2006 (2) TMI 103 - HC - Income Tax

Reassessment - (1) Whether, Tribunal was right in holding that the reopening of the assessment under section 147, and completion of assessment without issue of notice under section 143(2) within 12 months is not valid? (2) Whether, Tribunal was right in law in holding that, non-furnishing of the copies of the reasons by the Assessing Officer for reopening the case under section 147, even though the assessee has not applied for certified copies of the reasons recorded by the Assessing Officer and paying the necessary charges is valid? - first question now raised, therefore, stands concluded in favour of the assessee - In view of conclusion in respect of question No.1, the question of non-furnishing of copies of the reasons by the Assessing Officer for reopening the assessment does not arise at all.

Summary

Issues:
1. Validity of reopening assessment under section 147 without issuing notice under section 143(2) within 12 months.
2. Validity of non-furnishing of reasons for reopening the assessment.

Analysis:

The High Court of Madras addressed the issues raised by the Revenue in appeals under section 260A of the Income-tax Act, 1961 against the order of the Income-tax Appellate Tribunal. The appeals concerned the reopening of assessments for the years 1991-92, 1990-91, 1989-90, and 1992-93. The court examined whether the reopening of assessments under section 147 without issuing notice under section 143(2) within 12 months was valid. The court also considered the validity of not providing copies of the reasons for reopening the assessment to the assessee.

Regarding the first issue, the Revenue argued that the assessment was completed under section 143(1) of the Act, justifying the reopening under section 147 to correct the quantum of interest deduction. The Revenue contended that the assessee did not provide relevant facts and evidence with the return. However, the court referred to a previous judgment and held that if notices under section 143(2) were not served within 12 months, the proceedings under section 143 of the Act would conclude, as per the decision in CIT v. M. Chellappan. Therefore, the court concluded that the reopening of the assessment without issuing notice under section 143(2) within 12 months was not valid, favoring the assessee.

In light of the above conclusion, the court determined that the issue of non-furnishing of reasons for reopening the assessment did not arise. Consequently, the court found no error or illegality in the decision of the Appellate Tribunal. The court dismissed the appeal, stating that there was no question of law, let alone a substantial question of law, for consideration. No costs were awarded in this matter.

In summary, the High Court of Madras ruled in favor of the assessee, holding that the reopening of assessments without issuing notice under section 143(2) within 12 months was not valid. As a result, the court dismissed the appeal by the Revenue, emphasizing that there was no substantial question of law arising from the Appellate Tribunal's order.