2019 (8) TMI 1616 - HC - Income Tax

Reopening of assessment u/s 147 - CIT-A held that the reopening notice had been issued without having recorded the reasons which led the Assessing Officer to form a reasonable belief that income chargeable to tax escaped assessment - HELD THAT - We note that both the CIT(A) and the Tribunal have concurrently come to a finding of fact that no reasons were recorded by the Assessing Officer prior to issuing the reopening notice dated 6 March, 2009. Nothing has been shown to us to suggest that the above finding of fact is perverse. Thus we see no reason to entertain this question as it does not give rise to any substantial question of law. Whether error in dates mentioned while furnishing reasons for reopening and quashing the reopening proceedings while failing to appreciate that such mistake is covered under u/s. 292B? - Section 292B of the Act, would have no application in the present facts as the condition precedent for issuing of the reopening notice namely, recording of reasons has not been satisfied by the Assessing Officer. In this case on facts it has been found that no reasons were recorded by the Assessing Officer in support of the reopening notice dated 6 March, 2009. Thus it is not a case of clerical error, but the substantial condition for a valid reopening notice viz. recording of reasons to form a reasonable belief is not satisfied.

Summary

Issues:
1. Validity of reopening notice under section 148 of the Income-tax Act, 1961.
2. Application of section 292B of the Act in case of error in dates mentioned in reopening notice.

Analysis:

Issue 1: Validity of reopening notice under section 148 of the Income-tax Act, 1961
The appeal challenged the order passed by the Income Tax Appellate Tribunal, Mumbai, relating to the Assessment Year 2004-05. The Assessing Officer issued a notice under section 148 seeking to reopen the assessment, but the Respondent contended that the notice was issued before recording the reasons for reopening, rendering it without jurisdiction. The Commissioner of Income Tax (Appeals) held that the notice was indeed issued without recorded reasons, leading to the vitiation of the reopening process. The Tribunal, upon review of the assessment record, found that no reasons were recorded before the notice was issued, concluding that the reopening notice was without jurisdiction. Both the Commissioner of Income Tax (Appeals) and the Tribunal agreed on this finding, and the High Court upheld this decision, dismissing the appeal as it did not raise any substantial question of law.

Issue 2: Application of section 292B of the Act in case of error in dates mentioned in reopening notice
The Court determined that section 292B of the Act, which deals with errors in documents, did not apply in this case as the essential requirement for issuing a reopening notice, i.e., recording of reasons, was not fulfilled by the Assessing Officer. Since no reasons were recorded to support the reopening notice, the Court held that it was not a mere clerical error but a failure to satisfy the fundamental condition for a valid reopening notice. Consequently, the Court found that the questions raised did not give rise to any substantial question of law and therefore dismissed the appeal.

In conclusion, the High Court upheld the decisions of the Commissioner of Income Tax (Appeals) and the Tribunal, ruling that the reopening notice was without jurisdiction due to the absence of recorded reasons, and that section 292B of the Act did not apply in this context. The appeal was dismissed accordingly.