2012 (3) TMI 137 - AT - Income Tax

Re-opening of assessment under 147 - reason supplied after the expiry of six years from the end of relevant A/Y - Held That - since the reasons for the reopening of the completed assessment were supplied to him beyond the period of six years from the end of the assessment year under consideration, the reopening is invalid - In view of Haryana Acrylic Manufacturing Co. vs. CIT (2008 - TMI - 31355 - DELHI HIGH COURT), assessment declared void ab initio.

Summary

Issues involved:
1. Validity of notice u/s 148 of the Income Tax Act for assessment year 2002-03.
2. Whether reasons for reopening assessment were supplied within the statutory time limit.

Analysis:

Issue 1: Validity of notice u/s 148:
The department appealed for assessment year 2002-03, challenging the deletion of an addition on account of unexplained investment in property. The CIT (A) was criticized for holding that the Assessing Officer had not recorded his own 'satisfaction' and for questioning the jurisdiction of the DCIT. The department contended that the Assessing Officer had valid reasons for reopening the case based on information from the Investigation Wing. However, the assessee argued that the notice u/s 148 was invalid as the reasons for reopening were supplied after the statutory six-year period. The Tribunal referred to previous judgments and held that the notice u/s 148 must be served within six years from the end of the assessment year, and failure to do so renders the reopening void.

Issue 2: Timely supply of reasons for reopening:
The department argued that the reasons for reopening were supplied to the assessee within a reasonable time period, allowing for objections to be raised and disposed of. However, the Tribunal disagreed, emphasizing that the reasons were supplied beyond the six-year limit, making the reopening invalid. The Tribunal upheld the assessee's contention based on precedents like 'Haryana Acrylic Manufacturing Co.' and 'Balwant Rai Wadhwa vs. ITO', which established the requirement for timely supply of reasons for reopening assessments. Consequently, the appeal filed by the department was dismissed due to the invalidity of the reopening, rendering the raised grounds irrelevant.

In conclusion, the Tribunal's judgment focused on the statutory compliance regarding the notice u/s 148 and the timely supply of reasons for reopening assessments. The decision highlighted the importance of adhering to legal timelines and precedents to ensure the validity of assessment proceedings.