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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
This appeal by the assessee is directed against the order dated 26.12.2019 of Commissioner of Income Tax (Appeals)-II, Indore for Assessment Year 2011-12.
Prametric Trading Co.P.Ltd.,Indore 2 A.Y.2011-12
The original grounds filed along with the form no.36 were in the nature of contentions and arguments and, accordingly, the assessee filed concised grounds vide letter dt 27th April, 2023, which read as under :-
(i) The Ld. CIT(A) has erred in confirming assessment order dt
26.11.2018 passed u/s 147 r.w.s. 143(3) of the Act and the additions and disallowance made.
(ii) The Ld. CIT(A) has erred in not holding that the issue of the Notice u/s 148 of the Act is without jurisdiction and the consequent order dt. 26.11.2018 passed u/s 147 r.w.s.
143(3) of the Act is bad-in-law and deserves to be quashed.
(iii) The CIT(A) has erred in law and in facts and circumstances of the case in confirming the disallowance of Short Term
Capital Loss of Rs. 40,81,414/- being loss incurred on sale of shares of the Companies other than Well Pack Paper and Container Limited.
(iv) The CIT(A) has erred in confirming the addition made on account of alleged estimated unexplained commission expenditure of Rs. 3,11,250/- calculated @ 5% of Rs.
62,25,000/- being sale consideration of shares of Well Pack Paper and Container Limited. Prametric Trading Co.P.Ltd.,Indore 3 A.Y.2011-12
(v) The CIT(A) has erred in not holding that the AO ought to have started the computation of total income with income as
per order giving effect to the order of the CIT(A) in the first
round.
Ground no. 2 is regarding validity of notice issued u/s 148 of the Act and consequently reassessment order passed u/s 147 read with section 143(3) of the Act. The issue raised in this ground is purely legal in nature and goes to the root of the matter, therefore, we first take up ground no.2 for hearing and disposal.
The ld. Authorized Representative has submitted that the original assessment order was passed u/s 144 on 31st March, 2014, which was challenged by the assessee before the CIT(A) and the matter was carried to this Tribunal in the appeal in I.T.A.No. 543/In/18. This Tribunal vide order dt.14th February,2023, while deciding the appeal filed by the Revenue, upheld the order of the CIT(A) and the appeal of the Revenue was dismissed. Therefore, the issue, which was taken up by the ld.AO for reopening of the assessment was already a subject matter of the appeal before the CIT(A) as well as before this Tribunal. Apart from objecting the reopening on the subject matter already pending before the CIT(A), the ld. Authorized Representative has submitted that the reopening is beyond four years from the end of the assessment year and, therefore, in the absence of any new information or material and failure on the part of the assessee to disclose fully and truly all material fact and necessary Page 3 of 25
Prametric Trading Co.P.Ltd.,Indore 4 A.Y.2011-12 for its assessment, the reopening is not valid as per the first proviso to Section 147 of the Income-tax Act, 1961.
The next contention of the ld. Authorized Representative for challenging the validity of the assessment order is that the reopening of the assessment is without valid approval granted u/s 151 of the I.T.Act, as the same is mechanical and without application of mind. He has further submitted that even the AO did not supply the reasons recorded for the reopening of the assessment to the assessee despite repeated requests of the assessee. The AO has issued notice u/s 148 on 27th March, 2018, to which the assessee has filed reply dt. 26.4.2018, and submitted that the return filed by the assessee u/s 139 may be treated as return filed in response to notice u/s 148 and specifically requested the AO to supply the copy of reasons recorded before issuing the said notice. The ld. Authorized Representative has submitted that the AO without supplying the reasons recorded to the assessee, issued notice u/s 143(2) on 9th November, 2018. In response to the said notice, the assessee filed reply dt. 10.11.2018 and again requested the AO to kindly provide the assessee the copy of reasons recorded for reopening the assessment. The ld. Authorized Representative then referred to the letter dt 14.11.2018 placed at page no.104 of the paper book, issued by the ld.AO and submitted that the alleged reasons recorded by the ld.AO are being supplied vide said letter. He has submitted that since the letter dt 14.11.2018 is not a copy of the reasons recorded by the ld.AO but only the abstracts of the reasons recorded by the Prametric Trading Co.P.Ltd.,Indore 5 A.Y.2011-12 ld.AO supplied to the assessee, which is not the complete reasons or the original reasons recorded by the ld.AO for reopening f the assessment. He has then referred to the letter dt. 15.11.2018 of the assessee, whereby the assessee again requested for supply of the copy of the reasons corded for reopening of the assessment. The AO replied to the said letter of the assessee vide letter dt.15.11.18 placed at page no.108 of the paper book, wherein the AO stated that the copy of reasons for reopening of the case has been sent already by post vide letter dt 14.11.18. The ld. Authorized Representative has submitted that what was supplied by the ld.AO vide letter dt 14.11.18 is not the copy of the reasons recorded or the actual reasons recorded by the ld.AO, but it is only a part or gist of the reasons recorded by the ld.AO. Therefore, the AO has not supplied the reasons recorded for reopening of the assessment. The assessee was left with no option but to raise the objection against the notice u/s 148 as well as reasons recorded for reopening of the assessment, which were disposed of by the ld.AO vide order dt. 21.11.18 at page no.119 of the paper book. The ld. Authorized Representative has submitted that the assessment order passed o without supplying the complete reasons to the assessee is not valid and liable to be set-aside. He has relied upon the decision dt. 29.06.12 of Mumbai Benches of the Tribunal in the case of Tata International Limited vs. Dy.
CIT in I.T.A.Nos. 52 SOT 465 and submitted that an identical issue has been considered by the Tribunal, wherein the AO did not supply the complete reasons for reopening of the assessment but only gist of the reasons supplied to the assessee. The Tribunal has held that it is a violation of principles of Page 5 of 25
Prametric Trading Co.P.Ltd.,Indore 6 A.Y.2011-12 natural justice, as the assessee is entitled to know the reasons on the basis of which the AO has believed and formed an opinion that the income assessable to tax has escaped assessment. The Tribunal has taken a serious note as to why the AO was so reluctant and hesitant to furnish the reasons actually recorded for reopening of the assessment. Thus, when there was no reason and rather justifiable reasons for depriving the assessee of the reasons actually recorded, then the order passed by the ld.AO without furnishing the reasons was held to be not sustainable in law. He has further submitted that the Tribunal has also considered the fact that if the reasons recorded were not supplied during the assessment proceedings, then furnishing the reasons subsequent to the assessment order would achieve no purpose and tantamount to deprive and deny the assessee of its right to raise objections against the validity of notice issued u/s 148. The ld. Authorized Representative then relied upon the judgement of Hon'ble Bombay High in the case of New Era Shipping Limited vs. CIT, 430 ITR 431 (Bom). He has also relied upon the following decisions :-
(a) CIT vs. Trend Electronics, (379 ITR 456).
(b) CIT vs. Videsh Sanchar Nigam Limited, (340 ITR 66)
The ld. Authorized Representative has also relied upon the decision of Hon'ble Bombay High Court in the case of River Valley Meadows and Townships P.Ltd. vs. Dy. CIT, (2022) 284 Taxman 536 (Bom)(H.C.) and submitted that notice
Prametric Trading Co.P.Ltd.,Indore 7 A.Y.2011-12 issued u/s 148 without mandatory approval u/s 151(2) is invalid and liable to be quashed.
6. On the other hand, the ld. DR has relied upon the orders of the authorities below and submitted that the AO has supplied the substance of reasons recorded for reopening the assessment vide letter dt. 14.11.18 and thereafter the AO has reaffirmed the supply of reasons vide letter dt 15.1.2018.
He has also filed the copy of the approval granted u/s 151 of the Act for issuing the notice u/s 148 of the Act alongwith the reasons recorded for reopening of the assessment.
We have considered the rival submissions as well as relevant material on record. On the direction of the Bench, the ld. DR has filed the copy of the approval u/s 151 of the Act granted by the Pr. CIT alongwith the reasons recorded for reopening of the assessment. On careful perusal of copy of the approval as filed by the ld. DR, we find that the approval in the case was granted on 28th March, 2018, and the same was communicated to the AO by the ITO Pr. CIT vide letter dt. 29th March, 2018. We further noted that the notice u/s 148 was issued by the ld.AO on 27th March, 2018. Thus, it is manifests from the record that the notice u/s 148 dt. 27th March, 2018 was issued prior to the approval granted by the Pr. CIT on 28th March, 2018, and the same was communicated to the AO vide letter dt. 29th March, 2018. For ready reference, we reproduce copy of the notice issued u/s 148, approval
Prametric Trading Co.P.Ltd.,Indore 8 A.Y.2011-12 granted by the Pr. CIT dt 28th March, 2018 and the letter dt 29th March, 2018, communicating the approval of the AO as under :-
Prametric Trading Co.P.Ltd.,Indore 9 A.Y.2011-12 Prametric Trading Co.P.Ltd.,Indore 10 A.Y.2011-12 Prametric Trading Co.P.Ltd.,Indore 11 A.Y.2011-12 Prametric Trading Co.P.Ltd.,Indore 12 A.Y.2011-12
8. The ld. DR has not disputed the fact that the notice u/s 148 was issued on 27th March, 2018, whereas the approval was granted by the Pr. CIT on 28th March, 2018, which was communicated to the AO vide letter dt 29th March, 2018. Therefore, it is clear that the notice u/s 148 was issued by the ld.AO without mandatory approval u/s 151 of the Act. since the notice u/s 148 was issued after the expiry of four years from the end of the assessment year in question, therefore, the notice u/s 148 issued without prior approval of Pr. CIT u/s 151 of the I. T. Act, is a nullity and liable to be quashed. Hon'ble Bombay High Court in the case of River Valley Meadows and Townships P.Ltd. vs. Dy.
CIT, (supra) , has held in para 4 to 8 as under:-
“4. Mr. Kamat submitted that if this necessary satisfaction/approval was granted only on 26-6- 2019, how did Respondent No. 1 issue notice under section 148 on 25-6-2019, i.e., a day prior thereto.
5. Mr. Suresh Kumar requested for some more time to file reply. Since we were satisfied with the submissions of Mr. Kamat, we found no purpose would be served by adjourning the matter to file a reply and in any event Respondents had sufficient time and they could have filed the reply earlier.
Mr. Suresh Kumar submitted that his instructions are that in one copy it is erroneously written '26-6-2019' whereas in the other copy in the file of Respondent, it is '25-6-2019'. In our view, that also shows that there was non-application of mind while granting the approval. Moreover, in the order dated 21-9-2021 passed by Respondent dealing with the objections filed by Petitioner, the stand of the Assessing Officer is not what Mr. Suresh Kumar stated in Court today. In the objection dated 17-9-2021, Petitioner has brought to the notice of the Assessing Officer that notice issued under section 148 dated 25-6-2019 was illegal and was issued without approval of competent authority and approval dated 26-6-2019 was an afterthought to cover up the action of the learned Deputy CIT. In the order dated 21-9-2021 rejecting this objection, the Assessing Officer does not deny that the approval was dated 26-6-2019 whereas the notice Page 12 of 25
Prametric Trading Co.P.Ltd.,Indore 13 A.Y.2011-12 was dated 25-6-2019 but simply states that the reason of escapement of income was sent for approval to learned Additional CIT on 14-6-2019 much before the notice under section 148 was issued.
7. In our view, therefore, the Petitioner's submission that the notice dated 25-6-2019 issued under section 148 of the Act was illegal since there was no prior approval as required under section 151(2) of the Act has to be accepted.
8. In the circumstances, that notice itself has to be quashed and set aside. In such a case, the consequential orders also have to be set aside. Therefore, prayers (a) and (a1) which read as under, are granted. "(a) a writ in the nature of mandamus, prohibition, certiorari, or any other appropriate writ, direction or order quashing the notice dated 25-6-2019 issued by the Respondent No. 1 under section 148 and consequent proceedings initiated pursuant thereto under section 147 of the Act; (a1) issue a writ of Certiorari or any other appropriate writ, direction, or order thereby quashing and setting aside the impugned order dated 21-9-2021 (Exhibit G) and impugned assessment order dated 28-9-2021 (Exhibit N) passed by the Respondents."”
Accordingly, the notice issued u/s 148 dated 27th March, 2018 is invalid and the same is quashed.
After going through the relevant record, we find that in response to notice u/s 148, the assessee filed reply dt 26.04.2018 requesting the AO to treat the original income filed by the assessee, as the return of income in response to notice u/s 148 and also requested the AO to supply copy of reasons recorded for reopening of assessment to the assessee. The assessee again vide letter dt 10.11.2018 requested the AO to supply the copy of the reasons recorded for the opening of the assessment. Thereafter, the AO vide letter dt. 4.11.2018
Prametric Trading Co.P.Ltd.,Indore 14 A.Y.2011-12 purported to have supplied the reasons recorded for reopening of the assessment, which reads as under :-
Prametric Trading Co.P.Ltd.,Indore 15 A.Y.2011-12
Prametric Trading Co.P.Ltd.,Indore 16 A.Y.2011-12
The alleged reasons recorded by the ld.AO for reopening of the assessment provided vide letter dt. 14.11.2018 are highlighted by us. If we compare these reasons supplied by the ld.AO to the assessee with the copy of the original reasons recorded by the ld.AO now produced before us then we find that there is a mark difference between the reasons actually recorded by AO and the reasons claimed to have been supplied to the assessee which are not even abstracts of the reasons recorded. The actual reasons recorded by AO, are reproduced as under :-
Prametric Trading Co.P.Ltd.,Indore 17 A.Y.2011-12 Prametric Trading Co.P.Ltd.,Indore 18 A.Y.2011-12 Prametric Trading Co.P.Ltd.,Indore 19 A.Y.2011-12
11. Thus, if we compare the original reasons recorded by the ld.AO with the reasons supplied to the assessee, then the so called reasons supplied by the ld.AO cannot be regarded as either the reasons recorded or the copy of the reasons recorded. These reasons are not even the abstract of the original reasons recorded as it does not contain any information and the details of which is given in the original reasons recorded by the ld.AO. An identical issue has been considered by the Mumbai Benches of the Tribunal in the case of Tata International Limited vs. Dy. CIT (supra )in para 6 to 9 as under :-
“6. We have considered the rival contentions as well as relevant material on record. We have also carefully perused the various decisions relied upon by the parties. Though the arguments from both sides were also addressed on the merits of the issue; however, at this stage, we confined ourselves to the issue of validity of reopened assessment. 6.1 As we have noted above that initially the Assessing Officer issued a notice under section 148 dated 31.1.2007. The said notice was cancelled/withdrawn and a fresh notice under section 148 was issued on 28/03/2007. The assessing officer has given the reasons of treating the said notice dated 31/01/2007 as cancelled for technical reasons and fresh notice was issued to rectify the procedural lacuna in the earlier notice dated 31/01/2007. Though nothing has been elaborated either in the communication dated 28/03/2007 or in the reassessment order as what was the technical reason and a procedural lacuna in the earlier notice however, it appears from the record that the earlier notice dated 31/01/2007 was issued prior to the approval of the Commissioner of income tax dated 26/03/2007 and therefore, the earlier notice was cancelled and treated as withdrawn. The Assessing Officer, than obtained the approval of the Commissioner of Income Tax on 26/03/2007 and thereafter issued the fresh notice dated 28/03 2007 on the basis of which the Assessing Officer, proceeded with the reassessment proceedings. Thus, after the fresh notice 28/03/2007, the notice dated 31/01/2007 becomes non-est, immaterial and irrelevant for reassessment proceedings and therefore, has no consequence whatsoever with regard to the validity of reassessment. 6.2 The main objection of the assessee against the reassessment is non-supply of the reasons recorded by the Assessing Officer for reopening of assessment. There is no doubt that the Assessing Officer recorded the reasons on 31/01/2007 for reopening of the assessment and Prametric Trading Co.P.Ltd.,Indore 20 A.Y.2011-12 accordingly issued a notice under section 148. The regions as recorded by the Assessing Officer are as under: "This case appears in the list of companies who had supplied goods to Ira under the scheme of "Oil for Food Programme of the UNO". The name of the assessee company appears at Sr. No. 113 of the Voicker Committee Report submitted on 27/10/2005 wherein the mention of illegal commission under the heads of AASF & Inland Transportation fees amounting to US 370780 & 399361 respectively had been paid. Details were called from M/s. Tata International Ltd and from the details submitted it is seen that these payments have been made during the period relevant to A.Y. 2000-01 to 2002-03. Hence, it is clear that based on the additional information of the Voicker Committee, the commission payment has been made by the assessee. As per the information gathered, it can be seen that commission Rs. 9,82,542/-, Rs. 1.27,42,120/- and Rs. 1,06,09,979/- for A.Ys. 2000-01, 2001-02 and 2002-03 respectively has been paid. The payment of kicks backs/bribe is prohibited by law and therefore, squarely thus within the ambit explanation to section 37(1) of the I.T. Act, 1961 and requires to be disallowed. Therefore, I have reasons to believe that income to that extent has escaped assessment. As such the assessment needs to be reopened u/s 147 of the I.T. Act, 1961 to tax the escaped income. The case is fit for issue of notice u/s.148 of the I.T. Act, 1961. Notice u/s. 148 of the I.T. Act is issued to the assessee for A.Y. 2000-01, 2001-02 & 2002- 03." 6.3 In response to the fresh notice under section 148 dated 28/03/2007 the assessee vide its letter dated 25/04/2007 specifically requested the Assessing Officer to furnish the reasons for issuing the notice under section 148. The averments made in paragraph 3 of the said letter are as under: "We also take this opportunity to renew our request to you to furnish to us the reason(s) for issue by you of your said notice under section 148 dated 31st Jan 2007 and of the fresh notice, in accordance with the procedure laid down by the Supreme Court in GKN Driveshafts (India) Ltd. v. ITO [2003] 259 ITR 19 (SC)." 6.4 In pursuant to the said request of the assessee the Assessing Officer has supplied the gist of the reasons of reopening vide letter dated 28/06/2007 as under: "Vide the above referred letter wherein we have requested that the reasons for Issue of the said notice dated 28.03.2007 be furnished in accordance with the procedure laid down in the case of GKN Driveshafts (I) Ltd. v. ITO [2003] 259 ITR 19 (SC). The gist of the reason for reopening is as under :
Prametric Trading Co.P.Ltd.,Indore 21 A.Y.2011-12 "During the year under consideration, the assessee company has supplied/goods to Iraq under the scheme 'Oil for Food Programme of the UNO'. The name of the assessee company appears at Sr.No. 113 of the Voicker Committee Report submitted on 27.10.2005 wherein mention of the illegal commission under the head 'AASF' and 'Inland Transportation Fees' had been paid. Therefore, I have reasons to believe that income to that extent has escaped assessment," 6.5 Since only the gist of the reasons were supplied, the assessee was not satisfied with the reasons as supplied by the Assessing Officer and requested vide its letter dated 25/07/2007 and demanded the true copy of reasons actually recorded by the Assessing Officer in terms of section 148 (2) of the Income Tax Act instead of the gist of reasons for reopening reproduced in the letter dated 28/0 6/2007. 6.6 In response to the assessee's letter dated 25/07/2007, the Assessing Officer vide its letter dated 27/07/2007 reiterated that the reasons for reopening were supplied vide letter dated 28/06/2007. Since the request of the assessee for furnishing the reasons actually recorded by the Assessing Officer was not given heed; therefore, the assessee again demanded the reasons as recorded by the Assessing Officer for reopening of the assessment vide its letter dated 13/08 2007. Despite repeated requests and demand of the assessee the Assessing Officer was adamant on his stand for not supply of the reasons actually recorded for reopening of the assessment and insisted upon that the same have been supplied to the assessee vide letter dated 28/06/2007.
7. As held by the Hon'ble Supreme Court in case of GKN Driveshafts (India) Ltd. (supra) that the Assessing Officer is bound to furnish reasons within a reasonable time so that the assessee could file objection to the issuance of the notice and the Assessing Officer, accordingly, bound to dispose of the same by passing a speaking order. Thus, the supply of reasons is to facilitate the assessee to present its defence and objection against the reopening of the assessment. 7.1 Even otherwise as per the rule of natural Justice, the assessee is entitled to know the reasons on the basis of which the Assessing Officer has believed and formed an opinion that the income assessable to tax has escaped assessment. It is not understandable as to why the Assessing Officer was so reluctant and hesitant to furnish the reasons actually recorded for reopening of assessment. We see no reason and rather justifiable reasons for depriving the assessee of the reasons actually recorded by the Assessing Officer for reopening of the assessment.
In the case of Videsh Sanchar Nigam Ltd. (supra) the Hon'ble jurisdictional High Court has confirmed the order of this Tribunal whereby the reassessment was held as invalid because the reasons recorded for reopening of the assessment were not furnished despite repeated requests and furnished only after completion of assessment. The Hon'ble High Court has observed in para to as under:
Prametric Trading Co.P.Ltd.,Indore 22 A.Y.2011-12 "2 The fining of fact recorded by the Income Tax Appellate Tribunal is that in the present case the reasons recorded for reopening of the assessment through 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, Income Tax Appeal no.71 of 2006 decided on 27th November 2006 has held that though the reopening of the assessment is within three years from the end of 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 has been dismissed by the Apex Court vide order dated 16th July 2007." 8.1 Thus the reasons are required to furnish within a reasonable period of time so that the assessee can raise the objections at the preliminary stage of proceedings. If the reasons are not supplied during the assessment proceedings, than furnishing the reasons subsequent to the assessment proceedings would achieve no purpose and tantamount to deprive and deny the assessee of its right to raise the objections against the validity of notice issued under section 148. 8.2 Thus reassessment completed without furnishing the reasons actually recorded by the A.O. for reopening of assessment is not sustainable in law because the A.O. is duty bound to supply the same within reasonable time as held by the Hon'ble Supreme Court in case of GKN Driveshafts (India) Ltd (supra). The subsequent supply of the reasons would not make good of the illegality suffered by the reopening of assessment. A similar view has been taken by this Tribunal in case of Fomento Resorts & Hotels Ltd [IT Appeal No. 71 of 2006, dated 27-11-2006 (Bom.)] and decided a similar issue in para 7 as under: "7 We have considered the submissions made by both the sides, perused the orders of the authorities below and material on record. It is an admitted fact that the assessee has not filed return of expenditure tax in the normal course. The Assessing Officer issued notice purportedly u/s 11 but inadvertently on the notice, u/s 8 was mentioned in lieu of sec.
In this regard, we are in agreement with the findings of the ld Commissioner of Income Tax(Appeals) that this mistake was covered by the provisions of see. 292B of the Income Tax Act, therefore, we do not find any merit in the contentions of the assessee in this regard. As far as the issuance of notice u/s 11 is concerned, the preliminary condition of not filing of return is satisfied. Therefore, in such a situation, notice can be issued, provided the same is not barred by limitation. However, after issue of notice, if the assessee asks for furnishing of reasons for issuance of such notice, the Assessing Officer is bound to furnish such reasons. The adherence to this procedure is a necessity because at the preliminary stage itself, if the proceedings can be completed if the Assessing Officer gets satisfied with Page 22 of 25
Prametric Trading Co.P.Ltd.,Indore 23 A.Y.2011-12 the explanations given by the assessee. it is an undisputed fact that the Assessing Officer, in the present case has not supplied reasons to the assessee, therefore, the notice issued by the Assessing Officer is bad in law and consequently the assessment made in pursuance of such notice is liable to be quashed. In this view of the matter, we cancel the impugned assessment. We order accordingly."
9. The order of this Tribunal was upheld by the Hon'ble jurisdictional High Court as mentioned in the decision in the case of Videsh Sanchar Nigam Ltd (Supra). Even the SLP filed by the revenue against the decision of Hon'ble jurisdictional High Court has also been dismissed by the Hon'ble Supreme Court vide order dated 16 July 2007. Thus, it is settled proposition as laid down by the Hon'ble Supreme Court as well as Hon'ble High Court that the reasons as recorded by the Assessing Officer are required to be furnished to the assessee and the reasons recorded cannot be improved upon or amended by any correspondence, letters etc. It is an undisputed fact that the reasons actually recorded by the Assessing Officer were not furnished to the assessee till 14.06.20012 despite repeated requests and demands and therefore, the gist of reasons as furnished vide letter dated 28th June 2007 cannot be treated as reasons actually recorded by the Assessing Officer as per section 148 (2) and as mandated by the Hon'ble Supreme Court in case of GKN Driveshafts (India) Ltd ( supra). Thus, the Assessing Officer has failed to furnish the reasons recorded for reopening of the assessment within the reasonable time and rather prior to the completion of assessment, than the reassessment order passed without supply of reasons as recorded for reopening of the assessment, is invalid and cannot sustain. Accordingly, we set aside the reassessments for all 3 years under consideration being invalid.”
The Tribunal in the said decision relied upon the judgment of Hon'ble Bombay High Court in the case of CIT vs. Videsh Sanchar Nigam Limited (supra) as well as the judgment of Hon'ble Supreme Court in the case of GKN Driveshafts (India) Limited vs. ITO and Others, (2003) 259 ITR 19 (S.C.).
Therefore, the reassessment order passed without supply of the reasons as recorded for reopening of the assessment is invalid and is not sustainable. The Hon'ble Bombay High Court in the case of New Era Shipping Limited vs. CIT (supra), has reiterated this view as taken in the case of Videsh Sanchar Nigam Limited,340 ITR 66.
Prametric Trading Co.P.Ltd.,Indore 24 A.Y.2011-12
A similar view has been taken in a series of decisions as relied upon by the ld. Authorized Representative of the assessee. Accordingly, following the binding precedents as well as the decision of Mumbai Benches of the Tribunal, wherein one of us is Judicial Member was a party, we hold that reassessment order passed by the AO without supplying the reasons recorded for reopening of the assessment is not valid and liable to be quashed. Accordingly, we set aside the reassessment order, as invalid for want of supply of reasons recorded for reopening the assessment.
Since we have quashed the initiation of reassessment proceedings, as well as the reassessment order on legal ground, therefore, we do not propose to go to the merits of the Additions made by the ld.AO, as the grounds raised by the assessee on the merits of the additions become infructuous.
In the result, the appeal of assessee is allowed.
Order pronounced in the open court on 12.06.2023.