2014 (4) TMI 356 - HC - Income Tax

Validity of Notice u/s 148 of the Act Reasons not recorded - Whether the notice issued by the AO u/s 148 of the Act without recording reasons as contemplated by sub-Section (2) of Section 148 of the Act would vitiate the whole proceedings Held that - The AO is obliged to record reasons before issuing notice u/s 148 of the Act - The Tribunal rightly was of the view that revenue failed to produce such a document - Since the Department produced the original print out copy by the computer of the reasons recorded which are identical as are filed by the assessee containing identical correction by hand with no signature on the correction, it is apparent that the reasons were not recorded at the time of issue of notice - the date of notice is 30-1-2004 and the reasons recorded are clearly dated 4-2-2004, i.e., the reasons are not recorded before the issue of notice but afterwards, the assumption of jurisdiction is clearly bad - The Tribunal noted that notice was issued even before the reasons were recorded there is no reason to interfere in the order of the Tribunal Decided against Revenue.

Summary

Issues:
1. Reopening of income tax assessments by the Income Tax Appellate Tribunal.
2. Requirement of recording reasons under Section 148 of the Income Tax Act.
3. Dispute regarding the timing of recording reasons and issuing notice under Section 148.
4. Appeal by the Revenue challenging the Tribunal's decision.

Analysis:
1. The batch of 13 income tax appeals arose from a common order by the Income Tax Appellate Tribunal, involving different assessment years. The appeals were filed by educational institutions claiming exemption under Section 10(23c)(vi) of the Income Tax Act. The Revenue challenged the Tribunal's decision partially allowing the assessees' appeals.

2. The key issue raised by the Revenue in all appeals was whether the notice issued under Section 148 of the Act without recording reasons would render the proceedings invalid. The assessees argued that the reasons were recorded after issuing the notice, violating the mandatory requirement of Section 148(2) of the Act.

3. The assessees contended that the reasons were recorded post-notice issuance, while the Revenue maintained that the reasons were prepared before sending the notice. The Tribunal examined the original records and found discrepancies in the dates on the reasons recorded, indicating that the notice was issued before recording reasons, as per the Tribunal's findings.

4. Despite the Revenue's appeal on substantial questions of law, the High Court upheld the Tribunal's factual findings, concluding that the notice was indeed issued before recording reasons. The Court found no grounds to interfere with the Tribunal's decision, dismissing all appeals by the Revenue without costs.

This detailed analysis of the judgment highlights the procedural and legal aspects involved in the case, focusing on the critical issue of recording reasons under Section 148 of the Income Tax Act and the timing of such recording concerning the notice issuance.