2018 (1) TMI 193 - HC - Income Tax

Reopening of assessment - case made out in the affidavit belatedly filed by the Assessing Officer - Held that - An Appeal against the order of Assessing Officer was preferred by the respondent assessee on 25th January, 2011. During the pendency of the said Appeal which was decided on 20th June, 2011 no such affidavit was filed by the Assessing Officer. On 8th September, 2011 the appellant assessee preferred an Appeal before the Appellate Tribunal. From the impugned judgment, it appears that the Appeal was heard 3 years thereafter on 19th February, 2015. The affidavit relied upon by the learned counsel appearing for the appellant was belatedly filed on 24th March, 2014 which is nearly 2 years after the Appeal was preferred before the Appellate Tribunal. Thus, what was stated in the affidavit was clearly an afterthought. The affidavit has been taken into consideration by the Appellate Tribunal. The Appellate Tribunal noted that even assuming that the Assessing Officer had dictated reasons on 30th March, 2010, in fact the reasons were signed by him admittedly on 31st March, 2010. The Appellate Tribunal, in our view, rightly held that the process of recording reasons as per the mandate of Sub-Section (2) of Section 148 of the said Act was completed when the Assessing Officer signed the reasons on 31st March, 2010. Thus, even before recording reasons under his signature, a notice under Section 148 was already issued on 30th March, 2010. Therefore, the Appellate Tribunal was right in holding that even if the case made out in the affidavit belatedly filed by the Assessing Officer is correct, it will not advance the case of the appellant revenue any further. No substantial question of law arises

Summary

Issues:
1. Validity of notice u/s.148 and assessment proceedings.
2. Recording of reasons for reopening assessment.
3. Compliance with Subsection (2) of Section 148 of the Income Tax Act, 1961.

Issue 1: Validity of notice u/s.148 and assessment proceedings
The appellant-revenue questioned the ITAT's decision to annul the assessment proceedings, arguing that the assessee never objected to the validity of the notice u/s.148 during the assessment proceedings. The CIT (A) set aside the reassessment, emphasizing that recording reasons was essential for issuing the notice under Section 148. The Assessing Officer's affidavit stated that although he dictated reasons on 30th March, 2010, he signed them on 31st March, 2010. The Appellate Tribunal dismissed the appeal filed by the appellant-revenue, considering the timing of the reasons' recording and signing. The High Court noted the belated filing of the affidavit and deemed it an afterthought. Despite the consideration of the affidavit, the High Court upheld the ITAT's decision, stating that the process of recording reasons was completed when the Assessing Officer signed them on 31st March, 2010, even though the notice was issued on 30th March, 2010.

Issue 2: Recording of reasons for reopening assessment
The appellant-revenue contended that the Assessing Officer had the information and recorded reasons for reopening on 30th March, 2010, but a typographical error made it appear as 31st March, 2010. The High Court observed that the affidavit filed by the Assessing Officer was belated, submitted almost 2.5 years after the appeal was filed before the Appellate Tribunal. Despite the belated submission, the Appellate Tribunal considered the affidavit but concluded that the signing of reasons on 31st March, 2010, was crucial for compliance with Subsection (2) of Section 148. The High Court agreed with the Tribunal's decision, emphasizing that the notice under Section 148 was already issued on 30th March, 2010, before the reasons were signed.

Issue 3: Compliance with Subsection (2) of Section 148 of the Income Tax Act, 1961
The appellant-revenue argued that the recording of reasons before issuing the notice under Section 148 on 30th March, 2010, complied with Subsection (2) of Section 148. However, the High Court noted the timing discrepancy between dictating and signing the reasons. Despite the Assessing Officer's contention that the reasons were dictated on 30th March, 2010, the High Court upheld the ITAT's decision that the signing on 31st March, 2010, was crucial for fulfilling the requirements of Subsection (2) of Section 148. The High Court dismissed the appeal, stating that no substantial question of law arose in this case.