M/S ALDOUS TIE-UP LTD.,KOLKATA vs. ITO, WARD-7(1), KOLKATA, KOLKATA

The ld. AR submits that the assessee raised Ground No.2 challenging the validity of reopening of assessment u/s 147 of the Act for violation of procedure contemplated therein before the CIT(A) and the CIT(A) dismissed the said issue without giving reasons. He requested to adjudicate Ground No.2 as a preliminary issue as it answers the root of the case. The ld. DR did not object the same. Therefore we proceed to adjudicate Ground No.2 as the preliminary issue.

Heard both parties and perused the materials available on record. It is noted from the record that the assessee raised a ground before the CIT(A) challenging the action of Assessing Officer that the reassessment order passed without furnishing reasons recorded for reopening is bad in law. It is noted from Para No.4, the CIT(A) without giving reasons dismissed Ground No.2 raised by the assessee by stating that the Assessing Officer has validly reopened the assessment proceedings. The contention of the ld. AR is that the Assessing Officer has to supply reasons recorded in terms of the objection raised by the assessee. We find that the Assessing Officer observed in Para No.2 the case of the assessee is taken up as per the reasons recorded, but nowhere it was mentioned by the Assessing Officer the reasons for reopening of assessment were furnished to the assessee. Since no reasons supplied by the Assessing Officer, the assessee challenged the action of Assessing Officer before the CIT(A) and the CIT(A) also without examining the issue in detail passed a non-speaking order.

Further the contention of the ld. AR is that the Assessing Officer without recording any reasons for reopening passed reassessment order which is bad in law. Taking into consideration the said submission of the ld. AR and to verify the same, we summoned the assessment record for verification as to whether the Assessing Officer actually recorded reasons for reopening of assessment or not. The ld. DR produced assessment record and we find no such noting of recording reasons for reopening of assessment. This factual aspect is not disputed by the ld. DR. Therefore when there were no reasons recorded found in the assessment record, it is deemed that no reasons were recorded and consequently the reassessment made therein is liable to be quashed.

We find that the issue is well-settled by the decision of Hon’ble Supreme Court in the case of GKN Driveshafts (India) Ltd. v. ITO (2003) 259 ITR 19(SC).

The ld. Sr. DR, Sri C.J. Singh, argued that the non-supply of reasons recorded is a procedural irregularity which could be cured and does not make the reassessment order void or non-est. He placed reliance on the order of Hon’ble Supreme Court in the case of Home Finders Housing Ltd. vs. ITO reported in [2018] 94 taxmann.com 84 (SC). Further he placed reliance on the order of the Delhi Tribunal in the case of ACIT vs. Mukut Mahal Banquet (P) Ltd. in and argued that non-compliance of a procedure was a mere irregularity which cannot tantamount to nullity of reassessment order.

We find that the Hon’ble Supreme Court in the Case of Home Finders Housing Ltd. (supra) was arising out of decision of Hon’ble High Court of Madras reported in 93 taxmann.com 371(Mad) wherein it is noted that an order was passed without following prescribed procedure and the Hon’ble High Court held that the entire proceedings could not be vitiated for not following a procedure. The facts therein are that Assessing Officer without disposing off the objections filed by the assessee proceeded to complete the assessment. The Hon’ble High Court held that it is a procedural irregularity and remitted the matter to the file of Assessing Officer for addressing the objections raised by the assessee. In the present case, we find as discussed above there were no reasons recorded by the Assessing Officer for reopening the assessment and in our opinion no purpose will serve by remanding the file to the Assessing Officer as there was no reasons recorded by the Assessing Officer, therefore we find that the facts and circumstances in the present case as that M/s. Aldous Tie-up Ltd. Assessment Year: 2011-12 of in the case of Home Finders Housing Ltd. (supra) are not similar. Therefore the ratio laid down by the Hon’ble Supreme Court is not applicable in the facts on hand.

Regarding the other decision in the case of Mukut Mahal Banquet (P) Ltd. (supra) of Delhi Benches of ITAT wherein the Assessing Officer failed to dispose off objections raised by the assessee held to be committed an error in terms of decision of Hon’ble Supreme court in the case of GKN Driveshafts (India) Ltd.(supra), considering the same the matter was remanded to the file of Assessing Officer. As discussed above, in the present case, we find on examination of assessment record which is produced before us and no reasons were recorded by the Assessing Officer, therefore the decision of Delhi Tribunal is not applicable to the facts on hand.

In the light of above decisions, we make it clear that when a notice u/s 148 of the Act is issued, burden lies on the assessee to file return of income if it thinks fit. The assessee can seek copy of the reasons recorded by the Assessing Officer for reopening the assessment. It is the duty of the Assessing Officer to furnish reasons within a reasonable time. In response to which the assessee is entitled to raise objections for issuance of notice u/s 148 and the Assessing Officer is duty bound to dispose off the said objections by passing a speaking order. As discussed above in the present case, there was no reasons recorded by the Assessing Officer and therefore the reassessment order passed by the Assessing Officer without recording reasons is not in accordance with law. Thus, Ground No.2 taken as preliminary raised by the assessee is allowed.

Ground No.3, 4 & 5 are raised questioning the reassessment order on merits. Since we have decided the validity of reassessment