be cured by remitting matter to authority, it is prayed that the case may he sent back to the Assessing Authority for correcting the procedural irregularity,”
We have gone through the facts and circumstances of the case and noted that admitted fact is that the AO has not supplied the reasons and even before CIT(A) also no reasons were supplied to the assessee. From the above noting made by CIT(A), it is clear that the reasons were never supplied to the assessee either before completion of assessment or even at the stage of first appellate order. The principle relied on by the assessee on the Hon’ble Bombay High Court consistently in all the cases that the re-assessment is bad in law for the simple reason that the assessee was not supplied reasons for issuance of notice under section 148 of the Act, despite request made by him. Accordingly, following the principle laid down by the Hon’ble Bombay High Court in the above cited case laws, we quash the reassessment proceedings and allow the appeal of assessee.
11 | P a g e ITAs No.7188 & 7666/Mum/2004 10. As regards to the issues raised by assessee on merits, we are not going into the same as we have already quashed the reassessment. Hence, we will not adjudicate the issues on merits.
As regards to the Revenue’s appeal also, which is on merits, since we have adjudicated the issue of jurisdiction and quashed the reassessment proceedings, we need not to adjudicate the Revenue’s appeal.
In the result, the appeal of the assessee is allowed and the appeal of Revenue is dismissed. Order pronounced in the open court on 01.08.2019.