2015 (12) TMI 1854 - AT - Income Tax

Reopening of assessment u/s 147 - as argued no reasons were recorded for reopening before the date of issue of notice u/s.148 - HELD THAT - From the notesheet, we found that the first entry pertains to issue of notice u/s.148 dated 6-3-2009 and the last entry is dated 16-12-2009. However, we do not find any entry in notesheet recording the reasons for reopening, after the date of issue of notice on 6-3-2009 u/s.148, it means reasons for reopening was not recorded after issue of notice u/s.148 dated 6-3-2009. Since note sheet recording entries prior to the date of issue of notice u/s.148 dated 6-3-2009 was not made available to us, it is not possible for us to find out independently as to whether any reasons for reopening was recorded prior to issue of notice u/s.148. As per entry on the note sheet, between 24-8-2009 to 16-12-2009, the assessee had asked for issue of reasons and the AO has sent the reasons. However, the notings of the proceedings carried out by AO before issue of notice u/s.148 was not made available to us. Thus, the copy of notesheet so filed by ld. DR which is incomplete, do not help us to reach to the conclusion as to whether any reasons were ever recorded by the AO prior to the issue of notice u/s.148 on 6-3-2009. Under such circumstances, we have no option other than relying on the finding recorded by CIT(A) to the effect that no reasons were recorded for reopening before the date of issue of notice u/s.148 on 6-3-2009. - Decided in favour of assessee.

Summary

Issues Involved:
1. Validity of reopening assessment under section 148 of the IT Act.
2. The sequence and timing of recording reasons for reopening.
3. The correctness of the reasons provided for reopening.
4. The impact of procedural errors on the validity of the reassessment.

Detailed Analysis:

1. Validity of Reopening Assessment under Section 148 of the IT Act:
The primary issue was whether the reopening of the assessment by issuing a notice under section 148 dated 06-03-2009 was valid. The CIT(A) held that the reopening was invalid because the reasons for reopening were recorded after the issuance of the notice, which is contrary to the legal requirement that reasons must be recorded before issuing the notice. The Tribunal upheld this finding, noting that the assessment records did not substantiate that reasons were recorded prior to the notice.

2. The Sequence and Timing of Recording Reasons for Reopening:
The Tribunal examined the sequence of events and found discrepancies. The notice under section 148 was dated 06-03-2009, but the reasons provided to the assessee were dated 19-03-2009. The department later claimed that the reasons were actually recorded on 05-03-2009, but this was not substantiated by the assessment records. The Tribunal found that the notesheet entries did not support the department's claim, leading to the conclusion that the reasons were indeed recorded after the notice, making the reopening invalid.

3. The Correctness of the Reasons Provided for Reopening:
The CIT(A) and the Tribunal found that the reasons provided for reopening were inconsistent and contained errors. Three different sets of reasons were recorded, with one set not pertaining to the assessee and another set recorded after the notice was issued. The Tribunal found that these procedural errors could not be validated under section 292B, which allows for minor procedural lapses but not for substantive errors like recording reasons after issuing the notice.

4. The Impact of Procedural Errors on the Validity of the Reassessment:
The Tribunal emphasized that procedural compliance is crucial for the validity of reassessment proceedings. The errors in recording and communicating the reasons for reopening were significant enough to vitiate the entire reassessment process. The Tribunal upheld the CIT(A)'s decision that the reassessment was invalid due to these procedural lapses.

Conclusion:
The Tribunal dismissed the revenue's appeal and the assessee's cross-objection, upholding the CIT(A)'s decision that the reopening of the assessment was invalid due to procedural errors in recording and communicating the reasons for reopening. The Tribunal emphasized the importance of adhering to procedural requirements to ensure the validity of reassessment proceedings.