2012 (1) TMI 384 - AT - Income Tax

Summary

Issues involved:
The issues involved in this case are related to the assessment completed by the Assessing Officer (AO) u/s.144 r.w.s. 147 of the Income Tax Act without supplying the reasons recorded for reopening the case, violation of principles of natural justice, and the subsequent appeal challenging the assessment.

Assessment Proceedings:
The case pertains to the assessment year 1999-00, where the DCIT referred the case to the Assistant Valuation Officer u/s.131(1)(d) to determine the correct cost of construction of a property. The Valuation Officer provided a report stating a higher cost of construction than declared by the assessee, mentioning lack of cooperation from the assessee during inspection.

Initiation of Proceedings:
Based on the Valuation Officer's report, proceedings u/s.147 of the IT Act were initiated, and notices u/s.148 were issued for multiple assessment years. The AO proceeded with protective/substantive assessments for different entities involved in the project to safeguard revenue interests.

Grounds Raised by Assessee:
The assessee raised grounds challenging the assessment u/s.144 r.w.s 147, citing lack of reasons provided for reopening the case. The CIT(A) dismissed the ground, stating that the appellant was aware of discrepancies in construction costs from related proceedings and upheld the AO's actions.

Judgment and Directions:
The ITAT directed the AO to provide the reasons recorded for reopening the assessment, following the precedent set by the Supreme Court in GKN Driveshafts case. The AO was instructed to pass a speaking order after considering the assessee's objections. The ITAT also highlighted the need to address jurisdictional issues before deciding on quantum additions, as per legal precedents.

Conclusion:
The ITAT allowed the appeal of the assessee for statistical purposes, emphasizing the importance of following due process and providing reasons for reopening assessments. The matter was remanded back to the AO for further proceedings in compliance with the directions given by the ITAT.