2018 (12) TMI 1696 - AT - Income Tax

Rectification of mistake u/s 254 - Validity of reopening of assessment u/s 147 on non-communication of reasons for reopening the assessment - Non consideration of other decisions relied upon by the AO - HELD THAT - ITAT has considered various judicial precedents and taken a view that non communication of reasons are fatal to the validity of assessment made u/s 147 r.w.s. 143(3) of the Act. Non consideration of other decisions relied upon by the AO would amount to review of the order of the ITAT which is not permissible within the scope of section 254(2) of the Act. Revenue has not argued before this Tribunal or brought the decision of S.Narayanappa Vs. CIT 1966 (9) TMI 36 - SUPREME COURT during the appeal hearing. Similarly, the decision of Hon ble Coordinate Bench of ITAT Delhi in the case of Smt.Gurinder Kaur 2006 (6) TMI 144 - ITAT DELHI-A was also not brought to the notice of the Bench during the appeal hearing. Therefore, there is no occasion to consider the decisions of Hon ble Supreme Court in the case of S.Narayanappa and the decision of Coordinate Bench of Delhi in the case of Smt.Gurinder Kaur. It is settled issue that once, the Tribunal has considered the decisions of the Hon ble High Courts or Supreme Court and taken a conscious decision, review of the same is not permissible. Miscellaneous Applications, the arguments of the Ld.DR and the order passed by this Tribunal and found no mistake in the order which require modification u/s 254(2)

Summary

Issues involved:
1. Validity of assessment under section 147 for non-communication of reasons for reopening the assessment.
2. Consideration of judicial precedents regarding non-communication of reasons for assessment validity.
3. Appeal by revenue against ITAT order dismissing assessment for non-communication of reasons.
4. Request for recall of order to re-adjudicate the issue under section 254 of the Income Tax Act, 1961.

Issue 1: Validity of assessment under section 147 for non-communication of reasons for reopening the assessment:
The case involved the assessee challenging the assessment made under section 147 for non-communication of reasons for reopening the assessment. The ITAT quashed the assessment orders, citing the duty of the Assessing Officer (AO) to communicate reasons upon request by the assessee, as established by judicial decisions like GKN Drive Shafts (India) Ltd. Vs. ITO. The ITAT considered various decisions, including those of the Hon'ble Supreme Court and High Courts, to rule that non-communication of reasons renders the assessment invalid.

Issue 2: Consideration of judicial precedents regarding non-communication of reasons for assessment validity:
The revenue filed a Miscellaneous Application against the ITAT order, arguing that non-communication of reasons should not invalidate assessment proceedings under section 147, citing the decision of S.Narayanappa Vs. CIT. However, the ITAT upheld its original decision, stating that once a conscious decision is made considering relevant judicial precedents, review is not permissible. The ITAT also highlighted that the revenue did not present its arguments or relevant decisions during the appeal hearing, preventing reconsideration.

Issue 3: Appeal by revenue against ITAT order dismissing assessment for non-communication of reasons:
The revenue sought to recall the ITAT order based on the argument that non-communication of reasons should not invalidate the assessment proceedings under section 147. However, the ITAT maintained its stance, emphasizing that the Tribunal's decision, supported by legal precedents, cannot be reviewed unless a mistake is apparent from the record, as per section 254(2) of the Act.

Issue 4: Request for recall of order to re-adjudicate the issue under section 254 of the Income Tax Act, 1961:
The revenue's request for a recall to re-adjudicate the issue under section 254 of the Act was dismissed by the ITAT. The Tribunal cited the decision of the Hon'ble Karnataka High Court, stating that reconsidering the application of legal principles or findings recorded in a review petition is not permissible under section 254(2). The ITAT found no mistake in its original order that warranted modification, leading to the dismissal of the Miscellaneous Applications filed by the revenue.

In conclusion, the ITAT upheld its decision to quash the assessment orders due to non-communication of reasons, emphasizing the importance of following established legal principles and precedents in determining the validity of assessment proceedings under section 147 of the Income Tax Act.