2019 (7) TMI 1689 - AT - Income Tax

Reopening of assessment u/s 147 - non supply of reasons and not qua the change of opinion - HELD THAT - In this case the assessee has not filed any return of income despite the issue of notice under section 148 due to the fact that all the records of the assessee were seized by the various government agencies and assessee was not having any access to such records at the relevant point of time. This fact was brought to the notice of the AO. Assessee requested by various letters during course of the assessment proceedings to supply the reasons but AO did not supply any reasons recorded for re-opening. Even after completion of the assessment, the assessee again requested vide letter dated 30.05.2018 and 01.05.2019 to supply copy of reasons but some were not supplied to the assessee. Once it has established that assessee has not been supplied copy of reasons recorded, then the reassessment proceedings as well as the assessment framed as a result thereof are invalid. The case of the assessee is squarely covered by the decision of the Hon ble Bombay High Court in the case of CIT vs. IDBI Ltd 2016 (7) TMI 1587 - ITAT BANGALORE wherein it has been held that where the reasons recorded are not supplied to the assessee, the order of reassessment would be without jurisdiction. - Decided in favour of assessee.

Summary

Issues Involved:
- Appeal against order of Commissioner of Income Tax (Appeals) for assessment year 1995-96.
- Challenge to addition of unexplained deposit in bank account.
- Claim for deduction on interest expenditure.
- Denial of deduction under chapter VI A of the Act.
- Confirmation of interest charged under sections 234A, 234B, and 234C.
- Dispute regarding taxation in hands of appellant instead of late individual.
- Challenge to reopening of assessment and validity of assessment order.

Analysis:

1. Appeal Against CIT(A) Order:
The appellant challenged the order of the Commissioner of Income Tax (Appeals) for assessment year 1995-96. Various grounds of appeal were raised, including disputing the addition of an unexplained deposit in the bank account, denial of deduction on interest expenditure, denial of deduction under chapter VI A of the Act, and confirmation of interest charged under sections 234A, 234B, and 234C. The appellant also contested the taxation of income in their hands instead of the late individual, arguing that the assets and income belonged to the deceased.

2. Challenge to Reopening of Assessment:
The appellant raised an additional ground challenging the jurisdictional issue regarding the reopening of assessment and the validity of the assessment order dated 30.03.2011. The appellant argued that the issue was legal and technical, going to the root of the matter, and should be admitted for adjudication. The appellant cited relevant legal precedents to support their position. The Department objected to the admission of the additional ground, citing lack of pressing the issue before the Commissioner of Income Tax (Appeals) and the second round of litigation. However, the Tribunal admitted the additional ground for adjudication, emphasizing the legal nature of the challenge to the AO's jurisdiction.

3. Validity of Reassessment Proceedings:
The appellant contended that the AO failed to provide a copy of reasons recorded for reopening the assessment despite repeated requests. The appellant argued that this failure rendered the reassessment proceedings and assessment order invalid and void. The appellant cited various decisions to support their argument. The Department opposed, stating that the assessment was valid as the appellant did not file a return of income in response to the notice under section 148. The Tribunal, after considering submissions from both parties and legal citations, held that failure to provide reasons for reopening rendered the reassessment proceedings and order invalid. The Tribunal quashed the reassessment proceedings and the consequent assessment order.

4. Conclusion:
The Tribunal partly allowed the appeal of the appellant, primarily on the grounds related to the challenge of the reopening of assessment and the validity of the assessment order. The Tribunal's decision was based on the failure to provide reasons for reopening, which was deemed crucial for the validity of the reassessment proceedings. The main grounds of appeal were not adjudicated upon due to the decision on the additional ground challenging the jurisdiction of the AO. The appeal was concluded on 17.07.2019.