2020 (2) TMI 829 - AT - Income Tax

Validity of reopening of assessment - action of AO in completing the assessment without providing a copy of reasons recorded u/s 148(2) - HELD THAT - The requirement of supply of reasons u/s 148 of the Act when the assessee has specifically requested for the same after complying with the notice u/s 148 is sine qua non and goes to the root of the jurisdiction of the AO. In our opinion, the assessment framed without supplying reasons recorded u/s 148 deprives the assessee from filing the objections to the said reopening. Therefore the assessment framed by the AO without supplying reasons is without jurisdiction and cannot be sustained. The case of the assessee is squarely covered by the decision of hon ble jurisdictional High Court in the case of CIT vs. M/s IDBI Ltd. 2016 (10) TMI 166 - BOMBAY HIGH COURT - The appeal of the assessee is allowed on legal issues.

Summary

Issues:
Challenge to assessment order without providing reasons recorded under section 148(2) of the Act.

Analysis:
The appellant contested the order of the Commissioner of Income Tax (Appeals) regarding the completion of assessment without providing reasons recorded under section 148(2) of the Act. The appellant argued that not receiving a copy of the reasons violated established legal principles. The delay in filing the appeal was attributed to the Chartered Accountant's preoccupation with other professional duties, which was deemed a reasonable cause. The Tribunal condoned the delay of 10 days and admitted the appeal for prosecution.

The facts revealed that the assessee's return of income was initially accepted under section 143(1) of the Act. However, the case was reopened under section 147 based on information indicating hawala purchase transactions. Despite the assessee's request, the Assessing Officer did not provide the reasons recorded under section 148(2) during the assessment proceedings. The assessment was completed under section 143(3) r.w.s 147, adding an amount on account of profit from bogus purchases. The appellant argued that the failure to provide reasons rendered the assessment null and void, citing relevant legal precedents.

The Tribunal observed that the failure to supply reasons under section 148(2) deprived the assessee of the opportunity to object to the reopening. It was deemed a jurisdictional requirement and essential for a valid assessment. Relying on the decision of the jurisdictional High Court, the Tribunal concluded that the assessment without providing reasons was without jurisdiction and could not be sustained. Consequently, the order of the Commissioner of Income Tax (Appeals) was set aside, and the assessment framed by the Assessing Officer was quashed.

As the appeal was allowed on the primary legal issue, other grounds raised by the assessee were considered academic and not adjudicated. The Tribunal partially allowed the appeal, emphasizing the importance of providing reasons recorded under section 148(2) for a valid assessment.