SHALINI CHAWLA,NEW DELHI vs. ITO, NEW DELHI

Asstt. Yrs: 2002-03 Shalini Chawla Vs. Income-tax Officer, F-118, Mansarover Garden, Ward 49(2), New Delhi. New Delhi. PAN: ADEPC 4075 E ( Appellant ) (Respondent) Appellant by : Shri Sachin Garg Respondent by : Shri P. Dam Kanunjna Sr. DR Date of hearing : 13/11/2015. Date of order : 30/11/2015. O R D E R

This appeal has been preferred by the assessee against the order dated 18/05/2015, passed by the CIT(A)-17, New Delhi, in appeal no. 5/2007-08/14 to 17/2014-15 for A.Y. 2002-03, challenging the validity of the order passed u/s 147 read with section 143(3) as well as challenging the addition made u/s 68 amounting to Rs. 4 lacs.

Ltd. Vs. ITO 259 ITR 19 (SC). In this regard he relied on the decision of this Tribunal dated 10/6/2015 in the case of M/s Jagat Talkies Vs. DCIT (ITA nos. 1068 to 1073/Del/2008), in which this Tribunal, in the absence of reasons being not provided by the AO, quashed the assessment passed u/s 143(3) read with section 148.

“7. We have considered the rival submissions carefully and have gone through the order of the Assessing Officer and the learned CIT(A). We find that the basic facts in this case are not in dispute. The reassessment proceedings were initiated in this case by issue of notices under Section 148 of the Act for the relevant assessment years. The assessee has specifically requested for the reasons leading to the reopening of assessment under Section 148 and has also filed a four page letter dated 23.06.2006 addressed to the Assessing Officer during the course of assessment proceedings wherein, apart from dealing with the queries of the Assessing Officer, a request was made in the concluding part of the letter to supply the reasons for reopening of the assessment under Section 148 of the Act. The assessee has also filed an affidavit to this effect regarding non-receipt of reasons for reopening of the case under Section 148 of the Act. The CIT(A) has given a finding in paragraph 6.4 of his appellate order that it appears from the records that the request for providing reasons for issuing the notice under Section 148 was made by the appellant. The CIT(A) further recorded that it is also apparent from the assessment records that there was no formal communication of the reasons for issuing notice under Section 148 by the Assessing Officer to the assessee. This finding recorded by the learned CIT(A) could not be controverted before us on behalf of the Revenue. In these facts of the case, the only issue which requires adjudication is that whether the non- communication of. the reasons recorded for issuing notice under Section 148 of the Act, inspite of a specific request made by the assessee for providing reasons for issuing the notice under Section 148, renders the whole reassessment proceedings vitiated and void in law. The Tribunal, vide its order dated 05.01.2009, has set aside the issue of validity of notice under Section 148 for the relevant assessment years and has restored the same to the file of the Assessing Officer for a fresh decision in the light of the decision of Hon'ble Apex Court rendered in the case of GKN Driveshafts (India) Ltd. (supra). We find that the Hon'ble Supreme Court, in its judgment dated 25.11.2002 in GKN Driveshafts (India) Ltd. (supra), held that when a notice under Section 148 of the Act is issued, the proper course of action for the notice is to file return and if he so desires, to seek reasons for issuing' notices. The Assessing Officer is bound to furnish the reasons within a reasonable time. On receipt of reasons, the notice is entitled to file objections to issuance of notice and the Assessing Officer is bound to dispose of the same by passing a speaking order. In the case of the assessee before us, we find that the assessee has requested for furnishing of the reasons recorded for issuance of notice under Section 148 of the Act and the Assessing Officer has not furnished the reasons to the assessee. The plea of the learned DR, that this decision of Hon'ble Apex Court in GKN Driveshafts (India) Ltd. (supra) is distinguishable, as, in this case, the assessee has filed the return of income, is not sustainable. We find that filing of return of income or otherwise is not decisive to the issue of legality of the notice of reassessment by issue of notice under Section 148 of the Act. The decision of Hon'ble Gujarat High Court in Sahkari Khand Udyog Mandai Ltd. (supra). relied upon by the learned DR, is of no help to the case of the Revenue. We find that the Department in this case has supplied the assessee the copy of the reasons recorded by the Assessing Officer for issuing such notice. The Hon'ble High Court has concluded in this case that the Assessing Officer shall supply the reasons recorded by him for issuing such notice within 30 days of the filing of the return of income by the assessee without waiting for the assessee to demand such reasons. In the case of the assessee before us, it is an admitted fact that the Department has failed to supply the assessee the copy of reasons recorded by the Assessing Officer for issuance of notice under Section 148 of the Act. The reliance of the learned DR on the order of the Tribunal in the case of the assessee dated 05.01.2009. wherein the issue of legality of .issue of notice under Section 148 was restored by the Tribunal to the file of the Assessing Officer, is also misplaced for the reason that the said order of the Tribunal dated 05.01.2009 was set aside by the Hon'ble Delhi High Court vide their order dated 09.05.2011, wherein it directed the Tribunal to decide the aforesaid appeals afresh. The case law cited by the learned counsel for the assessee supports the case of the assessee that once it is found that the copy of the reasons recorded for issuance of notice under Section 148 of the Act was not given to the assessee, inspite of a specific request made by the assessee in this behalf, the proceedings of assessment thereafter, including the assessment order passed, shall be vitiated and void. The decision of Hon'ble Delhi High Court in Haryana Acrylic Manufacturing Company (supra) is binding on the Tribunal, wherein it is held that the requirement of recording the reasons and communicating the same to the assessee, enabling the assessee to file objections and the requirement of passing a speaking order are all designed to ensure that the Assessing Officer does not reopen the assessments which have been finalized on his mere whim and fancy and that he does so only on the basis of lawful reasons and a deviation from these directions would entail the nullifying of the proceedings and. the order of assessment in this case was accordingly quashed. Respectfully following the decision of Hon'ble Jurisdictional High Court in Haryana Acrylic Manufacturing Company (supra), we decide the issue in favour of the assessee and hold that in view of the fact that the assessee was not given the copy of the reasons for issuing notice under Section 148 of the Act by the Assessing Officer inspite of a specific written request of the assessee for providing the same. the whole reassessment proceedings and the resultant order of assessment passed under Section 143(3)/148 of the Act have become vitiated entailing in nullifying proceedings and. Accordingly, the orders of assessment under Section 143(3)/148 are quashed and. the grounds of appeal No.1 to 4 of the assessee in all these appeals are allowed.”

Order pronounced in open court on 30/11/2015.