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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR
Before: DR. M. L. MEENA & SH. ANIKESH BANERJEE
This appeal is filed by the assessee against the order of the Ld.
CIT(A)-1, Ludhiana dated 09/01/2019 for the Assessment Year 2010-11 wherein the appellant had challenged validity of the assessment order on account of not providing the reasons recorded for issue of notice under section 148 of the Income Tax Act.
At the outset, the learned AR for the assessee submitted that the Ld. CIT appeal erred in not taking cognizance of the fact that the AO has not provided the reasons to the assessee based on which notice under section Assessment Year: 2011-12 148 was issued to the assesse. He submitted that the assessee has made a written request before the AO for providing reasons stating that we have already filed our return of income in compliance to notice under section 148 of the Act. However, no reason for opening the case under section 148 has been provided so far inspite of two written request made vide letters dated 06/10/2017 and 25/11/2017 (Synopsis Pgs. 11 and 12). The AR contended that no reasons for reopening of the assessment under section 148 has been provided by the AO and therefore, the AO’s failure to supply the reasons recorded for reopening the assessment in the case of assessee would entail the entire reassessment proceedings bad in law and liable to be quashed. In support, he placed reliance on Delhi High Court in the case of Haryana acrylic manufacturing company 2008 15 DTR0274 wherein the honorable court has observed that the requirement of recording of the reasons and communicating the same to the assesse is required under the law to file its objections and the requirement of passing a speaking order thereof to dispose of the objection raised are all designed to ensure that the AO does not reopen assessment nearly on the fancy. The deviation from these directions would entail the nullified all the proceedings (APB, Pgs. 4 to 24). He also referred to the judgement delivered by ITAT Delhi benches in the case of M/s Jagat Talkies vs DCIT in /Del/ 2008 to Assessment Year: 2011-12 1073/Del/ 2008 (2015) 44 CCH 885 (APB, Pgs.25 to 33); SahKari Khand Uddhav Mandal Limited 370 ITR 0107 Gujarat High Court where court concluded that the AO shall supply reasons recorded by him for issuing such notice for reopening of the assessment within 30 days of filing of the return of income to the assesse without waiting for the assesse to demand such reasons (APB Pgs 34 to 45).The Ld. Council for the appellant further placed reliance on the judgement of the honorable Apex Court in the case of GKN DRIVESHAFTS (INDIA) LTD. vs. INCOME TAX OFFICER & ORS 259 ITR 19 wherein the apex court has held that if the reasons are not communicated to the assesse, the deviations from same would nullify the assessment proceedings. He pleaded that even on two times request of the appellant assessee, no reasons have been supplied in the present case to the assesse and hence, the assessment order needs to be quashed.
Per contra, the ld. DR supported the impugned order.
Heard the rival submissions, perused the material on record, impugned order and case law cited before us. Admittedly, the copy of the reasons recorded by the AO has never been provided to the assessee in spite of written request made to the AO by the appellant, in the course of assessment proceedings vide letter dated 06/10/2017 and 25/11/2017(APB Pg. -11&12) which are reproduced as under:
Assessment Year: 2011-12 5. The ld. AR for the assessee contended that the legal ground was rejected by the Ld. CIT(A) relying on SLP dismissed against High Court's orderin case of “Home Finders Housing Ltd. vs. Income-tax officer, Corporate Ward 2(3)[2018] 94 taxmann.com 84 (SC) that non-compliance of direction of Supreme Court in GKN Driveshafts (India) Ltd. v. ITO [2002] 125 Taxman 963 that on receipt of objection given by assessee to notice under section 148, Assessing Officer is bound to dispose of objections by passing a speaking order, would not make reassessment order void ab initio is not applicable to the peculiar facts of the case as no copy of reasons recorded was provided to the appellant even at his written request as above although the assessee has participated in the assessment proceedings.
6. The Ld. AR argued that it is an established law that assessee after filing return in response to notice u/s 148 of the Act, can seek copy of reasons recorded and Assessing Officer is bound to furnish reasons within a reasonable time. On receipt of reasons, the assessee is entitled to file objections to reasons recorded and the Assessing Officer is bound to dispose of the same by passing a speaking order.
Assessment Year: 2011-12 7. The Ld. AR contended that it is not open to the Assessing Officer to refuse to provide copy of reasons recorded. Since, as a result of such refusal, assessee is deprived of right to file objections to the reasons recorded and that the assessee can file writ petition before the Honorable High Court on dismissal of objections filed by the assessee to the reasons recorded. He also rely on the decision of Coordinate Bench, Amritsar in the case of “Shri Bhushan Kumar Vs. ITO” in vide order dt. 08/04/2014 wherein Tribunal has held as under:
We have heard the rival contentions and perused the facts of the case. The Ld. counsel for the assessee, Mr. P.N.Arora, Advocate invited our attention to page 3 of the paper book, in which the assessee has requested to the ITO Ward 1(3), Bathinda to supply the reasons dated 20.12.2010. The said reasons were not supplied by the A.O. and the assessment was completed under section 18.08.2011. The issue was agitated before the ld. CIT(A), who has given his finding that the assessee has never required the AO for supply of reasons recorded by him and therefore, it cannot be said that a reasonable opportunity has not been afforded. But at the same time, the ld. counsel for the assessee has produced before the Bench, the original receipt of the letter dated 20.12.2010 submitted to the ITO Ward 1(3), Bathinda for supply of reasons. In the facts and circumstances, we are of the view that the re- assessment order cannot be held to be valid since not supplying the reasons is violative of principle of natural justice in view of the decisions of Hon’ble Bombay High Court in the case of CIT vs. Formento Resorts & Hotels Limited in Appeal NBo.71 of 2006 dated 27.11.2006 and in the case of CIT vs. Videsh Sanchar Nigam Limited in Appeal No.4235 of 2010 dated 20.07.2011 (supra).
Assessment Year: 2011-12 Thus, in the facts and circumstances of the case and the decisions relied upon hereinabove, reassessment made is held to be invalid. Thus, ground No.1 of the assessee is allowed.
Since the assessee has succeeded in the legal issue and the assessment has been held to be valid, therefore, we do not proceed to decide the issue on merits. Hence, the appeal of the assessee is allowed.
8. Following the Hon’ble Apex Court in the case of “GKN DRIVESHAFTS (INDIA) LTD. (Supra), on identical facts, Coordinate Bench has granted relief to the assessee in the case of Kamal Kaur in in respect of Assessment Year 2011-12 vide decision dated 21.06.2023 which reads as under:
“7. We have heard the rival contentions, perused the material on record, impugned order, written submission and case law cited before us. Admittedly, the appellant assessee hasmade specific request for copy of reasons recorded by the AO for reopening the assessment, vide letter dated 01.08.2018.
Following the Hon’ble Apex Court in the case of “GKN DRIVESHAFTS (INDIA) LTD. vs. INCOME TAX OFFICER & ORS”, (Supra) the Hon’ble HIGH COURT OF MADRAS in the case of “Commissioner of Income Tax, Chennai vs. Janak Shantilal Mehta”, [2021] 124 taxmann.com 516 (Madras) has observed that the Tribunal was right in quashing reassessment proceedings by Assessing Officer on ground that reasons for reopening were not communicated to assessee and despite opportunities, revenue was not able to produce any evidence to show that reasons recorded for reopening had been provided to assessee as requested by them in their letter vide para 12 and 16 of the judgement as under: 12. What is important to note is that section 292BB of the Act is not a cure when there is total absence of notice. In this regard, it would be beneficial to refer to the decision in the case of CIT v. Laxman Das Khandelwal [2019] 417 ITR Assessment Year: 2011-12 325/266 Taxman 171/108 taxmann.com 183 (SC). Therefore, the provisions of section 292BB of the Act will not be applicable to a case where the assessee questions the issuance of the notice itself, because non-issuance of notice would result in lack of jurisdiction. Firstly, the necessity to communicate the reasons for reopening is not contained anywhere in the Income-tax Act. The Hon'ble Supreme Court in GKN Driveshafts (India) Ltd. v. ITO [2003] 259 ITR 19/[2002] 125 Taxman 963 had laid down this rule so that the assessee gets an opportunity to know the reasons based on which the re-opening has been done. The assessee on receipt of the reasons for reopening is entitled to submit his objection which is required to be disposed of by the Assessing Officer by passing a reasoned order and this order, if against the assessee, is justiciable under Article 226 of the Constitution of India. Therefore, the non-service of the reasons for reopening as mandated in GKN Driveshafts (India) Ltd., (supra) would not be covered within the scope and ambit of section 292BB of the Act. What is important to note from the said decision is that there is a duty cast upon the Assessing Officer to dispose of the objections placed to the reopening of the assessment by passing a speaking order. If the Assessing Officer fails to do so, the re-assessment proceedings is liable to be set aside. The procedure, which has been carved out by the Hon'ble Supreme Court in GKN Driveshafts (India) Ltd., (supra) binds the assessee as well as the Revenue. Therefore, the procedure cannot be done away with especially when, the assessee has made a request in writing for furnishing the reasons for reopening, which was received by the Assessing Officer and there is no document produced by the Revenue to prove that reasons were communicated to the assessee. The assessee having made a request for furnishing copy of the reasons for reopening, which was received by the Assessing Officer, would clearly be put to prejudice on account of non-communication. Therefore, the decision of the Hon'ble Supreme Court in Sudhir Kumar Singh (supra) cannot be made applicable to the facts and circumstances of the case. Therefore, the Tribunal was well justified in holding that the reassessment proceedings were invalid.
Thus, considering the factual position in the instant case and having noted that the assessee, at the first instance, sought for furnishing the reasons for reopening, would clearly show that non-furnishing of reasons has put him to prejudice. As noted above, the Revenue could not produce any evidence to show that the reasons recorded were provided to the assessee in spite of opportunity having been granted by the Tribunal. Thus, we find that the Tribunal was right in allowing the assessee's appeal and quashing the reassessment proceedings.
9. In the present case,the assessee has made specific written request for supply of the copy of reasons recorded by the AO for reopening of the assessment, vide letter dated 01.08.2018 as above. However, reasons for reopening were not communicated to assessee and despite given opportunities by us, revenue was not able to produce any evidence to show that reasons recorded for reopening had been provided to assessee as requested by him.The assessee having made a request for furnishing copy of the reasons for Assessment Year: 2011-12 reopening, which was received by the Assessing Officer, then, the assessee would clearly be put to prejudice on account of non-communication of reasons in view of the principle laid down by the Hon’ble Apex Court in the case of “GKN DRIVESHAFTS (INDIA) LTD. vs. INCOME TAX OFFICER & ORS”, (Supra).Meaning thereby, the non-communication of reasons to the appellant assessee vitiates the entire reassessment proceedings and the resultant assessment order passed u/s 143(3) r.w.s. 147 of the Act 1961, would be rendered invalid.
10. In the above view, we accept the grievance of the assessee as genuine and therefore, we hold the reassessment proceedings initiated by the AO as invalid on ground of non-communication of reasons for reopening of the assessment. Accordingly, the impugned order is quashed.”
In the instant case, the assessee has made a specific written request for supply of the copy of reasons recorded by the AO for reopening of the assessment, vide letter dated vide letter dated 06/10/2017 and 25/11/2017(APB Pg. -11 &12) as above. However, reasons for reopening were not communicated to the assessee and despite given opportunities by us, revenue was not able to produce any evidence to show that reasons recorded for reopening had been provided to assessee as requested by him. The assessee having made a request for furnishing copy of the reasons for reopening, which was received by the Assessing Officer, then, the assessee would clearly be put to prejudice on account of non- communication of reasons in view of the principle laid down by the Hon’ble Apex Court in the case of “GKN DRIVESHAFTS (INDIA) LTD. vs. INCOME TAX OFFICER & ORS”, (Supra). Meaning thereby, the non-communication
Assessment Year: 2011-12 of reasons to the appellant assessee vitiates the entire reassessment proceedings and the resultant assessment order passed u/s 143(3) r.w.s.
147 of the Act 1961, would be rendered invalid.
On parity of facts, following the coordinate bench decision in case of Kamal Kaur (supra) we hold the reassessment proceedings initiated by the AO as invalid on ground of non-communication of reasons for reopening of the assessment. Accordingly, the impugned order is quashed.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 29/08/2023.