What did the Tribunal hold?

The Tribunal held that the assessee should be supplied with the reasons for reopening the assessment to enable them to make submissions. The matter was restored to the CIT(A) to provide the reasons and then adjudicate the appeal on merits if the reopening was found to be valid.

The assessee requested the reasons for reopening the assessment from the AO and CIT(A), but these were not provided. The lower authorities also failed to record the reasons for reopening in their orders. The assessee argued that without the reasons, it could not properly defend its case.

What were the issues?

Whether the assessment reopening was valid without providing the reasons to the assessee. Whether the CIT(A) should adjudicate the appeal on merits after providing the reasons for reopening.

M/S.Poornaprajna House Building… vs ITO | ITAT Bangalore 2017

Income Tax Appellate Tribunal, “C” BENCH : BANGALORE

Before: SHRI SUNIL KUMAR YADAV & SHRI A. K. GARODIA

For Appellant: Shri. S. Ramasubramaniam, CA

For Respondent: Shri. M. K. Biju, JCIT

Hearing: 10.10.2017Pronounced: 11.10.2017

O R D E R Per Sunil Kumar Yadav, JM :

These appeals are preferred by the assessee against the respective orders of the CIT(A) confirming the additions made by the AO. The learned counsel for the assessee invited our attention to the order of the lower authorities with the submissions that neither the AO nor the CIT(A) has reproduced the reasons for which the assessment was reopened. During the course of hearing before the CIT(A), assessee has specifically asked for the copy of reasons for reopening the assessment, but the same were not given to him on the ground that it was not sought before the AO. Despite making efforts by the assessee, the reasons for reopening the assessment were never supplied to the assessee. Therefore, in the absence of reasons, the assessee cannot prosecute its case properly. The learned counsel for the assessee further contended that in the interest of justice, matter may be restored to the AO with the direction to supply the copy of reasons to the assessee so that he can file the objections, if any. After disposal of the objections filed by the assessee, the AO can reframe the assessment.

The learned DR candidly admitted that the AO/CIT(A) has not recorded the reasons for reopening of the assessment in their orders. Therefore, he is not aware of the contents of the reasons for which the assessment was reopened. He however agreed that let the matter be sent back to the CIT(A) with the direction to supply the copy of the reasons to the assessee and after disposing of the objections with regard to reasons for reopening the assessment, the CIT(A) may readjudicate the appeal again after affording an opportunity of being heard to the assessee.

Having carefully examined the order of the lower authorities in the light of rival submissions, we find that undisputedly, none of the lower authorities have recorded the reasons for reopening of the assessment. Therefore, we are not aware on what grounds or reasons the assessment was reopened. Though the assessee has asked the CIT(A) for supply of reasons, it was not given to him. In the light of these facts, we are of the view that assessee should be supplied with the reasons so that he can make submissions with regard to the reasons recorded for reopening of the assessment. Since it is not available before us, we are of the view that in the interest of justice, the matter may be restored to the CIT(A) for adjudicating the issues with respect to reopening of the assessment after providing copy of reasons to the assessee. If the reopening is found to be valid, the CIT(A) may adjudicate the issue on merit after affording an opportunity of being heard to the assessee. Accordingly, the order of CIT(A) is set aside and matter restored to his file with a direction to first supply the copy of reasons to the assessee and thereafter adjudicate the appeal on merit in terms indicated above.

In the result, appeal of the assessee is allowed for statistical purposes.

Pronounced in the open court on 13th October, 2017.

M/S.POORNAPRAJNA HOUSE BUILDING CO-OPERATIVE SOCIETY LTD.,BANGALORE vs. INCOME-TAX OFFICER, BANGALORE

What did the Tribunal hold?

What were the facts?

What were the issues?

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